저자: Kevin · 외국인
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미국 서비스 PMI 50.1로 약세 신호, 가격지수 69.9로 고물가 재확산 우려. 최근 3개월 고용 하향 수정(5월 -125k, 6월 -133k, 7월 +73k)으로 노동시장 냉각. 경제활동참가율 하락을 고려하면 실업률이 실제로는 4.9%로 뛸 수 있고 Sahm rule 발동 가능성 제기. 파월 연은은 인플레이션에 집중하지만 Jackson Hole에서 노동시장 우려 반영 여부가 관건. 9월 금리 인하가 시장에 거의 반영된 상태. 테슬라 및 Axon, Palantir 등 AI·법집행 관련 성장주 긍정적 언급.
다듬은 글
Well, it might be game over for the paradigm of the United States economy as we know it. In this video, we are going to break down what research and data is saying about the slowdown happening in our economy. Specifically, we'll be referring to uh some of the latest data reports from this week that can help us understand what's actually going on with that labor report.
Is it really just a one-time report or is there something more concerning happening? In addition, we're going to talk about this GDP paradigm shift. We'll talk about the Federal Reserve's transition and Miran's appointment. We'll also talk about Tesla and a big big change at Tesla. We'll have to talk about that in detail.
We'll talk about some other favorite stocks right now as well towards the end of the video. Now, keep in mind, I'm going to condense as much of this information in this video as possible. This might be the only video I post between now and when I get back uh from Japan, so apologies. This is going to be a little bit longer and we're going to integrate a few different sponsors and and messages in this, including that the new coupon code is now coupon code Jhole.
That's right, because Jackson Hole, which we'll also be talking about, is coming up on August 22nd, which will represent the next price increase for the courses on building your wealth and the alpha report, as well as the course member liveream. So with all that said, let's get started. Thank you so much for tuning in while I'm on uh this trip to Japan.
Uh okay, so ISM services, we need to start here. ISM services remain a source of strength in America, just services in general. This is really important because we see goods weakening as we have seen for a long time, especially amongst consumers. That bottom 80% of the consumers, they're really feeling the squeeze.
And even though we had some good revenge spending in 2023 and 2024, we've really seen a flatlining of the growth of consumer spending, mostly because people are starting to get tapped out. Uh think about the amount of leverage that our economy is experiencing. Not only do we now have innovative products like leveraged ETFs, which really use options to increase leveraged returns for people in the stock market, which then don't show up in FINRA margin statistics, right?
Think about that for a moment. In terms of why valuations are so high in the stock market, you have FINRA margin statistics at all-time highs and you're not even incorporating the fact that we have leveraged ETFs which mostly use options to accelerate or amplify their upside or downside returns depending on what kind of leverage ETF you have as well as buy now pay later which still we don't have any accurate reads on.
All these things have been really good at sort of propping up not only valuations but consumer spending for the time being. But it does sort of make you question you know what kind of debt bubble are we walking into. Uh but for now the United States has had a relative strong economy a relatively strong economy when it comes to service spending which is important.
This is what you want in a more modern economy. This is what happens when we have technological innovation and productivity and free time. We spend money on not just goods but also on services. Think restaurants, think travel, think vacation, think entertainment, think going to a movie theater, going to bowling, going to a throwing, all of these things.
Going to drinking, you know, going out for drinks with your friends or whatever. Those are things that make a country rich and vibrant uh and quite frankly over time uh happy place to live. This is normal. And so we hope that AI can accelerate even more of that. Uh however, services have really remained the only source of strength in our economy and now we're starting to see some softness here.
The ISM report this week on services PMI registered a 50.1 uh uh% gain uh which since this is a diffusion index means we're really on the border of contraction for services which is quite odd. In fact, the ISM services uh company suggests that this comes with a number of quote yellow flags as well as some red flags.
The biggest red flag is that the prices index on services is up to 69.9%. That is the highest level that we have seen since October of 2022, which was, you know, within a month or two of us having that 9% CPI read. I remember reporting on. Leave a comment if you were here when I was reporting on that 9% CPI read.
I think it was 9.1% on the beaches of Disseldorf, which who knew Disseldorf had beaches, lakes, I guess. But anyway, at the same time, you see new export orders and imports moving from expansion to contraction. And the overall data quote wasn't great for a services sector that typically enjoys a blast of vacation and experience spending in July before school starts.
So in other words, kind of a seasonally weird and weak services report suggesting there's definitely some underlying pain in this economy. New orders moving from expansion to contraction also not great as we move away from some of that posttariff sort of taco uh enthusiasm that okay well things won't be that bad and now it's all about looking at the labor market which what's interesting about the labor market from this ISM report is the ISM's or the company that puts together the ISM suggests that the forecast was mirrored not only by disappointing BLS numbers in July but also the downward revisions for previous months and the index reading for July does not bode well for the next two or 3 months.
In fact, quote says one of the leaders at the ISM, I would expect the BLS numbers to be weak through the rest of the summer. Panelists are saying that their companies are not backfilling openings and while we're not yet seeing mass layoffs, there has been difficulty in hiring people for targeted jobs.
It's a slowdown in act in hiring activity that is real. Now, this will become very important when we talk about the Fed in just a moment, but really what you're getting out of this ISM report is a surprisingly negative read on a portion of the economy that's usually very strong and usually seasonally very strong right before back to school.
So, this is an underlying crack in growth that's going to contribute to our discussion about this GDP paradigm shift. We're going to talk about that. Uh now, just know going into this that there's a lot of talk about maybe this July report will just be a one-off jobs report that came in bad. But remember, this was actually a three for one, like a three for the price of one report.
See, May was revised down 125,000 jobs. That was right during our 90-day pause. June was revised down 133,000 jobs and July only had 73,000 jobs which included 55,000 in healthcare and 18,000 in social assistance. So relatively weak for three reports in a row already. Now that's going to change some things for the Federal Reserve and this GDP paradigm shift which we're going to talk about.
We got to talk about Jackson Hole which is very very critical. But first a message from Gemini. Oh boy. The Gemini credit card is coming for your no fee credit cards. The Gemini credit card is offering 4% in Bitcoin rewards back on gas, EV, transit, taxis, and ride share up to 300 bucks, plus 3% back on dining, 2% back on groceries, 1% on all else.
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So, check it out. Pretty awesome for a zero fee card to be offering these rewards. Again, that's gemini.com/cat. Now, we got to talk about Jackson Hole. Last year's Jackson Hole was a pivotal moment for markets and the Federal Reserve. And this year's Jackson Hole, especially that keynote address from Jerome Powell, is going to be critical for the market yet again.
In fact, the most important thing that we need to pay attention to in Jackson Hole is Jerome Powell's response to really the current unemployment rate uh less uh or or compared to the unemployment rate if labor force participation were steady. See, right now the unemployment rate has really been bobbing between 4.1 and 4.3%.
It's no surprise that the Federal Reserve is not really nervous about the labor market because the actual unemployment numbers aren't that bad. But the problem is labor force participation has been plummeting because either people are quitting the labor force entirely or you know they're showing up in 27 weeks unemployed numbers which is a six-month unemployed figure that basically suggests uh or is a number that basically only goes up when we lead into a recessionary environment though it can happen for many months before a recession.
Uh and that's exactly what we're seeing right now. Uh but the point is these numbers basically evidence that people are not being counted in the labor force. And if we were to count these people who are either discouraged because of immigration policies or they're being deported and the labor force is shrinking or uh you know for whatever reason they're done trying to look for work.
They just basically go into what's called forced retirement and end up spending less money and living off of what they have rather than trying. Well, uh, if we adjusted for that, we'd actually see an unemployment rate that would have skyrocketed over.7% with this last labor report, and we'd be at 4.9% unemployment.
In other words, next month we could be knocking on the door of 5% unemployment based on a constant labor force participation rate, which essentially would start sending signals of not only the sum rule triggering off again, which is that early recessionary warning indicator. Obviously, not not a perfect tool.
last time it false flagged as it just barely broke that recessionary indicator. Uh but you know if we looked at labor force numbers and we saw these unemployment numbers there's no doubt the Federal Reserve would be cutting. And so this is why a lot of people wonder like is Powell just like purposefully trying to focus on the actual unemployment rate rather than considering that there are other dynamics that are very dangerous.
A declining labor force participation rate, mind you, is recessionary in itself. In fact, one of the reasons labor force participation goes down is because it's so hard to get a job that you just give up. That ends up showing up in worse consumption. And so, this is why people are like, "Oh, Powell's going to be too late." I actually agree, and I've been saying this, that Powell is fighting inflation because he thinks that's what's most important right now, but there won't be inflation to fight if you end up destroying the labor market.
And that's what's so fascinating about Jackson Hole because it gives us an opportunity to see will Powell change his tune or is he going to stay focused on inflation? See, remember Powell is so worried about inflation psychology, the human psychology of inflation and the persistence of inflation and tariffs absolutely hurt that.
For example, uh I wanted to go buy another Roland switcher board and I noticed that when I originally looked at it in January, it cost about $5,999. That has gone up now for live streaming to $6,600 in an 8month time span. That's a 10% increase. It's substantial in the way of inflation. And the way corporations sort of sell this to people is oh well, you know, we have to deal with these tariffs.
But then of course, you know, when we listen to just political shills on X or TV, all we hear is that, well, wait a minute, we're collecting, you know, record levels of tariff revenue. You know, this is good for America. We're paying off our debt. I don't know why I'm sounding like Tucker Carlson all of a sudden, but the reality is it's generally Americans who pay this.
And and this isn't meant to devolve into like some kind of political rant on tariffs. It's actually just to let you help or help you see what Powell is concerned about. See, the Economist reports via Goldman Sachs or I should say Goldman Sachs reports via Goldman Sachs uh via The Economist. I I can't get my words out today.
Goldman Sachs sites that 80% of tariff impacts are eaten by United States purchasers. This was reported in The Economist. And ultimately tariffs lead to lower uh choices or fewer choices for Americans at higher prices. And this makes sense. Now, of course, in the near term, it's very addicting to go but look at all this tariff revenue without recognizing who's actually paying that bill.
Now, again, I'm not here to make some kind of argument on tariffs. It's simply to say that Powell recognizes this. And because Powell recognizes this, he looks and says, "Hey, look, tariffs caused inflation in 2018 when Donald Trump 1.0 instituted tariffs." He not only instituted tariffs on just a very specific and famous example that everybody uses, including Powell himself.
Hey, we're going to tariff washing machines. And then what do corporations do? Corporations raised the prices of washing machines and dryers. Now, we were in a period of disinflation because the economy was slowing down. So that sort of masked the overall impact of inflation but the inflation was very clear and present and that was something that Jerome Powell looked at and said that is what affects people's psychology and ends up leading to unanchored inflation which repeats the 1970s destruction of any Fed credibility that there even remotely is which would be really bad because then you end up with repeated recession after recession after recession and you had something around four recessions in the span of 1967 to 1982.
Uh when if you look at the last 15 years outside of COVID, we've had zero. So uh you know having control of inflation psychology is so critical to Powell and Powell's legacy that it almost seems like he's somewhat accepting of the unemployment rate going up. And I think that's why he's looking to sort of redefine what metrics he's looking for.
And that's taken me a few weeks or I should say about a week now to reconcile because when Powell told us last week, hey, you know, we're actually just going to look at that base topline unemployment number. I'm like, what? You've never mentioned that before. You're just sort of redefining now why you want to stay stubborn on inflation.
And the reason is because he is convinced that inflation is going to come from tariffs. And there's no question of that. We're already seeing tariff inflation in goods. We know that. We've already seen uh an annualized 7% gain year overyear in core uh exa autos goods inflation which is bad. Very bad.
Cars on the other hand are very very difficult to sell in this environment with high interest rates. That's why we say exa autos because they're deflating. But the point of this is this is very much in very different from this appointment which we'll talk about him in just a moment just a few letters removed from But if you look at any videos of this character, you will find he is essentially a knee bender for Donald Trump.
He is somebody who bends the knee and says that Donald Trump is always right. Uh Donald Trump was right about inflation in 2018. He's right about inflation and tariffs today. He's right about tariffs back then. He's right about inflation when Biden was president because Donald Trump was demanding that uh uh you know Powell raise rates under Biden.
You know what whatever his narrative is Powell bad, Powell wrong and Trump right. Okay, fine. We'll talk about the implications of that in just a moment. But there is a chance that Powell actually digs in his heels during Jackson Hole and says, "Okay, if we are going to have a Trojan horse basically come into the Fed, then I need to be even more aggressive in potentially fighting these Trojan horses." Now, that is going to be really interesting because a lot of people were going to see that as potentially bearish come Jhole.
Now, something to keep in mind is with Jhole coming up, not only that coupon code, but which is literally Jhole, J A Yhole meet Kevin.com, but I'm going to keep sending alerts and suggestions on in terms of what kind of trades to pay attention to in a particular day. For example, yesterday when Tesla was at 309, I suggested, hey, watch Tesla go to 318.
That's a critical trade. Went to 319. Easy bag. This morning in the alpha report, we suggested, hey, I don't think you should watch Dualingo. It's up 30% in pre-market. And I don't think you should watch the QES. It's already up 80% 80 basis points in pre-market. I think those will slip. Instead, you should watch AMD, which ends up going from like 1% up to 5 to 6% up.
So, these are the kind of insights that you get in the alpha report over at meetke.com. Use coupon code J-hole before the 22nd. And we've also finally got our Trump economics lectures coming up which will be very exciting uh probably by the uh end of this month or early September somewhere on Labor Day which is very exciting.
So anyway uh at the Federal Reserve though you have to consider that you have a lot of potential challengers inside that are going to fight against Jerome Powell. these people are not going to be speaking at Jackson Hole, which really sets up Jackson Hole as potentially an aggressive moment for Powell to dig in his heels on why his definition of the labor market is more important that the labor market is fine and that inflation is the problem when everybody else at the Fed, well maybe not everybody, but a lot of other people at the Fed are saying, "No, no, no, no.
The labor market is showing serious signs of cracks just like we're starting to see not only in the ISM reports or the uh BLS reports, but in other reports. Consider this for a moment. Waller and Bowman both wanted to cut last meeting. We already know that Qashqari and Daly are now signaling that they will join in requesting rate cuts.
Expect on top of that, Moran is going to show up and you're now going to have at least five votes for a rate cut in September and markets are therefore fully pricing in a rate cut in September. This creates some real complexities in what's next for the economy. In fact, City Bank has a warning on this and TS Lombard has a response essentially to their warning which we will talk about after this word from Turboen.
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Check out the details and all of the offerings over at Turboenant. Use that link in the description down below. And that's our paid sponsor, Turboenant. City Bank warns us via the Globalizer report that a sign of labor market weakness is clearly present. However, this report is critical and we should not just dismiss it as just one month.
We are watching the economy very closely now, not just at City Bank, but outside City Bank as well for the economy transitioning from a place of low hiring to increased job loss. Now, while unemployment claims numbers this morning came in a little bit higher than expected and the continuing claim numbers are the highest since 2021, we're still not seeing major signs of layoffs yet.
Although we know that as soon as we get those signs of layoffs, even Jerome Powell is going to roll and he's going to favor the labor market and he's going to favor rapid emergency cuts. The problem is you actually have another Fed board member who will also probably join the other five that I've mentioned.
Uh Waller, Bowman, Kashkari, Daly, and Veron. you'll probably have Goulsby join because Goulsby is the only one who gives us a very clear warning on how quickly the employment market could change. Uh we've talked about the beverage curve before, which is basically the curve that suggests that when you have low vacancies and you have a low unemployment rate, you're really in an anomaly of a time.
And it's just a matter of going from low vacancies on a chart on the y-axis to basically high unemployment rate on the x-axis. And that will look like a normal downs sloping halfpipe so to speak or more like half of a halfpipe. It's a downward sloping curve. Right now we have more of a downward sloping line which is economically extremely rare.
We're in a very weird and abnormal time for the labor market. Goulsby is the one who makes this clear. He says what happens is everybody tries to hold on to labor as long as they can. When they finally decide that they have to crack and they have to lay people off, the layoffs happen in mass. They happen quickly and everybody, all these companies like Sheep get on the boat and start laying off together in mass.
Yes, some layoffs have already started and maybe not all of them are showing up in unemployment claims because they've got severance packages or they're still waiting for their 9 months to be up in September with the government uh layoff cuts that were announced. You know, the 200,000 people that basically took the voluntary departures from the government uh in severances that ended September.
All that data is still going to come up ahead of us, right? that those claims might not show up until October, November or December. But even forget that private payroll is obviously very weak. The real problem is when we start getting panic layoffs and Goulsby warns us that once you get panic layoffs, it's too late.
It's not easy to quickly stop that. You can't really see the labor market go and fall down and just go, "Oh, we want it to stop right here." It doesn't really stop at a level. It just keeps going. This is why, ironically, Donald Trump, even though Donald Trump is pretty much the reason Powell is not cutting right now because of the inflation concerns.
Ironically, Donald Trump will probably end up proving to be right because if Donald Trump, you know, ends up being able to point and say, "Hey, see, look, Powell was too late because jobs fall off a cliff because Powell was waiting for the inflation from tariffs." then Powell will indeed look too late because the Fed will start cutting rates and it won't actually do anything.
Everybody is really excited, by the way, about pushing the market to new all-time highs, which has been working great. Even Asian and European stock markets are doing really, really well over hope that we're going to have easing policy in the United States. But you have to remember, rate cuts don't save a job crashing economy or an economy crashing because of jobs.
What saves that is money printing. Literally running the money printer to bail companies out. I mean, consider Apple, for example, got like a $400 million grant to utilize, I think it was Texas wafer manufacturers back in 2018, uh, or sorry, it was actually during the Biden administration that, uh, Apple got that grant.
And that's what actually encouraged them to use a local United States manufacturer versus, uh, you know, a foreign manufacturer. It wasn't the threat of tariffs. That was generally just a clever rebranding of expenses that they were already going to have to try to basically, you know, suck up to Donnie T, which remember back when this happened in 2018, uh, you had Tim Cook go to the Oval Office and give Donald Trump a new iMac that they were working in part with Texas manufacturing facilities to make.
And yay, this is great. we're going to invest all this, you know, $360 billion at that time into America. And much of that didn't actually end up happening because it was just a rebranding of stock comp or R&D or expensing that they already do in the United States with engineers or otherwise at, you know, with people who work at Apple.
You know, the same thing is being done now with these $500 billion of tariffs, but that that's okay. The point of that, that was obviously very tangential to this whole uh, you know, Goulsby employment argument here, is that Donald Trump is under the impression that what he is doing is encouraging the sort of job growth in the United States and companies are promoting all of this.
Yes, we're going to spend and we're going to hire and invest in America, but a lot of it is really just a sales pitch, not necessarily true new economic growth. Because remember, if you spend $100 this year and $100 next year, you're still spending that $100 next year, but that's not necessarily growth.
In fact, the growth between that spending is zero, which if your growth turned from 100 to, let's say, $99, then you'd have negative 1% growth, you'd technically be in recession, right? So recasting how these companies are spending money is not necessarily the best argument for suggesting, oh yeah, you know, the economy is going to be fine.
Look at all this money being invested into America. Yeah, probably not great to look at. Just like looking at rate cuts isn't great to look at. You need the money printer to run once you actually have a layoff crisis. And that's because once you have a layoff crisis, it is very hard to stop it. And that's why people think that Powell is just going to be too late.
The reality is he probably will be. But then again, ufts Lombard who has an optimistic approach. They say that July's data suggests that employment picked up again. I don't really see how they say that because, you know, in July we only had 73,000 jobs. 55,000 of those were healthcare and 18,000 were government, you know, social services jobs.
So, I don't really get where they're getting this idea from of hiring picked up again following a recent slew of trade deals and our economists believe the labor market will remain resilient this year. I I don't know if they just sort of like react to what the NASDAQ is doing because when the NASDAQ was not doing well in in April, they were, "Oh my gosh, this is recessionary." Uh, and now they're like, "Oh, NASDAQ alltime highs.
Oh my gosh, the economy is going to remain resilient." In fact, they go as far as saying, "We don't think the macro shocks from tariffs and tighter immigration are strong enough to push the US into a recession. After all, there has been no credit boom and no obvious malinvestment." Which is also a very interesting thing to say because then you look and go, "Really?
No credit boom? No BNPL boom, no leveraged ETF boom, no all-time high in FINRA margin statistics outside of leveraged ETFs?" Hm. All right. No credit boom. Okay. What? Whatever. TS Lombard. So, I mean really like there's fodder on all sides for people to pick from and that's the thing to pay attention to in this economy is the party's going to keep going until the music stops and the music doesn't stop until we get layoffs.
Until then, we keep going. However, Jackson Hole again, coupon code Jhole for meet kevin.com lifetime access, which once we release the Trumponomics courses, we'll probably get rid of the lifetime access. Uh, mostly because we'll just go back to like a, you know, monthly kind of subscription basis where you just kind of pay every month for when you have the product.
The lifetime access has been a hit though. A lot of people have really enjoyed it and people always email us about this. Can can I get in before the lifetime access is gone? It's kind of like a season pass except the season is life. But anyway, consider for a moment that Jackson Hole, all this said, will be an opportunity for J Pal to either join the Doves or put up his fists.
And I think there's a chance based on that last Fed meeting, he's going to put up he's going to put up a fight. If he puts up a fight, it's going to create some volatility in markets around Jhole. uh especially if then following JHole which is August 27th uh sorry August 22nd following Jhole we are going to get uh jobs data again the jobs data again and we'll get the QCW uh revision so the quarterly revisions come out at the beginning of uh September and then we will also get a jobs report that comes out at the beginning of September as well.
So both of those at the beginning of September. So really the next four to five weeks going to be kind of a big deal. Uh in terms of data QCW September mark your calendar for this uh the first quarter 2025 revisions are going to be September 9th, 2025. uh schedule of releases and then the employment situation for September will be August 5th.
So mark your calendar for Friday, August 5th, 8:30 a.m. That's the August report. And then Tuesday, sorry, um September 5th. So Friday morning, September 5th for the August jobs report. And then Tuesday, September 9th, uh, at 7:00 a.m. California time for the QCEW revisions. So, that's going to be pretty critical because it'll come right on the heels of Jackson Hole and presumably Powell's additional aggressiveness.
So, this said, now we've got to consider what's going on with this replacement. So, we've already talked about Moran basically being a shill for Donald Trump, but you have to know there's a little bit more going on here. Cougler, who was replaced by uh decided to suddenly leave to return to teaching at Georgetown.
Hm. Now, that's really interesting because what do we know about Georgetown? We know that Georgetown is basically a DC school. Not only do we know this about the Georgetown University, which is very, very politically involved as a private university in Washington DC, guess what? Eric Trump graduated from Georgetown.
Ivanka briefly studied at Georgetown before transferring to uh UPEN where her father also went. And you had Tiffany Trump graduate with a JD uh from um from Georgetown. So all of a sudden you have a lot of family members who either went to or graduated Georgetown. Clear connection to Donald Trump and the Trump family.
You have a Donald Trump who's very aggressive against universities, Colombia, Harvard, really any school of thought. At the same time, all of a sudden, that university potentially calls up Cougler and says, "Hey, what if we pay you a lot more money to just leave or create a vacancy at the Fed that Trump can then fill with his Trojan horse?" Okay, this is interesting.
When you start putting those pieces together, we go, "Oh, this is Trump back at it again." Now, maybe it's actually a good thing because on one hand, I agree Powell's probably going to be too late. On the other hand, it does create some concerns again for the independence of the Federal Reserve because if Powell looks like he is now flipping after the appointment of Iran, Iran, well, it's certainly going to look like politics are indeed creeping into the Federal Reserve.
Who knows, maybe they already have been. Uh that said, what's more interesting than since he's only going to serve until Cougler's term expires in January is Waller as Fed chair. Waller is apparently showing up as a leading potential for Fed chair. He wanted to cut in July, mind you. And I personally find Waller, I mean Hasset, it's a little bit of a bump on the log, but both of them would be better than Walsh.
I don't think Kevin Walsh would be great because he'll likely revert to his historical self of being very unwilling to let the country go into debt when we are in a recession. So imagine going into a recession without the Fed printing money. That sounds great from the point of view of less government debt, but it's going to be extremely painful.
So you kind of have to pick your poison on that. Do you want every human in America to basically suffer with the exception of the rich or do you want to print your way out of the next recession which you know if you don't you'll end up actually going through a great reset except it'll just be a great reset for the poorest Americans and not the richest Americans.
But anyway, Waller being a top pick fortunately and hopefully closes the door to a wash of Fed Reserve chair which I don't think you want to see. I think that would be bearish. Waller probably bullish rate cuts. But again, don't be misled or coaxed into thinking that rate cuts are automatically good for the economy.
Usually, we cut into pain. Now, this paradigm shift that I've been wanting to talk about has to do with AI as a percentage of GDP. Originally, when we talked about the AI boom, we said, hey, GDP uh is, you know, somewhere around $26 trillion. Maybe artificial intelligence represents somewhere around 2 to 5% of GDP.
That's great. But when it comes to GDP growth, GDP growth, which is currently estimated by the Atlanta Fed real GDP tracker at 2 and a half%. AI as a percentage of GDP growth. So just that that growth portion, might actually represent closer to half to nearly all of our GDP growth, which is really interesting because first of all, praise the Lord that we've got growth any growth engines somewhere, right?
This is a good thing. We don't want a recession. Nobody wants a recession. It's hard for everything. It's even hard. They're like, I mean, I think we'll be totally fine and resilient, but we love that this boom is going on in AI and the stock market because we think it's great for house hack. This obviously my real estate startup, my real estate baby, because of the AI product that we're planning on releasing in Q4, which is we think a huge gamecher for the company.
uh it's basically you know taking the AI that we've been building for the last six years with MLS of training uh you know the identification of real estate and good deals in real estate and and helping sort of educate what is a good deal versus what's not and giving that as a license to agents and uh and and you know even just users uh and so obviously if we can have some form of SAS model where agents can sign up for this uh and enable their clients to gain access to it we think there's a gamecher in terms of revenue and valuation for house hack which probably is why we'll end our fund raise.
Uh, you know, especially when the Fed starts cutting because, you know, why why why pay a 5% yield like we are right now plus upside in the stock if we don't have to. We think we'll probably not even have to fund raise if if this works the way we expect it to. So, we're really excited about that ADP uh AI growth as part of GDP.
That said, we are very concerned that if there's any slowdown, which we haven't seen yet, in artificial intelligence, the only growth lever we have left in the economy is gone. Contractors are slow, tenants are tighter on money. Uh tenants still 100% paid up at house hack. The normal economy is suffering.
This makes sense. We see this in consumer spending data as well, which creates this paradigm shift for what stocks to consider. I mean, consider, for example, just what you're seeing when you hear announcements from companies like Palunteer, which obviously reported phenomenal earnings this week. When you look at Palunteer, you actually hear Palunteer say that you can't just rely on an LLM.
You need an ML plus an LLM. And you could do this via Palanteer's ontological service, which is basically a way of packaging data in a way that an LLM or AI can actually process it. And this is leading hospitals to be able to discharge patients faster. Fanny to identify fraud in seconds versus two months.
Banks to be able to KYC customers in seconds versus 9 days. Corporate growth now exceeding government growth rates at Palunteer. And they literally go as far as saying LLMs alone just suck without the Palanteer process. Now, of course, we got GPT5 that just got announced, which it's unclear if GPT5 is really just a rebranding of some of the other models that exist.
I guess we'll see when we actually try it. But what's fascinating here is you see that AI is a product that will continue to gain investment for the time being because it's not just one portion of AI that you need to use. You need to use multiple portions of AI. We take our machine learnings that we've created with house hack and we combine these with large language models and we find the net result is even better than what we had with just MLS previously.
This is exciting and it contributes more to our economy which is fantastic. And so this to me suggests that we have this paradigm shift where we're really moving away from wanting to look at consumer investments. The best future investments even at today's valuations, the longer term, you know, next decade, two decad's best investments are probably no longer consumer style investments because the more AI grows, the less money consumers have to spend.
Instead, the winners are the Microsofts, the Metas, the Open AIs, the companies with the real Cashola. And what are they buying? They're what they're buying is where the winners are. The AI chips, the uh Nvidas, the TSMs, the ASMLs, the, you know, to some extent Super Microcomputers. Obviously, we saw they had a little oopsie-doopsy there on on some of their earnings numbers, but still this whole stack is phenomenal.
And super micro has done very very well uh frankly over the last 5 years it's up 1,400%. It's it's phenomenal. So the point here is moving away from a GDP that is driven 70% by consumers towards a GDP that might in the future be driven by almost entirely artificial intelligence is probably the long-term investment to really consider over the next decades.
And no, I'm not saying go all in here at all-time highs into just AI style things, but the point of me bringing this up is when this next recession happens, when you go reset up your portfolio or you go add money into a portfolio or whatever, you have to ask yourself, do I want to double back into those traditional consumer names when recovering out of this recession is probably going to be most difficult for the very consumers who are being affected by artificial intelligence.
And consider this, humans are basically getting squeezed, right? Headline reading is over. Basic legal filings, basic accounting, basic writing, journalism, fraud detection is over. You have to adapt. You have two ways to adapt. You could go physical, which is hard for older people. This is why, you know, people who are elderly or were just really just more advanced, I guess, in age, they're just like, "Whatever, I'll just take a forced retirement and I'll live on less because it's hard to get a job and you don't want to like res-kill and you don't want to go into physical." Or if you're younger and and you don't necessarily want to go in the direction of being creative, uh, and that's not a disc, it's just going into the creative direction, which AI can't do as well yet.
Human creativity. I'm not talking about like artwork or like generating like memes or things like that. That kind of creative we already know it can do. But I mean having human thought above and beyond machine thought which is hard to do and there probably won't be that many jobs in that sort of world.
Physical really becomes a crutch until we figure out what that next phase of productivity is going to be. And this means the consumer loses and the richest corporations just keep getting richer. Frankly, I think the next recession is where we will usher in universal basic income. Now, that said, that whole transition could take time, but Donald Trump is perfect for this.
Donald Trump is literally perfect for corporations. He exempts his favorite companies from tariffs, like Apple, 50% tariffs on India announced everybody but Apple. They're promising to do more in the United States, even though that's exactly what they said last time. And all they really did was rebrand their spend.
Apple's basically committing to spending 100% of their free cash flow in the United States over the next four years, which they just revised to $600 billion, which is 120% of their free cash flow every single year for the next four years. Micron's doing the same thing. They're saying they're going to invest way more money than even what their market capitalization is.
So then it makes you wonder like, are we really just sort of rebranding research, development, and stock compensation as a way of saying yes, we're investing in America? I mean, technically, if your stock doubles and you generate hundred billion of market cap and your shareholders got hundred billion richer, is that similar to basically saying we just invested $und00 billion in AI or whatever in America?
Maybe. I don't know. But Donald Trump makes this so much easier for corporations. I mean, if you're a corporate fraud like Trevor Milton, you can buy yourself a pardon. If you're a bank, no problem. Lower capital requirements. If you're a consumer, oh, sorry, the Consumer Financial Protection Bureau was basically just gutted and probably end up shutting down, which was promised in Project 2025.
Uh, don't like what the heads of agencies are saying, they could be fired. Everyone except JPAL. What changed this? Well, I mean, Citizens United, right? This is where corporations are seen as people and they can spend money, billions of dollars throwing money at, you know, basically whomever they want as a politician.
So it's no surprise then that foreign affairs is a complete piece on how difficult it is to recognize the results of corruption. Basically they say that corruption happens in secret and politicians can enrich themselves and America is basically moving from this democratic republic into a more competitive authoritarian state.
Uh imitating lawyers, immater imitating imitating intimidating gez uh law firms, universities and courts. All of this is a perfect demonstration of moving away from a democratic republic into more of a competitive authoritarian state. It's basically a clever way of saying we're a free market but we have a dictator.
Now the impacts of that even foreign affairs says could be a very very long time away. It might not ever be very clear what kind of wars or long-term outcomes could come from this or if anything bad will necessarily happen from political corruption. But what I can tell you, and this is sort of my takeaway of all this, I'm not trying to pick a side.
Remember, my goal is for everybody to hate me. Like I've tried like try if I could get everybody to hate me on stocks and the Federal Reserve and real estate that and and uh Democrats and Republicans and independents and whatever that then we could all just be on an equal playing field. That my goal is not to shell for any one person, party or company.
just to give you perspective of when I read these things and putting it together and piecing it together and going, "Huh, I never thought about it that way." And so the way I think about this when I hear about these sort of corruption pieces or sort of this authoritarian competitive state is okay well who wins in a competitive authoritarian state?
Ah, yes, the richest American corporations. And so really whether you know whether the recession that ends up coming ends up tanking in the stock market or not, it is really hard to argue against American exceptionalism. Like in the long term, the next 20, 30 years, can you really bet against American stocks?
No. Now, will there be a recession and will stocks sell off in that recession? Yes. Could that opp you know that moment be the biggest opportunity of a lifetime to get into what will be the richest corporations of an AIEL recovery with money printing flowing into the only job creators left which are going to be the richest corporations unlikely the smallest corporations who will just get eaten up by AI.
Well, let's just put it this way. Universal basic income is probably coming. Consumption is probably going to suck. UBI will be relatively low. and uh investing in the richest and best would be the way to go, which I'll give you a few examples in just a moment. But before I give you a few examples, I have to talk about Tesla and Dojo.
And I want you to hear my opinion on whether or not Tesla is going to be that company or not. But first, a message from Helium. s B . So, Tesla just disbanded its dojo team, which is insane because in 2023, Adam Jonas said that Dojo could add $500 billion to Tesla's market cap. Now, he has a prediction that they estimate that one humanoid robot at $5 an hour can do the work of two humans at $25 an hour, generating a net present value of $200,000 per company per year per humanoid.
That's incredible. Basically means we should all have like buy as many robots as possible, which is fantastic because Tesla is seen as a leader in Optimus robotics. Maybe that's the future. But here's the problem. Adam Jonas was way off on his dojo suggestion. Basically, Tesla is now saying, "You know what?
No more in-house chip designing. We'll just buy AMD and Nvidia products." And now Tesla's AI team uh is basically being recruited away by companies like Diversify AI or they're being reassigned within Tesla and they'll probably end up leaving after their reassignment at least some of them uh to other startups or companies where they potentially have an opportunity to focus on real AI and uh you know outside of obviously of FSD.
And so what ends up happening? Well, Tesla gets a big sort of stab in the back here in my opinion by the shutting down of Dojo. Why am I trying to be super bearish Tesla? No. It's just when you shut down what was supposed to be one of these these huge unique selling propositions for uh components inside of Tesla.
When you start shutting these things down, people start getting really concerned that the true crux you have is just relying on the consumer and not actually your new technology. The 4680 cells have produced a fraction of the battery cells that we hoped they would. And part of that is because they're more expensive to manufacture than the Chinese batteries.
On top of that, they're not as efficient as Elon Musk promised. That's unfortunate. The Cybert truck doesn't sell anywhere near as many cars as we hoped it would. On top of that, we are now hiring 100,000 robo taxi supervisors. So basically like Uber drivers to sit in the car and supervise the car as they roll out essentially robo taxi FSDish across different portions of the country which you know if some of these things end up with the same fate as dojo it does just make you wonder if we're going to have these bets on big innovative technologies like Optimus Cyber Truck Cyber Cab the semi-truck.
Where's the semi-truck? Where's the Roadster dojo? If we're going to have these big bets on these different ventures, then at the very least, please Lord, introduce cheaper cars that humans can drive today with FSD. Why do we not have the the Toyota Alfred in the United States? Here in Japan, you have the most professional taxi drivers I've ever seen in a country that I've traveled to.
Not only that, but they drive clean, luxurious, smaller sprinter style vans. Those Toyota Alfreds, it was one of their first minivans. It's more box shape though, so it doesn't have that sort of like soccer mom car look. These look like professional, beautiful cars, spacious with like the lie down seats, you know, comfortable, uh, you know, outfitting on the inside.
Gorgeous cars. And why are we not producing vehicles like that in America? In fact, I always wonder why we don't have cars like that in America. A, it's probably because of tariffs and barriers between various different countries. Not just current tariffs, but previous tariffs. Uh, but B, who knows?
Maybe it's just American desires for, you know, SUVs and their own types of cars that are more suburban or Escalade like or pickup truck like, but then why are we not creating more cars to appeal to that market? So that way we can at least prop up the consumer section of Tesla or sector of Tesla. We can print as many vehicles as possible and then that way any failure that happens like the shutting down of Dojo doesn't really matter because we're producing enough cash flow at the consumer side of the business.
So I'm not here to say that Tesla always fails on its innovative products. I'm here to say that it's okay for a company to fail on its innovative products as long as their core products still do well. I mean, let's look for example, like imagine if Tesla was like Apple and Apple went to you and said, "Hey, oh, by the way, I bought this case in Japan." But anyway, imagine if Apple went to you and said, "Hey, we're going to stop producing the iPhone." And the reason we're going to stop producing the iPhone, oh, dear Lord.
Uh, is because we're going to go allin on the future. And the future is going to look like this. the Apple Vision Pro. That's going to be the future. So, we're just going to like not really care about making new iPhones because the future is the Vision Pro. That's kind of what Elon Musk is doing, right?
It's it's constantly a new Vision Pro product and you're sacrif you're damaging the Apple brand, like the iPhone side of the business. Whereas Apple is like, "Hey, we're going to keep making awesome iPhones now. Now, we're going to lie to you about how great our artificial intelligence is because it's really crappy.
Uh, but you know, we're still going to make new iPhones and upgrade the camera and battery life a little bit. So, you keep buying it every single year. We're going to keep doing that. Well, at the same time, oh, I guess that didn't work out that well. That's okay. We still got the iPhone. That might be a little bit of a better strategy, right?
So, putting all of that together, it does make you question like, is Tesla the company that you look at and say, "Oh, yeah. We we like Tesla's going to be the consumer driver of the future. Well, they need consumers to survive through all their experimentation and their growth, but consumers seem to be the weakest stock uh to invest in right now in the S&P 500 or the NASDAQ.
In fact, we look at Tesla and say, okay, well then fine, what about Optimus Robotics? Like maybe that'll be the AI future, right? Yes, maybe. But who needs to buy those robotics? Well, who needs to buy those robotics or rich companies that are manufacturing? And then the question is, do they want robotics that have cool hands that can basically stand and do things, but they can really only handle lightweight things because the servos are too weak to repeatedly pick up heavy objects over and over again.
So, they end up just doing lightweight tasks standing relatively in one position for a very long period of time. This is why Elon Musk talks about having a master plan three to sort of refigure out how to make Optimus actually work. Who's going to buy that? Well, you better hope for Tesla that if you're investing in Tesla, you can move from the consumer to really rich corporations because I don't think the consumer through the next recession is going to be able to afford those robotics.
It has to be rich corporations. And those rich corporations have to be convinced that a humanoid robot is the solution. when the reality is you probably just need robotic arms or robotic crane cranes or robotic forklifts or purpose-built robotics that could just do exactly what they need to do over and over and over again and they don't actually need the human form factor.
Something to think about. So where then is the party? Well, obviously we already talked about Palunteer. That's where one of the big parties is. But and then of course you've got MP Materials. Although MP Material is probably 3 four years away from actual true real revenues from their Apple partnership or DoD uh partnerships and expansion of their critical rare earth mineral uh facilities, which then makes you wonder if in the longer term under a new president if we're just going to open up a rare earth deal with China and China will flood the market with rare earths and rare earths won't actually be rare anymore, which Elon has said all along.
We just need more of the refining capabilities. It does make you wonder about Axon. Now, Axon is a really interesting company because Axon isn't, in my opinion, really highlighted by retail as much as it should be yet. Now, I've talked about Axon a lot before on my live streams and and course member live streams, but you got to consider Axon as a game changer.
Now, I'm not I'm not trying to shill this cuz I got calls or options or stock on this. I'm just saying going through their earnings call, it makes me wish I owned a lot of Axon. acts on as sort of an AI play. The way you have to look at it is AI for law enforcement, which is the best way to probably deploy AI.
If you're wearing a body cam and rather than you spending half of your job writing police reports, you can just have AI listen to everything that you said and write the report for you and file it, evidence it, and correlate it to other reports all with artificial intelligence. Now, you could actually spend more time policing, which you might not remember this, but I was a police explorer for 3 years.
I spent 3 years on the road with law enforcement, and report writing was the absolute worst part of the business. It was fraught with forgotten uh moments or comments that were said that didn't make it into reports or quite frankly uh inaccurate things uh that were put in to shape a certain narrative in a report.
It's not good. AI has the potential of changing this and making policing a lot better. Not only that, but think about what they're doing. They're basically creating SAS for every single law enforcement agency around the world. We're not just talking about Homeland Security, ICE, you know, cops, sheriff deputies, uh, you know, local city police officers, security officials at at companies, Federal Reserve police officers, capital police officers.
But we're also potentially talking about our military. We're also talking about foreign countries. There are countries in Europe that are complaining about because of the Russia Ukraine war, people flooding their borders and they don't have enough manpower to fight what they're dealing with at their borders.
So they're like, "Please, we need more taser 10s. Taser 10s. Here's now a product that basically replaces the original Tesla or taser, which was basically taser, taser, taser, one shot. You deploy the cartridge, the little square cartridge. You'd have to take it out. You'd have to reload another cartridge before you could shoot it again, which is very slow.
It's a pain in the butt, not great. They finally then came out with a two-prong taser, and that's now being replaced by literally a 10prong taser. The Taser 10 lets you shoot 10 times. Boo. 10 shots and you can tase up to three people at one freaking time. Not that you want to tase three people at one time, which came up in the earnings call because then they're like, you know what happens if one person gets tased and they're like, "All right, all right, I give up." And the other person's like, "I don't." And then they both get tased.
The point is cops have a lower likelihood of uh failing to subdue a sub a subject and maybe you then have less shootings or death in in dealing with law enforcement. But then you also have AI cameras and AI report writing that documents all this. This is a company that has 29% of the annual recurring revenue of Palunteer.
They're also looking at developing their drone technology to where you can have drone first response. So if you know somebody calls 911, a drone shows up first to assess the situation, uh follow a criminal suspect, see how bad a situation is, how many cops need to be deployed, does a cop even have to respond.
Then they have counter drone AI technology called D drone because they're worried that we're going to start having drone warfare in the United States. But more on today they're like that's all future stuff which is crazy and super exciting. But more today they're talking about the the high-end police officer uh on sort of like when I say high-end like how much money the department is spending on the cop.
your top end could now go from $300 a month in subscriptions to $600 a month just in Axon subscriptions and that's expected to grow and so far only 70% of the officers are on a basic plan which is even lower than all of this. So there's so much potential for all this to explode at Axon and their margins are insane on this AI bids.
So, this is where I look at like, you know, hey, if House hack can can, you know, take a stab and and get some real market share and AI for real estate, Axon, law enforcement, uh, artificial intelligence, Palanteer, just straight up corporate artificial intelligence. It's no surprise that these companies are selling for these insane like hype pegs.
Well, Axon and Palanteer, Houseack is not selling for an insane valuation. It's selling for a very cheap, basically real estate only valuation in my opinion. You can learn more at househack.com. By the way, quick disclaimer. This is not a solicitation for you to invest. If you want to invest, you can go to house hack.com.
It's an open to nonacredited investors. You could read our paperwork and our offering circular and private placement memorandum that it's it's private company. But we do plan to end that fund raise uh probably when rates start coming down and when we launch our AI. But anyway, you know, like to me it's so surprised that the valuations are so high for these companies because people I think are recognizing crap.
I can't trust investing in the consumer. I can't trust in investing really in anything other than a practical deployment of artificial intelligence. And Palanteer and Axon are actually doing that. It's no surprise that Axelon's future bookings are up 43%. And that they've got growing opportunities all over the place.
So, I look, I know this is a really long video and we we had a lot to cover in this, but I want you to think about all this together. The labor market is weakening. There's no doubt about that. It's just a matter of time before it flips the layoffs and then we're screwed. We're going to not going to be worried about inflation because there won't be an inflation issue.
We need Powell to actually wake up to realize that the labor force participation rate falling is a recessionary indicator and our unemployment rate will be way higher. If if we actually realize that maybe Waller will, but by the time Waller gets in in May of next year, it's probably going to be too late.
You know, thanks to our sponsors, Helium, Turbo Tenant, and Gemini. Go check out house hack.com. Use coupon code J-Hole. Remember, that'll expire on August 22nd. J-Hold's gonna be a big deal because if JPAL really digs his heels in, it might actually end up confirming a recession. We know that Donald Trump is doing things to increase his own personal wealth, but all of those actions are just really good for big corporations that don't necessarily rely on consumers.
Uh, which does create some red flags potentially even for Apple, even though I mentioned them as a positive example. That's relying on the consumer, right? Apple is relying on the consumer. Tesla is relying on the consumer. Palanteer is relying on businesses. Axon is relying on the military and law enforcement.
Maybe that's why they've got that premium, right? Some things to think about. But anyway, if you found this video helpful, make sure you subscribe to the channel, hit that subscribe button, smash the like button, and I will see you when I get back from Japan. Thank you so much for watching. Goodbye.
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