00:00Hey everyone, it's Spencer Akimian and welcome back to Friday's edition of What's Moving Your Money.
00:06On today's episode, we are obviously going to be covering today's awful job report,
00:12what lies ahead next week as the Federal Reserve begins to cut interest rates.
00:17We are also going to be talking about the market reaction to all of this.
00:21And finally, we're going to do a preview of Q3 earnings.
00:25They are only 30 days away, believe it or not.
00:28So sit back tight and I hope you guys enjoy.
00:36So today's job report came out for the month of August and it showed that the United States only added about 25,000 jobs against estimates of 75,000 jobs.
00:47Now on top of that, last two months, jobs reports were revised down another 20,000 jobs on top of it already being negative.
00:55So July of 2020 was actually the worst jobs report that we've had in the United States since the pandemic.
01:03Think about that.
01:04July of 2025 was as bad of a job report as we have had in five years as a country.
01:10Now one thing that I think is very important here, and we highlighted it on yesterday's episode,
01:16was that the unemployment rate is beginning to rise.
01:19We are now at 4.3%, which was above the estimate of 4.2%, which was above last month's rate of 4.1%.
01:27We are beginning to see the unemployment rate rise.
01:30As job listings get taken off the table and as more people become unemployed, that unemployment rate will continue to rise.
01:38People that leave the workforce right now do not have any way to get back in.
01:44New college entrance graduates do not have a way to get back into the labor force or to even get in at all.
01:52And that is a big problem because that is how the unemployment rate rises.
01:57It's not just from layoffs.
01:58It's also from people that enter looking for a job and can't find one.
02:03And they are doomed over time.
02:05And these things take quite a while to fix.
02:08So we are likely going to be in a very weak job market and therefore quite weak economy for the foreseeable future.
02:17Now, let's get to what the Fed is going to do as it regards to all of this.
02:22The Federal Reserve has their meeting next week and they will be cutting interest rates.
02:27It depends if it's 25 or if it's 50 basis points.
02:30But regardless, they will be cutting interest rates.
02:33One thing that I ought to stress here on this channel,
02:38if you follow me on TikTok, if you follow me on Instagram, if you follow me on Twitter,
02:42you see I talk about this like a broken record all the time.
02:45Fed rate cuts will not do that much here to fix it.
02:50This is not a problem of access to credit.
02:53This is not a problem of credit being too expensive.
02:57This is a problem of companies are so uncertain with the economic environment
03:02and companies' profit margins are being so substantially hurt by tariffs
03:08that they are not hiring new workers.
03:11This has nothing to do with monetary policy.
03:15And when the problem does not start with monetary policy,
03:18the problem cannot be fixed with monetary policy.
03:22A giant mistake that we make in this country is that we think the Federal Reserve can fix everything.
03:29The Federal Reserve can fix things when it is a monetary problem.
03:34The Federal Reserve can fix things if they are willing to massively expand their balance sheet.
03:39The Federal Reserve can fix things when inflation is below target
03:44and they can pump money into the economy to push it back to target.
03:49That is when the Federal Reserve can fix things.
03:51The Federal Reserve can't fix the fact that businesses don't want to hire.
03:56The Federal Reserve can't fix the fact that people don't want to travel internationally into the United States.
04:02The Federal Reserve cannot fix the fact that people are afraid of getting laid off
04:10and they are therefore not spending their money.
04:12That is not going to get fixed with a rate cut.
04:15So yes, we will be cutting rates, but how much will it actually help the economy?
04:19I doubt it will impact the economy in any meaningful way.
04:24And therefore, we need other solutions to these problems.
04:27The most obvious solution is to roll back these tariffs.
04:30Of course, if we were to roll back these tariffs,
04:33yes, we will have lost a lot of credibility as a country and as a trading partner.
04:38But these problems will slowly begin to reverse.
04:41Will we do that?
04:42Of course we won't.
04:43So we're going to have to think about other ways to go about this.
04:46Now, I want to talk about the market's reaction to today's jobs report
04:51because it was classic recession trade.
04:54Stocks were down.
04:56Treasuries rallied.
04:57Gold rallied.
04:58Bitcoin was down.
04:59Commodities like oil was down, right?
05:01Any risk asset relating to the growth of the economy got hammered today.
05:07As the labor market deteriorates, consumer spending deteriorates.
05:11And as consumer spending deteriorates, the next logical step is for profits to deteriorate,
05:18which means asset prices in theory go down, which is why you saw risk assets,
05:23the Nasdaq, Bitcoin, oil stocks, you saw them getting hit hard this morning
05:29because traders are beginning to price in the fact that we may be in an actual recession already.
05:35As I have been saying for months, and I was getting laughed at online for months,
05:39but it looks like it's here and it looks like it's consensus at this point.
05:43Now, on the other hand of that trade, you had treasuries and gold rallying.
05:47This is why I always stress diversification, uncorrelated diversification.
05:53Own assets that do well, not just when the economy does great, but also when the economy does bad.
05:59That is how you become a good investor.
06:01By owning all the different types of assets, stocks, bonds, gold, crypto, oil, you name it.
06:08You've got to own all of it if you want to have a properly diversified portfolio that does well in all weathers.
06:15One thing that is causing this severe rally in gold is it's twofolded actually.
06:22One is all this economic uncertainty, the traditional way.
06:25Two is the fact that we are cutting the front end of the yield curve so aggressively in the coming few weeks and months.
06:33Gold rallies because gold has an opportunity cost.
06:36And when you can earn less interest on your money in a bank, then why not own a little bit more gold?
06:41So that is one of the reasons why we are seeing gold rally.
06:44And you will see funds when they put out their 13 Fs.
06:47You will see increased allocations to gold.
06:50Believe me, this always happens.
06:52It is the most cyclical and repetitive thing in markets.
06:56People get late to these trades and then they pile in once they realize, oh God, we got to get exposure.
07:02Now to end today's episode and this week's podcast, let's just briefly talk about Q3 earnings, which are only 30 days away at this point.
07:10I'm not sure how Q3 earnings are going to be, but what I am sure is that Q4 guidance, if it is given, is not going to be that nice.
07:21It is not going to be so good.
07:24You already see it with companies like Lululemon, like Walmart, like UPS, like FedEx, like any of the bellwethers, like John Deere.
07:33Every company that is guiding for the future is saying it's getting ugly for them.
07:39The only companies that are reporting better guidance and expected are the AI companies.
07:45And we've done an episode already and I'm going to do another one next week about how we are in this K-shaped economy.
07:51We have the AI tech leaders and they're doing great.
07:54And then we have everyone else who's struggling and hanging on by a string.
07:58For today's episode, that's going to wrap it up.
08:00And I want you guys to comment what your thoughts are.
08:03And I look forward to seeing you guys next week.
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