hey everyone me Kevin here in this degenerate episode of beer with me Kevin we are of course going to have C Stella so look we just got to be transparent here I would love to be bullish unfortunately I still think the FED is substantially behind the curve and in this video I want to give you a little bit of side into why I believe that the Federal Reserve is substantially behind the curve first I I'm not here to fearmonger you know I've got call options on quite a few different positions but there are positions that I think do well in a soft Landing or recession we talk about that in the courses you know tonight there's a coupon expiration at 11:59 p.m. California time you already know that meet kevin.com you know what to do stocks and psych you all my alerts my positioning everything you already know that but I want to show you this take a look at this this right here is a chart uh that was screenshotted today of the Atlanta Federal Reserve and it is a chart of the GDP now real GDP estimate okay so it's ticked down a little bit but who cares this is very volatile ignore this this is does not really matter this is up and down all the time big deal but instead I want you to pay attention to that boring paragraph right there that nobody reads ah Stella and carrots sh out right there you notice anything special about that paragraph most people don't because they bold the part they want you to read the GDP model estimate for real GDP growth in the third quarter is 2% and then everybody stops reading but wait a minute last week I complained that the second sentence indicated a 0% growth rate in something called Real gross private domestic investment growth now that's a mouthful if you can remember that that that would be the equivalent of shoving one of these in your throat and not dying I'm allergic to carrots by the way but anyway Real gross domestic so in other words inflation adjusted investment in America and then the growth rate of that okay decreased from 0% to - 2.4% now this is just one of the things we're going to talk about in this video but what is that somewhat signal to us this what I did is I went back past the oh that's gross bro silverfish oh silver newspaper gross bro you can't just attack me like that what the hell that's gross problem solved so what I did is I went back to the uh post Korean uh War so in other words the period after the Korean War the reason I did that is because domestic uh investment growth generally declines in a war because you uh redirect your factories towards uh spending uh for military equipment so I counted negative real domestic uh investment growth which is basically when the blue line goes under that black line across the bar there and they put a red arrow every time it went negative around a recession and a green arrow every time it went negative not in a recession what you can see here is that of the 14 times that it went negative 78.6% of the time it went negative in a recession just 21.4% of the time it occurred not in a recession one of those times was the mid 80s one of those times was approximately 1967 one of those times was approximately 2016 no though 2016 was barely negative at about 1.4% uh the mid 80s were negative down to about 4% and as were the 1967 periods so it's possible we could still be one of these green arrows but let's just say the odds are somewhat against us when this number starts rolling over it's bad but it's not just this number folks it's frankly the Federal Reserve starting to freak out and this morning when I when I listen to JP speak I'm like man am I the only one who thinks this guy's freaking out right now and no because later in the day take a look at some of the stuff that we saw from the uh in group or in we got major downward revisions to us jobs pushes the FED to act the weaker labor market momentum that we noticed where we thought we had 2.9 Million jobs and it only ended up being 2.1 million jobs thanks to the Bureau of Labor Statistics revisions has pushed the Federal Reserve basically into panic mode is their argument absolute Panic now listen to what they say here they say often times the Bureau of Labor Statistics is actually accurate H but usually they're only accurate during what are known as steady times they're actually typically inaccurate during the most important times turning points in the cycle when they tend to be significantly wrong and they update their forecast to suggest that they are going to look for a 50 basis point cut in September and then 25 in November in December because they think the fed's done effed up they think the fed's screwed up and has messed up the jobs market now that yes inflation is not a problem anymore it's jobs that matters and so then I wanted to see what Deutsche Bank thinks and Deutsche Bank thinks the same thing larger initial Cuts would require more disappoint labor market data than what we've seen to date in other words in English if we get a big Miss in August for the uh well in September for the August data we might get ourselves our 50 basis point cut and it's not exactly going to be bullish look at their little summary here in summary while Powell's Jackson Hole speech emphasized greater confidence on the path of inflation he spent more time more time folks you know this we covered this outlining risks of further unwanted deterioration in the labor market in turn the upcoming labor market and growth data will more likely determine the initial size and pace of policy easing it's true jpow didn't close the door to anything and on top of that if you look at Robo Bank scenario number two for artificial intelligence they basically give four scenarios they say look in one scenario everything goes to the moon productivity goes up demand for AI goes up everybody is a winner everything's great you know then they've got these like other Edge case scenarios with which I think are mostly nonsense like I think it's possible that everything could go up but then they also have this example of like everything stagnates and nothing benefits from AI I don't really believe that they have this example of demand surging for AI but not getting any productivity out of it maybe I'd put you know this maybe at a 20% chance the one I the other one I just read maybe at like a 2% chance demands surging and surging probably also at like 20 30% but the one I would put at 50% is right here and this is the one I want to read you and then when you combine all of this you start getting nervous watch this in the second scenario there is still this extensive set of AI tools that raises productivity this makes sense there are a good amount of AI tools that raise productivity but not all of them do and we assume though that the industry has a very steep learning curve which means that AI functions become widely available at low price points H it's like price Wars to basically get you to use their chat bot well we're already seeing that this is not a surprise cheers to that AI getting cheaper Baby Woo the marginal cost of many AI tools and user queries Falls to zero in other words the benefit of you building out your server stack is stupid because it becomes a commodity and like an extra querry doesn't actually cost anything that is not good news for AI stocks and doesn't feed into the AI investment boom keep in mind that scenario number one which I do give like a 30% credibility chance is basically everything just goes to the moon and so yes it is possible that everything goes to the moon I don't think it's as likely as this second one where basically we build so much compute that you basically lower the cost of marginal AI compute to near zero and then in the short time span it will require no macro significant upfront investment in order to implement these tools in the workspace everybody gets to implement the tools in the workspace but the problem with that is it's not just Americans who get to do it you now risk Outsourcing work to AI assisted workers in developing economies which means more joblessness in America and folks right there is what I'm concerned about because I try to position look people don't want to hear it people don't want to hear it just going to be transparent here going listen to myself say it because uh I want to make sure I'm uh I'm saying this appropriately okay folks I personally am positioning my portfolio so that I can run my startups whether we go into a recession or not the positions that I am investing in right now are killing it like they moon today it's because I have like seven figures of call options on two different strategies and both of them moon today I mean a lot of things moon today but these strategies moon in my opinion in a soft Landing in which case all stocks moon like Tesla and Nvidia Apple whatever all that stuff uh or a recession in which case I don't think everything moons only certain things Moon specifically some of the things that I've invested in which which I mean you know call me biased I obviously position because I want to prepare for either a soft Landing or recession so just join the courses on building your wealth you know exactly what it is you could see sort of my allocation but anyway coupon expires today there goes my phone Dang It Anyway the the problem here is that the Federal Reserve might be significantly slower than we suspect this is a really big deal I want to draw this out for you for a moment let's throw in a new page here and I want you to see why the Federal Reserve might be panicking in a little bit more of a detailed manner especially now that we have a little bit more insight from some of these institutions I want you to ask yourself what does minus 50 basis points do it takes us down to 475 BP okay what does another minus 25 and a minus 25 do it takes us down to 425 basis points that's where we sit with interest rates right and the middle is obviously 425 or 450 so now you have to ask yourself is that actually going to stop the layoff cycle the layoff cycle has not even started yet that's the real concern we're getting Rigg jobless data and I'll tell you there was a lot of upsetness over the bureo of Statistics Labor uh oh my gosh Bureau of Labor Statistics late release of the data for the revisions because certain Banks got the data before everybody else yeah the suits that everybody's like oh the suits got the data before us they got the data way before us messed up and this time it was blunt it was is blatant blatant rigging now you know we could chalk it up to a mistake but the point is we have substantially weaker labor data what does that mean going forward well it means we're going to highlight the importance of some specific dates coming up the dates you want to write down in your calendar if you have not yet are jolts on 94 ADP on 95 and most importantly nonform non nonfarm payrolls on 96 we have been growing pay was an average of about 176,000 jobs we were told it was closer to 250,000 but thanks to the revisions we're actually down under 180,000 and the odds are that since that was only a March toarch revision the odds are April May June July whatever comes after that all those months are all low as well that's not good that means what we've been told is probably even worse than expected this last Labor report that made everybody Panic that July labor report that came in at 114,000 take the revision off of 114,000 bro if you take 990,000 off of that you'll be down at 24,000 jobs for the month you how bad it looks that's a recession bro and jobs data lags we all know that so look people like Kevin just join the Bulls already I swear I want to I so badly want to be a bold but I also want to be transparent look at this folks this this see that dud can I really be bullish at 425 basis points of rates no I'll go bullish at0 to 150 baby that's 0% to 1.5% that's where your boy Kevin wants to go bullish and go on margin and go all in on Tesla and the yellow stocks or whatever I don't care I think I want to go bullish at 425 walking into an election and a potential recession hell no bro I'll buy the 30-year Treasury and twiddle my thumbs milking 4% for the next 30 years because you know what there's a real possibility we'll never see 4% on the 30 year ever again got carrots they supposed to make your vision better I'll let you in on something it didn't work for me anyway bro how did oh my God how did that get over there all right what else so we talk to bank oops talk to Robo Bank there were some other institutions that I was uh reading some research on as well not as many of them as I thought actually ended up talking about Jackson Hole I think they all kind of took an early Friday off freaking losers I'm filming this at like 9900 p.m. it's like already midnight on the East Coast good thing the coupon doesn't expire until midnight on the west coast but anyway this is crazy if jpow is panicking because they went too far they need to start doing 100 basis point Cuts not not 50 certainly not 25 they need to get this this stuff down ASAP because even if you get down to 2% right now it's not going to stop the layoffs it's going to take 6 to 12 months for that lag to actually encourage hiring again that's scary sorry I want to be bullish but I can't be not on these stocks you know the the big ones that I have been popular I've picked some other ones that kicked ass today and one of them was up like 9% and then I had like six figures of calls on it that's why I'm having a Stella and carrots anyway I got a little date coming up with Lauren so I'll see y all in the next one also what do you think I I moved the mic down low do you like the down low I I know everybody's been used to kind of like the mic out of the shot but I don't know I have to say I think it looks cool look at this did you know look at the armor of it I bought that arm black I got it black and I turned it gold I'm like Kanye all right I'll see you in the next one love you all bye these things that you told us here I feel like nobody else knows about this we'll we'll try a little advertising and see how it goes congratulations man you have done so much people love you people look up to you Kevin PA there financial analyst and YouTuber meet Kevin always great to get your take even though I'm a licensed financial adviser licensed real estate broker and becoming a stock broker this video is not personalized advice for you it is not tax legal or otherwise personalized advice tailor to you this video provides generalized perspective information and commentary any thirdparty content I show shall not be deemed endorsed by me this video is not and shall never be deemed reasonably sufficient information for the purposes of evaluating a security or investment decision any links or promoted products are either paid affiliations or products or Services we may benefit from I also personally operate an actively managed ETF I may personally hold or otherwise hold long or short positions in various Securities potentially including those mentioned in this video however I have no relationship to any issuer other than house act nor am I presently acting as a market maker make sure if you're considering investing in house Haack to always read the PPM at house hack.com