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hey everyone me Kevin here I am back and boy oh boy we got a buckle up for what's coming up next week this is going to be wild but before I go through the schedule with you I want to show you what some of the wall streeters are talking about so let's get right into it here we go Bank of America says hey this is like a bubble dream the FED is cutting oil is crashing China is printing money this is perfect people were going long gold as an inflation head Ed they're going long tech and everything else is a trade because we're going straight to the Moon their bull bear indicator by the way is midpoint I was actually surprised it wasn't a little bit more on the bullish side of the scale because it feels like things have been pretty dang bullish but hey it's their indicator so I guess they can determine how they want uh I've have been a little more nervous about labor but we are going to talk about what happened with that savings number today in a little bit more detail and I did find it interesting that Bank of America clients were actually adding more money to the 10 and 2year treasury notes rather than the very shortterm 4 to one week which were started declining over here uh and then very little there to the 2030 year uh this by the way 2030 year is seen as a recession hedge uh and since a lot of people don't think there's going to be recession maybe that's why there aren't a lot of inflows in that uh but I did want to look in here I wanted to see if they had August uh in their bull bear scale they actually did didn't they had Extreme bullishness as February of 2018 January of 2020 and then extreme bearishness as October of 22 uh and October of 23 and they called those uh buy bear points Ah that's funny that's right around when I launched my fund but anyway take a look at the CNN greed and fear index if you look at the greed and fear index we're almost solidly in the uh well we're certainly solidly in the greed category we're almost in the extreme greed category Mark momentum greed extreme greed on stock price strength and bread in other words uh more stocks going up than going down and then the put call volume this one's the scariest to me because this one can sometimes signal shocks coming up because usually after the put call volume uh gets this low into that uh sort of like under 65 is Level under 70ish level you usually end up having this pretty large ramp up uh in put buying and protection buying basically and you might be able to line that up with what's going on in markets but what's most important is take a look at where we sit right now we sit at about a 66 which we've only been lower than this uh for this area once twice in about the last year so we're getting pretty dang bullish we people like nah I don't want any puts this is leading some like the marketeer I was reading them a little a little earlier they're like you know maybe it's a good time to pick up some downside protection because downside protection is something you get when you don't need it and you don't even think about wanting it because by the time you need it it's too late interesting I'm not the biggest fan of puts mostly because I I think you really have to play the timing on it well sometimes I play it really well like for example I bought a put on Tesla this morning s an alert to everybody in the stocks and py group and I was up 61% on that trade and I'm like boom I'm running the register now of course Tesla ended higher but that's okay it was just a trade on the roller coaster right that's fine I don't have any other shorts or puts on any kind of stocks uh so what we have over here is uh volatility actually pretty neutral right now though we did have a little bit of a tick up in the vix and some on Wall Street were saying that little pick up there on the vix was like a sign that the vix is getting ready to wake up uh maybe but that's probably because the calendar we have coming up not necessarily a bad Omen I mean think what's coming up next week we're going to get the ADP employment report I'm going to give you some of these numbers and then we'll talk about what a little more with what happened with that savings rate today so obviously PC was good we already talked about that on the 1 which is Tuesday we're going to get the joltz numbers okay this is labor related so it's going to be a big deal everybody right now cares about Labor including myself because if we can actually start getting growth again in jobs which would be remarkable but you might actually stick a soft Landing even with those downward revisions that we've been getting in labor so you really you want to start pricing in recession you want to see jobs come in under a 100,000 you want to start pricing in soft Landing you want to see jobs coming in over 180,000 that's usually what I like to see somewhere around 90 to 100 under that once we start breaking that range it's bad like you get sub 50 you're probably going into recession uh so 90 to 100 is a good level to watch and a good level to watch on the flip side in my opinion is that like 180 level before you start trending back up to 200 so watch it I I think the dad is going to tell us that honestly within the next 5 to six weeks here this is the time to tell us you'll see why so mark your calendar October 1st you get the jolts report then you get 0p on October 2nd which is Wednesday we're expecting 125,000 jobs it's pretty good and ADP is usually the more bearish one and that's actually a turn up the last estimate for ad0 well actually the last result for ADP was 999,000 now we're looking at 125 that would kind of suggest that like July and August got slapped a little and like something weird happened there and now everything's kind of back and the part's back it's like the power went out for a second and everybody's like oh my gosh it's the start of the end and then the power came back on it's like no all right it's not even the generator that's just normal Power like we're good like we're not even coming in for a landing we're going keep flying keep flying the plane okay what are we circling the airport for so uh then uh we have the actual jobs report which comes out 2 days after that Friday the 4th and the current estimate is 146,000 so in order for you to go like Mega bear here uh keep in mind you get like ISM prices paid here twice uh once on the first and once on the third the first will be manufacturing the third will be uh for services so we'll get a little bit of a read on inflation again which is good since we had the S&P pmis that came in a little warm last week and started pushing Commodities up a bit so those could affect bonds or inflation concerns a little bit and gold watch those but otherwise everyone's going to care about Labor jolts ADP then the jobs report if this jobs report comes in hot and knocks it out of the park yeah it's it's going to be kind of hard to start arguing even with big revisions it's going to be kind of hard to start saying uh yep nope recessions right around the corner because quite frankly that it just even if you revised it down by 30% it would still be really good right if the estimate is 146,000 and let's say it comes in at 160,000 beat or or goes up to 160,000 so 14kb which seems relatively reasonable that'd be within standard deviations here uh so let me go down 30% just to take 30% off and see uh I would be down at time 70% 112 still in the positive direction even after the revisions and I'm actually going up not down right because the last release was 142 so you kind of be start creating a trend up and see what I always like to do is I like to invest in markets when there's Peak uncertainty so I mean I wouldn't be surprised for you to have red going into the labor market reads next week and if the labor market reads come in Weak jolts ADP jobs markets just really going to tank because everybody thinks the labor market is going to be that sort of canary in the cold mine cold mine for recession I I don't really believe that I actually think when the labor market starts telling you you're heading towards recession it's too late I think what's more likely to lead to recession is some kind of Market correction that comes as a result of some form of World War III Fe although so far the market has not cared at all it's kind of like the Market's almost like cheering on Israel taking out like every freaking hezb person they can come across because the more and more that war expands the more the market just keeps going up so I don't actually think we're going to get much too much scary news out of the jobs reports because I mean let's be real that's the last thing to roll really I think what people should be paying way more attention to are going to be earnings that third quarter earnings set orning start like 2 weeks after we get this jobs report I don't even care about the CPI report that comes out you know a week and a half or whatever after the jobs report I think that'll be fine just like the pce report that we got this morning or CPI last week I think what'll really matter earnings and that's what I most look forward to because those earnings won't tell me about this quarter who cares by this quarter I want to know about Q4 what are companies seeing going into Q4 I want to hear commentary from Domino's on the 10th Delta on the 10th I want to hear the banks start reporting how are defaults going I get GP JP Morgan Wells Fargo Bank of New York melon I and fenel for some construction numbers I get all of those before the market open on October 11th you got Tesla's Robo taxi day on the 10th which will probably be a by the rumor sell the news uh but then you're going into the 18th for earnings which frankly a lot of people think earnings are actually going to do really well there are a lot of people that who are upgrading what they think earnings are going to be and what deliveries are going to be for Tesla for this next quarter so frankly there's kind of like it's almost like a lot of people feel like things are kind of like you know slowly going on the up and up trajectory which is nice and the downside risk jobs but again we get a good jobs report here fantastic now the worst case scenario is you get a bad jobs report because if you get a bad jobs report next week or just bad jobs bad data across the board next week then it's going to amplify how important earnings are like let me rephrase that if you get good jobs data honestly do we really care that much about earnings yes we do because the earnings are going to be the leading indicators but the stock market will go in frothed up on the back of good labor data so like it's not that bad uh then of course you'll have election uncertainty but honestly I feel like we've already got so much election uncertainty I mean look at uh you know the betting markets for the presidency you've got predicted uh kind of showing kamla Harris at like a nine-point lead you've got the New York Times saying the latest polling puts both of the candidates at razor thin earning or razor thin margins in the Battleground States uh poly Market puts comma at 51 Donald Trump at 49 you've got the current estimates uh for Tesla deliveries at about 460 to about 465 honestly not bad it's pretty decent it's all going to come down to what margins are going to be but frankly it puts Tesla on track to get to about 1.8 million deliveries which is flat year-over-year growth it's not great but it's better than substantially negative so you know was like all right no problem so not bad uh then in terms of really pricing in the market usually usually markets look post election and go cool uncertainty is gone time for the markets to Moon I think that is such mainstream knowledge at this point that we've kind of already priced that in so I think the way to kind of reconcile all of this is sort of look at what what is left like what can actually make the market go down and doesn't need to go down well I'll answer the second one first no the market does not have to go down uh but the first thing we have to think of is uh labor lags but freaks the market out all you have to do is look at the July labor report and you'll see how the market freaked out I mean it it flushed out the Black Swan of the you know Japanese carry trade so and that was all on a labor report so that actually makes next week probably the most important for Price action but frankly less important for recession risks like the way I look at recession risk is uh you kind of go this way you go market crash Black Swan then you get lay uh well prices go down well that's part of market crash right then you get layoffs then you get earnings down then and and unemployment claims that go up uh and then you get labor down and then you have recession so if you think about it in this pattern really absent a Black Swamp you don't really get the layoffs ironically though a bad labor report could be the Black Swan just like it was in August so it's it's a little complicated to understand but next week is really important for what the market reacts with and that could create a cycle of uncertainty uh and be Amplified by earnings so here are sort of the two paths okay uh path one bad labor week uh amplifies any earnings misses people take profits and fear into election okay path two good labor week uh this buffers any earnings Miss in other words you could miss and uh would wouldn't be that bad right uh people uh Buy dips on misses and who cares on Election that's kind of what I think we got going on that actually makes next week potentially the most important week for this cycle so how do you play it well I mean honestly I mean uh like I mean I think one week puts going into it on Monday or going to fade a Decay like crazy uh probably Decay way way too much going into Friday so you probably if you were to get puts if puts you probably grab like October 20s just to give you a little bit more breathing room or just go uh or you know 90 days out right uh the other thing that you could do is uh if you get a bad labor report you know something you can hedge with you can hedge with uh long treasuries because because uh we should have low inflationary readings next week like pce maybe maybe right uh and uh labor crash should dump yields especially with fed speak uh which uh would amplify the promise of fed intervention think about that stock market go poopy doopy uh next week because of the labor market you're going to get fed that's like you know we're going to be really aggressive about the labor market you know you'll get the ghouls bees coming out going oh we need to cut by hundreds of points okay good great I mean that actually them reacting increases your chances again of a soft Landing so next week's big one week one week is probably too much if puts you probably go out October 20th or 90 days out and you just have to be careful with the F Decay and then obviously how much uh how long you want to hold on to the these you could hedge with treasuries which are a little less volatile uh I I don't love the triple leverag ones but there are plenty of options for uh longer treasuries TLT is an example of one uh but I also have positions in TLT so I'm not trying to just I I hate like I always like to disclose like if I'm saying something related to my book I don't want people to think that's that's the point of these videos uh it's just I always just like to be transparent with my thoughts uh really I don't think that you know you need to necessarily say oh I'm going to sell everything and go all cash I don't I don't think that at all uh but I think that starts happening if you get path one because you can hedge going into a bad week with some of these options uh you don't have to be all cash but this fear into the election that could be dip bable depending on earnings see now this is interesting get bad labor Outlook but earnings are like hey we hit a bump and everything's coming back on the up and up that's when you buy that dip on earnings so that could be an entry interesting so that would be you know I think Friday or week thereafter you know before you really get the earnings rolling out uh before earnings or just wait for the earnings I guess then you can determine it depends what you want so it would be Friday or or after earnings okay uh unless of course whatever selloff happens on on labor keeps going for a while but these are just some things to think of uh okay so if if you don't this is sort of number two if you don't get uh anything uh out of Labor then you're really just twiddling your thumbs for Black Swan the reason I say that is at least based on the current data uh yes there are certain parts that are doing very very poorly in the economy restaurants are doing very poorly temp job openings are doing very T poorly you know new hirings doing very poorly construction job openings architectural buildings uh real estate market still a little in the poopy and in many different parts of the the country uh with the exception of the underbuilt uh we did just get the same savings rate that got revised up uh this was actually a note from Goldman saying there's a chance the savings rate was low because of uh unmeasured interest income and labor compensation received by households okay uh and then at the same time we also saw GDP go up to 3.1% so savings rate got revised up almost 2% which was wild and GDP went up today look at this uh this accounts for the national associ iation of Realtors a decline in the nowcast of the personal consumption expenditures growth was more than offset by an increase in Real gross domestic investment growth in other words this section which had turned negative for a while I guess turned positive enough to uh boost this up as well as net exports okay so all of a sudden I guess GDP is on fire again which is pretty remarkable but you look at this in whole uh it all comes down to the Labor Market Bank of America talks about that too you know they're under the impression that we're going to have a 150k over here but if the labor market holds with the numbers we talked about I I don't know that there that there's a reason to be horribly bearish so uh I think that does make me more bullish on sort of my bull bare bull scale but I'm going to wait to make any kind of prediction on how bullish until we actually get our jobs numbers uh next week jolt uh the ADP report and the official uh report because if ADP comes in super low you know I use that as sort of my way of like sussing out the the jobs report from the BLS which always seems to get revised down afterwards so you have to kind of account for that already JP pal said so himself uh but overall I think this is a reasonable path so the reasonable path is Watch What Happens next week because you should have Max uncertainty at some point over the next 30 days let's write that down Max uncertainty over uh next 30 why you have uh you know uh uh strikes inside of Russia by Ukraine you have uh you know these these strikes by um uh Israel and uh an escalating Iranian threat you have uh gold and oil sussing something out maybe right is it an inflationary risk is that why Gold's going up or is there a larger risk going on you still have problems with the lower end lower-end consumer uh restaurants construction temp jobs and hiring uh all no bueno obviously we also know that 50 to 90 BP uninverted is usually where the recession begins we are close like next week could make this happen next week could make this flip I mean think about this just so you know where we sit right now on the two's 10 2 10 yield curve okay 210 yield curve right now is 19 okay so if we're at 19 here's the way to look at this uh oh let me get the twoe quickly okay bonds the 10 years is 3.75 nice round number 3.55 s on the two right so the way you could do this is you get bad jobs data bad jobs data and this is how quickly it'll happen bad jobs data 2year drops 75 BP to 2.75 uh 10e drops I don't know call it um 25 BP to 3.5 now you're 75 bips uninverted boom recession cam it doesn't even have to be that wide like you could literally go down to 3.25 on the 10 year or you could go down to three on the two and 3.5 on the 10 and then your 50 basis points inverted boom recession Camp it could literally happen next week uh obviously combined with uh election uncertainty do I think that earnings could be the Catalyst that pulls this off less likely mostly because you know it that's idiosyncratic I mean you did see that with super micro computer where super micro goes down and drags the whole Market down but you know to get sort of a systemic movement I feel like labor would be what does it so so that's my take that's my take uh I want just give a thorough update here on on sort of everything that's on my mind and what I'm watching uh and uh this this labor report will be the labor report based on September mind you so we actually get some September insights here uh the next point where I think you might really have more labor uncertainties probably be January those would be sort of post election post holidays layoffs anyway there you have it thanks so much for watching folk
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