worse than liberation day...

Well, it looks like the government

shutdown is upon us and we might not get

a lot of different data from the Bureau

of Labor Statistics, which is really

critical this week. Yesterday, we heard

the BLS tell us that they will stop

reporting any government data in any

statistical work if the government shuts

down. The government is now less than 24

hours away from a shutdown. And this is

really unfortunate because this week we

do have some catalysts which we were

hoping would be bullish catalysts. As

you can see uh on screen here you've got

job openings that came in this morning

which we'll talk about in just a moment

because Nick T has some charts for us on

these. We can also see that uh the ADP

private survey which is expected to come

out tomorrow set up a survey of about 50

to 51k 51 on the Doomberg and 40 uh

sorry 50 over here. And then we can see

the initial uh claims data and the

non-farm payrolls data. These are the

ones that we got to pay attention to

because both of these could end up

getting halted if the US government

shuts down. Both of them. Just minutes

ago, the Bureau of Labor Statistics came

out and reiterated that they will not

release unemployment claims data on

Thursday uh if the government shuts

down. It is likely that they also will

not release payrolls data because that's

what they said yesterday. Yesterday they

said we won't be releasing payrolls

data. Today they're saying we're not

going to release unemployment claims

data. So it sounds like if the

government shuts down we're not going to

get anything. Now yesterday I'm going to

save you the 20 minutes from actually

watching it. But yesterday we had Jay

Vance flanked by Vbot uh and Thoon and

Johnson uh come out and basically say

we're heading towards a shutdown. Uh

that's because JD Vance says that

Democrats want medical funding for

illegal immigrants.

This is not what Democrats are looking

for, but this is what Republicans are

using to brand the Democrats hold up to

make it look unpopular for Democrats to

cause the shutdown, which of course

would just lead to Donald Trump being

able to fire as many people as he

possibly can, which is exactly what

Donald Trump wants to do. So my

anticipation is we are almost certainly

going into a shutdown because it gives

Donald Trump what he wants. We already

know this. We saw the Washington Post

article and we also see the Bloomberg

headline this morning. Trump threatens a

lot of firings as deadlines loom. Yes,

we know Trump wants to do this because

he could blame Democrats for it. Look,

remember, Democrats are looking for

extensions of the ACA, the Obamacare

credits, especially now that we're at

medical enrollment time. Republicans are

saying, "Let's deal with that later."

But the problem is at the beginning of

enrollment time is when you're going to

start seeing price changes and

enrollment time starts roughly now for

insuranceances where they start building

out their pricing. Most enrollments

really done in November. So if we kick

the can down the road until after the

holidays, it'll be too late and people

lock in higher health care costs for the

next year through the Affordable Care

Act. That said, you've also got

Democrats who are looking for funding to

be returned to Medicaid. Now, Medicaid

funding, somewhere around a trillion

dollars of Medicaid funding was cut in

the big beautiful bill. That's because,

you know, the big beautiful bill is

estimated at like a $3.3 trillion cost.

It would have been like $4.3 trillion if

they didn't cut Medicaid. So, Medicaid

really helped reduce the appearance of

the cost of the big beautiful bill. So,

of course, you know, Republicans are

like, "Oh, we don't want that back in

cuz that's just going to make our tax

cuts look more expensive." Okay, so

that's where the stand still is right

now. Republicans are like, "Just give us

a clean resolution. We'll debate all

these other things later." Well, the

problem is we know that Republicans

don't need to debate anything with

Democrats. So, Democrats take the

opportunity that they can get, which is

a government shutdown negotiation where

you need 60 votes to keep the government

funded basically, and they use that as

an opportunity to try to leverage and

get what they want and create some at

least some sign of backbone for

midterms. That's also what this is about

is standing up for what each side wants

to posture for midterms. Problem is, I

really think Donald Trump wants a

shutdown. Now, what is that good for and

what is it not good for? Well, that's

exactly what we're going to break down.

Uh because there's some data, frankly,

on this. Uh just worth knowing as we go

into this. Uh if the government shuts

down, we end up hiding unemployment

claims data. We hide jobs data that

comes out on Friday. So, we're really

left with just the ADP numbers for

tomorrow. It lets VA fire people or

vote, I guess, is how you say his name.

Fire people, which is what he said.

That's what he outlined from project

2025. That's what he wants. It prevents

spending on Obamacare and Medicaid,

which is what Trump wants. It basically

gives Trump exactly what he wants,

smaller government. So, a shutdown is

kind of perfect for him. Now, it comes

at a time where we have some economic

weakness. I mean, look, the Chicago

Business Barometer dipped in September,

but it's not just that it dipped in

September, and this is seen even though

it's a survey of the Chicago area. The

the company says they're a leading

national indicator, that's how they

pitch their own survey. So, it's

probably a little bit biased in that

sense, but keep in mind what they say

here. They say that uh the largest

proportion of respondents is now

reporting the smallest level of

employments of employment growth since

the immediate aftermath of the 2008

financial crisis. And usually after a

financial crisis, that's when you have

the worst job numbers. And they're

basically saying we have the worst job

numbers right now in this leading

indicator per them since the financial

crisis.

uh and that we are seeing a decline

driven by quote another sharp slowdown

in new orders alongside declines in

supplier deliveries and employment. So

basically you're seeing parts of the

economy that are sending these warning

signs of hey like things are slowing

down. Trump doesn't want anything to

look like things are slowing down. So

it's beneficial to him to have a delay

of some of these unemployment surveys.

Look at under and understand how these

government shutdowns work. Congress gets

partially closed. Federal courts say

open. The housing department is

partially closed. The Treasury

Department is partially closed. The IRS

is mostly closed during a government

shutdown. Keep in mind like you have

personal tax extensions due October

15th. Like this is this is tax season.

You just had corporations that had

quarterly earnings due on September

15th. You had uh uh corporate uh reports

due September 15th for a lot of

companies. A lot of uh reporting

companies have uh six-month reporting

requirements that are due today,

although that's more SEC for September

30th. So, you got a lot going on. The

Federal Reserve stays open. Small

businesses uh Small Business

Administration partially closed. Museums

and part parks partially closed. So, you

know, government shutdown is going to

hit some things. Now, what like how does

the market usually respond? Well,

Doomberg suggests that usually in a

government shutdown, you get mixed

effects. Goldman says this as well. One

thing that seems to be a consensus is

that yields tend to go down. So take a

look at this chart right here. This is

the 10-year Treasury yield change from

day before shutdown. So this is the last

day of open. And you can see that yields

tend and they're volatile, but yields

tend to trend down after a government

shutdown. Even when you reopen, yields

tend to just move a little bit lower.

Now the rationale for that is associated

with fear. People are fearful uh and so

they move to potentially the safety of

bonds. This comes at the same time that

you have fears that the labor market is

softening a lot more than expected. Now

in fairness this morning we got Jolts

data that was pretty good. Well at least

decently good. The Jolts data was along

expectations maybe even slightly better

than expectations. But Nick T gave us a

warning. He said, "Look at the ratio of

job openings to unemployed workers." And

when you look at this ratio, you

actually find that we're dropping below

the one level on the 3-month moving

average. The Fed is targeting one. We

want the labor market to be such that if

we have 7 million unemployed people, we

have 7 million job openings. That's a

1:1 ratio. The problem is we now sit at

977

uh 978

basically 978. And we can calculate that

by using the household survey of uh

7,384,000

unemployed individuals in the household

survey, which is literally lifted from

this chart right here. You can get all

this data, by the way, that's written

down in the Meet Kevin app. It's

literally free. Download the Me Kevin

app, press data, and you can see all of

this. Okay? Uh and then you if when you

divide these two, you get a ratio that's

below one now. So that's how many people

are unemployed by job openings. So the

job openings number is slowing. That

might be why markets are pricing in a

96.7%

chance of a rate cut in October. October

29th is when we have our next rate cut.

Now what happens if the Fed stays closed

until then or or rather uh the the

government? Well, we might not actually

get our jobs data. We might not give the

Federal Reserve the ammunition they need

to give us another rate cut. Now look at

the S&P 500. This is why I always say

generally, and I've been saying this for

days, usually government shutdowns are

buy the dip opportunity, unless of

course you have some kind of shocker in

the labor market this time. So in the

S&P 500, typically once the government

reopens, you go straight up. So when the

government shuts down, you had a low and

you go straight up. So almost always a

buy the dip opportunity uh on on the you

know um

your your your S&P 500 over here and you

can sort of look at these different

levels here. You got 2018 20 uh January

over here you're up you're up you're up.

There have been cases where you're down

though. You can see this sort of dotted

line over actually yeah over here 1990.

So not always but more often than not

you trend up. Same with the 10-year

Treasury yield except in reverse. So

bonds gain in value but their yields

trend down almost all of the lines here

below zero and then the US dollar does

tend to slip a bit uh afterwards. So

this is somewhat interesting data. Uh

now Donald Trump believes this morning

along with Chuck Schumer both of them

actually Donald Trump was last night,

Chuck Schumer was this morning. Chuck

Schumer this morning says we are heading

towards the shutdown. Donald Trump said

the same thing yesterday in an interview

with Politico, which I could show you in

just a moment. But take a look at uh

this.

Government compensation of employees

represents about 1.2% of GDP. So it's

not like the largest factor as part of

GDP. And discretionary spending, which

gets paused in a government shutdown,

only represents about 25% of the

government spending. So, it's not like

it's the, you know, the employees are

the core driver of the economy at the

Fed, uh, federal government, or that,

you know, government discretionary

spending is a core driver here. That's

not the case at all. That's probably why

they're usually a government shutdown.

Last time in 2013 over here, we delayed

Bureau of Labor Statistics data by 18

days. The risk now is if we delay and we

end up having a long government shutdown

like we did over here, we actually might

not give the Federal Reserve the

unemployment data that they need for the

October 29th deadline.

October 29th is when the Fed makes their

rate decision. And the next one, we

don't have a Fed meeting at all in

November. So the next meeting then isn't

until December 10th where we're pricing

in a combined cumulative chance of uh or

or total of 1.73 cuts. So, we're not

fully pricing in those two rate cuts

this year. This unemployment report was

really supposed to be the data that

tells us, are we going to get a soft

landing or not? Employment in the DC

area has fallen this year, of course,

cuz Trump wants to fire a lot of people.

Most furled workers do not get counted

in unemployment numbers. So, just

because these workers are going to get

furled, you're generally not going to

see them show up in the unemployment

reports. They're not filing for

unemployment. They're just doing their

job without getting paid. So, usually

these shutdowns just not a big deal. The

only issue is delaying our data. That's

the pisser. We don't want to delay our

data. Uh and and that is unfortunately

exactly what might happen this time. Uh

as again, as you can see here, the big

ones being claims. I personally don't

care about the weekly data. I think it's

a very volatile and noisy number and it

doesn't really matter. Uh and then of

course non-farm payrolls. Those are

going to be the ones that get delayed.

Now, I'm a little bearish, ad bearish

the last two days. The last two days in

the Me Kevin Alpha report, I've been

saying, "Hey, like I think Q's are going

to go down. I don't think you want to

like bet on some skyrocketing cues

here." Uh because frankly, I think

people aren't pricing in the risk that

we're going to shut down. And I think

Donald Trump wants to shut down. Uh and

so what I've been saying in the alpha

report, I mean, it happened. I mean,

look at the cues yesterday, you know. Uh

let's get rid of this. Look at the Q's

yesterday. The Q's ran up uh and that

was only for like the first 30 minutes

and then what happened? The Q's closed

lower and bled for the rest of the day

and now we're right on the cues again.

So, you know, that's not because I'm

bearish the economy right now. It's

because I recognize that usually leading

into a government shutdown and leading

into data, you get weakness. This is the

kind of technical, you know, analysis

that we do regularly. We do this on a

daily basis. I also set up, by the way,

trades. If you want to join, you can

join at mekevin.com. We've got coupon

code daddy's backup. Uh, but u remember

what you get uh if you do this. Oh,

that's funny how that does that. Uh, but

anyway, remember what you get if you

join. You get um all of the uh trade

alerts, you get uh all the courses, all

the new lectures coming out, all the

live streams, all the alpha reports. But

anyway, uh you know, my take is that

over the next, you know, few weeks, the

best thing that could happen is we end

up getting uh how should I put it? Over

the next few weeks, what we want to get

are the best possible job numbers to

finally confirm a rounding out of the

labor market. That would be the best

case scenario. Donald Trump's layoffs I

actually don't think are that huge

of a deal because this is just Donald

Trump's MMO anyway. Donald Trump

threatens a lot of fires firings. Yeah,

but people don't look at government

firings as really like weakness for the

government anyway. The White House last

week directed agencies to draw plans for

mass firings. Uh this will be the 14th

government shutdown. This bill doesn't

have an iota of Democratic input, says

Schumer yesterday. I watched the full

video yesterday of what Republicans are

saying or what Democrats are saying.

Like there will be a path to them

getting the government reopened. I'm not

worried about that. Uh but it is

extremely likely in my opinion we will

shut down before we get to that that

stage and that's okay. I think that's

why Khi is showing an 82% chance of a

government shutdown. I also think, you

know, this is correct when Politico says

that, you know, Donald Trump thinks,

"I'm not worried about people thinking

that it's Republicans's fault that

there's a shutdown." Exactly. Uh we have

Donald Trump who's blaming Democrats and

it gives them an opportunity to fire

people like generals. See, Trump says

he'll fire generals on the spot if he

dislikes them.

That's the situation we're in right now.

So what does that mean broadly? Well, it

means gold up like qu like frankly. Uh

and the reason gold's going up on the

shutdown fears is because of a safety

asset. This happens every single time

you get uncertainty with a lack of data

or uncertainty in the stock market.

Yields down on bonds. So bonds up and

gold up. But usually it's a buy the dip

opportunity for the stock market almost

always. So uh we'll see. But uh again,

the only thing that could really screw

it up right now would be bad jobs. Adam,

we need to round this out. Oh, that's

interesting. Tesla's now down 1.4%.

Yeah, I was bearish on Tesla as well the

last two days. So, I called the 414

bounce and then yesterday morning in the

alpha report, Tesla was trading at like

447. And I'm like, guys, look, we're in

no man's land. Okay, the N Kevin Alpha

report, you could fact check me on this

yesterday. It's in the report yesterday.

We talked about it today as well.

Tesla's in no man's land.

It's probably trending back to 414. And

I think a lot of the enthusiasm around

uh the deliveries coming up next week

are probably a lot of that enthusiasm

probably built in uh which which then

just creates downside risk you know

along with the broader economy right now

which is on a downtrend. So again 80%

chance of a shutdown. It's basically a

foregone conclusion right now, which

unfortunately means we're going to get

delays with our government data, which

sucks because that's what we want to

confirm with soft land. Again, we want

growth in those labor numbers. Again, we

talked about this yesterday that most

institutions actually are forecasting uh

growth in the labor numbers. I mean,

look at this. Most of the estimates,

which haven't really changed, I'll

verify. Most of the estimates are that

we are going to soft land and get really

great data.

So best case scenario, the government

doesn't shut down. We get really bullish

job numbers and then what happens? S&P

610, man. Actually, potentially towards

630 by end of the year. I got to stop

giving out price targets that I usually

only do in the me Kevin Alpha report.

Um, okay. So, non-farm payrolls. Let me

get the latest estimate here because it

changes all the time. So if I go to

change of non-form payrolls, the current

estimate is 51,000. I just want to see

if it changed at all in the last 24.

So it looks like yesterday we had 58

qualified economists. Now we have 65.

Nobody on the downside, dude.

Wow. It's it's one guy. one guy at -20,

but the chart's basically not changed

and we had seven more estimates. I can't

even see where the delta is cuz it looks

so similar. Uh, it moved up. Actually,

the average estimate moved up.

It's at 56.4

and you've got pretty much everybody is

above 30,000.

Uh, so

that's wild.

That's wild. I'm When I'm talking about

the Q's, I'm talking about the triple

Q's.

Kevin, when would we get the jobs report

if the government shuts down and we

don't get it this Friday? Well, uh, in

2013, we got it when the government

reopened.

So, when they all showed back up to

work. So, that sucks. You know, that's

that's a long ways out.

Uh because this shutdown,

this is an opportunity for Democrats to

really try to f with Trump. But

ironically, Trump wants this because

then he's going to get to go around and

fire a ton of people. So,

I love buying the dip on government

shutdowns, and I probably will. What

I'll probably do is I'll buy the dip on

my 10-year stocks because remember I

have a list of 10 stocks to buy for the

next 10 years. Those are not stocks that

I think are like guaranteed going to do

great in the next 6 months. They're

stocks that are just slowly building out

like portfolios in that I'm not going to

sell between now and the next 10 years.

I'm just going to hodddle them and I'm

going to keep building them. In fact, I

kind of want them to go down because I

want to build a position in them. So I

could buy I could increase my Q for a

lower P, right? Increase my quantity for

a lower price.

Um, but there are also stocks that might

buy that I think could be like swing

trades u over the next six months. Like

this morning we did an analysis on a

stock that

probably once we get to the meat of the

government shutdown might have a low

buying opportunity. Uh I don't I even

said this morning like I don't think

I'll buy them now because I want to wait

for the max pain of the shutdown. Like

that shock. It's like oh my gosh,

Friday's coming. It's 5:30 a.m. and we

didn't get the jobs report. Dude,

markets are going to freak on that. It's

going to be such a buy the dip

opportunity for your long-term place in

my opinion. Uh, of course, you know, if

the jobs data comes in bad, we go into a

labor market recession. You also want to

have stocks that are going to do well in

a recession. And I don't think all

stocks will do well in a recession.

It's uh you know you're going to be

looking at

sure interest rate sensitive but you

also have to consider and this is

something to think about people forget

this when it comes to debt

people will leverage up to the tits we

call it you know you leverage up and

let's say you buy a house today for a

million bucks okay and you put 20% down

or or 10% % down cuz you're Lisa Cook

and you say you're going to live there

and then you leverage up at, you know, 6

and a half% on a 30-year mortgage. Okay,

everybody's idea is, "Oh, I'll just

refinance when rates come down. Then

hits the fan, you go into a

recession." Okay, then you're in a

recession. What appraiser is going to

let you refinance?

That's the problem, right? So

rates go to zero and you're like, "Oh, I

could refinance and get a lower rate."

But then all the appraisals start coming

in low because the appraisers are

worried. It's not just that prices can

go down on real estate. I actually think

lower rates will drive prices higher,

but it's that you create fear in

appraisal land. Appraisers are worried

about getting sued because if we're in a

recession, oh my gosh, I better sharpen

my pencil on all my appraisals.

appraisals are going to come in lower

because now what? Well, if I if I write

this too high, I could lose my license.

If the banks lose money and I get sued.

So, everybody sharpens their pencils. It

becomes harder to refinance. Worst case

scenario, home prices fall, which, you

know, could happen.

And then you're saddled with debt on a

fixed rate mortgage at 6 12%.

And rates are at zero and you can't

refinance and you can't sell. That's the

downside of being levered to the tits.

In other words, you're effed.

So, and there are people today buying

real estate uh at negative cash flows

making the bet that oh, it's all going

to be okay cuz rates are going to come

down and then, you know, home prices are

going to go up and I'll be able to

refinance. Yeah. Well, what if you can't

refinance?

And so, you know, that's why like maybe

just call me like a doom boomer. Okay,

call me here. Call me Bowser. That's

what you could call me. Call me Bowser.

You got a satur. Uh,

and uh

I I just think people forget that, you

know, just because rates go down, not

everybody's going to be able to turn

around and go refinance. And a lot of

people will be able to like house we

have no bank debt very very little

corporate uh you know outstanding

corporate bonds very few relative to the

assets we have uh and they're

convertible to equity so as long as we

perform well you know people get stock

so it's not a cash like there's no cash

outlay to pay those bonds um which is we

think win-win but the point of that is

you know companies with no debt will be

fine but if people are lever to the tits

uh and then they think they could

refinance but they can't.

That's when you hit the poopy oopies.

Now, the reason I bring that up is just

to keep on your radar. Just be careful

with the your assumptions around when

things go bad and and consider that when

you're looking at stocks to buy. Uh so

anyway, that's that's that's all the

reason I wanted to bring that up. So,

somebody here says home prices already

falling in Florida or Texas. Yeah,

Florida, Texas have this uniqueness to

them in that they they do overbuild.

Uh so they are much more cyclally

sensitive. However, sometimes they've

been seen as a leading indicator as

well. Uh so you know, in the 2008

financial crisis, Texans of Florida got

hit the worst too. So did Vegas.

Uh

so if you put more money down, you're

less at risk of being unable to

refinance. Yeah, exactly. So, you know,

if you put down like in the depths of

the financial crisis, what did real

estate single family homes go down? Like

42%. That's not going to happen again.

Knock on wood. But the reason I don't

think that's going to happen again is

because our loans are so much more

stable today. We're not doing negam

loans. We're doing ability to repay

loans. But the thing is those standards

are starting to loosen. They're just now

starting to loosen. I actually think if

we're going to have a housing market

bubble, it'll be fueled by the next

recession. So, like I don't think this

will be a real estate recession. I think

it'll be a labor recession. Uh which

will affect some tenants obviously, but

it'll mostly be a labor recession,

not a real estate bubble. We're not in a

real estate bubble at all. Like the

underlying fundamentals are very, very

strong of lending. Uh however, the next

recession will lead to shittier loans.

Donald Trump just gutted 90% of the

Consumer Financial and Protection

Bureau. That was the very entity

responsible for enforcing the DoddFrank

protections that forced ability to repay

qualified mortgages. They just gutted

it, dude. 90% fired. Well, that doesn't

turn all of the loans that were made

over the last 15 years into a bubble

asset. What it does is it sews the seed

for the next bubble.

Very interesting.

Very, very interesting though.

Yeah, Austin's a great example again

because you overbuild.

That's actually why I love the dumbass

I'm not calling liberals dumbass here.

I'm saying the dumbass liberal policies

of blue states because they suck so

badly at building. I swear to you, the

worst place to get permits to build

is in any libtard city, this is not to

be offensive to liberals, okay? I I love

my liberal friends. I love my MAGA

friends. I love them all. But I'm

telling you that the the these blue

state cities like the LA's, the Santa

Monas, the San Francisco, the San Diego,

worst places to build, best damn place

to buy. Nah, I I don't want to buy in

Santa Monica because of the rent

controls, but uh these are great places

to buy cuz they suck so much at

building. They just squeeze prices up.

Uh uh. So, you know, that's that's just

my take. You know, that doesn't mean I'm

right. Somebody says I'm looking pale.

What? Oh, my filth. What happened to my

Oh, okay. Hold on. Let's Let's add some

Let's Let's fix that for you.

How much Trump do we want, folks? How

much Trump should I put in?

We're going to make real estate great

again. Nobody knows real estate better

than your boy me Kevin. In fact, if you

want the greatest bond ever, some might

say the greatest investment ever. Don't

sue me, bro, though. You know, the

legacy media, they'll they'll come right

after you, okay? The fake news. They'll

tell you there's risk to every

investment.

They'll tell you to read the financials,

uh, to read the private placement

memorandum at househack.com because this

is not a solicitation, but some would

say a 5% yield on an annual basis paid

monthly with all the upside in the stock

at a valuation that's so low. Some would

say the lowest valuation ever, almost

real estate only,

there's no pricing of the artificial

intelligence they've got. Some would say

it's just a great deal. You could that

houseack.com.

All right, I'm going to remove some of

that Trump orange now. Uh,

there we go. Okay, back to normal. All

right, cool. There you have it. And use

your coupon code daddy's back at me.com.

>> Coupon linked below.

Coupon code expiring soon. I think the

bigger question is like if the

government shuts down and the coupon

code expires on jobs day, does the

government shutdown affect the

expiration of the coupon? I don't think

it should. I think the coupon needs to

expire because we already gave an

extension to the people who are begging

me to extend it in emails 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 Pra there, financial analyst and

YouTuber. Meet Kevin. Always great to

get your take.