wtf... this is not good for the economy.

hey everyone me Kevin here we've got a

talk fact-based update here on what the

heck is going on in the market and what

you need to be concerned about look

let's just be Crystal Clear companies

are struggling to increase their

earnings per share at the same time as

Desiring to raise volumes of what

they're selling goods and services the

problem is companies are having a

substantial difficulty today passing on

cost increases to their customers

compared to how easy it used to be Pepsi

for example just got kicked out of one

business owner's store because Pepsi

raised prices too many times people are

starting to revolt at higher prices and

as they should prices have exploded way

too high way too fast and companies

realize this now from Goods companies to

service companies you want to look at a

horrible example at a company that's

basically out of money look at Wayfair

they're basically cheering deflation and

trying to suggest we're just passing on

the cost savings to our customers that's

why we're cutting prices it's normal to

be super

promotional companies are panicking

because they can't raise prices anymore

as certainly not as high as they used to

be able to and it's not just Wayfair

company that's producing Furniture when

you're in a very slow real estate uh

Market it's everything from auto

companies Auto Zone part suppliers

Commodities look at lithium prices it's

deflation in Lumber look at deflation at

almost any kind of good or service the

rate of price increases is coming down

substantially even ski tickets yeah

they're still going up somewhere around

7 to 8% which is really annoying because

now it cost like $280 for a freaking

lift ticket which is absolutely insane

but the rate of growth is slowing and so

I'm not here to say there hasn't been

inflation I'm here to say it's all

slowing down substantially and when you

read company earnings calls you'll see

it you'll see it so clearly that when

you jump over to ec.com which is the

free forever research website where I

like to drump drop my research and my

opinions and I separate those by check

marks and little um uh Halo emojis here

but I want you to see paychecks warning

which as you know when you pop on over

here you could just click my links and

see some of the research that we're

looking at but look at this our small

business employment watch continues to

show moderation in both job growth and

wage inflation which is indicative of a

stable macro environment and and the FED

having their desired impact while we

haven't seen any normal signs of a

recession though now this is big we

started to see some softening and

seasonal hiring in the quarter

particularly in our large client

segments including our human resources

Outsourcing business many of which

typically add seasonal employees at this

time of year uh-oh warning from

paychecks but we've talked about this

warning before now how does this warning

relate to data that came out today and

why do we need to be concerned about

some of the data that came out today

well if you just look at the headline

numbers you'd think the FED still has a

long way to go in fact you'd probably be

in the camp of treasuries going way up

and there are a lot of folks who believe

this that treasury yields should go very

very high potentially higher than 5 6 7%

over the next decade I want to be clear

my opinion is the opposite will happen

that treasury yields and interest rates

will actually fall to lower levels than

we had before the pandemic now I want to

be clear about my bias before getting

into facts okay so let's look at some

facts we know that there are individuals

who believe treasuries are going to

Skyrocket the reason they believe that

is they believe the economy hasn't

really been hurt on high interest rates

yet we've discussed that on eack as well

they argue hey well if the economy is

doing so well under these high interest

rates maybe we can really sustain higher

for longer that's why when we got a jobs

beat this morning where we got a jobs

report coming in at 216,000 over 175,000

even though in the last 2 months we took

away 71,000 jobs from the numbers we

reported we did have about a

31,000 job beat here and we had wage

gains that are slowing year-over-year

but the month-over-month number ticked

up at 4% higher than expectations of. 3%

this immediately LED treasury yields to

rise and a lot of people to cheer uhoh

this is it we are going to unpr the

March rate cut including myself I

thought with this information we weren't

going to get our March rate cut anymore

well that was until we actually got some

more realistic data which aligns with

what we're seeing in in uh earnings

calls now remember when I talk about

more realistic data I want to be very

clear about something when the BLS labor

report says there's a problem it's too

late jobs reports are a lagging

indicator of problems in the economy

leading indicators are what companies

are actually doing planning on doing

what they're talking about doing those

are leading indicators what we saw from

paychecks the warning on deflation we're

getting from Wayfair the warnings we're

getting from uh any company you could

think of whether it's Best Buy it's

retail it's solar any company you could

think of the warnings are we are right

sizing the business we are hiring less

and we're trying to increase margin

because we can't keep raising prices

those are the warnings we're getting and

where are some of these finally starting

to show up right here

ISM services employment missed massively

we got a

43.3 release any number under 50 is

contraction we were not only expecting

it to be

51 but we were definitely not expecting

it to be in contraction and this is a

this is one of the early indicators

because this is a survey that says hey

are yall adding employees do you have

plans to add employees what are your

plans going forward the jobs report

looks back not only at last month but it

basically reflects hiring decisions that

were made when GDP was like 5% in Q3

right in Q3 you're like yeah let's hire

some people over the next few months you

got to put the job posting out you

allocate the budget you start hiring

people it takes time to hire people

that's why jobs data is so lagging and

so when we actually look at specifics

like whether it's paychecks warning the

ism Services numbers that we got even

numbers that we got earlier this week

look yes we got the jolts number uh

which was roughly stable again we went

to about

1.04 uh or 1.4 in terms of job openings

per unemployed person look at ISM

employment which uh was not uh the uh

ISM services employment this is just

it's another survey right also in

contraction now that figure did beat

expectations a little bit 48.1 but it's

in contraction we were expecting it to

be in contraction Services nobody was

expecting that to contract

and now we got a big contraction here so

combin what we're seeing with employment

in manufacturing and apparently now in

services in contraction paychecks is

warning company warnings about right

sizing to try to increase margin because

that's probably the only thing that's

going to increase EPS EPS for companies

this year this year is going to be all

about profit how do you increase

earnings per share it's not going to be

Topline it's going to be volume and

margin that's how you're going to make

more money uh and so the Fed needs to

wake up now we're getting balloons the

FED needs to wake up to these warnings

in my opinion as soon as possible

because the headline numbers are

misleading and if they go negative it's

too late we're in a recessionary cycle

look at the rate cut expectations after

the ism numbers 90.6% chance of five

rate cuts by December of 2024 26% chance

of seven rate Cuts little more than a

coin toss of six and now almost a 76%

chance of a cut in March way up from the

58% we saw this morning after some of

the data

releases now why did the numbers come in

hot well Bloomberg actually thinks warm

weather is to blame think about the

snowfall we've had this year very little

compared to last year a lot so really

interesting to see uh some of the

reactions in the market very volatile

okay stocks way down at first on the

headline jobs numbers way up here's what

you got to pay attention to going

forward okay CPI it's all going to come

down to inflation because if we can

continue to get weak inflation and I've

got the inflation estimates on screen

right here if we can continue to get

weak inflation reads the FED has a

license to cut If the Fed has a license

to cut they are going to suggest that

well we're just keeping tightness the

same it's because inflation is going

down and then they will cut which they

need to do otherwise they will push us

into a recession the Fed was late to

deal with the inflation problems yes I

do think inflation will end up in the

long term proving to be transitory that

is the inflation rate that is not to say

that I think high prices are going to to

come down we should not wish for high

prices to come down it would be very bad

people I I know that is an unpopular

opinion I know that okay I teach all my

unpopular

opinions in my courses on building rough

like the gold course or the real estate

zero to millionaire course stocks and

psychology money course with bellers all

those are at meetkevin.com you know

about

that I teach things that I think and

truly believe in for making real wealth

in the long term and so to be very very

C clear here my opinion is the Fed needs

to look past this headline number and as

soon as possible needs to start waking

up to realizing oh man our companies are

starting to complain that they might

have to start laying off even more just

to prevent EPS from going negative and

then their stocks from really dropping

off a cliff companies don't want their

stocks to fall it hurts hiring and it

hurts their wealth duh so what do they

have to do they have to beat on EPS how

do you do that when you can't raise

prices more volumes which actually means

lower prices so you increase volume

probably with lower prices

deflation and you cut hiring and you cut

spending on your Opex right that's how

you do it it's a big risk factor now you

don't want that deflation to be too

extreme because when you get deflation

you incentivize a cycle of saving versus

spending what does that mean big job

loss deflation has been historically

horrible for an economy some people

think like oh but the Roaring 20s

Roaring 20s was a freaking reference to

a social Awakening after you know

prohibition and uh uh then then uh the

social Awakening of women's rights and

and uh you know freedoms libertarian

ideals whatever okay that that's what

the Roaring 20s was about you want to

look at the 1920s you started the decade

in a depression massive joblessness and

you ended the decade with massive

joblessness you want to know suffering

it's not your stock portfolio going down

it's you losing your job being unable to

get another job not being able to make

the payments on your car and your home

having to sell those get rid of those go

into an apartment and then have your car

repossessed oh wait that was my

childhood yeah that happened to us okay

so I know the pain of losing your house

losing your friends losing your sense of

stability getting your car repossessed

then going to walking to school which I

know that doesn't sound like a big deal

a lot of people walk to school I'm just

saying okay it's a

change fed's got to wake up here 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 see how it goes

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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