Good morning everybody. Welcome to

another week of the sense of things. And

on today’s show, we got a lot of

information, but we’re going to be

blowing through it pretty quick. Ron is

going to give us this week at history.

Of course, he’s got bond inventories or

bonds versus dealer inventories, which I

think will be interesting, although it’s

bonds and they’re never interesting, but

we’ll go with that. We’ve got soft

landings and a lot of company reports

they’re talking about. and then percent

of tech IPOs and profits. Today I will

cover the jobs number for today which if

you haven’t seen it was ugly. And I will

cover a quick little thing that I did in

a daily read show that I do on a daily

basis talking about the yen carry trade

because this is one of these things

that’s in the background and the

backdrop that we really need to kind of

be aware of. So stay tuned. We’ll be

right back on in just one second. Hey

everybody, welcome to the show. Ron, how

are you, my friend?

Good morning. I can’t believe it. Out

here, kids are already going back to

school to the supermarket. Don’t laugh.

They got Halloween stuff out already.

Yep. They’ve had Halloween stuff out. My

wife, of course, is a crafter, so we’ve

been going to her usual craft stores and

I’m like, man, there was Halloween stuff

in June.

I like Halloween, but

Oh, I love it.

Wait till can we wait till at least late

September? We start getting to the point

this time of the year, this is when

Crystal starts to start making fall

stuff because we’re trying to will the

fall in at that point.

I hear you. I hear you. All right.

All right. What happened this week in

history?

All right. Actually, started out slow.

There was some interesting things. So,

first thing, George Washington becomes a

master mason.

Okay, cool. Interesting.

Thought it was my dad was a Mason. And

what did they say? Eight or nine of the

signers of the Declaration of

Independence were mason. Maybe more. I’m

not sure.

I think actually more of them. Yeah,

that was the the club thing back then,

too. It was the thing where guys got

together to hang out.

1790, Alexander Hamilton creates Coast

Guard to enter because their first job

was tariff enforcement.

And actually, it wasn’t the Coast Guard.

It was the revenue cutters, I think. It

was like the they call it the revenue

cutters administration or something like

that. I was just actually doing some

research on a Caleb Brewster who was in

if you ever saw the show Turn which was

about the spy Washington spies and Caleb

Brewster was one of the very first

revenue cutter captains.

Okay. History.com says it was called the

Coast Guard.

Yeah.

All right. 1858

first transatlantic telegraph cable

completed.

I thought that was interesting

considering how long ago that was.

Yeah. And it what I didn’t realize

actually it happened before before the

Civil War, which I thought I always

thought it was after the Civil War.

Yeah. 1861, Abraham Lincoln imposes

first federal income tax.

Damn Republicans. I’m joking.

I know.

1890, first execution by electric chair.

Old Sparky.

Can you imagine the first ones compared

to what they figured out later on? Like,

all right, let’s like close their eyes

and put a head over their head. probably

their hair was on fire back then

was going to take

save their head so they didn’t burst

into flames and yeah

1912 Teddy Roosevelt nominates a as was

nominated as a bull moose candidate

after dissatisfied with renomination of

Taft I thought this was interesting

because

Taft was his vice president and after

eight years he said Taft is the guy

figuring that he’ll continue with what

he did and Taft was so corrupt up. Teddy

Roosevelt was pissed. So he said, “But

my party won’t give me the nomination

over town. I’ll create the bull moose.”

And he obviously lost.

Yeah, he lost. But he also lost and

caused the

who’s

I’m trying to even think whose name is

came in after him.

But the funny thing was

Yeah.

Roosevelt tried to run again after

already having two terms.

Yep. I Ulissiz Grant, General Grant

tried to run again many years later and

lost. I thought that was interesting. I

And I’d like and I don’t know what the

history is. I guess I’ll have to run an

AI thing to find out how many presidents

after two terms tried to run again prior

to Franklin Ros.

I don’t think very many.

I know Teddy Roosevelt and Grant. Other

than that, I’m not sure.

Grant, I don’t I can’t think of anybody

else. I think most of the other ones

were there was either no chance in hell

or they were just done. 1914 first

electric traffic signal installed at

Uclid A and East 105th Street in

Cleveland, Ohio.

That I did not. Here’s the funny thing

about that. My dad was born on East

104th Street.

Aha.

And close to Uclid Avenue because it’s

he was there.

Obviously was one of the safer blocks in

the neighborhood.

Not anymore. Actually, it is now, but it

wasn’t for a long time.

Why at the time with cars?

Yes. Cars. Yes, neighborhoodwise not so

safe. But

1926, Harry Houdini escapes underwater

coffin after 91 minutes film of this.

It’s pretty The guy was amazing. And

what a name, Harry Houdini. By the way,

what was his real name?

Eric Weiss.

And do you know what he became obsessed

with later in life?

Yes, it was spiritualism because he

wanted to prove that spiritualism worked

because he wanted to talk to his mother,

but he realized it was all a big fake.

And so he decided,

okay, you’re on the right track. But how

did he know it was fake?

Because he’s a magician.

No, because when he went to go to these

people that said they were in touch with

the past, your mother kept they were

saying, “Oh, your mother said Harry,

everything will be okay. Harry and

obviously his mother never called him

Harry.

It was Eric. Yep.

That’s how he knew they were all BS.

Yep.

Anyway, moving on. 1944 and Frank

captured and I didn’t know this until

about seven, eight years ago when I saw

a documentary that actually it was a

family friend that ratted him out.

Yeah.

Yeah.

I think we talked about

what a friend. Thanks. Thanks, jerk.

1945 American bomber Anola Gay. drops

atomic bomb on Hiroshima. I put this in

here because actually I didn’t know the

numbers. 80,000 were immediately killed,

30,000 were immediately injured. And by

the end of the year, 60,000 more were

dead, but there could have been millions

dead if we invaded. But I mean, however

you want to look at the numbers,

yeah, there would have been millions

dead on both sides if we tried to invade

Japan. So, yeah, it

Yeah, it’s just like the most horrible

thing you wish you could uninvent. You

know, we’ve had a lot of positive things

that have happened because of nuclear

stuff, too. But

1959, first US satellite to photograph

the Earth is launched.

Cool.

1974,

Nixon announces he will resign.

I’m not a crook.

Not a crook. Oh, look at that.

1977, The Spy Who Loved Me released. In

my opinion, one of the top five Dame

James Bond movies.

I am right there with you. Absolutely

love it.

1983. I had to put this in there. Risky

business debuts. Launches Tom Cruz to

Stardom. One of my all-time favorite

movies. Awesome soundtrack. I bought the

soundtrack and it introduced me to a

group with Electric Music called

Tangerine Dream, who did a lot of the

music background. And I bought five or

six of their CDs over the years. If

you’ve never listened to Tangerine

Dream, either go get the soundtrack or

go get their CDs or listen to it on

Spotify. Good stuff.

Nice. Nice. I like this.

1996. God help us. The Macarena begins

its reign at top the US

60 weeks. Now, the reason I brought this

up because I was dating somebody at the

time, and I’m not much of a dancer, and

God, she’d get so pissed at me because I

couldn’t do the freaking moves of the

goddamn Macarena. Oh my god, I’ve had

nightmares in my sleep listening to that

crap.

The the best thing ever. I

And nobody knows the freaking words to

the song,

of course.

Macarena. No, it was I I it was I was at

I was flying out of Lovefield in Dallas

one time and one of the TSA agent it was

like super early in the morning. One of

the TSA agents you’re you get there and

you’re like trying to get your pockets

cleaned out and I’m patting myself down.

He’s like, “Ah, airport macarina, huh?”

Oh god, I could see it. All right, here

we go. So, I bring this up and yes, you

said it. The bond market is not

interesting, but the bond market in many

ways is more important than the equity

market because it’s between five to

seven times the size of the equity

market because it’s debt and we live on

debt and we build on debt and we die on

debt. And I this was interesting because

as the chart progresses, the size of the

bond market is bigger than what actually

is available for sale because people are

holding on to it for whatever reason.

And I I’d like to see how this

amazing. Yeah. Amazing how the dealer

inventories have just cratered. Good

lord.

Yeah. So this is from Financial Fables.

I love that website. And then I thought

this was interesting because we were

talking about coming out of 22 when will

there be a recession and just on

corporate reports like it just fell off

the face of the earth in 23 to actually

the second quarter of this year nobody’s

talking about a soft landing because

even though we had a rolling recession

for about 18 to 24 months the NBER the

National Bureau of Economic Research

never officially said we were ever in a

recession.

and everybody that thinks and we’ve

talked about this that oh it’s two

straight quarters of negative GDP growth

that’s not what the NBER classifies as a

recession. So I just thought this was

interesting because now what’s the most

often mentioned

terminology in corporate reports and

corporate earnings now

and if you’re not mentioning AI or how

much you’re spending on AI the market

kills you. It’s ridiculous. So, we’ll

have to try to find the chart on that.

Yeah. Of how many mentions of AI. I’d

love to see that how we’re utilizing AI.

Almost every company has to mention it

even if they’re in in a business that it

doesn’t matter. But we’ll see.

But I think it does matter in a lot of

businesses.

I’m not disagreeing with you, but it’s

just like if you don’t mention it a lot

or how much efficiencies you’re going to

get, whether they could be three to five

years out, they get crushed.

Yep. Absolutely. And then the last one

and it should see how this progresses

with all the big IPOs that came out in

the last year and are coming out in the

next year. How many of them are actually

profitable? And as you can see, I

thought that was interesting because

in the 80s and early 90s, many companies

were waiting until they were a little

more mature where they had positive cash

flow,

and then they’re like, “Okay, now to

have our breakthrough strategy, we need

to go public, get the money, and truly

expand,

keep the momentum going.”

Late n late 90s into the 2000s, it’s

like

profit. We don’t need a profit. We don’t

need those thinking

for an exit strategy. And if we become

profitable in 5 to 10 years, hooray. And

that was the mentality. And then you can

see that did continue until the

financial crisis in 089 and 10.

Yeah. Yeah. And I think it’s true kind

of this year. You look at

Elon Musk with a lot taking SpaceX

public. I it

he’s got revenue, but he doesn’t have

profits.

He didn’t have profit. Yeah. And it

they’re spending a lot of money. I

listened to their conference call and

it’s like they’re spending a lot of

money across the board. Now, do I think

it’s going to work? Yes, because I trust

Elon will figure it out.

He’s going to Did you see the thing that

came out the last two days? He wants to

build his own Fab Factory for chips and

memory. Did you And they had a

rendering, an overview. The building

looks like a chip, a memory chip.

[laughter]

It’s pretty cool, actually. And he could

do it

in true Elon weirdo fashion. Yes. and

it’ll be here in Austin and life will be

good.

I hear you. All right, what do you got?

All right, let me let me cover this. I

was trying to convert this into

something a little bit easier, but it’s

not working. You’re going to get a lot

of numbers on the screen. We got

earnings this morning or we got non-farm

payrolls this morning, which were ugly.

first month that we’ve seen in a couple

years where we were negative jobs,

negative 23,000 non-farm payrolls. Just

looking through that. Now, this is, I

think, the bigger part of the story,

which is in this section here. Let me

see if I can blow this up a little bit.

May. So they revised numbers down for

May from down 66,000 from 129 to 6020.

And then combined with that, it’s

103,000 jobs lost over the last several

months. Once again, my my belief that

these guys are just really not good at

tracking this when you have that big a

change. But to break

there’s going to be revisions some

point.

Yeah, there’ll be revisions again. and

then it’ll be go up and we’ve looked at

that. Five years down the road, they’re

still adjusting numbers, which makes no

sense to me. So, there’s got to be a

better way to do this. But sector by

sector, local government, education was

down 50,000 jobs. Now, key driver there,

seasonally adjusted drops, which we may

see that come back up because we’re

coming back into school. Like you said

at the beginning, retail trade down

19,000, which is actually somewhat

interesting. The big drop there was in

Super Centers and warehouse clubs down

21,000 and fuel dealers down five. Hobby

and sporting goods was up 10,000 which

is kind of interesting. We’re building a

I don’t know if you’ve ever been to one.

We’re building a Shields here in in the

town that I live in.

I think there’s one in Dallas.

Yeah, I’m sure there is.

I think I’ve been to It’s huge. It’s a

Walmart of sporting goods stuff.

It’s 10 Walmarts into one building. It’s

crazy. They’ve got a

Correct me if I’m wrong. Doesn’t Buffett

own that?

He might own it cuz he owns Nebraska

Furniture Mart, which they’re putting

one in here, too.

So, I could bet that probably is. And

yeah, it’s even got a ferris wheel

inside the store. It’s crazy.

Financial, banking, and credit down

nine, insurance down seven. Uh, healthc

care has been the driver. We’re up

22,000 in jobs there. And basically

everything else is flat. Even

construction has been a bit flat for the

summer, which is it’s intriguing to me

to see that. I think it’s something that

the market is rallying on today. I think

that this pretty much kabashes any I saw

as early as yesterday there was like a

57%

bet that the mar that the Fed was going

to raise interest rates in September.

There is not a chance in hell of them

doing that at this point. So, I think

there’s going to be some people flipping

their bets. I I just don’t see that

happening with the the trend that we’re

on with jobs. I just don’t see that

happening at all. Yes, inflation is

there, but jobs I think are the bigger

concern and you don’t need to be raising

interest rates into something like that.

Now, never put it past the Fed for doing

it, but it is there. Thoughts?

I agree. And just to take a half a step

back, Shields is 100% privatelyowned,

employeeowned store, multi-generation,

started 1902 in Minneapolis.

Interesting.

Regarding the numbers, I thought one of

the things that was interesting is for

the most part, the market is up today

because they say because it’ll prevent

the potentially prevent the the Fed from

raising rates. Give me a break. I will

tell you I don’t think there’s going to

be any changes before the election.

So, and there’s two more meetings and

we’ll see what happens. But the current

administration needs the market to go up

and if they raise rates, that’s not a

good sign.

No. And it’s basically counter trend to

what the data is telling us right now.

So, if you’re truly data dependent, as

they say they are all the time, this

ain’t the time to be raising rates. I

would argue the point that later in the

year I could see rates come down at this

point because we are starting to see

some slowing of the market or some

slowing of the economy. And my show that

I’ll do after this, it’s a week a show

that I call the weekly read is that’s

what we’re going to talk about today is

just strictly the fact that it the news

is good until it isn’t. So the market is

seeing this as good, but it ain’t good

[laughter] by any means. So, the last

thing I wanted to cover today, and this

is something I’ve been beating on the

drum for the last couple weeks, I it was

I saw a little story and this kind of

sparked me to do a little bit more

research and it’s an interesting thing

that I think we need to all keep our eye

on because this can unwind very quickly

and cause some big havoc in the markets.

So, it’s called the yen carry trade. So,

what exactly is the yen carry trade?

What it is basically

large traders, hedge funds, things like

that, they go and borrow cheap yen and

basically Japan’s interest rates are

near zero at this point. So they go and

borrow money in Japan,

turn around, convert that to dollars,

then they buy higher yielding assets,

and that can be anything from stocks to

bonds to real estate, anything else like

that. And then basically they earn the

difference on that. They’re basically

playing paying zero for the interest and

they just earn the difference whatever

they can make on it. And then they’ll

apply leverage to that on top of that a

lot of times. So sounds like something

good, sounds like something interesting

until the math breaks down. The yen

strengthens. So that can be from the

Japanese stepping in to try and defend

their currency. It could be Bank of

Japan raising rates, anything like that.

As I was covering this over the weekend

last weekend, the US and Japan

coordinated to defend the yen. So, they

stepped in and we stepped in and bought

yen, which caused the price to come back

up because we are at a 40-year low of

the yen to the dollar at this point. And

that’s it’s a couple things that can

cause some problems for us. one, if the

yen keeps going down, then effectively

our trying us trying to sell anything to

into Japan, we can’t sell anything in

Japan because it costs too much because

of the yen dollar conversion. But two,

it causes a lot of havoc in the market.

So, we stepped in to help out, which

stemmed the drop in the yen. But we also

have a Bank of Japan meeting coming up

just after Labor Day where they could

potentially raise rates and by doing

that it could throw the yen carry trade

the opposite direction on the math side.

So what ends up happening is the

investors jump in repay their loans that

forces them to sell to pay stuff off. So

what ends up happening Japan the carry

trade unwinds global selling happens. US

stocks drop. Guess what? Your portfolio

drops. So, what I would say is there’s a

couple things in this this show that we

did today that have me concerned a

little bit and it may be over over

wrought or whatever, but it has me

concerned and has me starting to think

about, okay, what do we need to do to

offset this in our own portfolios if

this happens and God only knows if we

raise interest rates in September, but

with are with what we’re seeing in the

the jobs market and you’ve got this

hanging over you. I would just say be

careful and be prepared if you see the

market reverse because these type of

carry trades can reverse. 2024 is the

last time it happened and when it

happened, we saw the market come

snapping back fast and what I would

guess is a lot of this this yen carry

trade is happening and blow and blowing

into AI stocks right now. We’ve already

seen them reverse once this summer. So,

just be careful. Make sure you diversify

your portfolios. And that’s all I’ve got

today.

No, good stuff. I love it. Love the

graphics, too. Makes it easy to

understand.

Yep. That was my That’s my new thing.

Chat GPT is awesome with graphics.

Oh, you’re such an AI geek.

I know. No, I have my Claude, which is

horrible at graphics. Put together the

numbers and everything and then I put it

in chat GPT, which is awesome with

graphics. So yeah, it’s been a fun kind

of week doing some of these

presentations like this

here for you and we do these shows for

you. So make sure you subscribe to the

channel and we will see you guys back

here very next time.