Worst Jobs Report in 26 Years | Trump Job's Report.

Well, take a look at the chart and guess

where the payroll revisions came out.

Obviously, the payroll revisions came

out right here.

911,000 jobs and unsurprisingly risk

assets trading down a bit. But

surprisingly,

interest rates on bonds are moving up.

Now, that's what we really got to talk

about because tomorrow we have some big

catalysts starting with producer price

index inflationary reads and then

following that we'll have the CPI

inflation reads. Usually we get those in

reverse order. Uh but tomorrow uh

Wednesday at 5:30 in the morning we'll

have our producer price index numbers.

Uh and these can actually accelerate the

increase of bond yields which right now

are at the lowest level they've been at

all year. But risk moving up even higher

which will be a little bit of a

short-term negative to uh some of those

real estate related uh stocks could be a

buying opportunity. But take a look at

this producer price index inflation

month over month tomorrow is expected to

be.3 and the core read is also expected

to be.3 and.3 for X food energy X food

energy trade. If these numbers come in,

which I think they're more likely to

come in at a four handle, so point4,

than they are to come in at a two

handle. If they come in at that four

handle, we probably are giving credence

the Fed going, "Look, 25 basis points.

That's it. We'll go meeting by meeting

after that." It kind of puts the market

into a bit of a stasis environment where

the numbers aren't such that we could be

so excited and rally that markets are

going to the moon, but they're not so

bad that, you know, we're expecting

massive rapid rate cuts. And that's

basically what we got out of the QC dub

numbers. As you can see here, we ended

up getting just 847,000

jobs created in the 12 months ending in

March. that reduces the monthly job

creation rate to just 70,583.

And usually you start getting

recessionary concerns at under 50,000.

And so I think what we have is a bond

market that's reacting to numbers that

are bad, but they're not recessionarily

bad. They're not bad enough to get the

Fed to say, you know what, we need many

multiple cuts. And unfortunately PPI in

my opinion more likely to come in

slightly higher than slightly low

tomorrow probably just adds fuel to that

fire. So it's possible that in the short

term over the next few days we could end

up seeing this 10-year yield just bounce

up a bit. Uh now again we're at the

lowest level we've been in all year with

the exception of this very brief moment

right on liberation day when the 10-year

dropped a smidge below 4%. But it

wouldn't be surprising to see this move

back up to about 415, maybe even 420 as

we get that PPI CPI data. Now, best case

scenario for markets tomorrow and uh

Thursday when we get our CPI numbers,

which are also expected to be.3,

year-over-year 2.9, year-over-year core,

3.1 on CPI, year-over-year PPI, uh 3.3

tomorrow, and 3.5 on the core. When you

get these numbers tomorrow,

best case scenario is that all those

inflation numbers come in at expectation

or slightly low. We want to see that

fire cooling underneath the hood. Now,

understand what I mean when I say the

fire cooling underneath the hood.

doesn't mean that, you know, there's no

inflation from tariffs and it doesn't

mean that, you know, we're at a place

of, oh, uh, there's there's like this

mega inflation and we're going to be in

a stagflationary environment, right? We

we want to stay away from any of that.

What really inflation cooling under the

hood means is something like this. Think

about the trend of inflation. This is

COVID inflation and then you come Oh,

there we go. Let's try that again.

Here's COVID inflation and then you come

down and then down and then you're

getting the tariff inflation, right? Oh,

there we go. I guess it doesn't show

until I let go, which is interesting.

So, what you're kind of getting right

now is uh iPad's being a little funky

this morning. There we go. What you're

getting right now is that you're getting

that little tick up there on the end.

And that's really important because it

shows you that your initial trend uh of

inflation is moving in the wrong

direction. It's a sign that we are

seeing under the hood inflation that's

rising on a consumer good pace at a tune

of about 5.6% annualized. That's a lot.

We're also seeing some of those uh you

know core non-housing services start

reacelerating which means there's

potentially a spillover from goods

inflation into services inflation and

that's how you get broad-based inflation

that's bad and unfortunately that's just

what the tariffs are bringing to us at

this time. So the tariffs are bringing

us uh rather than a continuation of a

downtrend of inflation, the tariffs are

giving us uh a a reaceleration.

Now Jerome Powell and the Federal

Reserve are broadly convinced that these

lines uh we'll pick a different color

here that these lines are going to be

broadly transitory over time. So that

you know on the left over here we had co

inflation and on the right we have a

bump from tariffs. Both of them, I think

they're arguing and from what we've seen

Powell say, uh, are going to be branded

as transitory in nature.

And what we're finding with Powell

bringing back flexible inflation

targeting or FIT, which is a slight

deviation from Fate, which was flexible

average inflation targeting by going to

FIT. to flexible average inflation

targeting. Powell's basically saying,

"Hey, for this period of time right

here, we just want to go and recognize

that tariffs are going to be a one-time

but overtime inflationary impact. If we

look through that like textbooks tell us

to do, then we could still reduce rates.

But the data today was not bad enough.

Even though it was the worst in 26

years, negative 911 was not bad enough

to actually motivate us uh to see any

kind of big drop in yields, assuming

that markets are going to get anything

more than a 25 basis point cut. That's

probably because we literally came in

right at the two standard deviation

level. Two standard deviations would

have been 990. We came in at 991, which

that only had a 5% chance of happening

statistically.

We got it. It's bad, but I think markets

see this as like a clearing event. It's

like, all right, we were all expecting

bad news. Best set up 800K, and maybe

because it's a market clearing event,

even though the numbers are so bad, the

bond market's kind of like, all right,

bro, priced in. And that's why we're

getting a little bit of a tick up here.

We've seen almost no movement in the

odds of a 50 basis point cut. We started

the day at about an 8% chance of a 50

basis point cut. We're at about a 10%

chance right now. it that's

indistinguishable from zero movement. So

we're really it's not bad enough data uh

to motivate big cuts and we do have a

risk that CPI and PPI over the next two

days are going to come in hot. Now best

case scenario and that's my bias. I I

lean towards getting a point4 rather

than a.3. We'll be covering them live

tomorrow at 5:30. Make sure you're part

of the Meet Kevin membership over at

meetke.com.

You pay once you get lifetime access.

Remember, you could write it off as

well. At least that's what a lot of CPAs

say. Uh, and you'll get our top 10

stocks to buy over the next 10 years.

Not personalized financial advice, but

there's stocks that I'm buying and not

selling for the next 10 years at least.

So, take a look, you know, again here at

this iPad. The the key here is uh if we

get a lower read, that would be clutch.

So, if we end up getting a read like a

0.2 two on PPI or CPI tomorrow. That's

going to be a real bullish catalyst

because that's where you can actually

get the stock market to go up and yields

to come down. But other than that, we

seem a little stuck in place right now.

The market's in this stasis of hey,

yeah, we're we're waiting for data.

We're, you know, bouncing on 577 on the

cues. We're rejecting the 580s, the

lower 580s, which are our all-time high

levels, 581 and 583. Uh, and we're just

kind of in a decent spot. Like prices

are relatively near all-time highs.

Yields are slowly trending down. Data

just isn't strong enough in any

direction to say, "Oh my gosh, yeah,

this is a recession," or, "Oh my gosh,

this is stagflation." It's pretty

benign. Now, what that means is time.

And that's actually something really

important to know if you're a trader or

you're investing in stocks.

When everything takes longer to happen

than you expect,

options become really risky because

options

do really well when what you expect to

happen happens quickly. Shares don't

have that pain. And so using shares to

make your investment decisions versus

options in this sort of market where

we're kind of like in this slog, but

it's like a slow motion movement of the

economy. It's that's kind of what I feel

like. It's like imagine you you've got

somebody running a marathon to a

recession,

but they're literally moving like this.

And then every time it's like, oh, his

hands all the way at the top. He's

getting closer.

Oh, wait for the next data set next

month. Oh, what's it going to be? Like,

we're moving so freaking slowly. It's

It's tough to to make big bets, I feel

like, in options right now. A lot easier

to just go, "Hey, buy the dip on great

quality companies that you can own for

the very long term on um uh you know,

stocks that you feel like are going to

be part of the next cycle." Like I

personally believe this next cycle is

going to be one where either way whether

we have uh really bad jobs data and we

go into a recession and rates go back to

zerp which is the um zero interest rate

policy which will be a huge refinancing

in GDP boom by the way. Uh huge for real

estate stocks which I think is why

Warren Buffett is investing in real

estate. We just need to get Warren

Buffett investing in house hack too. I

don't think he knows about it otherwise

he would. I I I'm sure. But uh but

anyway uh or we just normalize because

that hump, you know, this this hump

right here, that green hump goes away

and then we normalize our rates. Like

either way, I feel like the next cycle

and this is what we're we're choosing,

you know, stocks based on uh is in in

the meet Kevin membership is this these

next 10 stocks that we're buying. Well,

the next six because we've already

picked four of them. The next six that

we're buying, they're all based on

what's going to do well in our opinion,

no guarantees of course, in a soft

landing where rates just slowly come

down and the Fed policy rates go to 2

and a half or 3%. Or what does well in

that case, but even better if rates go

down to, you know, 2%, 1% or zero. So

that's the next regime to look at is a

lower interest rate regime either way

because I don't see stagflation as an

issue. Stagflation is really going to

come from uh a wage price spiral which

so far we're seeing no evidence that

people are actually able to demand

significant wage increases. It's

probable that uh artificial intelligence

is limiting people's ability to uh you

know get pay increases uh and and that

really limits the impact of inflation or

stagflation at least. But it still means

we're doing this slow slog towards

either a soft landing or recession.

Nobody knows when we're going to have

that final decision on on you know

what's coming or not. Uh but what we do

recognize is jobs growth on average is

low, but it's still slightly above our

recessionary numbers. And that's what

the QCW gave us this morning. 70,000 job

creation rate over the last 12 months

ending in March is still above the 50

typical threshold where you generally

start getting concerned about a

recession. You know, we've got an

average over the last 30 uh uh 4 months

that puts us at 37,000 jobs. If we end

up getting these revisions on top of

those, that puts us at -39,000 jobs,

then then we're basically in a

recession, right? If you carry those

revisions over, but we're not going to

have those revisions for another 6

months. So, we don't know. And so, as

with most recessions, you don't really

know until you're at like

like you don't really know that you're

in a recession until you're at the end

of it. And that's usually when the big

shock hits, which I think we are

shockprone in markets. We know we're

shock prone because the 102 yield curve

is sitting at above 50. Above 50 is a

shockprone level, but it's chilling out

a little bit. Well, down at 54 today.

So, I think that's the way to look at

this is you look for great quality

companies that you can own over the long

term that you could buy the dip on, but

they should be plays that that are

valuable in an environment that does

well when rates come down uh and

potentially when rates come down really

fast. I like I I really I have not

invested in this one. I'll be

transparent, but I like Warren Buffett's

play on Pool that Pool is that warehouse

distributor or or well they're a

distributor for pool equipment, pool

pumps and other ones. And I actually

think it's a really interesting company.

uh you know, we could take a quick peek

at it, but I think it's an interesting

play because really, if rates come down,

homeowners who have a lot of equity in

their homes, especially in markets like

in California, they're probably going to

get home equity lines of credit at now

lower rates. And what do people usually

do when they get a home equity line of

credit? They buy a boat, they pay off

their credit cards, and then they go

refill up those credit cards, which is

good for consumer spending, or they

renovate their home. Some people will

buy rental property which then they go

renovate the rental property, right?

When people do renovations, it's it's a

contributor to GDP. Like I think when

house hack I mean we're buying again,

you know, we've bought like five or six

homes just in the last like 14 days.

When we go spend, you know, 50 grand on

a renovation, that's 50 grand that was

sitting in a bank account, you know,

earning, you know, 5% or 4% or whatever.

Uh and it goes into the economy with a

multiplier effect. you know, painters

get work, flooring companies get work,

Lowe's gets work, the contractor supply

warehouses we use, they get work,

whatever. You know, the local lumber

place gets work for baseboards,

whatever. Like, everybody wins when

people spend money. And so, I think

that's why Warren Buffett looks at uh

pool uh the in, you know, investor docs

on pool over here. Sales are basically

flat year-over-year, but that's flat in

a high interest rate environment. Like,

I'm not here to chill pool. I'm just

here to say this is an example of of the

the logic people are using to make

investment decisions right now because

they're not trying to think of what's

doing well right now. They're trying to

think of what's the next cycle going to

bring us. And so you've got flat

revenues uh and and gross profit at pool

year-over-year

in a high interest rate environment.

Well, what direction does this go if

rates come down by a normalization and

spawn more refinancing or purchasing

activity or heliloc activity or rates

plummet? I mean, obviously, if you go

into a recession, you know, 10% more of

our workforce is going to be unemployed.

Our unemployment rate will go from 4% to

14%. And so, you'll have more

unemployment. But the people who are

employed,

some of them are gonna be like, "Damn,

rates are so cheap, honey. Let's go buy

a pool. let's go build a pool or

whatever. Uh, and I think that's what

Warren Buffett is seeing here by wanting

to invest in home builders and the pool

corporation. Flat in the worst interest

rate time uh implies good uh in in a

lower interest rate time. And I don't

know, maybe that's too too overly

simplified, but I look at this company,

they they don't exactly have like the

best balance sheet. So, I'm also

somewhat surprised because I know Warren

Buffett generally starts his analysis by

looking at the balance sheet. You know,

I've got $1.2 billion of long-term debt.

I've got bills to pay uh outside of I

don't even have deferreds over here.

I've got bills to pay of $800 million in

the next 12 months. Uh I have like no

cash. I've got $83 million in cash, but

I've got $1.3 billion in inventory. So,

I have to sell inventory to pay my

bills, which is fine. It's a

distributor, so of course they're going

to do that. But it's not a surprise that

they are borrowing. So I don't love the

balance sheet. That's I think that's

what's been keeping me away from wanting

to buy it. But I look at this. They're

borrowing on their credit line. You

know, net borrowing right here is about

what? $150 million borrowed right here.

And then maybe another 150 million

borrowed right here. So I've got about

net borrowing of about $300 million.

They gave about 250 of that away in

dividends and stock. That's what Buffett

likes as well. They're rebying the

stock. They're issuing dividends. Uh but

they're literally borrowing to do that.

Meanwhile, they're just chilling out lax

and lax and all cool and all waiting for

interest rates to come down and their

earnings are flat in the high interest

rate environment. So, it makes sense.

Now, in terms of an actual valuation for

the company, uh distributor, it's pretty

labor intensive. I probably would only

give this like a 1.67 peg price to

earnings growth ratio. Uh so, let's see

what they're trading for now. Uh let's

see. Pool pool investor relations.

This is the kind of analysis we like

doing in our course member live streams

as well, by the way. Uh almost a daily

basis. uh we're doing I mean we are

doing analysis on a daily basis but very

frequently we'll also do fundamental

analysis we did this morning uh we did

NBIS remember you you're in the course

member membership you get lifetime

access to all that analysis and you

could always re a lot of people go back

and play it back on 2x since we have the

recorded archive of it all but um pool

right now is trading

uh let's see here we've got a earnings

of about 11 bucks for the year ending

December number

and pool stock right now is trading for

about 321

divided by 11. That puts me at about a

29 times and then I've got growth. These

are current Wall Street growth numbers

which could be low. I've got growth over

the next four years of 11.5%.

Which implies a PEG ratio of

2.5. So it's definitely on the expensive

side. Like for me, I'd rather I

personally think they'll probably grow

more than this, but if they grow at 11%

on earnings and they've got EPS of about

11 uh and I give them a 1.67 peg, this

should be like a $200 stock. You know,

it's trading for 320 right now. So, like

it's too expensive for my buy level.

But, uh if I increase the growth rate

because I think we're going to go into a

refinance boom and I give them maybe a

20%. Okay. Okay. Well, if I give them a

20 uh at 1.67,

they should be about a $367 stock. So,

it's all going to come down to that

earnings growth. And I wouldn't be

surprised if the reason why Buffett went

for this is because he thinks that

either he doesn't trust the Wall Street

estimates or he thinks that the

company's going to grow more so than uh

you know, than than people expect, which

is possible. and again reiterates that

that focus on um expecting some kind of

like refinance boom or or whatever. Uh

that's that's my take on on that. But I

mean that's that's broadly what we pay

attention to uh when we're looking at

analysis. But broadly market is moving

in a relatively benign manner today. Uh

you know you've got some pain in even

pool down 3% in some of the real estate

plays. uh partly because of this bond

yield moving up rather than down like

what we've been seeing. So very

interesting, but uh it is what it is. So

we'll see. Probably getting ready for

CPI PPI tomorrow, the next day. I'll be

live on those at 5:30 in the morning. So

look forward to seeing you there. And

then remember to use coupon code bullish

gadget uh to get that meet Kevin

membership and lifetime access to it.

>> Why 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 Praath there, financial analyst

and YouTuber. Meet Kevin. Always great

to get your take.