Jerome Powell Problem | Bull Flippening.

hey take a look at this this is a bull

okay A lot of people are asking me Hey

Kevin can you cover more bullish stuff

are you always bearish I'm like no many

of you know I'm not always bearish I've

been bearish since July and I expect to

be bearish until at least right before

the election and and then trust me I

want to go back to being a bull okay

it's a lot easier but at least in the

meantime people are asking me Kevin like

hey you know can you give us like some

kind of like bull hope at least to look

at and I thought okay yeah let's look at

TS Lombard uh and the reason like TS

Lombard is because this team over here

they're generally generally more bullish

uh than than what I see by others out on

Wall Street uh and I like balancing My

Views to theirs you know for example uh

Dario Perkins over here starts with I've

been in the soft Landing camp for a

while and he's not going to abandon it

now okay all right so we kind of know

where this is getting started right uh

he's telling us hey look I'm a soft

Landing guy and these guys are

professional wall streeters I I love

their Insight honestly I recommend

everybody check out TS Lombard it's #n

notsponsored I I just like reading them

like when I see their name pop up I'm

like oh I wonder what they have to say

hopefully it's kind of like that for you

for me where it's like oh me Kevin video

hopefully you come and learn new things

every time right that's the goal uh so I

was reading this last night and I'm like

oh I was not expecting this so uh I want

you to see how he's net bullish but some

issues that are coming up for them take

a look at this so I'm not going to

abandon it now especially after the feds

50 basis point cut mind you with this 50

basis point cut here there are a lot of

people on Wall Street that say the left

tail has been eliminated by uh the

Federal Reserve I actually think that's

a pretty crazy um how should I put it um

complacent thing to say I don't think

the left tail is ever removed

but there were some analysts on Wall

Street I was reading they're like oh the

Federal Reserve basically said look we

cannot go to the left the left is down

right this is the down Market this is

sad this is like hyper runaway melt up

amazing bullish economy uh and then you

know this is your sort of middle

standard deviations here right middle

standard deviation one standard

deviation two okay simple the left tail

is like everything goes to poopy doopy

and uh this analyst I was reading

earlier today they're like oh the fed's

eliminated the left tail risk no left

tail risk this is great and I'm like no

no no no the FED has not eliminated a

left tail risk until they cut rates by

200 basis points in an emergency

capitulation capitulation cut and then

they cut another 20000 basis points and

we're basically back under 1% you know

then I think the Federal Reserve has

actually stopped the left tail risk now

maybe they're signaling that they would

be willing to do that but I don't think

they would be willing to do that until

you have some serious pain in Market KS

so uh you know point of that right is is

just to say like hey you know the FED

could be there to bail you out but the

fed's not going to capitulate and bail

you out until something breaks and

something actually has like a lot of

pain for a while the downside of that is

if something has a lot of pain for a

while it means valuations are are

typically lower right uh this is why

sometimes on days like today I kind of

just like uh trading you know this

morning I threw in uh right when data

came out we talked about it I threw in

this see 7 a.m. is even where my

screenshot is I threw in this order here

5 seconds after the data came out you

could look at that timing 82 Cent

purchase on the cues uh and this was my

Tesla S sell which I made some profit on

that which was nice but look at that I

sold it for 159 which was nearly a

double and I hit Buy on that I send a

notification to everybody in my Discord

puts and CNBC comes on like a minute

later they start tanking the freaking

Market was like kind of funny uh you got

to beat CNBC to the news uh but anyway

we try to do more of that I think that's

that's always entertaining uh remember

we have a flash sale in honor of that

called Data double going on until uh the

end of the day today and that trade held

its value for for like another 20

minutes or so so like you didn't have to

be really fast on jumping out uh but uh

but eventually we did end up bottoming

out on the cues and it it was important

to cover but anyway take a look at this

they say I'm not going to abandon after

the 50 you know especially after the

feds 50 that's fine uh it's a commitment

to not fall behind the curve blah blah

blah but there are a couple things that

are bothering me I'm like oh interesting

a bull getting bothered that's that's

rare usually it's just like hey it's

just going to go straight up recent

labor market trends covering in depth uh

covered in depth we've been talking

about these already uh and the sudden

rather surprising relapse in global

manufacturing okay so both of these

matter we've been covering these either

in the manufa facturing isms we've been

covering them in the labor market the uh

attemp layoffs the peing out of

government and education employes the

peaking out of job openings the number

of people who are 27 weeks unemployed

look that up Google that one and it's

I'm telling you it looks like you're in

a recession but anyway uh uh and then a

third thing that bothers him central

banks taking Victory laps okay

interesting so he's a bull and he's like

hm we're starting to face some problems

here labor market trends Manu facturing

and then the Federal Reserve basically

trying to say everything's fine we're

winning I actually agree with this I

think these Victory laps are somewhat

hubris and I was a little nervous that I

I feel like Drome Powell is holding back

the concerns he truly has and he's like

don't worry everything's fine to

purposefully pump the markets because he

realizes that if the stock market's up

you have a lower chance of getting

layoffs but but you're built on fugazi

foundations then yeah it's not great but

anyway the cycle that fooled the

consensus this has not been a normal

business cycle and they talk about how

leading indicators have given false

signals like postco manufacturing

recession uh this was not a sign of a

broader economic crash the Phillips

curve was wrong the Philips curve was

suggesting we should have had interest

rates up at like 9 or 10% uh people

thought a recession would be needed to

cure inflation no it's just once you

start lapping the price increases

everything's adjusted up wow all of a

sudden you don't need more inflation

unless you're printing more money okay

we we knew that that's fine this is why

we've been talking Nike SW recovery for

a while B baverage curve this this has

to do with the labor market expanding

labor force participation yield curve

predicts policy easings not necessarily

recession well the problem is usually

when you come out of recession you

predict a lot of easing it's because you

are pricing in a recession we're still

not there yet usually you don't start a

recession until you're 50 to 90 basis

points uninverted and uh we're at about

20 right now partial debt sustain ility

blah blah blah okay so the biggest error

so far postco in calling for a recession

has been underestimating the resilience

of Labor markets or believing that

central banks would have to destroy

labor markets to get inflation down

which would cause a recession even now

there's still a chance that people are

misleading or misreading labor market

trends here I want to focus on a

different issue Global manufacturing two

years ago it was easy to dismiss the

weakness in manufacturing as a head fake

okay so basically let me show this to

you on the map when you go down you go

down because of covid okay this this

makes logical sense when you come back

up you go up because everybody's

printing money like crazy and then of

course you're going to have a

year-over-year comparison so you're

going to have some volatility after the

you know the remarkable recovery what

he's most concerned about right now

beyond the labor market weakening which

we've already covered on the channel is

this right here this is his second big

concern

he's going wait a minute this latest

deterioration is actually more

concerning this chart is in his words

and he's a bull he's a soft Landing bull

particularly ugly okay that's not good

because this now means you've got the

labor market that's poopy doopy and now

you've got manufacturing that's turning

poopy doopy that's not great this is a

lot of poopy

dupies uh and then of course you know

you have uh the the oil Market that you

know yeah it bounced today because of

Chinese stimulus I mean we we we knew

the Chinese stimulus was coming we

weren't expecting it to be this big this

was great wonder what oil ended up

but the oil Market is signaling some

distress it might be the same distress

that you get someone like a Jamie

Diamond arguing about of like H you know

the market is pricing in Perfection I

think I'm going to sit on the sidelines

for this one that's what Jamie Diamond

says now maybe it's because he's getting

ready to retire or go on to I don't know

make a spack or something who knows but

uh you know it's saying something when

some of these big boys are like I don't

know man this is getting a little silly

but yeah look oil markets bottom to a

three and a half year low two weeks ago

today uh actually I think it was 15 days

ago but whatever you've had a nice

rebound from 69 to 75 but you're talking

an 89% rebound cool you're still way

lower than where you have been I mean

here's the chart that they they've given

on this uh and and this does signal uh a

downtrend uh either if you draw it like

this or frankly you look at uh you know

this sort of ceiling of highs that

you're getting this downtrend here you

know this is this is certainly

recessionary and it's again a sign of

weakening manufacturing base 18 months

ago we could basically ignore what's

happening in the global industrial cycle

reopening from the pandemic had caused a

massive pivot from Goods to services and

blah blah blah this triggered a huge

bull whip effect in inventories and

Manufacturing weakness didn't tell us

anything but now he's kind of like I

don't know now now we might be a little

bit in sort of a leading indicator issue

see this is why he shows up this uh us

leading indicator six-month annual

change and if you notice we've recovered

here in the leading indicator but we're

already starting to inflect back down so

it's like was was this drop right here

just sort of counterbalancing the run

but now we're inflecting back down

that's what he's looking at then he

looks he says over here so what's going

on is this a sudden relapse and not part

of the original fake cycle is this

something to worry about is it a sign of

monetary tightening finally starting to

bite maybe by the way you know that

would be a way of saying uh that

suddenly you've got a Federal Reserve

that has actually tightened because

inflation has fallen so much and even

though they're not raising rates anymore

the excess increase in rates that we

have is is leading to a tighter

environment but Global manufacturing

capacity

utilization this is we

they're basically pointing out here like

wait a minute why are we normalizing

here we should not be capping out here

because if we draw a line from where we

are and we draw it all the way back and

then you kind of just draw cross points

you're as bad as you were in

2012 uh over here in 2005 coming out of

the 2001 recession going into the Great

Recession uh you know close to almost a

brief low over here in uh 2015 uh and

then 2019 so so you're at at a pretty

low normal level if this is supposed to

be a return to normal this is odd

obviously China's uh economy looks worse

than people have ever seen before but

then again we got you know stimulus uh

today uh so so who knows maybe uh maybe

maybe that'll you know all of a sudden

help China uh but and and and spring up

manufacturing demand is what they're

suggesting but then again would would it

support Chinese manufacturing or us

manufacturing right probably Chinese

Manufacturing

uh but anyway after two two years of

listen to this after two years of

talking down recession

scares I'm conscious that I might

finally be overplaying my hand listen to

that a bull is saying damn okay if

you're bullish he's B basically here's

what he's doing if you're bull he's

saying

look we we might still stick to soft

Landing but we should really start

paying attention to labor I mean we saw

what happened in the ism report

yesterday Manufacturing Services

composite all lower than expected not

great the Beats were nominal and the

lows were low we saw what happened in

the Challenger report from a couple

weeks ago that was a horrible jobs

report we saw what happened this morning

on the conference board uh estimates not

good this is just some of the recent

data it just sort of compounds what

you've been seeing beige book nine out

of 12 sectors weakening this is

problematic but what does he say here as

I keep saying we are a more I think he

meant to say in a more but as I keep

saying we are in a more precarious

situation now and it is unsettling to

see Central Bankers do victory dances

okay this is this is a big one because I

I want you to just for a moment think

about

this when when Central Bankers do a

victory dance they're basically telling

you it's okay if interest rates go up

but wait a minute

now you're not fighting the

manufacturing pain or the jobs pain

because you just let yields rise which

is like fully dumb like I want to say

you know a word I shouldn't be saying

but it's basically it's kind of like

fully our word okay like we shouldn't be

saying or even referencing these things

but for the Federal Reserve to suggest

that oh we've declared Victory

everything's good and then all of a

sudden you see this jump and yields you

are tightening

on top of Labor Market weakness and

Manufacturing weakness that is full dumb

and why does the market keep rewarding

the fed well

because the FED is performing a victory

dance central bank hubris is definitely

top of cycle stuff yeah that's not a

good line uh and this is a bull this is

this is the full bull here but it isn't

time to panic yet not until the Perkins

rule triggers okay the Perkins rule is

sort of his version of the PS Rule and

he's like the PS rule might be triggered

but the Perkins rule hasn't triggered it

you know and then actually compares to

mrss too this is his rule on

unemployment he's like it hasn't hit yet

okay that's fine that that's fine but

let's just be clear a bull is like

things are still okay but we do have

problems let me show you quickly the

Perkins rule so you could see it here so

this is the Perkins rule Revisited from

August uh 26th

and let's just go right to his

definition of the Perkins rule so

basically what you have here is how does

the Perkins rule compare to the S rule

it certainly has more false positives

okay so so this is important because if

he's if the Perkins rule triggers it's

bad and he's saying his rule has more

false positives while it is rare for us

payrolls to decline outside of

recessions it does happen occasionally

usually this is due to obvious

distortions such as extreme weather but

it also happened during the famous soft

Landing in 1995 when a shockingly bad

employment report later revised prompted

Allen Greenspan to cut rates it also

happened in the late 60s okay well hold

on a second in 1995 you may have briefly

had a strong labor report but in 1995

1994 95 and 96 if you read the Federal

Reserve Open Market Committee

transcripts you will find what I saw as

well which is for those three years they

do nothing but talk about how the labor

market is so freaking tight we might be

causing a wage price spiral and they

only cut rates because they're like all

right we don't see the wage price spiral

yet the jobs Market's pretty tight but

you know and people aren't going out

there to hire they actually called some

businesses discouraged as as a reason

for why they weren't hiring uh but

anyway so then you look at this and he

goes okay Perkins rule over here sees

the uh Perkins rule fals positive in

1995 and and over there in the 60s so

it's clearly less functional than the

PSM rule uh but let's let's read what he

says the Perkins rule isn't fullprof but

that's not the point the important thing

is that when you look at every time the

P rule is triggered since World War II

there were only three occasions where

payrolls were not already negative 1970

1974 and

1980 usually when the S rule triggers

the Perkins rule has already triggered

that matters because it's the opposite

of what's happening today the latest

triggering of the P rule looks very

different to the average recessionary

experience so he's making an argument

here that basically I mean I hate to say

it but this time is different but he is

also saying that like hey if if we TR if

this should be a bad flag our our our

indicator should have already been

firing even if it's a false positive it

should have fired before the Som Rule

and so you know his rule is made up of

of slightly different measures and we we

don't know how useful or functional it

actually is but I want again you to show

or or you to see why uh is he saying

this just to be clear because I I don't

think I actually say it as clearly in

this video so I wanted to edit this in

just to add a little bit more clarity

the Perkins rule is when the

unemployment report comes in negative

now why is that important well the

Perkins rule basically Triggers on a

very simple basis it's when the

unemployment Port whatever it is comes

out and it comes in with any negative

read so that is going to introduce a lot

more volatility so if we go jobs report

St Louis Fred let's just say and uh we

get the uh change uh in payrolls we

could just open up the chart and look

and go all right cool when is it

negative and how often does it go

negative well an easy way to do that is

you look for the change in thousands of

people on a monthly frequency so you

just have to edit that a little bit on

the uh St Louis Fred website and once

you do that uh then you could actually

see how noisy it could be that you're

negative so uh it's a little easier to

get rid of the pandemic here because

then you could see over here oh look you

were actually negative in 2003 uh in

April of 2003 but the FED had already

capitulated at this point you know you

were bailing out you you were leaving

the market at the point you had a

negative report it looks like here 1997

-2k you had a negative report right

there - 7,000 in 1996 so that's another

false flag you had a uh- 15,000 over

here I I don't know that these oneoff

hits are that useful because look how

many false reads you get false false

false false false false false false is

Perkins rule like by the time we get the

Perkins rule in this economy we're going

to have some major problems because look

at this what you're really looking for

now is this downtrend that's happening

here right I mean even if you don't

believe in technical analysis I think we

could all argue these are lower highs

and lower lows it's a down Channel now

in case that's not particularly obvious

let's just smooth this out to the

quarterly okay is that more obvious of

downtrend let's go let's go

semiannual do you see the

downtrend now uh keep in mind we only

have the first half on here so it

doesn't actually show the deterioration

yet uh in the second quarter and so when

you throw that in you get that other

pull down over here so it doesn't look

that flat and then obviously if you go

out onto the monthly uh you could see

you know we are somewhat stabilizing

there in that June July August period

but a lot of people at this going come

on man this crap's probably already

negative anyway we can't believe their

numbers but imagine if their crazy

numbers go

negative ooh it's going to be dirty the

trend is not your friend and the Perkins

rule is probably going to trigger pretty

dang soon unless of course you think 150

BP cut all of a sudden is going to lead

to some boom in in hiring so I actually

wrote this down you know a few weeks ago

and he says uh there are several

problems interpreting the psalm rule

today this is is not a regular business

cycle again this is this time is

different the jobless rate comes from

many from the household survey which

looks artificially weak compared to

payrolls and so this is where I say many

would dispute this given the households

was more accurate post the BLS revisions

so I'm actually kind of you know

suggesting here that like hey like maybe

the household survey is actually more

accurate but than the you know payrolls

report but all the data is just a mess

it's hard to know what to believe strong

labor force growth has driven most of

the rise in the unemployment rate it is

harder to tell a reflexivity story when

employment is still growing so this

right here is a labor force

participation reference that you know

even if the participation rate stays the

same if you have a larger group of

people participating then you actually

have more employment but it looks like

the unemployment rate is going up so

this is where he's saying I'm not saying

everything is great investors should

fade the RW he's just saying the US

Labor Market does look increasingly

precarious and is not great when you go

into every employment report wondering

if this data is going to show gener you

know actual cracks genuine cracks the

FED needs to get ahead of this remember

this is from uh um you know about three

weeks ago but the point again of showing

you this was just to say that his take

is the Perkins rule hasn't triggered yet

and the Perkins rule is going to trigger

if you end up getting substantially

lower payroll reads in other words we

could just be one payroll report away

from his per Rule triggering and then

you're you're starting to get to where

you're triggering every kind of uh of of

recessionary warning signal you could

potentially ask for uh

so uh anyway uh he says uh just so you

see it here uh the Perkins rule the idea

that it is a cont contraction in

employment that signals recession not a

gradual trick trickle higher in the

jobless rate right right right right so

but this gradual contraction employment

is already what we're

seeing from the Challenger report from

the ism reports from the conference

board reports so anyway out of all of

this what do I think like what's my

bottom line takeaway I'm watching this

guy because he's a bull and I think he's

got logic I I agree with his tools I

agree it like things are really

concerning when it comes to labor right

now but I also agree that there is a

shot at a soft Landing he probably puts

a soft landing at you know a 60% chance

you know I put a recession at more like

a 70% chance so we're kind of flipped on

that but when that guy capitulates and

goes

bearish that that's that's when I know

it's uh it's about to get real and so

we're not quite there yet but as you can

see the way he talks you know in his in

his report three weeks ago he's like I

don't want to you know like play down

the r word and then what's he saying

this time this time he's going uh three

things are bothering me the sudden

rather surprising relapse in

manufacturing labor market trends and

top of cycle stuff like the Fed so again

uh like when you combine all of this I

just can't help myself but go like I

don't know man is this time to fomo by

right now is this fomo like all in

like I think the risk is way hi uh if if

we can get give me like two or three

labor reports you know give me give me

the September labor report from what I'm

seeing is going to be trash uh let me

see if the estimates are out by the way

give me the September labor report give

me the October labor report in November

and maybe even the December labor report

and if you really want to be sure

there's no recession give me the January

labor report because that's when you get

like the seasonal layoffs and the start

of 2025 layoffs although by November and

the end of October you should already

have the war notices for people who are

supposed to get fired in January so

that's why I really think the end of

October is going to be really really

interesting like I wouldn't be surprised

to see a lot of earnings where they're

like yeah we missed on earnings and

we're going to lay off a bunch of people

in January oopsies Maybe not maybe

earnings will will surprise nicely but

you know it's not going to take a lot to

get these Bulls to flip and once we get

nasty unemployment data that's when they

flip and then it's too late to try to

pick up a hedge you know I look like I

know I had a great day trade today I I I

doubled you know my money in in day

trade I don't know it was like it was

somewhere between $25 or $30,000 which

is great that's a freaking great day I

don't always have great days I can't

guarantee that the days are always going

to be like that but it was it was a good

trade and and I hope to send more alerts

like that that's my goal and if you want

to see what I'm trading make sure you

use that flash sale coupon code that's

going on but but also how I'm

positioning with Hedges and how I talk

about Hedges on a daily basis not shorts

but hedges so let's see what's going on

with jobs so the jobs report comes out

the beginning of October let me see if

there's an estimate for it yet

unemployment rate it's expected to stay

flat at 4.2 dude change in private

payrolls is expected to be 120 change in

nonfarm payrolls expect to be 140 if for

some reason you get like a 95,000 or

like a sub 100 handle this markets get

freaking

tank yeah I don't know because you don't

actually need like think about this for

a moment unemployment claims are

generally aligned with the unemployment

rate going up but you could actually

have a stable unemployment

rate and potentially see less hiring if

people are just more sticky at their

jobs and I think that's still going to

be enough to create some poopy dopiness

so I'm nervous for the volatility I'm

watching what the Bulls are doing every

single day I'm trying to read what the

Bulls are saying cuz trust me I I got

the bear case down all right folks I

love you all we'll see you in the next

one hey what you got Ken I'm ready for

you can 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 goes

congratulations man you have done so

much people love you people look up to

you Kevin P there financial analyst and

YouTuber meet Kevin always great to get

your

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