TRANSCRIPT
hey everybody it’s Jeff and Ron here
once again with the sense of things
welcome to the show we are so excited to
finish off this year or this summer
season we’re coming into Labor Day
weekend so we’re going to talk a little
bit about a couple things that Ron has
one called the sausage indicator which I
have no idea where he’s going with that
one but we’ll just go with it and in
addition to that he’s going to talk a
little bit about some data from UBS that
is somewhat
fluing and I’m going to do a segment on
economics going to the fall some
economic indicators that we want to be
paying attention to leading up to the
fed’s decision on interest rates this
month or this upcoming month so stay
with us we’ll be right back with you
[Music]
[Applause]
[Music]
hey everybody welcome to the show Ron
how you doing bud good morning Jeff yes
going in the Labor Day weekend I can’t
believe it Sunday is September last four
months of the year and it’s not like the
last four months of the year is going to
be nice and calm and not much going on
but I think we could say that going in
the last three or four months of the
year pretty much usual but this adding
to a political season and fed decisions
and Ian there’s just so much crap coming
at us the next few months it’s it’s it’s
gonna be anything but calm and uh
reassuring is I guess the best and I’ve
always said and I said this before and
then I wasn’t sure that even when Biden
was still in it as long as it stays
within three to four percentage points
we got major volatility yeah then he
dropped down Trump numbers came up
Camala came in and I gotta tell you you
got to be impressed she’s actually ahead
in just over 50% of the polls and now
that margin is back down to three to
four percent and I think that volatility
because of the uncertainty is just going
to throw our markets I don’t want to say
into chaos I would never say that but
certainly gonna throw it around like a
ragd doll in the next 60 days oh it’s
gonna be volatility Central and I just
think it’s going to be an interesting
season because you I I love how the the
media just fawns all over and I’m like
What’s the POS what do you have what’s
your positions what are you going run on
I I I just don’t get it so we’ll see I
think it’s just gonna be it’s going to
be craziness we’ve got a presidential
debate winging in here right before the
bed decision it’s not gonna be debate
it’s gonna be a shouting match good are
we GNA learn anything no probably not
once again it’s all about you know I I
remember when there used to be like
three to four presidential debates and
now it’s down till we just want to have
one that’s it I just need some sound
negotiation what do you negotiate
you show up your ask questions go the
thing with the mic no mic audience no
audience where it’s going to be what
network it’s on it’s ridiculous but
anyway it used to be you’d have what
four or five different networks do it so
you got each of their little takes on it
or they would do those thematic ones
where okay this one we’re going to focus
on foreign policy and what we’re going
to do this one we’re going to focus on
the economy yeah and all of a sudden
then this last two it’s been we’re just
going to have one or we’re going to do a
time a town hall or whatever you know
what just do more than one I want to see
these different candidates and how they
can react and how they how they’re going
to handle things because they’re going
to be the people that we’re gonna have
to deal with for the next four years
other than Biden completely shot himself
in the foot but other than a catastrophe
like that in a debate you’re not going
to learn anything and typically it’s not
going to sway any independent people but
you know what we’ll save another podcast
for that absolutely absolutely so you’ve
got a po culture reference I don’t want
to call it pop culture I saw this it was
funny so other than English or Spanish
this is the third most spoken language H
in the States now real quick I gotta
pick on your peeps in Texas Vietnamese
in Texas yeah I thought the third most
common spoken language in Texas was
either draw or twang it’s Texan it’s
Texan is the third language fourth
language is Vietnamese no because we
were when when the Viet or when the
Vietnam Boat Lifts happened they brought
a ton of Vietnamese here that were boat
people and brought them here and they
basically are a huge Enclave around
Houston and to the east of Houston
because that a lot of them were
fishermen and specifically shrimp
fishermen and our shrimp industry is
there on the Southeast coast so yeah
it’s a huge oh Galveston area yeah sure
yeah even to the east of there it’s
closer to Bowmont and some of those is
but yeah it’s a huge community and has
been for the last probably 40 years did
not know that there were three that
stood out to me I’ll go in order Nevada
Minnesota and Georgia what language is
Tagalog Tagalog is Filipino it’s it’s
Filipino native language oh okay and
what about Minnesota Hong Mong is those
are the M people from the central
Highlands of of Vietnam so that whole M
they literally took after the the fall
of Vietnam they literally took 90% of
the the mung community and moved it to
Minnesota why I have no idea because
there are people that come from the
Highland Central Highlands of Vietnam
why it’s like the Somali how they all
ended up in in Michigan or in Minnesota
as well I’m like you’re taking somebody
from subsaharan Africa or coast of
Africa and dumping them into the
freaking coldest place on Planet listen
I guess I asked the right person I was
gonna look some of this up but I thought
it would be good fod so I’m very
impressed for someone that’s never watch
sha Shank Redemption by way which was on
TV last night what I don’t get is the
French down in uh North Carolina and
South Carolina I have no explanation for
that one and I don’t understand Korean
in uh Georgia but yeah I’m I don’t I’ve
never heard of that being a huge Korean
community and all that I I love Alabama
and Mississippi though
we don’t speak nothing but
Merin yeah we don’t have nobody else but
mer here I was surprised by how much
German and Chinese yeah yeah especi and
and that’s in Kansas yeah in that
central part of the country you know
that was a lot of German but it’s
surprising to me that they still speak
German and and that’s a major language
for him and I know North Dakota and
Wisconsin there’s a lot of Norwegian so
I I don’t know I thought this was
interesting I mean it’s actually very
fascinating to me I guess NADA makes a
lot of sense because you know the
casinos and everything else so they they
come Filipinos literally they just
uproot their lives and they’ll come and
live and they don’t go home for years on
end so the only two that made sense was
Louisiana because I knew that was very
French oriented I’ve been to I’ve been a
couple places there and Arizona New
Mexico go with Navajo so th those two
did not surprise me but a lot of these
other ones I got to tell you I was a
little flumix it’s hilarious yeah a lot
of them do make a lot of sense but
there’s some weird ones in there that
I’m just okay yeah I I just makes me
laugh though Alabama Mississippi
Virginia and West Virginia we speak
amican that’s it no actually it’s German
German and Alabama Mississippi is
Vietnamese okay anyway all right all
right next all right so I got to tell
you we’ve done the underwear indicator
we’ve done the lipstick indicator
absolutely saw this actually I heard
about it and then I saw this article and
I had to just take the headline and then
I had to read it and then I saw
something on one of the business
channels about it that now just so you
know folks I did not do an inappropriate
Google search on this okay that’s is
good just wanted to get that out of the
way yeah but
apparently they’ve tracked this but when
sausage demand is down that just means
there’s a looming a recession
coming just saying I’m just saying wow
I’m just saying so when you have when
you don’t change your underwear when you
don’t buy sausage and you stop buying
the good lipstick we are
screwed yes that mean that means
apparently the vices are going away in
your spending budget apparently and they
are not putting lipstick on the pig here
is all I can say and they’re not putting
lipstick on the sausage no pun all right
moving on so we always talk about the
funny numbers and how it’s interpreted
so this week UBS wealth management
raised the odds of a recession from 25
to 20% and I had to do this because the
prior
week Goldman Sachs cut the RDS of a
recession from 20 to 20% and previously
I think it was in the prior month they
raised the odds from 15 to 25 and now
moved it down to 20 wow so we’re talking
about two of the biggest investment
Banks out there they got some of the
smartest people and we talk about this
with the government they are all dealing
with the same
numbers so you want to think about it
the government is supposed to be
bipartisan impartial when they’re
releasing things and whatever you don’t
know necessarily where the investment
banks are because obviously they don’t
want M they don’t want people to sell
they want more money in keep your money
invested so on and so forth so I always
a little leery about the market
strategist and how much are they being a
puppet for the puppeteers above them but
here it is Jeff please explain to me you
got some of the smartest people here and
they can’t figure this crap out bouncing
around any less than you and I bouncing
it around every week from one to the
other I’m gonna say kudos to Muhammad El
Aran because I’ve seen him probably six
times in the last two months and he has
been consistent across the board 30%
chance for as long as I can remember
back at this point he’s basically said
there’s a 30% chance and he’s I’m not
with the they ask with the with these
new numbers with the the jobs numbers
and all are you changing that number and
he’s 30% that’s it and it’s funny I’d
like to know when they come out with
that give us your formula how the hell
you came up with that yeah it’s it’s
literally like throwing darts at a dart
board yeah we know all the economic
numbers are trending down but what are
you looking at that you’re decreasing it
by 5% corre again we always talk about
this right the average person reads the
headline and not the Articles they eat
no pun they eat the sausage they don’t
want to know how it’s made I’d like to
know the substance behind this but they
don’t want the sausage that’s already
know this yeah sausage indicator is down
so they don’t want the sausage they just
want the thought of the sausage and
that’s it yes I agree all right what do
you got all right let me share my screen
this apparently today we didn’t even
talk about this before we got on but
apparently today the theme is economics
because we are coming into the fall
season and
economics is I think going to be a big
driver going in here because what are we
waiting on we’re waiting on the FED
meeting and and if they’re going to make
any announcements so what I did is I
went through the upcoming briefing.com
basically what’s out there as far as
some of these different dates and things
like that this week really the only
thing of note because we’re going into a
holiday weekend only thing of note
really was consumer confidence and K
Schiller which actually were positive
consumer confidence has just been
marking
time most of the year and a half it’s
just it’s up one time it’s down another
time it’s just been flat without a whole
lot of changes to that and I don’t know
when that change is gonna happen we went
over this last week when we had our show
and we talked about how credit card
defaults are starting to Rock It Up the
usage of credit cards is off the
charts but consumer confidence is still
up and I but the interesting thing is
just writing the cailes of that but re
other than Walmart right the majority of
the retail outlets in Amber kbby and fin
just came out Target Cole so and Retail
spending is down yeah
but a factor of consumer confidence I
would say yes yeah on my theme though
talked about that a couple months ago my
theme one of my themes is the trade down
consumer and Walmart’s numbers were good
TJ Maxx was good from that perspective I
think the consumer still buying it’s
just they’re not buying at the higher
end stores at this point and abomi
missing their numbers is just shocking
because that’s just not something they
do they’ve been the most consistent
stock I’ve seen um it’s a stock that
I’ve traded money presses on and off for
almost a year now and it’s been like
consistent like clockwork and them
missing a number is extremely shocking
all right coming up I will tell you also
very quickly just talk last Quick point
I don’t know whether it’s a matter of
desperation or what but last week I was
in the supermarket I don’t know what it
is by
you the Halloween stuff is already out
we are more than two months out from
Halloween and they got all the Halloween
stuff out yeah because they got C I
ended up throwing it out after one
handful but they’re gonna get they’re
gonna get Christmas stuff out here in a
couple weeks so they got to get through
the
hall all right next week course
shortened week because of Labor Day
really most of the data throughout next
week is it doesn’t really make a whole
lot of difference there is a big day
next week where trading impact is
typically going to be very high and that
is going to be personal income personal
spending pce and pce prices core these
are pce is the number that and it’s
personal consumer or personal tomorrow
consumer expenses this is the big number
that the FED follows so this is going to
be a big one for them they’re going to
be taking into account that crazy
adjustment to the jobs number and
they’re going to be looking at pce and
using that is one of their biggest
things coming up Friday of the next week
after that so it’s interesting if you
look at the next few weeks a big one the
rest of the week nobody really is gonna
give a crap about anything that’s going
on but that Friday after that September
6th you’ve also got non-farm payrolls
average alley earnings unemployment rate
average work week all things that are
going to factor into that whole
employment sector and then the week of
September 11th or you or September 11th
and September 12 you’ve got CPI you’ve
got core PPI initial claims that’s a
weekly thing um so all of this leading
up to the FED meeting on the September
17th and 18th a lot of data and we know
they are data dependent so this is a lot
of data that’s coming at them full on
where they’re making a decision on
what’s going to happen with interest
rates and it’s really intriguing because
I’ve never seen the FED change interest
rates this close to a an election ever
the last time was 92 from I know we
talked briefly and they did it three or
four times prior to the election and
Bush senior thought that it wasn’t fast
enough or far enough but that’s beside
the point but I look I’m on the record I
did I thought there’d be one or two this
year but I thought it would be after
after the election yeah I don’t think
it’ll be 50 it could be 25 but you know
what we could take some bets and get
into this the week before this we’ll
have a podcast ready to go for that
maybe we should dedicate it we’ll see
but it should be interesting and I can’t
stand the financial channels well
there’re be won’t there be and they have
people on all day long come on people
the best way to watch business Tel it’s
gonna be yeah I think it’s gonna be a
full hundred basis points oh no I think
it’s only GNA be 25 oh no yeah know it’s
everybody should got it six months ago
yeah please please honestly with if I
think if they had the real employment
number I think they probably would have
done at the LA the July meeting I think
they most likely would have dropped at
that point because I think that’s the
only thing that’s been holding him up at
this point because everything else has
been trending down and that number was
just ridiculously it just kept going up
and it made no sense and then all of a
sudden then it’s like a 30% Vision I
think for the FED it’s okay garbage in
garbage out at this point my last Quick
point we could wrap up I from being The
amatur econom Economist that I’ve been
for years loving watching this stuff I
was we had always gone by 5%
unemployment or employ is is always been
quote unquote Full Employment and for
years decades it’s always been five to
six and a half 7% we were in the low
three we were in the mid three
yeah the fact that we are 4.3 and it has
ticked up still means that the the
majority of the people that can work are
working yeah so again and they’re
spending too forget about all the
economic numbers but if the unemployment
number was the true number they were
going by we’re at 4.3 even if it ticks
up to
4445 yeah it’s still pretty good as far
as overall employment I heard somebody
make a a really good make a a really
good point yesterday
he was looking at he he just was talking
about the employment numbers and he said
the problem is they keep headlining
these big numbers oh it’s two million
three million whatever but he’s but
that’s not fulltime employment full-time
employment has declined part-time
employment has increased is it’s not
really full employment it’s people
working part-time and it’s a lot of
businesses I look at it from my personal
my business one of my businesses where I
do hire employees
we don’t work more than 35 hours a week
so they’re not going to be full-time
employees not only that too but I
noticed that last week I didn’t know I
didn’t hear the exact number but the
number of people that have two jobs yeah
is the highest in history in in history
yeah which okay that’s not good that
means that they’re not making enough yes
they employed but they got two jobs yeah
they may be employed but they’re working
14-hour days so yeah it’s insane and I
think the reality is I I think people
are Holding On by their by their fingers
on the cliff at this point and it’s not
going to take much to change and I think
you see just a little small downtick and
employment or uptick and unemployment
and I think that starts to it it starts
to build on itself and and it gets worse
and worse so I agree I agree I I just
think we’re at a precipice at this point
and I think people are stretched beyond
the the the rubber band stretch to its
maximum point at this point and it’s
either going to continue to stretch a
little bit more or it’s going to snap
somewhere in here and I think we just
need to be prepared for that fortunately
I hope that the fed’s GNA start lowering
rates and giving it easing things up a
little bit at this point but if the
federal government won’t stop the
executive side of the house won’t stop
pouring more money into it and looking
for ways to spend more money it’s going
to be for not at this point well look
they may do 25 basis points next
but I think the bigger Cuts will be
after the election I think so too we’ll
see get your popcorn ready they’ll be
too late in the game like they always
have and then they’re scrambling to try
and for all what’s going to happen folks
thank you for joining us today hopefully
you enjoyed this it was a bit of an
economics bomb on you sorry about that
but it was one of those things that I
think we all had to think about a little
bit make sure that
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next time have a happy holiday weekend