저자: MeetKevin · 외국인
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버핏 발언을 인용하며 관세가 경기침체를 촉발할 수 있다고 주장. 고용 지표는 양호하나 하반기(3Q25) 경기침체 가능성이 높다고 봄. 바클레이즈는 완만한 침체, Robo Bank는 기술적 침체 확률 5/7 모델을 언급. 현금 보유 권고 및 하우스액(House Hack) 투자 홍보.
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Are we going to hit recession or not? And what does the trade war mean for America? Here's Warren Buffett's take on trade. Trade can be an act of war and uh and I think it's led to bad things. Just the attitudes it's brought out uh in the United States. I mean, we should be looking to trade with the rest of the world and we should do what we do best and they should do what they do best and uh I don't think it.
Now, Buffett goes on to say more. But first, I think we should analyze what's currently going on in the economy. What's this jobs data that we just got on Friday and how does it impact the odds of a recession going forward? And then let's have a little bit more of a chat about what Warren Buffett says about trade.
Keeping in mind that as trade is considered or can be considered a trade war that is can be considered an act of war. It's worth remembering that not only did Warren Buffett just say this, but Jaime Diamond in his letter to shareholders said exactly the same thing. Marjorie Taylor Green, after all, is freaking out that Donald Trump is potentially risking war with Iran, which is sort of a flip given that she usually defends everything that Trump does.
And at the same time, you have a lot of talk over a potential increased impetus for China to invade Taiwan because of tariff warfare. So, when both Warren Buffett and Jaime Diamond, uh, you know, CEO of the largest bank in the world are telling us tariffs could be an act of war, maybe we ought to pay attention.
But it's worth knowing that so far the unemployment data that we've been getting has been pretty dang decent. I mean, Barclay's put it together very well. They said the Fed's going to sit on the sidelines because jobs data remains solid. The household survey indicates no fallout yet. U6 unemployment nudged lower and maybe we'll get a mild recession in the second half of 2025 topping out unemployment around 4.7%.
Now interesting because Barclays while they call for a recession they call for a mild recession with the acknowledgment that a more forceful recession could end up leading to an increase in these jobless numbers. So it seems like even Barclays in talking about sort of this positive jobs data suggest eh hold your horses.
It might be too soon to celebrate saying that April's jobs data which was collected in the earlier portion of the month of April where we still didn't have full clarity on tariffs and kind of still don't today might not be the best tell for what could happen in the economy. Now what's interesting also is there's a lot of talk about the birth death model.
I'll quickly just make a mention on this because some people mention there's this huge adjustment on the birth death model that led to 393,000 more jobs. You can see this in the actual tables on the birth death model, not seasonally adjusted. And it's not unusual to see these sort of numbers in adjustments.
Obviously, any kind of adjustments are always going to raise political questions, but I don't really see a difference in the size of adjustments between those under o, I'm just going to sort of ignore that and say, hey, the BLS is usually always late, but I don't really see the political bias in it just yet.
It could show up later, but I don't see it yet. Now, so Barclays is saying second half that it's too early to take this positive jobs data in the face of tariffs to say recession risks are off the table. The place where recession risks do seem to be off the table though are Europe. In the European Union, you have this idea that in the recession probability model put together by Rob Robbo Bank, the current near-term recession risk is close to the lowest point we've seen since March of 2022.
And the forward-looking components indicate only a slight increase in the chance of a recession solely because of tariffs. That's very different though in the United States. See, Robbo Bank goes on to say that the impact of tariffs in the United States are stagflationary because of the negative supply shock from having to find different suppliers, relocating production, and all of this takes time.
And while in the near term it's going to impact prices in a way, we're not entirely sure yet exactly what's going to happen with which products where where we're going to see shortages, all this TBD. But their belief based on the models they're running for the United States is that their models forecast negative GDP growth in the third quarter of 2025 in all scenarios and a technical recession in five out of seven of their recession of of their recession models.
Now, they acknowledge that they're not sure if that's actually going to turn into a quote unquote real recession because the National Bureau of Economic Research has sort of their own not necessarily clear definitions for what a recession actually is, but on a technical basis, so neg two quarters in a row of negative GDP and an increase in unemployment, they do expect will happen uh with with a greater than 50% chance uh in fact five out of seven, you know, odds chance here essentially.
So what's fascinating here with Robbo Bank and Barclays is both of them are telling us that the damage of tariffs don't look for it now. In fact, a lot of good is coming from tariffs in the near term in data because you're seeing this substantial pull forward of demand that's showing up now in Q1 earnings.
Okay, that makes a lot of logical sense, but it does kick the can of risk down into the third quarter and the fourth quarter, as in the second half of this year. Now, my hope is that if we do end up having some form of recession, that it's over and done with by 2027. That's my personal goal. Those are the models that we're sort of using internally to base our investment decisions on.
In other words, hey, if the recession comes and it's over quickly, great. We can deploy capital more quickly. But if the recession lasts longer, we want to be prepared for that scenario as well. And I think as an investor, it's worth considering those various scenarios. Hey, what am I going to do if we have a shallow recession later this year?
What's going to happen if I lose my job? What happens if the recession lasts two years? What opportunities can we take advantage of? And I actually see that as a hopeful opportunity. Much like when Warren Buffett today at the shareholder meeting talked about, hey, opportunities don't come to you every day.
They come all of a sudden out of nowhere. They don't really come in an even pace. And so, you want to be prepared for those opportunities. And the best call option, he says, with no expiration date and no premium, basically no strike price. Uh, and the best call option on every asset class possible is cash.
That's personally why we're hoarding cash. I mean, that's what we're doing at House Act. That's what I've been talking about since July of last year. And frankly, when you look at the data, the unemployment data, you can actually see that labor data was worse July of last year. See this hole right here where my mouse is?
This is un, you know, unemployment data or employment data rather going all the way back to May of 2021. And you can see how we sort of stagnated over here. Some would call it normalized. You know, 187 might be normalized. So you could call this normalized over here, but July was looking pretty gnarly over here because we were really plummeting in terms of that jobs data.
Now, of course, we got the, you know, some people don't like this phrase, but the quote unquote Trump bump or whatever over deregulation, uh, you know, the hope for tax cuts, the hope for some form of invigoration of the US economy under the MAGA movement. Uh, that maybe led to some of these job gains right here.
So, of course, the question now is, are tariffs going to create jobs or are they going to damage jobs? Well, and this is where we say we won't know until the second half of the year. So either way, you know, ex again, Houseack, we're fundraising, by the way, over at Houseack.com if you want to learn more about it.
To me, I see cash as a great opportunity. This, I think, is why Warren Buffett has one of the greatest cash piles. And it's not necessarily cash because he invests in short-term uh, you know, treasury-l like instruments. So do we. So that way you're picking up that yield in the meantime, but it gives you an opportunity.
And I think that's exactly what everybody should sort of be preparing for is either diversify into something that's giving you cash flow like a yield with maybe upside like I was like or you know something that makes you comfortable that gives you yield and and gives you opportunity. Uh so I think that's interesting in the face of probably most of the damage coming in the second half of this year.
Now, we'll see. A lot of this is going to come down to what happens with uh the Chinese trade and the potential for uh you know, people actually going to selling stocks in the face of either job loss or some form of real uncertainty. Like Buffett says, what we've seen in the last few weeks is nothing unusual in the stock market.
And he's totally right. We haven't actually seen any true panic. In fact, if you look at cumulative flows into US equities since 2020, as Bank of America quote unquote says here, no sign of selling for US stocks, both by US uh doiciled and non- US doiciled. In other words, the world really isn't panicking yet.
Now, that doesn't necessarily say they will with certainty, but they certainly could. We're just not at that level at this point. And I think that's why Buffett's like, "Yeah, yeah, no, we're not there yet." Now another thing you could see is that oil is starting to discount the potential for a recession.
Oil usually falls in recessionary shocks uh just like it does uh over here or did rather in the dotcom bubble just like it did in the global financial crisis, the great financial crisis just like it did during COVID. This is very very normal to see a recessionary environment be sort of predisounted by the oil market.
Now that said, where do we actually sit when it comes to trade negotiations and what kind of hope should we have? Well, there is hope that maybe some form of a trade deal will be arrived with China, but so far, you know, China is kind of digging in a little bit here. As you can see, China's Ministry of Commerce says the US has recently reached out through relevant channels multiple times, expressing a desire to engage in talks with China over tariff issues.
However, any potential dialogues are going to come down to the US rectifying their erroneous unilateral tariff measures. Saying one thing while doing another or even attempting to use talks as a cover for coercion and blackmail will not work with China. In other words, Donald Trump says, "Hey, we're talking to China." China's like, "Yeah, you reached out to some of our trade reps, but let's be real.
We're not going to talk to you until you remove tariffs." And then Donald Trump also makes it clear that, hey, you know, tariffs on China might go down, but they're not going to go to zero. This still puts us a little bit in a of a standstill environment. Now, over the last few days here, about the last 48 hours, we have seen China super quietly start exempting some goods from their tariffs.
Probably because they are starting to feel the damage. Of course, both sides are going to get hurt here, right? like nobody's saying that either side is immune and there's some hope that China's you know securities are for Xiinping has reached out and basically you know publicly said hey what can China do to help with the fentanyl situation keep this in mind this gets a little complicated China manufactures a lot of the precursor chemicals or ingredients for making fentanyl but you know those ingredients themselves aren't illegal they just get bought by people who use those ingredients for illegal purposes.
It's kind of like imagine you manufactured I'm just going to use this as a random example, okay? Clorox and Clorox was the ingredient in a very very expensive illegal drug and you were a Clorox seller. It's like okay well like does Clorox get in trouble? Should Clorox shut down? Should you stop making Clorox?
Should we try to use something else? Who's going to pay for that transition? or should we focus on the criminals who are actually taking Clorox and doing bad things with it, right? Just as an example, right? Uh so, and I'm not by no means implying that Clorox is is used for what I mean theoretically there's chlorine that you know you could do some crazy things with that, but you could do that with pool supplies as well.
Again, this is just an example. So the point here is China's starting to kind of open little doors for negotiations which is positive and hopefully these resolve because it so far at least according to foreign affairs seems like the Trump administration has somewhat underestimated China's willingness to kind of be silent and stubborn.
I think a lot of people including the Trump administration per foreign affairs here suggest you know thought that China was going to roll a lot quicker on this tariff war and so far they're digging in because well as a lot of people say China's been preparing for this for 4 years or more since basically the last trade war which started about uh let's see 6 and 1/2 years ago.
So it makes sense. Now, China's got something else that's really interesting. It's sort of different from America is that the median survival rate of businesses in China is only 3.7 years for small to medium businesses. Whereas in America, it's over eight years. Now, that's really interesting because it kind of shows China's method is more like, look, we're going to do whatever we can to undercut manufacturing even if it destroys our own businesses.
We are going to grow at all costs. And unfortunately that creates a little bit more of a revolving door for businesses in China. But it expands China's ability to export and continue to reduce prices. There's no sort of moat, if you will. Prices just keep going down. Uh and unless you can keep innovating, you have the money to keep innovating.
Well, you're going to get out innovated by the next business that pops up. Now, of course, there are also concerns that, hey, you know, ports are going to start slowing down. Uh, I think there was a great video by F-Stoppers where they were talking about ordering lids, bottles, and boxes for their sauce or whatever that they order for China.
Uh, and it takes forever for them to get these products because they have to be manufactured and once they're manufactured, it takes another, you know, 6 to 12 weeks to get their shipments to show up. And now tariffs are actually starting to hit now, you know, over the next 10 days here. So, currently we still have inventory and stores and products.
you know, things are available, but soon we're going to run out of inventory that is untariffed for toys or furniture or whatever. And often a lot of people are like, "Oh, well, just pay the 10% cost." But the problem is, you know, 10 plus% tariff. The problem is this 10% tariff or whatever it is could represent as much as 60 to 80, sometimes even 100% of a business's profit margins.
And so if your business's profit margin goes, let's say, from 10% to zero essentially, well, it's a little bit of a poopy dupy. You might not actually want to be in business anymore. I thought some of or you just physically can't be in business anymore, which is unfortunate. It's worst case scenario.
Now, I thought some of the comments were really interesting on the F-Stopers piece. Uh, you know, here's an Australian who says, "Hey, you know, we're basically uh your former allies now." Here's a licensed custom broker talking about being involved in the supply chain for 38 years and there's a title wave coming and everybody is on the beach and can't see it.
Then he goes on to sort of pitch his own business. Uh then uh you know here's somebody else also from Australia suggesting it's not hard to despise Americans right now. Uh you know here's somebody who's talking about the 60% profit. I' I've seen the 60% argument a lot. I it it can be less. It can be more.
It depends on the business. Some businesses say we're just not profitable at all. Some businesses say, you know, uh, a 10% tariff on our revenue is really just on the sort of like the the not on the topline revenue. It's actually just 10% on the COGS side, right? So, if a business has a 10% profit margin all the way, so they sell stuff for $100 and they get $10 at the end.
Well, if they sell stuff for $100, it probably only cost them $50 to make it, right? So, 10% on that $50 might be $5. But there you go. That's 50% of the net all the way at the bottom. Anyway, quick examples that don't really matter. So, just again more for context. So, when we put all of this together, nobody really knows, but it seems like a lot of institutions are in agreement that if if tariffs continue to stay in this level of an uncertain range, we're probably looking at a recession in the second half.
Now I think it's actually a great opportunity and I've you know just been maintaining for for people who watch my uh you know YouTube channel or or otherwise a if you have cash you have options or at least cash flow from something that's yielding you uh you know uh some form of a yield whether you're into treasuries or the the house hack 5% plus the upside in the stock what you you already know about that read that at househack.com but uh what I really think is interesting is Buffett's bluntness here because he makes it clear that you know we are better off when the entire world prospers that's how he ends this discussion and I couldn't agree with him more that I actually think more trade and more capitalism that spreads throughout the world just makes everybody richer and I love his point of view where and you'll see it in just a moment where he says you know we don't need to be against 7 and a half billion people in the world where we're the 300 million going haha we won that's not a good way to make friends that's not a good way to promote humanity Anyway, let's listen to Buffett a little bit more.
That's that's what we did originally. I mean, we were good at producing tobacco and cotton uh uh 250 years ago and we and we traded it and uh uh we want a prosperous world uh with eight countries with nuclear weapons, including a few that are what I would call quite unstable. I do not think it's a great idea to try and design a world where a few countries say, "Haha, we've won." And uh uh other countries uh are envious.
So, so my my import certificate idea which went no place. Uh uh I think we've got extra copies probably not a great demand for the copies. Uh if anybody did and if you'd like and write the office I think we could we could probably send you a copy of it. But the main thing to do is not use trade should not be a weapon.
And the United States, the United States, we've won. I mean, we have become an incredibly important country starting from nothing. 250 years ago, there's nothing been anything like it. And a lot of that built on the backs of other countries because they have enabled our expansion from a manufacturing industry to one of a service-based industry which is really one that's substantially richer than a manufacturing based industry.
I think you know obviously per capita GDP is substantially higher in the United States in part because of the trade that we've been able to do with other countries who have enabled us to purchase you know cheap mugs or cheap products for our businesses or cheap advertising or cheap print you know what whatever it is uh cheap computers machinery you name it which is a good thing it it seems to make the entire world expand uh and the entire world richer so I've maintained from day one that I think tariffs or stupid idea and and I will maintain that view because I view what is from an economic lens the most logical for the world.
Uh and so I couldn't agree more with Warren Buffett here and uh you know I I'll continue to argue against tariffs but again you know it is what it is. There is a very large uh sort of MAGA make America great again base that believes that the best thing to do is sort of reindustrialize the United States.
And of course to some extent it makes sense to industrialize the United States where it's important whether it's you know certain types of critical defense uh infrastructure you know making bombs or weapons or munitions or whatever which which you know we have some of the best defense contractors in the world uh to to also ensuring that we have some access to manufacturing our own critical chips which you know even the Biden administration supported via the chips act.
Of course, Lutnik says Donald Trump is going to 10x or 20x that sort of investment. Great. Let's hopefully see that play out. But I'm a big fan of TSMC building some of these advanced trips in America because if China does invade Taiwan, well, we don't want to be left without the ability to manufacture critical uh chips that uh that could be components inside of the weapons that we use.
We don't want to lose that supply chain. But this idea that you know everything like iPhone should be made in America, it's probably not going to happen. Uh and I think that's exactly why companies like Apple have already announced that they're going to now move more manufacturing to India rather than China to sort of escape this sort of fentanyl war uh and just go where the cost is still cheap even with you know an addition of 10%.
there. And it's a big mistake in my view when you have 7 and a half billion people that uh don't like you very well and you got 300 million that are crowing in some way about how well they've done. And uh uh I don't think it's right and I don't think it's wise. Uh I do think that the more the more the more prosperous the rest of the world becomes.
It won't be at our expense. The more prosperous we'll become and with and the the safer we'll feel and your children will feel someday. Uh so that's I like how Buffett concludes that by circling it back to safety, right? And I completely agree. Uh this this relates to the democratic peace theory that waring nations uh uh well let me rephrase this that uh countries that trade are less likely to war countries that don't trade are more likely to war.
So I couldn't agree more with Warren Buffett here and and I'm grateful that he had the coonas to bring this up. Uh, and I'm sad to see that he'll be stepping down because I personally have a belief that when people retire from something that gave them purpose in lives, in their lives, they usually go downhill very, very rapidly.
So, um, I I mean, I hate to say it, but I think that by Buffett, if he fully steps down from Birkshshire, he may not be with us this time next year, which is terribly sad. uh and and I you know personally I wish that he wouldn't step down but we don't know what what his health situation is. So anyway uh he's a legend and so I appreciate him standing up against uh this tariffs are good idea because it's nonsense.
Anyway uh . Remember if you want to diversify away from some stock market risk consider investing in a house hack. You could get 5% as a yield plus upside in the stock. So that way hopefully when we IPO one day, knock on wood, the shares could be worth a whole lot more. That's my hope. Obviously there are risks with every investment.
So go check that out over at houseack.com. Read the perspectes, perspectuses, whatever. It's available to nonacredited investors as well. See you all soon and the next one. Thanks so much. Goodbye. .
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