*Holy Smokes* Breaking Report Warns of Fed Rug Pull!

well well well another jobs insane

surprise it is a one day of course

before the official BLS jobs report but

we have a private jobs report that likes

to give us heads up as well as

unemployment claims and continuing

claims and jolt's numbers we like all of

this data so that we can try to

understand what's going on in the

economy the joltz data coming out later

today is expected to come in at 9.9

million but what did we just get we just

got continuing claims continuing claims

are a sign of how many people were

unemployed we're looking for work and

when the number goes down it's a sign

that they got a job which is designed

the economy is still willing to absorb

people who maybe lost their job and are

now looking for a new job we were

expecting survey says

1.737 million continuing claims we

actually got

1.720 so a miss again on continuing

claims not only did we miss on

continuing claims though but last week

we revised down the number by another

nine thousand so in other words

strong jobs Market however we did see

initial jobless claims tick up a little

bit to 248 000 versus the survey of 245

000 as reported just minutes ago that 3

000 beat though was offset by 3 000

reduction last week so really that's

like six of one half dozen the other no

change there I'll say initial job was

claims basically no change continuing

claims a little bit lower great

but what did we just get with ADP

a blowout an absolute blowout so listen

to this we were expecting 225

000 jobs to be added in the month of

June what did we get look on screen now

it's a fat coupon code for the shadowing

experience with meet Kevin linked down

below or the courses oh it's actually

the ADP report 497

000 change in private employment job

creation surged in June oh no oh no oh

no this is my fear

led by consumer facing services

oh no that's your corn remember Kevin's

fear right now Kevin's fear is that

people are going to travel so much more

than the seasonal adjustments are going

to take into account we're going to end

up seeing core inflation rise and people

are going to lose their behinds freaking

out thinking inflation is reanimating

just because people are traveling more

and spending more on Leisure and

hospitality

anyway Leisure and Hospitality trade and

transportation education and Health

Services showed strong gains still the

market was fragmented with Manufacturing

tech and finance showing declines

oops

oh dear lord okay so where are the

numbers concentrated wow wow that's

actually very interesting so it's the

small businesses here under 250

employees that are adding like nutso 160

000 for small

we just hired

first time ever by the way never had

this before first time ever just hired

an in-house attorney uh they're on I

don't know like day like eight or

whatever uh and uh it's uh it's so cool

like it's awesome uh like it it's like

who do you want to sue it doesn't cost

you anything I'm just kidding that's not

the intention right that we have

compliance purposes and stuff but but it

is kind of cool anyway so uh because

ordinarily like if you let's say you are

to get sued you're like crap I gotta

hire an attorney and it's expensive and

stuff it's like now it makes no

difference anyway 162 000 for small 137

a thousand for uh 20 to 49 employees 171

000 for uh 50 to 249. small increase

here for 250 to 4.99 how does that apply

to large uh large negative 8 000. wow

this is actually really interesting yeah

the big companies are not hiring as much

so consider that takeaway here for a

moment that's kind of incredible

actually so what you have is you have uh

companies oh oops uh Co over 250

employees

not adding I'm gonna say not adding

because you have a slight plus here and

a minus on the other I think that

offsets so really over 250 employees

you're not adding it's the under 250k

adding like a nutso which makes sense

because that's going to be more of your

your restaurants uh your hotels

and uh you know all your your uh related

Hospitality Services your waverunner

rentals your skydiving rentals you know

you're oh man it makes me want to go to

the beach of Florida so probably it's so

warm and beautiful there anyway stuck in

California uh so what do we got in terms

of a specific

sectors here manufacturing hit you've

got uh trade Transportation utilities up

90 000. this is actually where we also

saw some of that CPI Heat

that was actually the biggest one of the

biggest contributor of uh of CPI Payne

over here then you've got look at that

Leo oh Leisure and Hospitality 232 000.

that one sector alone

is bigger than the uh 232 oh sorry we

were looking at 225 000.

that's nuts

um we're looking at 225 000. we

literally beat that solely with Leisure

and Hospitality some broccoli Bob that's

an interesting name it's an alliteration

says who do you want to sue uh nobody

unblock people no no never uh anyway so

um okay let's keep looking here uh I

want to see the wage data though so

waged out of wage that a widget so let's

get the wage data yeah mostly because

when we look at the wage data we can see

how we're doing with any fears of a wage

spiral which we don't want

uh no come on we're the wage gains quite

interesting they're actually not

indicated usually they're they're right

at the bottom of this report

so I will continue to hunt for that

anyway let me see what Wall Street is

saying for this and what this is going

to do to our five-year break-evens uh

it's probably going to drive yields

higher it's probably going to reiterate

the hike which in my opinion does mean

you could have a potential sell down in

stocks but honestly it's a good thing it

just says we're that much further away

from a recession like anybody who says

oh I got it anybody who says this is bad

wants the economy to go into a recession

or something

it doesn't make sense this is absolutely

fantastic uh yeah five-year break even

just ticked up a little bit so you're at

2.22

one tenth of a percent on an uptick here

not a big deal uh whatsoever so that's

okay uh as far as oh yeah here we go

okay I'm getting the wage data now as

far as the let's look at the FED term

rate expectations that way we could see

if the Market's trying to price in any

more rate hikes uh beyond what we

already have price so the FED term rate

right now sits at a Juicy and Delicious

oh yeah

okay we just shot up from 5.35 to 5.41

so the way that works is you have to

think that another 25 BP hike would put

us at about

5.37 anything above 5.37 which is the

midpoint between five and a quarter and

5.5 anything above 5.37 implies a second

rate hike so this means we are now

starting to price in a second rate hike

this Honestly though

who cares like another 25 here 25 there

I don't care as long as we're not going

into a recession it just doesn't matter

uh you did just see another three

percentage points added to the chance of

a 25 BP hike for July you're basically

confirmed now uh and you're still stable

ah no you've added about four percent to

the chance of a second hike in September

yeah okay they shaved off the the stay

stable at five okay so now let's look at

wages

so in the ADP report we have

here it is

okay we're going to compare this to the

prior report because we want to see

what's going on with wage gains

so this is very important so we want to

compare to the May report

ADP report for May last month uh that

was let's see there's the May release

that's the jaw I release uh okay well

let's just for now quickly compared to

two months ago we'll be able to see a

little bit more transition if we go two

months back okay so I have both up here

so this here is now and we're gonna flip

between the two ready for this job

stayers six point four percent go back

two months job stayers six point seven

percent so continue to climb job

Changers you're at uh 11.2 percent

and you were at 13.2 percent two months

ago okay good

and what about uh Leisure and

Hospitality you were at 8.9

now you're at oh thank goodness 7.9 you

want to see that keep going down other

services 6.3 uh was 6.5 good education

went down professional business services

six two that went up

you actually had a little bit of a

sticky push here

I don't want to see that wait no no

sorry hold on a sec did I do that right

no no it went down one okay good it went

down one basis point I was I was flipped

backwards there for a second my bad okay

good we want to see them all Trend down

you've got Financial activity stable

information at six percent uh yeah that

went down that one uh trade yep all of

them went down

construction 6.7 versus six nine five

nine versus six two six four versus six

eight yeah this is fantastic so uh yep

there it is uh pay gains slowed again in

June slowest paid pace of growth since

October of 2021. this is fantastic

yeah this I mean it's great of course

your the market is going to initially

price in some concern because it means

rates are going up right it means it

means you're you have to start pricing

in your next rate increase but broadly

you have to look at this way we've

priced in multiple more rate hikes

from what we expected at the beginning

of the year we didn't think at the

beginning of the year we were going to

get to five percent

at least marketston then we got hot data

in January we got volatility in March

because of that along with the banking

crisis even before the banking crisis in

February you had stocks sell down as we

had to price in higher rates so

initially when you get strong economic

data the first algorithmic response is

crap bad that means more rate hikes that

means higher cost of capital that means

squeezing the economy more that means

j-pow is basically coming up to you

going

squeezing a little harder of course of

course the Market's going to turn red

that is the natural reaction of yay you

know more rate hikes but you have to

remember this is actually really good

because it tells you the economy is that

much further away from recession the

further away we are from recession the

better here's uh what is this Logan

commentary let's listen to this because

to give it a little more time she's

concerned whether inflation will return

to Target in a sustainable And Timely

way she says the pace of Labor Market

rebalancing remains slower than she

expected and that forecasters expected

she's there's no indication she said of

a deterioration of the labor market

she's skeptical and this is important

Logan comes to the Dallas fed having run

the New York fed monetary policy death

so she was steeped in these issues of

crises and financial crisis first no

indication about large lagged effects

from prior rate hike she says basically

it's already in the market or in the

economy right now already had a fair

amount of time to see the overall effect

she says housing markets looks to have

bottomed uh and housing rebound could

cause upside risk to inflation the

outlook for above Target inflation she

says and the strong labor market could

calls for more active monetary policy

and this is important tighter credit

conditions she's judged are unlikely to

offset the need for higher rates and

again that issue we talked about the

rebuilding of the treasury general

account by a trillion dollars not

creating liquidity pressure she says so

the three of course not stayed the fed's

hand lagged effects tighter credit

conditions rebuilding the treasury

account she's dismissing those guys

you just told us

she's not on board with that she wants

to see in the data look I told you it

was a story it was something the data

explains it and and I know we got a

great great guy who's going to talk

about this stuff coming up

yep and that is meet Kevin so bottom

line uh there's some questions here

should we be concerned about this is it

by the dip obviously your personal

allocations totally up to you right but

my take is that this the market that

we're in is likely to see almost all

dips bought by institutions in fact

that's what we just talked about earlier

uh on the channel is that institutions

are under allocated stocks and so you're

creating a floor that when you get dips

you get buying pressure because of

either fomo or under allocation or the

opportunity cost even though bond yields

are high and they continue to rise part

of that is actually a cause of people

dumping those bonds driving yields up

and then getting to stocks so but again

of course the Market's initial reaction

has to be down because algorithmically

that's the way it works if Fed rate hike

bets go up Market go down that's how

it's worked for the last 18 months and

that's been the easiest trade ever

but consistently what's happened over

the last six months is that we don't

care anymore about the rate hikes what

we actually care about is avoiding a

recession and avoiding uh an earnings

recession to the extent or more than the

extent that we've already priced in an

earnings recession you don't want a

recession

these numbers today say no recession

they also say no wage price spiral they

are a red flag for the potential that

core inflation ends up surprising up

because of more than expected spending

on Leisure Hospitality hotels flights

and all that crap but that will be

temporary that will be bad news between

basically

uh early August and mid-october that's

when you get your inflation reports for

July through September that's probably

when you get your your potential bad

news you get past that now you get past

the the summer travel season

and if inflation continues to Trend down

and there's no recession or it's delayed

substantially it's all great news again

I'm not trying to like put on like

rose-colored glasses here I'm like

people like whoa

how could it be good news we're not

going into a recession

that is good news like that's not

rose-colored glasses it's good news you

don't want to go into a recession

so uh you know it's it's a good thing

this this report absolutely does not

point to a recession which is fantastic

uh so I think it's great uh now by the

way

um I want to just throw this in here

really quick because I know some of you

have been curious about this MP material

MP material emailed me a little angry

yesterday because I tweeted about them

uh and so I wanted to address that and

uh just put it out there so yesterday

uh China talked about banning certain

Rare Earth uh exports that are needed in

chips to America it's basically like a

Tit for Tat slap back at America

and so I tweeted the following how

ironic MP materials jumping on Beijing

restricting exports of rare earth metals

yet ninety percent of MP materials

Revenue comes from a Chinese company so

people are investing in the United

States MP materials thinking they're

getting U.S rare Earths yet those rare

Earths are just going to China anyway

okay and then I I tweeted this which is

my the receipt

which is literally from their q1

earnings report of this year

that's their words not mine as of March

31st 2023

was a company's Prince was the company's

principal customer and accounted for

more than 90 percent of product sales so

anyway they emailed me and they're like

dude come on man like that's phase one

and and when we get to phase two

We're Not Gonna sell ninety percent of

our stuff to China anymore and I'm like

cool how about a factory tour or like a

mine tour and an interview and we could

talk about it and they're like yeah we

could do that after we transition to

phase two they're like okay cool when

are you guys transitioning and they said

we're not ready yet we'll let you know

like okay so in other words

for the time being you are going to

still sell ninety percent of your stuff

to China and that's okay but like don't

get mad at me for pointing it out I

think they're mad because I'm I'm

pointing out what is literally on their

disclosures like I'm reading their

report like don't get mad at me for that

is what it is

but if you're gonna say like hey like

that's gonna change when we get to phase

two fantastic

that that's that's great that is good

news uh but you're not there yet

so anyway wanted to add that in uh but

again bottom line all this recession

stuff

Kick the Can down the road recession

it's a good thing

Now goal here says

Kevin I work for the largest trucking

company that's going on strike

it does it rhyme with UPS

anyway

uh the raises are huge what we get other

trucking companies follow

have to make a deal by Og one

like how huge are we talking here are we

talking like like six percent wait wait

wait wait wait wait wait actually

are we talking

trade Transportation utilities are we

talking 6.3 percent

I want you to know this when it comes to

AI

time is what's going to make you money

and if you can prove that value to an

employer you'll always be able to be

employed so this is another way of

making sure that you don't get replaced

but

foreign