저자: Kevin · 외국인
요약 보기
미국 ISM 제조업 PMI에서 지불가격 상승이 나왔지만 실제로는 수요 둔화·고용 감소를 보여주는 경기침체 신호라고 진단. 10월 유가 상승은 이스라엘-이란 핵전쟁 우려 때문이며 최근 진정되어 브렌트유 73달러 수준이라고 설명. 가계조사 고용은 8월 7.8만명 등 부진하고 파업·허리케인 영향 해석은 과도하다고 비판. 금리 인하에도 장기금리가 급등한 점을 들어 Fed 인하 효과를 낙관하는 시각을 반박. 시장과 반대로 30년 장기채 롱 포지션을 취하고 금·엔비디아 숏은 청산했으며 20년물 장기채 매수를 검토한다고 밝힘.
다듬은 글
What the hell happened today? Because Treasury bond yields have skyrocketed. Now, that suddenly means that the Federal Reserve has actually cut interest rates by 50 basis points. Now the probability that they will give us another 25 basis point cut is almost 100%. Even Nick T. confirms this, which means they will ease monetary policy by 75 basis points over the next week.
And how did the market react to the Federal Reserve easing monetary policy by 75 basis points? Keep in mind, they are relaxing policies to try to stimulate hiring. So while the Fed is easing conditions to stimulate hiring, what happened in the markets is that yields rose by 75 basis points. This is madness .
And I found the reason. In this video, we'll break down why, whether this is a long-term problem, whether it needs to be fixed, and how you can capitalize on this from an investment perspective. Oh , and before we get started, remember that the coupon expires tonight. So go to mekevin.com, join the courses, join me on the live broadcasts for course participants every morning where we conduct fundamental analysis, discuss trading, fundamentals, investing, and any other questions you have.
Let's begin. OK. So to start, I'll go over here and we'll start with the ISM report, which is the Purchasing Managers' Index, PMI, from the Institute for Supply Management (ISM). This is a very important report because it contributed to today's jump in profitability, because prices paid jumped and we saw production weaken again, but when this report came out, prices paid soared.
People started trading again, which was also popular in " Trump trading," saying, okay, we're going to have stagflation or long-term inflation. Therefore, the long end of the yield curve will rise. At first glance, this sounds logical. But when you look closely , this is deeply wrong. Let's first understand what is actually contained in some parts of the report.
I promise I won't read it all to you. Let 's keep it simple. First, manufacturing activity in the US contracted again in October, and at a faster pace than last month, as demand continues to weaken. This is not good. This is how recessions begin. Output decreased, while input resources remained at a favorable level.
This is actually very important. I want you to remember that for a moment. Input resources remained at a favorable level. That is, even if raw material prices rise, they are still favorable for production, but against the backdrop of such support, demand remains weak, and this is really bad. But no one actually reads the reports.
People just read the headlines, take trend trades because, well, that's how the markets are trading right now . And you know what they end up doing? They are creating speculative hysteria that, frankly , is misplaced and will likely lead to a massive correction. In fact, one of my favorite things to do right now, besides getting rid of my Halloween makeup, is read on one of these Kindles (not the commercials).
I like how easy it is to read, and I'm rereading Securities Analysis again , and I like that line. Ready to hear it? It is always difficult to use a contrarian approach. Oh, it's always hard to take a contrarian position. Even very capable investors can succumb to the relentless pressure of a market that convinces them they are wrong.
It takes nerves of steel to hold on, because the pressure to give up is immense. Okay, I could have added the part about nerves of steel myself, but the part about pressure and the desire to give up is there. And that's important, because look at the data. Experts continue to mention companies' efforts to optimize staff numbers.
Yes, wait a minute. So, favorable raw material prices, slowing demand, constant pressure to optimize personnel, which means new layoffs. I want you to put all of this together for a moment . Good? Sum it up . Well, let's just write this down here for a moment. OK? Employment optimization, layoffs—that's a recession, right?
Favorable prices for raw materials. There is an extra letter here. You need to write correctly. That's it. Favorable prices for raw materials. What does this mean? This means that you should have enough capacity to produce anything, and... what's next? Well, weak demand, which is also a sign of recession.
All of this points to the same things we see in companies. Companies complain about this all the time . This is no longer a supply chain issue, except for the shortage of certain AI chips. This is a matter of overall demand in the economy, which has fallen. Here are some quotes. Optimization is ongoing, and we'll talk about pricing in a moment.
Market demand increased significantly in the second...sorry, decreased significantly in the second half of the year. Well, that's not good. We wouldn't want to see that. and the situation is expected to remain sluggish through the first quarter of 2025 . Don't even get me started on what 2025 will look like .
General pessimism in the economy is forcing customers to be more cautious. Business is picking up , but not too much. This applies to computers and equipment. Sales have been very sluggish for the last 6 months, although inquiries have increased by 30%. This indicates pent-up demand, but people are scared.
Business levels remain low as people are in a state of expectation. More quotes here, reports of strikes, blah blah blah blah. Okay, now I want you to move on to this category. This is the category of prices paid. And that's really important. Look here. Commodity prices rose in October after declining a month earlier.
Energy and transportation costs, and transportation costs directly depend on oil and gas prices, were, what, a secondary factor, a tertiary one? No, they were the main factor. The main reason for the increase in the index of prices paid was energy, as it literally said that oil and natural gas prices rose, which was somewhat offset by the weakness of steel.
Also, like materials, many materials have actually become cheaper, but it is energy that has become more expensive. Now, wait a minute. Can we see these energy prices on a chart to better understand the situation? Certainly. In fact, I put it here specifically because that's where the ISM notes that these surveys are sent out at the beginning of each month.
Some companies respond right at the beginning of the month. Most of them respond at the end of the month to give the best idea of pricing. OK. So what happened in October? Here is the price of oil at the beginning of the month, and here is the price of oil at the end of the month. Compare this to what happened in September, when prices were lower throughout September than they were in October.
So, of course, there was an oil-driven price increase. But this was not caused by stagflation in the economy. This was prompted by fears that Israel was about to start a nuclear war with Iran. And don't get me wrong, they're still playing "an eye for an eye." But, my goodness, those fears have subsided significantly.
And that's why Brent crude fell to 73. So in other words, what are we left with? OK. Well, all that's left is to think about it for a moment. The market says prices have risen, stagflation. This is what the market says. Okay . But if you really look at the data, data, data, data. If you really look at the data, what does it really tell you?
They say everything is slowing down, employment is falling, supply is there, demand is low for whatever reason: elections, demand, you know, uncertainty, whatever the reason, these are indicators of a recession. And when yields go up, you're actually just increasing the chances of a recession, which is crazy because you're doing the opposite of what, frankly , you should be doing.
Now I also want to show you something quite important. And this is a misunderstanding of what is happening with employment data. I already looked at the employment report this morning, so you already know my opinion on it, uh, which is that it's bad. Okay, the household survey actually nullifies the uh, the excitement we had last month.
Okay, the data views for August and September are bad. In August, we actually only created 78,000 jobs, which is terrible. That's almost a third of our normal pace, which is around 188-190,000 jobs. So, really bad. September was very active, but now the indicators are starting to turn negative, and the household survey is also showing a negative result.
Now, why does it matter that the household survey shows negative numbers? Because I want to, I wrote it in red right here. Striking workers, remember, we had strikes in early October and there were hurricanes. Striking workers are still counted as employed in the household report as long as they plan to return to work at some point.
The same goes for hurricanes. As long as they are expected to return to work, uh, they are counted in the household report. If the business was completely destroyed, then yes, of course, they could show up as, well, frankly, being, you know, "oh-oh " and be counted as completely unemployed because the business was destroyed.
But if you look at American Express, it's from a Fox News publication. American Express announced a program to help 1,000 businesses in Florida, Georgia, North and South Carolina, and Tennessee that qualify to receive up to $5,000 each. First, let me say that $5,000 each is nothing, but you know, it's a nice little PR move by American Express .
But secondly, okay, even if you have a thousand small businesses, how many employees does each of them have? Five. Ten. We are talking about five or ten thousand employees. So , how many workers did we lose in this month's household survey? More than 380,000 workers disappeared from the household survey.
Probably because they were significantly overestimated in the September report. Now we are making a correction for this. Remember, if it weren't for government employees, we would actually have a negative number on this unemployment report, or rather, employment report. Okay, fine. So what does TS Lombard say?
Well, this is the first time, Mr. Stephen Blitz, that I feel a little nauseous, because I think: brother, how lazy do you have to be to draft a document like this? And I generally respect TS Lombard. And sorry, Stephen, you're probably a good person . We could probably have a non-alcoholic beer or, you know, coffee together.
Which reminds me, oh boy, I have a long night ahead of me. But man, that was just downright lazy. Okay, we'll deal with that in a moment. Wait. This is a great, gray cup to drink from. We need to somehow get to where his ear is. This is strange . OK. What can we take away from this report about employment due to hurricanes and strikes?
Or what we can assume is that the Fed will cut rates by 25 basis points next week and by 25 in December. That's all they say. He actually casts a shadow over the unemployment report, saying, " Oh, well, the strikes and the hurricanes ruined everything." And, in fact, the markets just ignore it, saying, "Ah, that was a report about strikes and hurricanes." Dude, have you looked at the household survey?
No, because you're lazy, you look at the headlines, and the market behaves irrationally and overly optimistically. This, this is complete nonsense. And while this person simply rejects it, what is he claiming? Well, the downward revisions for August and September are significant because they are completed surveys , which are more consistent with the anecdotal data in the September Beige Book and confirm why the Fed cut rates by 50 basis points.
Probably. Thank you. So, you admit weakness, but what do you do next? Then you go on and say, “Hey, but, you know what? That's good, because, you know, while actual market rates are what really matter when it comes to whether the economy is heading for a recession, it's important to remember that the Fed is cutting rates right now , and what really matters is not forward pricing, but the value of real money.
That's what really matters, and since the Fed is cutting rates, we're doing well. And I'm like: are you completely stupid? Do you understand what I just said? You literally just said, "Dude, it doesn't matter what the Fed does. What matters is how much people actually pay. Didn't you look at what happened to real yields after the Fed cut rates?
It's a disaster . They just went up. What are you smoking, buddy?" So you're literally telling me, "Oh, it's fine because the Fed is cutting rates." People pay lower interest rates. No, they don't pay. They pay higher interest rates. Have you seen the mortgage rates? This is ridiculous. Equipment financing rates.
Do you want to take out a car loan? But that's enough for you. Everything only got worse. Unless, of course, dealers give discounts, which simply eats into their margins. So now you're basically saying, "Oh, 50 basis points, and then another 25, and another 25—that's going to help." That's what people thought in 2007.
That's ridiculous. And then you make the argument that, well, you know, temporary layoffs are usually a cause for concern. But this time it's different , because temporary layoffs may not matter as much anymore, because 20- to 24-year-olds are usually associated with temporary employment. And maybe staffing agencies—that's a thing of the past.
So we can't pay attention to those statistics anymore. And that's why there's this discrepancy . And I'm like, I don't know, man. They both seem to be heading down pretty much the same slope to the right. I guess it depends on where you start , but it doesn't look very good. So the point is, I think it's a little bit harsh to just say, "This time it's different." And Even though the number of temporary workers is falling rapidly and we're seeing more people losing their permanent jobs, the idea that we're just going to ignore the data that has consistently pointed to a recession in the past because " this time it's different " seems a little absurd, especially without acknowledging that fact.
And now it gets even worse, because I want you to look at what Bank of America says about the "flow show" and where the most popular deals are concentrated . Remember, I said we were going to talk about where the deals are and what's happening to people's expectations. So let's go to the " flow show," the latest report from Hartnett.
And when you look at it, it clearly shows where you shouldn't have invested over the last 30 days, because it shows you the most unpopular and least loaded deals, the most contrarian strategies. Personally, what I like about it is that I usually like to go against the general trend. When someone says, "Nobody's investing in XYZ," that's a sign to me that it's worth investing in.
at XYZ, because this is probably the next big deal. It just takes nerves of steel and patience to wait for the results. Look, I'm not a techie, but if you want me to do a tech video, even if it only gets 5,000 views—that's fine. Out of respect for you, I'd be happy to do it. I have all these gadgets and stuff.
I'm a huge productivity fan. We might do a productivity video, gadgets and tech, but this is just incredible. I have to say I've only been using this for the last, I don't know how many days. It seems like it came yesterday. Yeah, right. I don't know why this camera can't focus. I think it's better that way.
Maybe I put it in manual . That's it . This is a really cool thing. It's not on the screen, by the way . It's like it's resting on the cover of a book. That's great. So, okay. Ready for this? Look over here . Nobody is not going into this election with this portfolio. Long 30- year bonds, short gold, and short Nvidia.
Well, guess what I just did? I closed my long gold position because I think it's peaked. I already closed my position on Nvidia, and I think it's peaked. And maybe I'll open a long 20-year bond. So look, I may be an idiot for going against the market, but this is literally called a contrarian trade.
The most contrarian trade is buying bonds. Yes, it's because there's nobody there . And I think that's one of the best times to buy. I'm not saying my timing is perfect. It's not. But I think in the long run I'll be right. And in a year's time, people will say, "Oh my God, we're dealing with inflation, unemployment.
We are probably in the midst of a recession, and bonds are rapidly rising in price. "This could be the best deal of 2025. We'll see. Anyway, that's my opinion. If you want to get more of my thoughts every day, join our daily live streams for course participants on meetke.com. If you have questions or want to sign up for a package, email us at staffme.com.
And tomorrow morning we'll be doing a live debriefing for House Hike investors. If you have any questions, this is the best place to ask them. Thank you very much . See you in the next video. Bye and good luck. Don't advertise these things you've talked about som thoughts.
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