Oh boy, we're going to want to buckle up for Thursday Yeah, it's another report that could really be problematic for the stock market. Let's talk about it: 5:30 a.m. on Thursday we're going to get some really important numbers. Heads up, we're going on a mommy Moon trip for like the next 30 hours here to celebrate the twins we've got coming just waiting for a little bit of fog to clear.

not here, but where we're going and we're taking off. But anyway I Want to talk about this Thursday number that comes up. It's the quarterly report for GDP annualized and the expectation right now the survey is that it's going to come in at 4.2% This is double the 2.1% of the prior Q2 annualized number. This is a massive number and if it come, it's already expected to come in so high if it comes in even slightly higher.

I think markets are going to send those yields right back up. We know Bill Amman's you know, covered his treasury short and all of a sudden the 10 years down a bit. you know, back down to 4.85 or whatever. But we have to remember 4.85 is still like 40 basis points higher.

40 to actually probably more like 50 50. Yeah, what were you? We were like 4.2 there for a while so you're like 60 basis points higher than where you were for a while 60 65 basis points. So even after Bill Amman says hey I'm done shorting treasuries and we see the tenure go from 5% down to 4.85 this GDP number on Thursday if it comes in hot and it's already expected to come in high, right? Like if the expectation is 4.2 even if it comes in at 4, it's still hot, it's like what the hell The Federal Reserve drum pal just reiterated this last week. They said we want to see the economy grow at below Trend to help prove or ensure that inflation stays low.

Now, obviously, it's entirely possible We know this. We're researching this on a daily basis at our course member live streams or whatever. Uh, you know what? Like what we were researching this morning with Sherwin Williams or otherwise, we know the leading indicators of inflation are soft. We know there has been a lot of inflation, but the leading indicators are soft.

so what is that potentially mean? What Drome Paul says: Well, we want to grow at below Trend growth. Well, trend is 2% so that means we need GDP to come in at. you know, 1 and 1 12% growth or something lower. That would hopefully give the Fed the impression that they've done enough to slow the economy when GDP is growing at 1 and a half% Some people believe that a slower economy means less inflation.

I Personally believe that it's entirely possible to have a growing economy and low inflation as you actually encourage Innovation and Investments Some of the things that we're seeing a lot of the companies do right now that we're studying is they're not cutting investment spending yet. That's how you get a really dirty, dark recession. That's how you get 2008 over again when companies get to a level of so much fear that they start cutting and preserving rather than investing. Unfortunately, that's what Elon did right Elon pulled the you know we're we're going to slow walk a little bit on the permits for Giga Mexico I Think that's a massive mistake I and we have made that clear already.

But I personally think Elon should say something like on an earning call with like some kind of prepared script or whatever which I don't have a script for this but something like since we agreed to start building Giga Mexico Economic conditions have worsened. Interest rates have risen 1 and 12% or whatever it is. As a result, we are approaching the Mexican Government We're saying look, in order for us to continue building this, which we want to, we want to bring these jobs to your area. We're going to need additional support because the calculus we used then doesn't make sense anymore today.

and I think that would send a signal to investors that look, it's not Elon who's flip-flopping on the decision to build Giga Mexico It's economic conditions which are harder and we are now using that as a tool to negotiate for the benefit of investors at Tesla For employees of Tesla and the company of Tesla, that's what you should be getting from a CEO as opposed to yeah, we're just kind of going to flip-flop and slow walk this. sorry Mexican government, right? right? That's where you should be getting. But anyway, when companies exhibit that kind of fear, the true fear that like, okay, we need to cut R&D We need to cut Investments and they go Inward And that's the kind of GDP compression that you get in my opinion. You actually longterm delay.

The slowing of inflation, You long-term delay. more disinflation. What does that mean? Over the last 40 years, we have had a deflating economy. The only reason we've had any inflation at all is because we print money.

It's all the game of Fiat Okay, that encourages people taking on debt and spending and it's good for politicians. It's all rig okay, We we get that. So the problem though with these GDP numbers is GDP numbers are already expected to come in hot. Even if they miss the downside, they're still going to come in hot.

It's going to send a signal. the shell shock through I Think the Bond Market and the economy of people who aren't paying attention to these GDP numbers that are expected to come on Thursday and people are going to go. Oh crap. If GDP is annualized 4, you know2 % or even if 4% on a miss or 4 and a half% on a beat, that means the FED has to do more and If the Fed has to do more.

That means higher rates and I Think that the numbers on Thursday could be what actually shoot yields over 5% and it could be painful for risk assets. But this is where it's kind of like, well, what do you want I mean like on one hand, I actually think a GDP print that's strong is good because it means you're further away from recession. Look at American Express Who reported on Friday that uh, consumer consumer sales are still like us. Consumer purchases are still up 9% year-over-year Well in, you know, 2022, we were able to go.

Okay, sure you're sales are up 9% but inflation is 9% Well now it's like, well, inflation was. You know what? 4 and half% So you actually still have net growth in the amount of money people are spending. This is weird. We're supposed to be in a recession.

We're supposed to be where everybody's tightening, but people still have enough net worth to where they're still spending on stuff. So either the recession is just delayed because of the amount of extra money we have or we prove to the FED that inflation is gone with a stronger economy. And it's okay to lower rates because inflation isn't a problem. Well, that would be ideal.

The problem is, you're not going to prove to to the FED that inflation is gone until inflation's gone. Uh, well, at some point they'll pull out flexible average inflation targeting. You really need the 3 month and six month and 12 month. All of those moving averages really rolling over which I think as we get our housing disinflation over the next 6 months.

remember what the FED said said the FED said in July most of the housing disinflation is still ahead of us. That disinflation. That's going to be great. Uh and uh.

you know, Look, we can talk housing market. Obviously, we have a deadline November 1st for house hack and investing in house hack. Uh, but we'll talk housing and just a moment. let's finish this thought.

So what does this mean? Well I think you have a risk for Thursday potentially sending Guils High stocks down. We want to pay attention to it I'll cover it live Thursday morning 5:30 so mark your calendar for that. see what goes on I actually prefer personally higher GDP numbers because I don't think inflation is going to prove to be a long-term problem and I would rather be further away from recession because when people hear oh, we're officially in a recession, sometimes you can self- fulfill a worse recession because again, that's when companies say you know we're not investing, we're not innovating anymore for the future. That's when you really get that mindset shift that we have not seen yet in the cycle.

That's bad. That's that's when things get bad. Bad bad, not great. Okay, so that's Thursday now briefly on housing every day.

We're studying housing markets in different areas and what we're consistently finding is that price cuts are increasing substantially for October we have not yet seen more than about a 5% rollover from Summer comps like for example, you look at Fort Lauderdale which is an area I grew up in I grew up in Broward County you look at Broward County Uh, sales prices are actually nicely up year-over-year Florida's gotten really good inflow of prices. The question is, does that sustain well this winter will tell us because what we're finding is prices are already new pending sales are already 4 to 5% lower than some of the Peaks that we had uh, this summer. So is that potentially a sign that housing is just volatile in reaction rates? Of course it is. and housing is actually going to be.

well, not so much existing home sales. but you do get hello, Uh, you do get a housing uh, new build contribution to Um GDP so we'll We'll see some housing numbers in there, but that's not so useful for actual sales prices for properties. uh, What's more important though, is realistically there they're a few paths ahead. Something major breaks economy goes into Quick recession fed Cuts rates.

Hopefully they can, Uh, assuming inflation is relatively gone that I see as mostly unlikely, then there's the possibility that inflation rolls over very very quickly over the next few months. As housing rental, you know, owners equivalent rents come in low and you can cut rates more quickly. This leads to a risk rally. It's great for crypto.

It's great for stocks with probably more realistic is the patient approach, which is the Fed's going to keep doing this. I Don't know. Is inflation really good? and at the same time the data is like the economy still got life in it. You haven't fully crushed it below.

Trend right? Uh, and and so you get this nervousness I Actually think this nervousness is a fantastic time. Uh to build? Uh, and so personally, what I'm doing is most of what I'm spending money on right now is building businesses. uh, whether that's you know, expanding, uh, what we can do with house hack or uh hiring like for example, we're we're uh, still working on building a software Dev team if you want to apply, send an email to jobs at Meet Kevin.com include a resume, include a little video. we're looking for a full stack developer.

Uh, you know, you know, team could do everything basically. uh, jobs atme Kevin.com And and we're still investing right? We're investing, not just in in these businesses, but other businesses. And I think as long as business owners keep investing, we're good. we're We're avoiding a recession.

Downside is you get business owners like this pizza owner. Yesterday we went to a pizza shop. Beautiful location downtown. They opened up in 2019 right before the pandemic.

Crazy. Uh and uh I asked him hey, you know We were talking about their tenant improvements and their deals with their landlord and that and I asked him hey, how how have sales been and uh he's like straight down and so very pessimistic and and small businesses are getting hit the worst by interest rates right now. and so we have to empathize with small businesses who don't have access to a lot of capital so they can grow their businesses. This is where individuals themselves should be investing in their education and and building.

You know if you just shut down and don't do anything right now you're wasting time and you're wasting opportunity. Not as great, but in my opinion you really want to do is is build right now. but there are a lot of small businesses who are like that's great Kevin but we can't You know we can't take out more debt, our sales are down, our revenues are down. This sucks.

uh and so at some point I think the Federal Reserve wakes up and goes okay like if inflation is indeed gone we can we can lower. The question is when and that's the problem. It just takes longer. Lauren's point of view on the pizza shop was, well, they should bake better pizza and I'm like Savage uh anyway.

so Thursday I'll see you at 8:30 in the morning. Let's go. Uh, take off and go to the mommy Moon See you soon bye.