this fed move is insane

This morning, we had two folks from the

Federal Reserve give us more insights

into why maybe things are just fine and

we don't actually have to cut rates

three times this year. See, uh, last

week when we had the Federal Reserve

meeting, we got what was a really

doubbish statement from the Fed priced

in three cuts. They removed the word

solid from the jobs market. Mark's like,

"Oh, this is going doubbish." Then JPA

walked that back. Went pretty neutral.

you know, three cuts seems appropriate,

but hey, things overall are strong. And

yeah, the jobs market is below break

even, but uh yeah, it's okay. We're not

in a rush to cut, which is weird because

it's like, wait, if we're below break

even jobs, then why are we not cutting

more rapidly? Well, maybe it's because

JP Power was forging consensus with the

two people I'm about to give us insight

on who don't actually think we need to

be cutting at all uh for jobs. Now, I

think it's important to remember quickly

what is this break even rate of

employment? The break even rate of

employment uh is basically the number of

jobs required to keep the unemployment

rate stable. So if we're at 4.3%

you know over the last year break even

may have been uh you know call it

150,000 right and as we get 150,000 jobs

the unemployment rate basically doesn't

move that was our average unemployment

or or jobs read uh jobs read since I

mean most of the year or or for most of

the year uh Now uh people are expecting

that break even rate could be somewhere

between 20 to 50,000

maybe break even. The economist actually

goes as far as saying zero uh based on

potentially negative net migration into

the country which this is also where a

lot of people talk about the H-1B visa

issue which I give you sort of a quick

take on on my opinion on what what this

whole H-1B visa thing is. It's basically

a tax on people coming into America,

right? And this is very popular because

a lot of uh exist people already in

America say, "Hey, you know, we want

more jobs for Americans." And so that's

how Donald Trump and Blut are pitching

this. They're saying, "Look, $100,000

H1B application fee." Uh, so even just

to apply, we're going to five to

actually it's probably more like 20 to

40x the cost of the H-1B visa, which

usually costs somewhere between $5 to

$10,000. The gold card is an option to

pay a million for residency if you're an

individual uh or $2 million per uh

company employee if you want to relocate

company employees in your business. So

basically charge the businesses twice as

much. Uh but the business therefore is

paying and they're maybe getting a tax

deduction, right? So that's kind of how

they're like reverse engineering some of

these numbers. But anyway, the net

effect of this is going to be lower

immigration because companies that end

up still hiring H1B style people will

not give them H-1Bs. Instead, they'll

just say go work at our Canada office.

you know we'll we'll buy as an example

let's say you want to hire uh a hundred

Indian workers to work in you know your

technology department at Microsoft or

whatever maybe you'll open a Vancouver

office instead the net result of that is

lower migration into the United States

we're already having few you know

children below replacement rate we

already have uh virtually zero migration

in part because of how stringent the

border is now, uh, which, you know, a

lot of people are like, "That's where I

voted for." Well, that's fine. I think

Trump's done a great job on securing the

border. I think some of the immigration

raids are a little, you know, excessive.

Uh, and then obviously now this H-1B

visa thing, all it's really going to do

is tax more people coming here, which

means fewer people come here. So that

means the economies of other parts of

the world benefit from more people,

which means our break even employment

rate might actually be even lower. So in

other words, to keep our unemployment

rate low, if pop if if the employment

population is shrinking, it's actually

possible that you could have a negative

break even rate because if there are

people, you know, retiring or dying and

then fewer people are being born or

coming into the labor force, you could

actually be at a place where the break

even point for the labor report, the

labor market, job reports is negative.

you know, you could be at negative

20,000 jobs per month and the

unemployment rate stays stable, which

was just like that'd be crazy, but it's

possible. And so that's what's driving

people like what the Fed said today uh

to say, "Hey, maybe the employment

market is just fine." And so that's

where we get into what Bostic and Muslim

said this morning. So Bostic says,

"Look, we're only going to pencil in one

rate cut for the rest of the year." And

this is something where you know I've

been telling people in the alpha report

like hey like in the near term we are

going to be up against Treasury yields

going up post Fed and that's exactly

what's happened. You know we called that

before it happened which is important.

You know just looking at it in hindsight

doesn't doesn't do as much good but now

we can look at it in hindsight. You see

this bump right here slows down that

movement in lending companies or real

estate companies that really started

rallying over this idea of lower rates.

We're confident that this direction is

continuing, but now the Fed's not only

walking back market expectations that

maybe we'll get five rate cuts by March.

Now they're even walking back the idea

that we'll get three rate cuts by the

end of the year with Boston saying we're

only going to get one rate cut by the

end of the year. that will likely push

gold higher. Stocks potentially keep

slogging up uh schlloing up I like to

say and yields kind of stabilize maybe

somewhere around 4.15 maybe even 4.2. Uh

so it slows down the boom a little bit

in terms of real estate related place

that is. Now what's what really pisses

me off though is you get people like

Bostic who don't seem to really know

where they want their jobs target to be.

You know, Bostic uh for example says the

labor market is in I don't believe the

labor market is in crisis right now, but

it's an open question in terms of how

weak the labor market is. Well,

shouldn't the Fed know? Shouldn't they

have a standard? That's my opinion. That

pisses me off a little bit. Like I feel

like they should say we want this many

jobs and if we don't, we're going to cut

and just have some kind of clarity for

markets to be able to expect something

rather than we'll wait and see. But

that's what we're getting instead.

Bostic says that uh the tariff impact

has really been delayed not just because

of how Trump impi implemented them but

also because businesses are sort of

delaying when they charge these

increased prices really buttering out

the impact of tariffs and other

countries really haven't retaliated

against this as much as people thought.

Now, Bostic also said that it's also

taking longer to fill vacant jobs. And

so, in some markets right now, there's

actually a shortage of workers, which

potentially means you end up getting

worker pricing power and wage price

inflation, leading him to say, "Hey, may

maybe we got to be cautious here." Now,

keep in mind there's really no evidence

of wage price inflation right now, but

it's an argument, you know, it's an

argument that, hey, maybe there are uh

parts of the economy that are still

suffering worker shortages and that

could lead to inflationary pressures.

All right. So, Bostik basically says we

need more weakening before we could

really commit to more rate cuts. Mosa,

who also spoke this morning, roughly

says the same thing. He actually says

that financial conditions are so loose

right now that we really should be

cautious on cutting. I mean, I think

Zero Hedge had a fantastic piece from uh

that where they basically broke down

Hartnet's like almost S&P 10,000 price

target for September of 2027. And

basically Hartnet is arguing that we are

in a bubble, but that bubble is going up

between now and September 2027. That

basically we are in a relentless meltup.

gold at highs, credit cards at highs,

stock market at highs. And basically the

way to look at it is while you have all

of these things at highs, credit cards,

stocks, gold, we're getting rate cuts,

we're getting tax cuts, and you know,

tariffs are not meaningfully showing up

yet. On top of that, you got the biggest

jump in US mortgage refinancing since

mortgage uh March of 2020 uh on lower

rates as the Fed is cutting into an

accelerating market. This, by the way,

is great for the stock market. I mean,

look at Apple today. Apple's just

absolutely killing it today. Tesla

absolutely killing it today. And I

personally am bullish a slow schlog

continuing on the cues. We had a meet

Kevin alpha target of 600 on the Q's and

we hit 600 last week. We hit 600 again

uh this morning uh because we were at

599 when we opened this morning. Uh and

I think this this continues in the face

of this sort of like expanding bubble if

you will which is fine. You can make

money off of it. Uh but also refinancing

activity. Consider this for a moment. Uh

refinancing activity and the uh real

estate market. Where is that money

coming from? Right? A lot of people are

like, "Hey, like how do people have

money to refinance right now? Uh like

how do people even have equity is the

idea, right?" Well, here's the answer

for you. 54% of homes in the United

States are owned by seniors.

And the vast majority of these seniors,

76% of them have no mortgage at all. I'm

a real estate guy, okay? I I look at

real estate data very closely. And these

seniors are refinancing and pulling

money out of their homes. Their loan to

value right now on average is only 24%.

Which means they barely have debt on

their homes. Some of that money is

literally going into consumer spending,

financing their lifestyles, vacations,

buying junk for, you know, their their

kids or grandkids or whatever. Some of

the money is actually also going into

the stock market. And you have to think

about it this way. Why borrow on margin

when you could get margin called if you

could just take out a home equity line

of credit at 8%. Which is way cheaper

than a personal loan from SoFi at say 12

or 13%. Way cheaper than a credit card

at 20%. and no margin call. Just take

some money out of your real estate and

go throw it into the stock market. All

of that absolutely contributes to a

disaster in terms of like, you know, a

bubble economics, right? That's not good

in the long term, but in the short term,

it's fantastic because in the short

term, it just means you have this this

available capital that people can reap

or or extract from their real estate and

keep this economy booming. and seniors

are heavily in part to blame for this.

Now, heliloc lending and this is a very

interesting one. And then today, real

estate related names are doing, you

know, they're not doing as well because

those yields are coming up. We knew

that, right? Even before the Fed

meeting, I said, "Hey, look, course

members, if you were investing in real

estate related names, expect some air to

come out of the balloon after the Fed

because they're going to they're going

to end up seeing as if they're if

they're anything but super doubbish,

like if we get a neutral Fed, we are

going to see yields go up and it's going

to hurt the real estate names." So, just

know that. And that's exactly what

happened. But there is a company that as

course members we bought uh on uh IPO

day and uh that company has been

straight up since then. On IPO day we we

were around 34 bucks. It's trading for

like $43 right now. Uh so this company

is a HELOC provider. And what's really

interesting about those home equity

lines of credit is that home equity

lines of credit have more than 5xed

from 2 from 2009 to today. Though that

home equity industry is skyrocketing. On

top of that, second home loans are also

blowing up. Rocket Mortgage is the third

largest provider of second home loans.

So, these lending plays are really

helping enable this this sort of like

stock bubble that we're seeing. And as

rates slowly trend down again, which

they will, they'll normalize back down

again, these companies could continue to

be big beneficiaries of people basically

breaking the piggy bank of their homes

and investing in the stock market. Uh,

and again, if you want all those sort of

like buy, sell alerts, everything, make

sure to get the me Kevin membership at

me.com. But you already know that. Let's

let's keep that discussion short. So

that said, now we've got to consider

Muslim also goes on then to tell us,

hey, look, the jobs market right now, we

really need to see a real plummet in

jobs to actually encourage some form of

continued rate cutting cycle here. And

so what do they say? They say that well

markets say that current ADP jobs

expectations for next week 50,000 jobs.

That would essentially be unchanged from

the prior 54,000 jobs, which would not

be conducive to rate cuts. The BLS

current estimate 42,000 jobs. Now, we

only have a few estimates right now

that'll change, but that's way up from

the 22,000 that we had prior. Remember,

22K prior, really low. That's like

indistinguishable from zero once you

factor in revisions. It's actually

probably negative. Uh, so going back

from 22K to 42 would be good. maybe gets

us out of that negative territory. In

addition to this, uh, you know, both

Muslim and Bostic saying we really need

to watch that data as it comes out next

week because unless we get really weak

data, we might be done cutting, which is

unfortunate, but that's okay. Uh, so

they say more cuts are conditioned upon

further job weakness. Policy uncertainty

easing could also add to growth. So

businesses potentially, this is like a

double negative, are getting less

uncertain because like we get tax cuts,

we kind of understand the tariff dynamic

and stuff now, which leaves us quote

little further room for rate cuts. So

both of these folks unfortunately

talking down the idea of rate cuts.

Muslim also goes as far as saying that

labor market risks, while they're

weighted to the downside, we have not

actually seen the benefits of AI

productivity yet. says it's too soon to

argue we've seen the benefits of labor

market productivity which could

contribute to a boom. So you've got

Boston saying hey maybe we've got you

know uh still shortages of employees

which could lead to wage pricing power.

You've got Muslims saying hey AI

productivity and business uncertainty.

Both of these things are tailwinds for

the economy. We got a lot of things

suggesting that this economy could truly

soft land. And unless we get bad reports

here over the next, you know, whatever

couple uh couple weeks over here, don't

expect big rate cuts. Uh maybe one one

and done is the way to go. Right now,

markets are pricing in about a 90%

chance 90.9% chance of a rate cut

October 29th. uh and then we have about

an 82% chance of a second cut thereafter

which leads to a combined set of 1.7

cuts priced in for the rest of the year.

So even in the face of that jobs

weakness that we had last month unless

we get even more weakness we're just not

seeing uh the pressure for more rate

cuts. Uh somebody Cody here says won't

Doge make the next two reports very

negative? This is a reference to the

I've been asked about this like 20

times. Sorry, I've been asked about this

so much. So, I got this answer live

stream comment here. Thank you, by the

way, for the $4.99. And and thank you to

Somebody else donated to post like a

picture here, like an emoji picture.

Donated $19. That's That's really nice

of you. Double prizes. I appreciate that

with the little trophy you're holding.

Thank you, Bill. Here's the thing. Yes,

Doge rate cut uh job cuts that took

place at the beginning of the year. uh

those positions see their leave end in

September.

Those people could immediately apply for

unemployment which those numbers would

show up the first week of October. So

yes, that could be really bad. Uh in

addition, you are going to see some

people take longer to apply for

unemployment. So not all of the numbers

will show up all in October. They could

show up in November. However, what

markets are going to do is markets are

going to look at those labor reports and

they're going to say, "Okay, let's say

we got a bad jobs report. How many of

those bad job numbers were Doge

related?" And they will add those back

in. So, in other words, let's say we get

50,000 jobs, but then we're minus

100,000 because of Doge. I think markets

are just going to go just add the Doge

numbers back in because they're one

time. Oh, cool. Okay, we're growing at

$50,000 jobs and it'll actually be

bullish the economy rather than bearish

the economy. So, whatever ends up

happening uh with

this September jobs report

uh is is critical. But whatever happens

because of the Doge portion is not

critical. The Doge portion will get

adjusted out. It's everything without

Doge included that will matter. Uh, so

that's really important. So I would

watch that very closely. So uh, let's

see. Do you think H-1B new fee will push

companies to hire more remote workers?

Yeah, that well that's that's what I was

talking about earlier is that you're

just going to hire people uh, you know,

and then park them somewhere else. They

don't necessarily have to be remote.

They could be remote, but you could also

hire people and then park them in Canada

or in Mexico or wherever else because

there's no tariff on labor, right? So

think about that. There's no tariff on

labor. So, you know, somebody in

customer service working out of

Vancouver to provide customer service to

America, hey, you know, there's no

tariff on that. So, if there's no tariff

on that, you may as well not bring H-1B

people into the United States. You may

as well leave them somewhere else. The

long-term downside of that is you have

fewer people in America. But that's kind

of what Trump and Lutnik want. They want

fewer people in America because they

have this argument of nationalism which

is hey you know these people are coming

taking our jobs. You know whether that's

true or not you I I guess remains to be

seen but it it's worth considering.

That's uh the environment that we're in

right now. So

yes, as usual uh we have a government

shutdown looming October 1st. Who cares?

Nobody usually cares about that. And

then we have big job data on the first

with the ADP and on the third for uh the

BLS survey. But until then, you've got a

Fed here that's like, hey, things are

booming. Who cares right now? Why why

are we going to uh you know, promise all

these extra rate cuts when the Atlanta

Fed GDP is sitting at 3.3%. And look at

this. Uh and the next GDP update we'll

get is on uh Friday, but it's pretty

impressive. Now there there is talk that

you know certain segments of the economy

are potentially in recession. Uh you

know there was a a comment that the

Financial Times apparently made that

you've got uh maybe construction in a

recession. I actually think that's

great. It gets you cheaper opportunity

to pick up uh um you know construction

related uh uh material for house hack.

I'm a big fan of that. I I love that

because yeah, I mean we're building ADUs

like we're building more homes, but

that's what we do, right? Like we're a

company. We don't just buy fixer uppers

and provide housing, but we also build

housing to provide more housing for

people. Uh and then, you know, we're

booming on our AI. Like we don't want

the market to crash. Look, if if we go

into a recession, it'd be great for

interest rates. You know, interest rates

going to zero, fine. We'll break the

piggy bank, so to speak. We'll refinance

our properties that have no bank debt.

So, I guess it would be finance, not

refinance. and we'll go buy a bunch more

homes and do the same thing, build more

housing, which is what people want. Uh

but uh you know, as long as the economy

keeps booming, like we'd rather sell our

AI product because it's me, we think

going to be mega mega profitable. I

mean, no guarantees. We we you know I'm

a little biased co but I think what we

have cooking with our AI is so good and

so powerful that it's unheard of in the

real estate industry and and I think it

could like a thousandx the valuation of

house hacks house hack I again I'm like

mega bullish on it but you know we'll

see so like in a you know a good economy

is a great time to sell an AI product

you know you don't want to sell an AI

product in a recession I'm just saying

it's like hey either way we go it's fine

like I so I have a bias. Oh, look, a

banner. Get $30 off on the Metagasses.

They just came out with new beta

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Kevin.com/weeeble.

Also, I'm pretty sure Weeble is still

doing their 2% balance transfer. So, if

you get 2% if you uh balance transfer

your funds into Weeble, that's where we

always watch the lines and target our uh

$600 target here. We'll hopefully go up

from here.

Uh, and then, uh, if you if you're

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check out meet Kevin.combank.

All paid sponsors there. Uh, but anyway,

uh, let's see. Somebody here says, "All

the contractors I know are still booked

out three months, which is pretty

healthy." Well, that's great. Every area

is going to be different. And remember,

as a licensed contractor, you have to

book out. You know, if if you don't book

out, you you're going to start taking

jobs you shouldn't be taking. So you

have to book out especially since you

you have to consider permitting projects

for a lot of contractor work. So I don't

know that you know the anecdote that hey

contractors are still booked out 3

months is is uh super useful just

because you you know

there there is a risk that that is just

very typical and normal. Uh, so anyway,

somebody here says, "Bechcraft a uh

aviation museum in Tennessee is a must

visit for aviation lovers. You donated

$9 to say that." Well, that's very nice.

That's very nice of you. I'll have to

check it out. So, anyway, uh 50 states,

50 highest point. Okay, let's go.

Yeah, hit them all before you turn 50.

All right, so that gives us a little bit

of uh economic insights 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 Praath there, financial analyst

and YouTuber. Meet Kevin. Always great

to get your take.