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COT 30 === [00:00:00] Jeff Kikel: Hello, sense of things audience. It’s Jeff and Ron here once again for another weekly update on what’s going on in the world. Ron, how you doing, bud? Good morning, Jeff.

Hey, never a dull moment, right? Always economic news. Always geopolitical news. Good Lord.

It’s and this week was full of it. Jeff Kikel: All kinds of places all over the place. Can’t wait to get started on that.

And I wanted to start us off with a pop culture reference. Yes. I’m excited because this one

just made me chuckle this morning. And I just had to share it with the audience. So I shall

start with just the beginnings of this. Jeff Kikel: Why? No. This is Norfolk in in Nebraska. This [00:01:00] is Lee. I forget

what his last name is, and his watusi bull. Howdy duty. So wait. Oh, that’s a real live

bull. Oh, yes. This Jeff Kikel: is a real live bowl, like at the size of those horns. That’s not that’s not holy. Not a stuffed animal.

Jeff Kikel: This is actual, this is an actual bull. So yeah, I wanted to share this a little

bit so you can see it. Oh my God. Wait. No, that car looks like it’s designed for a bull.

It is. It’s specifically designed. What’s the matter? Did they get a ticket for not

wearing a seatbelt? No. They said that there were some violations. Jeff Kikel: Now you’ll see the violations to the former police car here in just a minute.

How did he even get the bull to go in there? He’s in there. He’s got a special spot along

the side. Yeah, but how did he get them in there? I understand. Oh, my God. Obviously,

you didn’t have him wearing a diaper. Yep. No. Jeff Kikel: There’s plenty of violations. So Lee actually uses this [00:02:00] car for

parades and stuff like that. And so he won the best the best car per for this rodeo parade,

but I just wanted to share the the crack police department here in in Nebraska. The guy is

the, I guess their spokesman or whatever. Jeff Kikel: And it says yeah, what does it say? We didn’t have a full understanding of

what it was. Cause they were getting all these calls from nine one, one from people going that this bull was riding shotgun in the car. He says It wouldn’t go far without being noticed

for sure. Yeah. You think there’s a freaking bull in the car. Jeff Kikel: But he does this during parades. Yes, he does it during parade, but he decided

let’s go on a joy ride. And for some reason, he and the bull just decided they wanted to go for a little trip. They tried the news tried to call. Yeah, this gentleman, Lee Meyer

but he wasn’t there. So his wife, Rhonda, got on the phone and sold told this radio [00:03:00] station that that howdy duty had been Myers best friend and buddy ever since

he got a meter 9 years ago. Jeff Kikel: Rhonda Meyer told us 92 that legal thinks he’s a movie star after his video of

his traffic stop went viral. But he’s a little shy. Howdy Doody is like a member of the family

now, but she wasn’t always wild about how much her husband spent on the bull over the years. He bought a police car, a former police car and turned it into a bull shotgun thing.

Jeff Kikel: Maybe he was stepping out on Rhonda with the bull. Yeah, I know. I just wow. I

just can’t even say it was just. I saw it as a thumbnail and I was like, Oh, I’ve got

to look at this. How do we even move on to economic and business news from there? I don’t

know. There’s a whole lot, what’s coming out of the other end of the bowl is a lot of what I see on wall street sometimes.

Jeff Kikel: And in Washington, DC too. And the bulls have been running this week. So I thought it was a good trend to [00:04:00] get us into the week here. It was apropos.

Yes, I hear you. All right. Let’s let’s let’s go 2 feet in at this point. And I know we

could probably spend an hour on this because Moody’s. Jeff Kikel: S. And P. Now, I believe downgraded, gotta love, g They are right on the bal two

years later from ever I still think they’re gun crisis and all that other This drew the

ire of politicians. No kidding. The first downgrade was 2012, 11 year, 11 years later,

we’re now getting another downgrade from another major. Jeff Kikel: So what happened in the last 12 years? They just said nothing to see here,

but I got to tell you, I don’t know about you. I have been impressed. I don’t have any other word for it. By the market move in the last three weeks, and it has just gone parabolic.

I think it’s a head fake. I said it was a head fake two [00:05:00] weeks ago. Jeff Kikel: And this negative credit rating that came out, I believe it was over the weekend,

last weekend had mooted effect on, on the market. And. And I was talking to another

advisor friend of mine and we were talking about all these things are just cinder blocks stacking up on cracked ice on a pond.

Jeff Kikel: And listen, I hate I would know we sound like doomsday here, but how can we

just say. Inflation is down again this week, which is good. How can we say, okay, it’s

all clear. They’re going to start lowering rates in six to nine months. Let’s start buying stocks again. I don’t, I just look, we all know, mentality thought process about money

and investments is very emotional, but the smart people, the smart money are basically

in cash now or cash equivalents. Jeff Kikel: What are your thoughts? I think, and I’ll share a chart. I just want to show

[00:06:00] people, cause I don’t think graphically we’ll, when I go to my part, I’ll show the U S the treasury yield curve. And I just don’t think people realize how out of whack. The

treasury yield curve is at this point, and I can, the chart that I have, I can show like what a normal one looks like and what this one looks like.

Jeff Kikel: And most people will tell you a normal yield curve, going from the lower left to right basically is showing you that. Things are healthy, things are, yeah, stable,

whatever you wanna call it. Stable. But yeah we’re not even close to, my god it grandma yield curve. It’s, yeah it, I knew it in the back of my head, but when you look at it actually

graphically you get an idea. Jeff Kikel: And I think the other part is, um, I think some people, and I’ve had some

conversations this week with clients and specifically a couple of. Newer clients that, their whole

strategy is I’m just going to, I’m just going to invest in treasuries now. Jeff Kikel: And, the problem with that strategy is[00:07:00] all the meat is at the short

end of the, at the short end, and that can change drastically. If you’re sitting out

there at 20 years, okay, let’s say you’re banking 4. 8 right now, Oh yeah, I can get

five and a quarter or five and a half or whatever, or five on the short end. Jeff Kikel: Yeah, that’s great. But that can reverse literally overnight. And now you’re

stuck with. Okay. Now where do I reinvest that money? And am I willing to reinvest it out at the 20 year end? And the other interesting thing is if you take a look at what the market

has done in the last three weeks, compared to the 10 year, which is what everybody looks at as the North star of the economy and the market it obviously it knocked on the door

of 5 percent again, it was five Oh two went all the way down to four 45, four 48.

Jeff Kikel: Now it’s back up the four, four 55, four 60. Again, what I’m trying to say is if everybody had that kind of strong belief that, Hey, we’re at the end of the rate hike

[00:08:00] heightening hiking if we’re at the end of that and things look great with the economy and inflation is coming down, that 10 year would be under four now.

Jeff Kikel: But I think, the other part of this, and I think looking at the last two years in the treasury market. In 30 years in this business, I have never seen interest

rates move, especially on that longer end of the curve, move as fast in either direction

that I’ve seen. It’s insane, cause it usually the bond market’s the most boring place out there.

Jeff Kikel: And, it’s eking out an extra 0. 2 percent here and there on either side of it. You’re seeing a hundred, a hundred basis point moves in either direction in really

short periods of time. So it’s really a crazy time for the safe asset of all things. Yeah,

I know. I think I might’ve mentioned it before. Jeff Kikel: A year ago, I never bought a treasurer. I never bought a bond. Maybe I got some bond

funds, right? To pay dividends because it’s more tax advantage. I never [00:09:00] bought

a bond before. So I got to go out there and really listen to some of the smart bond people

and they are. Astounded. I can’t even get enough adjectives to describe how they feel

of the movement in the bond market in the last 24 months. Jeff Kikel: Yeah. They said it’s not normal, it’s not healthy and it’s very dangerous.

And there’s a lot of reasoning behind it that I don’t think I can explain as well as they

can. But the idea is they’re saying now a flat curve. Coming from an inverted curve

has almost guaranteed a recession in the next six to nine months. Jeff Kikel: So I think our calls were three to six months early, you can’t predict everything,

right? So they’re looking at Q at first half of next year, probably Q2 the latest. Now a recession is, gauged differently, you got to listen to the people because the bond market

is where the smart money is. Jeff Kikel: You would have thought that they would feel a little bit differently or they

think they’re the smart money, but they would feel a little differently today, I would say, then then they had, it’s just [00:10:00] it’s very unpredictable in, in what should be a

very predictable area of the market. Jeff Kikel: I think it’s. People are running from I’m worried about stocks and now I’m

going to go into bonds and it’s okay that’s not necessarily, I think having a, having balance in your portfolio is a good thing. I was talking to a client who, her whole strategy

is or a potential client whose whole strategy is she’s just going to stay in treasuries

for the rest of her life, for retirement. Jeff Kikel: How old is she? Early sixties. Nothing wrong with that. If you could get

5%. Yeah, it is. Are you going to get 5%, and the problem along those lines is okay,

if you get 5 percent and inflation’s three, three and a half. Net you’re only getting

a couple percent and if you’re pulling four percent out of your portfolio You’re gonna run out of money. Jeff Kikel: It’s just straight up. It’s You’re just not making enough even with them. Yep

And so the last thing I want to do before I went on to the next slide the other thing a lot of these bond people were talking about because the average [00:11:00] person and

the average advisor doesn’t pay attention to This are the bond auctions on a weekly

basis. Jeff Kikel: Yeah, I believe it’s either three or four weeks in a row They’re saying Every auction has basically been borderline or atrocious just as far as the demand for it. So that’s

gotta be telling us something too. All right. It was funny. I think this week’s treasury auction, they actually put up half the amount that they normally would, and it’s still failed.

Jeff Kikel: That’s saying people aren’t really, the world outside of the United States who usually buys. The majority of treasuries are going, it’s not really worth it at this point.

Now I’ve been riding the coattails that there was a great article in Forbes about, again,

I know we’re a little bit of an echo chamber, but I think some of these things are very important and I know we don’t have like hours to go through all these, but they were talking

about how the stars continue to align, which is a great headline because I think that’s all you and I have been talking about over the last.

Jeff Kikel: Three to five months about how all these stars have been aligning. [00:12:00]

First one is just earnings expectations talking about the negative forecast that a lot of

these companies and sectors have been identifying. And, earnings is the mother’s milk of growth

in the stock market. If there, if the E and the P E is not either stabilizing or growing,

if it’s contracting, that’s not good. Jeff Kikel: That means the price of the stocks will come down or the price will go up, but

obviously go to a an expensive level that it’s overpriced. And then at that point, the

steeper you’re going up, the steeper and quicker the fall. It’s interesting that, you’ve only

got effectively three industries predicted to have positive earnings there. Jeff Kikel: It obviously technology, they’re, they got a cash machine there that, is it

going to go away for a long time? Energy, I believe I got to tell you, I stopped getting clients involved in the energy side [00:13:00] sector. I don’t know, 5 years ago, got burned

with a few. I’ll let that lie because I’m starting to get that thing in the back of my neck again. Jeff Kikel: But the problem is, it is so pegged to oil. And oil is the most manipulated market

in the world. How can you look at, and just use it as an example, Exxon, Chevron, Occidental,

Marathon, Hess, BP. How can you look at any of these and really say, these are the earnings over the next couple of years, when oil can go from 60 to 90 in a matter of six to eight

weeks and back down again. Jeff Kikel: How do you know six months or a year? You’ve got, you’ve got basically large

cartels controlling that and saying, okay we’re going to cut production because we want to keep prices high or whatever. And it’s, you have no control over it. So I typically

don’t invest a lot of money in anything commodity related. Jeff Kikel: Or can be heavily regulated by the government just for the simple fact that

I don’t have any control there. I at least feel like I have some control over some of the other stuff.[00:14:00] Agreed. And I’ve always said this to people about oil and precious

metals. Everything is about supply and demand. Jeff Kikel: Yeah. So can you tell me how much gold is in the ground and how much has been

mined in history? Can you tell me how much oil is in the ground and how much has been pulled out? No, the answer is no. So if you don’t know the supply, the demand to a certain

extent, but if you don’t know the supply, how can you come up with a reasonable price other than it to be manipulated?

Jeff Kikel: My last quick point there is. One of the OPEC people, let’s leave it at

that. Oh, excuse me. Basically said, I don’t know, this was six, seven years ago. He was

on one of the business channels saying, we think a good price for oil is between 80 to 100. So I have a couple of friends and clients who were talking about I’m thinking to myself,

how does he know that? Jeff Kikel: Yeah. What is he basing? What is he basing that? Now, look. We just like that price. It’s a good. Now look at the medium price of oil. Yeah. The last 10 years. Yep.

80 to 100.[00:15:00] They know their numbers and that’s because their average cost per to, to pull out a gallon of oil out of the ground is under 50 bucks.

Jeff Kikel: I think it’s in the 20 to $30 range. Yeah. In the US the average cost to

bring out a gallon of oil, I think is in the fifties. Mid fifties. , that’s a pretty big

delta. Big. So I dunno. Yeah. It’s amazing to me. Like I said I just and utilities, I’ve

been burned so many times on utilities at this point. Jeff Kikel: I just, sure. I don’t want to be there. But at least with utilities, it’s

interest rate sensitive and with interest rates all over the fence. It’s just, once

again, it’s an area that I do. I just don’t want to play. And I was listening to the news yesterday and Their interview and Louie Navalier, who I think is fantastic.

Jeff Kikel: And, he basically, he was talking about market breadth and he said, he goes, I basically am down to about six industries that I’m investing in right now. And he goes,

going into next year, I could see that reducing down to [00:16:00] maybe three, right? And

this is one of the best investors in the world consistently outpaced everybody. Jeff Kikel: And he’s talking about how it’s getting tighter and tighter to find. Places

that he’s comfortable investing in at this point. I think if I remember correctly about him and a lot of other very smart investors, they follow the options market. They’re watching

the call and the put volume and the, but in the, and the expiration on those to really

see where the smart money is putting it, because obviously that’s a derivative. Jeff Kikel: And as long as it’s a kind of a little bit behind the scenes they’re able

to stay ahead of the curve. All right, let’s go on. So I thought this was a great chart.

I’ve heard some pretty interesting market strategists talk about job holders. Having,

the number of job holders having two or more jobs is at an all time high. Jeff Kikel: So what is that telling you? Okay, yes they’re making more money in one job,

but as they make more money in one job, inflation comes up, so they’re not really ahead. So they need to put in another [00:17:00] five, 10, 15 plus hours a week to pay the bills

or to save a little bit, to have an emergency fund. Jeff Kikel: It’s a little scary. I get, Hey, I love people that hustle, right? It’s better

than the lazy people looking for handouts. But I think I think that’s the problem is

you run into a, you run into a point where it’s you have no more hours left. It’s there’s

only so many hours in the day and you run into a point where if you can’t, if you can’t make it with one job and you’ve got to have a second job there’s only so much time you

have at that point. Jeff Kikel: No, and that’s part of the, a part of the issue, which is just setting something

up and that’s part of the issue. It’s just at some point you’re going to get burnt out, what are you living? It’s tough. So I don’t I have to see how that trend continues.

Jeff Kikel: So moving on here, wrapping up some of these other slides, drop them off there. Yep. Okay. Yep. Yep. I had a slide out of place here. So I think this is I’m

going to go through these next 4 fairly quickly. Okay. So representation [00:18:00] of roles and layoffs. Recruiters and I know some client people and I have a client that’s a recruiter.

Jeff Kikel: She’s been pretty safe in her job. But when cruders get laid off, what is that telling you? Yeah, the demand for talent is falling off. I think that’s I will say

I never really thought about that hard until I saw this chart Yeah, one of the one of the guys that was in my that’s in my office here that works out of the co working spaces I

own he he’s a meta recruiter. Jeff Kikel: He got laid off earlier this year and He was like a senior recruiter. So he

was in charge of other recruiters, had to lay his entire staff off, and then he got fired. I think that’s interesting. Let’s keep going here. So just looking at like the personal

savings rates. I know we’ve talked about this before. Jeff Kikel: This is scary because that means people are just spending almost every dime

in their pocket. Yeah. We’ve talked about this before, not so much on the auto delinquencies, but certainly the credit card and. I don’t know how anybody could look at these 2 [00:19:00]

charts going, if the middle or lower middle class and the poverty level people are in

so much debt and the auto delinquencies are going up. Jeff Kikel: And again, these are auto delinquencies over 90 days, not just recent delinquencies

and then student loans and keep going down the line. What is this telling you? It just especially, you look on the credit card with the, we just talked about it last week. They

hit what? Jeff Kikel: 23 percent average now. Yeah. Okay. You’ve charged your cards up to the

limit and now you’re getting whacked by 23 percent every month. That’s. 23 percent a

year. Yeah. Yep. And then here’s the other one, the new card and requests for limit increase

rejection rates. First time I’ve seen this chart, obviously it segues off of what we

were just talking about. Jeff Kikel: The credit card rejection rate, is that the second highest in record just

after, or in the middle of, the heart of COVID. And then the second one [00:20:00] is people

wanting, again, they’re at their credit card limits. They need to increase their credit limit and they’re getting rejected.

Jeff Kikel: So that means at some point if the credit card and the banks are saying,

sorry, time out, we need you to be an adult again and start doing prudent spending and

saving. This is unbelievable. And again, it’s circled, it was circled how unprecedented

this is. Again, it’s just another cinder block on the crack dice on a pond. Jeff Kikel: And you combine that, you go back to that other slide of. The amount of people

with 2 jobs and more, trying to get to full time or more than full time. And it’s okay,

they’re already. They’re having to work harder and they can’t get the credit that they have. It’s going to have some effect.

Jeff Kikel: board when it comes to re else, which we’ll talk ab bit. Yeah. So I got to

te slide very quickly. Of cou getting better about govern related [00:21:00] places. But

hey, are going up again? They 6. 5 billion loss for the

Jeff Kikel: Another 2 cents is gonna, it’s got to put a dent into this, and obviously

they’re just going to keep losing money every single year. I know they’re trying to move from gas to electric, which should help bring down that cost because I understand like the

gas line item cost on the P and L. Is a high single digit, double digit number as a line

item cost on the overall P and L. Jeff Kikel: You, you look at the inefficiency of the distribution model. Every single piece

of mail is literally delivered by something that is gas powered. Yeah. And, you’ve got

this very inefficient distribution model going out into neighborhoods and everything else.

I think, the one thing it’s been interesting, at least us moving down to Austin, Was, in,

in the Dallas area [00:22:00] where I lived every how there were no like group mailboxes

in our neighborhood. Jeff Kikel: Everybody had their own individual mailbox. So that, that postal worker was driving

around to every single house and distributing and everything else. And now. And I, there

are very few neighborhoods in our area that don’t have the 1 solid mailbox. For the neighborhood

where you just come in and or you’ve got multiple ones in my neighborhood. Jeff Kikel: I Think that’s been part of the deal for them to cut costs a little bit. But

it’s still an inefficient distribution model taking it out there. And it’s interesting. We don’t even have the little mail trucks here. They actually use their own personal

car, their own personal cars. Jeff Kikel: And I’m guessing they pay him for it, but it’s, okay. Are they, is it more

efficient to own the own, own the trucks and distribute, or is it more efficient to pay,

65, 70 cents mileage on there? And if it wasn’t for e commerce, Amazon, eBay [00:23:00] Walmart,

if it wasn’t for them using the post office to help deliver. Jeff Kikel: whAt would that loss have been? cAuse you remember a lot of the post office

are doing Saturday and Sundays, we’re getting right into the holiday season and they’re going to be working overtime on the weekend to deliver those packages. Yeah. How much

of that is employee costs too, and that’s built in there. Jeff Kikel: So yes, we’ve got them working Saturdays and Sundays, full Saturdays and

full Sundays. They usually only worked half a Saturday. So now you’ve got them being paid overtime to distribute that. Are they actually making money on that or is it just. Marking

time or going backwards, who knows at this point, I don’t know, but between the post office and Amtrak, basically, it’s just another social security program for the government

to help keep it alive. Jeff Kikel: Just sucks money in and doesn’t really put any money out. Let me let me quickly

bring up my slides here real quick and we’ll just go through these more of the economic stuff. We’ve been watching the manufacturing index is really closely because I think [00:24:00]

that’s a really unique indicator. Jeff Kikel: Philly fed once again was. Down, but not down as much. Interestingly enough

is consensus and it was outside of the consensus range. So it sucked less than it has been.

This one is interesting though. I just don’t understand how these things are so far out of consensus ranges. It’s just, I don’t know.

Jeff Kikel: Once again, we’ve said it multiple times. I want to come back as an economist cause you can make money and be wrong all the time. This is the one that really was

intriguing to me. Empire state Which has been one of the worst throughout the year and came

in at a 9. 1 positive. Consensus was negative 3. Jeff Kikel: It’s been negative for going on 18 months now, and all of a sudden it popped

up to 9. 1. So is it something that was mismeasured that they report a wrong number? I have no

idea, but this they should all be fired. If they’re off that kind of [00:25:00] that was

well, and you can drive a truck through the consensus range as it is, and they can’t even hit it.

Jeff Kikel: Why even give a range at that point? We’ll find out when you do, just guess,

um, CPI this week. I think, this was some interesting things. We’ll look at CPI and PPI. I think very intriguing to me to start seeing the effects of, I think part of this

is the interest rates, but I think part of it too, is the bond market. Jeff Kikel: The bond market has been doing a lot of the work of the Fed this year, and,

we’re starting to see, okay, we’re pulling back on CPI. Inflation’s coming back a bit,

I think the other part that people need to look at, though, is you’re still inflating

above really inflated things. Jeff Kikel: So people still feel the effects of this because we had some 9%. In there and

those prices aren’t coming down. We’re not seeing deflation. We’re still seeing inflation

[00:26:00] on top of very inflated things from a couple of years ago at this point.

PPI, same thing, actually the first negative PPI number. So this is, this was intriguing

to me. Jeff Kikel: I don’t know your thoughts on it. tHis is what I don’t get. They were expecting

positive. It was negative. So that means prices are coming down. So prices are coming down.

That helps. That helps with inflation. A lot of people are expecting a spike going into

the end of the year. It should be interesting to see what the consensus was and how much it is out of range for next month or for this month reported next month.

Jeff Kikel: But all this is telling you, if you look at what’s X there was no month over month change, X food and energy year over year. It’s still going up, so and again, we

already talked about energy and the pricing of energy So I think not that it’s disturbing but it’s just following the trend that prices are still going up Whether it’s reflected

in the cpi or not prices are still going up [00:27:00] Yeah. Jeff Kikel: And like I said, on top of very inflated prices as it is. So it’s not making

people’s lives any better. It may make Wall Street feel a little bit better. I think starting

to see a little bit of crack, this is back to your piling, cinder blocks onto cracking

ice. Jeff Kikel: We saw a retail sales go down. And this was one of the things that spiked

the market this week because it was like, Oh my God, it didn’t suck as bad as we thought it did. But the reality is, okay, retail sales going into Christmas season are declining.

What does that mean? Are those people maxed out on their credit cards? Jeff Kikel: We don’t have a traditional season anymore. It seems like now all these, internet

retailers are doing Black Friday in the middle of, October or whatever, trying to get ahead

of everybody else instead of the traditional Christmas season. But, if you’re already seeing these cracks in the ice in October, what’s November and December going to look like?

Jeff Kikel: if You look at sector [00:28:00] charts. The retail sector has been sucking wind over the last several weeks. Number one even though it had a nice bump in the last

couple of weeks, a lot of the I know target was out talking about profitability because they’re securing a lot of their items in glass right now because of all the stealing, but

they, but he still said that. Jeff Kikel: The consumer has been slowing spending. Yeah. And then Walmart has had an

all time high, but even they’ve seen pullback with consumer. So crazy. Yeah. I feel really

good about being an investor in Walmart because I’ve got a 75 year old person at the front

door, stopping people from leaving. Jeff Kikel: Last one, jobless claims. So this one’s been hovering down in the consensus.

So I really hadn’t shared it much. But this week it spiked up significantly and out of

consensus range. So you’re starting to see more and more jobless claims. Now, this was something I still have to go back and do a little bit of research with to find [00:29:00]

out, okay, are the, do the striking worker these are jobless claims, but are, did the

striking workers, did that have some effect? Jeff Kikel: On these numbers, but I would assume it’s probably not because you quit.

You didn’t, you didn’t get fired or laid off. But also remember they were getting subsidized

by the union fund while they were on strike. So I don’t think you could do that and get

an unemployment check. So this tells me that things are starting to ramp up.

Jeff Kikel: If this continues, things are starting to ramp up on the jobless claim side. More and more layoffs happening. A lot of it’s happened in the tech sector, people got

shuffled around in that sector a little bit from what I’ve seen but it’s, I starting, I think, to roll out into some of the other parts of the world here, some of the other

industries. Jeff Kikel: Yeah, I remember, the unemployment hit three, nine. No, it was as low as three, four. And, people, I think if it hits four or five, don’t forget to seasonally, a [00:30:00]

lot of the major layoff announcements usually come in the first couple of weeks of January. Yeah. Cause that’s when everybody’s, they come out of their seasonal stuff and retail

and everything else. Jeff Kikel: plUs you’re rolling into a new year and they’re trying to, pretty up their balance sheets and everything. Yeah, I think we’ll see more of that. And, once again, it’s

all along the lines of a lot of the things we’re looking at. Yeah. Is the Fed, do they

have enough dry powder to keep us. Jeff Kikel: afloat and have their soft landing that they’re talking about. I don’t really

know at this point. And a lot of people are talking about, what’s your decrease in the rate, in the rates, the only way that would happen is if something does break in the economy.

Things do slow down too much, right? Jeff Kikel: And if things slow down too much, that means somebody’s not making money, right?

And that’s going to affect the markets. And it’s that trickle effect. So if they, if people were talking about as early as March, again, remember we’re talking about, or how they

were talking about November, December. And then it was like the, those are the same people talking March, but the consensus, the first rate cut is may or may, June or [00:31:00]

July of next year. Jeff Kikel: aNd once again, the fed doesn’t really like to be making moves. During a presidential

election year, because they get, it gets looked at as you’re manipulating the market so that, whoever’s in power can stay in power or whatever. They tend to, yeah. They sat on their hands

for probably 12 months too long. Jeff Kikel: Yep. So I don’t think they’re going to sit on their hands because next year,

I think if they do anything, I think I still think there’s going to be 1 more rate hike quarter of a point. I thought might have been November. Maybe it’s December. They’re talking.

No. You’ll kill things. So maybe it’ll be January. Jeff Kikel: That’ll be the last rate hike. And maybe that’s the 1 to say. That’s the

one to push things to a snail’s pace. Maybe it’ll be a soft landing. Who knows, but I

still think there’s one more rate hike. Yeah. I personally don’t think there’s going to be another one. I think we’re done at this point, but I also don’t think.

Jeff Kikel: That we’re going to see anything remotely come down anytime soon. I think,

[00:32:00] I, if you look at the treasury yield curve, that was one thing I promised before we got out of here. Let me just quickly pull that up here. Cause I wanted to show

what normal and what not normal looks like, all right, here’s what the yield curve looks like today. So you’ve got, high rates on the short end and low rates on the long end. Now,

the 20 year has started to come up a little bit. So this is what it looks like today. Let’s go back to 2010. that’s what a normal yield curve looks like.

Jeff Kikel: And even if you look back. To 2020. That’s what a normal yield curve looks

like. This is what we have today. So there’s a lot of feel good in this for people that

are very conservative that yeah, I’m going to make all this money, but that can come on that can come on glued pretty quickly. And you need to understand that this is where

the market is settling at right now. Jeff Kikel: Is that 49 ish? [00:33:00] Four, eight, five, somewhere around there on the

20 year. And it’s very likely that’s where it’ll settle down. So you need to be planning

ahead for the, for that eventual kind of shift around on the short end to get back to normal.

Yeah. Listen, this is a great chart because we’ve been talking about it for several months

now. Jeff Kikel: And, this is what happens, typically nine to 12, sometimes 18 months before. A

major slowdown or a recession in the economy. And then when it starts to flatten, go back

to a, before it goes normal again, that’s when usually the economy steps in a pothole.

Yeah. Jeff Kikel: And that’s where the federal will start to pull rates down, but they only really control the short end of the bond market. Controls the longer end. And like I said,

20 years settling in, 485 somewhere in that range. And that’s probably going to be where

the top end of the curve is eventually. Jeff Kikel: At some point, so you’ve really got to plan ahead for that. At this point,

you got to plan ahead for the [00:34:00] fact that. There’s probably not going to be very much movement. People think, oh rates go down. My price of bonds is going to go up. So I

want to be out there on the long end of the curve. Jeff Kikel: If it’s already there, it’s very unlikely. You’re going to get any kind of

movement on it. And these volatile bond rates are not good for banks. No because their risk

management becomes an impossibility. Absolutely. And you’re sitting there, what, four, something,

four, like four or five, something right now on the 10 year, which is what they use to judge most of their stuff.

Jeff Kikel: Yeah. We’ll have to see next week is Thanksgiving. So we yeah, we’ll be on Thanksgiving.

So we won’t we won’t do a show next week, but we’ll see you guys back here the week after. So thanks a lot. Make sure that you check on that little subscription button and

give us an upvote so we know you’re out there and share a comment if you like what you hear or if you want to hear something different.

Jeff Kikel: So we’ll see you guys back here the next time.[00:35:00] ​