SECTOR JOBS, LARGEST DECLINE
SINCE APRIL 2020.
YESTERDAY STRATEGIC WEALTH
PARTNER LUKE LLOYD, THANK YOU
VERY MUCH FOR BEING HERE.
WE ARE ALSO LOOKING AHEAD TO THE
SEPTEMBER JOB’S REPORT OUT ON
FRIDAY AND THEN, OF COURSE, VERY
SOON AFTER THIRD-QUARTER NEWS AS
WE AWAIT CORPORATE AMERICA AND THEIR GUIDANCE FOR THE REST OF
THEIR GUIDANCE FOR THE REST OF
THE YEAR IN 2023, WHAT IS YOUR
REACTION IN THE MACRO MARKET?
>> ONE OF THE MOST IMPORTANT
LESSONS, NUMBERS CAN LIE,
NUMBERS CAN BE MANIPULATED TO
TELL SO MANY DIFFERENT STORIES
AND THE FACT THAT PEOPLE ARE
STILL USING THE JOB MARKET TO
HIGHLIGHT THE STRENGTH OF THE
ECONOMY ABSOLUTELY BLOWS MY
MIND.
THERE’S MORE PEOPLE THAN EVER
THAT HAVE TWO JOBS TO SUPPORT
THEIR FAMILY AND THAT’S ONE TO
HAVE MAIN REASON THAT IS THE JOB
NUMBERS LOOK SO GOOD AND COMBINE
WITH LOWEST PRODUCTIVITY RATES
EVER SEEN IN HISTORY AND THE JOB
MARKET IS ESSENTIALLY ON ITS
LAST FOOT AND THE SHOE IS ABOUT
THE DROP.
THE TWO MAIN KEY FACTORS FOR THE
ECONOMY RIGHT NOW AND WHEN WE
GET BACK TO SOME SORT OF STABLE
GROWTH IN THE ECONOMY AND STOCK
MARKET IS RELIANT ON THE JOB
MARKET AND INFLATION.
EVERYONE TALK ABOUT INFLATION
BUT NOBODY TALKS ABOUT WHAT THE
UNEMPLOYMENT RATE LOOKS LIKE
WHEN INFLATION COMES DOWN TO 2
OR 3%.
THAT’S THE KEY TO THE ECONOMY
AND WHAT WILL DETERMINE
EVERYTHING FROM GROWTH IN THE
ECONOMY ALL THE WAY TO DEFAULT
RATES IN THE ECONOMY SO I THINK
UNEMPLOYMENT PROBABLY GOES
HIGHER THAN MOST PEOPLE THINK.
UPWARDS OF 5% OR 6% WHEN YOU
FUEL AN ECONOMY FOR STIMULUS
DEBT SINCE ’08 AND ’09 THE
ECONOMY NEEDS TO RESET.
MARIA: WHAT WILL THAT MEAN FOR
CORPORATE EARNINGS AND STOCK
MARKET?
OBVIOUSLY INFLATION, WE ARE
LOOKING AT 40-YEAR HIGHS AND
THAT HAS IMPACTED MARKETS
ALTHOUGH TEN-YEAR TREASURY AFTER
HITTING 4% HAS COME DOWN.
WE’VE GOT NATIONAL DEBT TOPPING
$31 TRILLION FOR THE FIRST TIME
AND THIS MORNING THE TEN-YEAR IS
UP 7 BASIS POINTS AT 3.708%.
YOU ARE SAYING ONE OF THE
BIGGEST WORRIES OUT THERE IS
LEVERED COMPANIES AS INTEREST
RATES RISE.
TELL ME ABOUT THE IMPACT ON
MARKETS AND THE MACRO STORY, TO
WHAT SOUNDS LIKE TO ME YOU THINK
IS DETERIORATING.
>> AGAIN, THE STOCK MARKET AND
THE ECONOMY WAS FUELED BY DEBT,
LOW COST DEBT SINCE 2008 AND
2009 AND RATES RISING A LOT OF
COMPANIES ARE GETTING SHOCKED.
MANY PEOPLE DON’T REALIZE A LOT
OF DEBT FINANCED BY COMPANIES
ARE THROUGH FLOATING RATES WHICH
MEANS DEBT BECOMES MORE
EXPENSIVE AS INTEREST RATES
RISE.
SO IT’S REALLY IMPORTANT TO
UNDERSTAND WHICH COMPANIES YOU
OWN AND THAT’S WHY YOU WANT TO
STAY AWAY FROM A LOT OF GROWTH
COMPANIES BECAUSE THEY ARE
HIGHLY LEVERED COMPANIES, THE
OTHER PART, MARIA, A LOT OF
PEOPLE LIVE IN ECHO CHAMBERS AND
THEY DON’T UNDERSTAND WHAT IT’S
LIKE OUT THERE AND I WAS IN
BEVERLY HILLS AND MANY PEOPLE
AREN’T THINKING TWICE ABOUT
SPENDING MONEY.
THEY ARE LIVING IN THEIR ECHO
CHAMBER AND I CAME BACK FROM
OHIO WHERE ALL PEOPLE COULD TALK
ABOUT FREE GOOD AND FREE
GADGETS. A LOT OF PEOPLE STILL DON’T
A LOT OF PEOPLE STILL DON’T
REALIZE HOW BAD IT IS OUT AND 8%
EARNINGS GROWTH --
DAGEN: LUKE, THE PEOPLE WHO I
LIVE WITH IN THE RURAL SOUTH
KNOW HOW BAD IT IS.
WE ARE TALKING ABOUT DEBT.
STEPHANIE POMBOY TWEETED THIS,
BRILLIANT, FAVORITE LADY.
ONE DAY-THIS WAS YESTERDAY, WE
ARE ONE DAY IN THROUGH THE
FOURTH QUARTER, IT’S NOT OFF TO
A GATE START.
4 HIGH YIELD DOWNGRADES FOR ONE
UPGRADE.
UP-DOWN RATIO OF 4.25.
WE WERE RUNNING THE OTHERWAY
LAST SUMMER.
THAT’S ONE THING TO WATCH OUT
FOR.
IN TERMS OF LIKE THE EMPLOYMENT
PICTURE AND INFLATION, SO
YESTERDAY JOB OPENINGS FELL.
THIS WAS IN AUGUST, LAYOFFS WERE
UP SLIGHTLY, OPENINGS FELL BY
10%.
THAT WAS TALKED ABOUT AS
SOMETHING THE FEDERAL RESERVE
MIGHT BE LOOKING FOR OR WANTING
TO SEE, BUT THAT -- THIS IS THE
KIND OF SLOWDOWN YOU DON’T WANT
TO HAVE, SO IF EMPLOYERS ARE
SKITTISH IN PULLING BACK, THAT
HURT SUPPLY BUT IT DOESN’T HURT
THE DEMAND SIDE WHERE CONSUMERS
KEEP SPENDING.
SO YOU GET THE SLOWDOWN IN THE
ECONOMY, THIS IS THE VERY TYPE
OF SLOWDOWN DRIVEN BY THE
SPLICED THAT YOU DON’T WANT TO
SEE.
IT MIGHT TAKE FOR CONSUMERS TO
REALLY PULL BACK LIKE THE
NEIGHBOR’S HOUSE GETS SOLD FOR A
HUNDRED THOUSAND DOLLARS LESS.
IT MIGHT TAKE THAT LONG SO YOU
HAVE AN ECONOMIC SLOWDOWN BUT
INFLATION THAT STILL NEEDS
FIGHTING BY THE FEDERAL RESERVE
AND THAT’S SOMETHING THE MARKETS
ARE TRYING TO GRAPPLE HERE.
MARIA: LAYER ONTO THAT HIGHER
OIL PRICES AND BIGGEST SUPPLY
CUT SINCE 2020.
ALL OF DAGEN’S NARRATIVE HERE IN
TERMS OF THIS SLOWING ECONOMY,
WHAT YOU DON’T WANT, THE WORST THICK YOU WANT ON TOP OF THAT IS
THICK YOU WANT ON TOP OF THAT IS
HIGHER OIL PRICE.
>> YOU’RE ABSOLUTELY RIGHT,
MARIA, IT’S SHOCKING THAT IS
LOOKING TO CUT SUPPLY AND ONE OF
THE BIGGEST MISTAKES SINCE I’VE
SEEN A LONG TIME AND PROHIBITED
THE MONEY AND STIMULUS IN THE
ECONOMY.
WE ARE STILL IN AN ENERGY CRISIS
AND WINTER IS ABOUT TO COME.
WHEN NATURAL GAS PIESES ARE HIGH
THE WORLD RELIES ON OIL AND
COAL.
NOT SOLAR, NOT WIND.
THE COMBINATION OF HIGH DEMAND
AND LOW SUPPLY COULD BE VERY
FAVORABLE FOR OIL PRICES THROUGH
THE END OF THE YEAR.
THE THING THAT JUST RATES ME,
MARIA, WHAT GOT US INTO THIS
MESS IN THE FIRST PLACE, LEFTIST
POLICIES LIKE TO PUSH THROUGH
RENEWABLE ENERGY.
I DON’T THINK PEOPLE REALIZE HOW
BAD IT IS OVER IN EUROPE, PEOPLE
LITERALLY CAN’T AFFORD TO TURN
ON THEIR LIGHTS.
WE MIGHT BE LOOKING AT STIMULUS
SITUATION HERE SOON.
MARIA: REALLY DANGEROUS STUFF.