Crap! Bad Jobs Data -- Powell KNEW [Full Details].

Well, now I'm just convinced that Jerome

Powell knew. We just had not great data

come out on the ADP employment report.

And yesterday was the first time we

heard Jerome Powell tell us, "Eh, we're

not going to take July off the table."

Which is when all of a sudden a July

rate cut went up from about an 18%

chance to a 21% chance. Then within 24

hours later, less than more like 22

hours later, what happens? Oh, the ADP

employment report comes in negative. We

were expecting it to come in at 98,000.

It came in at 333,000

with a -8 revision prior. We lost 8,000

more than we expected last. So 37 to 29

for last. This was 98 expected down to

-33. Now, negative employment reports

can happen, but it certainly takes some

of the fun away from the party that we

were having with the Jolts data

yesterday. And this literally just

updated again. We just went from a 25%

chance for a rate cut in July to now a

27.4%

chance in July. This is because futures

traders are pricing in a higher

likelihood of a chance in July. We are

nearly at a um 1.25% 25% chance uh well

I should say n let me rephrase this okay

when it says we expect 1.23 rate cuts

now for September it means we're

actually pricing in one and a quarter

rate cuts. Do we actually get one and a

quarter rate cuts? No. It just means

we're pricing in the chance that you

potentially even get a double cut uh by

September which could just be the

cumulative pricing of a cut in July and

September. But anyway, have these

negative reports happened before in

recent history? Yeah, they're very rare.

So, the lowest we had last year was

42,000. You can see that -3 over here.

Not great. We did actually have a -53

May 20, sorry, March of 2023. So, we had

a negative 53 before and then, you know,

sort of came out of it and we we went up

to a consistent 100 to 130,000 on the

ADP report. So, we can see that the

labor market's slowing. We already know

that the labor market has been slowing.

JPAL talks about this as well, but I

will say this ADP report little rough,

especially because it doesn't talk about

the normalization of the beverage curve

yet. Now, quick reminder what that is.

beverage curve says vacancies are low,

unemployment should be higher. Why is it

not higher yet? It's because we have low

layoffs. Okay. Now, what did the ADP

report have to say about that? Well, it

indicated that we actually went negative

33,000 not because of layoffs. We went

negative 33,000 because of low hiring

and low vacancies.

Why does that matter? It matters because

now imagine the dial of layoffs goes up

to normal. Then you go from negative

133,000 to negative 150,000 or something

very rapidly. That is the edge case

scenario everybody is worried about who

pays very close attention to the labor

market. Now most of us don't actually

give a fly in hoodie dooty because

frankly the stock market has been at

all-time highs. The only thing that's

kind of telling us that something's been

weird has been Bitcoin. although that

could have a lot to do with flows and

you know people talking about Ethereum

versus Bitcoin whatever really a topic

for a different video. Uh tomorrow we

still get the non-farm payrolls report

which is still expected to be 110,000

and usually is what markets care about

more relative to this private survey.

This private survey is the ADP

employment report. We did also by the

way get the challenger job cut survey

this morning. Uh the actual survey

sometimes takes a few hours to show up

on their website, but we already have

the data for the Challenger job cut

survey. Challenger job cuts came in at

negative 1.6%.

The prior was 47%. That would be

Challenger Job cuts year-over-year. So

actually kind of stable on that report.

We'll get the details uh in a few hours

when they come out. But look at just

this ADP job cuts report because it's

one of the first ones that I would say

that's really turning nasty. And who

knows, maybe ADP is just wrong. Maybe

this is just all fugazy. But let's see

what they're saying. Let's just be real.

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no-brainer. Job losses in professional

business and business services,

education, and health services led the

decline. leisure, hospitality, and

manufacturing showed gains. Now I want

to caution what we've been seeing in the

PMI uh you know both the S&P uh and the

ISM surveys for manufacturing have been

that manufacturing is still seeing this

frontloading of tariffs that this

continuous oh you know we might be at 30

35% tariffs soon on on uh you know Japan

or you know now there's talk about oh

Apple moving its production over to um

what's it called India

may not be going as well as expected.

That creates even more of a desire to

pull forward in manufacturing

uh before we get sort of our final

assigned tariff rate from Donald Trump.

But anyway, Foxcon Technology Group

asked hundreds of Chinese engineers and

technicians to return home from its

factories in India, dealing a blow to

Apple's manufacturing push in the South

Asian country. The bulk of Foxcon's

Chinese staff at iPhone plants in

southern India have been told to fly

back in a move that began about two

months ago. More than 300 Chinese

workers have left. Mostly support staff

from Taiwan remain in India. It's not

immediately clear why. And this

information is just now becoming public.

So clearly not not the smoothest of

sailing to just oh yeah, we'll just pop

up the factories in India. Anyway

though, layoffs continue to be rare.

This we should not cheer because what

we'd really want is layoffs to be normal

and then the unemployment numbers to

still be strong. But again, because

layoffs are rare, it's actually just us

sort of waiting for the straw that

breaks our back because as soon as

layoffs normalize, statistically, we're

screwed. Again though, right now, no

sign of getting screwed and jolt data

yesterday was decently good, right? A

hesitancy to hire and a reluctance to

replace departing workers led to job

losses last month. Still a slowdown in

hiring was yet to disrupt pay growth.

Still seeing that that slight pay

growth, which is good. Uh this is just

an overall chart here. We could see that

small uh actually look at that. The

largest companies hired the most. But

remember, over half of Americans work

for small businesses. So this is

important, but it's also not a surprise

to me that smalls are doing well. Which

is also why I'm so disturbed that the

Russell 2000 did so well over the past

few days, really since Liberation Day as

well. It's up like 22% since this

Liberation Day bottom. because I feel

like it's walking people into a trap

where you know what 17% of companies in

the Russell 2000 are zombie companies

that can't even service their debt. Uh

yeah, it's kind of scary. So anyway, um

this gives us a little heads up on maybe

why Jerome Powell knew.

Anyway, thanks for watching. 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.