저자: Kevin · 외국인
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8/1 고용지표(비농업고용·ISM) 부진과 27주 장기실업 급증, 마진부채 1조달러 돌파를 근거로 경기침체 우려를 제기. Waller·Bowman은 150bp 인하 필요를, Bostic은 인플레 경계를 주장하며 Fed 내 엇갈림을 강조. 관세 위법 소송 역풍 가능성도 언급. 중심 주장은 금리인하가 침체의 전조이며 주가 랠리를 믿기 어렵다는 것. 해당 영상은 코스 판매 홍보가 섞여 있음.
다듬은 글
Dylan says, "I got out of Open Door at the peak and into Rocket Mortgage thanks to you, Kevin, and the Alpha." But let's freaking go. The Federal Reserve has responded to the drama of what's happening with Trump's tariff policy and this disastrous Federal Reserve or jobs report. On top of that, courts might end up saving the day, but not for the Epstein files.
The Epstein files might be the coupon code for the expiring courses today. But when it comes to the Epstein update, apparently Maxwell has now been moved from a federal prison in Tallahassee, Florida to a minimum security prison camp in Texas. Yes, Maxwell has been moved to camp as Donald Trump makes sure everybody knows that he has the right to pardon Maxwell, but he hasn't been explicitly asked whether or not he should pardon or to pardon Maxwell.
But that's less important today because we know they're not going to release the files and that's why we have coupon code release the files expiring later today for the alpha report and the amazing programs of building wealth. Not. Well, wtements on what's going on with this jobs data, both from Waller and Bowman.
I'm also going to give you insight into what Boston just said. And we need to talk about what's going on in court because this is kind of crazy because so far courts have kind of been giving a lot of latitude to Donald Trump on a lot of different policies. It's possible courts might finally be U-turning here and actually strike down one of the most critical components of Donald Trump's economic policy, his tariff policy.
The courts are not happy with the Justice Department uh and and quite frankly the attorneys from the Trump administration's arguments on why they should be allowed to implement tariffs without Congress. And if courts decide the tariffs are illegal, maybe we could uh prop up the jobs market without rate cuts and uh and get back to some real enthusiasm.
After all, the cues today triple either rejecting or losing. Actually, this is about I would call it about three rejections on the 55720 line here. Uh this is a line we were talking about in the alpha report this morning as well. But forget about the lines for a moment and let's think about what the Fed just said.
So this morning, Bostic came out as a real hawk on inflation. Oh, we need higher rates. We need higher for longer. But this is totally the opposite of what Waller and Bowman are saying. And some of the arguments they're making kind of scary. In fact, Waller is going as far as suggesting we probably need cuts of 150 basis points.
That'd be quite remarkable to see those sort of cuts. And if Waller were in charge, who's one of the candidates for the Federal Reserve, we might actually get them. ISM payrolls, uh, for example, from manufacturing totally missed hardcore this morning. We'll go through Waller in just a moment, but ISM this morning contracted for a fifth straight month.
While overall things are still slowly growing, they are slowing in their rate of growth. The unemployment index came down lower as well, which just compounds with what we saw with the jobs report this morning. Uh, and we're seeing that US manufacturing activity contracted at a faster rate. uh with uh basically every category of manufacturing dropping and even though demand indicators improved like suggestions that hey there's still back like basically contractions in uh uh in we've got it right here uh contracting at a slower rate.
The new orders and backlog orders index contracted at slower rates. In other words, we're still in contraction for the positive. It's just like kind of teetering a little bit. You actually look deeper into this. None of the six largest manufacturing industries expanded in July. None of them. Tariffs are beginning to wear us out.
Sales are softening more than usual in the summer. Some businesses like the furniture business say business is steady for now, but they stocked up on a lot of inventory before the tariffs. Don't look on X for what's going on in Vegas or take my word for what's going on at Disneyland or Six Flags. It's dead.
Uh but take a look at this. For every comment on hiring, this is from the ISM report this morning, not even the labor report, right? For every comment on hiring, there were two comments for reducing headcounts and layoffs were the primary measure, an indication that staff shrinking continues to be urgent.
This is bad. Remember, the last thing that holds this economy up right or that is holding this economy up right now is the fact that we're not yet seeing layoffs. And so a pause to Trump's tariffs could not come soon enough because really what tariffs are doing is they are delaying the Federal Reserve from cutting rates because they're making the Fed nervous about inflation while at the same time we're damaging the labor market twoofold.
Once because we're not lowering rates and second because of the reconstruction of supply chains in general. like all of these ideas of investments from large companies like Apple or you know big AI investments or whatever they got to translate to jobs but when at the end of Trump's term probably not at the beginning of Trump's term you get through these recessionary fears first these are problems but let's understand for a moment Mr.
Waller statement because this is this one's pretty dramatic. It calls for a substantial set of rate cuts as soon as possible which I mean makes sense because when you look at that jobs report this morning look at this all these purple arrows here declining jobs and when you include the revisions in them.
So revisions plus the last jobs reports goods producing -41,000 construction -14,000 manufacturing -23,000 trade and transportation services -29,000 retail trade 9,000 slower consumers IT8,000 remember meta negative 1% on headcount Microsoft flat and these are the richest companies in the world flat with hiring AI doesn't necessarily mean you need more jobs, you use AI and get more done.
Financials were the only section that saw real job growth over here at 7,000, which is nominal outside of education and healthcare. But a lot of this was because of the insurance business based on the BLS report. Business services down 41,000, temporary help down 14,000, education and health, mostly healthcare, 67,000.
So outside of healthcare, we do not have jobs. There are no jobs. They're gone. 13,000 in leisure. These are horrible, horrible numbers. We better hope and pray that these numbers flip-flop. And maybe courts overruling Trump's tariffs will be the way to do it. Waller says that tariffs are a one-off price increase, that we should be looking through these tariff price increases and cutting rates.
The problem is Mr. Bostic says the textbook says that the reason we have oneoff price increases is because you impose the tariffs and then you're done. But that's not what we have right now. Right now you have we're going to impose tariffs. Okay, maybe we'll impose fewer tariffs. We're going to impose more tariffs.
We're going to impose fewer tariffs. We're going to impose more tariffs. We have all this like vacasillating of tariffs. And Bostic makes the case on CNBC this morning that the Federal Reserve needs to be really freaking cautious about inflation because you're screwing with people's psychology that people are dealing with these tariffs for a lot longer because Trump's not just one time and in there's so much uncertainty that people are constantly worried about pricing increases that we could self-fulfill price increases and that the Fed's basically going to end up in a 1970s situation again where they lose control of inflation.
Now, if we go into a recession, I promise you there won't be any inflation. We will eviscerate inflation immediately, but we'll be in a nasty recession. That's how Don uh you know, Mr. Powell is earning his reputation of too late because the reality is you don't have to worry about inflation. If we go into a recession, you'll have deflation.
That's bad. I mean, it's nice when prices come down, but it's bad because it means a lot of people are going to lose their jobs and you're probably at a 15% unemployment rate or more, which takes forever to get rid of because of well, frankly, artificial intelligence. I mean, don't look. I mean, you could look on e-hack or uh or just download the Meet Kevin app.
You know, remember, download the Meet Kevin app and you can get uh this. It's totally free, by the way. You can customize your notifications for the videos as well. So, if you don't want the pilot videos or, you know, Maxwell videos or whatever, that's fine. And you can uh click out of those, but download the Me Kevin app.
Again, totally free. And uh and you could see the chart where we threw it today. Uh and I think it's really useful because when you look in that Me Kevin app, you could see that 27we unemployed chart that almost nobody is talking about. Here it is blown up a little bit larger. But this is the app, you know, you can get it as well.
But here it is blown up a little larger. This is the 27 weeks unemployed chart and almost nobody's talking about this and it's skyrocketing. It's not good. You know, the every single recession that we've ever had has been led by the skyrocketing of the 27 weeks unemployed. It's because people are struggling.
Like, they're getting laid off and they're struggling to find work. In fact, Goldman Sachs had a piece on this this morning. I've got it right here. Goldman Sachs says that we're in the late innings of a systemic releveraging. Basically, everybody is going out and taking on debt. And that's why the market keeps pumping up because everybody's taking on debt.
everybody's getting fully exposed. Uh, and you know, that's a risky environment because once everybody's fully leveraged again, you know, where does new money come in to keep the sort of like bubble going, right? I mean, we just hit over a trillion dollars of margin debt, I think, for the first time ever in history.
Yeah. Look at this. Margin debt surges 9.5% in June to record high. First time ever we've been at a trillion dollars in in margin debt, FINRA margin statistics. And that's June data. We don't even have the July margin data yet. Imagine what the July margin data looks like. We're probably $1.2 trillion of margin debt.
It's crazy. But if you look at Goldman Sachs here, Goldman Sachs says there's no clear catalyst for a big collapse right now. You know, I don't think they would have written this if they saw the jobs numbers this morning because this was written right before the jobs data 632 UTC August 1st. So basically late yesterday.
Uh but take a look at this. They even they warn watch non-farm payroll and ISM. Both were really bad. But take a look at this. This is a really critical thing to pay attention to right hand side chart. This one right here. Okay. Continuing claims are still near highs. This suggests many who lost their jobs earlier aren't getting rehired.
Even if layoffs slow, dude, I'm not worried about layoffs slowing. They're they're slow. I'm worried about layoffs going up because remember the beverage curve that looks like that right now. Okay, the normal beverage curve looks like this, which is basically when you have low job openings, you have high unemployment.
But it looks like a line right now because we have low unemployment and low vacancies. As soon as we get layoffs, it normalizes and the unemployment rate skyrockets. This being the unemployment rate going up. This being job openings low, right? This is a normal curve. The straight line down is not a normal curve.
We've talked about this before, so I don't want to rehash this. But the backlog of still unemployed workers could keep continuing claims elevated. Yeah, it's a red flag. It's a problem. So now understand when Waller calls for 150 basis points of cuts, he's doing so because he's recognizing these fundamental shifts that are happening in the economy.
You know, we we talked in detail about uh the day trade, the medium trade, and the longer trade this morning in the course member liveream. You can get the daily updates on this and trade alerts or anything uh if you join over at meetke.com. Remember, you join once, you get lifetime access. So, even if you come back five years from now and you're like, I wonder what the trade is today that Kevin thinks, you know, it's my perspective.
I can't guarantee you. But what I can guarantee you is you get access to all the courses, you get my perspective uh in uh and you know, trade alerts. You get every live stream, every alpha report, all one price. Use coupon code release the files over at me.com. We've got a coupon expiring tonight, which just means the price is going to go up.
So, if you want to secure the lowest price, do so now. That said, look at Waller's commentary here. And then we got to look at a rough day in court for tariffs. But Waller's commentary is very concerning. Waller calling for 150 basis points of cuts says that real gross domestic product growth was just one and a half 1.2% in the first half.
Now he says much lower than the median participants estimates for longer run GDP growth. This is a little misleading. What he's doing is he's referring to this longer term column right here on the summary of economic projections uh which is right here this 1.8 but really the 2025 projection for GDP in June during the June SCP summary of economic projections was4 which you know 1.2 two is relatively close to but whatever you know he's trying to talk up the desire of having rate cuts right now taking together the data imply the policy rate should be around 150 basis points lower at around 3% the neutral rate in other words we should be cutting to neutral right now so like he if if it was up to him and you know poly market is actually betting that he has a shot at 13% shot of being announced as the next Fed chair by December uh if you remove this no announcement by December odds, he probably has like a 40% chance, maybe 30% chance of being the next Fed chair.
You know, he's calling for 150 basis points of cuts rapidly getting us to neutral. And the reason for it is because the labor market looks fine on the surface, but once we account for data revisions, the private sector payroll growth is near stall speed and other data suggests downside risks to the labor market have increased.
Inflation has been limited. We should not wait for the labor market to deteriorate. The wait and see approach on tariffs is not what we need right now. It's overly cautious and doesn't balance the risks because it's possible that the labor market falters before we ever get clarity on inflation. And when labor markets turn, they turn fast.
This is scary. Think about this. They're saying we may not get clarity on what happens with tariffs for a long time, but as soon as the labor market rolls, we could be screwed and we might be delaying for uncertain data we might never end up getting. So, we should just cut now and then see how the data evolves.
This was posted this morning by Mr. Waller. Bowman also dissented and wanted a rate cut in July and she says that economic growth is slowing with a less dynamic labor market and we should be getting back to neutral which is also 150 basis points lower. We should proactively hedge against the weakening of the economy and avoid risking more damage to the labor market.
Underlying economic growth has slowed marketably. private domestic final purchases have increased uh but but not as anywhere close to what we saw in 2024. It's like half the rate. We're seeing softening consumer spending and declining residential investment. Remember what we talked about this morning.
This morning we talked about like who who wins during this kind of stuff. Who wins is corporations. The rich and corporations win because they can lay people off, right? They can lay people off and they could benefit from cost reductions because of AI and they could use the cover of recession to lay people off and then companies with money get to deploy and they make even more money.
It's one of the reasons why house hack is hoarding cash so we could deploy in a more panicky time. You know, we got like 13 to 14 million of cash right now. And it's also one of the reasons I say, you know, if if the Fed cuts frantically 150 basis points, which right now the market is pricing in now an 88.7% chance of a single cut in September.
Uh but we are pricing in now 2.3 cuts by the end of the year. It keeps going up. You know, if we get sudden rate cuts, we're going to stop our fund raise right away for house hack. Why why are we going to pay, you know, our rental yield, you know, 5% or whatever. Why are we going to pay 5% out through conversion then people get all the upside in stock?
Like we could probably just raise money with our especially, you know, once we release our AI product hopefully later this year, you know, our SAS biz, like people probably just want to buy the stock and not need a 5% yield. or we might not even have to fund raise at all anymore depending on how much cash flow we can generate from from you know uh our our SAS biz which isn't really reliant on recession or in fact our product probably becomes better in a recession because people are going to be like which is the best deal of all these deals to choose from but you really have to ask yourself that like yes AI is great but we gave this analogy in the live stream earlier we're like look if UBS gets hired to do 690 investment deals to do research you know without AI they've got 128,000 employees to do it with AI.
Maybe they could get the same work done with 90,000 employees. So all of a sudden 38,000 people lose their jobs. But does that mean UBS gets more contracts? Like you know, do they do that much more business? Not necessarily. In the long term, yes. In the long term, AI or technological innovations will generally lead to more opportunities in the long term, but that could be 10 years out.
In the short term, aggregate economic work requirements don't change because of AI. You just have four fewer people getting the same amount of work requirements done. And it could take years for us to actually see AI create more jobs. You know, I gave this example with Lauren. If you get if you give Lauren a thousand property management emails pre- AI, you take her and two assistants and you get to work.
You grind. Now you have AI. Lauren could probably do it all herself. AI could handle 80% of her emails. Did Lauren get more than a thousand emails because of AI? No. Now she has more time, but two people are now out of a job because of that, right? Uh so, you know, it's going to be a while before before those those jobs come.
And that's the concern that the Federal Reserve is looking at here, which isn't great. Less dynamic labor market, which is showing signs of fragility. The employment to population ratio has dropped significantly this year. Businesses are reducing hiring, but they continue to retain their existing workers for now.
But what happens when they start realizing it's easy to hire people because, you know, unemployment claims are high and then you don't need to hire you don't need to hoard workers anymore like you've been used to for the last, you know, five five-ish years. Well, then you might get rid of them and then you get rid of them.
See, look at this. If demand conditions do not improve, firms may have little option other than to begin laying off workers. Recognizing it may not be that difficult to rehire them given the sha shift in labor market conditions. Hey, if there are a bunch of workers available, why not just fire a bunch of them now?
We could always rehire them in the future. I mean, that's really insensitive, but that's just the reality of capitalism. You know, so far firms have resisted reducing their workforces, but demand is so slow right now. It's just a matter of time for the layoffs to happen. I mean, Bowman literally says the reason the Fed's waiting is because of tariffs.
So, like Trump's tariffs are accelerating the pain in the labor market. And that's because firms appear more willing to reduce profit margins as they are less able to pass full prices through given weaknesses in demand. This isn't good. And this is why she says we should cut rates to neutral and stop and avoid more erosion to the labor market.
Now, you know, this contrasts with what Mr. Bostic says. Bostic says inflation is a greater risk uh and that, you know, we should be very cautious that we're not cutting too quickly because again, we don't want to repeat a 1970s situations because situation because we might not be as like restrictive as people think.
Obviously, you know, these numbers make it pretty clear, but he argues that it could take three, six, or even 12 months to for businesses to come up with pricing strategies. And because of these sloppy roll out of tariffs, his words, directly blaming Trump, we don't know what's going to happen with pricing, so why don't we wait?
So, you have like some of the most of the Fed that's like, ah, let's just wait. And two people at the Fed that are like, bro, you're killing the labor market by doing this. Hopefully courts saved the day. A rough day in court for tariffs. Literally, you have an 11 judge panel skeptical about Donald Trump's arguments or his administration's arguments at the US Court of Appeals yesterday.
And the reason the judges are skeptical is because you have basically a president that is implying that they could use a 1977 international emergency economic powers act because Nixon did previously. However, Nixon had his tariffs ratified by Congress and so it wasn't just a Nixon announcement and they were seen as a temporary measure.
So Nixon had temporary tariffs and Congress approved them. Donald Trump is not looking for temporary tariffs and he's not looking for Congress to approve them. And even if he were looking for Congress to approve them, the odds are Congress would not approve them. And the judges are actually saying, "Hey, we're not buying it.
We can't just give you the license to impose tariffs or taxes because of the major questions doctrine, which basically says for these things, you have to go to Congress. Congress has the power uh to to demand these things and the president isn't a king. The constitution doesn't let him command the tides of trades uh you know trade policies which is very interesting.
You look at some uh some of the top two comments on on the journal over here. I thought they were decent. Oh, if they actually load here. Showing com. There we go. Uh, if tariffs are to protect US economic interests in emergency, why are we tariffing Brazil for prosecuting Balsinaro or Canada for recognizing Palestine?
Somebody else says a global economic tariff reorder may well have been needed. However, the US Constitution does not need an economic or any kind of reset. Of course, you have to be careful because a lot of people are getting fussy taking a lot of real big sides here. I'm not a side taker. I try to just provide the facts as I see them.
You know, I quote tweeted Nick T who said Powell referred six times at his news conference to downside risks in the labor market, suggesting that realized weakness could build a case for easing policy. And I'm like, Nick T, what are you smoking? Nick T is like, Powell warned us. I'm like, no. Powell literally said we should be thankful we're not raising rates, that we need many months of data before talking about cutting rates.
And the market clearly saw Powell as hawkish, not dovish. Turns out Nick T then turned off comments to that particular quote tweet and then he reposted it again, but he turned off comments to the one where I quote tweeted him, which is interesting. It's like, wait, why Nick T, are you being such a mouthpiece for JPAL trying to play this, oh, Powell's always right.
I'm a shill for no one. My goal is for everyone to hate me. And I think I do a very good job at that cuz I don't shill for Trump. I don't shill for Biden or Kamla or Newsome. I hate that Newsome guy. I'm certainly not gonna shill for Powell. Now, I'll defend him when I think it's right, but I'm gonna I'm not going to get on my knees and say he gave us the fair heads up.
He didn't give us a fair shake. If anything, I don't think Powell knew. I mean, maybe the unemployment rate did go up, which that is the warning he gave us. But why then is he being a hawkish dumbass in that case? You know, if Powell knew, then it's almost like Federal Reserve malpractice to have been as hawkish as he was.
So, no, Nick T. Powell didn't warn us. That's a joke. If that's considered a Powell warning, then then, you know, Powell should go back to warning school. It's a joke. So, we get back to, you know, best case scenario, frankly. And I I said this the first time we saw this before it went to appeals. Best case scenario, all these tariffs get destroyed in courts.
They all go away and they go away before the labor market gets destroyed. Next best case scenario, the Fed starts supporting the labor market hopefully. But honestly, rate cuts probably aren't going to do it. Rate cuts are done in a falling economy. Rate cuts don't bail out the stock market. Everybody hoping that the market's going to moon because of rate cuts, I think is mistaken.
Rate cuts are the precursor to a recession. Now, I understand, you know, the market has rebounded to the 557 line, which is exactly the line we talked about this morning in the course member liveream. A very critical line this morning. Uh we talked about in our alpha report. We also, by the way, talked about Rocket Mortgage being a huge beneficiary here.
It's up 14 to 16%. In . This is why I think you should use coupon code release the files and join. But understand, best case scenario number one, because Trump's going to be too stubborn, is courts throw out these stupid tariffs and and we minimize that damage to the labor market. Hopefully then we don't get layoffs and we stop the layoff cycle that has just started.
Next best case scenario is maybe these job numbers were an anomaly. Maybe the QCEW revisions that we're going to get won't be that bad. I mean, it's wishful thinking, but it I'm willing to be optimistic. I mean, look at look up the BLS labor report. Go to the bottom. They literally give you the date for the QCW revisions.
Last year it was in August right here. preliminary benchmark revisions to the establishment survey data to be released on September 9th. Last year, we killed like a million jobs when we got this in August. And it tanked the market so badly that you got the Japanese carry trade crisis and a 50 basis point cut from the Fed.
So, I guess mark your calendar for 10 a.m. Eastern on September 9th. This is tough, folks. has a tough time with markets at all-time high, margins at all-time high, the labor market now finally starting to actually show crap, which we've seen coming for a very long time. Yeah, we had a lot of Trump enthusiasm around the election and afterwards.
Gold now rising within, you know, 50 to 100 bucks of its all-time high because people are panicking. And we're back to shock level here on the 210. Oh, yeah. 51 basis points. Right back to shock level because of this data. You know, we escaped that for a moment there. Skyrockets right back up. We've been at shock levels since liberation day, right?
Like usually being above 51 means we are prone to a shock. Now, I want you to understand, we don't know what the shock is going to be. Look at Goldman Sachs. There is no clear catalyst for an imminent collapse. Although, watch non-farm payrolls, which were bad. This is true, but that's the nature of a black swan.
We don't know what shoe is going to drop. We just know stuff's setting up and it ain't good. So again, I'm going to write this down just to make it like really crystal clear. Okay, best case number one. Courts kill tariffs and no layoffs. Okay, best case number one. Best case number two is the tariffs stay but no layoffs.
uh and tariffs stay. Uh best case number three is productivity boom offsets layoffs. Wishful thinking. Anyway, go to meet Kevin.com. Use coupon code release the files before midnight tonight. If you have any questions, you can always email us at staffm.
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