MAX UNCERTAINTY | Time to flip

hey everyone me Kevin here I am back and

boy oh boy we got a buckle up for what's

coming up next week this is going to be

wild but before I go through the

schedule with you I want to show you

what some of the wall streeters are

talking about so let's get right into it

here we go Bank of America says hey this

is like a bubble dream the FED is

cutting oil is crashing China is

printing money this is perfect people

were going long gold as an inflation

head Ed they're going long tech and

everything else is a trade because we're

going straight to the Moon their bull

bear indicator by the way is midpoint I

was actually surprised it wasn't a

little bit more on the bullish side of

the scale because it feels like things

have been pretty dang bullish but hey

it's their indicator so I guess they can

determine how they want uh I've have

been a little more nervous about labor

but we are going to talk about what

happened with that savings number today

in a little bit more detail and I did

find it interesting that Bank of America

clients were actually adding more money

to the 10 and 2year treasury notes

rather than the very shortterm 4 to one

week which were started declining over

here uh and then very little there to

the 2030 year uh this by the way 2030

year is seen as a recession hedge uh and

since a lot of people don't think

there's going to be recession maybe

that's why there aren't a lot of inflows

in that uh but I did want to look in

here I wanted to see if they had August

uh in their bull bear scale they

actually did didn't they had Extreme

bullishness as February of

2018 January of 2020 and then extreme

bearishness as October of 22 uh and

October of 23 and they called those uh

buy bear points Ah that's funny that's

right around when I launched my fund but

anyway take a look at the CNN greed and

fear index if you look at the greed and

fear index we're almost solidly in the

uh well we're certainly solidly in the

greed category we're almost in the

extreme greed category Mark momentum

greed extreme greed on stock price

strength and bread in other words uh

more stocks going up than going down and

then the put call volume this one's the

scariest to me because this one can

sometimes signal shocks coming up

because usually after the put call

volume uh gets this low into that uh

sort of like under 65 is Level under

70ish level you usually end up having

this pretty large ramp up uh in put

buying and protection buying basically

and you might be able to line that up

with what's going on in markets but

what's most important is take a look at

where we sit right now we sit at about a

66 which we've only been lower than this

uh for this area once twice in about the

last year so we're getting pretty dang

bullish we people like nah I don't want

any puts this is leading some like the

marketeer I was reading them a little a

little earlier they're like you know

maybe it's a good time to pick up some

downside protection because downside

protection is something you get when you

don't need it and you don't even think

about wanting it because by the time you

need it it's too late interesting I'm

not the biggest fan of puts mostly

because I I think you really have to

play the timing on it well sometimes I

play it really well like for example I

bought a put on Tesla this morning s an

alert to everybody in the stocks and py

group and I was up 61% on that trade and

I'm like boom I'm running the register

now of course Tesla ended higher but

that's okay it was just a trade on the

roller coaster right that's fine I don't

have any other shorts or puts on any

kind of stocks uh so what we have over

here is uh volatility actually pretty

neutral right now though we did have a

little bit of a tick up in the vix and

some on Wall Street were saying that

little pick up there on the vix was like

a sign that the vix is getting ready to

wake up uh maybe but that's probably

because the calendar we have coming up

not necessarily a bad Omen I mean think

what's coming up next week we're going

to get the ADP employment report I'm

going to give you some of these numbers

and then we'll talk about what a little

more with what happened with that

savings rate today so obviously PC was

good we already talked about that on the

1 which is Tuesday we're going to get

the joltz numbers okay this is labor

related so it's going to be a big deal

everybody right now cares about Labor

including myself because if we can

actually start getting growth again in

jobs which would be remarkable but you

might actually stick a soft Landing even

with those downward revisions that we've

been getting in labor so you really you

want to start pricing in recession you

want to see jobs come in under a 100,000

you want to start pricing in soft

Landing you want to see jobs coming in

over

180,000 that's usually what I like to

see somewhere around 90 to 100 under

that once we start breaking that range

it's bad like you get sub 50 you're

probably going into recession uh so 90

to 100 is a good level to watch and a

good level to watch on the flip side in

my opinion is that like 180 level before

you start trending back up to 200 so

watch it I I think the dad is going to

tell us that honestly within the next 5

to six weeks here this is the time to

tell us you'll see why so mark your

calendar October 1st you get the jolts

report then you get 0p on October 2nd

which is Wednesday we're expecting

125,000 jobs it's pretty good and ADP is

usually the more bearish one and that's

actually a turn up the last estimate for

ad0 well actually the last result for

ADP was 999,000 now we're looking at 125

that would kind of suggest that like

July and August got slapped a little and

like something weird happened there and

now everything's kind of back and the

part's back it's like the power went out

for a second and everybody's like oh my

gosh it's the start of the end and then

the power came back on it's like no all

right it's not even the generator that's

just normal Power like we're good like

we're not even coming in for a landing

we're going keep flying keep flying the

plane okay what are we circling the

airport for so uh then uh we have the

actual jobs report which comes out 2

days after that Friday the 4th and the

current estimate is 146,000 so in order

for you to go like Mega bear here uh

keep in mind you get like ISM prices

paid here twice uh once on the first and

once on the third the first will be

manufacturing the third will be uh for

services so we'll get a little bit of a

read on inflation again which is good

since we had the S&P pmis that came in a

little warm last week and started

pushing Commodities up a bit so those

could affect bonds or inflation concerns

a little bit and gold watch those but

otherwise everyone's going to care about

Labor jolts ADP then the jobs report if

this jobs report comes in hot and knocks

it out of the

park yeah it's it's going to be kind of

hard to start arguing even with big

revisions it's going to be kind of hard

to start saying uh yep nope recessions

right around the corner because quite

frankly that it just even if you revised

it down by 30% it would still be really

good right if the estimate is

146,000 and let's say it comes in at

160,000 beat or or goes up to 160,000 so

14kb which seems relatively reasonable

that'd be within standard deviations

here uh so let me go down 30% just to

take 30% off and see uh I would be down

at time 70% 112 still in the positive

direction even after the revisions and

I'm actually going up not down right

because the last release was 142 so you

kind of be start creating a trend up and

see what I always like to do is I like

to invest in markets when there's Peak

uncertainty so I mean I wouldn't be

surprised for you to have red going into

the labor market reads next week and if

the labor market reads come in Weak

jolts ADP jobs markets just really going

to tank because everybody thinks the

labor market is going to be that sort of

canary in the cold mine cold mine for

recession I I don't really believe that

I actually think when the labor market

starts telling you you're heading

towards recession it's too late I think

what's more likely to lead to recession

is some kind of Market correction that

comes as a result of some form of World

War III Fe although so far the market

has not cared at all it's kind of like

the Market's almost like cheering on

Israel taking out like every freaking

hezb person they can come across because

the more and more that war expands the

more the market just keeps going up so I

don't actually think we're going to get

much too much scary news out of the jobs

reports because I mean let's be real

that's the last thing to roll really I

think what people should be paying way

more attention to are going to be

earnings that third quarter earnings set

orning start like 2 weeks after we get

this jobs report I don't even care about

the CPI report that comes out you know a

week and a half or whatever after the

jobs report I think that'll be fine just

like the pce report that we got this

morning or CPI last week I think what'll

really matter earnings and that's what I

most look forward to because those

earnings won't tell me about this

quarter who cares by this quarter I want

to know about Q4 what are companies

seeing going into Q4 I want to hear

commentary from Domino's on the 10th

Delta on the 10th I want to hear the

banks start reporting how are defaults

going I get GP JP Morgan Wells Fargo

Bank of New York melon I and fenel for

some construction numbers I get all of

those before the market open on October

11th you got Tesla's Robo taxi day on

the 10th which will probably be a by the

rumor sell the news uh but then you're

going into the 18th for earnings which

frankly a lot of people think earnings

are actually going to do really well

there are a lot of people that who are

upgrading what they think earnings are

going to be and what deliveries are

going to be for Tesla for this next

quarter so frankly there's kind of like

it's almost like a lot of people feel

like things are kind of like you know

slowly going on the up and up trajectory

which is nice and the downside risk jobs

but again we get a good jobs report here

fantastic now the worst case scenario is

you get a bad jobs report because if you

get a bad jobs report next week or just

bad jobs bad data across the board next

week then it's going to amplify how

important earnings are like let me

rephrase that if you get good jobs data

honestly do we really care that much

about earnings yes we do because the

earnings are going to be the leading

indicators but the stock market will go

in frothed up on the back of good labor

data so like it's not that bad uh then

of course you'll have election

uncertainty but honestly I feel like

we've already got so much election

uncertainty I mean look at uh you know

the betting markets for the presidency

you've got predicted uh kind of showing

kamla Harris at like a nine-point lead

you've got the New York Times saying the

latest polling puts both of the

candidates at razor thin earning or

razor thin margins in the Battleground

States uh poly Market puts comma at 51

Donald Trump at 49 you've got the

current estimates uh for Tesla

deliveries at about 460

to about

465 honestly not bad it's pretty decent

it's all going to come down to what

margins are going to be but frankly it

puts Tesla on track to get to about 1.8

million deliveries which is flat

year-over-year growth it's not

great but it's better than substantially

negative so you know was like all right

no problem so not bad uh then in terms

of really pricing in the market usually

usually markets look post election and

go cool uncertainty is gone time for the

markets to Moon I think that is such

mainstream knowledge at this point that

we've kind of already priced that in so

I think the way to kind of reconcile all

of this is sort of look at what what is

left like what can actually make the

market go down and doesn't need to go

down well I'll answer the second one

first no the market does not have to go

down uh but the first thing we have to

think of

is uh labor lags but freaks the market

out all you have to do is look at the

July labor report and you'll see how the

market freaked out I mean it it flushed

out the Black Swan of the you know

Japanese carry trade so and that was all

on a labor report so that actually makes

next week probably the most important

for Price action but frankly less

important for recession risks like the

way I look at recession risk is uh you

kind of go this way you go market crash

Black

Swan then you get lay uh well prices go

down well that's part of market crash

right then you get layoffs then you get

earnings down then and and unemployment

claims that go

up uh and then you get labor down and

then you have recession so if you think

about it in this pattern really absent a

Black Swamp

you don't really get the layoffs

ironically though a bad labor report

could be the Black Swan just like it was

in August so it's it's a little

complicated to understand but next week

is really important for what the market

reacts with and that could create a

cycle of uncertainty uh and be Amplified

by earnings so here are sort of the two

paths okay uh path one bad labor

week uh

amplifies any earnings misses people

take profits and fear into election okay

path two good labor week uh this

buffers any earnings Miss in other words

you could miss and uh would wouldn't be

that bad right uh people uh Buy dips on

misses and who cares on

Election that's kind of what I think we

got going on that actually makes next

week

potentially the most important week for

this

cycle so how do you play it well I mean

honestly I mean uh like I mean I think

one week puts going into it on Monday or

going to fade a Decay like crazy uh

probably Decay way way too much going

into Friday so you probably if you were

to get puts if puts you probably grab

like October 20s just to give you a

little bit more breathing room or just

go uh or you know 90 days out right uh

the other thing that you could do is uh

if you get a bad labor report you know

something you can hedge with you can

hedge with uh long treasuries because

because uh we should have low

inflationary readings next week like pce

maybe maybe right uh and uh labor crash

should dump yields especially with fed

speak uh which uh would amplify the

promise of fed

intervention think about that stock

market go poopy doopy uh next week

because of the labor market you're going

to get fed that's like you know we're

going to be really aggressive about the

labor market you know you'll get the

ghouls bees coming out going oh we need

to cut by hundreds of points okay good

great I mean that actually them reacting

increases your chances again of a soft

Landing so next week's

big one week one week is probably too

much if puts you probably go out October

20th or 90 days out and you just have to

be careful with the F Decay and then

obviously how much uh how long you want

to hold on to the these you could hedge

with treasuries which are a little less

volatile uh I I don't love the triple

leverag ones but there are plenty of

options for uh longer treasuries TLT is

an example of one uh but I also have

positions in TLT so I'm not trying to

just I I hate like I always like to

disclose like if I'm saying something

related to my book I don't want people

to think that's that's the point of

these videos uh it's just I always just

like to be transparent with my thoughts

uh really I don't think

that you know you need to necessarily

say oh I'm going to sell everything and

go all cash I don't I don't think that

at all uh but I think that starts

happening if you get path one because

you can hedge going into a bad week with

some of these

options uh you don't have to be all cash

but this fear into the election that

could be dip bable depending on earnings

see now this is interesting get bad

labor Outlook but earnings are like hey

we hit a bump and everything's coming

back on the up and up that's when you

buy that dip on earnings so that could

be an

entry interesting so that would be you

know I think Friday or week thereafter

you know before you really get the

earnings rolling out uh before earnings

or just wait for the earnings I guess

then you can determine it depends what

you want so it would be Friday or or

after

earnings okay uh unless of course

whatever selloff happens on on labor

keeps going for a while but these are

just some things to think of uh okay so

if if you don't this is sort of number

two if you don't

get uh

anything uh out of

Labor

then you're really just twiddling your

thumbs for Black

Swan the reason I say that is at least

based on the current data uh yes there

are certain parts that are doing very

very poorly in the economy restaurants

are doing very poorly temp job openings

are doing very T poorly you know new

hirings doing very poorly construction

job openings architectural buildings uh

real estate market still a little in the

poopy and in many different parts of the

the country uh with the exception of the

underbuilt uh we did just get the same

savings rate that got revised up uh this

was actually a note from Goldman saying

there's a chance the savings rate was

low

because of uh unmeasured interest income

and labor compensation received by

households okay uh and then at the same

time we also saw GDP go up to 3.1% so

savings rate got revised up almost 2%

which was wild and GDP went up today

look at this uh this accounts for the

national associ iation of Realtors a

decline in the nowcast of the personal

consumption expenditures growth was more

than offset by an increase in Real gross

domestic investment growth in other

words this section which had turned

negative for a while I guess turned

positive enough to uh boost this up as

well as net

exports okay so all of a sudden I guess

GDP is on fire again which is pretty

remarkable but you look at this in whole

uh it all comes down to the Labor Market

Bank of America talks about that too you

know they're under the impression that

we're going to have a 150k over here but

if the labor market holds with the

numbers we talked about I I don't know

that there that there's a reason to be

horribly bearish so uh I think that does

make me more bullish on sort of my bull

bare bull scale but I'm going to wait to

make any kind of prediction on how

bullish until we actually get our jobs

numbers uh next week jolt

uh the ADP report and the official uh

report because if ADP comes in super low

you know I use that as sort of my way of

like sussing out the the jobs report

from the BLS which always seems to get

revised down afterwards so you have to

kind of account for that already JP pal

said so himself uh but

overall I think this is a reasonable

path so the reasonable path is Watch

What Happens next week because you

should have Max uncertainty at some

point over the next 30 days let's write

that down Max

uncertainty over uh next 30 why you have

uh you know uh uh strikes inside of

Russia by Ukraine you have uh you know

these these strikes by um uh Israel and

uh an escalating Iranian threat you have

uh gold and oil sussing something out

maybe right is it an inflationary risk

is that why Gold's going up or is there

a larger risk going on you still have

problems with the lower end lower-end

consumer uh restaurants

construction temp jobs and

hiring uh all no

bueno obviously we also know that 50 to

90 BP uninverted is usually where the

recession begins we are close like next

week could make this happen next week

could make this flip I mean think about

this just so you know where we sit right

now on the two's 10 2 10 yield

curve okay 210 yield curve right now is

19 okay so if we're at

19 here's the way to look at this uh oh

let me get the twoe

quickly okay

bonds the 10 years is 3.75 nice round

number 3.55 s on the two right so the

way you could do this is you get bad

jobs data bad jobs data and this is how

quickly it'll happen bad jobs data 2year

drops 75 BP to

2.75 uh 10e drops I don't know call it

um 25 BP to

3.5 now you're 75 bips uninverted

boom recession cam it doesn't even have

to be that wide like you could literally

go down to 3.25 on the 10 year or you

could go down to three on the two and

3.5 on the 10 and then your 50 basis

points inverted boom recession Camp it

could literally happen next

week uh obviously combined with uh

election

uncertainty do I think that earnings

could be the Catalyst that pulls this

off less

likely mostly

because you know it that's idiosyncratic

I mean you did see that with super micro

computer where super micro goes down and

drags the whole Market down

but you know to get sort of a systemic

movement I feel like labor would be what

does it so so that's my take that's my

take uh I want just give a thorough

update here on on sort of everything

that's on my mind and what I'm

watching uh and uh this this labor

report will be the labor report based on

September mind you so we actually get

some September insights here uh the next

point where I think you might really

have more labor uncertainties probably

be January those would be sort of post

election post holidays layoffs anyway

there you have it thanks so much for

watching folks and we'll see you in the

next one goodbye and good luck out there

can not advertise these things that you

told us here I feel like nobody else

knows about this we'll we'll try a

little advertising and see how it goes

congratulations man you have done so

much people love you people look up to

you Kevin P there financial analyst and

YouTuber meet Kevin always great to get

your

take even though I'm a licensed

financial adviser licensed real estate

broker and becoming a stock broker this

video is not personalized advice for you

it is not tax legal or otherwise

personalized advice tailored to you this

video provides generalized perspective

information and commentary any third

party content I show shall not be deemed

endorsed by me this video is not and

shall never be deemed reasonably

sufficient information for the purposes

of evaluating a security or investment

decision any links or promoted products

are either paid affiliations or products

or Services we may benefit from I also

personally operate an actively managed

ETF I may personally hold or otherwise

hold long or short positions in various

Securities potentially including those

mentioned in this video however I have

no relationship to any issuer other than

house act nor am I presently acting as a

market maker make sure if you're

considering investing in house Haack to

always read the PPM at house.com