The Complete Economic "Great Reset" | Trump & The Fed.

Donald Trump is ushering in three

economic resets and we're going to talk

about each of them. The order we're

going to go through this is simple.

We're going to talk about the Federal

Reserve first and the economic reset

that they are facing which is important

for you to know what the headwinds and

tailwinds of Federal Reserve policy are

going to be for your money. Then we're

going to talk about Donald Trump's

economic reset. And of course, we're

going to talk about what's coming after

everyone's jobs and the AI economic

reset. The first topic that we have to

touch on when it comes to the Federal

Reserve has to do with the beverage

curve. Now, you may not have heard of

this curve before. That's because it's a

pretty arcane and uh boring economic

topic, but it'll help you understand and

see exactly what the Federal Reserve is

facing today. Here is a classic beverage

curve. This is a curve that economists

use to show the relationship between job

openings on this end of the curve and

the unemployment rate. And you can see

there's a traditional pattern that this

curve follows. Essentially, as job

openings fall, the unemployment rate

moves over to the right. This makes

logical sense. Think about that for a

moment. If you have fewer job openings,

fewer people are getting jobs, and so

the unemployment rate is going to move

over to the right. So in other words,

you historically have a curve that looks

downward sloping and to the right. Now

there are abnormal abnormalities that

can happen during economic transitions

and that might be what we're

experiencing today because today we

don't actually have a normal curve. And

this is something that is giving the

Federal Reserve heart palpitations

because our job openings rate has

plummeted yet our unemployment rate has

remained low which is very odd because

it is not what you historically see in

labor markets. And so this is where if

we put a picture up of what today's

labor market looks like on the beverage

curve, we'll end up finding a curve that

looks quite demented. When we look at

this, we can see, wait a minute, maybe

this is why the Federal Reserve is a

little bit nervous because, as you could

see, this isn't much of a downward

sloping curve at all. If anything, it

kind of looks like we're basically just

a vertical curve over here. In other

words, job openings are plummeting while

the unemployment rate is staying low.

So, it's still on this left side over

here. We're converging into this corner.

This is not usual. And this is exactly

why the Federal Reserve is extremely

nervous and why you should be evaluating

okay what does this mean for Fed policy

going forward in the future? Well, what

it tells us is very simple. It tells us

that there is either a large problem in

the economy or a transition and both of

these problems or the transition and the

problem point to the same result. Let's

analyze these. First, if we have a

problem in our economy, such as delayed

laying off because companies and

businesses decide, you know, we had such

a hard time getting workers after COVID,

we're going to just retain workers for a

little longer. That could be an

explanation for the low hiring or low

job openings level, but also the low

firing level. So, low hiring, low

firing, that could be an explanation. So

in other words, we could be seeing a

delayed

normalization of the beverage curve, the

bever beverage curve, which is

problematic because it means we're

likely to see the unemployment rate

spike. So in a delayed scenario, we are

going to expect that unemployment

insurance claims are going to skyrocket.

The other potential is less damaging to

the economy. Uh but it could have the

same outcome and it is that the economy

is going through some form of a

transition. That is current and existing

workers are becoming more productive

potentially because of a change in

technology like artificial intelligence.

And as a result, the unemployment rate

is low, but companies just don't need to

hire to become more productive. Their

current workers become more productive.

and therefore you could have low

unemployment because you're not firing

people but you're also not hiring more

yet you're still able to grow and the

economy is still able to expand. This

would be the technological change. The

downside of the technological change in

the near term is it is probably

eventually also going to lead the

unemployment rate to go up. Now, in the

long term, technology tends to create

new opportunities and new jobs, but it's

during those periods of transition that

you tend to see unemployment spike. Now,

no matter what the cause is, the result

is the same. Unemployment is very likely

to rise over the next few years, either

through delayed firing, that is

companies say, "Hey, you know, our

earnings aren't growing anymore. Our

earnings are growing flat." In other

words, they're not growing. let's cut

some expenses and then we can grow our

earnings per share and hopefully our

stock can go up. That would be an

example of delayed laying off. Of

course, that could also create a

flywheel where companies lay off because

earnings are down, but then there are

fewer people with jobs, so earnings go

down even more and then you get more

layoffs. And that's usually how you get

an economic downycle or a recession,

some form of a reset. Uh and then of

course with technology you could see

unemployment slowly move up but

productivity and GDP continue to grow

and you essentially have higher

unemployment without a recession. So

think of this as your recessionary

unemployment and think about this as

your not recessionary increase in

unemployment and you could have a mix of

both of these. The point is unemployment

is likely going up over the next few

years until of course we come and

discover new purposes for people to have

work. Uh and we see unemployment go back

down which could take decades. Think

about people getting re-educated in

trades or or different skill sets or new

opportunities in the future. It's going

to take a while. So in the near term

unemployment is likely to move up and

the Federal Reserve realizes this. Both

of these aspects will likely lead

interest rates to go in one direction

and that's down. However, there is

something that is keeping the Federal

Reserve awake at night. There's

something that tells the Federal Reserve

we need to delay because we're not sure

yet if we should start striking on

lowering rates. Now, the answer is yes,

they should start striking on lowering

rates. But what is the Federal Reserve

waiting for? Well, they're waiting for

guidance on what's going on with price

related policy because of their dual

mandate. They have two jobs. One job is

to make sure that we have stable uh

prices. And the other is that we have

maximum employment. Well, we have

maximum employment right now, but we

don't have stable prices. And we're not

convinced that even if we do have stable

prices today that those prices are going

to remain stable. Now, why why would the

Federal Reserve tell us, "Hey, we're not

convinced that prices are going to

remain stable." Well, it's actually

quite simple because the Federal Reserve

provided this guidance in their beige

book released just yesterday. Uh, and so

their beige book quite frankly gave us a

time frame for what to expect. As you

can see here, prices have increased at a

moderate pace since their previous beige

book. However, the contacts and this is

the national summary. So, looking at all

of the districts combined, their

national summary suggests the following

contacts. Federal Reserve has over 2,000

economists regularly talking to

businesses uh and and then you know

hiring companies essentially. Contacts

that plan to pass along tariff related

costs expect to do so within the next 3

months. So, in other words, there's your

time frame. The Federal Reserve is

bluntly telling you, hey, we are going

to have more guidance on where we sit

with prices in about three months. Now,

this is interesting because the Fed is

now going to be in a place where they

say we're going to wait. Mind you, the

economy and the job market weakening and

transitioning is telling us cut. And

this is where you have a disconnect

between the two. The worstc case

scenario is that we start seeing rapid

increases in the unemployment rate

before we get that threemonth or tariff

related price drama behind us. So in

other words, if let's say we're in July

and we see a massive spike in

unemployment or we're in August with a

massive spike in unemployment, the

Federal Reserve might not yet be able to

cut. We know in the future they're going

to be able to cut and they're going to

likely cut by a lot because uh

inflation, which we'll talk about in the

tariff section, is less likely to be

problematic in the longer term, which

we'll explain why in just a moment. And

they'll be solely focused on jobs. In

the meantime, you're going to hear a lot

of noise about weekly unemployment

claims or what's going on with job

reports. It's very difficult for us to

care at all about any of these numbers

until we have a longer term trend. This

makes looking at weekly claims a fool's

errand. In other words, it's it's almost

worthless to look at it. Here, by the

way, is a chart of seasonally unadjusted

unemployment claims. And it shows you

that typically in the summer and in, you

know, somewhere around the end of

December, January, you tend, Here's

January, right? you tend to get a spike

in unemployment claims. These claims

really get leveled out through seasonal

adjusting so that we don't have all this

crazy up and down. But something you're

going to notice a lot of people pay

attention to over the next few months,

is people are going to say, "All right,

well, let's find 2025, which is right

about here. There we go. And let's see

what happens over the next few weeks in

these unseasonally adjusted numbers. As

long as they come down again by about

week 31 to 37, which would be about the

end of August, which is really

interesting because the Fed gave a time

frame of 3 months from May, which is the

end of August, and their next Fed

meeting that really matters is

September. Well, then we'll know has

this started declining just like it

usually does every single year. So, the

Federal Reserve should be in a pretty

good place to see what's going on with

labor market dynamics by September. The

question is, will markets panic about

this normal increase in unemployment

claims in the near term? Well, in the

longer term, it doesn't really matter

because the Fed is likely to lower rates

no matter what happens. But in the near

term, you're setting up for this

unemployment claim concern at the same

time as you're up against Q2 earnings.

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know. Meet Kevin sent you. But Kevin,

what about the labor report? It comes

out the first Friday of every month,

including Oh, wow. How convenient. June

6th. Well, the labor numbers absolutely

matter because the Federal Reserve will

panic when it comes to losing labor or

losing jobs, losing this side of their

mandate. In fact, if you look over here

to June of 2024, right over here, you're

going to find that this is about where

the Federal Reserve cut rates by uh

essentially 100 basis points, but 50 on

one given meeting and then 2525 because

the labor market was

essentially going straight to the

poopers. Look at that trend line. Pretty

straightforward, right? But there's

something unique that usually doesn't

happen. Austin Goulby from the Federal

Reserve told us the labor market usually

does not just level out once it started

to decline. But, and this is where you

can credit whether it's enthusiasm for

Trump or Trump himself. Well, it's

probably enthusiasm given that it

started to pick up in November and

December. To some extent, you can credit

Donald Trump. And this is just

apolitically observing that jobs started

picking up again in November and we got

and December and into January and you

kind of got whether it's this this

increase here and then a leveling out we

could call it. You kind of got an

environment where we got a nice little

boost from the Trump administration

either enthusiasm for how great business

is going to be in the future or his uh

big beautiful bill or tax cuts or

whatever. We did get a bump.

Historically, we do not level out. This

is very unusual. In a normal cycle, we

fall into an unemployment driven

recession and then we slowly recover out

of that. Now, there are guesses in terms

of how bad that kind of recession could

be, but so far these numbers are going

to keep vacasillating up and down on a

monthly basis. they'll continue to get

revised. Don't worry so much about the

monthly numbers. Worry about the longer

term trend. This longer term trend could

be a normalization. And if we can level

out like this above about ideally

100,000 jobs per month, this economy can

keep booming. And there's good news. At

the moment, even bearish analysts

forecast just a quote shallow recession

starting in the third quarter with a Fed

cut in September. This is Robbo Bank

providing you their bearish outlook.

Their bearish outlook is a shallow

recession. They also say that the depth

and length of a recession depends of

course on what tariff scenarios

materialize. And this is of course where

we get into talk around pricing and

inflation. And there are two really

important components to pricing and

inflation. Two important components

above and beyond just speculating about

whether companies will have pricing

power. We already know that I believe

most companies right now don't have the

best pricing power unless they're

selling to rich corporations like Nvidia

selling to rich corporations or

Palunteer selling to rich corporations.

They have pricing power because they're

selling to customers with endless access

to capital. However, companies selling

to consumers are facing a harder time

attracting customers. In fact, if you

look at consumer companies like a Costco

or even a Dollar General, what you're

finding in their earnings calls is

they're telling you, "Hey, one of the

reasons we keep attracting customers is

because we are so missionoriented in

driving prices down, that we're getting

more visitors, and in other words,

greater numbers of transactions." But if

you look closely at what both of these

companies tell you, they tell you very

clearly we are reducing prices and

that's how we keep getting customers

here. So when it comes to consuming

consu consumption based companies, we're

not looking at a lot of pricing power

for consumers. Again, rich corporations,

no problem. Different story. There's

plenty of capital that Microsoft and

Apple and Amazon and Meta and Google

have to spend as well as large

healthcare companies that can spend

money on software such as that with

Palunteer or otherwise and those can

lead to booms in those industries which

is great. They have pricing power.

However, consumer companies do not in

this environment. Now, what matters when

it comes to inflation and the Federal

Reserve's mandate? Well, the Federal

Reserve cares about something called the

personal consumption expenditures rate,

which is really this manipulated version

of parts of consumer price inflation and

some parts of the producer price

inflation reads. Really, they're trying

to find a basket that a normal everyday

American spends money on. And what

you'll notice is normal everyday

Americans spend money on things like

Costco and Dollar General goods, not on

Nvidia and Blackwell chips. So in other

words, where companies have the power to

raise prices, consumers aren't buying

and it doesn't show up in consumer

prices. Where consumers are buying,

prices are going down. So in other

words, we should continue to see a de or

at least disinflationary trend in

prices. Now, of course, are prices

higher than where they were in 2019? Of

course, this is because we had an

incredible uh incredibly reckless amount

of money printing through both sides of

the political aisle. Uh and we have to

deal with those higher prices. Now, of

course, that's my take on pricing, but

what market signals can we see in

regards to inflation expectations? Well,

one, you could look at long-term

inflation expectations like the 5-year

break even or the 5-year forward break

even. Uh these are great charts and

tools that show you that inflation

expectations in the longer term really

haven't taken off. They're relatively

stable to where they've been over the

last year and a half. So in other words,

markets in the long term aren't really

pricing in higher inflation. And when we

look at oil prices, some would argue

that we're actually pricing in

recessionary dynamics when it comes to

energy pricing. Now, some of this could

be because of uh additional supply from

the Middle East, but a lot of folks

usually see the 60 handle on oil WTI.

This is the Western blend. You could

also look at Brent, which is the

international blend, uh, and find that

some of these levels are starting to

approach recessionary levels, which is

good from a consumer price point of view

because usually in a recession, prices

decline. usually see deflation in a

recession until of course the Federal

Reserve turns the money printer on and

absorbs all of that deflation and just

raises prices again. But again, that's

for the other end of this cycle that

we're in. Here's another thing that you

could look at COVID style supply chains

breaking. And if you look at what Bank

of America tells us, they say that our

weekly bottleneck scale remained at two

this week. Uh in other words, there's

very little congestion in supply chains.

supply chains are very open. They're not

heavily bottlenecked. And so we don't

think we're going to see a lot of

supplybased inflation. Mind you, this is

for the week of June 2nd where we are

already in the midst of this tariff

warfare. So despite the tariff warfare,

supply chain congestion is very low. A

lot of this is probably driven by

corporations

who really cleaned up their supply

chains postco to make sure they could

deal with shocks in the future to always

provide their product to customers and

clients whether that's front running

with more inventory or it's diversifying

supply chains whatever the economy

appears to be more resilient today. Now,

based on all of this data, were it not

for Donald Trump's tariffs, we would

probably have secured a soft landing by

now because the Federal Reserve would

already be in the mindset of cutting

rates even more than they have thus far.

In other words, tariffs have done a good

job of punting rate cuts, and it does

create a risk that the Federal Reserve

will be too late. And so this is where

we have to evaluate where do we sit on

tariffs right now. See tariffs and

ultimately what you think about them

whether they're good or bad. If other

countries use them why don't we tariffs

are economically bad. It doesn't really

matter what side of the spectrum you're

on. We can all agree that if the Federal

Reserve was willing to cut uh in March

that has probably now been punted out to

September or November. And

unfortunately, because there is a lag in

when the Federal Reserve cuts rates, if

the Fed cuts rates in September or

November because of an unemployment

spike or a spike in layoffs, which is

exactly what the Fed is worried about,

then it will take even longer for those

rates to take in effect or take effect.

Had it not been for tariffs, we could

have started cutting even earlier and

preempted that slowdown or normalization

of the beverage curve, which is a

slowdown in the labor market. Again,

whether it's because of technology or

it's because of lower pricing power at

companies, that doesn't matter. Either

way, the trend is up on employment, down

in rates. The issue is we've now delayed

rate cuts heavily because of, actually,

probably almost exclusively because of

tariffs. Because had it not been for

tariffs, inflation would have been

relatively stable, it is relatively

stable around two and a half. Now the

problem is forecasts for inflation are

now going up or are being predicated on

what happens over the next 3 months. And

this is why a lot of economists are

worried about tariff negotiations and

where we go in terms of how long these

tariff negotiations take. Now we did

hear today that Donald Trump spoke with

Xiinping. The problem that we find is

markets react positively to any optimism

around trade. However, so far on our

progress of 90 deals or over a 100 deals

in 90 days, I think the marketing was 90

deals in 90 days. We've had no trade

deals with a trade deficit nation. We've

only made one trade deal with the United

Kingdom with whom we have a trade

surplus or at best case we have neutral

trade. This is somewhat some somewhat

problematic because now the trade

negotiations uh that our country is

engaging in with other countries is now

hampered by both court decisions uh

which show other countries that our

courts are arguing that tariffs might be

illegal which essentially lead other

countries to say as we've already seen

them do. Hey, why don't we just wait to

see what the courts say before we

negotiate? That's not great. The impact

of court decisions, like the court or

not, you could agree with the court, you

could disagree with the court, it

doesn't matter. The impact is

delay on the end of tariffs, which the

more delay we get here, the more delay

we potentially get at the Fed, which

increases the chance of a Fed policy

mistake. Again, the Fed being too late.

The other issue on top of courts that

you face is you also face political

pressure not only through the big

beautiful bill uh and the pain that

Donald Trump is now going through with

Elon Musk essentially turning on

congressional spending which is

extremely popular by the way. A lot of

people are very upset about the idea

that we're going to add to our deficit

rather than cut like what was advertised

to most Americans.

Both of these

things lead to, in my opinion, delayed

trade negotiations, which again lead to

the Federal Reserve delaying their cuts.

Now, hopefully we can end everything by

the end of liberation, the 90-day

liberation day pause, which would be

great. We'd be over all of this in July.

But because of courts and because of

politics, we actually might see this

tariff negotiation go on for the rest of

the year, that wouldn't be great because

the longer the tariff negotiation goes

on, the longer the Federal Reserve is

going to punt rate cuts and the more

damage the labor market could end up

causing. Now, this is where we have to

evaluate, do we actually care as

investors what's going on with the labor

market? Unfortunately, the answer to

this is yes, because generally when the

labor market induces a recession, just

like the scare that we had in August of

last year, the stock market could suffer

rapid sell-offs. This is not abnormal.

However, it could be a buy the dip

opportunity and which it is, we're going

to talk about in just a moment because

of what I think the Federal Reserve is

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description. Mike Wilson, who used to be

the resident bear at uh Morgan Stanley,

is actually telling you that a recession

may be the perfect buy the dip

opportunity. In fact, he says, quote,

"We think recession probability has

fallen significantly post the reduction

in headline rates on Chinese tariffs

from 145 to 30." Having said that, in

the event we get a recession, not our

base case, in other words, they don't

think this will happen, but if we do, we

think it would be mild and could

actually present a bull case for stocks

over the next 12 month time horizon. And

to this, I actually agree that if we

have a shallow recession, you could

rapidly have another opportunity to buy

the dip just like what we saw in April.

The true downside is the most bearish

things we are finding from Wall Street

analysts today is shallow recession. And

this is where when we look at history,

we have to evaluate what did people say

about the economy in 2001 and in

2007. Oh, folks, don't worry. Things are

just

normalizing. Things are just leveling

off. we're going to have a level off.

Unfortunately, in both of the prior two

recessions where we did not have the

Federal Reserve supporting us until the

end of the recession, actually marking

the end of the recession, the stock

market suffered severe declines. In

fact, had you bought at the beginning of

2001, it could have taken you over 13

years to break even on your investment.

And certainly after

2007 equity pricing, it would have taken

you four to five years to break even on

some of your purchases. Now, for

somebody who's dollar cost averaging,

maybe this isn't a big deal. In fact,

arguably, it's not. And when we talk

about artificial intelligence and what

you should do about this and how to

adjust your own positioning, stay tuned

for the end of the video because we're

going to go through exactly this. Just

remember though, the bottom of these

supposedly shallow recessions was very

simply marked by the Federal Reserve

coming in to bail out both of these

situations. Once in March of 2003 and

again in February of

2009. That was your end. That was

ultimately where we V-shaped recovery

up. At the moment, the Federal Reserve

isn't in this position again because the

very thing that's potentially creating

recessionary risk is also what's

preventing the Federal Reserve from

being able to bail us out. In other

words, we can only hope that the tariff

issues, whatever happens, whether we get

deals or we don't get deals, we can only

hope that we have the answers before the

unemployment rate skyrockets because

then the Federal Reserve is stuck

between a rock and a hard place. And the

question that a lot of people then ask

is, "But Kevin, won't the Federal

Reserve just cut rates anyway as soon as

jobs fall off a cliff? uh why would they

care about inflation if the jobs market

is is uh is collapsing? They'll prefer

jobs, right? I mean, they don't want

people to be

unemployed. Well, this is where I have

really unfortunate news. Historical

evidence tells us exactly the opposite

is true. The Federal Reserve will almost

always prefer price stability over the

labor market. And we can evidence this

by looking at what happened in the

1970s. In the 1970s, the Federal Reserve

was what we could call hyper respponsive

to changes uh in data that could affect

the labor market. So hyper respponsive.

Uh in other words, if you look at rate

changes in the 70s, Federal Reserve

changed interest rates a lot. This

really damaged their credibility. And

that's not to say the Fed has infinite

credibility today. They certainly don't.

But the Federal Reserve was responding

to an environment where we left the gold

standard. Uh we removed price uh caps

which led to immediate inflation at the

same time as leaving the gold standard

at the same time as having an oil price

shock. The 1970s were a little bit

disastrous

for

fiat. How did we solve that? Well, we

solved it. Mind you also Jerome Powell

has criticized this era as never wanting

to return to this 1970s style

stagflation again. What does Jerome

Powell promote? Well, it's exactly what

we did to solve the issue of the 70s.

And this is what we call the Paul Vulkar

era where we actually had a very rare

double dip recession entirely induced by

the Federal Reserve tightening monetary

policy to break the back of inflation.

by breaking the back of inflation. They

also broke the labor market, but it

didn't matter. Losing jobs was a cost

the Fed was willing to pay in order to

regain credibility. And so the rationale

behind this is if you can't sustain

prices, your entire country collapses.

If you have joblessness, you might have

a recession, but you'll live for at

least another cycle. So the Federal

Reserve will almost always

prefer stable prices and this is why the

tariff negotiations ending in a positive

way before the unemployment rate

skyrockets is critical. Now markets

today aren't really discounting that

this tariff negotiation could go on

forever. It seems today that markets

broadly with the exception of the oil

markets are saying, "Hey, you know what?

uh the worst levels of tariffs happened

in April. Everything's fine right now.

Uh and uh we'll get through this. True.

But one of the reasons a lot of pricing

changes haven't shown up yet is because

a lot of companies built up inventory in

Q1 to get through a few months of

tariffs. That means the biggest risk for

us is an extended trade war. And the

courts just made this even more risky.

Before we talk about artificial

intelligence, let's talk about three

chart charts that are false signals. Uh

the first is the money supply. This is a

chart of the percent change of money

supply. And a lot of people say, hey,

markets can only keep going up because

we must be printing money again because

our money supply is increasing. How much

money is available and circulating? This

is the M2 money supply.

But this argument falls apart when you

actually look at it throughout history

because what you'll find is every single

time you had a recession, the money

supply skyrocketed. And you'll find

frequently, not always, like right here

is not always, but you'll find

frequently that money supply

skyrocketing can actually occur towards

the end of a recession. Uh, and we're in

an environment, here's another one.

We're in an environment now where we're

seeing, yeah, an increase in the

relative level of money supply compared

to prior years, but it could it

potentially be the beginning of any of

these recessionary points? Of course,

it's too soon to tell. So, just using or

relying on the money supply chart, I

don't think is very useful because it is

characteristic of recessions and not to

see an increase in the money supply. I

would argue that this money supply chart

will increase substantially should we go

into a recession. Uh but uh there are a

lot of factors that could impact why

money supply is increasing. Honestly,

probably artificial intelligence has

something to do with it right now, which

is again contributed to our labor market

wos, why we need those rates to come

down sooner rather than later. But the

Fed won't because why would they? Take a

look at the Atlanta Fed real GDP

estimates right now. They are over 4%

right now which is remarkable. 4.6% on a

GDP estimate for Q2. Why? How does that

make any sense? Well, actually makes a

lot of sense if you understand the

definition of GDP. See, when we look at

the definition of GDP, GDP is really the

sum of gross domestic product, all the

things that go into it, consumption,

trade, capital, investments, whatever.

uh minus uh

net

imports. So in other words, when we

import a bunch of stuff like we did in

Q1, our GDP level plummets. Okay? Well,

we did our importing in Q1. We front ran

Q2. So now we're subtracting way less

than usual. And so of course the GDP

looks artificially high. Q1 artificially

low. Q2 artificially high. So this chart

that circulates frequently on social

media isn't particularly useful either

and it won't be really until we get to

Q3 Q4. Q3 is probably decision time for

the economy because in the third quarter

is when we'll get not only Q2 earnings,

but we'll get all of the data from the

trade war to see did our labor market

survive and we'll have guidance for what

companies are doing going forward.

Usually layoffs come slowly and then all

at once. We don't want a Q2 or sorry, a

second half of 2025 layoff season. And

then of course, Donald Trump argues that

because of tariffs, our economy is

booming. But let's be real, our economy

is booming in spite of tariffs. In fact,

if it weren't for tariffs, we could

probably confirm a soft landing today.

In fact, we could have probably

confirmed that months ago. However,

because of tariffs, we might actually

kill the very soft landing that we were

in the progress or in process of

achieving. What do we do about all of

this? How do we put all of this

together? Well, let's do exactly that

and put the pieces of the puzzle

together. Mind you, this is very similar

to what we do in the course member live

streams every day where I give you my

opinions as the market evolves every

single morning when the market is open.

not only short-term trade suggestions,

long-term suggestions, but also macro

analysis, real estate analysis. And you

can join that daily by going to meet

Kevin.com. Join and get your alpha

report every day along with your course

member liveream access. If you try it

for 30 days and decide you don't like

it, you can always cancel your renewal.

But check out the options we have at

mikkevvin.com. So, first let's

understand how to put all this together.

The first thing we need to know is that

in the long term, it's extremely likely

that rates are going to come down. It is

highly unlikely we're going to see high

levels of inflation that are anything

more than onetime price increases from

tariffs. And even then, it's unlikely

given the lack of pricing power that

companies have. This is, of course, my

opinion. I could be wrong, but I believe

over the long term, rates are going to

go down. Donald Trump did delay these

rate decreases thanks to tariffs. So we

believe that rates are going to come

down in the long term. We also believe

that unemployment is going to go up in

the long term. Both of these together

are critical for you and your future

because one of the reasons or the main

reason we're going to see unemployment

structurally stay higher for longer is

artificial intelligence. And it'll take

decades for us to create all of the jobs

that we've now lost and potentially even

create more new jobs. That will take

decades. So what kind of jobs are really

resilient today? And how could you

position yourself in markets around

this? Well, I believe the jobs that are

most resilient today are anything that

relates to physical or social. Uh so

think

about nursing, nursing patients. Think

about setting that IV line, giving that

anesthetic, giving the shots, that

epidural, the doctor who's actually

performing the surgery. Yes. Can we be

augmented by robotics in the future?

Yes. But the physical will always be

augmented for a very long period of

time. I would argue at least our

lifetimes and beyond. Physical and also

the social connection. Do we really need

a lot of social connection? I hate to

say it, but in bookkeeping, no. In the

future, a lot of these aspects, even

today, will be automated away. But the

physical and social space, these will

last for much longer. In fact, there's

research that people on their deathbed

today would much prefer human

interaction over artificial

intelligence. They've already done

studies on this, which is remarkable

because I feel like we've only used

artificial intelligence for a couple

years. the fact that they already have

studies on this. I don't know if some

labor union put that together and

they're like, "Please don't fire the

nurses yet." Who knows? But some

specific jobs outside of uh nursing or

doctors or some of these healthcare

industry uh topics, and of course, we'll

talk portfolio construction in just a

moment. Uh some other ones that I

actually think will be relatively

resilient for a while. Uh real estate

agent. Now, I a lot of people think, "Oh

my gosh, what do you need an agent for?"

You know, computers can put the

documents together. or computers can put

uh evaluations together. True. And

they've already been able to do that.

The difference is just like the nurse

example, a real estate agent is more of

a therapist than they are a transaction

processor. Now, transaction coordinators

working for real estate agents or

lenders might be more at risk because

those jobs are often less reliant on

relationships and more reliant on

numbers or rates or fees.

Something else to consider, uh, and I

know a lot of people don't believe in

this one, but I personally think, uh,

being a pilot, uh, a pilot will be less

likely to be replaced by artificial

intelligence in the long term

because who's going to get on a plane

knowing that if that computer shuts

down, nobody's there to fly it? You

still need that psychological backup.

Now, you might go down from two pilots

and cockpits down to one in the future.

And of course, a lot more things are

going to get safer and more automated,

but I think for quite a while until we

uh we're willing to put our lives in the

ST, you know, into a chip uh and

batteries, you're going to want that

backup pilot for quite a while. Uh other

places obviously uh to consider are uh

contracting and uh trades. It's why in

2021 when I ran for governor in

California, I promoted uh trade school

and how we should really be uh

encouraging plumbing uh electrical

knowledge, framing knowledge in our

schools. So that way when people

graduate high school at 18, they could

go right into a job site and do

something functional. Whereas today,

people graduate at 18 and they have

almost no practical skills. they have

the skill to maybe go to be an undergrad

student at college, but that doesn't do

you much practical for the economy right

away. So these sort of skills will all

matter uh and and will be very resilient

for a while to this artificial

intelligence revolution. No doubt that

artificial intelligence re revolution as

part of this Trump economic reset is

going to lead to higher unemployment.

And so the more you can arm yourself

with skills that other people do not

have, the better. Uh, in fact, it's one

of the reasons we're so excited about

what we're doing over at House Hack

because, uh, to us at House Hack, we are

developers, we deal with construction,

we deal with, uh,

fixerupers, we deal with inperson

analysis. Uh, that's difficult to do

over a computer. It can be augmented by

but not replaced by very important

distinction. So real estate a big deal.

Now obviously you can invest in house

hack. We have a nonacredited round open.

You get a 5% yield per year paid to you

monthly. Uh and you get all the upside

in the stock once we uh convert our bond

offering to shares assuming our

valuation goes up. Otherwise you get

your money back over time. Read the

paperwork over at houseack.com. You can

read all the disclosures or see my

videos on it. Uh but that said, to me,

this is a very resilient to AI business.

However, it's also a business that's can

crack the egg to future AI technology to

make it easier for us to augment what

we're doing. Auditing, billing, you name

it. Rent collection, rent screening,

it's augmented by, not replaced by very

big difference. Now when it comes to a

personal portfolio and uh what risks

there are in the economy today, the

greatest risk and and this is not to say

you need to panic and sell out

everything, but the greatest risk that I

believe people have and and could lead

to true pain in the next down cycle, I

don't believe people fully understand

the pain of leveraged ATFs. Uh, I've

seen complaints uh circulate on on

social media for this, but most people

aren't taught in schools why leveraged

ETFs are so dangerous. They're great

trading tools for maybe a two or

three-month period. Sometimes they're

used in tax loss harvesting, right? If

let's say you have 10% or a 30% exposure

in bonds and then you tax loss harvest

those bonds, you move to uh a triple

leverage bond ETF with a 10% allocation

and then after you know one or two

months you move back into the non-triple

leverage. That's a tax strategy, right?

That said, a lot of people might not

realize that if you have a stock that is

$100 and it goes down 30%. Well, then

you'd have a stock that's $90 in a

non-leveraged ETF or sorry, a stock

that's $70 in a non-leveraged ETF. Uh,

and in the leveraged ETF, you'd lose

90%. So, you'd be down at

$10. Now if the market then recovered by

let's say doubling okay so the market

doubles uh well if the market doubles uh

then in uh what we have is a 100% gain

here or a 300% gain over here. So a

double would bring this to about let's

call it uh double is 10 30 we got about

60 bucks over here whereas over here

you'd be about 140 bucks. So, in other

words, you kind of got left behind a

little bit because you've got the triple

double over here, which is a

6x, but you only have but you have the

double over here, which brings you to

140, which shows you that the difference

between 140 and 60 is really the

punishment that you get for being in a

leveraged ETF. So, I think leveraged

ETFs are quite dangerous in downturns.

And if you have exposure to leverage

ETFs, they're great on the upside, but

you should really consider setting stop

limits that are good to cancel. So that

way you could step out of these ETFs

automatically before it's too late.

Leverage ETFs could really hurt. In

addition to that, which is less popular

today because of leveraged ETFs, margin

and being margin called on the downside,

very risky. Want to stay away from

margin. One opportunity to use stop-

losses here as well is if you're in

margin, set stop losses that

automatically if the market declines

pays off your margin and that way you

don't have to get forced to paperhand

your favorite shares and that sort of

core portfolio you have as the market is

falling. Now, the most important thing

doesn't matter if you're buy the dipping

in stocks or real estate or you're

diversifying to venture capital or house

hack or whatever. The most important

thing for you is to think about what can

you do in this new economy we're going

to into in this Trump reset. What can

you do to increase your skill set? And

in my opinion, grabbing as much of the

items that you can from this list helps

you. In fact, I put my money where my

mouth is. I'm a jet pilot. I'm a real

estate broker. I run a company that uh

develops real estate, handles

construction, coordinates construction,

re analyzes real estate in person. It's

a very physicalbased business augmented

by uh artificial intelligence. And then

of course social media. You don't have a

robot talking to you or some AI

generated prompt giving you the same

thing that you've heard in your own

pocket before. You're getting a human

analysis from me because none of what

you saw in this presentation is

artificial intelligence. Now the future

could be replaced by AI, sure, but it's

going to start sounding like AI

commoditized. Everyone's opinions blend

together. is one of the reasons why I

don't love using artificial intelligence

for my social media and I don't love

watching other people on the internet

because all the information starts

blending together gets commoditized

everything sounds the same. So if you

like this sort of unique perspective uh

make sure to sub subscribe to the

channel check out our sponsors link down

below. So big bottom line, your

homework. Build up that skill set. Don't

go bankrupt on leveraged ETFs or margin.

And know that in time rates will come

down and longerterm unemployment is

going to go up. So be careful in that

labor