The economy has peaked, BUT it doesn't matter (yet).

Added: 2026-06-02

[00:00:00]A number of indicators are in the process of peaking and in some cases have already topped out. So I'm going to talk about that in this video and how it relates to every other asset.

[00:00:10]So what we're looking at here are the employment figures for the construction space and also spending in construction and construction is critical when it comes to the overall economy because it's the sector which has the largest implications for basically every other sector in the economy. And as you can see here, the total employment for construction hit some significant headwind in 2024 and has essentially flatlined since then. But more importantly, when it comes to the spending, the total construction spending both in residential and non-residential, the trajectory of spending has just stopped altogether in many cases. And the last time this happened, it was the precursor to the global financial crisis and basically every other downturn before then. So you can see here, I'm just going to zoom right out across these charts so we can see what happened the previous times that we saw a slowdown in employment and spending in the construction space. So we're zooming out now over 30 years to see what typically happens when our chart here stalls out and actually reverses. And it should be pretty obvious to you that we've been in a raging bull market since the lows on this chart of around 2011 with one big blip in the middle which was of course the co drop. But you can see the previous time we started to stall in this chart was just before the GFC and it's actually a leading indicator. The construction employment stops before the rest of the economy turns down. And we also saw it leading into the tech wreck with this chart here topping out early in 2000 actually the end of 1999 before going sideways which was the precursor to the GFC and also before the downturn that we saw in the '90s. So we just get this signal play out time and time again across the spending and also the employment. When it comes to total construction spending in residential, it topped out in ' 06. The economy topped out or rather the stock market topped out after that. We got a lower high here. We're seeing something similar play out with the spending just stalling altogether and dropping off which is also the case in the non-residential sector. So, this here is just critical when it comes to understanding the overall economy because it's our leading indicator to let us know when we may be heading into a longer or bigger downturn across the board, which paints an entirely different picture to what the S&P 500 is doing. We are printing new all-time highs yet again when it comes to the stock market, which is creating a bit of an illusion as to how the economy is doing. But that should not be news to you, at least if you have been watching my channel for at least the last couple of weeks. So, what does this all mean?

[00:02:27]And what do you actually do with this information? Well, the trend is up in the stock market, so you don't fight the trend. We're still seeing higher prices, and that's the way to be going with the market. When it comes to understanding what's going on behind the scenes, it's one of those times where it's a matter of preparing for the worst and hoping for the best because a lot of data is suggesting an economic downturn is coming or is perhaps already here. We're just yet to see it translate when it comes to the S&P 500. And that could still take some time to do because these things are slowmoving beasts. The construction or real estate space is a much larger asset and it takes a lot of time for us to see the boom bust cycle play out. Takes a long time for the lows to form. Then the uptrends last many many years in some cases over a decade to 15 years and sometimes a little bit longer. So when the tops actually come about, tops are also a process which take time to unfold. And it's the unfolding which I believe we're seeing right now with this data here suggesting that to be the case. But like I said before, stock markets are still trending higher, at least the indices. But what we can do in times like now is pull apart the different sectors to see which sectors are leading the charge. So it should be no surprise here that the technology sector, which is what this is here, is picking up most of the slack for the overall economy, pushing the market higher, pushing the indices higher. But each sector beats to the rhythm of its own drum. This here is the finance sector, which has been flat since 2024, going absolutely nowhere. So there's just no gains in this space of late. The same is true of the healthcare sector which has been going nowhere for years and the same for the real estate sector which unsurprisingly is the case when we're already looking at construction and residential data etc etc. So a number of sectors aren't doing a whole lot while one sector alone is leading the charge. And while some other sectors aren't sitting in too bad of a position such as the communication sector, industrial sector and material sector, they're still yet to print new all-time highs. Only one sector in the entire US economy is actually printing new highs being the tech sector which is why the indicy the S&P 500 which is widely considered to be a view of the economy is looking very strong. Now what this has done is pushed the market into a highly speculative phase where everyone is pretty much gambling on the next big thing. And that becomes very evident when you just look at the price chart and people's behavior. And this is the chart of Bitcoin where you can see an enormous run up into around the July August period of last year before ultimately topping in October. And then when you look to gold and also silver from around the time that Bitcoin was topping, you can see that they were actually making lows and beginning to run up really hard. So we began to see speculation go from Bitcoin and crypto into precious metals bottoming around this period going on an enormous run up almost doubling. In fact from that August period around the time Bitcoin was topping silver more than tripled.

[00:05:07]What's interesting is when you look to the lower highs in gold and silver which took place around March it was more obvious in gold. In fact when it topped around March that's the same time that money began flooding back into tech stocks. And we've since seen a 50% move and in some cases more in individual stocks from around the time the speculation ended in metals. It's now gone into tech. And this is all happening in a time when the real economy, actual jobs and spending in real construction and labor is stalling or falling. So to say that we're in a speculative market, I think is an understatement. When it comes to portfolios, most people's portfolios are doing great if you're just a passive ETF investor as money continues to flood in to mostly tech stocks which are still doing well. So practically speaking, the trend is your friend and you want to ride those trends for as long as possible and for the most part they just continue up. But I guess the question you got to ask yourself is where is the money going to flow to after the tech sector eventually tops out? Well, that's a question I'm asking myself anyway. But I'm not too concerned about it because like I said before, the trends are still up and we have no structural changes in what the price or market behavior is actually doing. It's just something I think worth considering, especially when we're seeing the real economy show signs of peaking. In the bigger picture, I'm increasingly leaning on a sideways move into the end of the year before perhaps one more blowoff move for the overall stock market, which I think will breed enough complacency and hope that this time is different before we get to the culmination of the overall economic cycle. Now, this is a moving target and I'm not wed to that, but just to share with you some insights into how I'm thinking about the bigger picture, this here is certainly on my radar. So, while spending and construction employment continue to slow down, we're going to stay close to the price action and market structure to get some insights into when the trend might actually be changing. And in the meantime, if you'd like to see how we're managing our portfolio throughout the economic cycle, what we're preparing for into the peak and also what we plan on taking advantage of in the downturn, then join us in the investor accelerator. We have a sale on right now. Link is down below.

[00:06:57]In terms of the markets and how I'm currently seeing it, that's all I've got for you in today's market update.

[00:07:01]Wishing you more health, wealth, and happiness. Until next time, I'll catch you then.