good morning folks and welcome to the

sense of things for this week jeff and

Ron here we’re gonna have a fun episode

today where Ron is going to share with

us some fun names of towns across the

country i’m going to do a little bit of

a piece on the kind of all the factors

that the Fed looks at uh where they’re

pointing right now and why I think that

they are going to run the same movie

that they always have which is to wait

too dang late and throw the economy into

a mess ron and I disagree on that but

you’ll get to hear that ron’s got some

great stuff on credit card balances

again got some other information on the

market so stay tuned we’ll be right back

on in just a second for a spirited

debate

[Music]

[Applause]

[Music]

hey everybody welcome to the show it’s

Jeff and Ron here ron how are you doing

buddy good morning i promise I didn’t

send you a picture of what shirt I was

going to wear today there you go i know

yeah i was like “Oh yeah you are right.”

Mine Mine’s just one color yours has got

the little crosshatches to it i got to

have a little texture in there it’s our

uniform of the day come on i hear you i

hear you you got some fun stuff to kick

us off right yeah look there’s always

something going on every week and the

presidency likes to have a reality show

and be in the news every day they said

there was a call with Xi but and that he

initiated but no new news and the White

House hasn’t confirmed so we’ll have to

see what I think it’s interesting with

the whole Putin situation it sounds like

the president’s kind of he’s been

holding off the Senate on putting

sanctions out there but quite frankly I

think that’s the only way you’re going

to stop Putin is just to take away the

money from him at this point and really

the only thing they export is energy if

you pound on everybody that’s buying his

energy one I it’s it takes some supply

offline but I think the Middle East

probably can make up for that so the two

biggest industries is energy and malware

yes I’m not sure if they export the

malware as much as import that’s an

industry it is an industry yes they do

and they import the money from from the

using the malware but Absolutely all

right you ready yeah let’s learn about

some some city names okay this was in

Parade magazine online and I saw these

names and I’m going through it so I’m

going to identify what I thought were

the more interesting ones out of the 75

i’ll give the full list people could

pause it and read it on their own but I

thought this was probably the most

interesting names big Bottom Washington

ZZ YZ California let me just before we

go any further Big Bottom Washington so

is the is the theme song for the town

Big Bottom Girls from AC/DC i don’t know

it could be Santa Claus Indiana i wasn’t

aware of that one okay lick Skillet and

you would think these two towns would be

next to each other need more Alabama and

hygiene so it would be Need more and

Hygiene yeah it would make sense yeah i

mean you could have the Need More

Hygiene metro area at that point then we

of course got zero originality no name

Colorado yep we have a in Austin we have

a no-name road oh okay there you go and

then we got Butternuts New York i don’t

know if that was a joke or if that was

someone’s last name i am aware of why

Arizona why smut Eye Alabama on the

bottom yum yum Tennessee and Ding-Dong

Texas where is Ding-Dong Texas by the

way you’re the I have no freaking clue

where it is i’ve never even heard of

Ding-Dong Texas but what you don’t have

in here is Truth or Consequences New

Mexico which named itself after the TV

show back or the game show back in the

day and I’m looking at the list here i’m

trying to find Toad Suck Arkansas which

is an area that I used to How could you

not have to suck Arkansas i will tell

you because this is my next slide and

the main reason why I wanted to do this

is because for the most part I spent a

good chunk of my life in Pennsylvania

yep even growing up as a teenage boy you

always laughed at this name of a town in

Pennsylvania it is not one of the top 75

huh the best name for a

town is Intercourse Pennsylvania i’ve

heard of that which the funniest part is

it’s in the Amish area which is

hilarious little west little west but

near so here’s Philadelphia all right so

here this is where it is this is about

two two and a half hours west of

Philadelphia now I thought what was

interesting about intercourse is that

Virginia is for lovers but Pennsylvania

has intercourse in case you wanted your

t-shirt to go to the greatest ever and

just in case you could speak to this

woman about intercourse information

apparently yep and just in case you want

to drive around in the mer in the

merchandise shop you can get a license

plate that just says “I love Intercourse

i love Intercourse i love this this is

awesome i love it you got a good name.”

But come on this is the best town name

in America and actually I got to tell

you when I looked at the list and I’m

thinking “Wait a minute maybe they

changed the name of the town.” And of

course they did not because you can

imagine every t-shirt store on the

corner there’s got to be selling

something yeah

well the funny thing is that I love the

sign up there that you’ve got that says

“Formerly was called Cross Keys from a

noted old tavern stand.” So you’re

sitting there going “Okay it’s Cross

Keys what are we going to rename this

town what What do we want to tell to the

world?” Intercourse how about that and

if you notice when it was founded it was

before the Revolutionary War before we

were basically as a union so yeah even

before we were thinking about it at that

point that’s backly back in the French

and Indian wartime yeah all right

getting on to more serious stuff

conference board some interesting things

here now the CEO confidence now this was

obviously from April yeah but even with

a nice bounce back in late April and

into May the CEO conference is down and

we had talked about this in our pregame

if you’re a CEO or CFO that is a

multinational company you still don’t

know what the tariffs could or may not

be so how can you go to investors on

quarterly earnings calls and say “Hey

this is what we expect topline but there

is no way you could say bottom line you

got to give a wide range.” So I thought

that CEO confidence was interesting and

then the other one here on the right

basically goes through the risks right

obviously geopolitical instability will

always be on this chart but look how

high it is tariffs number two and

whenever I talk to clients and meetings

and whatever these are the top two

things that worry that worry us ray

Dalio was on going on every news channel

talking about talking about this i don’t

know what you find the most interesting

here but I I what I don’t think is I

don’t really think it’s surprising it’s

what I would expect at this point they

don’t know what the they don’t know how

this is going to work out and basically

the administration has said “Trust us

it’ll work trust us.” And anytime

Washington comes to you and says “Trust

us,” it you got to get your hackles up a

little bit there i think the only thing

we can equate to this is how it worked

out in the first administration although

we didn’t have all this tariff stuff it

it worked out and you got a whole bunch

of things that are coming down the pike

between the hopefully getting all this

tariff stuff worked out in the next

let’s say six weeks and which I don’t

think is going to happen but I think you

may get a little bit more worked out

before then and the other side of it is

the whole tax situation and I think

leading up to that it’s going to be back

and forth and fighting and you’ve got

Elon Musk on his side saying stuff and

you’ve got you know and I respect Elon

but don’t think he really understands

how Washington works and it’s okay there

they can’t do everything in this one

bill they’ve got to do it in several

different things down the pike here are

they going to once again you got to

listen to trust us we’re going to do it

who knows but the reality is I think

there’s a lot of things coming down the

pike for the next let’s call it six to

eight weeks i think it’s anybody’s game

and I think if I was a CEO or a CFO I’d

be answering the same way I’ve heard all

of them which is

I got no idea so all I can say is with

Musk like them love them hate them

whatever how can anybody get excited

about hey we found cuts whether you

whether

whether they’re legit or not let’s just

say the majority of them are let’s just

say how can you get excited about cuts

and reducing waste and then all of a

sudden look at a new tax bill that

increases spending yeah yep i understand

where he’s coming from because he’s not

the only one there’s a lot of people in

Congress several senators that are that

way they’re like “Okay what are we what

are we cutting i don’t see us cutting

anything.” Yes we’re spending more money

on defense and we’re spending more money

on I I personally think on the defense

side let’s look at let’s look at your

defense budget and see where you can cut

some out of there because it’s been

the most inefficient process from

procurement for the last 40 50 years

they’ve been immensely inefficient in

their in the way they procure things

programs take 10 years to come out and

the thing is basically inferior by the

time it comes out so yeah I agree

and then I just have a real quick we’re

not going to be able to hit all these

but yeah always personal consumption is

going up that’s another reason why our

market keeps going up retail sales

control versus census and JP Morgan

Chase card tracker i thought this is

interesting as the census is moving down

credit cards are basically staying

pretty steady yeah and on the right hand

side this is Bank of America’s credit

card spending by sector airlines yeah

department Store this surprised me home

improvement is always pretty steady and

Yeah i think on the airline side I’ve

personally just seen from pricing

airline tickets and stuff like that

because we’re traveling a little bit

later on in the year so we’ve been

pricing airline tickets and they are

less than they were when we flew last

year to the same location at the same

time so I think that’s part of I don’t

know why gas is down yeah but I don’t

think that’s really had that much effect

but prices seem to be down a little bit

yeah but spring and summer is when

people do home improvement yeah but look

at this this is all Yeah i mean that

that’s the one that concerns me more

than anything because that’s telling me

okay that’s a real estate problem too

and talking to my realtor buddies they

were saying this was like the worst

spring selling season that they’ve seen

in probably four to five years and and

that includes the the pandemic and

everything else the rates are so high

nobody’s selling their house and I think

the the other part is people are just

from talking to my one realtor buddy

that I run a group with what he was

saying is it’s just people are like

paralyzed in making a decision it really

has nothing to do with interest rates or

anything like that it’s just like

they’re paralyzed to make any kind of a

decision at this point so they’re just

not moving or not putting their house

the part of that is there’s not enough

inventory that if you’re going to sell

what are you going to buy that’s correct

and then if you are going to sell if

somebody’s got to finance it who wants

to pay 7% yeah and the reality is people

are having to bring down if they’re

forced to sell they’re really having to

bring down their the price of their

houses right now and it’s funny because

I just did a tax protest here in Austin

and I just first off this they were just

insane on their valuation of my house

but just looking at the spike that

happened kind of 2021 2022 on their

chart literally my house went up like

$250,000 in

value according to them during the

pandemic and then now it’s down actually

below it was where it was before the

pandemic hit you put in the appeal and

you fight it yeah oh I did yeah and I

got a massive reduction i didn’t if you

search for tax protest using AI and my

name you can read an article that I

wrote about that where I used AI to

actually do this and ended up saving

myself probably about $12,000 a year so

there you go well cool uh let me share

with my stuff what I’m going to talk

about a little bit today is what I’m

seeing i just want to go through the

Fed’s stuff that they look at and talk

about their apparently data dependent so

when we look at all this and we’ve been

talking about are they going to raise

rates are they going to lower rates are

they going to stay the same i’m going to

walk through these numbers

in the way they show today and wait a

minute look look oh you got your

ding-dong yes i wanted to make sure we

knew that ding-dong Texas is Hold on so

where what city is that okay so here’s

where I am right now this Oh it’s north

it’s north of Boston so it’s north of me

it’s south of or just close to Temple

Texas khen and if you know about the

military Fort Kavasos is here used to be

called Fort Hood Texas and so it’s right

there in literally the middle of nowhere

there is nothing in Ding-Dong Texas

except for Longhorn Cow you got to be a

ding-dong to live there you got to be a

ding-dong to live there and apparently

there’s nothing but cows that live there

i think I’ve driven through that area

once or twice and I totally agree with

that picture it’s nothing but cows all

right so looking at this week’s economic

calendar nothing earthshattering we had

the ones that really say something ism

manufacturing index it was nothing

exciting petroleum status report

although they say this is red which

means it’s like a super important thing

nobody gives a crap it seems like I

don’t ever hear anybody talking about it

probably the biggest one this week was

jobless claims and the jolts report

which we’ll go through here in a second

and then tomorrow employment situation

so we’ll get a little bit of a take on

the employment situation so let’s let’s

walk through some of these charts this

first of is the Joltz report which is

the job openings and labor turnover

survey if you guys remember back in the

day when we were talking about this it

hit its absolute high point in roughly

April of 2022 we had 12 million job

openings this was if you remember back

during the pandemic when you drove down

every street it seemed like every

low-end service place

had help wanted now hiring signs

everywhere you look there was that over

the last several years we’ve seen that

number decrease so job openings now are

right around 7.3 million at the high

point they were upwards of almost 12

million at that point

12,134 the bottom line here is total

non-farm hires which if you look at this

the You got to share your screen did you

not share it oh it should be shared can

you not see it no huh okay let me

unshare and reshare

share can you see that i can there we go

okay all right let me actually increase

the size of this chart just slightly

here and that should help this be I

guess it’s not going to go up here oh

there we go all right so here’s our

little chart if you look at this top

piece this is the job openings so this

is open jobs that they’re trying to fill

like I said hit the highest point around

12 million somewhere around March 2022

and it’s been on a steady decline since

then this week’s Jolts report basically

in line with where it’s been

7.4 let’s call it at that point so

that’s been going here’s the interesting

thing if you watch the bottom line here

this is the actual hires you know if you

look at this over time it been on this

steady little rise and it’s actually

been on a decline here this year and the

of course the job openings have been

declining as well so if you talk to my

recruiter friends that I have here

working in my office and things like

that you’re starting to see there’s just

especially in the high-tech areas it’s

been much less there’s more people I’ve

been looking for a job i think it’s

relatively easy to get a job on the low

end in the service industries but some

of the more skilled especially tech

areas it’s getting a little bit harder

to find jobs so that’s an interesting

thing to look at the unemployment rate

we were talking about this previously so

if you look at the long-term

unemployment rate of course when we’re

out here around July of 2021 it was

massively up there’s 14% up there if you

look at it over the last three years I

looked at one year here okay it’s about

the same but if you look at three years

that’s been going up and it’s getting

upwards or it’s getting up to where the

Fed would say hey we’re at full

employment or whatever in their world

today used to be six 7% was the

unemployment rate now it’s they say five

we’re getting closer to five and we’ve

been on a steady rise to toward that

let’s look at another number that they

look at the PCE this is the one that

they look at primarily if you look at it

over five years we were at the high

point about 7.2% in June of 2022 it’s

been slowly going down but we’re getting

closer to their target number which is

2% at least that’s what they say we look

over three years we’re steadily

declining we’re getting close to that 2%

number that they’re wanting at least on

the PCE

side all right so here is CPI which was

interesting to me because I thought CPI

was going

down but if you look at CPI it’s been

slowly creeping up so this might be an

if they said they were data dependent

and they used this number I could argue

the point maybe we’re seeing inflation

flying into the market and we shouldn’t

reduce interest rates at this point but

look at PPI now so here’s producer price

index over the last three years and it

went way below in April down to

negative.5% which tells us that the lead

end of the market which theoretically

should be the ones that are experiencing

all the tariffs and inflation and all

that well producer prices are reducing

pretty significantly here which should

roll back out to us in the in the real

world so last but not least let’s look

at the Treasury yield curve and what I

did is I marked three different places

on the yield curve chart which I didn’t

know you could do this you could pin

these which saves me from having to jump

back and forth between them but you know

the different ones that are on here so

this red one is the interest rate on May

or yeah May 1st 2025 so here’s where we

were the Fed funds rate basically is

where it is at the longer end of the

curve the 20 year and the 10 year or the

20 and the

30-year now are higher than where they

were so that’s the bond market saying

“Hey we think that with all this

spending that the the world is going to

end and all that who knows if they’re

the smartest guys in the room i don’t

know.” 10-year hasn’t really changed

dramatically although if you listen to

the news they would tell you that the

world is ending and interest rates are

going through the roof but they really

haven’t changed and they’re in this

range that the Fed likes to see which is

that block

so all of that

said if you if I were a Bettton man I

would say that probably we need to start

thinking

about reducing interest rates at this

point because if we’re data dependent

we’re going to follow

that what do I think is going to happen

i think the Fed I’ve seen this movie

before i think the Fed’s going to sit on

their hands and wait and ring their

hands and everything else until it gets

too late and the economy starts to slow

even more and we start to see less jobs

and everything else because of the

uncertainty part of that’s the

administration I totally admit but part

of that is the Fed holding these rates

freaking pretty high quite frankly

they’re historically not high but his if

you look at the last let’s say 20 years

they’re up there when it comes to that

and but also but

also pe people are still spending banks

are still loaning money even with

interest rates this high obviously

because it’s been a while since they

lowered lowering a quarter of a point

isn’t going to do anything except

psychological

but if they do it a couple of meetings

in a row That’s something different if

they wanted to lower it a quart of a

point to see the effect of it that’s one

thing but as we know until some of these

dar tariff agreements are signed

I don’t see why they would want to lower

rates with the risk of inflation and

here’s the thing we won’t know really in

the next three to four months we’re

going to know when it comes holiday

season

yeah yeah which we will and we might see

price prices rise we might see inflation

go up at that point i think one of the

challenges that we’re going to see is

we’re so reliant certain industries are

so reliant on China and if you look at

the percent or if you look at the number

of tank or the number of container ships

and things like that i was I heard

something on the news when I was driving

the other day that typically per month

we got 60 to 65 containers ships in to

US ports and it’s down to 30 to 35 at

this point in the period where a lot of

these companies are stocking up for the

Christmas season and things like that i

just look at it like our local Hobby

Lobby because my wife is a crafter so

we’re in there quite often and just

looking at the shelves

in Hobby Lobby right now they’re just

not as filled or stocked with certain

products like flower like fake flowers

and stuff like that they’re just not

anywhere near as stocked as they were

before so I don’t know if that’s an

effect of some of this stuff going on

with China and all that who knows

yeah it’s one of those weird one-offs

that I would say that I could see being

a major factor later on in the year that

might cause inflation to go up but like

I said I’m I’ve just seen this movie

happen too many times in my career where

the Fed just hand rings and hand rings

and then all of a sudden it’s oh crap

now we’ve got to now everything’s slowed

down now we’ve got to make changes and

Powell’s going into his last what year

as Fed chair and he wants his legacy to

be that he was the greatest mind that’s

ever been in that chair and who knows he

doesn’t seem like a narcissist like that

i don’t know he’s been a little

narcissistic with some of the stuff he’s

come out with that typ and we’ve seen a

couple of these greenspan was

narcissistic as hell oh yeah and I think

in some weird ways Yellen was but I just

never quite got her but yeah I mean

we’re both academics yeah and Yellen

they were academics yeah yeah at least

Pal is at least a market guy but I just

there’s times where I look at them and

I’m like “Okay why do you need to say

that there’s no need to just report the

data and share it with us.” And you

don’t need to give an opinion in a lot

of cases but that’s what the but that’s

what the media wants they Of course they

do of course they do but you need but

but he does sidstep a lot of the grenade

questions because I and this is the

whole thing and I know we got to go here

but I think one of one of my favorite

things to that is think about like when

they’re doing the presser then all these

people from the US and around the world

and now you get the microphone it’s your

chance you got one question yep and you

ask him a question that you know he

can’t answer that is your one

opportunity to ask a question and you

know he can’t answer so when are you

going to lower rates hey we can’t answer

that we’ll we’ll decide in our next

meeting it’s data dependent next

question you’ve been there all day your

media company paid for you to go and ask

the question that you knew you asked the

dumbest question you possibly can ask

ever yeah i I don’t put the I don’t put

the media past just some of the dumbest

people i’ve ever seen get those jobs

especially in the like government

coverage like that they’re they’re some

of the dip dippiest people I’ve ever

seen just why would you get a breaking

story do you think Yeah do you think

he’s going to go huh i’ve never

said go yeah great question i think

we’re gonna do No he’s never gonna say

that there is no Fed chairman ever that

is gonna say that yeah so why keep

asking that same stupid ass question all

right all right folks we do these shows

for you hopefully this was fun and

you’ve got some new names of of cities

that you can enjoy hopefully this data i

don’t know if I convinced you one way or

another but it it’s how I see it when it

comes to this and a lot of great

information from Ron like I said the the

big concern I have is that one one

column in that chart that you had Ron

which was the spending on home

improvement because that tells a lot now

it also may tell the fact that people

did a lot of home improvement during the

pandemic and they just don’t have

anything else left if they’re not moving

there’s always something to do oh I know

it’s like a never- ending story all

right guys thanks a lot and we will see

you guys back here the very next time