원문 보기
Hey everyone, me Kevin here coming to you from uh some river somewhere. Uh anyway, I wanted to talk about what Donald Trump's uh tariff and court disaster just brought us. I personally and and you know this about me, I don't like the tariffs, okay? I think the tariffs are crazy. I think the tariffs, they're attacks, consumers pay them, businesses lose money on them, they're margin destroyers, whatever.
Now, maybe people got enough money and it's not a big deal. Maybe if everybody's got enough money, it doesn't matter. Consumers spend a little bit more, uh, businesses take a little bit of a haircut, and Donald Trump gets his, uh, you know, tariff revenue, whatever. But in the background, I was hoping that tariffs would die, that one day the corpse would come in and say, you know what, this is illegal and the tariffs are banned.
They're illegal because it would be the most bullish catalyst ever. Literally bullish catalyst because frankly we would get that margin back. We'd get that consumer purchasing power back. We would lose the dead weight loss that economically occurs when you have extra government taxation. We want smaller government, not bigger government.
So instead, what the court just did on Friday night, which you know, we were where were we? Kalahari. Place is awesome by the way. But anyway, instead what the court did on Friday night is said these tariffs are indeed highly illegal. You know, split decision, whatever this appeals for, and people who get into power doesn't matter because even though their ruling was a majority decision that the tariffs are illegal, they're like, but we'll allow the tariffs to stay in place.
And I'm like, what the hell is this? the positive bullish catalyst we potentially had coming of a court overruling the tariff. Boom. Uh we lost that bullish catalyst. So that is unfortunately an additional bit of a negative. Now so far we've been okay, right? PPI, CPI. Yeah, they've been gone going up, but the Fed's basically saying, "Hey, this stuff's going to be transitory, so we're not really worried about it.
Yeah, it might not be point transitory. It might be transitory over an extended period of time, but eventually it'll prove to be transitory." All right, good. That's good because we're worried about J Pal screwing up and all and forgetting the reality that we are likely going into an unemployment recession at some point in the future.
That bill needs to be paid. No, maybe not. Maybe we can stop planning our way out of it and grow out of it, which would be great. That would be the best case scenario. Uh, but it's good. Like, so far it's been good that Powell has pulled us. All right, we're not. All right, let's get out of here. We're not going to be in a an environment of being stubborn, right?
We're not going to say, "Oh, we're worried about inflation and therefore we're going to kill the jobs market." Decided, "Okay, no, we're not going to do that. Instead, what we're going to do is we're going to say, no, no, there are risks in the labor market. Uh, and we're going to look at tariffs as transitory overtime, and we'll be willing to set up a 25 BP cut in September." Now, Waller is telling us maybe we'll even get 50.
uh in September if the labor market data is worse than expected. Mind you that we also heard that the Federal Reserve is looking at weekly ADP data, the private payrolls data which is coming in even weaker and that they get it on a week-by-eek basis whereas we only get it on a once a month basis. Now, I thought that was really interesting because I'm like, "Oh, okay.
So, they're seeing this private data. Maybe that's weaker that we're not seeing." Uh, and maybe they're starting to believe that private data a little bit more because, you know, do you really want to piss off Donald Trump with data right now? You piss them off with data, you get fired. You know, George Gammon actually had a fantastic video.
He said, "Hey, here's the thing. You know, we uh or a live stream or whatever he had. He goes, "Look, the reason real GDP looked like it came in so much stronger recently, uh, is because we argued that in the last data readings in the second quarter, inflation was low because the tariff effects hadn't hit yet." Okay.
Well, if the tariff effects haven't hit yet, real GDP, let's just make round numbers here. Okay. Let's say, Jack, you got to put the life jacket in the basket. Uh, let's say GDP is 10%. And inflation is 10%. then real GDP is zero, right? Because you're subtracting inflation. But if GDP is 10 and inflation's one, then you have GDP of nine, right?
I'm making that extreme example just to showcase that inflation matters because if you say inflation is low in the second quarter, which frankly it was, you can make the argument that GDP was a lot higher. And of course GDP was low Q1, Q2 is higher. Now you've got the Atlanta Fed saying, "Oh, well GDP so far in Q3 is doing well." Is that because of the inflation adjustment?
Is it is it because some of the inflation numbers aren't as high yet? We're just starting to see some of that fire under the cylinder of potentially uh you know core goods starting to sneak up on us. Some of those core services starting to sneak in. Will that end up in inflation psychology. We are seeing inflation break evens back at some of the highest levels that we've seen over the last few years, but those really haven't broken out to some kind of crazy unsustainable level yet.
Yet, key word. So, to be determined. But what really bothers me is the one thing I was really hoping for was that these tariffs would be considered illegal. And that bullish catalyst just got killed. So to me that's a bit of a negative. Now is it possible that the Supreme Court will get involved in this?
I think very late. I think the Supreme Court is doing exactly what Donald Trump wants right now. And the best thing the Supreme Court could do is just wait, be patient, let Donald Trump be Donald Trump and do what he wants and get out of his way. That way you could still feain Supreme Court independence.
you could still feain the separation of powers. Uh which I I don't actually know how much of that we have right now. Uh and and that's okay. That's not to like pick political sides. You know me, my goal is to piss everyone off. It's just to say that we did just lose an extra bullish catalyst. Now, hopefully markets in the near term look at this and go, "That's okay.
All we're going to do this week is we're going to look at this shortened 4-day week. We're going to look at the labor report." Uh, and you want to get Mom and Max out so they could start drying. I'll walk with you. Let's get that labor report on Friday. The latest labor report estimates are that we're going to get somewhere around 75,000 jobs.
Now, if we get somewhere around 75,000 jobs, it's weak, but it's not so bad. What we really don't want is something under 50 because that's where people like Waller say, "Hey, if we get a break even of under 50 where uh or or you know, labor reads under 50 on the BLS stats, then how indistinguishable are we really from negative?" Because revisions take forever to come in.
Remember this, the QCEW revisions that come in on September 9th are going to be for the March 6-month period. The 6-month period ending in March. So, we'll get a negative shock there, but it won't yet revise this summer. So, we have to assume that whatever that negative shock is there transfers over to the same thing we end up with potentially through the summer.
But we won't know the summer's data via QCW revisions until the spring. So we're always looking at this lagging data and that's where the Federal Reserve could end up making a mistake. So long and short of all of this is we lost a potential bullish catalyst. Is that necessarily super bearish? No. It just rehighlights how important the Friday jobs report here is going to be along with the ADP report that'll come out uh this week as well.
I'm pretty sure it's usually on Wednesday. I think they're doing it on Wednesday still. It depends. It could be Thursday because of Labor Day. We'll see. Uh so we'll be covering those live. Uh both the ADP and the payrolls numbers. We'll be covering those live. Uh I hope you're there. Uh, and then, uh, obviously with the Fed meetings coming up on the 17th.
So, I hope you're having a wonderful Labor Day weekend. Uh, I'm in Texas for a little while longer, so uh, shout out to y'all in Texas. And, uh, thank you so much for being here and being a subscriber of the channel and, uh, coming for a ride with me. Uh, that's I think that's all I got. So, I'll see you in the next one. Five.
Comments 0