quitting

folks we got to talk about

quitting because quitting is a big deal

and to some of you this may come as a

surprise some of you may be very excited

about this and be very very bullish

about this

well folks

here's the reality when people

quit their jobs

they oftentimes go to new jobs and make

more money the problem with people

quitting and going to new jobs and

making more money is it leads to an

increase in wage price

growth which is inflationary it's a

problem and the second thing it does is

it encourages companies to keep job

openings open so when we compare the

number of job openings at 1.9 to the

number of people looking for work at one

we end up getting j-power that says this

is a bad ratio and we get j-pal that

says we don't want out-of-control wage

price growth even though some wage price

growth for obviously the worker is a

good thing overall in the economy we

don't want too much of that well folks

we actually have some good news because

these two things combined together here

lead to a hawkish fed

some good news is a first and i'm going

to reverse order here first

we are seeing companies like apple and

google and facebook snap vimeo redfin

you name it companies are closing job

openings and companies are freezing

hiring or potentially even laying off

people like tesla's laying off folks

that is hopefully going to bring this

ratio in line with what j-pal wants

which is more of a one-to-one as job

openings get closed we could get to more

of a balanced labor market that's really

really good but there's a second thing

that's all really fascinating about why

people thinking about quitting but then

maybe not actually quitting because

they're worried about a recession could

mean see that's something that's

fascinating to consider is look at this

chart for a moment here this is an

expectations chart this tells us

expectations three months ahead and it

says that consumers are growing less

optimistic about the labor market which

could lead to less job switching and see

this right here is the three month

moving average of expectations ahead we

see we've gone negative over here we

haven't seen a negative number during

the covet pandemic we last saw a

negative number over here in 2016 coming

out of the great recession where we had

this slower recovery especially for

lower waged individuals slower recovery

and we've had a lot of optimism over

here but we're now negative again the

first time in about six years that we're

negative again and what's neat about

this

is that because we're negative people

might actually decide you know what it's

time to end

this quit culture and instead of

quitting to find a new job maybe getting

that higher rate maybe that's too risky

in this environment maybe we'll just be

happy right now with the raise that we

got or whatever we'll stay because we

don't want to risk being unemployed

quitting into a recession and when that

happens and people make the choice to

stay you can actually eliminate

potentially a lot of that out of control

wage price growth or at least the

concern of wage price growth growth so i

started this video off by saying that

hey quitting and the change that we're

seeing in quitting could be a good news

because it could be another thing on top

of breakevens on top of commodity prices

coming down and on top of inflationary

prices coming or inflationary aspects of

our society coming down the fact that we

could also see people less interested in

quitting and job openings

are getting cut and we see that

jolts indicator coming more into balance

and less pressure on wages less wage

pressure

we have all of the pieces of the puzzle

here really for good news the second

half of the year

in terms of inflation coming down so in

my opinion when i said that you know

some people might be happy about this

update on quitting

i'm happy and if anything it makes me

bullish to reiterate that this is

probably buy time this is probably time

and not financial advice but this is

probably time where look we've taken

some big elevators to the bottom of the

market here it's been very very painful

and yeah we might trade sideways for a

while but i wouldn't be surprised if

this is either really close or slightly

behind us maybe this here was 268 on the

qqq with a little bit more of a stable

level here at about 280. we're almost at

300 again right now you know i don't

expect to be at 400 again anytime soon

but

i'm optimistic and the more i see these

inflationary pressures come down the

more excited i get just remember this

date folks july 28th it's the date that

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thanks bye