Recession Concerns: The podcast discusses recent job data, highlighting a significant drop in job openings and the potential implications for a recession, with the labor market showing signs of weakness not seen since 2021.
Labor Market Shift: A critical threshold has been crossed where there are now more unemployed individuals than job openings, indicating a shift from a supply-constrained to a demand-constrained labor market.
ADP Employment Data: The ADP report showed a dramatic slowdown in labor market growth, with only 54,000 jobs added in August, significantly below expectations and previous months' figures.
Interest Rates and Market Perception: Despite narratives of rising interest rates, the podcast notes that Treasury yields have actually declined, suggesting a disconnect between market narratives and actual data.
Fed and Economic Expectations: The discussion emphasizes that growth and inflation expectations, rather than the supply of treasuries, are the primary drivers of interest rate movements, with current trends indicating a slowing economy.
Upcoming Non-Farm Payrolls: The upcoming non-farm payroll report is highlighted as a crucial indicator, with potential revisions being particularly important for assessing recession risks.
Market Analysis: The podcast suggests that the bond market provides more reliable economic insights than the stock market, with current bond yield trends pointing to economic concerns.
Transcript
Hello, fellow Rebel Capitals. Hope you guys are doing well. We've got new jobs data out and let's remember nonfarm payrolls tomorrow. That's going to be a biggie. But yesterday we had the Jolts numbers and today we had the ADP numbers and it was a swing and a miss, baby. It was a big whiff. And let's get into it right now. And then we're going to ask the question, is this kind of ringing the bells for recession? Is this another huge red flag? Or is the economy just running on all eight cylinders and this is just kind of a a hiccup? Well, let's dive into it. And of course, I'm on my own again today because Josh is busy swiping Tinder. I don't if he's swiping right or swiping left. I don't know how that really works. But anyway, let's do a screen share and get into it. There we go. First and foremost, let's go to let's go back to yesterday. And this was the jolts numbers. And this was the first kind of whiff that we got that this week's total job data may be, let's just say, disappointing. So, the last big jobs number non-farm we had last month, you guys remember that? It came out way under expectations and they had those huge revisions down. And that's when Trump basically came in said, "No, I I I don't like bad numbers. Nothing. I I want the the propaganda guy to get in there. Hurry, hurry, hurry. Let's fire this gal. Get her out." But regardless of what you think of that, the bottom line is now or for this next round, I don't think we have the new guy in yet. I don't know how that process works. So, it might be kind of the assistance from the old gal that was fired. But let's get in. But this week, the bottom line here is this week we've got tons and tons and tons of job data since, and this is the first big round or first big dump of data since we had kind of the blowup non-farm payroll of last month or the shocking non-farm payroll for the market. Now, for you rebel capitalists, you're like, "Yeah, it's kind of what I expected." All right, here we go. So, this is going back to yesterday. The Jolts numbers, job opening data falls to levels rarely seen since survea sickness. Key talking points. The job openings in labor turnover reported showed around 7.18 million listings in July. That's a reading rarely seen since the surveys sickness and I believe it was the worst since 2021. We're going to go into a Zero Hedge article here in just a moment that gets into some more detail. I just wanted to go straight to CNBC just to get kind of the highlights here. And we can see this chart. So, this is what they're referring to. 7.18. That is the worst. Yeah, I don't even think it's 2021. Yeah, I might have actually been a little too optimistic in the title of this video. I think we got to go back to 2020. Looks like. All right. Now, you can see that this number in and of itself isn't horrific when you see prior to the surveys sickness, but it's just what we've had or comparing it to what we've seen over the last five years. And then obviously this trend, this trend is going straight to the no bueno zone. Let's go over to Zero Hedge. Let me make sure the screen share is working. Here it is. Okay. Let's go over to Zero Hedge. And let me zoom in for you guys. There we go. Labor market crosses critical threshold. the first time since 2021, there are more unemployed than job openings. And this is going back to the Joltz number. But we're also going to check out today's ADP because that, if you didn't see, was a swing and a miss. All right. Well, moments ago, the BLS reported the jobs uh openings tumbled by another 176,000. So the consensus for the jolts number yesterday and remember this is job openings 7.38. So basically 7.4 and we got 7.18. Let's actually go over to the calendar. I always like doing this. We get a visual easier to see. So we're looking at 7.2. I guess they rounded 7.4. We got a 7.2. Factory orders were negative -2 by the way. And oh, just FYI, the Beige book, I took a look at that and it it really didn't say anything. It just said kind of it's slowing down and the slowdown that we saw during the last Beige Book, we're seeing it play out again in this beige book. Okay, back to the Zero Hedge article. This is a chart I think we just saw. Looks like this is getting into the nitty-gritty. We've got mining and lodging, huh? Or mining and lodging. Mining and logging. Lodging. I was like, that's kind of weird they put those two together. Jeez. All right. So, this is what we're looking at here. Job openings. Okay. And then we've got hires. Let's keep going. Oh, government jobs. Well, that's good that those are actually decreasing. So, in the context I'm reading from the article, in the context of the broader jobs report, it appears the after four years maybe that I think that's a typo. after four years of the US labor market dodging the bullet, luck may have run out because whereas in June the labor market was still supply constrained. Now what they're talking about this is from the vantage point of the employer. So meaning that there's more job openings than there are available applicants. That's where they're getting the supply constraint. when there was 342,000 more openings than jobs. Uh that's again I don't know if I'd say it that way. I think that's kind of a typo. Basically there was 342,000 more openings than potential job applicants. Let's say in July where we finally uh backed back to demand constrained. So now all of a sudden we go supply constraint. Now we're demand constraint meaning there's not enough jobs. Uh so the demand for workers has fallen. So that we've what they're saying is we've crossed that threshold where over here there was more demand for workers than there was supply of workers and now we've gone down and we've crossed that threshold to where there's less demand for workers than there is supply. with 55,000 fewer job openings than unemployed workers, the first negative print since April of 2021. That's a big deal. Very big deal. And again, it it's not it isn't necessarily about just a snapshot of the labor market as it is right now. I think that's misleading. And a lot of people do that. A lot of talking heads and people on social media and CNBC, they'll take a snapshot as to what the labor market or the economy looks like right now and then they'll just extrapolate that indefinitely into the future. It's like, whoa, whoa, whoa, whoa. Now, what are we doing here? No, we've got to look at the trend. Look at the trend here. And the trend is getting it. It might not be horrific right now, but the trend itself is going straight into the no bueno zone. So why why these talking heads do that? I I I just I don't know. It's like we're on this downward trend and once we get to the optimal level, we'll just stop and then just flatline. Like that doesn't happen. That doesn't happen. And for some reason all these quote unquote experts just talk and assume that it does or talk like it does and assume that it does. Okay. Okay. So, here we got quits hires. Yep. All right. So, now let's go over to I think you guys get it with uh the big takeaway here. The punch line is that we've crossed the threshold to where we're no longer supply constrained meaning supply of workers constraining meaning the uh demand for workers exceeds the supply. But now we have cross crossed that threshold where the demand for workers is lower than the supply. So it'll be really interesting to juxtapose this to tomorrow. I can't wait for that report to come out tomorrow and see what the not just the unemployment rate but with the household survey. How many jobs did we lose? is how many jobs do we gain relative to the labor force participation? And of course, the biggie is going to be the non-farm payrolls with the establishment survey. Okay, now let's go over to the ADP. So, that was yesterday, guys. You get the punchline there. Now we're looking at ADP, which I think even if Trump's guy hasn't come in yet, which I don't think he has. But, uh, moving forward, I'm personally going to put more emphasis on the ADP number than the non-farm payroll because I think obviously Trump's going to put in a yes man. Love Trump, hate him, whatever. It's not about the administration or whether he's right or wrong. It's just he's putting in someone that's highly highly highly incentivized to look at the numbers through rosecoled glasses, let's say. All right. So, that's why I'm obviously going to pay attention to the numbers and I think the market is still really really going to pay attention to those numbers and the market's going to move based on the non-farm payroll. But me personally, if I'm looking for a proxy as to what's happening with the overall labor market, I'm probably going to put a little bit more weight on the ADP numbers. Okay. Labor market growth slows dramatically in August with US adding just 54,000. So you say, George, okay, just 54,000. Give me some context. Let's go back to the calendar and we can see last month we were at 106,000 which wasn't great and the expectation was for us to see a decline down to 75,000 and we got 54 54 initial jobless claims today 237. So we saw an uptick of eh call it 8,000 and higher than expectations. Not a dramatic uptick but usually again we're talking about the trend here. Usually in my research or my research shows the initial claims kind of front runs if you will the uh non-farm payrolls. So once you see this trend or maybe trend like this with the initial claims getting worse or going up then usually you see that non-farm payroll follow which is what we saw last month and we'll have to see what we uh see tomorrow. I mean if we get a a and by the way the expectation tomorrow is for 75,000. So last month that horrific number 73,000 with the revisions down tomorrow they're expecting 75. Man, I'm You know what? I'm almost going to be more interested in the revisions tomorrow than I am the headline number because if we see history play out or if we see tomorrow play out like it has 95% of the time over the last two or three years, it's always just this blowout number at the beginning or a much better number at the beginning and then they revise it down. They revise it down. Revise it. I mean, they've done this like literally the last 24 months, this has happened like 22 months where they've revised the prior months down. So, they come out with a good headline number and then w hopefully the market doesn't ex or hopefully the market won't pay any attention to this other number that is more accurate. We kind of like sweep under the rug. But now I I I think especially since that last one with those huge revisions, I think the market might even be paying more attention to the revisions now than the actual headline number just a hypothesis. So let's get back to CBC talking about today's ADP. US private sector hiring, these are the key talking points, rose less than expected in August and significantly cooled from prior month. Private payrolls increased. Okay, we talked about that. Thursday's release adds to an already concerning picture for the labor market. US private sector hiring rose less than expected. Okay, we got that. They're just reiterating here. Here's a quote from Nella Richardson, ADP's chief economist. The year started with strong job growth, but that momentum has been whipsawed by uncertainty or just a slowing economy. I mean, you know, is it uncertainty or more certainty? Meaning that at the beginning of the year, it's like, oh, maybe the economy is going to be good, maybe it's going to be bad. There's uncertainty. But now it's like, okay, the economy is definitely slowing down, so maybe there's even more certainty than than there was. I guess it's all in the way you look at it. Labor market worries have pushed traders to build an already hefty bets the Federal Reserve rate cuts. Okay, yeah, we know that there's now a 97.4% chance. And remember just what a couple weeks ago this dropped down to like what 80 75 something like that because supposedly we had that blowout number with the what was it the PPI with inflation and that's not see like yeah yeah it's a higher than expected inflation number but at the end of the day it's all about the labor market and if you guys don't believe me just go back and look at a chart of the unemployment rate and the CPI the inflation rate the 1970s and I I mean, that's the inflationary decade, right? And so, people have this idea that the unemployment rate can go straight up and inflation can go straight up at the same time. That's not a thing. That that's that's not a thing. And I don't in in my view, people just haven't done the research. But if you do, you see that even in the 1970s, even in the 1970s when the unemployment rate spiked in an economic slowdown, you had disinflation, not deflation, but disinflation. So, I don't know why this decade would be any different or what we are going through now would be any different. You say, "Oh, George, we've done all this money printing." Now, actually, the M2 money supply grew more from 1970 to 1975 than it has from 2020 to 2025, or at least uh the end of the year 2024 is last time I checked. Okay, so getting back to these jobs numbers here, 54,000. Okay, so now I think what we want to do is go over what interest rates are doing. And that gives us a read and and I'm not talking about Fed funds. I think more importantly, we got to look at what the two-year and the three, excuse me, the two-year and the 10-year are doing. So, we look at the look at this. And by the way, this is another pet peeve of mine, and I've stated it many times on this channel, but I think it's worth restating. How often do, especially if you guys are on Twitter or you guys listen to other podcasts or, you know, talking heads, whatever, how often, even recently, have you heard, "Well, interest rates are going up in the United States." Well, interest rates are going up. Interest rates are going up. Well, interest rates are blowing out. Well, no one's buying treasuries. Investors are dumping treasuries. foreigners are dumping treasuries. Oh, the interest rates just keep going up. How many times have you heard that? I mean, it's like I hear it five, six, seven, eight, nine times a day when scrolling through Twitter and just like experts. Well, I mean, look, you've got the dollar crashing and you've got interest rates skyrocketing. You hear that? Adnauseium. I mean, over and over and over and over again. I think people hear it so often that they just assume it has to be true. So they don't even look at the facts. But when you look at an actual chart, heaven forbid we look at the data, you see that look, the 10-year Treasury right now as we speak is trading at 4.16. Keep in mind, Fed funds is 4.3 and look at what it's done this year to date. Year to date, the 10-year Treasury at the beginning of 2025 started at 4.6. Today, like I said, 4.16. So, call it a decline of 44 basis points this year. Just this year. And that's the 10-year. The two-year is down way more than that. Way more. But even with the 10-year Treasury yield going down by 44 basis points, the narrative is still somehow interest rates keep going up. Investors are dumping treasuries, foreigners are dumping tre. It just it's nonsense. It just goes back to this crazy world that we live in where reality of reality that doesn't matter. facts, data, who cares? The only thing that matters is just narrative. And if you can spin a good narrative and just say it enough times with enough confidence and enough authority, people will just believe they'll believe anything for heaven's sakes. Unbelievable. But as you would imagine, I don't want to give get off on a tangent there. since we've got the jobs data yesterday and then today 10-year Treasure just tanks. And another pet peeve of mine, I'm not going to go off on too much of a tangent, but how many times do you hear an argument for basically the supply of treasuries impacting interest rates? So, oh my gosh, those boy oh boy, we're running these massive deficits, these trade deficits or these uh budget deficits, excuse me. We'reing these massive uh budget deficits and it's 6, seven, 8% of GDP. The interest payments, oh my gosh, they're over a trillion dollars. And why does that matter? Because that's more supply of treasuries. Supply of treasuries. Supply of treasuries, right? And then we've got 37 trillion in debt and we've got 200 trillion in offbalance or off uh uh balance sheet debt. We've got all these unfunded liabilities. So the the the treasuries is going to have to issue more and more and more and more and more and more and more and more debt and the supply of treasuries is going to go through the roof and demand's going to be down here. And you know what that means? Then interest rates are going to go up and then the Fed's going to have to come in and monetize the debt. They're going to print money and then the dollar's going to crash and Bitcoin's going to go to $45 trillion. This is the argu this is the argument that you hear and that argument if you take it back step by step by step by step the premise the starting point for that argument is the supply of treasuries or the supply expectations of treasuries US debt set another way impacts the yields and if you actually just look at a chart if you look at US debt. If you look at deficits, I I I can see no correlation whatsoever. In fact, I see an opposite correlation. Meaning, the higher the debt goes, the lower the interest rates. So, what does move interest rates? You guys say it with me. You've heard it say, you've heard me say this, so I'm blue in the face. Growth and inflation expectations. So did look at what's happened over um in the last since uh January 2025. So we the 10-year Treasury has gone down by 40 call it 44 45 basis points. Now has the deficit somehow decreased? Has the debt decreased? Has the supply of treasuries decreased? Any of these things? No. It's gone straight up. But yet yields have gone down. Why? Because it's not about supply. It's about growth and inflation expectations. And I don't want to get into it on this video, but the me the the mechanism, the equ the equilibrating mechanism is the banks, commercial banks in and outside, especially outside of the United States. That's why you see just such a tight correlation with nominal growth growth and inflation expectations and the 10-year Treasury. And if you say, "Oh, well, it's because BENT isn't issuing anything long into the curve." Okay, great. Then why is the 2-year Treasury trading sub 3.6? Sub 3.6. And look at this. Let's do a year to date on this bad boy. We start off at 4.28 and now we are at 3.6. So what is that? 68 basis points or yet somehow interest rates are going up. Look, by the way, this what this tell and I'm I'm look, I hate to say this, but I I can't sit here and lie to you guys. I've got to call a spade a spade. And hopefully you guys can appreciate that because I if I wanted to get the most views possible, if I wanted to get the most subscribers possible, I would sit there and tell you guys what you want to hear. And most of you guys, what you want to hear is that narrative. You want to hear that interest rates are going skyhigh, that interest rates are going higher and higher and higher and higher because we have this deluge of supply of treasuries and that the the bond vigilantes are going to come in and they're going to restrict the government spending. Finally, finally, the bond vigilantes are here and they're going to drive up interest rates. That means the Fed's going to print money. Mo most of you guys are gold bugs or Bitcoin bugs, whatever. You want to hear this. So, it would behoove me to tell you what you want to hear, but I'm not going to do that. I'm never ever ever ever ever going to do that. And I know it pisses a lot of you off. Sorry. Sorry. That's hopefully you can even if you disagree with me, hopefully you can appreciate my honesty and you can appreciate me just calling it like it is or at least calling it like I see it, right? And I think I've got a lot of data and a lot of charts like this one to back up my opinion. But anyway, getting back to what we're discussing right here. You got to think about this. Right now, Fed funds is 4.3. So reverse repo, which by the way is how the Fed controls interest rates. Remember that? I think people forget. Remember, the Fed sets a uh a floor on interest rates supposedly in theory by reverse repo because what they do is they sit there and say, "Okay, Fed funds at 4.3. Reverse repo is at let's say 4.2." And so why would any entity out there lend to buy a 2-year Treasury when they could just lend to the Fed, that's what re basically reverse repo is, and get 4.2%. So that's how they try to set a floor. But look at this. It's trading at 3.6. Think about that. 3.6. So these people that are buying a 2-year Treasury, right? They have the opportunity to go ahead and instead of getting a 3.6% interest rate get a 4.2 or 4.3 at the Fed and they're choosing not to. Why? Why? Why do you think that is? because these primary dealers can go in and buy the 2-year Treasury or, you know, even more so the the one month or threemonth T bill and they can they they think the economy is getting so bad that they see an opportunity in the future to keep this on their balance sheet to where they can rehypothecate it. They can lend it out and make more than the haircut they're taking by buying it in the first place relative to what they could get with reverse repo. So this is why I really really like to follow interest rates because it tells you exactly what the the real players, the sophisticated players are doing and thinking these global primary dealer banks and how they see the economy. Stock market just I mean almost you almost want to ignore it but I think the bond market gives us a lot of great information. All right, guys. Enjoy the rest of your afternoon. As always, make sure you are standing up for freedom, liberty, free market capitalism. And oh, by the way, recession alert. We'll have to see tomorrow. We'll have to see tomorrow. If the non-farm payroll comes out just horrible, and they do some big-time revisions, especially if they get those revisions negative, then my probability for recession goes straight through the roof. Because in all the research I've done, the the main indicator timing indicator that I can find for an a recession where the NBER would actually come out and admit to a recession is the labor market and the number one component for the labor market on farm payrolls. So stay tuned. We'll see what happens tomorrow.
RECESSION ALERT: Worst Jobs Data Since 2021
Summary
Transcript
Hello, fellow Rebel Capitals. Hope you guys are doing well. We've got new jobs data out and let's remember nonfarm payrolls tomorrow. That's going to be a biggie. But yesterday we had the Jolts numbers and today we had the ADP numbers and it was a swing and a miss, baby. It was a big whiff. And let's get into it right now. And then we're going to ask the question, is this kind of ringing the bells for recession? Is this another huge red flag? Or is the economy just running on all eight cylinders and this is just kind of a a hiccup? Well, let's dive into it. And of course, I'm on my own again today because Josh is busy swiping Tinder. I don't if he's swiping right or swiping left. I don't know how that really works. But anyway, let's do a screen share and get into it. There we go. First and foremost, let's go to let's go back to yesterday. And this was the jolts numbers. And this was the first kind of whiff that we got that this week's total job data may be, let's just say, disappointing. So, the last big jobs number non-farm we had last month, you guys remember that? It came out way under expectations and they had those huge revisions down. And that's when Trump basically came in said, "No, I I I don't like bad numbers. Nothing. I I want the the propaganda guy to get in there. Hurry, hurry, hurry. Let's fire this gal. Get her out." But regardless of what you think of that, the bottom line is now or for this next round, I don't think we have the new guy in yet. I don't know how that process works. So, it might be kind of the assistance from the old gal that was fired. But let's get in. But this week, the bottom line here is this week we've got tons and tons and tons of job data since, and this is the first big round or first big dump of data since we had kind of the blowup non-farm payroll of last month or the shocking non-farm payroll for the market. Now, for you rebel capitalists, you're like, "Yeah, it's kind of what I expected." All right, here we go. So, this is going back to yesterday. The Jolts numbers, job opening data falls to levels rarely seen since survea sickness. Key talking points. The job openings in labor turnover reported showed around 7.18 million listings in July. That's a reading rarely seen since the surveys sickness and I believe it was the worst since 2021. We're going to go into a Zero Hedge article here in just a moment that gets into some more detail. I just wanted to go straight to CNBC just to get kind of the highlights here. And we can see this chart. So, this is what they're referring to. 7.18. That is the worst. Yeah, I don't even think it's 2021. Yeah, I might have actually been a little too optimistic in the title of this video. I think we got to go back to 2020. Looks like. All right. Now, you can see that this number in and of itself isn't horrific when you see prior to the surveys sickness, but it's just what we've had or comparing it to what we've seen over the last five years. And then obviously this trend, this trend is going straight to the no bueno zone. Let's go over to Zero Hedge. Let me make sure the screen share is working. Here it is. Okay. Let's go over to Zero Hedge. And let me zoom in for you guys. There we go. Labor market crosses critical threshold. the first time since 2021, there are more unemployed than job openings. And this is going back to the Joltz number. But we're also going to check out today's ADP because that, if you didn't see, was a swing and a miss. All right. Well, moments ago, the BLS reported the jobs uh openings tumbled by another 176,000. So the consensus for the jolts number yesterday and remember this is job openings 7.38. So basically 7.4 and we got 7.18. Let's actually go over to the calendar. I always like doing this. We get a visual easier to see. So we're looking at 7.2. I guess they rounded 7.4. We got a 7.2. Factory orders were negative -2 by the way. And oh, just FYI, the Beige book, I took a look at that and it it really didn't say anything. It just said kind of it's slowing down and the slowdown that we saw during the last Beige Book, we're seeing it play out again in this beige book. Okay, back to the Zero Hedge article. This is a chart I think we just saw. Looks like this is getting into the nitty-gritty. We've got mining and lodging, huh? Or mining and lodging. Mining and logging. Lodging. I was like, that's kind of weird they put those two together. Jeez. All right. So, this is what we're looking at here. Job openings. Okay. And then we've got hires. Let's keep going. Oh, government jobs. Well, that's good that those are actually decreasing. So, in the context I'm reading from the article, in the context of the broader jobs report, it appears the after four years maybe that I think that's a typo. after four years of the US labor market dodging the bullet, luck may have run out because whereas in June the labor market was still supply constrained. Now what they're talking about this is from the vantage point of the employer. So meaning that there's more job openings than there are available applicants. That's where they're getting the supply constraint. when there was 342,000 more openings than jobs. Uh that's again I don't know if I'd say it that way. I think that's kind of a typo. Basically there was 342,000 more openings than potential job applicants. Let's say in July where we finally uh backed back to demand constrained. So now all of a sudden we go supply constraint. Now we're demand constraint meaning there's not enough jobs. Uh so the demand for workers has fallen. So that we've what they're saying is we've crossed that threshold where over here there was more demand for workers than there was supply of workers and now we've gone down and we've crossed that threshold to where there's less demand for workers than there is supply. with 55,000 fewer job openings than unemployed workers, the first negative print since April of 2021. That's a big deal. Very big deal. And again, it it's not it isn't necessarily about just a snapshot of the labor market as it is right now. I think that's misleading. And a lot of people do that. A lot of talking heads and people on social media and CNBC, they'll take a snapshot as to what the labor market or the economy looks like right now and then they'll just extrapolate that indefinitely into the future. It's like, whoa, whoa, whoa, whoa. Now, what are we doing here? No, we've got to look at the trend. Look at the trend here. And the trend is getting it. It might not be horrific right now, but the trend itself is going straight into the no bueno zone. So why why these talking heads do that? I I I just I don't know. It's like we're on this downward trend and once we get to the optimal level, we'll just stop and then just flatline. Like that doesn't happen. That doesn't happen. And for some reason all these quote unquote experts just talk and assume that it does or talk like it does and assume that it does. Okay. Okay. So, here we got quits hires. Yep. All right. So, now let's go over to I think you guys get it with uh the big takeaway here. The punch line is that we've crossed the threshold to where we're no longer supply constrained meaning supply of workers constraining meaning the uh demand for workers exceeds the supply. But now we have cross crossed that threshold where the demand for workers is lower than the supply. So it'll be really interesting to juxtapose this to tomorrow. I can't wait for that report to come out tomorrow and see what the not just the unemployment rate but with the household survey. How many jobs did we lose? is how many jobs do we gain relative to the labor force participation? And of course, the biggie is going to be the non-farm payrolls with the establishment survey. Okay, now let's go over to the ADP. So, that was yesterday, guys. You get the punchline there. Now we're looking at ADP, which I think even if Trump's guy hasn't come in yet, which I don't think he has. But, uh, moving forward, I'm personally going to put more emphasis on the ADP number than the non-farm payroll because I think obviously Trump's going to put in a yes man. Love Trump, hate him, whatever. It's not about the administration or whether he's right or wrong. It's just he's putting in someone that's highly highly highly incentivized to look at the numbers through rosecoled glasses, let's say. All right. So, that's why I'm obviously going to pay attention to the numbers and I think the market is still really really going to pay attention to those numbers and the market's going to move based on the non-farm payroll. But me personally, if I'm looking for a proxy as to what's happening with the overall labor market, I'm probably going to put a little bit more weight on the ADP numbers. Okay. Labor market growth slows dramatically in August with US adding just 54,000. So you say, George, okay, just 54,000. Give me some context. Let's go back to the calendar and we can see last month we were at 106,000 which wasn't great and the expectation was for us to see a decline down to 75,000 and we got 54 54 initial jobless claims today 237. So we saw an uptick of eh call it 8,000 and higher than expectations. Not a dramatic uptick but usually again we're talking about the trend here. Usually in my research or my research shows the initial claims kind of front runs if you will the uh non-farm payrolls. So once you see this trend or maybe trend like this with the initial claims getting worse or going up then usually you see that non-farm payroll follow which is what we saw last month and we'll have to see what we uh see tomorrow. I mean if we get a a and by the way the expectation tomorrow is for 75,000. So last month that horrific number 73,000 with the revisions down tomorrow they're expecting 75. Man, I'm You know what? I'm almost going to be more interested in the revisions tomorrow than I am the headline number because if we see history play out or if we see tomorrow play out like it has 95% of the time over the last two or three years, it's always just this blowout number at the beginning or a much better number at the beginning and then they revise it down. They revise it down. Revise it. I mean, they've done this like literally the last 24 months, this has happened like 22 months where they've revised the prior months down. So, they come out with a good headline number and then w hopefully the market doesn't ex or hopefully the market won't pay any attention to this other number that is more accurate. We kind of like sweep under the rug. But now I I I think especially since that last one with those huge revisions, I think the market might even be paying more attention to the revisions now than the actual headline number just a hypothesis. So let's get back to CBC talking about today's ADP. US private sector hiring, these are the key talking points, rose less than expected in August and significantly cooled from prior month. Private payrolls increased. Okay, we talked about that. Thursday's release adds to an already concerning picture for the labor market. US private sector hiring rose less than expected. Okay, we got that. They're just reiterating here. Here's a quote from Nella Richardson, ADP's chief economist. The year started with strong job growth, but that momentum has been whipsawed by uncertainty or just a slowing economy. I mean, you know, is it uncertainty or more certainty? Meaning that at the beginning of the year, it's like, oh, maybe the economy is going to be good, maybe it's going to be bad. There's uncertainty. But now it's like, okay, the economy is definitely slowing down, so maybe there's even more certainty than than there was. I guess it's all in the way you look at it. Labor market worries have pushed traders to build an already hefty bets the Federal Reserve rate cuts. Okay, yeah, we know that there's now a 97.4% chance. And remember just what a couple weeks ago this dropped down to like what 80 75 something like that because supposedly we had that blowout number with the what was it the PPI with inflation and that's not see like yeah yeah it's a higher than expected inflation number but at the end of the day it's all about the labor market and if you guys don't believe me just go back and look at a chart of the unemployment rate and the CPI the inflation rate the 1970s and I I mean, that's the inflationary decade, right? And so, people have this idea that the unemployment rate can go straight up and inflation can go straight up at the same time. That's not a thing. That that's that's not a thing. And I don't in in my view, people just haven't done the research. But if you do, you see that even in the 1970s, even in the 1970s when the unemployment rate spiked in an economic slowdown, you had disinflation, not deflation, but disinflation. So, I don't know why this decade would be any different or what we are going through now would be any different. You say, "Oh, George, we've done all this money printing." Now, actually, the M2 money supply grew more from 1970 to 1975 than it has from 2020 to 2025, or at least uh the end of the year 2024 is last time I checked. Okay, so getting back to these jobs numbers here, 54,000. Okay, so now I think what we want to do is go over what interest rates are doing. And that gives us a read and and I'm not talking about Fed funds. I think more importantly, we got to look at what the two-year and the three, excuse me, the two-year and the 10-year are doing. So, we look at the look at this. And by the way, this is another pet peeve of mine, and I've stated it many times on this channel, but I think it's worth restating. How often do, especially if you guys are on Twitter or you guys listen to other podcasts or, you know, talking heads, whatever, how often, even recently, have you heard, "Well, interest rates are going up in the United States." Well, interest rates are going up. Interest rates are going up. Well, interest rates are blowing out. Well, no one's buying treasuries. Investors are dumping treasuries. foreigners are dumping treasuries. Oh, the interest rates just keep going up. How many times have you heard that? I mean, it's like I hear it five, six, seven, eight, nine times a day when scrolling through Twitter and just like experts. Well, I mean, look, you've got the dollar crashing and you've got interest rates skyrocketing. You hear that? Adnauseium. I mean, over and over and over and over again. I think people hear it so often that they just assume it has to be true. So they don't even look at the facts. But when you look at an actual chart, heaven forbid we look at the data, you see that look, the 10-year Treasury right now as we speak is trading at 4.16. Keep in mind, Fed funds is 4.3 and look at what it's done this year to date. Year to date, the 10-year Treasury at the beginning of 2025 started at 4.6. Today, like I said, 4.16. So, call it a decline of 44 basis points this year. Just this year. And that's the 10-year. The two-year is down way more than that. Way more. But even with the 10-year Treasury yield going down by 44 basis points, the narrative is still somehow interest rates keep going up. Investors are dumping treasuries, foreigners are dumping tre. It just it's nonsense. It just goes back to this crazy world that we live in where reality of reality that doesn't matter. facts, data, who cares? The only thing that matters is just narrative. And if you can spin a good narrative and just say it enough times with enough confidence and enough authority, people will just believe they'll believe anything for heaven's sakes. Unbelievable. But as you would imagine, I don't want to give get off on a tangent there. since we've got the jobs data yesterday and then today 10-year Treasure just tanks. And another pet peeve of mine, I'm not going to go off on too much of a tangent, but how many times do you hear an argument for basically the supply of treasuries impacting interest rates? So, oh my gosh, those boy oh boy, we're running these massive deficits, these trade deficits or these uh budget deficits, excuse me. We'reing these massive uh budget deficits and it's 6, seven, 8% of GDP. The interest payments, oh my gosh, they're over a trillion dollars. And why does that matter? Because that's more supply of treasuries. Supply of treasuries. Supply of treasuries, right? And then we've got 37 trillion in debt and we've got 200 trillion in offbalance or off uh uh balance sheet debt. We've got all these unfunded liabilities. So the the the treasuries is going to have to issue more and more and more and more and more and more and more and more debt and the supply of treasuries is going to go through the roof and demand's going to be down here. And you know what that means? Then interest rates are going to go up and then the Fed's going to have to come in and monetize the debt. They're going to print money and then the dollar's going to crash and Bitcoin's going to go to $45 trillion. This is the argu this is the argument that you hear and that argument if you take it back step by step by step by step the premise the starting point for that argument is the supply of treasuries or the supply expectations of treasuries US debt set another way impacts the yields and if you actually just look at a chart if you look at US debt. If you look at deficits, I I I can see no correlation whatsoever. In fact, I see an opposite correlation. Meaning, the higher the debt goes, the lower the interest rates. So, what does move interest rates? You guys say it with me. You've heard it say, you've heard me say this, so I'm blue in the face. Growth and inflation expectations. So did look at what's happened over um in the last since uh January 2025. So we the 10-year Treasury has gone down by 40 call it 44 45 basis points. Now has the deficit somehow decreased? Has the debt decreased? Has the supply of treasuries decreased? Any of these things? No. It's gone straight up. But yet yields have gone down. Why? Because it's not about supply. It's about growth and inflation expectations. And I don't want to get into it on this video, but the me the the mechanism, the equ the equilibrating mechanism is the banks, commercial banks in and outside, especially outside of the United States. That's why you see just such a tight correlation with nominal growth growth and inflation expectations and the 10-year Treasury. And if you say, "Oh, well, it's because BENT isn't issuing anything long into the curve." Okay, great. Then why is the 2-year Treasury trading sub 3.6? Sub 3.6. And look at this. Let's do a year to date on this bad boy. We start off at 4.28 and now we are at 3.6. So what is that? 68 basis points or yet somehow interest rates are going up. Look, by the way, this what this tell and I'm I'm look, I hate to say this, but I I can't sit here and lie to you guys. I've got to call a spade a spade. And hopefully you guys can appreciate that because I if I wanted to get the most views possible, if I wanted to get the most subscribers possible, I would sit there and tell you guys what you want to hear. And most of you guys, what you want to hear is that narrative. You want to hear that interest rates are going skyhigh, that interest rates are going higher and higher and higher and higher because we have this deluge of supply of treasuries and that the the bond vigilantes are going to come in and they're going to restrict the government spending. Finally, finally, the bond vigilantes are here and they're going to drive up interest rates. That means the Fed's going to print money. Mo most of you guys are gold bugs or Bitcoin bugs, whatever. You want to hear this. So, it would behoove me to tell you what you want to hear, but I'm not going to do that. I'm never ever ever ever ever going to do that. And I know it pisses a lot of you off. Sorry. Sorry. That's hopefully you can even if you disagree with me, hopefully you can appreciate my honesty and you can appreciate me just calling it like it is or at least calling it like I see it, right? And I think I've got a lot of data and a lot of charts like this one to back up my opinion. But anyway, getting back to what we're discussing right here. You got to think about this. Right now, Fed funds is 4.3. So reverse repo, which by the way is how the Fed controls interest rates. Remember that? I think people forget. Remember, the Fed sets a uh a floor on interest rates supposedly in theory by reverse repo because what they do is they sit there and say, "Okay, Fed funds at 4.3. Reverse repo is at let's say 4.2." And so why would any entity out there lend to buy a 2-year Treasury when they could just lend to the Fed, that's what re basically reverse repo is, and get 4.2%. So that's how they try to set a floor. But look at this. It's trading at 3.6. Think about that. 3.6. So these people that are buying a 2-year Treasury, right? They have the opportunity to go ahead and instead of getting a 3.6% interest rate get a 4.2 or 4.3 at the Fed and they're choosing not to. Why? Why? Why do you think that is? because these primary dealers can go in and buy the 2-year Treasury or, you know, even more so the the one month or threemonth T bill and they can they they think the economy is getting so bad that they see an opportunity in the future to keep this on their balance sheet to where they can rehypothecate it. They can lend it out and make more than the haircut they're taking by buying it in the first place relative to what they could get with reverse repo. So this is why I really really like to follow interest rates because it tells you exactly what the the real players, the sophisticated players are doing and thinking these global primary dealer banks and how they see the economy. Stock market just I mean almost you almost want to ignore it but I think the bond market gives us a lot of great information. All right, guys. Enjoy the rest of your afternoon. As always, make sure you are standing up for freedom, liberty, free market capitalism. And oh, by the way, recession alert. We'll have to see tomorrow. We'll have to see tomorrow. If the non-farm payroll comes out just horrible, and they do some big-time revisions, especially if they get those revisions negative, then my probability for recession goes straight through the roof. Because in all the research I've done, the the main indicator timing indicator that I can find for an a recession where the NBER would actually come out and admit to a recession is the labor market and the number one component for the labor market on farm payrolls. So stay tuned. We'll see what happens tomorrow.