SH*T SH*T | New Fed Report Changes EVERYTHING.

oh boy y'all almost got me I almost

flipped I almost

flipped it's like

ohoo that Temptation oh my gosh I I wow

yes ah that was that was very close for

those of you who know what I'm talking

about great for those of you who don't

know I'm sorry but we are going to talk

about that job's data yesterday and

frankly I didn't post video yesterday

because it literally took me well I was

also flying for house hack and looking

at properties but in between doing all

that it it essentially took me the last

24 hours to really figure out and

understand what is going on what path

we're on where we are in the economy now

and what you need to look for as well as

potentially how to position a portfolio

around this now because I did not post

yesterday In fairness to all those of

you who are curious

yes I'm going to have a big portfolio

talk on Monday where I talk trades

companies and hedges and any kind of

adjustment trades potentially millions

of dollars worth on Monday in the course

member live so I did extend the coupon

to 11:59 p.m. on Sunday because I didn't

post yesterday and there was no reminder

for you so if you want to be a part of

that course member live on Monday and

you want to get that for life all the

future course member lives we do that or

analyses fundamentals trade alerts you

name it go to me kevin.com bu the stocks

and sight course watch lecture one

you're in

forever okay great so let's get into

what happened and it is true when when I

first heard this data that the last two

months the prior two months so uh July

and August which were pretty bad were

revised up by a net of roughly 70,000

jobs and September was absolutely

phenomenal I have to say I was a little

blown away I I thought to myself my gosh

okay well if all the bad data is being

revised away GDP is being revised away

construction job openings being revised

away and now a jobs being revised you

know the bad is being revised away like

the Bears were right to be bearish but

if it all the bearish data they were

using is being revised away then the

Bears are wrong to be bearish so then

I'm like oh

my you you have to flip then so the last

24 hours have gone deep

and of course we already know the basics

we we know the headline numbers we know

there's a lot of talk about how the

establishment survey showed uh over

800,000 government jobs created but the

establishment survey actually shows that

800,000 jobs as Jobs created on the uh

non-seasonally adjusted side and when

you seasonally adjust that goes to about

31,000 and honestly in the establishment

survey that's actually Fair because

those are almost all teachers but

there's there are deeper problems

including what the household survey says

I will explain those differences in

moment it does get a little nuanced and

I'm sorry in advanced but again it took

me like 24 hours to get through this so

an analysis uh starts with what yields

have done since

jpow you know gave us a 50 jpow gave us

a 50 and what happened we literally got

the 10year yield up 32 basis points the

2-year yield up 38 the one year is up 26

mortgage rates are up about 50 basis

points we've essentially gone across the

entire yield spectrum and we've made

everything tighter not looser which is

fine if you have an inflating economy

and a strongly growing economy it's okay

you would want to tighten rates in that

case so you don't you know overheat

essentially and create inflation which I

don't think a good economy is synon

synonymous with inflation anyway Cathy

wood agrees with this whether you like

her or not doesn't so much matter but

what really creates well if you're Peter

shiff it's the expansion of the money

supply but to me what really creates

inflation or consumer prices going up is

frankly stimulus otherwise Innovation uh

really leads to deflation the more we

invest in capex the more deflation we

get look at China they're frankly in

deflation people like oh but you know

this is going to cause inflation all the

stimulus they're so deep in the hole

they're so deep in the hole this is

really a topic for a different video but

uh the Point here is that you you know

you would expect yields to go up if you

thought things were really really good

so I thought okay well maybe things are

really good maybe I shouldn't be a bear

and let me go deep in this jobs report

so my take when I look at the jobs

report and it's going to be you know I'm

going to give you a little preview and

then we'll go through some of the

details my take is that we're roughly at

stall speed on a plane now now maybe

yall don't fly I I I don't fly I'm not a

pilot okay but like let's say you're

coming in for a landing with my little

toy jet here okay so so you're pitched

down a little bit you know 3% I don't

know 5% whatever so you're pitched down

but the plane's just going so slow that

you're not going to make it to the

runway now you could nose down but then

you're going to have a hard Landing

you're boom you might break your landing

gear or just crash okay so so you don't

want to nose down too much now you could

keep your pitch but you're going to have

to add speed because if you're at stall

speed you you you like you need to speed

up your plane again I'm not a pilot I'm

trying my best here okay you need to

speed up you need to add some gas add

some thrust everybody likes some thrust

right so we're flying a little too slow

to actually make it to the runway safely

we really need speed boost uh and then

we'll be okay if we pull up without

adding thrust then we're just going to

literally stall that's not going to be

good gosh I never thought this would

actually become useful uh oh I just

Tangled it I okay well I'll have to

untangle that God that looks terrible I

now have to untangle that uh right as I

say I never thought this would be useful

it actually becomes not useful it's

foreshadowing of the economy no uh okay

anyway so uh the the problems you have

here uh really start when we actually

get into the reports on what generally

happens on an annual basis now this gets

a little tricky so there are few things

to look at the first that I want to look

at is something called the uh level of

unemployed people usually working

fulltime now this by

itself isn't solely useful we have to

look at a lot of things here but let's

go ahead and look at usually full-time

if you look at this it kind of helps us

understand this stall speed that we're

at because if you go into the 82 or 80

recession you have a rapid crash if you

go into 91 you have a rapid decline in

this you go into 2001 rapid decline 2008

rapid decline what do you have over here

you have a stair step decline kind of

like a stair stepper at the gym decline

okay that is that normalization I don't

know stair step okay is that

normalization from the big spike I don't

know stair step oh gosh now we're

negative so the year-over-year change in

people employed usually full-time is now

negative which means we have fewer

people you like employed full-time who

usually are employed full-time which is

generally something you only see at the

earliest Midway through recession so who

knows maybe we're already in a recession

we we generally don't know if we're in a

recession until like a year later right

so you could already theoretically be in

it or you know maybe maybe this time

it's happening a little earlier who

knows you were negative over here at the

early portion of the 2001 recession

which would be like March of 01 so it

could be like technically in it or right

at the beginning of it or who

so this alone is not helpful but it does

show us that the stall speed is present

because if we're really growing we

should be seeing more people on a

month-over-month

basis working full-time so again I call

this the stair stepp or slowdown and

it's why I talk about stall speed this

is really driving me nuts I apologize uh

for this like just just look away for a

second but I I see it in the uh the

video monitor and it just drives me

absolutely nuts I cannot have I'm like

jpow okay I got to I got to fix this I

cannot have the plane like this it's

maybe it's an OCD thing uh uh now I've

really just janked it up there we

go I definitely screwed something up but

uh here all right it's a little better

[Music]

now I apologize ol for wasting your time

please fast forward the video and if for

whatever reason you can't then uh once

again I apologize I'll fix it later this

is a lot better than the stra that just

doesn't look good anyway all right

so next this is where things get really

like really start getting really

interesting the typical employment level

that we have in our

economy uh especially through the '90s

is around 2 million job gains created on

an annual basis keep in mind we still

have some real serious like juice to get

to don't get me started on table A8 okay

it's it's going to be pretty bad uh but

what I want you to do and you could do

this yourself too is just type into

Google St Louis Fred uh employ

employment level that's Fred with an r

in there I I know that's weird I I still

haven't figured out why they do that I

think it's Federal Reserve economic data

but whatever okay so when you get there

what I want you to do is I want you to

just do change from a year ago in

thousands of people okay uh and then

it's so noisy on the monthly so change

this to annual and then what I want you

to do I mean you could leave Co in here

if you want uh if you want to just make

it a little bit more clear you you could

get rid of Co just by scrolling over on

the right but let's just leave Co so

we'll leave the chart as it is look at

what a normal economy looks like for a

moment okay a normal economy sits in

this range right here I think we can all

agree that a normal economy somewhere in

this range right and look on the left

that would be somewhere between 1 and a

half to maybe 3 million jobs created per

year right that's a normal economy in

fact if you look at the '90s you were at

a normal level of job creation

throughout the entire '90s okay that's

interesting so where do we sit today

relative to that level of job creation

well we sit in a worse place because so

far we don't have this full years of

data but if we're trying to get to 2

million jobs created in the year on the

employment level where do we sit right

now so far year to date with three

quarters being done we sit at 314,000

q1 we lost 248,000 jobs so q1 that's

when you get the layoffs uh that was

2024 Q2 you got 62,000 jobs Q3 you got

264,000 add that together you're only

year-over-year or actually for this year

you're only up 314,000 jobs which

actually aligns with if you go all the

way back to last September you're also

roughly up about 300K jobs so in other

words like since last September we've

really been at that stall speed where

were like oh we don't have the thrust

anymore oh boy you know when you're on a

plane and they like pull back on the on

the uh thrust because you're you're

getting ready to land or like you just

took off and then they pull back on the

thrust and it's that like weird sinking

feeling you get like it's like oh what's

happening and really the pilots are just

trying to like level out or whatever but

everybody's always like oh my God we're

crashing like that's kind of the feeling

the Bears are feeling right now like

okay so so far

year over oh let me clarify this year

over-ear we're at 314,000 jobs created

from September to this September that's

way lower than the 2 million if you

actually add together just this year -

248 62 264 that's actually only 76,000

jobs created so far in the 9 months this

means the next 3 months are going to be

extremely critical because you need

October November and December to be

really freaking good so you could get

back to that normal growth period of

around 2 million jobs

created so now I'm going to show you

this screenshot because it's really

helpful okay here's the red line this is

what we were talking about with the 90s

right here where my M Mouse is right and

this is the normal trajectory I did Kill

Co out of here because it zooms in on

the chart makes it a little bit more

clear rather than having the big spike

up on the right okay so you normalize

this look at the times it went near

negative on the red line which is the

annual every time it goes near negative

you have this green circle you have a

recession so every time near negative

recession okay like every single time

there's not a time over here it goes to

near negative that you don't have a

recession however there are times it

doesn't go to negative and you still

have a recession see over here so it's

like either way if you go negative you

always have a recession if you don't go

negative you could still have a

recession because that's happened before

over here but having a low change in

thousands of people so millions of

people here of job gains having this be

at you know for the year

76,000 is

horrible it's really bad because you're

close to that that threshold of like

guaranteeing a recession okay but Kevin

like the job's data was so good are you

just trying to look for like bearish

information

okay well I I get it I I I like let me

just be transparent I want IPO house

hack like ASA freak compete if we go

into recession that's going to be harder

if we don't go into recession let's

freaking go you see what I'm saying okay

so like I don't want any

recession I just I just can't help

myself I'm looking at this data so

people like but Kevin the jobs numbers

were so good it was such a big number

okay well what happened in history well

right before the 1990 recession

in July we started the 990 recession in

may we had a job read of

299,000 huge Spike look at that green

circle right here is this is where you

really start turning negative into

recession but look at the blue the blue

shows you this huge Spike that you get

the blue is actually the quarterly but I

read it on the monthly and on the

monthly read you're at 299 this is a

huge Spike over here and you still went

into recession cuz the data is so

freaking volatile on the month over

month look at March the month the

recession began

employment spiked up

171,000 in households data and 3 months

earlier you spiked up 292,000 so in

other words you had these giant job

reports right before the 2001 recession

literally just two three months before

the recession you had these giant really

glorious jobs

reports and then you look at

2007 literally November of

2007 like right when the recession was

beginning

649,000 jobs created that followed -2 98

in October which came after two or 562

in September look at the volatility the

recession began in December right before

that it's like Yay Oh yay

crash so like over the past three

recessions outside of covid household

jobs spiked 171 to 649,000 in a single

month report and we still hit recession

and my guess is back then the markets

also rallied on these reports recession

still came because jobs is a lagging

freaking

indicator so like the month over month

data doesn't matter what really matters

is is this like how many jobs are we

actually going to create this year well

right now if we're at 314,000 you look

at this right here I drew this red line

just to show you if this red line on the

left is normal it's going to crash

you're going to crash to oops you're

going to crash to this low level right

here which would be uh this is the which

is in line with the quarterly numbers so

that's a really really bad pace you're

actually probably you know if I actually

get the number over here that's pretty

bad if the annual number is all the way

down here you're basically on the

doorstep of recession the annual number

the red line should be stable around

here in an expansionary time again we

need October November December data to

get us up because right now you know I

drew this line to 314,000 going year

year to September but we're not even at

314 so far this year to date again we're

at 76 which means we're basically I know

this chart's funny we're probably like

right there on top of the black line and

if these three reports come in negative

we will be in the hole and you're

basically going to guarantee a recession

uh okay and and usually you get Negative

job reports after a really big positive

report we just got a big positive report

now why well how about because of

revisions ah now this is an interesting

one buckle up for this one folks you're

going to want life insurance for this

one metkevin.com life paid promotion

you're going to want to get the courses

on building your wealth to know what's

going on with the portfolio on Monday

because this chart is this is

insane you do not want to see this chart

okay I'm going to show it to

you okay it's a table damn it Kevin you

said chart clickbait I'm sorry I'm sorry

sorry okay look at this you don't find

this table unless you dig down into A8

on the uh like like literally their 100

page document or whatever it's crazy and

if you go to government workers this was

insane first of all there's the

establishment survey which I opened this

video about I said 800,000

non-seasonally adjusted uh teachers got

adjusted to 31,000 establishment jobs

okay fine fine that seems normal because

they're mostly local

right but wait a minute

because they seasonally adjusted away

all of those teachers government workers

should basically be close to zero

because teachers are going back to work

but wait a minute government this is the

household report not the establishment

report household is they call workers

hey you got a job cool payrolls means

they call companies payrolls is the

establishment one it's a little

confusing okay that's why I said we're

going to get new want here if you look

at the household

survey the seasonally adjusted read

right here from August to September

exploded from 21.4 million to 22.2

million that is a seasonally adjusted

785,000

gain that is unprecedented and it's

absolutely insane look at this July to

August you were like - 150 plus 40 this

is like plus 50 you know like these

these numbers this this is crazy I don't

know what the hell happened here with

the seasonal adjustment number but 7

85,000 on the seasonally adjusted one so

you're telling me all the teachers that

went back to work you adjusted them out

and you still got 785,000 job gains on

the household survey which the household

survey is the one that dictates the

unemployment report so if you took out

all of those the unemployment rate

instead of going down would have gone up

to like 4 and a

half%

what what and on the non-seasonally

adjusted right here you're up 1.3

million again that's probably where the

teachers are the difference between

those two numbers but this seasonally

adjusted you still came in with that

high of a number that changed this

entire report because when you actually

look into like restaurant jobs they were

negative and then seasonally adjusted

positive even though we know restaurants

are in the freaking pooper right

now so you know a lot of people are

saying okay so you know why like is this

political is this you know just trying

to elect KLA

Harris maybe it's possible absolutely

possible I I'm I like I don't try to be

jaded like that I think it could also

just be that the Bureau of Labor

Statistics doesn't have all their data

yet and the adjustments they're making

aren't that great

uh uh so that's not

great and that means we're going to get

revisions as they continue to get data

remember this jobs report came out on

October 4th they're going to keep

getting data out over the next two or

three weeks so they can help revise

September numbers probably going to get

a big downward revision here because

this is crazy this was like a 3.7 Sigma

standard deviation uh above expectations

read this is it's

insane uh so okay so where what do you

need going forward so going forward you

really need to add like 1.5 million jobs

in October November December can it

happen and would that make Kevin bullish

yes it can happen in q1 of 2023 we

actually added 1,500 1.5 million jobs so

yes one quarter can change everything we

could literally have a really good

October November December and confirm

the soft Landing that would be thrust

like what we're talking about with the

plane thrust if you get three quarters

in a row now of not this crazy

government jobs boost but like actual

like growth in

jobs soft Landing stuck hats off bare

thesis

dead that's what you need so you really

like it's crazy but you kind of have to

now wait until like February

to confirm there's no recession because

then you get the January jobs data to

see if there giant layoffs there but

you'll also have the full Year's data

which I guess the full Year's data

you'll have in early uh January but

anyway so this is crazy if you also look

at a

chart of the magnitude of the seasonal

adjustment versus what you historically

see this is the chart you get this shows

you how crazy this September seasonal

adjustment is the orange here

is the uh non-seasonally adjusted let's

take the seasonal adjustment the blue

okay so just look at the season again

usually this is adjusted down because of

all the teachers well why all of a

sudden is this 785,000

and in September of

2022 it was less than 400k in 21 it was

negative in 2020 it was negative in 2019

it was less around 300K in 2018 it was

nominal 2017 nominal 2016 it was like

100k why all of a sudden this huge

magnitude and then of course right

before the election I mean again you

know again that's that's the Jade I

really I try to be neutral and not like

super politically jaded but this is it

is

odd so if the economy truly

is weak and the jobs data is wrong now

you have a real problem because if the

jobs data is wrong it means you are

stall speed and you're losing thrust at

the same time as you're losing thrust

and you're at stall speed Jerome Powell

is kicking up the flaps which basically

is increasing your drag and so now your

speed's falling even more so you're

contributing to the decline with higher

rates because of what we talked about at

the end of the at the beginning of the

video this is crazy so then you look at

the yield curve we're almost back to

inversion well GE we're 4.8 basis points

uninverted

when is the last time we've actually

gone from inversion to uninverted by

about 20 basis points the same we hit

this like a couple weeks ago where 20

basis points uninverted to basically

back to inversion well you did go back

to inversion in 2006 right before the

2007 you know end of 2007 uh December of

07 the recession began um so this has

historically happened like you can Bob

around this line usually recessions

don't actually begin until you're about

50 to 100 basis points uninverted we

only got to 20 so again at that stall

speed we're like yes we can add thrust

and keep going we can keep this freaking

plane

flying but it's tough because add to

this you know some of the other

recession indicators housing starts

versus completions at 1974 lows 1980

lows you know pre-2 2008 recession lows

really really bad you know 1995 didn't

look like this restaurant performance

index so low it's recessionary a number

of unemployed people 27 weeks and over

at you know at least onethird of the way

into recession ISM Manufacturing

payrolls were horrible the Challenger

report for payrolls was absolutely trash

9 out of 12 fed beige book districts uh

declining uh the temporary hiring uh

stretch largest negative stretch of

readings for temporary hiring waning

pricing power at companies

delinquencies I don't know man I don't

know so my take is that uh on Monday

we're going to be talking about uh

Hedges we're going to be talking about

portfolio

allocations uh there are a couple ways

to go here you could either go long

Equity with Hedges or you could go cash

with Hedges it sort of depends on on

your POV but there I think there are

some really neat things you can do

especially where certain retracement

levels sit now we're going to talk about

that in the course member live stream

hope you're there use the coupon code

before Sunday at 11:59 p.m. I got to go

to my Mastermind I love you all thank

you so very much for being here we'll

see you all in the next one and if you

want to join the next Mastermind these

are all like millionaire entrepreneurs I

mean this is this is a really great

group of people go to meetkevin.com

Mastermind and uh maybe you can get in

on the next one thanks so much goodbye

and good luck do 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

Go congratulations man you have done so

much people love you people look up to

you Kevin PA there financial analyst and

YouTuber meet Kevin always great to get

your

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