f*** i might be wrong

hey everyone me Kevin here I'm coming

from the tropics actually it's more of

like a water park and Kids Place which

is really cool because it's uh Jack's

birthday today uh and uh we've got a

little bit of uh Kevin could be wrong

piece here which I always like doing I

always like having a a balanced

perspective of what's going on and this

is a really interesting one because uh

we're going to dive into uh the

unemployment rate and what the near term

might look like and how that could

affect mortgage rates treasury rates and

quite frankly the stock market and it's

a little bit of the counter to what

we've been talking about and what we've

been reading and studying uh so I figure

hey let's get into it so this is from

Pantheon

macroeconomics and what they're actually

looking for is a potential dip in the

unemployment rate uh in the uh September

release the September release comes out

September 6th I would write down these

dates September 6th at 5:30 a.m. we'll

get the August releasee October 4th

will'll get the September then on

November 1st we'll get

October uh unemployment release now

what's fascinating about that is you'll

actually get an unemployment read Just 4

days before the election which I

wouldn't be surprised if we have some

massive volatility right before the

election mostly because historically we

do we generally have extremely high

volatility uh about the 6 to8 weeks

leading into an election which would

really St start beginning technically

calendar-wise after the September

unemployment report uh that releases or

sorry the August unemployment report

that releases September 6 but not if

that report's good and see

macroeconomics is penciling in a decline

in the unemployment rate and a decline

in the unemployment rate from 43 to 42

could potentially

untriggered which would untriggered

recessionary warning it almost be sort

of like an early

prefire now I wanted to see why they

thought this and we've got a lot of

details here because there's some big

implications as to what this could mean

uh I do quickly want to add a little bit

of color though because yesterday some

people uh they asked uh they had some

questions about the new uh Financial

advisory service that we're offering

should be really clear just a quick note

on this it's it's Consulting all right

we're Consulting folks on how to build a

wealth plan it's not like we're trying

to take their money and and take bips

and saying oh we're going to outperform

the market we could allocate you to vo

uh and to a balance of that bonds and

real estate or whatever you're looking

for the idea is how do we get you

Building Wealth with real estate while

balancing that with your income your

debt your Investments your Renovations

with real estate your Acquisitions of

real estate that's the whole point so if

you want to learn more about that

service it's all over at stock hack.com

it's a new service we're launching

October 1st and it'll be licensed

Financial advice where we can can

actually create a real plan with you and

the cool thing is we don't charge hourly

fees and we have a lower basis point fee

uh than what you usually fee see but we

do have a monthly retainer that goes

with that so do check that out learn

that over at stock.com okay so let's

keep reading here so uh the continuing

claims data that we're getting right now

has indicated a uh that the 4-we moving

average has actually declined from

238,000 to 232,000 so what I did is I

wanted to line up unemployment claims

with the unemployment rate and they both

lag the start of a recession but they

actually do align pretty dang well so

you have a very clear sort of hey when

the unemployment claims Spike you do

generally see a spike in the

unemployment rate so that Association

makes me agree with them that hey you

know what you could actually have a good

payrolls report here for August mostly

because they're suggesting that a lot of

the jump in unemployment we saw

uh in the July report was in their

opinion 40% due to Temporary layoffs now

the BLS suggests that hurricane Barrel

did not impact the data but rather these

were potentially other temporary layoffs

a lot of people on social media were

saying oh you know because of the

hurricane or the weather or whatever

that's not what we actually saw in the

data a lot of it had more to do with

temporary layoffs in California that was

quite interesting uh but anyway uh

unemployment due to inventory

involuntary job losses usually Rises

slightly more than the unemployment

claims during labor market downturns

because some people will be ineligible

to claim benefits okay so I wanted to

dive into this a little bit and so what

they're saying here is even though they

think that the unemployment rate might

drop they do think that unemployment

claims may not reflect everyone and this

is where I wanted to dig into a little

bit who might not be eligible for

unemployment claims and then the story

shifts a little bit listen to this

higher income individuals may be less

and this is this is my sort of note

taking from other sources as well uh so

adding to this piece here higher income

layoffs versus claims higher income

individuals might be less likely to

claim unemployment benefits because they

might receive a severance they might

have higher savings there might be a

negative stigma associated with filing

for unemployment which they might view

as hurting their ability to get another

job they might have high confidence in

themselves and their ability to get

another job they may straight up not be

eligible for unemployment due to their

prior income or they may have other

income now what's fascinating about that

is we look at this recession as

potentially more white collar driven

unemployment layoff recession which

means unemployment claims wouldn't

potentially capture a rise in White

Collar unemployment which I thought was

very interesting that's not to say that

I don't agree with them there is a

chance we could have a September job

droing the unemployment numbers which

would actually be really bullish markets

might rally on that and you might see

the 10-year Treasury and some of the

other treasury notes go back to their 50

dma their 50 dma on the 10year is

currently over like 4.1 and we're at

like 385 right now so in the short term

betting uh on bonds could be in the

short term a bad idea uh if the uh jobs

report comes in really good next month

we could end up seeing a bets for a 25

basis point move from the FED rather

than a 50 which means we have to unpr uh

more Cuts remember the FED right now is

sitting somewhere around uh or markets

are expecting and pricing in about 1.33

cuts that would have to go all the way

down to one and that might be a little

painful for markets in the short term un

pricing that but it could be bullish

soft Landing narrative until and this is

the next part quote consumption growth

will slow slowly now this is where

we do have a little bit of bad news in

this so even though this piece is

supposed to be hey you know Kevin might

be wrong I might be wrong here in the

short term over the next month or two

but listen to this the rate of growth in

consumer spending however looks

unsustainable the only reason we've seen

this sort of outpaced uh growth in

spending has been because the personal

savings rate was obviously very high uh

during covid people had excess cash then

they blew through that and now the

personal savings rate has actually

Fallen to substantial lows in their

words that has only been possible

because the savings rate has fallen to a

very low level the Bureau of e economic

uh analysis uh now estimates that the

savings rate was just 3.3% in Q2 down

from the previous estimate and well

below the 2015 to 2019 average a very

low savings rate was unsurprising when

the labor market was very strong and

consumers were sitting on big stocks of

ex savings built up by the pandemic but

the stock of excess savings has now

diminished significantly especially for

lower income households the ongoing

softening in the labor market and the

rise in unemployment meanwhile will

probably lead to a rise in precautionary

savings that suggests the savings rate

will rise markedly from its current low

levels now this is an interesting one

because I wanted to take that and line

it up with something else I noticed over

at the St Louis Fred the data website uh

and the first thing what I saw when I

saw it was oh my gosh first of all they

said congratulations it's Jack's

birthday and second of all happy Labor

Day weekend everybody we love yall Kevin

has a Labor Day sale for the programs on

building your wealth over at

meetkevin.com go check him out obviously

separate from the financial advice over

at stock.com but go check that out uh

coupon expires Monday okay so that

suggests that the savings rate will rise

marketly from its low level so what I

did is I went to St Louis Fred and I

lined up the spike in the savings rate

rate when does that usually occur and

usually spikes and savings rates after

you had a low trough for a couple years

like what we talked about yesterday

occur within the first quarter of a

recession some of the data we were

looking at yesterday like the spike in

unemployment claims usually occurs in

the first third of a recession so

typically neither of these are going to

be a leading indicator for what

recession looks like instead what you're

getting is hey uh confirmation that

you're in one and this also makes sense

because as we start seeing the

unemployment rate rise and people start

getting more nervous that they might

lose their jobs they start saving more

money because they're worried about a

recession that usually doesn't happen

though that fear usually doesn't broadly

hit people until you're already in a

recession this means once again and as

usual Kevin is probably

early in fact I I think there's a

potential that you could end up seeing

uh the the recession well first of all I

think we'll see a lot of election

volatility election volatility probably

see mostly in October I would guess but

end of September to October after that

if my take and it's been this my take

has been that take advantage of the dip

on Election volatility and buy the dip

in stocks go long stocks in October

volatility if there's no sign of

recession yet at that point so given

that the jobs data comes out the last

jobs data comes out on November 1st over

the next three data sets uh even though

I think that's lagging what I want to do

personally this is from sort of my my

portfolio my positioning thinking I want

to look at I I I sit on the sidelines I

like my bonds I like mortgages mortgage

plays uh but what I like as well is that

we can be patient that's my thought

September October November let's get

that data after that data comes in

evaluate where do we sit with earnings

see we'll have just gone through Q3

earnings in October and what forecast

are we getting for Q4 if we have great

unemployment data and we have great

forecasts from all the companies

reporting in Q3 that might and and and

we're still not seeing any other you

know craziness of recession like some

sudden decline in GDP or some black SWAT

or whatever if we don't have any of that

bad news between now and then then going

to get more bullish more bullish soft

Landing it pushed me back to kind of

that seven range uh however if we have

data leading data not lagging data but

leading data whether that uh is uh an

estimate of GDP forecast the personal

savings rate adjusting uh people

spending you know consumption falling

forecasts from companies and earnings

calls really saying oh my gosh we

thought July was bad uh you should see

September October it's even worse that's

going to make me more nervous and more

bearish so this is just basically a way

of saying hey your boy Kevin's going to

be DEA dependent now what else did I

write down here so they think that uh if

so consumption growth will slow much uh

at a much weaker or sorry if so

consumption growth will slow towards the

much weaker pace of growth in real

incomes our forecast is for consumption

growth of just 1 to 1 a 12% over the

second half of this year that level of

consumption growth by the way is

recessionary uh now now you're

technically still growing slightly on

consumption but it's so low that you get

layoffs and that leads to the spiral of

less even less consumption so it's kind

of like this it's like soft Landing into

a recession like a really kind of slow

slowdown into recession which isn't a

surprise I mean a lot of people think

we're already in a recession I'm not

convinced that we're already in one but

I think we could be at the early Innings

of one uh but anyway I think this is

very interesting because it's a piece

that does sort of say Hey Kevin in the

short term you could be wrong here so

just be prepared for that I think it's

worth considering that uh in the longer

term they kind of reiterate my fears but

again I'm going to be patient over the

next 3 months I don't mind uh sitting

out the market at these you know near

alltime highs although we are off

all-time highs you know somewhere maybe

7% below all-time highs uh like on

NASDAQ or or you know specific

individual Securities that we've seen

over the last few months uh and and so

I'm okay with that uh I I continue to

maintain that I think the upside is

maybe 10% at this point point I used to

say 15% I think now the upside is maybe

10% and uh the downside is closer to 30

to 50% uh mostly because once people are

I mean think about how fast it goes and

this is why I don't mind being early

because look at what happened October

5th I know we had the carry trade unwind

but that came 3 days after the July

unemployment claims or unemployment read

the market just moved fast price in to

start pricing in a recession they're

plummeting and that's the concern is how

quick the market is to price that in and

when you combine that markets have

already almost fully priced in the

Federal Reserve rate cutting cycle it

just doesn't leave me a lot of Hope for

a lot of upside uh at least not

speculative upside combine that with

where valuation set right now and our

boy Warren Buffett

selling Apple Bank of America come on

anyway thank you so much for watching

folks we'll see you in the next one

consider subscribing uh just a message

to all the supporters I I I really

appreciate you thank you so much I know

there are um very few and and uh sort of

noisy uh people that leave disgruntled

uh comments over oh that Kevin's selling

something that's a scam you know it's

funny it's like when did capitalism

become so hated I I don't understand

like to me I've always mentioned the

goal is provide value and so for example

with stock Haack our goal is wow how can

we provide

as much value for people and it's not

like you know okay send your money over

we'll custody it with JP Morgan and take

some fees from you that's not the goal

the goal is to actually look at your

family situation and go how can we make

you retire better and earlier and more

well off than you would have otherwise

that's what you're paying for you're

paying for a consultant an advisor right

a licensed financial adviser really

having a plan if you want more make sure

to sign up over on the interest list at

stack.com uh at this point it's not open

we'll open it October 1st but but yeah I

do think it's interesting how how anti-

uh sort of capitalistic the world has

become uh I I I think it's just um I

don't know if it's like social media and

envy uh or or what but uh it's funny

because you look at at at commentary

sometimes and you really shouldn't but

you can look at commentary and people

like I I just don't like the guy it's

like okay what do you do

wrong I don't know I just don't like

something the Bott him I just want to

punch his face it's like okay I mean I

want to punch my face too all right

folks we'll see you the next one bye