DANGIT — sinking | Trump Tariff Disaster

Hey everyone, me Kevin here coming to

you from uh some river somewhere. Uh

anyway, I wanted to talk about what

Donald Trump's uh tariff and court

disaster just brought us. I personally

and and you know this about me, I don't

like the tariffs, okay? I think the

tariffs are crazy. I think the tariffs,

they're attacks, consumers pay them,

businesses lose money on them, they're

margin destroyers, whatever. Now, maybe

people got enough money and it's not a

big deal. Maybe if everybody's got

enough money, it doesn't matter.

Consumers spend a little bit more, uh,

businesses take a little bit of a

haircut, and Donald Trump gets his, uh,

you know, tariff revenue, whatever. But

in the background, I was hoping that

tariffs would die, that one day the

corpse would come in and say, you know

what, this is illegal and the tariffs

are banned. They're illegal because it

would be the most bullish catalyst ever.

Literally bullish catalyst because

frankly we would get that margin back.

We'd get that consumer purchasing power

back. We would lose the dead weight loss

that economically occurs when you have

extra government taxation. We want

smaller government, not bigger

government. So instead, what the court

just did on Friday night, which you

know, we were where were we? Kalahari.

Place is awesome by the way. But anyway,

instead what the court did on Friday

night is said these tariffs are indeed

highly illegal. You know, split

decision, whatever this appeals for, and

people who get into power doesn't matter

because even though their ruling was a

majority decision that the tariffs are

illegal, they're like, but we'll allow

the tariffs to stay in place. And I'm

like, what the hell is this? the

positive bullish catalyst we potentially

had coming of a court overruling the

tariff. Boom.

Uh we lost that bullish catalyst. So

that is unfortunately an additional bit

of a negative. Now so far we've been

okay, right? PPI, CPI. Yeah, they've

been gone going up, but the Fed's

basically saying, "Hey, this stuff's

going to be transitory, so we're not

really worried about it. Yeah, it might

not be point transitory. It might be

transitory over an extended period of

time, but eventually it'll prove to be

transitory." All right, good. That's

good because we're worried about J Pal

screwing up and all

and forgetting the reality that we are

likely going into an unemployment

recession at some point in the future.

That bill needs to be paid. No, maybe

not. Maybe we can stop planning our way

out of it and grow out of it, which

would be great. That would be the best

case scenario. Uh, but it's good. Like,

so far it's been good that Powell has

pulled us. All right, we're not. All

right, let's get out of here.

We're not going to be in a an

environment of

being stubborn, right? We're not going

to say, "Oh, we're worried about

inflation and therefore we're going to

kill the jobs market." Decided, "Okay,

no, we're not going to do that. Instead,

what we're going to do is we're going to

say, no, no, there are risks in the

labor market. Uh, and we're going to

look at tariffs as transitory

overtime, and we'll be willing to set up

a 25 BP cut in September." Now, Waller

is telling us maybe we'll even get 50.

uh in September if the labor market data

is worse than expected. Mind you that we

also heard that the Federal Reserve is

looking at weekly ADP data, the private

payrolls data which is coming in even

weaker and that they get it on a

week-by-eek basis whereas we only get it

on a once a month basis. Now, I thought

that was really interesting because I'm

like, "Oh, okay. So, they're seeing this

private data. Maybe that's weaker that

we're not seeing." Uh, and maybe they're

starting to believe that private data a

little bit more because, you know, do

you really want to piss off Donald Trump

with data right now? You piss them off

with data, you get fired. You know,

George Gammon actually had a fantastic

video. He said, "Hey, here's the thing.

You know, we uh or a live stream or

whatever he had. He goes, "Look, the

reason real GDP looked like it came in

so much stronger recently, uh, is

because we argued that in the last data

readings in the second quarter,

inflation was low because the tariff

effects hadn't hit yet." Okay. Well, if

the tariff effects haven't hit yet, real

GDP, let's just make round numbers here.

Okay. Let's say, Jack, you got to put

the life jacket in the basket. Uh, let's

say GDP is 10%. And inflation is 10%.

then real GDP is zero, right? Because

you're subtracting inflation. But if GDP

is 10 and inflation's one, then you have

GDP of nine, right? I'm making that

extreme example just to showcase that

inflation matters because if you say

inflation is low in the second quarter,

which frankly it was, you can make the

argument that GDP was a lot higher. And

of course GDP was low Q1, Q2 is higher.

Now you've got the Atlanta Fed saying,

"Oh, well GDP so far in Q3 is doing

well." Is that because of the inflation

adjustment? Is it is it because some of

the inflation numbers aren't as high

yet? We're just starting to see some of

that fire under the cylinder of

potentially uh you know core goods

starting to sneak up on us. Some of

those core services starting to sneak

in. Will that end up in inflation

psychology. We are seeing inflation

break evens back at some of the highest

levels that we've seen over the last few

years, but those really haven't broken

out to some kind of crazy unsustainable

level yet. Yet, key word. So, to be

determined. But what really bothers me

is the one thing I was really hoping for

was that these tariffs would be

considered illegal. And that bullish

catalyst just got killed. So to me

that's a bit of a negative. Now is it

possible that

the Supreme Court will get involved in

this?

I think very late. I think the Supreme

Court is doing exactly what Donald Trump

wants right now. And the best thing the

Supreme Court could do is just wait, be

patient, let Donald Trump be Donald

Trump and do what he wants and get out

of his way. That way you could still

feain Supreme Court independence. you

could still feain the separation of

powers. Uh which I I don't actually know

how much of that we have right now. Uh

and and that's okay. That's not to like

pick political sides. You know me, my

goal is to piss everyone off. It's just

to say that we did just lose an extra

bullish catalyst. Now, hopefully markets

in the near term look at this and go,

"That's okay. All we're going to do this

week is we're going to look at this

shortened 4-day week. We're going to

look at the labor report." Uh, and you

want to get Mom and Max out so they

could start drying. I'll walk with you.

Let's get that labor report on Friday.

The latest labor report estimates are

that we're going to get somewhere around

75,000 jobs. Now, if we get somewhere

around 75,000 jobs, it's weak, but it's

not so bad. What we really don't want is

something under 50 because that's where

people like Waller say, "Hey, if we get

a break even of under 50 where uh or or

you know, labor reads under 50 on the

BLS stats, then how indistinguishable

are we really from negative?" Because

revisions take forever to come in.

Remember this, the QCEW revisions that

come in on September 9th are going to be

for the March 6-month period. The

6-month period ending in March. So,

we'll get a negative shock there, but it

won't yet revise this summer. So, we

have to assume that whatever that

negative shock is there transfers over

to the same thing we end up with

potentially through the summer. But we

won't know the summer's data via QCW

revisions until the spring. So we're

always looking at this lagging data and

that's where the Federal Reserve could

end up making a mistake. So long and

short of all of this is we lost a

potential bullish catalyst. Is that

necessarily super bearish? No. It just

rehighlights how important the Friday

jobs report here is going to be along

with the ADP report that'll come out uh

this week as well. I'm pretty sure it's

usually on Wednesday. I think they're

doing it on Wednesday still. It depends.

It could be Thursday because of Labor

Day. We'll see. Uh so we'll be covering

those live. Uh both the ADP and the

payrolls numbers. We'll be covering

those live. Uh I hope you're there. Uh,

and then, uh, obviously with the Fed

meetings coming up on the 17th. So, I

hope you're having a wonderful Labor Day

weekend. Uh, I'm in Texas for a little

while longer, so uh, shout out to y'all

in Texas. And, uh, thank you so much for

being here and being a subscriber of the

channel and, uh, coming for a ride with

me. Uh,

that's I think that's all I got. So,

I'll see you in the next one. Five.