WE’RE ON YOUTUBE NOW! See HERE & HERE (Yeah … I’m REALLY excited about this).

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Before you Trade Today: Know the Economic Calendar! Also See This Weeks Most Anticipated Earnings. NEVER BE SURPRISED BY EASILY ANTICIPATED MARKET BREAKING NEWS. That’s our goal here.

PAID SUBSCRIBERS: My short play is red by 7.93%. Ouch huh? & that’s after averaging up. They reported earnings Wednesday (AH). NON-GAAP EPS was $0.11 when -$0.02 was expected (Matching the same quarter last year). Bad news for my short? All up until we consider the GAAP EPS. Their GAAP loss was -$0.45 per share. My position is small enough to increase in size significantly. So I will wait & see where she goes before allocating more capital. I haven’t lost on a short play yet in this newsletter, & I’m hoping this one turns around. But damn this market certainly turned bullish despite a mountain of bad economic data.

ECONOMIC NEWS & COMMENTARY: GDP growth came in at -0.9% after -1.6% the previous quarter. Markets rallied for one or all of three reasons. 1) The bad news is largely behind us until the inflation numbers Wednesday after next. 2) A slowing is what investors want to see to get inflation in check. 3) Short covering taking profit prior to AAPL/AMZN earnings.

Institutions are really pumping this market, but they have a vested interest in blowing smoke up our asses. Listen, consumer spending is overwhelmingly propped up by the service industry. Discretionary spending is shockingly low, the inventories reflect this. Sure, Amazon announced higher than expected sales, but I’ve been ordering from Amazon just so I don’t have to drive to the store (gas prices) to pick up my essentials ... well, that … & I can buy Redbull in bulk on the cheap. Yeah yeah, I know its bad for me … don’t preach. What do you think fuels these newsletters?

HOW HIGH EMPLOYMENT IS DRIVING INFLAITON: As of June 2022 the Civilian Labor Force Participation Rate was 62.2%. Before the pandemic hit it was 63.4%. We have yet to fully recover on civilian labor force participation. And if you think 1.2% is small potatoes, understand that a 1.2% increase in labor participation would add nearly 2% more workers to the existing labor force. Now remember that the unemployed count as labor participants. So the amount of people truly working is roughly 58.6% once we deduct the 3.6% unemployment rate. (Note: The Labor Force Participation rate are those who are either working or looking for work [Employed + Unemployed]=Labor Force).

Why is all of this important? Because labor is the number one expense of most firms. And when there is a labor shortage, businesses need to increase wages to compete for workers. Here’s what I’m getting at, so as long as labor force participation remains low, so as long as unemployment remains low, INFLATION WILL DRIVE ON, despite whatever happens to supply chains, energy, or other factors. And as people are having less and less children as time goes on, that means the labor force grows at a slower & slower rate as time goes on, despite businesses growing at a faster rate over the same time frame.

By now, it should suddenly dawn on you how inflation can drive higher & higher over time. The only way’s to cool this off is to either import more workers, force people back into the labor force, automate more jobs, or for the Fed to drive the economy into a recession. And what is the dual mandate of the Fed? Price stability & high employment! THEY ARE OFTEN MUTUALLY EXCLUSIVE! While it is possible to do both at the same time, amid periods of high inflation it can result in runaway inflation & an eventual economic collapse.

Why isn’t anyone telling you this? Because no politician, economist, or member of the Federal Reserve Board of Governors, wants to admit that they need higher unemployment, businesses to fail, or pay cuts to get prices to come down. It’s why, IN PART, Congress ceded their constitutional authority to a central bank in the first place & preached the “independence of the Fed.” They can avoid the political fallout of tough decisions amid hard times. Food for thought!

WORLD MARKETS:

• S&P 500 futures rise after strong Apple, Amazon reports as Wall Street heads for winning week

• European markets climb with earnings, economic data on the agenda

• Hong Kong’s Hang Seng drops more than 2% with tech stocks under pressure; yen strengthens

RECOMMENDED:

• Apple’s iPhones held up surprisingly well in China even as the country faced Covid lockdowns

• Dollar strength is more worrisome than inflation for Asia, economist says

• Amazon says consumer spending remains strong, bucking broader retail gloom

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