f*** i might be wrong
Summary
TLDRIn this video, Kevin discusses the potential impact of unemployment rates on the economy, focusing on a predicted dip in rates that could affect mortgage and treasury rates, as well as the stock market. He highlights the upcoming September unemployment report and its significance, especially in the context of the upcoming election. Kevin also addresses the launch of a new financial advisory service, emphasizing its focus on wealth building through real estate. He concludes by advising viewers to be patient with market investments, waiting for more data before making financial decisions.
Takeaways
- ๐ Kevin celebrates his son Jack's birthday and discusses the potential impact of unemployment rates on the economy.
- ๐ The script anticipates a dip in the unemployment rate, which could affect mortgage and treasury rates, and the stock market.
- ๐ Important dates highlighted include September 6th for the August unemployment report, October 4th for September's report, and November 1st for October's report.
- ๐ The discussion suggests that a drop in the unemployment rate could trigger recessionary warnings, contrary to popular belief.
- ๐ข The script notes that higher-income individuals might be less likely to claim unemployment benefits, which could skew the data.
- ๐ There's a potential for a 'soft landing' into a recession, with consumption growth slowing to a pace that could lead to layoffs.
- ๐ผ The script mentions the launch of a new financial advisory service focused on wealth planning, distinguishing it from traditional financial services.
- ๐ผ The new service, launching October 1st, will offer licensed financial advice with a lower fee structure and a monthly retainer.
- ๐ The script references data from the St. Louis Fed, suggesting that savings rates typically spike in the first quarter of a recession.
- ๐ The personal savings rate has fallen to a low, which historically has been a sign of a potential economic downturn.
- ๐ค Kevin expresses his cautious optimism, suggesting that he will be data-dependent and patient, waiting for more economic indicators before making investment decisions.
Q & A
What is the significance of the September 6th unemployment rate release mentioned in the script?
-The September 6th unemployment rate release is significant because it could potentially show a dip in the unemployment rate, which might trigger recessionary warnings. It's also notable because it comes just four days before the election, which could lead to market volatility.
What does Pantheon macroeconomics predict regarding the unemployment rate in their September release?
-Pantheon macroeconomics predicts a potential dip in the unemployment rate from 4.3% to 4.2% in their September release, which is expected to come out on September 6th.
Why might the unemployment rate decrease according to the script?
-The script suggests that the decrease in the unemployment rate might be due to a decline in temporary layoffs, which were high in the previous month's report, possibly due to factors other than the hurricane as initially speculated.
What is the role of Kevin's new financial advisory service mentioned in the script?
-Kevin's new financial advisory service is designed to consult on wealth planning, focusing on real estate investments balanced with other financial aspects such as income, debt, and renovations. It's not about outperforming the market but about building wealth with strategic planning.
How does the script relate unemployment claims to the start of a recession?
-The script indicates that both unemployment claims and the unemployment rate tend to lag the start of a recession but align well with it. An increase in unemployment claims often precedes a rise in the unemployment rate.
What factors might cause higher income individuals to be less likely to claim unemployment benefits as mentioned in the script?
-Higher income individuals might be less likely to claim unemployment benefits due to receiving severance pay, having higher savings, a negative stigma associated with filing for unemployment, high confidence in their ability to secure another job, or being ineligible due to their prior income.
What does the script suggest about the potential impact of a good jobs report on the markets?
-The script suggests that a good jobs report could be bullish for the markets, potentially rallying them, and could lead to a reevaluation of treasury rates and the Federal Reserve's rate cut expectations.
How does the script discuss the personal savings rate in relation to consumption growth?
-The script discusses that the personal savings rate has fallen to substantial lows, which has been supporting high consumption growth. However, as the savings rate is expected to rise due to labor market softening, consumption growth is expected to slow, which is a recessionary sign.
What is Kevin's strategy for the market volatility expected around the election mentioned in the script?
-Kevin suggests being prepared for election volatility, particularly in October, and advises to be patient, waiting for data after the election to make more informed decisions about market positioning.
What is the script's stance on the current economic state and the possibility of a recession?
-The script presents a nuanced view, suggesting that while there might be short-term bullish signs, such as a potential drop in the unemployment rate, there are longer-term concerns about consumption growth, personal savings rate, and other leading indicators that suggest the economy could be entering a recession.
Outlines
๐ Economic Insights on Unemployment and Market Trends
In this segment, Kevin discusses the potential impact of unemployment rates on the economy, particularly focusing on the upcoming September release and its implications for mortgage and treasury rates, as well as the stock market. He highlights the possibility of a dip in the unemployment rate, which could trigger recessionary warnings. Kevin also addresses the timing of these economic indicators in relation to the election and the historical volatility seen in financial markets during such periods. Additionally, he clarifies a new financial advisory service, emphasizing wealth-building strategies and a balanced approach to investments.
๐ผ Unemployment Claims and Their Economic Implications
Kevin delves into the relationship between unemployment claims and the unemployment rate, noting how they often align with the start of a recession. He discusses the current data indicating a decline in continuing claims and speculates on the reasons behind it, including temporary layoffs and the potential underreporting of claims, especially among higher-income individuals. The conversation shifts to the possibility of a white-collar driven unemployment recession and its implications for market trends. Kevin also touches on the potential for market bullishness if the upcoming jobs report is positive, and the broader economic indicators that could influence the Federal Reserve's decisions.
๐ Concerns Over Consumption Growth and Recessionary Signals
In this part, Kevin addresses concerns about the sustainability of consumption growth, noting that the current pace of spending is largely due to the depletion of personal savings accumulated during the pandemic. He points out that the personal savings rate has fallen to a low, which could lead to an increase in precautionary savings as the labor market softens. This, in turn, might signal a recession, as people tend to save more when they fear job loss. Kevin also discusses the potential for market volatility around the election and the importance of being patient and data-dependent in making investment decisions.
๐ญ Kevin's Market Outlook and Critique of Capitalistic Sentiments
Kevin shares his personal market outlook, suggesting a wait-and-see approach until more economic data becomes available. He anticipates that the market might react positively to good unemployment data, but also expresses caution, given the potential for a recession. He adjusts his expectations for market upside and downside, reflecting on the speed at which markets can change and the importance of not being late to react. Kevin also comments on the societal shift against capitalism, expressing his views on the value of providing financial advice and the goals of his financial advisory service.
Mindmap
Keywords
๐กUnemployment Rate
๐กMortgage Rates
๐กTreasury Rates
๐กStock Market
๐กRecession
๐กVolatility
๐กConsumer Spending
๐กPersonal Savings Rate
๐กElection Volatility
๐กSoft Landing
Highlights
Kevin discusses the potential impact of unemployment rates on the economy and financial markets.
Pantheon macroeconomics predicts a dip in the unemployment rate, which could affect mortgage and treasury rates.
The September unemployment rate release is anticipated to cause market volatility, especially before the election.
Kevin explains the correlation between unemployment claims and the unemployment rate, and their lag in indicating a recession.
The BLS suggests that temporary layoffs, not hurricane impacts, contributed to the July unemployment increase.
Higher-income individuals may be less likely to claim unemployment benefits due to various factors.
Kevin speculates on a potential white-collar driven unemployment recession and its implications.
A good August payrolls report could be bullish for the markets, affecting treasury rates.
Kevin discusses the potential for a 25 basis point move from the FED, influenced by job reports.
Consumption growth is predicted to slow, which could lead to a recessionary environment.
The personal savings rate has fallen to a low, which historically precedes a recession.
Kevin shares his investment strategy in response to the economic outlook, including a potential 'buy the dip' approach.
The upcoming Q3 earnings reports and GDP forecasts will be crucial in assessing the market's direction.
Kevin's outlook for the market includes a potential 10% upside and a 30-50% downside risk.
Warren Buffett's recent selling of stocks is mentioned as a market indicator.
Kevin addresses the criticism of his financial advisory service and clarifies its value proposition.
The importance of a long-term wealth-building plan over short-term market fluctuations is emphasized.
Kevin reflects on the societal shift against capitalism and its implications for financial advice and investment strategies.
Transcripts
hey everyone me Kevin here I'm coming
from the tropics actually it's more of
like a water park and Kids Place which
is really cool because it's uh Jack's
birthday today uh and uh we've got a
little bit of uh Kevin could be wrong
piece here which I always like doing I
always like having a a balanced
perspective of what's going on and this
is a really interesting one because uh
we're going to dive into uh the
unemployment rate and what the near term
might look like and how that could
affect mortgage rates treasury rates and
quite frankly the stock market and it's
a little bit of the counter to what
we've been talking about and what we've
been reading and studying uh so I figure
hey let's get into it so this is from
Pantheon
macroeconomics and what they're actually
looking for is a potential dip in the
unemployment rate uh in the uh September
release the September release comes out
September 6th I would write down these
dates September 6th at 5:30 a.m. we'll
get the August releasee October 4th
will'll get the September then on
November 1st we'll get
October uh unemployment release now
what's fascinating about that is you'll
actually get an unemployment read Just 4
days before the election which I
wouldn't be surprised if we have some
massive volatility right before the
election mostly because historically we
do we generally have extremely high
volatility uh about the 6 to8 weeks
leading into an election which would
really St start beginning technically
calendar-wise after the September
unemployment report uh that releases or
sorry the August unemployment report
that releases September 6 but not if
that report's good and see
macroeconomics is penciling in a decline
in the unemployment rate and a decline
in the unemployment rate from 43 to 42
could potentially
untriggered which would untriggered
recessionary warning it almost be sort
of like an early
prefire now I wanted to see why they
thought this and we've got a lot of
details here because there's some big
implications as to what this could mean
uh I do quickly want to add a little bit
of color though because yesterday some
people uh they asked uh they had some
questions about the new uh Financial
advisory service that we're offering
should be really clear just a quick note
on this it's it's Consulting all right
we're Consulting folks on how to build a
wealth plan it's not like we're trying
to take their money and and take bips
and saying oh we're going to outperform
the market we could allocate you to vo
uh and to a balance of that bonds and
real estate or whatever you're looking
for the idea is how do we get you
Building Wealth with real estate while
balancing that with your income your
debt your Investments your Renovations
with real estate your Acquisitions of
real estate that's the whole point so if
you want to learn more about that
service it's all over at stock hack.com
it's a new service we're launching
October 1st and it'll be licensed
Financial advice where we can can
actually create a real plan with you and
the cool thing is we don't charge hourly
fees and we have a lower basis point fee
uh than what you usually fee see but we
do have a monthly retainer that goes
with that so do check that out learn
that over at stock.com okay so let's
keep reading here so uh the continuing
claims data that we're getting right now
has indicated a uh that the 4-we moving
average has actually declined from
238,000 to 232,000 so what I did is I
wanted to line up unemployment claims
with the unemployment rate and they both
lag the start of a recession but they
actually do align pretty dang well so
you have a very clear sort of hey when
the unemployment claims Spike you do
generally see a spike in the
unemployment rate so that Association
makes me agree with them that hey you
know what you could actually have a good
payrolls report here for August mostly
because they're suggesting that a lot of
the jump in unemployment we saw
uh in the July report was in their
opinion 40% due to Temporary layoffs now
the BLS suggests that hurricane Barrel
did not impact the data but rather these
were potentially other temporary layoffs
a lot of people on social media were
saying oh you know because of the
hurricane or the weather or whatever
that's not what we actually saw in the
data a lot of it had more to do with
temporary layoffs in California that was
quite interesting uh but anyway uh
unemployment due to inventory
involuntary job losses usually Rises
slightly more than the unemployment
claims during labor market downturns
because some people will be ineligible
to claim benefits okay so I wanted to
dive into this a little bit and so what
they're saying here is even though they
think that the unemployment rate might
drop they do think that unemployment
claims may not reflect everyone and this
is where I wanted to dig into a little
bit who might not be eligible for
unemployment claims and then the story
shifts a little bit listen to this
higher income individuals may be less
and this is this is my sort of note
taking from other sources as well uh so
adding to this piece here higher income
layoffs versus claims higher income
individuals might be less likely to
claim unemployment benefits because they
might receive a severance they might
have higher savings there might be a
negative stigma associated with filing
for unemployment which they might view
as hurting their ability to get another
job they might have high confidence in
themselves and their ability to get
another job they may straight up not be
eligible for unemployment due to their
prior income or they may have other
income now what's fascinating about that
is we look at this recession as
potentially more white collar driven
unemployment layoff recession which
means unemployment claims wouldn't
potentially capture a rise in White
Collar unemployment which I thought was
very interesting that's not to say that
I don't agree with them there is a
chance we could have a September job
droing the unemployment numbers which
would actually be really bullish markets
might rally on that and you might see
the 10-year Treasury and some of the
other treasury notes go back to their 50
dma their 50 dma on the 10year is
currently over like 4.1 and we're at
like 385 right now so in the short term
betting uh on bonds could be in the
short term a bad idea uh if the uh jobs
report comes in really good next month
we could end up seeing a bets for a 25
basis point move from the FED rather
than a 50 which means we have to unpr uh
more Cuts remember the FED right now is
sitting somewhere around uh or markets
are expecting and pricing in about 1.33
cuts that would have to go all the way
down to one and that might be a little
painful for markets in the short term un
pricing that but it could be bullish
soft Landing narrative until and this is
the next part quote consumption growth
will slow slowly now this is where
we do have a little bit of bad news in
this so even though this piece is
supposed to be hey you know Kevin might
be wrong I might be wrong here in the
short term over the next month or two
but listen to this the rate of growth in
consumer spending however looks
unsustainable the only reason we've seen
this sort of outpaced uh growth in
spending has been because the personal
savings rate was obviously very high uh
during covid people had excess cash then
they blew through that and now the
personal savings rate has actually
Fallen to substantial lows in their
words that has only been possible
because the savings rate has fallen to a
very low level the Bureau of e economic
uh analysis uh now estimates that the
savings rate was just 3.3% in Q2 down
from the previous estimate and well
below the 2015 to 2019 average a very
low savings rate was unsurprising when
the labor market was very strong and
consumers were sitting on big stocks of
ex savings built up by the pandemic but
the stock of excess savings has now
diminished significantly especially for
lower income households the ongoing
softening in the labor market and the
rise in unemployment meanwhile will
probably lead to a rise in precautionary
savings that suggests the savings rate
will rise markedly from its current low
levels now this is an interesting one
because I wanted to take that and line
it up with something else I noticed over
at the St Louis Fred the data website uh
and the first thing what I saw when I
saw it was oh my gosh first of all they
said congratulations it's Jack's
birthday and second of all happy Labor
Day weekend everybody we love yall Kevin
has a Labor Day sale for the programs on
building your wealth over at
meetkevin.com go check him out obviously
separate from the financial advice over
at stock.com but go check that out uh
coupon expires Monday okay so that
suggests that the savings rate will rise
marketly from its low level so what I
did is I went to St Louis Fred and I
lined up the spike in the savings rate
rate when does that usually occur and
usually spikes and savings rates after
you had a low trough for a couple years
like what we talked about yesterday
occur within the first quarter of a
recession some of the data we were
looking at yesterday like the spike in
unemployment claims usually occurs in
the first third of a recession so
typically neither of these are going to
be a leading indicator for what
recession looks like instead what you're
getting is hey uh confirmation that
you're in one and this also makes sense
because as we start seeing the
unemployment rate rise and people start
getting more nervous that they might
lose their jobs they start saving more
money because they're worried about a
recession that usually doesn't happen
though that fear usually doesn't broadly
hit people until you're already in a
recession this means once again and as
usual Kevin is probably
early in fact I I think there's a
potential that you could end up seeing
uh the the recession well first of all I
think we'll see a lot of election
volatility election volatility probably
see mostly in October I would guess but
end of September to October after that
if my take and it's been this my take
has been that take advantage of the dip
on Election volatility and buy the dip
in stocks go long stocks in October
volatility if there's no sign of
recession yet at that point so given
that the jobs data comes out the last
jobs data comes out on November 1st over
the next three data sets uh even though
I think that's lagging what I want to do
personally this is from sort of my my
portfolio my positioning thinking I want
to look at I I I sit on the sidelines I
like my bonds I like mortgages mortgage
plays uh but what I like as well is that
we can be patient that's my thought
September October November let's get
that data after that data comes in
evaluate where do we sit with earnings
see we'll have just gone through Q3
earnings in October and what forecast
are we getting for Q4 if we have great
unemployment data and we have great
forecasts from all the companies
reporting in Q3 that might and and and
we're still not seeing any other you
know craziness of recession like some
sudden decline in GDP or some black SWAT
or whatever if we don't have any of that
bad news between now and then then going
to get more bullish more bullish soft
Landing it pushed me back to kind of
that seven range uh however if we have
data leading data not lagging data but
leading data whether that uh is uh an
estimate of GDP forecast the personal
savings rate adjusting uh people
spending you know consumption falling
forecasts from companies and earnings
calls really saying oh my gosh we
thought July was bad uh you should see
September October it's even worse that's
going to make me more nervous and more
bearish so this is just basically a way
of saying hey your boy Kevin's going to
be DEA dependent now what else did I
write down here so they think that uh if
so consumption growth will slow much uh
at a much weaker or sorry if so
consumption growth will slow towards the
much weaker pace of growth in real
incomes our forecast is for consumption
growth of just 1 to 1 a 12% over the
second half of this year that level of
consumption growth by the way is
recessionary uh now now you're
technically still growing slightly on
consumption but it's so low that you get
layoffs and that leads to the spiral of
less even less consumption so it's kind
of like this it's like soft Landing into
a recession like a really kind of slow
slowdown into recession which isn't a
surprise I mean a lot of people think
we're already in a recession I'm not
convinced that we're already in one but
I think we could be at the early Innings
of one uh but anyway I think this is
very interesting because it's a piece
that does sort of say Hey Kevin in the
short term you could be wrong here so
just be prepared for that I think it's
worth considering that uh in the longer
term they kind of reiterate my fears but
again I'm going to be patient over the
next 3 months I don't mind uh sitting
out the market at these you know near
alltime highs although we are off
all-time highs you know somewhere maybe
7% below all-time highs uh like on
NASDAQ or or you know specific
individual Securities that we've seen
over the last few months uh and and so
I'm okay with that uh I I continue to
maintain that I think the upside is
maybe 10% at this point point I used to
say 15% I think now the upside is maybe
10% and uh the downside is closer to 30
to 50% uh mostly because once people are
I mean think about how fast it goes and
this is why I don't mind being early
because look at what happened October
5th I know we had the carry trade unwind
but that came 3 days after the July
unemployment claims or unemployment read
the market just moved fast price in to
start pricing in a recession they're
plummeting and that's the concern is how
quick the market is to price that in and
when you combine that markets have
already almost fully priced in the
Federal Reserve rate cutting cycle it
just doesn't leave me a lot of Hope for
a lot of upside uh at least not
speculative upside combine that with
where valuation set right now and our
boy Warren Buffett
selling Apple Bank of America come on
anyway thank you so much for watching
folks we'll see you in the next one
consider subscribing uh just a message
to all the supporters I I I really
appreciate you thank you so much I know
there are um very few and and uh sort of
noisy uh people that leave disgruntled
uh comments over oh that Kevin's selling
something that's a scam you know it's
funny it's like when did capitalism
become so hated I I don't understand
like to me I've always mentioned the
goal is provide value and so for example
with stock Haack our goal is wow how can
we provide
as much value for people and it's not
like you know okay send your money over
we'll custody it with JP Morgan and take
some fees from you that's not the goal
the goal is to actually look at your
family situation and go how can we make
you retire better and earlier and more
well off than you would have otherwise
that's what you're paying for you're
paying for a consultant an advisor right
a licensed financial adviser really
having a plan if you want more make sure
to sign up over on the interest list at
stack.com uh at this point it's not open
we'll open it October 1st but but yeah I
do think it's interesting how how anti-
uh sort of capitalistic the world has
become uh I I I think it's just um I
don't know if it's like social media and
envy uh or or what but uh it's funny
because you look at at at commentary
sometimes and you really shouldn't but
you can look at commentary and people
like I I just don't like the guy it's
like okay what do you do
wrong I don't know I just don't like
something the Bott him I just want to
punch his face it's like okay I mean I
want to punch my face too all right
folks we'll see you the next one bye
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