Jobs Report

Hey everyone and thanks for jumping back Into the Macroverse today we're going to talk About the most recent jobs report if you Guys like the content make sure you Subscribe to the channel give the video A thumbs up and check out the sale on Into the cryptoverse premium at into the Cryptv verse.com let's go ahead and jump In so we had a pretty blowout jobs Report today the unemployment rate well Stayed relatively flat I mean it's still At 3.7% Um if you were to go take a look closely You can see that we popped up here to 3.8% for you know three months and then We dropped down to 3.7 and now we've Been at 3.7% for 3 months so the the labor Market in that regard Still Remains Relatively strong it has not shown the Um you know a a move yet above 4% if you were to take a moving average Uh like a three-month moving average you Can see that it was going up the Three-month SME but yet it has pulled Back recently to where the 3month SMA is Back down to 2 3.7% so pretty good numbers coming from The unemployment rate if you were to Look at there and there's some other we We could we could also break it down by Category uh we could look at like 16 to 19 year olds and see that it's Fallen a

Little bit here it had reached a level Of 12.4% by October and it's actually Fallen a little bit here going into the Latter part of last year and the early Part of this year if we were to take a Look at what it was doing a year ago you Can see let me sort of zoom in over here You can see that for 16 to 19 year olds A year ago it was it actually found sort Of a local high in um November of 2022 uh here it found a local high in October of 2023 and of course last year It it essentially and we just got the Data point for January so we're Essentially looking at at sort of Comparing this data point to this one Right here right from January 2023 and you can see that um sort of From like a cyclical point of view this This metric trended down until May and Then starting in May and then moving you Know through October that's when that's When it started to go up so that's an Interesting metric I also want to take a Look at the unemployment level uh this Is something that we got today um we Saw 144,000 144,000 to the downside meaning The unemployment level fell and that's Of course reflected in in the Unemployment rate right I mean you can See that it it was at 6.26 6.27 million And then it dropped all the way down to About 6.12 million if we were to take a

3month moving average of that I mean you Can see it it essentially just looks Like the like the unemployment rate we Could also go take a look at at the Unemployment level by reason for Unemployment um you have job losers Which dropped about 30,000 uh still technically in an Uptrend but it has leveled off here Recently you could look at Job Lo job Losers on temporary layoff also dropped By about 41,000 we could also go look at At new entrance to the labor force this Is one of the ones that has been moving Up probably the most aggressively for a Little while that one dropped off pretty Pretty big uh this last month right and If you take a three-month estimate of That one you know and you try to get Tune out some of the noise you can see That it has been moving up um from you Know the mid 400k range all the way up to the you Know near around 600k range so pretty Big move in a short period of time but This month it had a fairly substantial Drop we can also go take a look at the Unemployment rate per state I'm not Going to spend a a a lot of time here This was actually updated um about a Week ago but just to go through a few States some of them look better than Others um and again a lot of them still Have relatively low unemployment rates

Right like the unemployment rate in in Alabama is is 2.6% but if we were to go Look at some of the other you know some Of the larger states by population right If you were to look at at California the Unemployment rate continues to to not do So well it's all the way up at 5.1% % One of the reasons I think is because as We've gotten further and further into The tightening cycle a lot of the tech Companies the smaller market cap tech Companies you know they just haven't Done as well right it's it's certainly Easy to look at at companies like apple And and meta and and alphabet and so on And so forth Microsoft and see that They're doing well but they also have a Lot of cash on hand they have healthy Balance sheets and they're more likely To survive tightening Cycles whereas a Lot of the smaller market cap stuff that Maybe doesn't have as good healthy of a Balance sheet those stuff those places Are are are struggling more and of Course are laying people off and and That might be one of the reasons why you See places like California uh with an Unemployment rate that continues to go Up while other places for instance like Connecticut while it has gone up Recently I mean it there's no denying That the unemployment rating in Connecticut has started to turn up right I mean it was 3.5 now then 3 6 and then

It moved to 3.8 it's still nowhere near California which is at 5.1 and there's Some other places I believe up in you Know up in New England um I believe like Rhode Island is one that has relatively Low unemployment rate again one of these Where it's it's moved up recently but in September it was all the way down at 2.6% right I mean you know if you think Back to the the national rate was was 3.4 but in Rhode Island it was all the Way down here at 2.6 now it has started To move up recently right 2.6 2.7 2.9 3.2 I mean it's certainly moving up but It it was moving up from a relatively Low level we could go take a look at New York um unemployment rate in New York is Now at 4.5% so uh back in August it was at 3.9 And then four and then 4.2 and then 4.3 And now it's coming in at 4.5 and if we were to go take a look at At Texas that might be another Interesting one to look at and perhaps Florida Texas is a state where you can Actually see that the unemployment rate Fell somewhat recently I mean again if If right if the unemployment rate is Still at 3.7% there have to be some States right where the unemployment rate Is actually going down I mean so far We've looked at ones where it was going Up but there have to be some where it's Going down if the unemployment rate is

Is staying stagnant at 3.7% but you can See that the unemployment rate in Texas Uh the lowest at went this cycle was run 3.7 it then moved up to in the 4.1% Range for a long time and then it just Had a drop down to 4% and the last one I I think um unless I think of anything Else I wanted to look at was uh was Florida Florida and maybe the District Of Columbia Florida the unemployment Rate still relatively low I mean again Like we can always say yeah it is Trending higher right I mean of course It is trending higher it was also Trending higher over here here right but The angle of attack at this point wasn't That Steep and then the angle of attack Steepened a lot and that's where the Economy you know that's where the Economy actually slowed down um even Over here right in in in the Unemployment rate in Florida in you know This cycle bottomed out in the low twos And it was slowly trending up but it Took until this hit about 4% before the Economy really slowed down and and it's Currently at at 3% right and it was at You know it was at 2.8% a couple a Couple of months ago um and then I did Mention we can take a look at the distri District of Columbia this was one of the Other ones kind of like California where It is it is higher right it's at 5.1% And it was looking it was a little

Optimistic after it had hit these highs Back over here at 5.1 because it had Come back down to 5% but then it's right Back up to 5.1 so starting to go back up Um hopefully I can find some other ones Where it's going down just sort of show That in some in some states it has moved Down Colorado it it actually Increased um Massachusetts it is has increased as Well um pretty big jump actually from 2.9 to 3.2 but you get the idea I mean Again like the unemployment rate in a Lot of these states it's going up but Still at this point at a relatively low Level okay but trending in the wrong Direction but still at a Rel low level And you could even look at at like the Number of states where the unemployment Rate is rising um over the last month And see that over the last month there's 27 states where the unemployment rate Has gone up right so there's clearly Some that have stayed flat um or have Have decreased this is only looking at Ones that went up so right if it stayed Flat then it's not included if you if You tune out a little bit of the noise And instead of looking at just one month Ago you say all right well let's look Three month months ago you can see that It it is at about 43 states have an Unemployment rate higher um today than They did three months ago but it's

Potentially you know I mean you can see That it over here it came up to you know 242 back in October of 2022 um but then it fell right but then It fell as we got further into the year And then here it's found this at least Local high in November of 20 23 last year it basically fell until January right January 2023 right it Topped out in October it then fell in November a big drop in December and then It bottomed out in January here it's October November and then December right So this last year from October to November was a pretty big drop November To December was a pretty big drop here October to November it still went up November to December it did go down but Only only slightly um so it could be Interesting to see how the trend changes Or what it does next month right like Does it does it continue to go down is It lagging this one or is this just a Very muted version of it and it's Something more than just say cyclical um You could also look at it compared to Six months ago which really Tunes out a Lot of the noise and if you look at it Compared to 6 months ago you can see That it's currently at 39 states have a Higher unemployment rate today than 6 Months ago um in October 2022 it reached 41 right so it reached 41 in October and Then it fell basically it it fell

Through um through April and then it Started to go up starting in April uh so We'll see if it you know if it follows a Similar pattern or if it deviates we Could also take a look at alternative Unemployment rate measures right Everyone knows this one here the Standard unemployment rate which is u3 There's Al U1 which means greater than 15 weeks unemployed this is one that had Been moving up more aggressively than Than the other imployment rates in terms Of rate of change but after moving up to 1.4 it's basically just hung around 1.4 1.3 and actually went down slightly in This most recent report we could also Take a look at people not in the labor Force um not super exciting of a metric To to look at it hasn't really done a Whole lot but if you were to look at a Year-over-year percentage change will Take maybe a three-month moving average Um you can see that it's it's slightly Positive continuing on uh we have the Labor force participation rate um that One stayed flat this last month looking At a year-over-year uh percentage change Shows a pretty large drop basically from October um and now it's looking at it It's it's about 0.1% uh looking at the civilian Labor Force Level it looks like it dropped by About 175,000 um this is the civilian labor

Force level is the number of people who Are either employed or unemployed but Actively seeking employment um so that Actually dropped by 175k taking a year over-year percentage Change right you can see that it it was At 2.24% and then now it's down all the way To 847 per. so pretty large drop there in a In a short period period of Time we also have the employment level So this is total nonfarm this is the the The blowout jobs report that we actually Had today um if you were to zoom in here Still trending higher right still very Much trending higher but if you look at The month over Monon change I'm trying To remove the the the pandemic stuff you Look at the month over Monon change also Last month I believe was revised higher As well and so you can see that it's It's actually starting to go back up Right like it isn't I mean it hasn't the Monthly change hasn't put in a new low Since December of 2022 as as you know as maybe as hard to Believe as that is that's what this Looks like now if you were to go look at The household survey it looks a lot more Grim uh where where you know where They've lost jobs by about the same Amount that on the establishment survey That they've gained jobs but this is is

Is what the establishment survey says I'm looking at it on a quarter over Quarter basis you can see that the Quarter over quarter uh percentage Change has started to accelerate Slightly here at 0.55% and then finally looking at it on A year-over-year percentage change you Could see that it's now down to about 1.89% that's total Nonfarm we could uh switch it up and Look at some other sectors uh there's Like total private which also went up Quite a bit I mean you might say well You is it just because the government or Or something but total private jobs uh The unlo employment level went up by 317,000 pretty large month over Monon Gain right pretty large month over month Gain in fact in order to see a gain this Much in a single month you'd have to go All the way back to in fact exactly a Year ago right I don't know if you guys Remember but we had a pretty large Blowout number in January of 2023 right you can see see here I mean January 2023 we we saw the Month-over-month change at 27% this January it's at2 36% right and Taking a a simple moving average like a 3mon SMA you can see it's accelerated Into That um maybe one other category and We'll look at at

Manufacturing manufacturing went up by About 23,000 so um pretty I mean not a huge Change but still a a modest move up in Manufacturing now let's go take a look At non-farm private payroll employment Level uh if you're not familiar with This this is coming from the ADP the Automatic data processing Research Institute this is a lot noisier than the Establishment survey that we just looked At but you can see that they also added 107,000 jobs um when you're looking at At total private if you would if you Switch this over to say manufacturing it They added only about about 2,000 jobs Sometimes looking at a year-over-year Percentage change is interesting I me You can see that it is shedding jobs Right manufacturing jobs um have been Have been dropping on a year-over-year Percentage basis um but right there's Still they still basically at the same Level that they were pre pandemic right So yes they' they've dropped you every Year but still at the same level as Preep pandemic and there's other times In the past right where where they Basically just trended sideways for a While um There's Leisure and hospitality is one That's always interesting to check in With it it's basically flatlined since July right it hasn't really made a huge

Move since July of last year I'm looking At a year-over-year percentage change it Has it has you know come off its peak of 177% and it's now down to just about About 5% or so but I mean if if this Doesn't start to go up soon then the Year-over-year percentage change will of Course continue to drop because I mean It's basically at the same level today In January as it was half a year ago Right now of course we are you know as We go into into the summer we might see That go up from sort of like a Seasonality basis but you get the idea Um as to why the year of year percentage Change hasn't really you know been going Up as much because well it's basically Been flat for the last six Months um total temporary Help Services Employees this has been one that has Been in a in a decline For quite a while if you look closely it Topped out in March of 2022 and it's Been mostly moving down ever since uh But it actually did go up by about 3.9 Th000 jobs um in this most recent report Looking at a month-over-month percentage Change this is actually the first Positive print that we've seen in this Metric really since March of 2022 we had A couple we had a few that came Relatively close to putting in a Positive print But ultimately they were Unable to do so okay and this is one of

Those ones that looks a lot scarier when You look at it on a year-over-year Percentage change basis um you know it's Still at -7% and it's basically been Around negative 7% um you know for for About a year Now job openings uh continues to to Slowly Trend down over a macro scale but In terms of locally it it has kind of Leveled out here at this you know at Around 8 to 9 million so it hasn't made Another drop just yet and what a lot of This does is it really opens it sort of Raises the question well where is the Neutral rate you know is the neutral Rate lower than where we currently are Is it higher obviously Powell has said Many times that we are clearly in Restrictive territory but the question Is is you know how restrictive is it or Is it restrictive you know I mean if They if they paused here at 52% and the economy starts to re Accelerate and byy Association inflation Starts to re accelerate well that could That could certainly present um a Problem but if is this just a fluke and I I think this goes back to why Powell Is very you know resistant to the idea Of a March rate cut how can you cut Rates in March when you have you know Unemployment rate still at secular lows When you have um you know blowout jobs Report where you're gaining 300,000 jobs

And I know a lot of people are going to Say the numbers are made up and at but I You know that stuff doesn't matter right This is what monetary policy is based on And these are the numbers that we got Right the the labor market is it is and It has been resilient it doesn't mean That it won't eventually fold that's What usually happens in tightening Cycles but the process the business Cycle process can can take years to to Ultimately play out so we will see you Know I I think it's fair for Powell to Say like we're probably not going to cut In March because we're only going to get Two more data points for each series for Most series between now and the next fed Meeting um and and I mean for and for This stuff we're only going to get one More data point right we're only going To get one more unemployment rate print Between now and the next March meeting Because the March meeting's in in I you Know late March but we're only going to Get one more unemployment rate reading Between now and then and I don't think There's going to be any I mean unless it Comes in in February well above 4% I Don't really think they're going to cut Um so I and I I think it makes sense for them To just simply continue to hold there uh Job openings in terms of manufacturing Job openings it also it it slightly went

Up I'm still above the the pre-pandemic Levels some some categories look a lot More Bleak like retail trade is is Actually below prepandemic levels but it Actually did get a a bit of a nice Bounce here coming into the beginning of The year and and we can actually go back To last year and and see that you know December um marked a local high in job Openings in the retail trade and then it Trended down through basically March so We'll see if it does the same thing here Or if it's a new trend and I think That's what Po's looking at is you know Is this just like some type of seasonal Behavior where there's resilience in the Labor market just like there was last January and then the next following few Months it then went back down or is the Economy starting to re accelerate and And and people are starting to get um You know are more jobs being created so I I think you know honestly I don't think they're going to cut in March I think something pretty Catastrophic would have to happen Between now and March for them to want To cut and and I I think really the Question becomes not whether they're Going to cut in March but whether They're going to cut in May um and I Mean of course it depends on how the Labor market unfolds between now and Then but that's I think one thing we

Have to more so consider if you look at It from the other perspective right if You look at it not from the sense of of Job openings or or or people that are You know getting or that are that have a Job but if you look at Job quits you can See that people are still relatively Scared to quit their job normally as as We get further and further into Tightening Cycles um you know people are are less Willing to quit because they're less Likely to find another job a lot of People might not quit until they found Another job um you know if you think About it most people don't go out and Quit their job without having something Else lined up but there's maybe fewer People having stuff lined up because you Can see that job quits continues to drop And is now below the pre-pandemic level Right and I mean you can see that you Know in Prior economic downturns this Metric was going down but the Counterpoint uh to all of that is while It has gone down it is still basically Just back to where it was during you Know pre pandemic right so yes this has Basically just been getting been getting A lot of the excess out um now we're Back to where we are pre- pandemic and I Again I think Powell's right we have to Get a few more data points here to make Any conclusions what if a lot of these

Metrics just sort of stabilize at the Current pre-pandemic levels if that's The case then you don't really have any Strong reason to cut but if they if they Continue to drop um relatively quickly Then then of course you would have have More reason to to cut and I mean you Could also look at look at it in terms Of like retail trade I mean you can see That in terms of retail trade job quit Are at 423,000 the last time they were This low was back in 2015 so some Sectors are certainly taking a bigger Hit than others in terms of you know the Flexibility of people to sort of quit Their job and and just go find a new job And then there's also the job quits rate Which is basically the same thing um Initial claims still coming in Relatively low as I've said before you Know if you're if you're thinking about Like recession recessionary type initial Claims I think you'd have to see this in The 300,000 range um for it to be Recessionary and so we're clearly not There at this time and so I would not Say that this constitutes as Recessionary Behavior Uh right now um it Has moved up here a little bit off the Lows uh do note that in January you know December January 2022 uh or sorry December 2021 January 2022 it it had a Move up um same thing January 2023 right It had to move up so um I I guess the

Question is is you know is it is it Doing something similar where it comes Down here puts in a low and then just Trends higher going into the middle part Of the year which certainly could be the Case right that certainly could be the Case um it but he even put in a lower Low compared to where it was last January right last January initial Claims bottomed out at 194,000 this January they bottomed out at 189,000 with that said they've already Shot up to 224,000 which last year it Took until the end of February for them To reach that level and so the the stuff On the on the weekly is is relatively Noisy I would always recommend putting In some type of of moving average in There whether it be a 3-we SMA or a Sevene SMA to maybe get a better read on It you can also look at initial claims Per state but it is really really noisy And this stuff is not seasonally Adjusted uh we could go look at Continued claims continued claims Continue to sort of show that while People haven't been getting laid off as Much um there are still a significant Number of people that are having a Harder time finding a new job right so You know while people might be getting Laid off at the same rate there's still A lot of people that are hard having a Hard time finding a new job and that's

Why contined claims continues to go up And and really you can see that um a Year ago in in January 2023 it was at 1.65 million now remember initial claims Was the same essentially as it was in January 2023 but and um but continued claims in January 2023 was at 1.63 million today It's at 1.9 million okay so you have Another 300,000 people that are putting In continued claims compared to last Year right so the the the layoff rate as It's essentially the same maybe a little Bit higher but the number of people Having a harder time finding a new job Continues to to slowly go up and I mean You can see that here January it's Starting to to move up again if you were To go look at last January um it it it Essentially started I mean it was Already moving up going into January Kind of like how it was over here but Didn't find any type of local top until Until April so that's um continued Claims uh we also have continued claims Per state obviously not seasonally Adjusted so not that useful but you can Also look at the number of states where Like the percentage year-over-year Change of continued claims is going up Um if you want to buy a certain Percentage here we'll say Okay 30% you Can see that the number of states where The year-over-year change was 30% or

More reached a high at 27 States back in November it is now since dropped all the Way down to five and now it's back up to Eight uh per the most recent reports Number of states where the percentage Year-over-year change in initial claims Is greater than 30% um uh hit a high last year in July At 18 and it just hit a a pretty low Level of one uh in December and now it's All the way back up to 16 and this is What of course it looks like in the Grand scheme of things certainly some Areas in the past where it had some Spikes up but it didn't do anything uh It looks like in order to be squarely in Re Cession territory you would need to See this metric go up to above maybe 25 Or so like if half the country if half The country has you know uh if if half The number of states has a Year-over-year percentage change of Initial claims that are greater than 30% That has historically lined up with a Recession uh but we're just simply not There yet and there's no guarantee that We get there I mean you can see that Again in July 2023 it went all the way Up to 18 but then it just came right Back down Highers is another one that looks pretty Weak right so so some of the some of the Metrics look strong some of them look Weak new highers still looks relatively

Weak right I mean it did get a move up This past month but still likely in a Larger downtrend always possible it's Going to bottom out you know I mean it's Going to bottom out somewhere I don't Know where that's going to be and it's Possible that it already has but clearly The FED if you look at something like This there's no way to know if if it's Bottomed out or not and there's no way To know it because there's lags in Monetary policy we don't know the full Extent of it and until many years later And it's only obvious really in in Hindsight so again I know a lot of That's confusing because there's so much There's so much data but there's there's Actually a cool thing we can do we can Actually look at at sort of you know we Can normalize prior behavior and and Look to see you know is it recessionary Or is it not and we actually have it by Categories here interest rates Production and business national income And product and employment and in terms Of employment while some risks are Slightly elevated they're still Relatively low and even across the board The main risk that is elevated is just Yield curve risk right interest rate Risk and the problem of course is that The longer they take to go to to lose Monetary policy the more they risk this Risk over here spilling over into these

Other categories but again it's really Hard to know exactly when that's going To occur and it's you know impossible to You know to time that perfectly um and There are cases in the past where the FED has it achieved a soft landing and So I think that's always something you Should keep in the back of your mind 1967 was one the mid1 1990s was another if you were to go take A look closer at at some of the the risk Stuff say the unemployment rate risk It's at 0.005 right really really low it It was starting to spike in October but Now it's come right back down um the one With the highest risk is job openings Because job openings has continued to Fall that risk has been all over the Place right I mean it's gone up it's Gone down but until it really goes up And stays elevated um you know it's hard To hard to know exactly when it's you Know when it's going to hit um and then Maybe finally we could look at at Continued claims risk you know it's Popped up a little bit over over recent Months but even recently it's it's Fallen back in a little bit so Interesting way to view the markets um We could also go look at very quickly we Could go look at the S um I believe it Was the oh yeah the Su rule recession Indicator so if you look at the S rule Indicator uh it actually dropped back

Down so what this means is when it Crosses the gray line that is a a Recession signal we haven't crossed it Yet so that signal has not yet been Given and again I know people might be Frustrated by by certain things you know By you know whether you whether you want It to just go back down and have a soft Landing or whether you want there to be A a um a surge in this stuff just so the FED will finally pivot and and maybe the Smaller businesses will start to do well It's important to remember that the Business cycle takes years to play out Right you should not be looking at this Sort of stuff and saying all right this Has got to happen on on a really small Time frame when we know it can simply Take years for it to it to play out um So please keep that in mind and and if You we actually have the Som rule Recession indicator per state so we've Coded it up to have it per state and um Uh you can see like in Alabama it has Not triggered but I imagine I imagine it It has triggered in California yeah it Has triggered in California I imagine it Has triggered in the District of Columbia right it has um in Florida Probably not right it hasn't it's Getting closer but it has not yet Triggered um in Texas it probably hasn't We just saw the unemployment rate I Believe go down yeah so you can see that

It actually went down and New York I Don't think it has I could be wrong um It's in New York it is Getting I mean it's getting relatively close Right it's at 0 433 um so 0. five is is The threshold so in some states it's Getting closer um a lot closer than than Others and then you can also look at Simply the number of states where the Su Rule has triggered and um you can see That it has been recently going up right It it found a local top last year um or In in late 2022 of of of 13 it then went All the way back down to two for a lot Of 2023 and now it starting to go back Up right so it went from two 2 to 6 to 11 and then now it's at 18 so that means Now 18 states have triggered the S Rule Now the S rule was not designed at a State level in mind but if you did take Some leeway and and apply it to that Then you could see that 18 states have Now triggered the S rule we could also Go take a look at smooth recession Probabilities still relatively low um Only uh as of December 2023 the odds That we were in a recession are only 74% So relatively low odds that they will Back data recession to you know to the End of 2023 at this point given you know Given the smooth us recession Probability indicator we could also go Take a look at the Kansas City fed labor

Market conditions index continues to Slowly drop but still well above the Zero line um it's currently coming in at At 78 there's also the Kansas City fed Labor market conditions index um which I Think it's probably worthwhile to apply Some type of a of a moving average to This and you can see that it's basically Just sort of oscillating around zero so Not a whole lot of growth um but it also It clearly does not look like you know These draw Downs at this point so we've Covered a lot um you know as a reminder In terms of how does this affect you as An investor the one thing I will I will Continue to reiterate and I I've said Many many times over over the years is That you know the further you get into Tightening Cycles um the more you know The more those higher market cap stuff Outperforms the lower market cap stuff And the reason is because the balance Sheet of companies like apple and meta And and and and alphabet and Microsoft Right and and Nvidia the balance sheet Of those companies are really healthy And and a lot of investors can look at That and say all right you know these Companies they will survive whatever Comes next right they will survive it Because they're not going to go anywhere Even If the Fed does push us in into a Slowdown right the problem is that the Lower market cap stuff they're not

Getting that Lifeline right like think About all the small businesses that just Started their company a year ago they're Not necessarily they don't necessarily Have you know billions of dollars of Cash on hand to fall back on and so what Happened today right you have the S&P up You have the NASDAQ up because the mega Cap Tech stuff are doing really really Well right meta is up 20% today alone by By the way you know meta was was a Company back in late 2022 I I was very Vocal on ITC premium that regardless of E of if a recession ever does come I Said that $100 less than $100 is Extremely deep value on on something Like meta and now what's crazy is a mega Cap Tech stock is up essentially 5x Since then you know we talk about you Know Bitcoin and I also bought some Bitcoin back then but but Bitcoin is is Only up about 3x I mean you're talking About a mega cap tech company up 5x in In just over a year and and I again you Know the the receipts are there on ITC Premium where we talked about how even If there is an eventual slowdown meta Will likely not take out this low and What will more likely happen is it'll Just put in a a much higher low okay um So the issue of course for you know for For for lower Market market cap stuff is That the higher the the money just keeps Getting diverted into all these Mega

Caps because investors are more Confident that the mega caps can Actually survive right and you know Money wants to find a home it wants to Find yield somewhere and so it gets Diverted into the mega cap stuff the Problem is look at the Russell today Right it's down half a percent right It's down and why is that well because a Lot of the companies in the Russell they Don't have you know tens of billions of Dollars to fall back on and all this Means all the labor market report means Is that the FED is now further away from Cutting than they were a few weeks ago Now the market is thinking there's only A 21 a half% Chance is going to be a Rate cut in March so the companies that Are relying on looser monetary policy to Increase demand those companies now have To wait even longer to see that right They have to wait even longer longer to To get to the point where they can say All right great we have lower interest Rates therefore we're going to get more Demand um and and and and then their Stock price goes Up right that has been pushed out so That the issue for the smaller market Cap stuff is the further and further and Further that rate Cuts get pushed out Some of these companies just they say Enough is enough and they go bankrupt Right they lay people off and so that's

Where we are in the business cycle is That these a lot of these smaller Companies right they are going those are The ones going bankrupt laying people Off and a lot of the money is getting Diverted into the higher market cap Stuff that people are more confident Will survive long term that's at least My interpretation of it and and you can Really understand it even better by Looking at say like the valuation of the Russell against the NASDAQ right the Russell continues to bleed to the NASDAQ As We are continuing to go into looser And looser monetary policy do you see This or in as we're going further into Into tightening not loer monetary policy Do you see these months here right There's like you know about half a year Here where the Russell outperformed the NASDAQ that was after we got back into QE and loose monetary policy but the Further we go into Tighter and Tighter Monetary policy and by the way you don't Have to raise rates to go into tighter Monetary policy it could just be that You them there for a while right think About how many companies would really Like there to be lower interest rates I Mean even on the on the earnings call With Tesla I believe they were talking About how you know some of their demand Issues are just because of rates are so High and if rates could come back down

That would bring demand back but if You're the FED how do you lower rates With blowout job reports like we just Saw because if you do if you do lower Rates too soon then you run the risk of Inflation reaccelerating Just like it did in the 1970s where by The way it came down here to 3% and then It started to re accelerate okay the FED Doesn't want that we're at 3% right Headline inflation has been at 3% since June it hasn't it's been sticky it Hasn't made that move core inflation has Has um you know it it's been moving down But not as quickly as the FED would like And so the again the issue is that until We get back to loose to monetary Policy those lower market cap stuff are Not going to do as well as as the higher Market cap stuff now that doesn't mean They can't ever go up in value right if The higher market cap stuff goes up it Can lift the other stuff up but it just Means there's not as much money going Into those other other other places just Simply because investors are spooked if They can even survive the tightening Cycle and that's it goes back to these You know all these ideas that we Presented about higher market cap stuff Doing better and and lower risk stuff Doing better than higher risk stuff and The higher risk stuff will likely start To do better on the other side of rate

Cuts but at this point I don't think the Argument is whether we get a rate cut in March I think the argument is do we get Even get a rate cut in May the FED has Said many times they're probably only Going to cut I think in their Dot Plot In the SCP the summary economic the Summary of economic Projections they've said uh they're Likely only only going to cut three Times This year and the market is still Pricing in you know five rate Cuts they Were pricing in six now they're pricing In five but they there's a good chance That the market is still you know still Has too high of of expectations and if You go back to the last um um cutting Cycle you can see in 2019 in 2019 they Only cut three times right they cut in July September and October July September and October so you know maybe The FED Cuts in May but if they do then They maybe they cut in July so maybe They do May July and November or maybe They delay it until June and they do June September and December that could Be something that plays out so I think It you know I think it makes sense to be Open-minded about about that and um and To remember that you know as it relates To you know to sort of cryptocurrency And whatnot it wasn't until the FED Started to cut rates that Bitcoin showed

A lot of weakness right because remember Last cycle um just sort of remembering What happened it was around the time of Um if we just pull it Up it was around the time of rate cuts That Bitcoin that Bitcoin finally showed Weakness at this point we're still Pushing out rate Cuts right so I don't We don't know how long it's going to Take in order to in order to even get to Rate Cuts but it's probably not going to Be March and it might be may but we will Have to wait and see anyways if you guys Like the content make sure you subscribe Give the video a thumbs up and again Check out the sale on into the Cryptoverse premium at intothe crypt.of

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