The Fed is Screwed.

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thesis on the plays we're making I'm

highly concerned about what's going on

at the Federal Reserve I believe that

the Federal Reserve is starting to

realize they're between a rock and a

hard place and it's about to get really

nasty for the entire economy not only

are markets topping out we've seen that

on bitcoin The Q's the S&P 500 the Dow

you name it Microsoft it doesn't matter

not only are we toppy but we're starting

to see some of the catalysts that could

really push us over the edge like

slowing growth in the AI World brought

To Us by none other than today asml

coming in with orders at 3.6 billion EUR

versus the 4.6 expected now that's still

a great and large set of orders but it's

flat year-over-year and it really hurts

the growth equation when all of a sudden

you miss by

22% that's a problem and so now the

question is what is the Federal Reserve

going to do and where do we sit with the

Federal Reserve well first it's worth

remembering that the Federal Reserve has

a very important dual mandate we know

about this very well it's maximum

employment and of course stable prices

but the kabes letter put out a great

tweet this morning breaking down where

we are starting to see quite frankly a

breakdown of workforces over the last 4

months take a look at this uh Tesla 10%

of its Workforce you've got Wayfair 133%

uh you've got Hasbro 20% twitch 35%

PayPal 9 eBay 9 City Group 20,000

employees Macy's 4% whatever blah blah

blah blah blah so we're seeing these

large numbers that are coming through

and so it doesn't surprise us that we're

starting to see not only this topping in

markets uh but also a concern that hm

maybe the inverted yield curve could be

right and we're starting to see the

indication that you know what we're

about to go into a little bit more of a

poopy market now we don't want that

nobody wants that but the reality is the

Federal Reserve is about to get squeezed

and here's how the Federal Reserve is

going to get squeezed while we're

starting to get some of these leading

indicators about pain in the job Market

I want you to pay attention to what

inflation has been doing and its

trajectory for the last 3 to 6 months

zoom in right here and you could see the

trajectory for the last 12 months you

could see that on a CPI basis if we look

at the last three and six months and

annualize that 3 to 6 month average

inflation's actually trending up to 4.8

to 3.9% that's substantially higher than

what the pce year-over-year figure is

telling in us right now now we get the

pce Catalyst next week which is great

we're going to get pce we expect it to

come in at 2.7 which is the lowest read

since March of 2021 so that gives the

Federal Reserve a little bit of latitude

on hey maybe just maybe we've got room

here and we can go ahead and lower

rates at some point this year especially

since we're seeing weakness in jobs but

the pce forecast uses data from CPI and

the CPI trend from the last 3 to 6

months is very bad extrapolating this

out and you have the opposite of what

you had last year where you had this

idea that yay inflation's finally

proving to be transitory and so this is

why I was exceptionally surprised

yesterday when Jerome Powell made the

following clear to us and markets

actually rallied on it I thought it was

delusional yesterday we had Jerome

Powell gave give us a nice jpw to the of

the face and what did he tell us well of

course he told you that meet Kevin has

an expiring coupon code this Friday for

the courses on building your wealth and

that comes with all my Buy sell alerts

this morning we uh picked up some

$117,000 on an smci short uh that helps

for one of the trades that missed

yesterday uh one of the trading sets

that missed yesterday and we've got more

trades in the books today uh that a

couple more trades that are also

profitable and we're not done trading

yet yet so if you want all those alerts

make sure you're part of the stocks and

psychology of money group you get every

single Buy sell alert that I said but

what are we paying attention to here

with japal what's this bizarreness that

yesterday we get recent data shows solid

growth in the labor market well no solid

growth in labor growth right and a lack

of further progress I should just say in

labor there we go and a lack of further

progress in inflation this is J house

starting to turn somewhat bearish he

says the labor market remains very

strong and the inflation figures that

we've gotten are not giving us greater

confidence this is really bearish and

really bad and I want to show you I'm

sort of going to draw this out so we can

see this a little bit more clearly why

jpow is putting us between a rock and a

hard place and it's bearish I want to be

bullish it's much more fun to be bullish

I've been bullish since the end of 2022

going all the way into uh uh you know

this Nike Swoosh that we've had but I

think we're about to get introduced to

some volatility again why is that well

think about this what is JP saying he's

saying

inflation bad and

jobs good that's what he's saying this

would lead us to say that rates are

going to be uh at 5 and a half so we'll

call it 5.375 as the midpoint for longer

it really delays our rate cut

expectations for the year in fact when

we look at rate rate cut expirations for

or rate cut expectations for the year

right now we're looking at maybe 1.76

Cuts with the first Cuts probably not

really coming until September that's

when we really price in nearly a full

cut by September so we're looking for

that cut in September and that

reiterates this longer aspect but at the

same time jpow saying oh jobs are so

great we need to focus more on inflation

and keep rates higher what are we

starting to see we're starting to see

cracks in labor and that is a big

concern because labor is a lagging

indicator and it can be a really painful

indicator because it happens rapidly for

example yesterday I tweeted the

following about Tesla I said uh first of

all I retweeted Sawyer tweet here where

Sawyer said Tesla has removed nearly all

job listings in North America the Middle

East and Africa it appears that job

listings counts have been reduced by

over 80% this is a problem and I tweeted

this as a problem I said recent

inflation data has not given us more

confidence that's jow so we need to

fight inflation more and rates can stay

higher for longer this at this level for

longer it doesn't look like we're going

to get another hike but we're starting

to see those cuts like I showed you from

Kobes at the beginning of this video and

at Tesla see I think this is becoming

more than a Tesla problem this is

actually starting to become an economic

problem where at the same time as jpow

says oh no we need to get more

aggressive on rates keeping them higher

for longer we're starting to see jobs

weakness that is the worst case possible

scenario why is that the worst case

scenario well because only 15 to 20% of

fund managers think we're actually

potentially going to go into a recession

well usually right before a recession

everybody gets caught off guard that

we're going to go into a recession and

the bond Market's signaling a recession

coming for a while so at the same time

as jome Powell is starting to Pivot back

to we need to be more aggressive on

inflation we're starting to see more

cracks in the labor market and I don't

think they're just isolated to Tesla now

we we're at 30 days now we we're past

the tax loss harvesting on Tesla I could

buy back into Tesla right now and save

$20 per share uh just by buying back in

right now which would be great that

means for every eight shares I had I get

I basically get one free it's buy eight

buy one free easy buyback right now but

now I'm bearish on the entire

economy and so I don't want to be I I

want to just declare Victory right that

would be beautiful right now I'd like to

be able to say look I told everybody I

was selling Tesla I told everybody that

early in the stocks and site group like

I do and I said that I would notify

everybody as soon as I Reby Tesla uh and

so in the meantime I'm just watching the

market bleed so great okay cool we we

made a good move that's fantastic could

we have made the move earlier of course

everybody could be more perfect

but the issue right now is these cracks

forming in labor I don't think are only

a Tesla issue and that is making me a

little nervous now why is it that we're

still getting good jobs data from the

Bureau of Labor Statistics we're not

really getting hot unemployment claims

we're not really getting uh uh bad jobs

data right well that's because what

we're getting is we're getting less job

openings ah well we can track that as a

potential leading indicator so let's do

it together what we're going to do is

we're going to look up the St Louis Fred

and we're going to go to the jolts

that's the job openings and labor

turnover level and I'm going to

specifically go to job openings and I

want to see what happened to job

openings as you go into a recession uh

and so then and then we can overlay some

of the other figures as well so let's go

ahead and do this we're going to do this

together so here here we go here we can

see job openings total non-farm job

openings you can see job openings slowly

decline as you go into a recession at

least comparing back to the 2008

recession we were already in recession

when this figure started falling we were

already in recession when the dot bubble

started blowing up and don't even get me

started on the Hindenburg uh indicator

this morning the Hindenburg indicator

which we talked about right here it was

the Hindenburg omen and it says we have

more of an omen right now than we had in

2000 when it comes to the NASDAQ in

other words a potential red flag leading

indicator for a NASDAQ selloff or

sideways trading that's the Hindenburg

Omen you can look that one up yourself

but look at this yes we have job

openings plummeting but they really

don't really fall off a cliff until

you're really in a recession right

that's when you really get a fall off

the Cliff but now how does this compare

let's add a line here how does this

compare to let's go with uh non-farm

payroll the jobs report right so we're

going to go to all employees add the

data

series okay now we're going to have to

normalize this so we're going to have to

zoom in to a period of time where we

have both data sets let's zoom in right

here and now we need to normalize this

so we're going to go with a percent

change from a year ago so we can compare

the two two and uh what happened to my

ah right the the percent change is very

nominal when wait a second hold on a

second here percent change from a year

ago that's line two percent change from

a year ago line one there we go Okay

cool so now take a look at this you

actually see the job openings number

with the exception of covid here you see

the job openings number come

down well before you start seeing the

the all employees level come down now

that makes intuitive sense let's zoom

into that let's go to 2007 look at that

so you didn't actually see the non-farm

payrolls number go negative until April

of

2008 but you already trending negative

on the jolts for almost a year before

that uh about 6 months before that the

jolt starts trending negative and so you

can see the jolts number was moving down

those job openings get cut first so your

first leading indicator of an

unemployment problem coming is less job

openings and then you get the negative

non-farm payrolls report let's let's go

ahead and kill jolts for a moment and we

can see that more clearly look at how

long it takes for jobs to really go

negative it really took until

May to September of 2008 and then you

just fall off a cliff so looking at jobs

obviously as a like lagging indicator

one of the earliest would be jolts like

how many job openings do we have and we

start seeing those job openings really

collapse and get crushed pretty dang

quickly uh in uh in in recessions in

recessionary times and again maybe we're

just normalizing right now that's that's

an idea right so let's go put it in

let's go put jobs again let's do uh

jolts let's look at

layoffs so we already looked at jolts

let's get rid of the other for a moment

let's get rid of non-farm payrolls we

could look at this together there

layoffs when do we get layoffs okay so

this is the layoffs read we really get

this layoffs and discharge number not

really showing us any fear like this

isn't actually that bad so we're not

getting as many layoffs yet let's see

how that compares to

2008 jump in over here yeah look at that

your your layoffs and discharge number

uh was you know it it wasn't really

indic indicative of any massive issues

uh I mean yeah you had these Rising

levels going into seven and eight uh but

I can't really say that the jolts

layoffs indicator was really a tool for

me really what was much more of an a

leading indicator again is job

openings so you know what let's also

throw in job openings in

construction job uh openings I think

that's one of your recession sensitives

so let's add Construction in let's get

rid of dist

charge yeah look at that see these

numbers going negative that's what you

don't want when you look at 2008 right

here it's the job openings those are

your first leading indicator and right

now we're negative on total

construction's you know bobbing up and

down let's add construction or let's add

Manufacturing in here cuz we've seen a

manufacturing rebound so we'll go uh

openings and let's do manufacturing add

data

series here we go okay yeah look at that

when it comes to recession so let's try

to get 2008 over here there all of them

go negative First when all three of them

go negative that's when you're starting

to knock on the door of recession and

they stay negative throughout the entire

recession we don't have yeah I mean your

negative coming out of the dot bubble

this jolt survey started in ' 02 so I

wish we had more data and then obviously

you're going to be negative in covid but

you didn't have all of them negative

during the 2010s that makes sense of

course you had them all negative during

covid and then you were all negative in

22 we didn't have a recession here so

are we coming out are we over that

recession I don't know but this this is

what I'm watching because if this

rotates down again which I feel like is

what we're starting to get as a leading

indicator

especially if jpow is going to if this

is the market pricing in Oh yay rates

are going to come down we're going to

get seven rting decreases or you know a

few rate decreases three or whatever two

just give us something if that goes away

and turns into no rate Cuts this year

all three of these go negative this is

going to be a powerful in my opinion

leading indicator of a recession

coming and that's because jpow gets

squeezed into a hard corner so I'm not

happy about that that's my take right

now that's what I'm watching the leading

indicator is job openings I've explained

why JP's getting pushed into a corner

it's going to lead to more pain in job

openings and you'll start seeing that

collapse in openings so again going back

to what we saw at Tesla look Tesla's got

a big pay package that they've got to

negotiate in now the stock never

actually went up after elon's pay got

cut which is really weird because that

was anti-dilutive the stock should have

gone up on that and it didn't so that's

odd

it should have gone up it didn't the

fact is the stock went down now you got

a price back in the pay package coming

back in that's probably dilutive right

and so now you're pushing the stock

potentially down even more so that's not

good uh I'm not saying Elon doesn't

deserve his pay package I think it's

messed up that you could kind of undo

something that was promised and voted on

by shareholders I get the judges POV

you've got a judge that's saying hey

look uh you might be wasting corporate

resources paying for back work

especially since the majority of

shareholders were misled uh uh that's a

judge's argument but let shareholders

decide today what they want to do but uh

you know there there are arguments on

both sides we'll see what happens but uh

unfortunately I don't think these job

cuts are just isolated to Tesla and it's

bad news for the broader economy so

we'll see what happens anyway if you

want all my trade alars make sure you're

part of the stocks and Psych group we uh

we did really well this morning on smci

uh I can throw that up on screen uh

that's right here I I want to get more

of these uh so we're going to do some

more trading today and we'll see what

happens and uh thank you so much I'll

send all my trade alerts appreciate you

being here and we'll see you soon in the

next one thanks again goodbye why not

advertise these things that you told us

here I feel like nobody else knows 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 PA there financial analyst and

YouTuber meet Kevin always great to get

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