it's over

Well, it might be game over for the

paradigm of the United States economy as

we know it. In this video, we are going

to break down what research and data is

saying about the slowdown happening in

our economy. Specifically, we'll be

referring to uh some of the latest data

reports from this week that can help us

understand what's actually going on with

that labor report. Is it really just a

one-time report or is there something

more concerning happening? In addition,

we're going to talk about this GDP

paradigm shift. We'll talk about the

Federal Reserve's transition and Miran's

appointment. We'll also talk about Tesla

and a big big change at Tesla. We'll

have to talk about that in detail. We'll

talk about some other favorite stocks

right now as well towards the end of the

video. Now, keep in mind, I'm going to

condense as much of this information in

this video as possible. This might be

the only video I post between now and

when I get back uh from Japan, so

apologies. This is going to be a little

bit longer and we're going to integrate

a few different sponsors and and

messages in this, including that the new

coupon code is now coupon code Jhole.

That's right, because Jackson Hole,

which we'll also be talking about, is

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represent the next price increase for

the courses on building your wealth and

the alpha report, as well as the course

member liveream. So with all that said,

let's get started. Thank you so much for

tuning in while I'm on uh this trip to

Japan. Uh okay, so ISM services, we need

to start here. ISM services remain a

source of strength in America, just

services in general. This is really

important because we see goods weakening

as we have seen for a long time,

especially amongst consumers. That

bottom 80% of the consumers, they're

really feeling the squeeze. And even

though we had some good revenge spending

in 2023 and 2024, we've really seen a

flatlining of the growth of consumer

spending, mostly because people are

starting to get tapped out. Uh think

about the amount of leverage that our

economy is experiencing. Not only do we

now have innovative products like

leveraged ETFs, which really use options

to increase leveraged returns for people

in the stock market, which then don't

show up in FINRA margin statistics,

right? Think about that for a moment. In

terms of why valuations are so high in

the stock market, you have FINRA margin

statistics at all-time highs and you're

not even incorporating the fact that we

have leveraged ETFs which mostly use

options to accelerate or amplify their

upside or downside returns depending on

what kind of leverage ETF you have as

well as buy now pay later which still we

don't have any accurate reads on. All

these things have been really good at

sort of propping up not only valuations

but consumer spending for the time

being. But it does sort of make you

question you know what kind of debt

bubble are we walking into. Uh but for

now the United States has had a relative

strong economy a relatively strong

economy when it comes to service

spending which is important. This is

what you want in a more modern economy.

This is what happens when we have

technological innovation and

productivity and free time. We spend

money on not just goods but also on

services. Think restaurants, think

travel, think vacation, think

entertainment, think going to a movie

theater, going to bowling, going to a

throwing, all of these things. Going to

drinking, you know, going out for drinks

with your friends or whatever. Those are

things that make a country rich and

vibrant uh and quite frankly over time

uh happy place to live. This is normal.

And so we hope that AI can accelerate

even more of that. Uh however, services

have really remained the only source of

strength in our economy and now we're

starting to see some softness here. The

ISM report this week on services PMI

registered a 50.1 uh uh% gain uh which

since this is a diffusion index means

we're really on the border of

contraction for services which is quite

odd. In fact, the ISM services uh

company suggests that this comes with a

number of quote yellow flags as well as

some red flags. The biggest red flag is

that the prices index on services is up

to 69.9%.

That is the highest level that we have

seen since October of 2022,

which was, you know, within a month or

two of us having that 9% CPI read. I

remember reporting on. Leave a comment

if you were here when I was reporting on

that 9% CPI read. I think it was 9.1% on

the beaches of Disseldorf, which who

knew Disseldorf had beaches, lakes, I

guess. But anyway, at the same time, you

see new export orders and imports moving

from expansion to contraction. And the

overall data quote wasn't great for a

services sector that typically enjoys a

blast of vacation and experience

spending in July before school starts.

So in other words, kind of a seasonally

weird and weak services report

suggesting there's definitely some

underlying pain in this economy. New

orders moving from expansion to

contraction also not great as we move

away from some of that posttariff sort

of taco uh enthusiasm that okay well

things won't be that bad and now it's

all about looking at the labor market

which what's interesting about the labor

market from this ISM report is the ISM's

or the company that puts together the

ISM suggests that the forecast was

mirrored not only by disappointing BLS

numbers in July but also the downward

revisions for previous months and the

index reading for July does not bode

well for the next two or 3 months. In

fact, quote says one of the leaders at

the ISM, I would expect the BLS numbers

to be weak through the rest of the

summer. Panelists are saying that their

companies are not backfilling openings

and while we're not yet seeing mass

layoffs, there has been difficulty in

hiring people for targeted jobs. It's a

slowdown in act in hiring activity that

is real. Now, this will become very

important when we talk about the Fed in

just a moment, but really what you're

getting out of this ISM report is a

surprisingly negative read on a portion

of the economy that's usually very

strong and usually seasonally very

strong right before back to school. So,

this is an underlying crack in growth

that's going to contribute to our

discussion about this GDP paradigm

shift. We're going to talk about that.

Uh now, just know going into this that

there's a lot of talk about maybe this

July report will just be a one-off jobs

report that came in bad. But remember,

this was actually a three for one, like

a three for the price of one report.

See, May was revised down 125,000 jobs.

That was right during our 90-day pause.

June was revised down 133,000 jobs and

July only had 73,000 jobs which included

55,000 in healthcare and 18,000 in

social assistance. So relatively weak

for three reports in a row already. Now

that's going to change some things for

the Federal Reserve and this GDP

paradigm shift which we're going to talk

about. We got to talk about Jackson Hole

which is very very critical. But first a

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Now, we got to talk about Jackson Hole.

Last year's Jackson Hole was a pivotal

moment for markets and the Federal

Reserve. And this year's Jackson Hole,

especially that keynote address from

Jerome Powell, is going to be critical

for the market yet again. In fact, the

most important thing that we need to pay

attention to in Jackson Hole is Jerome

Powell's response to really the current

unemployment rate uh less uh or or

compared to the unemployment rate if

labor force participation were steady.

See, right now the unemployment rate has

really been bobbing between 4.1 and

4.3%. It's no surprise that the Federal

Reserve is not really nervous about the

labor market because the actual

unemployment numbers aren't that bad.

But the problem is labor force

participation has been plummeting

because either people are quitting the

labor force entirely or you know they're

showing up in 27 weeks unemployed

numbers which is a six-month unemployed

figure that basically suggests uh or is

a number that basically only goes up

when we lead into a recessionary

environment though it can happen for

many months before a recession. Uh and

that's exactly what we're seeing right

now. Uh but the point is these numbers

basically evidence that people are not

being counted in the labor force. And if

we were to count these people who are

either discouraged because of

immigration policies or they're being

deported and the labor force is

shrinking or uh you know for whatever

reason they're done trying to look for

work. They just basically go into what's

called forced retirement and end up

spending less money and living off of

what they have rather than trying. Well,

uh, if we adjusted for that, we'd

actually see an unemployment rate that

would have skyrocketed over.7%

with this last labor report, and we'd be

at 4.9% unemployment. In other words,

next month we could be knocking on the

door of 5% unemployment based on a

constant labor force participation rate,

which essentially would start sending

signals of not only the sum rule

triggering off again, which is that

early recessionary warning indicator.

Obviously, not not a perfect tool. last

time it false flagged as it just barely

broke that recessionary indicator. Uh

but you know if we looked at labor force

numbers and we saw these unemployment

numbers there's no doubt the Federal

Reserve would be cutting. And so this is

why a lot of people wonder like is

Powell just like purposefully trying to

focus on the actual unemployment rate

rather than considering that there are

other dynamics that are very dangerous.

A declining labor force participation

rate, mind you, is recessionary in

itself. In fact, one of the reasons

labor force participation goes down is

because it's so hard to get a job that

you just give up. That ends up showing

up in worse consumption. And so, this is

why people are like, "Oh, Powell's going

to be too late." I actually agree, and

I've been saying this, that Powell is

fighting inflation because he thinks

that's what's most important right now,

but there won't be inflation to fight if

you end up destroying the labor market.

And that's what's so fascinating about

Jackson Hole because it gives us an

opportunity to see will Powell change

his tune or is he going to stay focused

on inflation? See, remember Powell is so

worried about inflation psychology, the

human psychology of inflation and the

persistence of inflation and tariffs

absolutely hurt that. For example, uh I

wanted to go buy another Roland switcher

board and I noticed that when I

originally looked at it in January, it

cost about $5,999.

That has gone up now for live streaming

to $6,600

in an 8month time span. That's a 10%

increase. It's substantial in the way of

inflation. And the way corporations sort

of sell this to people is oh well, you

know, we have to deal with these

tariffs. But then of course, you know,

when we listen to just political shills

on X or TV, all we hear is that, well,

wait a minute, we're collecting, you

know, record levels of tariff revenue.

You know, this is good for America.

We're paying off our debt. I don't know

why I'm sounding like Tucker Carlson all

of a sudden, but the reality is it's

generally Americans who pay this. And

and this isn't meant to devolve into

like some kind of political rant on

tariffs. It's actually just to let you

help or help you see what Powell is

concerned about. See, the Economist

reports via Goldman Sachs or I should

say Goldman Sachs reports via Goldman

Sachs uh via The Economist. I I can't

get my words out today. Goldman Sachs

sites that 80% of tariff impacts are

eaten by United States purchasers. This

was reported in The Economist. And

ultimately tariffs lead to lower uh

choices or fewer choices for Americans

at higher prices. And this makes sense.

Now, of course, in the near term, it's

very addicting to go but look at all

this tariff revenue without recognizing

who's actually paying that bill. Now,

again, I'm not here to make some kind of

argument on tariffs. It's simply to say

that Powell recognizes this. And because

Powell recognizes this, he looks and

says, "Hey, look, tariffs caused

inflation in 2018 when Donald Trump 1.0

instituted tariffs." He not only

instituted tariffs on just a very

specific and famous example that

everybody uses, including Powell

himself. Hey, we're going to tariff

washing machines. And then what do

corporations do? Corporations raised the

prices of washing machines and dryers.

Now, we were in a period of disinflation

because the economy was slowing down. So

that sort of masked the overall impact

of inflation but the inflation was very

clear and present and that was something

that Jerome Powell looked at and said

that is what affects people's psychology

and ends up leading to unanchored

inflation which repeats the 1970s

destruction of any Fed credibility that

there even remotely is which would be

really bad because then you end up with

repeated recession after recession after

recession and you had something around

four recessions in the span of 1967

to 1982. Uh when if you look at the last

15 years outside of COVID, we've had

zero. So uh you know having control of

inflation psychology is so critical to

Powell and Powell's legacy that it

almost seems like he's somewhat

accepting of the unemployment rate going

up. And I think that's why he's looking

to sort of redefine what metrics he's

looking for. And that's taken me a few

weeks or I should say about a week now

to reconcile because when Powell told us

last week, hey, you know, we're actually

just going to look at that base topline

unemployment number. I'm like, what?

You've never mentioned that before.

You're just sort of redefining now why

you want to stay stubborn on inflation.

And the reason is because he is

convinced that inflation is going to

come from tariffs. And there's no

question of that. We're already seeing

tariff inflation in goods. We know that.

We've already seen uh an annualized 7%

gain year overyear in core uh exa autos

goods inflation which is bad. Very bad.

Cars on the other hand are very very

difficult to sell in this environment

with high interest rates. That's why we

say exa autos because they're deflating.

But the point of this is this is very

much in very different from this

appointment which we'll talk about him

in just a moment just a few letters

removed from But if you look at

any videos of this character, you

will find he is essentially a knee

bender for Donald Trump. He is somebody

who bends the knee and says that Donald

Trump is always right. Uh Donald Trump

was right about inflation in 2018. He's

right about inflation and tariffs today.

He's right about tariffs back then. He's

right about inflation when Biden was

president because Donald Trump was

demanding that uh uh you know Powell

raise rates under Biden.

You know what whatever his narrative is

Powell bad, Powell wrong and Trump

right. Okay, fine. We'll talk about the

implications of that in just a moment.

But there is a chance that Powell

actually digs in his heels during

Jackson Hole and says, "Okay, if we are

going to have a Trojan horse basically

come into the Fed, then I need to be

even more aggressive in potentially

fighting these Trojan horses." Now, that

is going to be really interesting

because a lot of people were going to

see that as potentially bearish come

Jhole. Now, something to keep in mind is

with Jhole coming up, not only that

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Jhole, J A Yhole meet Kevin.com, but I'm

going to keep sending alerts and

suggestions on in terms of what kind of

trades to pay attention to in a

particular day. For example, yesterday

when Tesla was at 309, I suggested, hey,

watch Tesla go to 318. That's a critical

trade. Went to 319. Easy bag. This

morning in the alpha report, we

suggested, hey, I don't think you should

watch Dualingo. It's up 30% in

pre-market. And I don't think you should

watch the QES. It's already up 80% 80

basis points in pre-market. I think

those will slip. Instead, you should

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kind of insights that you get in the

alpha report over at meetke.com. Use

coupon code J-hole before the 22nd. And

we've also finally got our Trump

economics lectures coming up which will

be very exciting uh probably by the uh

end of this month or early September

somewhere on Labor Day which is very

exciting. So anyway uh at the Federal

Reserve though you have to consider that

you have a lot of potential challengers

inside that are going to fight against

Jerome Powell. these people are not

going to be speaking at Jackson Hole,

which really sets up Jackson Hole as

potentially an aggressive moment for

Powell to dig in his heels on why his

definition of the labor market is more

important that the labor market is fine

and that inflation is the problem when

everybody else at the Fed, well maybe

not everybody, but a lot of other people

at the Fed are saying, "No, no, no, no.

The labor market is showing serious

signs of cracks just like we're starting

to see not only in the ISM reports or

the uh BLS reports, but in other

reports. Consider this for a moment.

Waller and Bowman both wanted to cut

last meeting. We already know that

Qashqari and Daly are now signaling that

they will join in requesting rate cuts.

Expect on top of that, Moran is going to

show up and you're now going to have at

least five votes for a rate cut in

September and markets are therefore

fully pricing in a rate cut in

September. This creates some real

complexities in what's next for the

economy. In fact, City Bank has a

warning on this and TS Lombard has a

response essentially to their warning

which we will talk about after this word

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City Bank warns us via the Globalizer

report that a sign of labor market

weakness is clearly present. However,

this report is critical and we should

not just dismiss it as just one month.

We are watching the economy very closely

now, not just at City Bank, but outside

City Bank as well for the economy

transitioning from a place of low hiring

to increased job loss. Now, while

unemployment claims numbers this morning

came in a little bit higher than

expected and the continuing claim

numbers are the highest since 2021,

we're still not seeing major signs of

layoffs yet. Although we know that as

soon as we get those signs of layoffs,

even Jerome Powell is going to roll and

he's going to favor the labor market and

he's going to favor rapid emergency

cuts. The problem is you actually have

another Fed board member who will also

probably join the other five that I've

mentioned. Uh Waller, Bowman, Kashkari,

Daly, and Veron. you'll probably have

Goulsby join because Goulsby is the only

one who gives us a very clear warning on

how quickly the employment market could

change. Uh we've talked about the

beverage curve before, which is

basically the curve that suggests that

when you have low vacancies and you have

a low unemployment rate, you're really

in an anomaly of a time. And it's just a

matter of going from low vacancies on a

chart on the y-axis to basically high

unemployment rate on the x-axis. And

that will look like a normal downs

sloping halfpipe so to speak or more

like half of a halfpipe. It's a downward

sloping curve. Right now we have more of

a downward sloping line which is

economically extremely rare. We're in a

very weird and abnormal time for the

labor market. Goulsby is the one who

makes this clear. He says what happens

is everybody tries to hold on to labor

as long as they can. When they finally

decide that they have to crack and they

have to lay people off, the layoffs

happen in mass. They happen quickly and

everybody, all these companies like

Sheep get on the boat and start laying

off together in mass. Yes, some layoffs

have already started and maybe not all

of them are showing up in unemployment

claims because they've got severance

packages or they're still waiting for

their 9 months to be up in September

with the government uh layoff cuts that

were announced. You know, the 200,000

people that basically took the voluntary

departures from the government uh in

severances that ended September. All

that data is still going to come up

ahead of us, right? that those claims

might not show up until October,

November or December. But even forget

that private payroll is obviously very

weak. The real problem is when we start

getting panic layoffs and Goulsby warns

us that once you get panic layoffs, it's

too late. It's not easy to quickly stop

that. You can't really see the labor

market go and fall down and just go,

"Oh, we want it to stop right here." It

doesn't really stop at a level. It just

keeps going. This is why, ironically,

Donald Trump, even though Donald Trump

is pretty much the reason Powell is not

cutting right now because of the

inflation concerns.

Ironically, Donald Trump will probably

end up proving to be right because if

Donald Trump, you know, ends up being

able to point and say, "Hey, see, look,

Powell was too late because jobs fall

off a cliff because Powell was waiting

for the inflation from tariffs."

then Powell will indeed look too late

because the Fed will start cutting rates

and it won't actually do anything.

Everybody is really excited, by the way,

about pushing the market to new all-time

highs, which has been working great.

Even Asian and European stock markets

are doing really, really well over hope

that we're going to have easing policy

in the United States. But you have to

remember, rate cuts don't save a job

crashing economy or an economy crashing

because of jobs. What saves that is

money printing. Literally running the

money printer to bail companies out. I

mean, consider Apple, for example, got

like a $400 million grant to utilize, I

think it was Texas wafer manufacturers

back in 2018, uh, or sorry, it was

actually during the Biden administration

that, uh, Apple got that grant. And

that's what actually encouraged them to

use a local United States manufacturer

versus, uh, you know, a foreign

manufacturer. It wasn't the threat of

tariffs. That was generally just a

clever rebranding of expenses that they

were already going to have to try to

basically, you know, suck up to Donnie

T, which remember back when this

happened in 2018, uh, you had Tim Cook

go to the Oval Office and give Donald

Trump a new iMac that they were working

in part with Texas manufacturing

facilities to make. And yay, this is

great. we're going to invest all this,

you know, $360 billion at that time into

America. And much of that didn't

actually end up happening because it was

just a rebranding of stock comp or R&D

or expensing that they already do in the

United States with engineers or

otherwise at, you know, with people who

work at Apple. You know, the same thing

is being done now with these $500

billion of tariffs, but that that's

okay. The point of that, that was

obviously very tangential to this whole

uh, you know, Goulsby employment

argument here, is that

Donald Trump is under the impression

that what he is doing is encouraging the

sort of job growth in the United States

and companies are promoting all of this.

Yes, we're going to spend and we're

going to hire and invest in America, but

a lot of it is really just a sales

pitch, not necessarily true new economic

growth. Because remember, if you spend

$100 this year and $100 next year,

you're still spending that $100 next

year, but that's not necessarily growth.

In fact, the growth between that

spending is zero, which if your growth

turned from 100 to, let's say, $99, then

you'd have negative 1% growth, you'd

technically be in recession, right? So

recasting how these companies are

spending money is not necessarily the

best argument for suggesting, oh yeah,

you know, the economy is going to be

fine. Look at all this money being

invested into America. Yeah, probably

not great to look at. Just like looking

at rate cuts isn't great to look at. You

need the money printer to run once you

actually have a layoff crisis. And

that's because once you have a layoff

crisis, it is very hard to stop it. And

that's why people think that Powell is

just going to be too late. The reality

is he probably will be. But then again,

ufts Lombard who has an optimistic

approach. They say that July's data

suggests that employment picked up

again. I don't really see how they say

that because, you know, in July we only

had 73,000 jobs. 55,000 of those were

healthcare and 18,000 were government,

you know, social services jobs. So, I

don't really get where they're getting

this idea from of hiring picked up again

following a recent slew of trade deals

and our economists believe the labor

market will remain resilient this year.

I I don't know if they just sort of like

react to what the NASDAQ is doing

because when the NASDAQ was not doing

well in in April, they were, "Oh my

gosh, this is recessionary." Uh, and now

they're like, "Oh, NASDAQ alltime highs.

Oh my gosh, the economy is going to

remain resilient."

In fact, they go as far as saying, "We

don't think the macro shocks from

tariffs and tighter immigration are

strong enough to push the US into a

recession. After all, there has been no

credit boom and no obvious

malinvestment." Which is also a very

interesting thing to say because then

you look and go, "Really? No credit

boom? No BNPL boom, no leveraged ETF

boom, no all-time high in FINRA margin

statistics outside of leveraged ETFs?"

Hm. All right. No credit boom. Okay.

What? Whatever. TS Lombard. So, I mean

really like there's fodder on all sides

for people to pick from and that's the

thing to pay attention to in this

economy is the party's going to keep

going until the music stops and the

music doesn't stop until we get layoffs.

Until then, we keep going. However,

Jackson Hole again, coupon code Jhole

for meet kevin.com lifetime access,

which once we release the Trumponomics

courses, we'll probably get rid of the

lifetime access. Uh, mostly because

we'll just go back to like a, you know,

monthly kind of subscription basis where

you just kind of pay every month for

when you have the product. The lifetime

access has been a hit though. A lot of

people have really enjoyed it and people

always email us about this. Can can I

get in before the lifetime access is

gone? It's kind of like a season pass

except the season is life. But anyway,

consider for a moment that Jackson Hole,

all this said, will be an opportunity

for J Pal to either join the Doves or

put up his fists. And I think there's a

chance based on that last Fed meeting,

he's going to put up he's going to put

up a fight. If he puts up a fight, it's

going to create some volatility in

markets around Jhole. uh especially if

then following JHole which is August

27th

uh sorry August 22nd

following Jhole we are going to get uh

jobs data again the jobs data again and

we'll get the QCW

uh revision so the quarterly revisions

come out at the beginning of

uh September and then we will also get a

jobs report that comes out at the

beginning of September as well. So both

of those at the beginning of September.

So really the next four to five weeks

going to be kind of a big deal. Uh in

terms of data QCW September mark your

calendar for this uh the first quarter

2025 revisions are going to be September

9th, 2025.

uh schedule of releases and then the

employment situation for September will

be August 5th. So mark your calendar for

Friday, August 5th, 8:30 a.m. That's the

August report. And then Tuesday, sorry,

um September 5th. So Friday morning,

September 5th for the August jobs

report. And then Tuesday, September 9th,

uh, at 7:00 a.m. California time for the

QCEW revisions. So, that's going to be

pretty critical because it'll come right

on the heels of Jackson Hole and

presumably Powell's additional

aggressiveness. So, this said, now we've

got to consider what's going on with

this replacement. So, we've

already talked about Moran basically

being a shill for Donald Trump, but you

have to know there's a little bit more

going on here. Cougler, who was replaced

by uh decided to suddenly leave

to return to teaching at Georgetown. Hm.

Now, that's really interesting because

what do we know about Georgetown? We

know that Georgetown is basically a DC

school. Not only do we know this about

the Georgetown University, which is

very, very politically involved as a

private university in Washington DC,

guess what? Eric Trump graduated from

Georgetown. Ivanka briefly studied at

Georgetown before transferring to uh

UPEN where her father also went. And

you had Tiffany Trump graduate with a JD

uh from um from Georgetown.

So all of a sudden you have a lot of

family members who either went to or

graduated Georgetown.

Clear connection to Donald Trump and the

Trump family. You have a Donald Trump

who's very aggressive against

universities, Colombia, Harvard, really

any school of thought. At the same time,

all of a sudden, that university

potentially calls up Cougler and says,

"Hey, what if we pay you a lot more

money to just leave or create a vacancy

at the Fed that Trump can then fill with

his Trojan horse?"

Okay, this is interesting. When you

start putting those pieces together, we

go, "Oh, this is Trump back at it

again." Now, maybe it's actually a good

thing because on one hand, I agree

Powell's probably going to be too late.

On the other hand, it does create some

concerns again for the independence of

the Federal Reserve because if Powell

looks like he is now flipping after the

appointment of Iran, Iran, well, it's

certainly going to look like politics

are indeed creeping into the Federal

Reserve. Who knows, maybe they already

have been. Uh that said, what's more

interesting than since he's only

going to serve until Cougler's term

expires in January is Waller as Fed

chair. Waller is apparently showing up

as a leading potential for Fed chair. He

wanted to cut in July, mind you. And I

personally find Waller, I mean Hasset,

it's a little bit of a bump on the log,

but both of them would be better than

Walsh. I don't think Kevin Walsh would

be great because he'll likely revert to

his historical self of being very

unwilling to let the country go into

debt when we are in a recession. So

imagine going into a recession without

the Fed printing money.

That sounds great from the point of view

of less government debt, but it's going

to be extremely painful. So you kind of

have to pick your poison on that. Do you

want every human in America to basically

suffer with the exception of the rich or

do you want to print your way out of the

next recession which you know if you

don't you'll end up actually going

through a great reset except it'll just

be a great reset for the poorest

Americans and not the richest Americans.

But anyway, Waller being a top pick

fortunately and hopefully closes the

door to a wash of Fed Reserve chair

which I don't think you want to see. I

think that would be bearish. Waller

probably bullish rate cuts. But again,

don't be misled or coaxed into thinking

that rate cuts are automatically good

for the economy. Usually, we cut into

pain. Now, this paradigm shift that I've

been wanting to talk about has to do

with AI as a percentage of GDP.

Originally, when we talked about the AI

boom, we said, hey, GDP uh is, you know,

somewhere around $26 trillion. Maybe

artificial intelligence represents

somewhere around 2 to 5% of GDP. That's

great. But when it comes to GDP growth,

GDP growth, which is currently estimated

by the Atlanta Fed real GDP tracker at 2

and a half%. AI as a percentage of GDP

growth. So just that that growth

portion, might actually represent closer

to half to nearly all of our GDP growth,

which is really interesting because

first of all, praise the Lord that we've

got growth any growth engines somewhere,

right? This is a good thing. We don't

want a recession. Nobody wants a

recession. It's hard for everything.

It's even hard. They're like, I mean, I

think we'll be totally fine and

resilient, but we love that this boom is

going on in AI and the stock market

because we think it's great for house

hack. This obviously my real estate

startup, my real estate baby, because of

the AI product that we're planning on

releasing in Q4, which is we think a

huge gamecher for the company. uh it's

basically you know taking the AI that

we've been building for the last six

years with MLS of training uh you know

the identification of real estate and

good deals in real estate and and

helping sort of educate what is a good

deal versus what's not and giving that

as a license to agents and uh and and

you know even just users uh and so

obviously if we can have some form of

SAS model where agents can sign up for

this uh and enable their clients to gain

access to it we think there's a gamecher

in terms of revenue

and valuation for house hack which

probably is why we'll end our fund

raise. Uh, you know, especially when the

Fed starts cutting because, you know,

why why why pay a 5% yield like we are

right now plus upside in the stock if we

don't have to. We think we'll probably

not even have to fund raise if if this

works the way we expect it to. So, we're

really excited about that ADP uh AI

growth as part of GDP. That said, we are

very concerned that if there's any

slowdown, which we haven't seen yet, in

artificial intelligence, the only growth

lever we have left in the economy is

gone. Contractors are slow, tenants are

tighter on money. Uh tenants still 100%

paid up at house hack. The normal

economy is suffering. This makes sense.

We see this in consumer spending data as

well, which creates this paradigm shift

for what stocks to consider. I mean,

consider, for example, just what you're

seeing when you hear announcements from

companies like Palunteer, which

obviously reported phenomenal earnings

this week. When you look at Palunteer,

you actually hear Palunteer say that you

can't just rely on an LLM. You need an

ML plus an LLM. And you could do this

via Palanteer's ontological service,

which is basically a way of packaging

data in a way that an LLM or AI can

actually process it. And this is leading

hospitals to be able to discharge

patients faster. Fanny to identify fraud

in seconds versus two months. Banks to

be able to KYC customers in seconds

versus 9 days. Corporate growth now

exceeding government growth rates at

Palunteer. And they literally go as far

as saying LLMs alone just suck without

the Palanteer process. Now, of course,

we got GPT5 that just got announced,

which it's unclear if GPT5 is really

just a rebranding of some of the other

models that exist. I guess we'll see

when we actually try it. But what's

fascinating here is you see that AI is a

product that will continue to gain

investment for the time being because

it's not just one portion of AI that you

need to use. You need to use multiple

portions of AI. We take our machine

learnings that we've created with house

hack and we combine these with large

language models and we find the net

result is even better than what we had

with just MLS previously. This is

exciting and it contributes more to our

economy which is fantastic. And so this

to me suggests that we have this

paradigm shift where we're really moving

away from wanting to look at consumer

investments. The best future investments

even at today's valuations, the longer

term, you know, next decade, two decad's

best investments are probably no longer

consumer style investments because the

more AI grows, the less money consumers

have to spend. Instead, the winners are

the Microsofts, the Metas, the Open AIs,

the companies with the real Cashola. And

what are they buying? They're what

they're buying is where the winners are.

The AI chips, the uh Nvidas, the TSMs,

the ASMLs, the, you know, to some extent

Super Microcomputers. Obviously, we saw

they had a little oopsie-doopsy there on

on some of their earnings numbers, but

still this whole stack is phenomenal.

And super micro has done very very well

uh frankly over the last 5 years it's up

1,400%. It's it's phenomenal.

So the point here is moving away from a

GDP that is driven 70% by consumers

towards a GDP that might in the future

be driven by almost entirely artificial

intelligence is probably the long-term

investment

to really consider over the next

decades. And no, I'm not saying go all

in here at all-time highs into just AI

style things, but the point of me

bringing this up is when this next

recession happens, when you go reset up

your portfolio or you go add money into

a portfolio or whatever, you have to ask

yourself, do I want to double back into

those traditional consumer names

when recovering out of this recession is

probably going to be most difficult for

the very consumers who are being

affected by artificial intelligence. And

consider this, humans are basically

getting squeezed, right? Headline

reading is over. Basic legal filings,

basic accounting, basic writing,

journalism, fraud detection is over. You

have to adapt. You have two ways to

adapt. You could go physical, which is

hard for older people. This is why, you

know, people who are elderly or were

just really just more advanced, I guess,

in age, they're just like, "Whatever,

I'll just take a forced retirement and

I'll live on less because it's hard to

get a job and you don't want to like

res-kill and you don't want to go into

physical." Or if you're younger and and

you don't necessarily want to go in the

direction of being creative, uh, and

that's not a disc, it's just going into

the creative direction, which AI can't

do as well yet. Human creativity. I'm

not talking about like artwork or like

generating like memes or things like

that. That kind of creative we already

know it can do. But I mean having human

thought above and beyond machine thought

which is hard to do and there probably

won't be that many jobs in that sort of

world. Physical really becomes a crutch

until we figure out what that next phase

of productivity is going to be. And this

means the consumer loses and the richest

corporations just keep getting richer.

Frankly, I think the next recession is

where we will usher in universal basic

income. Now, that said, that whole

transition could take time, but Donald

Trump is perfect for this. Donald Trump

is literally perfect for corporations.

He exempts his favorite companies from

tariffs, like Apple, 50% tariffs on

India announced everybody but Apple.

They're promising to do more in the

United States, even though that's

exactly what they said last time. And

all they really did was rebrand their

spend. Apple's basically committing to

spending 100% of their free cash flow in

the United States over the next four

years, which they just revised to $600

billion, which is 120% of their free

cash flow every single year for the next

four years. Micron's doing the same

thing. They're saying they're going to

invest way more money than even what

their market capitalization is. So then

it makes you wonder like, are we really

just sort of rebranding research,

development, and stock compensation as a

way of saying yes, we're investing in

America? I mean, technically, if your

stock doubles and you generate hundred

billion of market cap and your

shareholders got hundred billion richer,

is that similar to basically saying we

just invested $und00 billion in AI or

whatever in America? Maybe. I don't

know. But Donald Trump makes this so

much easier for corporations. I mean, if

you're a corporate fraud like Trevor

Milton, you can buy yourself a pardon.

If you're a bank, no problem. Lower

capital requirements. If you're a

consumer, oh, sorry, the Consumer

Financial Protection Bureau was

basically just gutted and probably end

up shutting down, which was promised in

Project 2025. Uh, don't like what the

heads of agencies are saying, they could

be fired. Everyone except JPAL. What

changed this? Well, I mean, Citizens

United, right? This is where

corporations are seen as people and they

can spend money, billions of dollars

throwing money at, you know, basically

whomever they want as a politician. So

it's no surprise then that foreign

affairs is a complete piece on how

difficult it is to recognize the results

of corruption.

Basically they say that corruption

happens in secret and politicians can

enrich themselves and America is

basically moving from this democratic

republic into a more competitive

authoritarian state. Uh imitating

lawyers, immater imitating imitating

intimidating gez uh law firms,

universities and courts. All of this is

a perfect demonstration of moving away

from a democratic republic into more of

a competitive authoritarian state. It's

basically a clever way of saying we're a

free market but we have a dictator. Now

the impacts of that even foreign affairs

says could be a very very long time

away. It might not ever be very clear

what kind of wars or long-term outcomes

could come from this or if anything bad

will necessarily happen from political

corruption. But what I can tell you, and

this is sort of my takeaway of all this,

I'm not trying to pick a side. Remember,

my goal is for everybody to hate me.

Like I've tried like try if I could get

everybody to hate me on stocks and the

Federal Reserve and real estate that and

and uh Democrats and Republicans and

independents and whatever that then we

could all just be on an equal playing

field. That my goal is not to shell for

any one person, party or company. just

to give you perspective of when I read

these things and putting it together and

piecing it together and going, "Huh, I

never thought about it that way." And so

the way I think about this when I hear

about these sort of corruption pieces or

sort of this authoritarian

competitive state is okay well who wins

in a competitive authoritarian state?

Ah, yes, the richest American

corporations. And so really

whether you know whether the recession

that ends up coming ends up tanking in

the stock market or not, it is really

hard to argue against American

exceptionalism. Like

in the long term, the next 20, 30 years,

can you really bet against American

stocks? No. Now, will there be a

recession and will stocks sell off in

that recession? Yes. Could that opp you

know that moment be the biggest

opportunity of a lifetime to get into

what will be the richest corporations of

an AIEL recovery

with money printing flowing into the

only job creators left which are going

to be the richest corporations unlikely

the smallest corporations who will just

get eaten up by AI.

Well, let's just put it this way.

Universal basic income is probably

coming. Consumption is probably going to

suck. UBI will be relatively low. and uh

investing in the richest and best would

be the way to go, which I'll give you a

few examples in just a moment. But

before I give you a few examples, I have

to talk about Tesla and Dojo. And I want

you to hear my opinion on whether or not

Tesla is going to be that company or

not. But first, a message from Helium.

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no-brainer. So, Tesla just disbanded its

dojo team, which is insane because in

2023, Adam Jonas said that Dojo could

add $500 billion to Tesla's market cap.

Now, he has a prediction that they

estimate that one humanoid robot at $5

an hour can do the work of two humans at

$25 an hour, generating a net present

value of $200,000 per company per year

per humanoid. That's incredible.

Basically means we should all have like

buy as many robots as possible, which is

fantastic because Tesla is seen as a

leader in Optimus robotics.

Maybe that's the future.

But here's the problem. Adam Jonas was

way off on his dojo suggestion.

Basically, Tesla is now saying, "You

know what? No more in-house chip

designing. We'll just buy AMD and Nvidia

products." And now Tesla's AI team uh is

basically being recruited away by

companies like Diversify AI or they're

being reassigned within Tesla and

they'll probably end up leaving after

their reassignment at least some of them

uh to other startups or companies where

they potentially have an opportunity to

focus on real AI and uh you know outside

of obviously of FSD. And so what ends up

happening? Well, Tesla gets a big sort

of stab in the back here in my opinion

by the shutting down of Dojo. Why am I

trying to be super bearish Tesla? No.

It's just when you shut down what was

supposed to be one of these these huge

unique selling propositions for uh

components inside of Tesla. When you

start shutting these things down, people

start getting really concerned that the

true crux you have is just relying on

the consumer and not actually your new

technology. The 4680 cells have produced

a fraction of the battery cells that we

hoped they would. And part of that is

because they're more expensive to

manufacture than the Chinese batteries.

On top of that, they're not as efficient

as Elon Musk promised. That's

unfortunate. The Cybert truck doesn't

sell anywhere near as many cars as we

hoped it would. On top of that, we are

now hiring 100,000 robo taxi

supervisors. So basically like Uber

drivers to sit in the car and supervise

the car as they roll out essentially

robo taxi FSDish

across different portions of the country

which you know if some of these things

end up with the same fate as dojo it

does just make you wonder

if we're going to have these bets on big

innovative technologies like Optimus

Cyber Truck Cyber Cab the semi-truck.

Where's the semi-truck? Where's the

Roadster dojo? If we're going to have

these big bets on these different

ventures, then at the very least, please

Lord, introduce cheaper cars that humans

can drive today with FSD. Why do we not

have the the Toyota Alfred in the United

States? Here in Japan, you have the most

professional taxi drivers I've ever seen

in a country that I've traveled to. Not

only that, but they drive clean,

luxurious,

smaller sprinter style vans. Those

Toyota Alfreds, it was one of their

first minivans. It's more box shape

though, so it doesn't have that sort of

like soccer mom car look. These look

like professional, beautiful cars,

spacious with like the lie down seats,

you know, comfortable, uh, you know,

outfitting on the inside. Gorgeous cars.

And why are we not producing vehicles

like that in America? In fact, I always

wonder why we don't have cars like that

in America. A, it's probably because of

tariffs and barriers between various

different countries. Not just current

tariffs, but previous tariffs. Uh, but

B, who knows? Maybe it's just American

desires for, you know, SUVs and their

own types of cars that are more suburban

or Escalade like or pickup truck like,

but then why are we not creating more

cars to appeal to that market? So that

way we can at least prop up the consumer

section of Tesla or sector of Tesla. We

can print as many vehicles as possible

and then that way any failure that

happens like the shutting down of Dojo

doesn't really matter because we're

producing enough cash flow at the

consumer side of the business. So I'm

not here to say that Tesla always fails

on its innovative products. I'm here to

say that it's okay for a company to fail

on its innovative products as long as

their core products still do well. I

mean, let's look for example, like

imagine if Tesla was like Apple and

Apple went to you and said, "Hey, oh, by

the way, I bought this case in Japan."

But anyway, imagine if Apple went to you

and said, "Hey, we're going to stop

producing the iPhone." And the reason

we're going to stop producing the

iPhone, oh, dear Lord. Uh, is because

we're going to go allin on the future.

And the future is going to look like

this. the Apple Vision Pro. That's going

to be the future. So, we're just going

to like not really care about making new

iPhones because the future is the Vision

Pro. That's kind of what Elon Musk is

doing, right? It's it's constantly a new

Vision Pro product and you're sacrif

you're damaging the Apple brand, like

the iPhone side of the business. Whereas

Apple is like, "Hey, we're going to keep

making awesome iPhones now. Now, we're

going to lie to you about how great our

artificial intelligence is because it's

really crappy. Uh, but you know, we're

still going to make new iPhones and

upgrade the camera and battery life a

little bit. So, you keep buying it every

single year. We're going to keep doing

that. Well, at the same time, oh, I

guess that didn't work out that well.

That's okay. We still got the iPhone.

That might be a little bit of a better

strategy, right? So, putting all of that

together, it does make you question

like, is Tesla the company that you look

at and say, "Oh, yeah. We we like

Tesla's going to be the consumer driver

of the future. Well, they need consumers

to survive through all their

experimentation and their growth, but

consumers seem to be the weakest stock

uh to invest in right now in the S&P 500

or the NASDAQ. In fact, we look at Tesla

and say, okay, well then fine, what

about Optimus Robotics? Like maybe

that'll be the AI future, right? Yes,

maybe. But who needs to buy those

robotics? Well, who needs to buy those

robotics or rich companies that are

manufacturing? And then the question is,

do they want robotics that have cool

hands that can basically stand and do

things, but they can really only handle

lightweight things because the servos

are too weak to repeatedly pick up heavy

objects over and over again. So, they

end up just doing lightweight tasks

standing relatively in one position for

a very long period of time. This is why

Elon Musk talks about having a master

plan three to sort of refigure out how

to make Optimus actually work. Who's

going to buy that? Well, you better hope

for Tesla that if you're investing in

Tesla, you can move from the consumer to

really rich corporations because I don't

think the consumer through the next

recession is going to be able to afford

those robotics. It has to be rich

corporations. And those rich

corporations have to be convinced that a

humanoid robot is the solution. when the

reality is you probably just need

robotic arms or robotic crane cranes or

robotic forklifts or purpose-built

robotics that could just do exactly what

they need to do over and over and over

again and they don't actually need the

human form factor.

Something to think about. So where then

is the party? Well, obviously we already

talked about Palunteer. That's where one

of the big parties is. But and then of

course you've got MP Materials. Although

MP Material is probably 3 four years

away from actual true real revenues from

their Apple partnership or DoD uh

partnerships and expansion of their

critical rare earth mineral uh

facilities, which then makes you wonder

if in the longer term under a new

president if we're just going to open up

a rare earth deal with China and China

will flood the market with rare earths

and rare earths won't actually be rare

anymore, which Elon has said all along.

We just need more of the refining

capabilities. It does make you wonder

about Axon. Now, Axon is a really

interesting company because Axon isn't,

in my opinion, really highlighted by

retail as much as it should be yet. Now,

I've talked about Axon a lot before on

my live streams and and course member

live streams, but you got to consider

Axon as a game changer. Now, I'm not I'm

not trying to shill this cuz I got calls

or options or stock on this. I'm just

saying going through their earnings

call, it makes me wish I owned a lot of

Axon.

acts on as sort of an AI play. The way

you have to look at it is AI for law

enforcement, which is the best way to

probably deploy AI. If you're wearing a

body cam and rather than you spending

half of your job writing police reports,

you can just have AI listen to

everything that you said and write the

report for you and file it, evidence it,

and correlate it to other reports all

with artificial intelligence.

Now, you could actually spend more time

policing, which you might not remember

this, but I was a police explorer for 3

years. I spent 3 years on the road with

law enforcement, and report writing was

the absolute worst part of the business.

It was fraught with forgotten uh moments

or comments that were said that didn't

make it into reports or quite frankly uh

inaccurate things uh that were put in to

shape a certain narrative in a report.

It's not good. AI has the potential of

changing this and making policing a lot

better. Not only that, but think about

what they're doing. They're basically

creating SAS for every single law

enforcement agency around the world.

We're not just talking about Homeland

Security, ICE, you know, cops, sheriff

deputies, uh, you know, local city

police officers, security officials at

at companies, Federal Reserve police

officers, capital police officers. But

we're also potentially talking about our

military. We're also talking about

foreign countries. There are countries

in Europe that are complaining about

because of the Russia Ukraine war,

people flooding their borders and they

don't have enough manpower to fight what

they're dealing with at their borders.

So they're like, "Please, we need more

taser 10s. Taser 10s. Here's now a

product that basically replaces the

original Tesla or taser, which was

basically taser, taser, taser, one shot.

You deploy the cartridge, the little

square cartridge. You'd have to take it

out. You'd have to reload another

cartridge before you could shoot it

again, which is very slow. It's a pain

in the butt, not great. They finally

then came out with a two-prong taser,

and that's now being replaced by

literally a 10prong taser. The Taser 10

lets you shoot 10 times.

Boo. 10 shots and you can tase up to

three people at one freaking time. Not

that you want to tase three people at

one time, which came up in the earnings

call because then they're like, you know

what happens if one person gets tased

and they're like, "All right, all right,

I give up." And the other person's like,

"I don't." And then they both get tased.

The point is cops have a lower

likelihood of uh failing to subdue a sub

a subject and maybe you then have less

shootings or death in in dealing with

law enforcement. But then you also have

AI cameras and AI report writing that

documents all this. This is a company

that has 29% of the annual recurring

revenue of Palunteer. They're also

looking at developing their drone

technology to where you can have drone

first response. So if you know somebody

calls 911, a drone shows up first to

assess the situation, uh follow a

criminal suspect, see how bad a

situation is, how many cops need to be

deployed, does a cop even have to

respond. Then they have counter drone AI

technology called D drone because

they're worried that we're going to

start having drone warfare in the United

States. But more on today they're like

that's all future stuff which is crazy

and super exciting. But more today

they're talking about the the high-end

police officer uh on sort of like when I

say high-end like how much money the

department is spending on the cop. your

top end could now go from $300 a month

in subscriptions to $600 a month just in

Axon subscriptions and that's expected

to grow and so far only 70% of the

officers are on a basic plan which is

even lower than all of this. So there's

so much potential for all this to

explode at Axon and their margins are

insane on this AI bids. So, this is

where I look at like, you know, hey, if

House hack can can, you know, take a

stab and and get some real market share

and AI for real estate, Axon, law

enforcement, uh, artificial

intelligence, Palanteer, just straight

up corporate artificial intelligence.

It's no surprise that these companies

are selling for these insane like hype

pegs. Well, Axon and Palanteer, Houseack

is not selling for an insane valuation.

It's selling for a very cheap, basically

real estate only valuation in my

opinion. You can learn more at

househack.com. By the way, quick

disclaimer. This is not a solicitation

for you to invest. If you want to

invest, you can go to house hack.com.

It's an open to nonacredited investors.

You could read our paperwork and our

offering circular and private placement

memorandum that it's it's private

company. But we do plan to end that fund

raise uh probably when rates start

coming down and when we launch our AI.

But anyway, you know, like to me it's so

surprised that the valuations are so

high for these companies because people

I think are recognizing crap. I can't

trust investing in the consumer. I can't

trust in investing really in anything

other than a practical deployment of

artificial intelligence. And Palanteer

and Axon are actually doing that. It's

no surprise that Axelon's future

bookings are up 43%. And that they've

got growing opportunities all over the

place. So, I look, I know this is a

really long video and we we had a lot to

cover in this, but I want you to think

about all this together. The labor

market is weakening. There's no doubt

about that. It's just a matter of time

before it flips the layoffs and then

we're screwed. We're going to not going

to be worried about inflation because

there won't be an inflation issue. We

need Powell to actually wake up to

realize that the labor force

participation rate falling is a

recessionary indicator and our

unemployment rate will be way higher. If

if we actually realize that maybe Waller

will, but by the time Waller gets in in

May of next year, it's probably going to

be too late. You know, thanks to our

sponsors, Helium, Turbo Tenant, and

Gemini. Go check out house hack.com. Use

coupon code J-Hole. Remember, that'll

expire on August 22nd. J-Hold's gonna be

a big deal because if JPAL really digs

his heels in, it might actually end up

confirming a recession. We know that

Donald Trump is doing things to increase

his own personal wealth, but all of

those actions are just really good for

big corporations that don't necessarily

rely on consumers. Uh, which does create

some red flags potentially even for

Apple, even though I mentioned them as a

positive example. That's relying on the

consumer, right? Apple is relying on the

consumer. Tesla is relying on the

consumer. Palanteer is relying on

businesses. Axon is relying on the

military and law enforcement. Maybe

that's why they've got that premium,

right? Some things to think about. But

anyway, if you found this video helpful,

make sure you subscribe to the channel,

hit that subscribe button, smash the

like button, and I will see you when I

get back from Japan. Thank you so much

for watching. Goodbye.