Well, Mr Joe Biden has more tax plans to try to avoid a debt ceiling along with updates on housing. Apple We've got Covid and research Labs yield curves to talk about Federal Reserve updates and much more. Joe Biden is apparently now proposing a 25 minimum tax on a Billionaire's income. He's also proposing doubling the capital gains tax rate to 39.6 percent from 20 percent basically to raise incomes on those who only receive income through capital gains.

Remember, if you're paying somewhere, let's say you make at your job somewhere around two hundred thousand dollars, which is fantastic. You might be paying somewhere around 37 percent in taxes on sort of the last dollars that you're earning. Uh, and that is quite different from somebody potentially receiving a million dollars in long-term capital gains from a stock they held and only paying 20 federal taxes. So by Biden is doubling down on this idea which was a campaign promise of his as well, part of his build back better economic package.

And uh, personally, I hate to say it. but I think a lot of Joe Biden's plans right now are really just click bait for debt ceiling negotiations. That is. how ludicrous of ideas can the Democratic party throw out in front of the mainstream media to pick up so that Republicans can have a heart attack and shout back at those.

And potentially the idea is hey, hey, hey Well, you know we'll negotiate with you on the debt ceiling. Just pull back on a lot of these things. I Don't think Republicans will end up being fooled though. They know they have control over the house.

So a lot of these proposals from Joe Biden I think are really just nothing. Burgers But obviously this is all just prepping for uh, what's expected to be a somewhat intense debt ceiling raising debate probably somewhere close to our X date since Congress always does everything last minute somewhere around June regarding housing. A lot of talk about the next wave of housing pain coming Now it's probably slightly too early to tell right now, but we do know that when we look at the 10-year treasury yield and it's hovering around four percent again today, we expect that that brief fall to about 3.37 on 10-year treasury yields will end up proving to be a slight anomaly right around the beginning of the year when inventory is usually at its lowest. That could potentially lead to a short-term bump in real estate prices, but I expect we're just setting up for the next, like down.

A lot of talk as well about people being in, uh, quote, unquote, stuck. uh, and and no, not in the sort of Step row step CIS manner, but instead parents and children stuck in either homes that they own right now or children not able to move out and form their own households because interest rates are so expensive and people feel handcuffed to the lower interest rates that they have. After all, interest rates more than doubled from a low of around two and a half percent for a 30-year fixed rate mortgage pay court uh, or or I should rephrase this: a subscriber loss for people cutting the cord. the cable cord apparently is expected to hit 6 million this year.

That is 6 million. people are expecting to cut the cord with their cable providers or potentially satellite providers as well versus 2022 where we had about 5.2 million cut the cord so to speak. That sets up for about another seven to eight percent erosion versus six percent and 22 four to five percent in 2021.. Remember Arc Invest has a thesis that a lot of this cutting will actually be a Big Boon to companies alike a trade desk which personally I have an exposure to and I agree with Now it is making a lot of companies especially companies like even Dish TV look like potential value opportunities.

However, you have to be very careful. when we are an innovative creative Times, it is very common to look at Value companies and end up with a value trap that is very dangerous where something looks like it's trading for a very low multiple compared to its cash flow, but it's actually trending on the way to bankruptcy now. What's remarkable is if you go back to the days of Warren Buffett and Benjamin Graham in the 1950s, in my opinion, because Innovation took longer, you had more time to sort of milk the cigar butt of value stocks and trade in and out of them right? I Think there is more risk doing that today given how quickly The Innovation cycle moves. Some are now arguing that artificial intelligence could could essentially be Moore's lawing or doubling in its capacity every six weeks.

Now it's possibly true because uh, we're so early in the artificial intelligence cycle and it's almost easy to double the capabilities of artificial intelligence right now. but these are just also potentially extreme estimates. But they're really just to make the point that be careful if you're looking at companies that look like value plays. I Think there are a lot of value traps out there right now, and there are a lot of companies that look phenomenal with leftover cash flow and potentially High dividends, but do consider their staying power.

So uh, at Bloomberg actually went as far as calling TV a melting Ice Cube and that uh, TV defections may slow. but now with YouTube offering NFL Sunday tickets, losses could actually intensify so slight, uh, talking out of both sides of their mouth there. Now another thing that I thought was very interesting is yesterday somebody railed on me for having uh Apple airpods. usually I just have sort of a little one in.

but I'm traveling right now and this is what I have uh and uh I I Was wondering why why do people hate on on the Apple audio devices? These are actually pretty remarkable I used to wear headphones all the time and generally after wearing headphones for a long period of time like if you watch my January 6 coverage where I wore a broken sort of beat set of headphones for for 10 hours and then there were a bunch of a bunch of you subscribers who were actually so nice you ended up sending me replacement headphones that was really cool I think there were like four of you who did at the same time some really awesome bows, some other beats I mean phenomenal. Y'all are so wonderful and nice. Uh and uh what? I found though with my original Beats is they would hurt my head after a while because the the band is the hard plastic Here you have this this mesh fiber and I could almost wear these all day long without even feeling them. uh or go on a run or whatever if you go running with them.

Obviously this this stuff gets a little shitty so you might want to replace that over time. But anyway, so I was wondering why is there hate for these and then I also at the same time picked up on this Bloomberg another Bloomberg piece. Actually this was a Uh Bloomberg intelligence piece and they were talking about how Apple airpods could actually become Apple's third most important product. Uh, there is now analysis that the Audio accessory department at Apple could end up hitting 22 billion dollars by 2023 14 above consensus with 62 percent of Gen Z owning airpods.

Now if there are multiple different kinds of airpods, you know the little things that are in your ears that always fall out I can never keep the little white things in, they always fall out. Uh, so I prefer the larger ones. but then again, these are a little harder to travel with. But anyway, Airpod average selling price is right now in 2022.

sit at about 181. those are that's 24. actually less than what we saw in 2021. However, we expect to get those Asps back to around two hundred dollars, especially with the Maxis And sales for for airpods could eventually end up surpassing iPad sales.

I Personally thought that projection was insane. Uh, because I mean after all, I mean these are like 500 bucks. The other ones are like, what 250 bucks? but iPads I mean the cheapest iPad's what? 349 bucks right now for a sort of the old school iPad Uh, I mean maybe I suppose. Actually, now that I think about it, if the cheapest iPad's around 349 bucks, that makes this more expensive than the cheapest iPad That's insane.

The iPad Mini sits what five? six hundred bucks if you get the iPad Pro maybe that's where my head is. the iPad Pro which I generally prefer. Uh, which is what I'm using right now. This thing's like 1500 bucks once you're looking at, you know, LTE and and uh, the a little bit of a storage upgrade.

Uh, but then again, not everybody's gonna be getting the iPad Pro So maybe it's actually a very interesting idea. And personally I love Apple Uh, it's it's one of a a company that I have large exposure to. But one of the fascinating things to me about Apple as well is their ability to consistently come up with a new product vertical that that like for example, the audio department that ends up becoming some remarkably incredible uh Revenue driver like Bloomberg is arguing here. so phenomenal and Apple's got insane margins.

So personally when it comes to let's say VR headsets I Know there are a lot of people who are very excited about Meta, you know. Facebook However, they just dropped their prices because their their products are not selling. so there are you know. Mark Zuck's having this drop prices for his his 3D headset and I wouldn't actually be surprised if Apple ends up coming out with a substantially better product.

it is expected to come out later this year. more expensive, somewhere around three thousand dollars per headset I think that's a little extreme. uh I think it's going to be a little bit more of uh, sort of dare I say luxury item but maybe one of those things where it's like cool to buy but then you don't really use it that much if Apple can figure out how to get people to actually use Virtual Reality more often that could actually end up being a huge other vertical for Apple I Personally wouldn't price it into my fundamental analysis, but I I would consider it icing on the cake I consider that sort of a margin of safety for some of these phenomenal companies. It's kind of like how I try not to price in things like you know, an Optimus robot or or whatever other crazy revenues that could potentially come to Tesla those are more just icing on the cake.

uh. And another topic that was somewhat interesting here is that uh, on uh, biosafety Labs There are 69 biosafety level four labs in the world. A level four lab is very similar. Well, it's basically the level of laboratory that the Wuhan Institute of virology uh is and was, uh, the there are 69 of these facilities in the world.

And there's a lot of talk right now about how these uh, level four Labs actually cost somewhere around 1.25 billion dollars to build. But there are 15 different organizations that advise on biosafety, but none of them actually have the authority to set standards safety standards for any of these biosafety labs. And so there's a lot of talk now about how lab leaks are potentially totally possible for covet, because there's no one regulatory body saying hey, here's how to regulate safety for biosafety labs. They're basically self-policing Kind of crazy.

Regarding the yield curve, there's obviously a sign significant yield curve, inversion right now. Some say that's because of the Federal Reserves Dot Plot Others say it's a just a straight up harbinger of recession coming 10-year treasury yield now at four percent and the two-year sitting over five percent. that is a spread of over 100 basis points, which is very similar to the Volca era Volcker error. I should say which is where we last had an inversion the depth exceeding 100 basis points.

That's one full percent policy rates of course, right now haven't even hit five percent yet. So uh, maybe some more work to be done Jerome Powell Also testified in the FED yesterday touching on a two percent uh Target Talking about again, no reason to change it, how it's the global standard. Inflation is everywhere. Swap's now pricing in a 5.65 terminal rate.

However, Jerome Powell Yesterday did sort of walk back some of the ideas that 50 basis points was already decided. He said we have not decided yet what to do regarding 25 or 50 basis points at the next meeting on the 22nd. That's probably because we're waiting for the Jobs data to come out tomorrow. Job stat obviously comes out tomorrow, so stay tuned for that.

Uh, that Jobs data tomorrow, uh, will be one of two of the big Uh catalysts that we're waiting for leading up to the Fomc meeting on the 26th. So I'm pretty excited about that job's data coming out tomorrow. Uh, there's a little bit of taka as well, about racial gaps on unemployment Jerome Powell Talking about how that's somewhat structural and and he's not exactly sure why. Talks a little bit about making progress on Cbdc's and now housing is really constrained by zoning in many areas and there's little the FED can do about zoning.

you know, kidding? Tell me about California Zoning in California is just honestly I think quite mentally like stupid you on one hand for I'll just give you a quick example because it's always fun to rant on California and I'm allowed to do that because well I I ran for governor in California and I tried to bring logic and plans. uh I don't know, it came in second and out of recall candidates I Guess logic doesn't work too well in politics. But anyway, let me give you an example of not logic. State of California says hey, we want everybody to be able to convert their garage into an Adu well guess what? which is an accessory dwelling unit like a little apartment? Well, guess what? most cities are now saying Uh, well, we'll let you do adus as long as they're not in a high fire area.

Oh okay, where are the high fire areas? Oh, here's the map. Oh, that's the entire city, Exactly. It's like it's so stupid. it's it's like oh I I Politics just drives me nuts.

but uh, I've just I've just resigned to to to laugh about it I love covering politics because it's so ridiculous. but I also try to find sort of the truth as much as possible and uh, that that's challenging in politics. but anyway, that gives you a little bit of uh, of a rundown. sort of like I'll call it a Roundup of some of the Wilderness stuff happening in the last few days here.

Now we gotta touch on crypto and some of the insanity regarding crypto. We gotta now hit Silver Gates bankruptcy or should I say their liquidation, the Bitcoin ETF and updates regarding that I'm going to talk a little bit about Peter Schiff's son. Yeah, and we're going to talk about Coinbase which has happened with someone over at Coinbase and what did it have to do with some potential theft going on at Coinbase? A little bit of a warning sign for those of you if you use Coinbase. So first things first.

a few days ago, we actually covered Silvergate. Capital We pulled up the balance sheet for Silvergate and one of the things we complained about with Silvergate was the massive pain on their balance sheet. I mean we showed that their total assets fell from about 15.4 billion dollars to 11.3 Not only that, but they totally removed any valuation of their intangibles, which was basically a sign that they were writing their brand down to nothing. Their total liabilities dropped as well, but then again, the spread between Their total liabilities and assets fell to let less than 600 million dollars whereas previously it sat at around double that.

and a lot of this was due to the write down of really bad investments. In fact, a lot of people are saying hey, this is to hear the losses. For example, this is what happens when you end up borrowing short, but lending long you end up taking the L when interest rates change and you end up going bankrupt. Loss on: Securities Loss on Derivatives Impairment of intangibles I mean massive write Downs Here at Silvergate.

Well, Silvergate has now announced that they plan to wind down operations and liquidate the entire Bank Remember, Silvergate was a Community Bank in California That was uh, that basically hopped on the crypto bandwagon and the idea was that hey, this was going to be a bank that would create on and off ramps 24 7 for individuals Jerome Powell Somewhat kind of responded to this, a disaster slightly by talking about how the Fed's FED Now system expected to be released later this year, which is sort of a replacement for ACH and Zell basically more instantaneous transacting. There is still an intermediary, the FED, but more instantaneous payment between two different banks. This was really what Silvergate was trying to do for crypto by being an on and off ramp in an intermediary for crypto to get from dollars to crypto. Unfortunately, because of the lending, they expose themselves down to, they're now liquidating their Bank Uh, their shares fell another 50.

But they do say they're going to be able to repay all of their deposits. and this was a stock that was actually trading for up to 220 in November of 2021.. it's now trading for somewhere around two dollars, which, uh, quick math is down over 99. Uh, This also does put more pressure on regulation for crypto, and it's not the good kind of Regulation I mean I Suppose regulation in general was always deemed to be something that was a hard pill to swallow, but something eventually crypto would have to go through.

Uh, but uh, this does put more scrutiny from the SEC and certainly companies like FDIC on anybody who touches crypto because ultimately who ends up having to bail out Banks who will, uh, can't fulfill their deposit requirements? well, the FDIC and and potentially the government. So Silvergate's demise here is I Think a little bit of an L for the crypto industry following of course, the disaster that we've been uh seeing over the last year. uh, I still have I still have nervousness regarding Binance. I Am very hopeful though that once we get through this sort of flushing out of the excess, uh, there's a high likelihood that we end up getting to cleaner regulation and uh, and less of this this nonsense.

Uh, and that's exactly where I am actually paying attention to what's going on with the Grayscale Bitcoin Trust. The Grayscale Bitcoin Trust is basically kind of. It's It's a fund. You have to be an accredited investor and you suffer.

Dare I say suffer. It's not that long. You have to sign up for at least a six month lockup if you want to invest in the grayscale Bitcoin trust. And the goal is that the assets under management in the Grayscale Bitcoin Trust will eventually be turned into an ETF which is an exchange traded fund.

Now the difference between that is uh ETFs Generally don't trade forward discount or premium. It's possible that they they slightly do, but that's more of a rounding error in my opinion than it is an actual discount or premium. ETFs Generally trade at what's known as net asset value. So let me give you an example: I'm an active ETF manager which is true I'm a licensed financial advisor.

But let's say that my ETF I'll just say has uh, I don't know. Let's make it up. Okay, let's say it has exactly 20 million dollars in assets under management. Well then we have and and then let's say it.

It has I Don't know uh. shares Worth one million dollars a share. Well, if we have 20 million dollars in assets under management, then there are 20 shares ETFs work very differently from the way stocks work because the number of shares that exist just aligns with how many people put money in. So if somebody comes along and says here's 20 million dollars, well then we just create 20 more shares.

There's no like dilution, the shares just represent how much money is in it. It's very different from a mutual fund or something like the Grayscale Bitcoin Trust and very different from from actually stocks ETFs are are much uh, dare I say uh I I would I would call them preferred to this I'm going to but I want to be very clear. This is my opinion I think ETFs are much more preferred because there is none of this sort of dilution or discount or premium or all of the Ridiculousness dilution of course, affecting stocks. uh, specifically, uh, companies.

uh and then of course, these massive discounts or premiums affecting mutual funds uh, or things like the Grayscale Bitcoin Trust grayscale Bitcoin Trust right now A trades at about a 50 discount to the assets it actually has under management. So what that means is if you have a hundred dollars of Bitcoin in the grayscale Bitcoin Trust the the fund is actually trading for fifty dollars and the reason it's trading for that sort of discount is one regulatory risk and number two illiquidity. And and it's basically the Grayscale Bitcoin Trust Trying to price in the market the free market is trying to price in? Well, what if Bitcoin Falls more right? Uh, and so uh, Grayscale is actually suing the SEC over the rejection of the opportunity to turn the Grayscale Bitcoin trust into an exchange traded fund I Actually think a Bitcoin ETF which companies like Arcanfest have also filed for would be very brilliant I Think it would be a smart way and a safer, much much safer way for people to be exposed to crypto. Uh, the regulation over the storage of of crypto assets would be a substantially uh, more scrutiny based or in my opinion, safer for individual investors than individual investors having to worry about you know, Cold Storage versus uh exchanges.

Then you have exchange risk. then you have cold storage risk like losing your your coins. There's actually a joke on Reddit that the guy who lost like 400 million dollars of uh, crypto on a hard wallet because he threw away his laptop. uh, there was a joke.

It's a joke. but it was. It's funny. Well, maybe not.

But anyway, it was circulating that he spent two million dollars to basically dig up the dump where he threw away his laptop or where he thinks he threw away his laptop and he finally found his hard wallet, was able to recover his coins only to realize that what he thought was 400 million dollars of Bitcoin was actually just Bitcoin cash. and uh, he only had four hundred thousand dollars of value after having gone into debt by two million dollars to actually recover this hard drive. and now he's upside down 1.6 million dollars. and anyway, the point of that is, that's a sad story.

There's some humor in it, but it's to argue that it's not easy if you have your money on Exchange It's convenient, but uh, you know now you have exchange risk if you have your money on Cold Storage What if you lose it, you know and I know a lot of people are like, well, that's your problem. You should put it next to your gold buyers and your guns. but again, you know it's it's there's risk whereas if you have an ETF I Personally think it's the easiest way to have exposure to crypto. but but you can't have that right now because the SEC doesn't want it Anyway, the Grayscale Bitcoin trust is suing.

uh, there's the potential that, uh, the court right now is leaning towards actually vacating the rejection, which would be fantastic for the grayscale Bitcoin trust because then it would go back to the SEC and the SEC would either have to approve the grayscale Bitcoin trust to turn into an ETF or uh, reject them again with with uh, potentially a different reason that they pull out of their butt. But personally, for crypto investors I think one of the best things that could happen would be Us ending up getting a crypto based ETF I think it would be phenomenal. For crypto, it would be a very, very bullish moment. I Did uh end up having dinner with Peter Schiff and his family yesterday? I'll say Peter Schiff's son is uh, super into Bitcoin Brilliant guy realized obviously I mean anybody could have known this, but both of them were very libertarian.

But government is nearly always bad. a smaller government is much better or potentially no government. I mean our conversation ended up turning into the potential for the privatization of fire departments and blockchain-based arbitration of disputes, which is something that's been theorized for a very long time. The blockchain arbitration of disputes? Uh.

One of the issues we ended up running into was what if somebody loses a dispute and doesn't pay and what if the assets that are now arbitrated through blockchain are actually real assets and and can't be traded like for example, a house or a car? Uh, even though the title can be traded through blockchain, you you the physical possession of it can't Uh and so then then we kind of. The conversation briefly devolved into the idea of well, then who has the militia and they were joking like oh, is is the militia going to gonna start Department Are they going to start wearing uniforms? Should we call it a police department? So uh. anyway. really, really fascinating discussions.

So uh. anyway, it's very interesting to see Peter Schiff who's obviously very anti? uh Bitcoin and then his son sort of take the opposite position of being very Pro Bitcoin Uh, but both of them being anti-government Uh, anywho, so uh, you know. Another thing that I thought was fascinating was that apparently a man uh, was hacked. A person named Jared Ferguson was hacked.

uh, on uh, having his money on Exchange with Coinbase. Allegedly, the individual uh hat was a a victim of being Sim swapped Sim swapped. Let me say that correctly. Apparently Jared Ferguson is now suing Coinbase for over ninety six thousand dollars in losses because his phone was hacked.

Uh Sim Swapping is basically where somebody calls in your cell phone provider and ends up uh, requesting a new Sim because they allege that they lost their phone. they impersonate you and then they can use that phone to uh, basically they would need then your username. uh, for let's say, your Coinbase account. They reset the password for your Coinbase account.

Getting a confirmation text I would imagine they'd have to have some kind of uh access as well, then maybe to your email, but maybe not I Mean in theory, if you have somebody's login email and you Sim swap to get a code, you could just reset your password on the page. uh, log in and then transfer your crypto out. Uh, Jared is now suing Coinbase alleging that a Coinbase is violating the ET uh or sorry the Electronic Funds Transfer Act protecting customer funds from electronic fund transfer fraud and violating article 4A of the California Uniform Commercial Code stating that if a bank authorizes an unauthorized order, it will get refunded or the individual will be refunded. However, Coinbase is not a bank and uh, doesn't uh fall under the same sort of Regulation as Banks do.

Therefore, it's likely that unfortunately Jared mate actually lose uh, that case. So uh, this is leading of course to a lot of debate about uh, crypto security and of course a lot of people make the argument again in the crypto space. hey, not your keys, not your crypto Uh, of course that's easy to say, but it is. It is not the most convenient thing to have uh your your coins off exchange if you're trading them right? So I do I do empathize well I can't empathize I haven't lost money to to one of these I I sympathize with Uh with people who end up losing uh money on on exchanges, especially if there's there's hacking involved because you know you might want to be trading from uh, either a stable coins to actual crypto assets uh, like Bitcoin or Ethereum or otherwise.

Uh so Anyway, long and short of that is if you can avoid exposure to Sim swapping via you know, putting putting additional security measures into your your phone account by maybe calling and uh, ask your ask your phone provider to to uh set a code word onto your account. So if anybody ever calls in they have to give a code word or you know, set up more security whether that's uh, don't use Sim authentication, use, uh, use authenticator apps, you know, and then back up your authenticator apps onto a different device in the event you do lose your your phone. Uh, but anyway, a two-factor identification big deal here. uh I would uh I would highly encourage.

Uh, looking at that, a lot of people in the crypto Community obviously say hey, you should just never use two-factor identification on your phone. A lot of people actually calling for just straight up Banning two-factor identification? uh through cell phones I I Kind of completely agree with that. Uh. anyway.

overall, uh, it's it's worth taking. Also, a look at just sort of what's going on now. uh Sim swap is a tool that makes a copy of your phone remotely. Yeah, I mean that's that's a I guess another way to put it I Mean it's it's really what it's doing is it's allowing text messages to go to somebody else's device, right? Uh, so I think that's uh, that's obviously a a problem anyway.

Bitcoin Right now sitting at about twenty one thousand, uh, 625 dollars at the time of this recording, we have been trending down going into these Catalyst meetings here. not only the jobs report, but also the CPI report. So uh uh, you know, big big problems. All new phones are now E-sim Thankfully I don't know that Esim actually makes a difference because somebody can activate an Esim by calling in somewhere else.

You don't actually need a physical uh SIM card anymore. You could get Esim, So Esim actually hurts. uh, in my opinion, more so than uh Than Physical But anyway, someone here writes: Cold Storage can have multiple backups of the same one. You can get multiple uh wallets.

but yes, I'd rather hold half in a trust, right? I mean that's a very good point. It's like you could, you could. It's kind of like guns. Okay, let's say you have 20 guns in your house.

It's like you can find 20 different places to hide it, but it's still a pain in the ass, right? I Mean you could put guns in in multiple different properties in case one of them burns down or whatever. Uh, but. but you have to keep track of all of them. You have to make sure they're safe and somebody else doesn't have access to them who's unauthorized, Who then has access to the combinations where you're hiding them all, right? It's you know, How do you track it? It's it's a pain in the butt and there's just things to to think about.

Uh, Anyway, that's sort of a little bit of a crypto discussion. Uh, for all of us. Oh kid. Okay, let's see here.

turn turn on. So uh, it looks like Unemployment claims came in. Let's go ahead and look at that unemployment clients unemployment claims and buy one sec trying to get this crap to load. Um, okay, okay, more claims than expected.

That's actually good news. I Know that's terrible from like a human point of view, but I'm also going to give us the preview for tomorrow. So uh, let's let's do that. Well, we just got on unemployment claims, but in addition to that, we need to talk about what you need to know going into a Friday March 10th Because the actual BLS which should just be shortened to BS You know Bureau Statistics Yes, Anyway, Bureau of Labor Statistics releases their jobs report tomorrow at 5 30 a.m Pacific Time 8 30 a.m eastern time I will be covering it live.

so make sure you tune in to the meet. Kevin Channel But I'm going to give you the Bloomberg estimates right now and I'll also give you some Wall Street estimates for what to expect going into the labor report tomorrow. This is a big deal I Want to prep you for it. But first, let me just cover that.

Yes, we did end up getting initial claims today that were actually dare I say bullish for the market This is not a good thing for individuals I Want to be very clear I sympathize with anybody losing their job I Don't think it's fantastic for people to lose their jobs. It is unfortunate that going into recessionary environments unfortunately, the likelihood of people losing their jobs increases, right? That's sad. But anyway, so what happened today? Well, today, we got initial jobless claims that came in. Uh, the expectation was 195 000.

Uh, the prior read was 190. 000 in claims sitting below 2 000 is Uh, is sorry. 200 000 is still showing a pretty strong labor market. We did just finally come in with claims of two hundred and Eleven thousand.

Two Hundred and Eleven thousand. That is. Uh, more jobless claims than expected by about six-ish percent. That's actually good news for markets.

Uh, you do have continuing claims that came in higher than expected as well. Continuing claims coming in over Uh, 1.7 million. Continuing claims? We're sitting at. Uh, the actual number here 1.718 The expectation was 1.660 Now what I'd also like to tell you is the revision.

The the prior read was One Six Five Five that was actually slightly revised down to One Six Four Nine. Barely a revision. Barely a revision. Probably not worth talking about because it's so nominal.

What's more important is that we actually beat the survey today with higher continuing claims. Uh, it. and again, this is what the Federal Reserve is trying to engineer, right? So the sooner we get job loss, the sooner we could say okay, we're in a recession and the sooner we could get over this now. I Hate to say it, but it's kind of like ripping off a bandage right now.

It just feels like we're kind of like peeling up the edge of the bandage and we're just like a child. We're like man, it's like I don't know why mommy put a bandage on like the hairy part of my arm. You know it's like you're kind of feeling it up. It's like it hurts, it hurts, it hurts.

It's like somebody just needs to come along. but but nobody, nobody wants to because it's just it's painful, right? So we're just kind of sitting here going. uh well. Maybe if we just keep healing it eventually it'll go away and maybe it'll hurt less in aggregate, but it'll be.

It'll be more annoying for the longer period of time I Somewhat feel like that's what's going on with the economy if we had to compare it to a crusty bandage, uh, maybe just take a few showers and it'll just just wash off. But anyway, tomorrow's numbers very important. So last month in January we had an absolutely insane read from uh, the labor report. We had 517 000 jobs.

Now that 517 000 jobs was expected to be mostly a joke. uh dare I say a joke. But it was. It was terrible.

we had Barons basically tell us the uh, seasonal adjustments for January were so ridiculous that uh, really, you can't put any weight on the January data that we ended up getting because of how different the environment is this January compared to really any of the januaries we've had in the past now. I Don't want to come across as suggesting that this time is different I mean every single year January is considered seasonal adjustment month. But bottom line: Barons is basically saying the Bureau of Labor Statistics was expecting us to lose somewhere around 2.8 million jobs in January compared to December whereas usually we lose somewhere around 2.3 million jobs so that the bar for for job loss was was actually set so much higher that when we got the actual uh, jobless Rapport the unemployment report, the numbers came in so much stronger thanks to this insane seasonal adjustment and the potential excuses for that are one labor hoarding that is, more companies saying look I still have enough money to where maybe I can sustain through the recession. It's been so hard for me to hire people I'm going to keep people rather than being super reflective or responsive to the market where as soon as things slow down I start firing because people are somewhat shell-shocked and they don't necessarily want to start firing people because it's been so painful to hire them in the first place and in some cases so expensive to hire people in the first place so they don't want to go through that kind of garbage again.

Anyway, the seasonal adjustments for January are expected to suffer from Big revisions as well. So what? I One of the big things I'm looking forward to tomorrow is not only am I going to look at what happened with the actual numbers tomorrow which I'll give you the survey for in just a moment, but I'm actually going to look at the revision. So the survey for tomorrow and changing non-farm payroll is 225 000. that's a that's basically half of what we had before at 517 000.

but I really want to pay attention to obviously. Best case for the market that comes in soft right change in non-farm payrolls if it comes in lower that is less people got new jobs from 225. If we get something like what, Wall Street is more expecting like uh, Barclays JP Morgan Most Wall Street firms are expecting somewhere between 190 to 2 100. although the firms surveyed by Bloomberg have an aggregate estimate of around 225 000.

So let me say the firms that I'm reading reports for old Wall Street Let me clarify that are suggesting 190 to 200 the Bloomberg consensus which is many more different firms, they're sitting at 225. Obviously, if that comes in lower, it'll be bullish. Because it'll it'll show. Okay, all right, finally, the Fed's work is starting to have an effect.

Maybe that means if the Fed's work is starting to have an effect January was just an anomaly. And maybe just maybe the FED can slow down their rate increases Because finally, their rate hikes are starting to impact the market. That's a big deal. Markets are waiting desperately for evidence that the Federal Reserve's raid hikes are actually affecting the market.

Worst case scenario, you end up getting a Kenny G response Where basically the Federal Reserve is hiking, but the market keeps growing. That is, the economy keeps growing, people keep adding jobs, and we actually get a strong jobs report. Like if tomorrow we got something like a 250 or 300 000 jobs report. People are gonna freak I Think you're just going to get a straight down in the stock market because what's going to happen is you're going to build up so much fear that oh My gosh, January is a reanimation of the economy.

It's like a zombie that's getting up again and and the Fed's been trying to shoot it with the shotgun over and over again. It's been trying to double tap, but the damn zombie keeps getting up and they're like fine. I Guess we have to put in maybe some incendiary rounds. In other words, we got it.

We gotta raise the rate. Uh, the you know the Federal Reserve This can rate even more Fed funds, right? Uh, and and that would then reflect in lower stock and asset prices because that's what we do as our expectations for the FED funds rate go up. Stock market goes down. Now It's been relatively resilient.

The fact that we've gone from 4.9 on a terminal rate to 5.6 and if you know, only slightly, trade it down on markets is phenomenal. It really suggests that markets are more fearful of Paul Volcker than they are of a slightly increasing Fed funds rate that's higher for longer. That's really what the market is telling you right now. But boy, if we get a bad jobs report tomorrow, we're going straight down.

We're going straight down because it's suggesting that January was not a seasonal adjustment anomaly. It suggests that oh good lord, the zombie is back up. The Fed's going to have to get a lot more aggressive than anybody is expecting. We can't give February that same seasonal adjustment excuse.

So February's hot. It's bad news. Depending on how hot it is is going to be really interesting. Now, keep in mind the the only leftover excuse if we get a bad report tomorrow for for the jobs report would be that, well, I mean unemployment is lagging.

Okay, yeah, everybody knows that unemployment is like, well, not everybody. Some people still think unemployment is a leading indicator, which is insane. Unemployment is a substantially lagging indicator. And and so the only leftover excuse if we get a hot Jobs report tomorrow is that Well, you know it's a lagging indicator.

That'd be the only leftover excuse. But but really, the bull argument would start looking very, very weak if that were the case, right? Uh, and loading up the incendiary rounds to the door on an online raid? Rust references. Anyway, So uh, the surveys 225 for non-farm payrolls, The unemployment rate is expected to hold stable at 3.4 percent. Here's another very important statistic: The change in average hourly earnings.

This is going to be a very big deal. Uh, it's going to be one of the first things I look for at that unemployment report tomorrow. is that change in average hourly earnings? Because this is where we look at what's known as an average hourly Earnings Wage Price Spiral Induction in English If people keep getting paid more money month of a month. In other words, people got paid more money in February than they were making in January Well, it clearly means people were given the Jerome Powell a big middle finger.

he gonna have to do a whole lot more to hurt us. That's it. Just didn't like simple plain English Here, Uh, 0.3 is the expectation that annualizes and please remember it's not an exponential function. it is just multiplied by 12..

Point: It's not like genius math. Okay, this is very simple. If the expectation is 0.3 it means the annualized annualized rate of inflation. The speed we are traveling at not compounded.

It's the speed we're traveling at. It's 3.6 for wage increases that is obviously still higher than expected. So like best case scenario, tomorrow we get some kind of unemployment report that says uh, you know we get 200 000 new jobs or less. A one handle would be like sexy and beautiful and a turn on.

Uh, this is what happens when you're in finance all day long. Those the references you make. But anyway. uh, average hourly earnings? Uh, move from uh, if if we can get instead of a 0.3 anything below that like I'll take a point two all day long I'm not even gonna ask for anything lower than that I'll gladly take a point too.

That would be very, very delicio show. Now do note that the average hourly earnings year over year expected to step up from 4.4 to 4.7 percent. But that does not matter so terribly much as the actual average hourly earnings coming down on a month-over-month basis. That is going to matter more again.

Survey Point Three Now, uh, average weekly hours worked is expected to slightly tick down again to 34.6 The lower average hourly, uh, average hours worked per week comes in the better for the markets because the lower that number is again, the survey is 34.6 down from 34.7 less. The lower that is the indication is the softer the economy is and the less demands there are on workers to work harder. longer longer is actually the the precise way to put that. Uh, now that's an indication.

You know if it comes in too low then it's a sign that oh no, the recession could be worse, right? But really, we we so so we we have to have a very balanced report where it comes in soft but not not so soft on average hourly works that, uh, hours worked. Average weekly hours worked because that signals recessionary fears, right? So like it could come in too low where it's like, oh my. God Recession Labor force participation rate is expected to be stable at 62.4 I Still think it's remarkable that the average hours worked is only like 32 percent. I I I Don't I I Have no idea who only works 32 hours.

uh, or 34 hours. Whatever. It's like no difference at that point. whoever that is I'm I'm very jealous.

Uh yeah anyway. but uh, one of the things that I do think is very interesting as a potential impetus for, uh, actually potentially higher labor reports that is more jobs being created and potentially less inflation for wages. Now this is this is crazy. Think about what I just said.

more jobs created but less inflation? Okay, well, how does that work? Well, what it means is if we continue to get more Leisure and hospitality and Airline hiring air travel Services Hotel Whatever. If we continue to get more hiring in that sector, we're going to see a higher Jobs report. But if more people are available. Best case scenario here's like your your ultimate best case scenario, right? You get a consistent with survey jobs report A lot of those jobs are in retail and hospitality and travel, but the average pay is going down or or like the increase the rate of increases going down right? People aren't making less money, they're just making more money at a slower growth rate, right? But here's something very interesting.

Take a look at this. This right here is uh, an article on more Women rejoin the workforce, lifting the economy Now I Think this is really interesting because the article goes through and talks about how American women are staging a return to the workforce and this is actually helping Propel the economy Now this is actually really good because if households look, let's just be clear here: a lot of women and this is not I'm not. And nowhere in this video do I want to be considered sexist uh, or or somehow like trying to make an argument about men versus women. This is not a political video, this is just Financial Fact Financial Fact is that more women stayed home to take care of children during the pandemic because Child Care was either condemned, unsafe, or unavailable.

Now, there are a lot of single working households because we are potentially going into a recessionary environment, more women may go back to work. And this is not to say that women don't have hard work when they're at home. Okay I Want to be very clear about that I Highly respect people who take care of children all day long because while I can take care of children, maybe all day long once a week, I ain't gonna do it every single day, It's a very difficult job anyway. Uh, so what do you have over here? Women have gained more jobs than men for four months straight, including January's hiring surge, pushing them to about 49.8 percent of all jobs created.

Female workers last edged higher than men on U.S payrolls in late 2019 before the Pandemic sent nearly 12 million women out of work, compared to 11. uh, sorry, 10 million for men. Even as job opportunities grew a little a year later, nearly 1.5 fewer million fewer mothers were actively in the the labor force in March of 21, then in February of 2020 amid Child Care disruptions and health concerns, virtual schooling, daycare closures, blah blah blah blah. the workforce is powering the economy's underlying source of strength.

See now this is very important. If people are going back to work and they have more household income, then they could actually sustain economic growth. AKA Positive GDP Spend Which means no recession because more women going back to work to supplement men who are losing their job or or making less money or not enough money to sustain because of inflation that we've experienced means maybe we could actually the more women go back to work, the less likely we end up having a recession. Now that's actually really an interesting idea for now.

Demand remains strong. women hold 66 percent of all jobs in Leisure and Hospitality That compares to like Tech where it's more men. But anyway, women's employment in these sectors grew by 719 000 in the six months ending. January Uh, accounting for 38 of all private sector jobs.

Men account for a dominant share of jobs in smaller sectors such as Transportation warehousing, manufacturing and construction, and the tech heavy sector. But what's suffering from layoffs? Well, Tech is suffering from layoffs. Men, uh, take up roughly 60 percent of tech jobs Warehouse Manufacturing construction. These areas are seeing a Slowdown but where do you see a pickup? Well Leisure Hospitality Educational Education Health and other services.

In other words, the services sector where inflation is still strong is where women are actually picking up more jobs. Now, this is actually very interesting because again, it means we could actually be seeing a higher jobs report as more women take more jobs. However, more availability of Labor Supply also potentially aligns with less Uh inflationary pressures on being forced to pay people more money. In other words, and this sounds terrible.

Okay, but it's from a finance point of view. but in other words, more women going back to work means wages are not going up as fast, which means lower income for people which sustains as potentially out of a recession or out of a deep recession which potentially sustains earnings at companies. But it also helps us remove the risk of a wage price spiral. Remember a lot of these: Services Industries are still behind well below trend for employment growth because of the pandemic.

Healthcare is back to 2019 levels, but we should have another 900 000 jobs in health care if it hadn't been for the pandemic because so many people were tired or whatever. So uh, here's just sort of an anecdote. If you think there's going to be a recession and realize your husband or partner is in a highly sensitive sector, you might decide. well I better try to work more and not quit or just get a job in the first place.

Nurse saying blah blah blah blah article goes on A job paying ten dollars an hour might not be attractive for women struggling with school schedules. An economics professor says, but if the same job starts at 15 16 per hour and offers benefits, she might take it. Uh, interesting I Found I'm in a much okay. Here's just sort of an anecdote of a woman who says you know I feel more value in my life when I go in and add value at a job and then I go home to add value to my family rather than solely being with with kids all day long.

But but anyway, uh yeah, it's very interesting and again this this is not. This is not an argument about you know the the gender pay disparities or whatever. Uh, you know again, it's not designed to be a political video here. This this is just fact.

But the fact of the matter is this is fantastic news, right? More income for household means a shallower recession? It means less EPS pain for companies which is a big fear of markets right now. And it potentially also means more uh uh. Likelihood that we're able to avoid a Paul Volcker? uh Rock pull from the Federal Reserve because uh, of uh, of a lack of a wage price spiral impetus. So this is actually all fantastic news.

Uh I Expect a lot of insight tomorrow from the Labor report Again, that's at 5 30 A.m Pacific Time 8 30 a.m eastern time I will be live streaming it. Uh, live. just like I live stream every morning. Hopefully you'll join me for sort of the day's Finance news every morning.

Okay, next topic So we now talked Crypto. We talked, uh, jobs. Um, that was somewhat bullish. Now we got it.

Why don't we talk about something a little bearish? Yeah, let's do that. Sorry. Gary Give me about um, 30 seconds here. So I'm gonna pull up a video as well.

see some what your comments thoughts on CPI next Tuesday Uh, ask me. Monday or Sunday I don't know, you know I Think the really the BLS Jobs report will give us a little bit of guide on how to feel about that inflationary impetus. Um, that's just my thesis right now. so we'll see.

Uh then we've got uh Nikki T tweeted Okay, let's see. let's take a quick look and see what Nikki T had to say we love our boy Nikki say Nikki Um, thank you for pointing this out. Okay, let's see Nick T Iff Nick Nick What did he have to say? Uh Nick T Just tweeted due to revised seasonal factors, a model of underlying Trend inflation produced by the New York fed multivariate core ticked up to 4.9 in January after initially being reported to have been around 3.7 at the end of 2022.. let me just just reiterates the noise of of these changes and in seasonal factors and it just again.

it reiterates how annoying these seasonal adjustments are. It's like it's like the data is already not super believable. but now you change all the the standards. With all these adjustments, it's like good Lord We'll just have to see I mean tomorrow will be a first example.

Yep. So anyway, all right here we go. We're ready for this. All right, let's talk about the Bears I Love me talking about some bears stand by Give me like 10 seconds.

Well now we got to talk about the Bears What we're going to do in this bearish video is we are going to take my bullish bias and respond to what some of the Bears are saying we're going to talk about. BlackRock We're going to react to video from a chief Economist interviewed by CNBC and we're going to see what people think about the terminal Fed funds rate. We are going to look at what the financial times thinks about the probability of higher rates and how much higher. And we are going to look at some of the pain presented by T.S Lombard and their Parish opinion.

So if you are a bear, you want to watch. If you are a bull, you want to watch. and if you are a human, you want to take a look at the Saint Patty's Day coupon. Dare I say link down below for the programs on building your wealth, lifetime access to the course member live streams, access to all the beautiful content and perspective on building your wealth whether it's through stocks, real estate, being an entrepreneur being employed, how to make more money, tax benefits, Llc's risk liability everything and Q A with me, take a look at that linked down below.

Let's get started. BlackRock and Mr Rick Reader thinks it is reasonable that the Federal Reserve will easily get to a six percent terminal rate markets are presently at the time of this recording pricing in a 5.65 rate and now BlackRock believes it is not only reasonable to get to six percent, but also stay there for an extended period of time potentially as long as a year. The probability of a half Point High increase from the Federal Reserve is now sitting as high as 73.5 percent according to a CME Fed Watch Tools That is not great for the March 22nd meeting and it is a Big Boon to the Bears unless of course we get 25. And if we've been pricing in bearishness then that means Moon Okay, maybe not quite moon, but it would be positive.

Anyway, it does show that the 50 BPI is very much on the table. uh BlackRock is really comparing the US to Uh to a chemical like polyurethane. Now I I think this is sort of a weird comparison, but but he says markets can be stretched, bent and stressed and flexed without breaking. Uh, and and really a six percent rate shouldn't break our financial institutions or our financial systems which are very strong.

So while it's bearish to argue for six percent, he's really saying like the odds of us really breaking something by going to six percent not that high Now it's also worth taking a listen into. What this this particular interview here from CNBC I think is uh, pretty fascinating. So let's let's jump into this here and we'll listen to this together. Okay, ready for this? Here we go.

What we're missing right now is some guidance that says how much is going to be enough because clearly said where we are, where we were telling you we're going is not enough and I think The one thing that Steve and other uh people haven't mentioned is the guidance that the Federal Reserve report itself gave us. It said that given the kind of policy rules that people have been using to assess different types of policies, we need right somewhere on the order of six and a half, seven percent to get enough of a Slowdown in the economy I I Just like to say what the FED is talking about is this Taylor rule. The Taylor rule, as you can see on screen here, adjusted for current conditions, suggests a Fed funds rate closer to seven percent. If this is basically the Federal Reserve has about four or five different versions of the Taylor rule they use, and the Taylor rule really says you could be at a terminal rate of five percent, you could be at a terminal rate of over seven percent.

and it just depends on which measure of the Taylor rule you're looking at I don't know how much it really matters. Back in the covet pandemic, the Taylor rule actually told the Federal Reserve that they should go negative. So when you hear Taylor rule, think about it like a suggestion. but I would pay more I would give more Credence to what the FED is actually saying which is look hot jobs hot CPI report rates go up soft or expected 25 and pause sooner.

Simple. We'll see. Let's keep get us back to two percent inflation. Those numbers are not even on the table right now and I think the message is Yet to Come and we might actually see if this inflation story disappears on us and the economy actually is hotter than we thought.

we may be seeing six and seven percent numbers. Uh, between now and the middle of the year? Yeah, we were I Steve and I both thought we were just uh, talking to Professor Taylor about this not not a couple of days ago I think he was at six percent bill. but um, either way it seems let's talk about kind of the the yield current version: the 10-year yield at uh, four percent now I have to like think every time I say these numbers because we've been whip song around so much. So you're saying we're going to six, maybe seven percent on the FED funds rate.

the 10-year is now at four percent and not going back to the highs we saw in the fall have. We started the process whereby the higher the FED funds probability goes, the lower the 10-year yield might go because it's so concerned about where that gross trajectory is taking us. One of the things to keep in mind is that the FED is not focused on the inverted yield curve. They're focused on what it really means for the economy if we have a Slowdown in inflation.

If People really adapt their expectations, adaptive behavior and we get the kind of soft Landing they're hoping for. We have lower 10-year rates, but if you have a crash and a hard Landing we also get that the lower 10-year rates the the the the the FED itself of course prefers that soft landing and they're hoping that through this jaw boning and early jaw boning, they're going to be able to get people to change the behavior early enough so that we avoid that hard Landing. But the the the inversion of the yield curve gives us two scenarios and and which scenario is going to be? Let me just pause there before he talks about the two scenarios. Uh, what? What's really important to remember about the 10-year yield curve is the 10-year yield curve crashes housing right? The or the 10-year yield.

the more it's around four percent or higher the more pain you have in real estate. Now, the Federal Reserve to some extent to some extent wants real estate to soften because as Robert Schiller tells us, the wealth effect is most affected by real estate. Which means if real estate values come down, people finally stop spending money. What is the Fed always told us they want to control Demand by reining in demand.

They can reign in inflation. They cannot solve supply chain problems. they can only fight demand. The easiest way to do that is Crush housing.

So in my opinion, the more the FED teases the idea that we're going to go higher for longer. The higher the 10-year goes, the higher the 10-year goes. The reason it goes up is because people think, well, if we're going to go higher for longer, then maybe I should wait to buy bonds Less People buying bonds higher yields higher yields, more paying for Real Estate It's simple: the only way that 10-year goes down is when: yes, either we are in a recession and the FED has accomplished getting rid of inflation or we're going in for that soft landing and inflation is going away without a recession. But until then, the more the FED says higher, longer, higher, longer, higher, longer, the more these 10-year treasury yields go up, the more pain you have for housing.

In my opinion, it's very simple. It's very clear. let's keep going upon how credible the FED statements are and how much Wall Street takes it to heart. Probably one of the worst pieces of news: Steve This week was the Unit Labor Cost and Productivity report.

or maybe it was last week, But when it shows that for the quarter, um, unit labor costs, think we're still six and a half percent. productivity is now falling, so it's now showing evidence of Labor hoarding. You know that firms are just reluctant to let people go, which means inflation is higher, uh, for now than it otherwise would have been, and that we could end up seeing more hikes and then a deeper downturn resulting in the next I Don't know what the time frame is now 6, 12, 18 months I mean this is going to be a long period of waiting, Waiting and waiting for these conditions to fully set in. Kelly I've given up a lot of my optimism here.

but but one thing I've not quite given up just yet as my optimism on productivity. Um, and and I can we can go through that? and I think you and I probably should do a segment on this down the road. but right now, there's a lot of volatility in the productivity numbers because we had this surge of productivity at the beginning of the pandemic, when some of the lower wage and lower productivity workers uh, were let go and now they've come back. so I'm not quite ready yet to give up the ghost.

I think we've maybe had some improvements in productivity from different business processes that have come out of Covid, so I'm a little bit I remain optimistic on that front I don't think we're quite giving that up. What does concern me though, is the issue of whether or not we have enough workers in the workforce and that was discussed and and I think that we are still several million short of where we should be relative to have it. And quick note there. This is actually where my talk about women coming back to the workforce from That Wall Street Journal article is really important.

We talked about this idea that a lot of women are stopped working during the pandemic because of child care needs or otherwise or or fear of of Covid because women are more represented in Leisure and hospitality and travel and health care and education and these really affected by the pandemic. However, those folks now fearful that uh, you know their spouse or otherwise could be losing their job in manufacturing, construction or Tech might end up seeing themselves go back to work to help prop up their households ability to sustain during these expensive times and and difficult times which that would actually put downward pressure on uh, the the sort of labor rate of inflation uh, downward pressure on a wage price spiral increasing the supply of labor is is a phenomenal way to ensure that we don't have to get Paul Volckert. But uh, you know it certainly does indicate. Yeah, yeah, going through a little bit of a tougher time, but hey, if we could fill those jobs, we can remove that labor tightness.

Fantastic. The Federal Reserves that much closer to a soft Landing workers to do the job and you know I Thought it was interesting. Bill P is getting asked now more about pockets of the economy where we have problems. We'll talk about this later, but commercial real estate was one of them.

Um, and just this idea of you know when Warren President and he tried to say you know we don't think we have to have a worsening labor market to bring inflation down. But I'm not sure that's true because it's now unit labor costs that are driving inflation higher.