the fed JUST froze over

look here's the thing

this morning when the jobs numbers came

out we pretty much

said i actually literally said that this

jobs report is the nail in the coffin to

the taper happening this month the

federal reserve meets on september 22nd

you should have that date written down

september 22nd but you should also have

the cpi report written down

september 14th the reason for that is

in the jobs report we had a 7.2 percent

annualized inflation reading for wages

7.2 percent annualized 0.6 month over

month

could jack up the cpi

if the cpi on the 14th comes out with a

substantial inflection point to the

downside nail in the coffin confirmed i

expect no taper in september if the cpi

reading comes in high

because even though we're adding fewer

jobs jobs are scott like

job inflation is skyrocketing because

people are rushing to try to hire people

then

we would expect maybe the taper could

still happen in september however

the places where most people are getting

hired right now are in things like

business services in fact i'll pull it

up really quick we'll look at it

together here really quick it's this is

very important because in the last cpi

report most wage inflation was actually

in

entry-level jobs like retail and

hospitality and restaurant jobs that's

where most of the wage inflation was so

you can't just lump all wages together

right most wage inflation was in the

starter up jobs

not in things like what we see over here

which is architectural and engineering

services business and professional

services private education

uh maybe in motor vehicles other

services financial activities we haven't

seen a lot of inflation in these

particular jobs here we've seen most of

the inflation right here in these jobs

down here but look at this leisure

hospitality unchanged retail trade

declined with losses in food and

beverage stores of 23 000 jobs garden

supply stores 13 000 jobs and the 44 000

a 42 000 decline 43 000 job decline in

food and drinking places with leisure

and hospitality uh employment down 1.7

million or 10 since feb 2020 that's

obviously comparing to before the

pandemic but month over month you're

seeing those declines so

my expectation we're going to look at

something here in a moment my

expectation is we're going to see this

taper get delayed because even though we

still have that cpi data coming out on

the 14th we expect that most of the

folks

who are actually getting employed

are not the ones in the industries where

wages are skyrocketing where wages are

skyrocketing we're actually not seeing

as much job growth

even though average hourly earnings here

did show an increase in this particular

report

worth noting uh

okay let's see here

oh oh also also look at this disclaimer

here this is very interesting look at

this i just noticed this check this out

right here however

because average hourly earnings vary

widely across industries

the large employment fluctuations since

february 2020 complicate the analysis of

recent trends in average hourly earnings

also very interesting because that's

potentially another way of saying hey

like even though we saw this increase

here maybe the average hourly earnings

went up because we had more people in

these higher skilled jobs

also possible which is not necessarily

that cpi inflation

in fact they reference

tables b3 and b8 we can take a quick

peek at that and then i want to get to

this bloomberg article

so let's pull the labor report that's

interesting

because we want to get as much

information as we can now going into the

cpi report

to be prepared okay i've got the table

here

okay

that's this button right here so here's

our table

and here you go average weekly hours and

overtime okay this is how much they're

working

so we don't want that one we want this

one b8 here we go

average hourly earnings so where did

things go up that's what we're looking

for in fact you know what let's go ahead

and put this really quick to where i

could annotate it

this will be interesting

okay so we're going to drop this right

in here with the labor report give that

a second so we can annotate it here we

go

so

where did wages go up average hourly

earnings we know went up so what we're

looking at is here where's the biggest

increase so we had a four dollar

increase here we had a decrease here

we'll make that pink here was an

increase we'll go with yellow for that

little increase here this was a little

bit bigger

i guess i can highlight that one too

that was about the same same this had an

increase this had an increase this had a

bigger increase here this had a no

that's nominal that had a decrease no

i'm sorry this actually had an increase

a slight increase here okay so these are

the things that are going up so

total private went up mining and lodging

went down but otherwise manufacturing

went up

and

transportation warehousing utilities

information see none of those are

actually

the the lower wage jobs that are showing

the big inflation right and that's

usually where you see the big big big

big inflation so i wonder if how that'll

be reflected in cpi

leisure hospitality right here only made

up an increase interestingly but that's

that's surprising of about a dollar

so that could be good for cpi because we

don't expect that these sectors right

here to be the main drivers of longer

term

wage

wage inflation because generally we see

most of the wage inflation here

that's fascinating

okay so we'll see how cpi comes out and

their reading but let's go ahead and

specifically talk taper here and jump on

over to

bloomberg

so with bloomberg they just released

this article after we had obviously our

video this morning talking about how i

don't think the taper is going to happen

anyway fed delay taper past september is

all but certain is what bloomberg is

reporting now so bloomberg is saying

that and we've okay

sorry

disappointment over the august payroll

report is all but certain to delay

uh obviously the jobs report came in low

they're saying here this report puts

september off the table says a fed

economist i agree with that

tapering later this year is still a bear

case

and the data over the next few months

will be important in determining the

announcement i mean that's almost saying

that it's entirely possible we could

just rotate into next year

for uh for the taper i believe that at

the july fomc meeting most fed officials

agreed it would probably be appropriate

to begin tapering

uh the central bank uh yeah right at the

end of september

or at the end of the year but there's

also been talk about the end of

september but this changes that the

sharp slowdown in hospitality and even

retail job creation can be seen as

evidence that the delta variant is

having an impact on the job market true

jerome powell said that we had made

clear progress and expected the gains to

meet the goal of substantial for further

progress needed for tapering but that

just got screwed up by this jobs report

and labor force participation remained

flat

the hawks could get more resistive due

to persistently higher wages so that's

the risk factor in all of this so the

risk factor in all of this and that's

the way to end this talk about this

taper the risk factor in all of this is

that these sectors that have not been

inflating as much yet start inflating

more these these yellow sectors right

here on the left if we see these numbers

go up more more and more

then we're going to have potential

issues

with with the taper coming sooner and

inflationary issues

but so far

while they've been going up they haven't

been going up as crazy as some of those

entry-level jobs so in other words

bottom line expect the taper to get

delayed we'll see what happens but i do

expect the taper to get delayed it's

worth noting for clarity that yes the

cpi does actually break it down services

if you just type in services when you're

on the cpi pages here you'll see

financial services personal care

services legal services

delivery services right these are all

things that get measured including pet

services recreation services hospital

related services dental services

gardening lawn care services uh

everything including obviously rents in

that so it's just worth noting that the

cpi does track this and not only does

the cpi track this but also obviously

the labor report so if if we see both

the labor report and cpi starting to see

other sectors outside of hospitality

having their wages go up and it starts

looking unsustained it's going to be a

problem it's going to keep inflation up

higher so now with the taper not coming

what do we pay attention to personally i

believe we pay attention to

higher value stocks especially tech

stocks and specifically safer ones i

love if we get an inflection point to

the downside in in inflation which i

expect i am all in on things like apple

google amazon big big big big fans here

in addition to our big fan here in

addition to being a big fan on these

safer stocks also obviously big fan of

things like

lemonade hippo insurance

matter port we've got uh what else do we

have i don't know lots of things here

palantir let me take a look at some of

these other ones uh the bigger tax right

bigger tech thing smaller tech let's see

here

momentum doesn't necessarily trade off

inflation pinterest is okay uh bullish

for tesla obviously sofi is okay

c3 ai okay

coin coins can be up in the air see if

inflation doesn't fleck downward i don't

know if it's going to be great for

crypto so crypto is one i'm a little

more nervous of in fact this morning

when we saw those wages jump crypto

skyrocketed it was like instant like

bitcoin boom one thousand dollars here

well i'll even show you it's worth

looking at because i want you to see

this just

when this jobs report came out this

morning at 5 30 in the morning take a

look at this it's so worth seeing

so right here we have jumps and spikes

and all this but this was perfectly

timed right here you at the bottom at

49.99 or right before the jobs report

jobs report comes out here

first minute this right here that 5 30

minute the market's like

oh my gosh

oh my gosh employment numbers came in

way lower than expected and then but

wait a minute inflation for wages is 0.6

that's 7.2 percent annualized

a thousand points in like three minutes

or a thousand dollars in three minutes

it was incredible so worth noting that

uh but yeah otherwise uh etsy redfin

google amazon square right these are

stocks i think will do very very well if

we get this inflation reflecting down

this september 14th is a big moment we

have literally on this channel been

waiting

waiting for september and october it's

finally here now i want to get rewarded

i've been very patient

anyway thank you so much for watching

this we'll see you in the next one get

your insurance by going back kevin.com

lemonade life insurance pet insurance

renters insurance and homeowners

insurance macgyver.com

lemonade thanks for watching

[Music]

you