It's time to curb our enthusiasm. and I'm saying this because I'll tell you seeing the 10-year treasury job 90 basis points from 5 to like 410 has actually LED people go stupid again in some real estate markets. Some of the real estate markets I'm like and we're going to obviously talk jobs and stocks and things in the moment as well. but some of these real estate markets people are starting to take hard money loans on again and they've kind of been doing that for a while.

but they're taking these 15% hard money loans and they're speculating that if they buy something now in December they're going to be able to sell it for 20% more in March I'm like that's not healthy. that's like meme stocks, but in real estate. uh and and part of me is just bitter because people are paying stupid prices on certain properties and it's like it's fine. like I'll I'll keep buying off Market or or other ones there.

Plenty of deals out there. but I look at it because I see those as signs of danger and risk. It's kind of like when you see you know mem stock Skyrocket like uh, the the favorite one that we absolutely tore a complete new a-hole uh into which was shot. We did an analysis on this one in the course member live stream like two or three days ago and we absolutely wrecked this one.

I Mean this is just a trash company. Completely trash. Let me put it this way, in case you don't know anything about this company, what does buying amusement park supply chain vendors have to do with women's sexual? Health Pharmaceuticals Cannabis and detox drinks. Yeah, that's this company for you.

Okay, it's a joke. Uh, so anyway. look ignoring that for a moment. It is very healthy for enthusiasm to just stay tenuous a little bit.

I Kind of, you know I Was thinking about it as a as somebody who is bullish I Actually don't want the insane Euphoria Because it makes it harder to buy good deals like stocks or real estate. It doesn't make it impossible, it just makes it a little harder. Let's be real. anybody who says it's not harder when everybody's euphoric is lying to themselves.

It feels easier because you're buying and then then hopefully things go up and then you feel like you did the right thing. but you're just part of a Mania right? that Mania is actually starting to show in data we just got this morning. Look at this. This is the University of Michigan Sentiment: Uh, and uh, these numbers are absolutely insane.

You probably already saw them. So I'm going to save you from just repeating the same thing that you probably have already heard about. But what I really want you to pay attention to is just. First of all.

well, two things. Number one: this is the preliminary read, so there's a lot of volatility. Every two weeks they come out with either the preliminary or the final at the University of Michigan This is the preliminary read, which is just a way of saying hey, like this is just our initial thought right now. this could change and it does.

This does change a lot, but the Delta here is insane. Uh, the difference or or the the rate of change that you've seen between sentiment here. uh, not only popping off from last month which we were expecting sentiment to go up, but how much sentiment has gone up is actually really good. I Think what happened is you had Israel Lead people think oh no, the world's over.

Uh, we're going to go into World War III Bill Amman saying rates are going to break through 5% we're going to have the highest rates ever and that was a very gloomy time. remember October There was stocks down for three months in a row. Very very gloomy outlook on inflation and expectations for interest rates and uh, individuals, expectations for inflation jumped to, you know, over 4% They were 4 and a half% in the last read. Now they came in at 4.3 All of these numbers almost instantaneously corrected.

Which is incredible because a lot of the data that we get really aligns with we're probably more like in a 19. I'm going to write these dates down because this: these are very important we're probably and I want you to study these? We're probably more in like a 1952, 1983, 1994. uh uh, somewhere around here these are probably the moments that we're in right now. maybe even like a 2003.

And you'll see that in the data. If you look, you have volatility in the unemployment numbers, which you'll touch on those. uh, you're coming out of a recession, You're coming out of high inflationary T Uncertainty is still high I Just don't think it's so good to go back to instantaneous Euphoria Because then we're just going to Bubble up again I Actually think the Catalyst for a bubble or or quite High Imagine for example, the FED Cuts 1% next year and starts cutting more because solely because inflation goes down not because of recession, right? I Think we go euphoric. I Mean I Think there's a chance we start getting like 2021 pricing in again, especially after inflation adjusted.

mostly because the Fed's going to stop vacuuming. Money yields on money markets are going to plummet when yields on money markets start going down to 3% or sub 3% Again, people are going to be like, you know. Imagine money market yields were 2.9% and inflation is 2% People are going to be like what am I in money markets for for 0.9% they're going to fly right back into stocks. We're going to go right back to Euphoria and that's going to make it harder to build your portfolio I Strongly believe that now.

And I've been saying this for a while now. At least a year. Now's the the perfect time to build. to build And to acquire because when it goes nutty again, we're going to look back and go.

Damn. I Wish I bought during the uncertain time. Remember, uncertainty is an opportunity. Uh, but anyway, when we look at these time frames, these these were actually times where we weren't walking into a big recession.

I Mean there's always a recession coming. You know, later in like 1955 56 you have uh, uh, 85. No, not not so much. 85 you had in 85 you had inflation expectations start flipping uh, way down.

which was great. Uh, the Fed was starting to realize that it took years for people to get over inflation expectations. uh, ele being elevated and actually their expectations coming down. but you had, you know, 8789 volatile, uh, 1991 bubble? obviously.

Uh, but you know after 2003 you had another 5 years to go. So like there's always going to be another recession. I'm not here to say there won't be another recession. I'm here to say that is actually coming in so Goldilocks that there's a chance we're actually going to set up for Euphoria again.

Which don't get me wrong, like I'll take advantage of the Eia. but I also I I I I Want to This to serve as is almost a reminder to maybe take some tendies off the table during the next euphoric run. I Wouldn't be surprised if when we get our first rate cut, let's say it's March or it's May it might be May Uh, we'll see what inflation does you know Tuesday's obviously inflation. Uh, we'll get inflation data then I Wouldn't be surprised to see some Euphoria at the beginning of this year.

Uh, and it'll start getting priced in very slowly and people look back going. damn that came off that bottom real fast. But anyway, these numbers absolutely incredible. But but starting to get a little almost too optimistic makes me wonder I mean we were looking at Delta this morning and Delta's like oh, people were spending like crazy JetBlue wasn't that happy JetBlue is like yeah, not not for us.

You know we're not seeing that kind of spending like crazy. but but Delta's like there's no slowdown. everybody's spending spending spending okay. uh, so uh then uh, then let's take a look at another one here.

So this is the Inflation Expectations chart. Obviously we can see it popped off a little bit after the Jobs Report this morning. The Jobs report this morning is an interesting one. Uh, I I Do think we should understand.

Uh, what's going on with this Job Jobs Report. So this Jobs report, as we can see, the trend is clearly down on on jobs. Uh, the longer term trend is about 180,000 Last 12 months is about 240,000 We got 199, which was a little hotter than expected. The big problem was that 4% month over month in the Uh wage gains.

And there's some issues here because yes, we had 4% wage gains. but we also had a higher paid industry get back to work a lot of those striking. Auto Workers We had an An employment attorney in the Uh live stream this morning. remember I'm live every day Uh, totally for free at 525 when the Market opens up, you're welcome to join on the Me Kevin live channel it's a link below but anyway.

uh, we had an employment law attorney. that said, usually after a strike, you get paid your back wages and you go back to work at a higher pay. And so we're all wondering and trying to calculate. Is there a chance that is what skewed the month-over-month read .1% higher than expectations It's really hard to tell though.

Because of a labor force of 168 million, even a 30,000 job change doesn't change much. Even if you go big with hourly change numbers you're you're barely seeing a change. So I think it's It's probably too hard to tell in between the seasonal adjustments and all the other craziness that's going on how much the Striking workers going back had to do with uh uh, these these wage gains. Probably what we're going to have to do is just look at sort of a 3 to six month longer term average of What wage gains are doing and a bigger tell for this economy is really going to be CPI coming out on Tuesday So uh, keep in mind on a month-over-month basis, the the jobs data feels very, very rigged.

Uh, we also have some pretty cool indicators. We haven't talked about this one before, but there's this one called the Sam rule for predicting a US recession. And what it tries to do is it takes Jobs data and tries to predict a recession to where when the Sam rule Rises uh to to a factor uh of of essentially recession. Uh, with this white bar, you often have a recession almost always actually going back to 1950, you've had a recession with the exception of one false positive in the late 1950s 1959.

But right now, or the Sam rule is basically a way of saying hey, when unemployment goes up for I think it's like three, It's on a three-month moving average more than half of percent. It could be a sign that a recession is coming. It's a way of trying to take the lagging employment data and try to make it leading data. And uh, this softening we got today is actually a way of unwinding some of that risk.

You can see that, uh, right here. here's the Sam rule. a little bit closer and see that sort of trend down slightly there. but obviously it's it's a volatile indicator.

But I mean you look at the other recessions, you know we're usually even at the beginning of a recession coming. We're usually well into the trending positive. Uh, it's very rare that it actually goes down. See over here in 08 it's slowed, but it's just constant Trend up and then it accelerates as you go into a recession.

That's not really what we're seeing here. In fact, what we're seeing here is much more reminiscent to what you got right here in 2011. See, you go positive and you slow. You also got that in 2003.

That's why I was kind of suggesting. You know, maybe we're a little bit closer to those other dates that I got I gave. You could look this up. By the way, look up realtime.

Sam Rule St Louis Fred You can look that chart up. We're much closer to that 2003 2011 which is really just post crisis and that makes sense. I mean look at that mid 80s here. these are post crisis moves.

Look at that 77 you had another four or five years before recession. Here you get this. this increase and then it falls again. So this this going positive right here that we've seen is not necessarily a problem.

it's You know when we really get on this trend up that it's an early indicator. and this Sam rule fired early in 2007 and 8 I mean it was firing starting in November of 27 and really started going all the way for about a year and then it just went parabolic so you had a leading indicator there. I Mean look at the dot bubble. you had the leading indicator all of 2001 almost before you got the parabolic at the end of 20012 2002.

So uh, it is. It is a tool that we can pay attention to. Uh, so you know for me, what am I looking for? Well, I mean obviously CPI data is the most important. This is the best case scenario for Goldilocks right? Is that you have employment that stays strong.

Uh, Wage gains that average 3% That's the goal is. Can we get them to average 3% Uh. And then of course. uh, we we want to see uh, GDP stay positive, right? That's the goal for Goldilocks And that's what we're seeing right now.

Uh, the question is, can that last under the weight of these higher interest rates? Let's take a look at Nick T Who also gives us these uh, aggregate payrolls And then he gives us some beautiful charts as he usually does. Take a look at this aggregate weekly payrolls for the private sector. you get the year-over-year numbers as well as the 3-month annualized. We can obviously see this coming back into line of where we are pre excuse me, pre pandemic, which is fantastic.

That's the direction that we want to go. Uh, as far as Uh Wage gains themselves, probably going to have to give it a few more months to actually see. Okay, is that 04 going to stick? Or are we going to go back to a0 two? We're going to go back to a three again. We want to average about 3% on an annual basis for wage gains.

Wage gains at 4% is the lowest we've seen in this cycle year-over-year Again, though, is that month over month number that? that? uh, got people a little bit concerned. Uh, we did on a month-over-month basis hit .2% last month, which could be also because of people being on strike so we don't know how those seasonal adjustments come into play. Those are all going to be things to consider. Now as far as a catalyst, CPI is expected to come in flat, month over month next.

Uh, you know, on Tuesday 0% Uh, personally, I'm really I don't really care so much about the headline number month over month being zero or 3.1% headline. It'd be nice if that came in at two .9 That'd be great. But what I really want to see is housing take more of a toll on this and I'm pushing for A02 on that core month over month I want 0 2 instead of. 3? That'll be much more in line with positivity.

But then again, does that lead to Euphoria? Uh, who knows Some will say I'll just look at the Magnificent 7. you've already got Euphoria But then again, when you look at the Magnificent 7, there is one in the Magnificent 7 that isn't euphoric and that one's called Tesla So check that one out. So anyway, uh these are some of my my thoughts here. Uh, bottom line: practical implications for this uh I would say Look, we're probably in a place where a lot of people are going to start moving from money markets to stocks as this data comes in more and more benign and we end up proving that we're in more of like a like I said a mid 90s uh or a 2003 or 2011.

You know everybody was worried about a double dip. Recession 2011 was the best freaking time to buy. So uh I'm I'm not a Bayer obviously. but uh also want to be realistic that uh betting on massive Euphoria could happen but uh I would at least write down somewhere like next Euphoric cycle take some profits.

This just my take Anyway, thanks for watching. We'll see you in the next one. Good luck. Why not advertise these things that you told us here I Feel like nobody else knows about this? We'll we'll try a little advertising and see how it.

Go Congratulations man you have done so much People love you people look up to you Kevin PA there financial analyst and YouTuber meet Kevin Always great to get your take.