Deep Dive
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A warm welcome to the Monday Risk Reversal Podcast. Guy Adami here, along with Elizabeth Young-Thomas, soon to be a mother, by the way. This might be the last Monday we see her for quite some time. And you know what? I'm okay with that, although we will miss her dearly. And of course, Dan Nathan. Dan, how are you? I'm doing great. Good morning, people.
There's a lot going on here. That move Friday, Elizabeth, was interesting now. Again, I'll give it maybe month-end stuff, a little sort of some oddities going on, maybe people getting ahead of what they thought would happen over the weekend. Obviously, there's a huge move in crypto. But real quick, Friday's price action, anything to glean from that? Interesting is an understatement. In the middle of the day, we sold off. There were slight
gains in most of the major indices earlier in the day, sold off middle of the day because of, I don't know if you heard about this meeting that happened in the Oval Office. It's a meeting that happened in the Oval Office. Sold off on the heels of that, but then the afternoon, just a rip your face off rally, and we had one of the best days that we've had in a long time. So I don't know how to explain it at this point, because I would have thought that increased geopolitical tensions and
and perhaps even further conflict between Russia and Ukraine would have caused the market a little bit more nerves. But here we are. Oh, we just opened this morning up less than 1% on all of the major indices. But Friday's rally, maybe just a little bit of a relief. I understand there were some tech
levels that we hit, we were down about 5% from the highs in the S&P. So encouraging to see a bounce at that level, because then that means that buyers have come in. A lot of times, if you get below that 5% drawdown, things get a little bit more disorderly and people start to panic more.
Yeah, I think that probably was the vibe in general. So we had that 5% pullback, right? Things felt kind of bad, especially after that NVIDIA report. That was good, let's be clear, right? And then you had that sell-off that accelerated, I think, Thursday afternoon, stock closed down close to 8% or so. It just felt like sentiment got really bad. You know, Liz, we had Tom Lee on the pod. We recorded Thursday afternoon, it dropped Friday morning. You know, and he had mentioned, and somewhat casually,
you know, and that is his nature in general. But he thought that, you know, if we were down five, six, seven percent or so from those recent highs, that that could be the low into the summer. And I think a lot of what you just said, you know, if a lot of the trade, you know, tension is worked into the market right here or was Friday morning when we're down five percent and some of the other uncertainty that was going on in and around geopolitics and everything,
It's set up for the sort of squeeze that we had on Friday afternoon. I think Guy and I, while we are probably in the mindset of selling rallies right here, we also don't press really poor sentiment, right? Like we're just probably not pounding the table on this is a great sale right here. But this is why this week I think is so interesting. Do they punt on the tariffs tomorrow, right? Do we start to focus on Friday's jobs report? You know, really what is embedded in
as far as the economic projections right now. We've seen, and we were quoting John Butters from FactSet last week, how EPS for Q1 has come down a bit for the full year. It's come down a little bit. So maybe expectations are weakening a little bit on that front. But again, there's this GDP, I think,
Doug Cass sent it to us, the Atlanta Fed GDP Now. I think they have a reading for Q1 that's negative, right? So a lot of folks, we've been talking about this recession probabilities. Maybe it's been moving up a little bit. If you start seeing a print go below 2% estimates, forget let's call GDP Now maybe an outlier. You know what I mean? Then you probably start to have a market or at least investors that start selling rallies also. You know, it's interesting, Elizabeth, you had talked about this towards the end of last year when we,
when you and I and Dan would talk about my concern with inflation and you sort of warn people that, you know, you might see something hot in January, but you also said, and maybe correctly in retrospect, that, you know, there's this January effect at the beginning of each year where things seem elevated based on a number of different inputs, right?
And then they sort of get mitigated as the year goes on. So the PCE that we saw on Friday basically backs up some of the assertions you had late last year. So not that I want to start there, but I want to sort of drill down on that a bit. Yeah. So if you remember, the CPI report came in hot pretty much across the board for January. And markets didn't like it. We had a lot of volatility in the rate market. We had a lot of volatility in what happened with Fed rate expectations. PCE came in more or less average.
expectations, but certainly not cooler. It hasn't shown a ton of progress. And that's, I think, where we're stuck right now with inflation. And the market had somewhat of a reaction, but not really. It wasn't this huge surprise. So when you look at PCE, I mean, we know that that's what the Fed tends to talk about and tends to target. Although I would point out that Jerome Powell has said in
a number of different press conferences that they do look at headline CPI and that they are focused on what affects the consumer. And to Dan's point earlier about GDP, if you're looking at GDP coming in negative for the first quarter, I mean, first of all, I would be surprised. I think it would take a lot to really bring us down to negative from where we are. But if we start to hear negative numbers in GDP for the first quarter, I think the stock market has a lot lower to go because that would be quite a big surprise from where we're priced. And I would expect...
that you see relief in inflation at the same time, but not for good reasons. It would be because demand had slowed, consumers had stopped spending, no longer want to absorb the price pass-throughs that are happening from companies. That would put us in a completely different situation than what I think we're in today. I also think you'd see a 10-year that's much lower than what it is today because of those fears. So it's not just the January effect.
There is a January effect. But if you look at prior years, CPI in particular tends to surprise to the upside, even for the first quarter of the year. Yeah, that's a great point on the 10-year also, because I think we kissed 4.2% on Friday afternoon a little bit. And again, maybe that's a technical level. Maybe it's not. We're down from 4.8% in mid-January. And this is one of the things I thought was really interesting. David Rosenberg, Rosenberg Research this morning had a
a note out, or as he does every morning. But I just want to read this one bit. Markets cool on Trump 2.0. From my lens, the Trump honeymoon period with the markets is over. The major averages have now done nothing since Election Day, which is a far cry from the powerful and ongoing risk-on response at this stage in Trump 1.0. Only 8% of the S&P 500 stocks are at fresh 52-week highs, well below the 25% share in the early November when President Trump won the election.
Bitcoin has been in a free fall. We know that change. We'll hit that in a second. The U.S. economy, instead of speeding up, is slowing down. So, Guy, do you think Rosie has his finger on the pulse of investor sentiment? And, you know, and we got to broaden that out, not just investors, but the way folks who participate in the economy, right?
companies that are making hiring plans and CapEx plans and R&D plans. I mean, does this make sense to you in the context of what Liz just kind of laid out for the potential? Yeah, it does make sense to me. And again, it's that whole be careful what you wish for in the form of lower yields, because lower yields to me are signaling exactly that. Things are slowing down. And when you start hearing negative GDP prints, I don't remember. I mean, it was probably in the midst of
COVID, where those types of numbers were being talked about and obviously then being subsequently printed. So that should be concerning. And I guarantee it's creating some alarm bells in this administration right now, because the last thing obviously that they want to see is a slowdown in economic growth. Now, it might be able to be explained away as a pundits and politicians typically do and blame things on prior administrations. But the reality is when you walk into the door, you own it. So that's going to be a bit problematic in terms of
Is the market set up for it? No. And we'll talk about other things over the next few minutes. But JP Morgan talking about air pockets in the economy, potentially in the market. So I'm not convinced that those things are priced in. Although I will say, one of the things that clearly is starting to show its head, and we've talked about this a number of times, the VIX continues to sort of, I think, be this very quiet story, clearly manifesting itself in individual names, Dan, but not necessarily manifesting itself in the broader market yet.
Yeah, and that's a great point, just given the data that we just read, 8% of S&P 500 stocks near highs versus 25% in November at those highs. So you're seeing that broadening out story is going the opposite way right now. But Liz, I got a question for you because this is something, and I hit Tom Lee about this because Guy and I in our conversation, he said something pretty interesting and it seems out of consensus a little bit.
So he said that tariffs, and I don't think he was relating or referring to an extended sort of trade war, but maybe in the near term, he said that tariffs have the potential to be deflationary. Why? Because, okay, you're going to see consumers push off big purchases and the like, so prices are going to come down because of that. And I guess I haven't heard too many people make that argument, but to me, it's actually, it's not stagflationary.
So if you have prices that are not going to come down meaningfully, but you have consumers that are waiting for them to come down, that's going to slow economic growth. But if you have all these other conditions in place that are going to keep input costs higher, supply chain sort of issues, geopolitics is going to remain a sort of thing, does that make some sense where
I'm coming from versus what his, you know, kind of his thought about it being deflationary. So some of this, if you if you look at what's happening in China, we obviously know that China is suffering from a growth issue. They're suffering from a deflationary issue out there.
They have been exporting deflation to the rest of the globe for a while. So that's part of the force. I think in this case, what Tom might be talking about, if you look at just measures of inflation from a common man's standpoint, meaning the stuff that we can't opt out of, right? We can opt out of buying televisions. We can opt out of buying dishwashers, some of those discretionary items. You can't opt out of food, energy, shelter, car insurance, some of those required things.
tariffs are probably not going to change the picture on those required things very much. In fact, may even increase the cost of those required things. In which case, yes, if you have a slowing economy and an increase in costs and stuff that consumers have to buy every single day, no matter what, then yes, that's a stagflationary environment. The tricky part will be that some of the measures, because of the way that we measure inflation, headline inflation in particular, it will show likely that
costs either have increased or certain elements of it have just kind of stayed steady. The data may contradict what we're actually experiencing in real life, but where it will come through is the consumer will shift their behavior. And we've seen some of this story before. Consumers can shift their behavior very quickly. And then you very quickly end up with retailers with
mismatched inventory, not good outlooks on the next few quarters of consumption, and you get a GDP surprise, right? So I think that's the real risk that we have, maybe not in the first quarter, but as some of this rolls through in the second and third quarter of 2025. You know, Dan, you mentioned NVIDIA, you mentioned the quarter. And again, there was nothing horrible about the quarter. I mean, people will point to the revenue. And again,
They came in, Gene Munster thought they would beat revenue consensus by about $2 billion. I think they beat by about a billion. And he thought the subsequent guide for the next quarter would be of the magnitude of a $2 billion beat. And that didn't happen either. But with that said, the numbers are still significant. But as we're sitting here, there was a Wall Street Journal article, and this is something you've talked about, and I'll sort of
Summarize it a bit. Chinese buyers are circumventing U.S. export controls to order NVIDIA's latest artificial intelligence chips, illustrating the challenges the Trump administration will face in choking off cutting-edge American technology. Basically, they're getting around it
by doing sort of this third parties in the nearby regions. Now, that's going to prove to be problematic, and you don't really want to poke that bear. And I say that because NVIDIA, again, has not traded particularly well now since that reversal we saw in January. Broader market,
hanging in there like a champ, but the sort of the, one of the pillars of this rally has been Nvidia and there are all these stories out there now. Yeah. And it goes, you know, there's two aspects of this, right? So if Singapore, Vietnam, they're buying these chips, right? They're putting them into servers. They're selling them into China. This article goes into great detail about some of the ways in which
that is done. We know that's been going on for a very long time. And, you know, one of the reasons why we continue to see this kind of 100% year over year revenue growth for a couple of years is they were obviously circumventing a lot of these export controls and the like here. There's two things that I think really stand out to me about this is that, you know, we've talked about the
beats getting less and less guy. I feel like every quarter, that's something that you've been talking about. So, you know, expectations were a 5% revenue beat. They did that for the quarter. They did that for the guidance. This is coming after, you know, two and a half years of massive, massive beats. So there's two ways you can think about this.
Are they setting up for, we're in this digestion phase, do they start to reaccelerate growth and then you start getting bigger beats and then therefore if folks really do believe the stock is cheap, trading at 26.5 times this year expected growth of 50% on the revenue and the EPS, you could make that argument. So are they getting the benefit of China right now?
no doubt about it. Our Chinese probably doubling ordering, you know, Blackwell right now, no doubt about it. When I say Chinese, I mean those countries in and around it. I also think it's interesting, NVIDIA was up 4% on Friday after its 8% decline. It
got back basically half of the move from Thursday afternoon. The stock was trading down most of the day Thursday after their earnings. I want to say about 4% accelerated to the downside, got all that back, at least what it gave up the afternoon before. And now it's down 4% again today. So it'll be interesting to see as it gets back towards those lows from Thursday if it takes it out, because I actually, I think there's a huge barometer for mega cap tech right now.
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You know, there's certain people, Elizabeth, that I listen to when they speak. You obviously are one of them. But another one is Ray Dalio. And, you know, there was a Bloomberg piece and he talked about a U.S. debt crisis, heart attack quotes within three years. Three years is a long time. But I'm just going to sort of
give you some of the highlights. I know you saw it. Ray Dalio, the billionaire founder of hedge fund Bridgewater Associates, has a warning for the Trump administration. Commit right now to reducing the deficit or risk a major debt crisis within three years. If you don't, you're going to be in trouble. And then he talked about a lot of different things. I think he was on the Odd Lots podcast as well. He talked about his belief in gold. And I also think, Elizabeth, he talked about the fact that
You know, when you have those kinds of debts, what it does to the bond market and sort of the buyers of last resort and what they're willing to pay to buy our bonds. So, you know, he painted an interesting picture, a picture that I know you've been talking about for a while. So obviously rates have come down. We address the reasons why. And again, I think one of the reasons is because there is a slowdown in the economy. But the flip side of that coin is everything that Ray Dalio is talking about.
Yeah, I mean, this is one of the reasons that all roads lead to gold and why you've seen new high after new high after new high and people sort of scratching their heads about where the demand is coming from. It's coming from forces like this. And when you talk about the 10 year yield having fallen, I think the assumption broadly is that, oh, it'll just keep coming down now in some sort of orderly fashion. We'll have a yield curve that gradually steepens as the Fed normalizes rates and everything will go just very swimmingly.
If we have a debt crisis, and to your point, three years is a long time, and right now it feels like one day lasts three years. But if we have a debt crisis, buyers are absolutely going to demand a higher yield. They are going to demand to be paid more to hold onto our debt because of the level of debt that we have. I think that both sides of the aisle are on the same page on that. We understand that there's a debt problem in the United States. The hard part about it is how do you solve that
quickly. It is very difficult to solve quickly. And the math of it, if we're going to lower taxes, you have lower revenue. You also have to commensurately lower expenses, which I think there's some attempt by the administration to do. However, it's not as easy as just pushing a button and solving that
problem. So we are going to come up against this volatility and this issue over and over again for probably this entire administration, because it is a difficult thing to get in front of. I think that it does pose a pretty big risk of seeing a rise again in the 10-year yield, a rise in long-term yields, and just a rise even across the curve. That's why you've seen a lot of asset managers and big bond managers, Jeffrey Gundlach is one of them,
shortening duration, not wanting to own anything beyond a 10 year, really favoring the belly of the curve. And now you're seeing even shorter duration preferences because of that. Because I think the last assumption on this is that if we do have that major debt problem, the Fed will have to turn dovish. If the economy starts to suffer, if demand in the treasury market starts to suffer and the Fed has to turn dovish, that means that lower yields will occur on the short end of the
Yeah. And let's just be clear here. Every administration over the last 20 has kicked that can down the road. You know what I mean? And so that's why, you know, when we have folks like, you know, Steve Eisman on with us, he's almost like chuckling when you bring up the potential for, you know, a debt bomb, you know, kind of, you know, hurting our economy. But I think the point that you just made about the 10 year, it could go either way. And we talked about this last week that Treasury Secretary Besset, you know, one of the things that they are focused on is
Is the 3-3-3, one of the threes is getting the 10-year yield back to 3% or so. And Mike Wilson's out this morning in his note from Morgan Stanley. The reason why rates are falling is important. Rate sensitivity has diminished as the 10-year yield has settled below 4.5 level. In other words, lower rates are currently not benefiting equity returns to the extent they have just a couple weeks ago. Given the reason why yields are falling, softer growth expectations.
What this means for the time being is that growth, both economic and earnings, is now the prominent driver of equity indices, guys. So that's something that we have kind of, you know, come to know that the 10-year yield, the movements of it affect stocks, you know, go back to late 21 when the Fed signaled that they were going to start to raise the Fed funds rate. We saw the 10-year go up and we saw, you know, high valuation stocks for the most part. And then all stocks
go down. You know, at one point, I think the S&P was down close to 27% as low as in 22, and the NASDAQ was down more than 35 or something like that. But again, the volatility that we've seen in the 10-year over the last couple years since that bottom has really not affected stocks adversely one way or the other. Yeah, and that leads to the JP Morgan note. And you know,
We're starting to thread this all together, Elizabeth. And this is from JP Morgan. The economy's at a risk of plunging into an air pocket. The risk of a broadening air pocket inactivity where more aggressive trade, immigration, and fiscal consolidation policies could increase uncertainty and ultimately affect payrolls. I mean, this is going on and on to talk about a lot of the things which we've been discussing for a while. So in terms of lower yields, yeah,
Yeah, yields are going to go lower if we do hit this air pocket, because there will be a flight to perceived quality and form of the bond market. But it goes back again to be careful what you wish for, because if you think lower yields are going to be some salve for the broader market, I think you're mistaken. And Liz, real quick, I think one of the reasons, and Dan and I talked about this last week, that the Trump administration is now seemingly more focused on
bond yields or rates than they are with the stock market is I think there's this belief that if rates go down, by definition, the stock market will take care of itself. So thoughts on that? Okay, two things. So I would say, and I wrote about this a little bit last week, I would say we are in the midst of a regime shift. And this is not a political statement whatsoever. It's a regime shift of yields falling and not serving as a catalyst for stocks to move higher. So the market's reaction function to yields
has changed. And it's because of the reason that yields are falling. And Guy, I know you've been talking about this for years now. You have to pay attention to the drivers, not just the absolute level, not even just the spread between the twos and tens. It's the drivers of why things are moving like that. There also was a note out, I think it was from Goldman this morning, about ratcheting down earnings.
earnings expectations. I believe the full year earnings expectations, they brought it down from 11 to 9%. So even absent some of this volatility that we're seeing in yields, geopolitical risk, all of the other things that are going on, we're in a year where the expectations are just more muted. We've got
lower earnings expectations, lower return expectations. And I think that's all important to keep in mind when you're thinking about going forward and what the growth trajectory of this economy looks like. You also have to think about what the growth trajectory of the market looks like. The market is probably not going to eclipse growth of the economy again, and especially if we don't have technology stocks pulling their weight. So I think there's
still quite a bit of volatility to come. I think there's still quite a bit for investors to get through in this first half of the year. And we have to be careful not to set our expectations too high because already we've seen so much more volatility than I think is even something that we're used to in a full year. Yeah, no doubt. And again, you know, before we get to the jobs report and what we think
or at least how the market takes it one way or the other. I think we want to hit semis again, and we can kind of move on from NVIDIA a little bit and just kind of think of Broadcom and Marvel report this week. And so these are two stocks that got huge boosts in December. I don't know if you guys recall. I think Broadcom broke out to a new all-time high after really consolidating for a while. It was up 24% or something the day after its report. They gave some huge guidance as it relates to
Three years out, their AI chip sort of TAM and the market just ate it all up. When you look at where Broadcom went and where it is right now, it's almost filled in that entire gap. Marvell, on the other hand, is fantastic.
filled in more so of that gap and gone a bunch lower. And so the idea of these two companies that make custom silicon, right? So if 50% of NVIDIA's revenue were all the hyperscalers, including meta and XAI and the like, so all of those customers were looking to diversify and make high-end GPUs that were more specific to some of the products and services that they have, those two companies were meant to get, you know, I think the bulk of that sort of revenue diversification. But here we are this week. Their guidance is going to be
really interesting to me and then how these stocks relate. And the other one, and Guy, maybe this is for you a little bit. Taiwan Semi is trading at five-month lows right now. It's down about 23% from its highs. Now, we know that Taiwan Semi makes 90% of these high-end GPUs. So when you think about trade and tariff, you think of the ratcheting up of the situation that we have with China, which also could push them to get more aggressive with Taiwan. This is a situation that I know you've been talking about for a
a wild guy, but it seems to get closer and closer for the potential, at least of economic blocks or, you know, that sort of thing that would definitely ratchet up the tensions. And it would ratchet up the tensions as China looks at the West now, and they see us
really splintering away from some of these alliances, right? Look at the Europeans and us have never been further divided than we are at this moment. Look at how this administration is treating some of our allies over here, Canada and Mexico, and Europe.
You know, I mean, to them, this is like, you know, this is like kids in a candy store. They can really do whatever the hell they want right now. And we really don't have the position to kind of work on three fronts, if that makes some sense. No, fair. And I think that's something the market's trying to figure out. And you're right to bring up Taiwan Semi, which is trading at levels we last saw in our
October of last year. And you're right to bring up Broadcom because at 193, you know, if you go back and look that huge guide that they gave in December, I mean, you just said it, we've almost round tripped. I think it started that day back in December around 180. And here we are at 193. And, you know, depending on what you want to look at in terms of semiconductors, be it the Sox or the SMH,
Those are both things that topped out in July of last year and have been trading sideways to lower since. With a market that's been predicated on the strength of the semiconductor sector and industry, if you really go down and look at it, this is a sector that has not traded well now for the last eight or nine months.
which I don't think a lot of people fully comprehend. So we'll see. And again, you're right to bring these things up. I am fascinated to hear what Broadcom has to say and if they can build on that last quarter, which was historic in terms of the move that we saw. I mean, if you think about it, Dan, Broadcom at one point was a $1.2 trillion company. It's just dipped below a trillion dollars again. And that stock moved, I think, almost 35% or 40% in one day in
Yeah, no doubt. Liz, you know, before we get to jobs again, I think this is probably almost more important for that jobs print. We have Costco reporting this week. We have Target. We have Best Buy. We have a handful of other retailers. And when you think about what we heard from Walmart a couple weeks ago, by no means was that like a bad quarter.
quarter bad guidance, but they did guide down a little bit. And some of their commentary did reflect the fact that tariffs and trade are definitely top of mind, but then also the consumer and what they are willing, you know what I mean, to spend price-wise. I don't know about you guys, but I've heard a lot more about the price of eggs over the last month or so than I did
in 2024. So if that's just one anecdotal sort of point, it seems that consumers are still struggling with prices, you know what I mean, of some everyday items. And I think Costco, what they have to say about the consumer is going to be really important. Well, Costco has benefited, as has Walmart, from the trade down, largely in the grocery department.
of both stores to across the board in consumers. So regardless of income level, those both of those have benefited from lower prices. Nobody's immune, right? So we put tariffs on, you know how much agriculture we get from Mexico? If we put tariffs on, grocery prices are staying high.
and particularly in the goods that we get from the countries that we're talking about slapping a 25% tariff on. And grocery prices, like I talked about earlier in this episode, that's one of those common man items. You can't avoid it. You can try to buy cheaper things. And I think people are already trying to do that by going to Walmart, by going to Costco, trying to find the cheapest way that they can buy these everyday items. You can't get much cheaper than where we are. And if you're a company that is needing to either import those goods or...
or try to pass it through to maintain your own profit margins, because discretionary spending has gone down, and you're not getting profit margin from the other places in your store, then you have to pass some of it through. And consumers just aren't going to be able to avoid some of these price hikes, or maybe even maintaining the higher price that we're already seeing. So eggs are not the only story. Of course, those are the ones making headlines. But anybody who's gone to a grocery store in the last month or so knows that the bill just is higher. And
You don't notice it on every single item, but you get to the register and realize, you know, I just bought a handful of things and here we are at $50 and I don't know what happened, right? So I think consumers are going to continue to feel that pinch. And then there's a risk that gas prices rise as well if we're putting tariffs on energy and other products that are coming from Canada and so on and so forth, or if tensions escalate again between Russia and Ukraine. There are just so many question marks out there that can affect the items that we cannot
opt out of as consumers. You know, I know real quick, just to wrap up the retail side, we have Best Buy tomorrow. By the way, Best Buy topped out in November of 2021 around $135 a share. It's currently trading around 90. Great operator, fantastic.
through COVID sort of seemingly falling on at least the stock on hard times last couple of years and then Target tomorrow as well. Target has their own issues. And I will say this is for me, I don't think it's necessarily a tell on anything other than how they're operating. But the big one for you this week, I think Elizabeth, it's going to be Friday, the jobs report. And again, you're talking to somebody in the form of me that thought the job market would deteriorate a lot
faster than it has. I mean, because it quite frankly hasn't really deteriorated at all. Although below the surface, I will continue to say there's damage being done. So if we look at what the expectations are for this jobs report, change in non-farm payroll is expected to come in at 160,000, which is above what last month was. But remember when that number was in the 200s.
pretty steadily for a very long time. So we've slowly come down. Obviously, it's a good thing that we're still adding jobs. But when you look at things like average hourly earnings, also expected to come down a tick. And then we've got the unemployment rate expected to stay steady at 4%. Now, there have been some confusing reads in the jobs market for the last few months, things like maybe the number of jobs added goes down and it disappoints, but somehow the unemployment rate
stays steady. So there are some conflicting data that come through in this report. I still remember what happened in August, although we call it the Japanese yen crisis. That was happening the Monday after a pretty bad jobs report. And we had an unemployment rate that went up to, I believe, 4.3 percent. It was supposed to come in at 4.1 percent. And the market
freaked out in the United States. So if we have another jobs report where the unemployment rate surprises to the upside, you have to be prepared for that kind of volatility. Unfortunately, in August, it just got layered on top of with a bunch of other stuff that was going on around the globe. But I don't expect that this one is going to change things dramatically. I do think, though, as we get through the first quarter and maybe into the second quarter, you'll start to see some differences. And I've mentioned this probably a million times now on this pod and on Market Call.
you have to watch the construction market. We have mortgage rates that are still high. We have new home sales that have come down. We have existing home sales that we know are pretty much frozen. As construction workers are in less demand, you're going to see construction unemployment roll over likely. And that usually leads the broader labor market by about six to nine months.
Yeah, no doubt. And again, we covered a lot of stuff that's going on this week, you know, from tariffs. We didn't really cover the crypto thing. But again, this seems like a big grift here. Just last night, you know, there was some talk about a Bitcoin strategic reserve. You saw Bitcoin that was what, 84,000 looked really like it was on its way back towards, you know, 74,000, the breakout level. So all those sorts of things ripped. Let's see what happens there. But, you know, between trade
tariffs earnings and then jobs which you just went over i mean this week could be a really important week in the market you know the s p if you look at the options is pricing about a two percent move in either direction that was coming in to today and already we've had a one percent move from the highs since we started recording this um the s p is down about 40 basis points it was up i think 40 or so maybe a little more i see a lot of red on my fact set
screen. So, you know, to me, I feel like this is the sort of setup that, you know, investors probably didn't want into Friday guy. You know what I mean? Like a kind of make or break sort of situation, especially if you continue to see the trade and the tariff stuff not going away anytime soon. So I don't know. Maybe we see a real
relief rally if they push out another month. I don't think the administration has been very clear about what the concessions they want from Mexico and Canada are. If it's just about the flow of illegal drugs, we know that's not something that they're going to get in the week ahead here.
Well, a lot to talk about this week. We'll discuss a lot of it on Market Call, on the Risk Reversal podcast we'll be doing through the week. But we want to thank you for joining us. Obviously, always thanking Elizabeth Young Thomas, she of SoFi. Dan Nathan will be back later today. Market Call, remember Market Call at 11 a.m.
Monday and Tuesday, 1 p.m. this coming Wednesday, back to 11 on Thursday. We will keep you updated in terms of times. And obviously, the podcast continued to drop. We did a great one with Tom Lee last week that dropped on Friday. Dan mentioned that. So be on the lookout for that if you haven't seen it. And we'll talk to you folks later.