The Fed's FINAL Warning.

You need to mark your calendar for the

most important date happening within the

next two weeks. And it has everything to

say about this market, including what

the Federal Reserve just said. Well,

actually, we're about to go through what

the Federal Reserve just said because we

got the Fed minutes for the December

meeting, and it just amplifies what

happens on this date coming up. This

date has absolutely nothing to do with

the fundra closing for House Hack

tomorrow, which is cool. We're excited

about that. We're releasing our AI app.

It's super cool. You know, yesterday I

was showing this screenshot. We raised 3

point roughly about $3.8 million in

December as of yesterday. That has

jumped to 4.5 as of this morning. And I

think based on what I'm seeing here,

we're we're about to cross five. So,

shout out to those of you uh investing

in House Hack here. Yeah, that number is

showing at 4.8 right now. Pretty

incredible. But anyway, let's ignore

Houseack for a moment and the AI coming

out and understand this calendar right

here. So, what does this tell us? It

tells us January 9th, the employment

situation 8:30 a.m. release. Be there.

Be square. Mark your calendar. Why does

it matter? Well, it matters because A,

the Federal Reserve just said it matters

in their minutes. We're going to be

going through these, but I want you to

see this point blank upfront.

This is a simple synopsis of the labor

situation. On January 9th, we are going

to get a full month of December

collections. Okay, this means for

household survey, not house hack for

household surveys. Uh this will be the

first full household survey released

since September. Uh collections that

were done in September and then were

reconciled and released, right? Uh so

that means we don't actually have a

household survey that we can rely on at

all for October because it's blank.

There was no household survey done. So

basically households didn't get a phone

call going, "Hey, you got a job?" You

know, that's different from the payroll

survey, which is the Bureau of Labor

Statistics calling businesses or getting

surveys back from businesses saying,

"Hey, how many employees do you have?"

The reason they do two different surveys

is because the payrolls report where

they call employers to say how many

employees you have could double count

employees because if you work at

electrician A and electrician B, both

electricians might report you as an

employee. But in your home, you only

report yourself once. Yeah, I got a job.

Doesn't matter how many jobs you have.

Just matters that you have a job or not.

Anyway, that's why there are two

different surveys. And what's

interesting is we did not get a full set

of collections in November. We got half

because the government was half shut

down. We got no data in October. So that

means we're flying blind uh all the way

through basically January 9th on that

household survey. That household survey

is going to be really interesting

because it's basically going to fill in

October, November, December. 3 months,

an entire quarter of households data is

what we're really expecting it to get

color on on January 9th where they've

actually had a full like well six to

sevenish weeks to actually finish

collecting their household survey and

processing it which is great. Not saying

the government data is accurate, just

saying there's a lot of weight on this.

But it's not just that. We're also going

to get revisions. We'll get revisions on

the November jobs. Technically, it'll be

the first revision on the job November

jobs release that we got. We'll get our

first actual revision on the October

jobs revision should be the second.

We'll get our second revision on

September should be the third and final.

But again, the government shutdown

screwed everything up. Now, why do these

revisions matter? Well, they matter

because of our four-w week or sorry,

four month moving average. These are our

four week I keep saying week. Uh I'm

thinking too much trading stocks. It's

like alpha reports all over my brain. Uh

but anyway, uh the 4month moving average

here on payrolls data is - 26,000

because we had a revision down to -

26,000. Uh we had a revision down to

108,000 positive in September. Negative

105 in October though heavily weighted

by the U government layoffs in October.

Then in November we bounced back to

64,000

jobs. So, if we look at that on a 4-week

moving average basis, we just add that

together and divide it. I guess said it

again, whatever. You know what I mean?

At this point, uh you get to about

10,000 jobs on average per month. That's

pretty bad. And now, in fairness, that's

that is with the government, but that's

pretty clearly below Jerome Powell's

target of 20 uh,000 for a labor break

even. And it's even worse when you take

Jerome Powell's words because J.

Powell's words are if the BLS says 40K

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how people connect. Because JPAL's words

are, if the BLS says 40K, assume - 20K

is the actual. So, you're taking off

60,000 jobs off of what the BLS is

saying. Well, in the last four months,

BLS report is showing 10K, which if you

applied the Jerome Powell logic to it

would mean we'd we're actually at

about50,000

jobs. 50K on uh Jerome's logic. Okay,

not great. Uh so we're going to get a

lot of color on that January 9th date.

Now, what's interesting is if you look

at what Bloomberg Intelligence is

saying, they're actually commenting that

the SOM rule would have likely triggered

if we actually collected the October

household survey, mostly because

education, healthcare, and AI are the

only sectors growing. And if you jump on

over to what the charts are showing us,

we can go to the real-time SA SOM

indicator and we see the first ever

false flag which was last August during

the Japanese carry trade crisis. This

caught a lot of people off guard. We

thought this was the beginning of the

unemployment uh cycle. It didn't come.

You got Donald Trump got elected and we

got this big tailwind of hiring and the

unemployment rate actually fell. Uh and

the SAM rule fell which was fantastic.

was great for the economy. Now people

are saying that if we actually collected

the October households data, we would

trigger it again. Now maybe the rule

sucks because now all of a sudden it's

been wrong once before, so maybe it'll

be wrong again. And that's true. A lot

of people are holding out hope for that,

including what the Fed just said in the

minutes, which we'll hit in just a

moment. The Fed obviously also paying

close attention to liquidity because we

are seeing more and more of these

Federal Reserve RAIPO operations than

you would traditionally have seen over

the last well frankly four years. It's

like you usually don't see lines here

and all of a sudden we're seeing a ton

of lines here. It's just a way of saying

that liquidity is tighter. It's a way

that the Federal Reserve is trying to

brand that oh well this just means we're

getting right where we want to be with

our reserves uh regime. Other people are

like, "Nah, man. The the financial

plumbing is running dry." And uh it's

just a matter of time before something

breaks. Whether that's a bank or private

credit, nobody knows. Does that lead to

a cascade of layoffs? Everybody's got

some kind of doomsday uh you know,

opinion on what's going to happen there.

Nobody knows. That's that's the bottom

line. But what we do know is what the

Fed is saying. So the Federal Reserve is

paying attention to this. They say, "Oh,

well, you know, see, investors are

they're attributing the firmness in repo

rates to a decline in liquidity because

of large Treasury debt issuance." In

other words, the federal government

keeps printing money, so it's their

fault, not ours. That's literally what

the Federal Reserve here is saying, but

uh you know, what are you going to do?

Uh so anyway, then you've got while

usage of these operations has increased

recently, there have been days where a

large volume of repo trades occurred

well above the operation's minimum bid.

suggesting reluctance by some potential

participants to engage. This is

typically because when you go borrow

from the Fed's emergency sort of repo

operations facility, their standing

facility, there's a little bit of a

stigma associated with it that oh no,

like is your bank or your financial

institution in trouble? Why are you

going to the banking window? Did you get

margin called? You know, kind of like

the rumor everybody saw yesterday with

Phil with silver, which I thought was

bogus. still looks to me like it's

bogus. Probably just had to do with

margin requirements changing at the CME.

Don't forget that. That is a lesson.

They can always change the margin rules

on you, right? Great investing lesson to

always remember. And if you don't have

debt, you don't have to worry about it.

Like house hack or myself. House hack

has convertible bond debt, but no bank

debt. No bank debt. And I have no

personal debt either. But anyway, uh

several other indicators of liquidity in

short-term funding market, including

volatility, uh pointed to reserves being

within the ample range. Basically,

they're saying, "Guys, don't worry. You

see all those lines on the chart? Just

ignore it. Everything is fine.

Don't worry about the Pomo or the tomo.

It's fine. Just FOMO back into markets.

Now, one of the reasons they really want

you kind of to FOMO into markets and

they don't want to stoke any kind of

panic is because if you actually go

through the minutes, you'll find the

note here. Listen to this. Uh on balance

we expect expect real GDP to be faster

on balance through 2028. Why?

Primarily reflecting greater projected

support from financial market

conditions. Oh, what are financial

market conditions? The stalk market.

Companies willingness to lend to

companies when their stocks are high and

stocks going up. It creates financial

liquidity and creates financially loose

conditions which beget more spending

whether it's frivolous or uh

inappropriately invested or not. Higher

markets beget more spending and it's

good for GDP. And the Fed's kind of like

guys don't worry about our plumbing's

fine. Everything's fine at the plumbing.

Okay? We just spent billions of dollars

at the Federal Reserve making sure our

plumbing is fine. We even showed Donald

Trump our plumbing. It is fine.

Please take us for this word. So they

want us to believe that everything is

fine. Of course, that's their job

because they want the stock market to

stay up because if the stock market

stays up, GDP grows. Cool. No recession,

no labor recession. Ironically, the Fed

pumping the stock market, which is

exactly what we talked about, you know,

back on December 10th, like the Fed

pumping the stock market is exactly what

they need to do to keep the labor market

from rolling over. Now, is it just as

Mr. Myron at the Fed says for stalling

the inevitable recession. Yes. And of

course Donald Trump wants to do

everything in his power to make sure

there's no recession under his watch.

That's why now you got Waller coming out

going, "Yeah, I see a case for reducing

rates 100 basis points." You know, he's

starting to sound like Myin because he

wants the job.

Freaking obvious. Uh anyway, so they

talk about this, you know, as a result

of this higher or increased GDP uh and

higher financial markets. They think

that the unemployment rate will go up.

Sorry, the unemployment rate will fall.

Employment will go up. Okay, so now

that's really interesting because what

the Fed is basically saying is, hey, we

think the unemployment rate is going to

go down, which is good, right? But the

only reason we think the unemployment

rate is going to go down is because

financial markets are up. So if

financial markets go down, then the

unemployment rate might not go down. It

might stay up or go up even more and

actually turn to the SOM rule. Again,

Bloomberg Intelligence tells us that

they think the SOM rule would have

already triggered had we collected the

October uh households data. But

unfortunately, if you look at here it

is, household data. And then you look at

the employed level over here, you're

going to find for October, it's

literally blank because nobody was in

the office to pick up the phone to

actually call people.

Anyway, why does this matter? It matters

a lot because it puts more

pain, if you will, on top of

that January 9th data. And that's why

that January 9th data is a day that I

say make sure you mark your calendar for

it because it's so important. Now,

obviously, also mark your calendar for

tomorrow because it's the House hack

fundraising deadline. And we're also at

the same time, I hate doing, you know,

sort of a double expiration like this,

but we're uh we're going to raise the

price on the um uh the courses uh at

meetke.com as well as the reinvest AI

mostly because we're releasing the app

and the coupon is literally called

release the app. So whether as the app

comes out, we raise the price for for

anybody who wants to join after that.

You know, it is fair that people who

join before the app is out get a better

deal than people who join after the app

is out. But anyway, uh okay, good. So

what else did we see in the actual

minutes? Okay, so the minutes had a lot

about employment in them and also

inflation. The biggest piece or concern

that they made about inflation was this

fear that hey if we don't come across as

serious on 2% then markets could end up

misinterpreting that we are no longer

committed to 2%. So, that's the only

reason you're seeing people not wanting

to cut rates. Right now, markets are

only pricing in about a 16% chance that

we're going to get a rate cut on my

birthday, which is a little bit

disappointing to me. I was really hoping

for a rate cut on my birthday. It

actually just fell even more. It's only

like 15.5% now. So, unfortunately, my

birthday is going to be marked by a

gloomer day for the Fed. I'll just go on

vacation after that to make me feel

better. But uh anyway, we are pricing in

uh probably about a 57%

chance of two to three rate cuts.

Certainly two uh 27 uh it's more than

probably more than that. It's about a

coin toss right now as to whether or not

we're going to get um uh two or three

rate cuts next year. But you all know

it's way too far out to really look at

that. What's much more interesting is

this. Take a look at this. Most

participants noted that a move towards a

more neutral policy would help force

stall the possibility of a major

deterioration in the labor market. So in

other words, like they're so acutely

aware about poopy dupy happening uh on

or in the labor market that they're

cutting to forestall that collapse

basically in the labor market. And I I

can't help but think when I hear the

word forstall, I can't help but think

they mean kick the can down the road.

But in fairness to them, uh forstall

actually means to prevent.

So, you know, definitionally, they're

cutting to try to prevent the labor

market from rolling over because they

realize, as they've said before, this is

not news, the downside risk to

employment have increased in recent

months and the downside risk to

employment have risen in recent months.

See, they they say the same thing

numerous times because they want you to

be really clear that the only reason

they're cutting is because not because

they're not worried about inflation.

they are worried about inflation, but

because they think all of a sudden

you're going to see the labor market

fall off a cliff. Now, right now, the

market forecasters are forecasting that

we're actually going to get a good jobs

report January 9th, which would be

fantastic. Now, obviously, we'll break

it down, but if we can get a good jobs

report next month, uh, to the tune of

maybe 50 to 60,000 jobs, I'm going to

pull it up right now to see what the

forecast is, that would be great. We'll

get CPI after that on the 13th, but

it'll be less interesting, frankly, than

the change in payrolls. Yeah, we're

forecasting 55,000 non-farm payrolls,

private payroll, 73. Now, we were

supposed to get the weekly jobs data

from ADP today, but we're not going to

get the weekly uh ADP jobs data day,

which I thought was a little bit

unfortunate. I kind of like woke up this

morning. I'm like, "Oh, I'm kind of

excited to see the the ADP numbers."

Because even Bloomberg had it in their

sort of like calendar of things coming.

They're like, "Oh, it's coming." And

then they yked it. And I'm like, "Why'd

they yoink it? And where's the data? How

come nobody's talking about the data? I

was looking for it this morning." Uh and

uh it actually turns out that if you

look at their last weekly release, which

was their last weekly press release, the

uh ADP did the company did say that they

would wait until the next full monthly

ADP report. So, you know, that'll come

out now, the next full monthly ADP

report. Let's see here. I'll let me see

if I have a forecast for that one

because that could be kind of cool to

look at as well. Uh, and in the

meantime, if you have any questions, by

the way, about investing in House Hack,

remember IR at househack.com. I

personally can't wait to be done with a

pitch. And like I don't want to sell any

more of the stock because I think our AI

is about to freaking kill it. I just

found a deal, by the way. Let me read

this ADP number out here, but I just

found a deal through the app. I was

going to make a video on the app and

then I'm like, "No, I need to write an

offer on this deal instead." I got so

excited about it. So, the current survey

for the ADP report for December is

actually also 50,000. Now that comes out

on January 7th. So we are going to get

7th and 9th. We'll get data right there

which uh you know should be exciting to

get. So we'll see. But until then you

know to me not a lot of negative

catalyst. Not a surprise that markets

are kind of I mean like I look at like

meta today 667. It's like you get a

little bit of fun at the beginning for

some trading and it's just flat the rest

of the day. It's like everybody's on

vacation. I'm trying to get the cues

nicely back to 627. you know, let's get

a little bit of pump in before the job

numbers. Why? Because if we get bad job

numbers, I think we want a little meat

on the bone. You know what I'm saying?

Like I I I don't want the economy to

fall off a cliff. Uh I I I don't mind

that AI keeps booming. Maybe I'm a

little biased. I got an AI startup. I'm

like, hell, no problem. Please keep

cranking. So anyway, I just like putting

my cards on the table. Uh but anyway,

hopefully that's uh exciting and

insightful to you and uh we'll see you

in the next one. Remember this video is

not a solicitation. Go to houseack.com

to read the offering circular or

reinvest.co. It is exactly the same

company. You could buy our AI there as

well. Uh and uh if you want to join the

me Kevin Alpha Report, you can do that

over at me.com. Thanks for watching.

Goodbye and good luck.

>> Why not advertise [music] 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 Pafra there, financial

analyst and YouTuber, Meet Kevin. Always

great to get your take.