Who’s the Skunk at the Party? (FvF Ep. 182)

In Episode 182 of Facts vs Feelings, Ryan Detrick, Chief Market Strategist at Carson Group, and Sonu Varghese, Chief Macro Strategist at Carson Group, dig into a market environment defined by soaring oil prices, sticky inflation, and geopolitical tension and ask the big question: Who's the real skunk at the party?

Inspired by Jamie Dimon's 49-page annual report, the conversation centers on inflation as the underappreciated threat to an otherwise resilient economy. Ryan and Sonu break down what WTI crude at $115 a barrel is signaling, why real yields matter more than nominal ones, and how equity markets have held up remarkably well given the backdrop of war, energy shocks, and a hawkish Fed pivot.

The episode covers the March jobs report, a surprisingly solid 178,000 jobs added, and what slowing immigration means for the labor market's break-even rate. Sonu explains the shift to a low hire, low fire economy, why youth unemployment has improved sharply since September, and why manufacturing is showing early signs of life.

Ryan and Sonu also discuss portfolio construction in a volatile inflation world: why the traditional 60/40 may not cut it, why small cap value is quietly outperforming, and how managed futures and real assets are earning their place in diversified models. They close with a preview of next week's special guest, oil analyst Rory Johnston of Commodity Context, and a cautious but glass-half-full outlook for the second half of the year.

Key Takeaways:
- Inflation, not just the war, may be the biggest long-term market risk.
- Real yields falling last week was a key positive signal for equities.
- The labor market break-even rate has dropped to near zero due to stalled immigration.
- Youth unemployment (ages 20 to 24) has fallen sharply since September, a constructive sign.
- Diversification across geographies, sectors, and asset classes is more important than ever.
- Midterm years are historically volatile, but one year off the lows, markets have always been higher.

Jump to:
0:00 - Opening And Fast Moving Headlines 
2:05 - Oil Spikes And Market Signal Check 
8:25 - Real Yields, Valuations, And Midterm History 
14:25 - Jamie Dimon On Inflation Risk 
18:10 - Building Portfolios For Volatile Inflation 
23:00 - Fed Cuts Debate And Growth Indicators 
30:00 - Spring Break Stories And Travel Chaos 
34:40 - Jobs Report: What Matters Most 
42:23 - Layoffs Data And Youth Unemployment Reality Check 
49:50 - War Timeline, Commodities Crunch, And CPI Ahead 
53:10 - Next Week's Guest: Rory Johnston

Connect with Ryan:
• LinkedIn: https://www.linkedin.com/in/ryandetrick/
• X: https://x.com/RyanDetrick

Connect with Sonu:
• LinkedIn: https://www.linkedin.com/in/sonu-varghese-phd/
• X: https://x.com/sonusvarghese?lang=en

Questions about the show? We’d love to hear from you! factsvsfeelings@carsongroup.com

Hashtags:
#FactsVsFeelings #Inflation #OilMarkets #StockMarket #MacroEconomics #FederalReserve #JobsReport #MarketVolatility #GeopoliticalRisk #Diversification #EnergyMarkets #InterestRates #WealthManagement #CarsonGroup #InvestingOutlook

[inflation risk stock market 2026, Jamie Dimon inflation warning, WTI crude oil price surge, real yields and equity valuations, March jobs report analysis, labor market break-even rate immigration, youth unemployment trends 2026, Fed rate cut outlook 2026, managed futures portfolio diversification, small cap value stocks outperforming, midterm year market volatility history, portfolio construction inflation environment, geopolitical crisis oil prices, low hire low fire economy, Rory Johnston commodity context]

Transcript

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SPEAKER_00 0:02

Welcome to the Facts versus Feelings Podcast. I'm your host, Ryan Dietrich, and I'm joined by my co-host, Sony Vargist. Cutting through the noise each week with Ryan Dietrich, Chief Market Strategist, and Sony Vargeist, Chief Macro Strategist, taking out the boring and helping investors focus on what really matters. Hey everybody, we are back. The latest facts versus feelings, right in Sonu as always. Sonu episode 182. Who's the skunk at the party? And we were just talking. You didn't even know what I was getting at with that title, but I had no idea. Yeah, well, it's kind of a fun one. That's good. And maybe we're all about, you know, we we want to provide timely, unique content. But listen, we are trying to get eyeballs to this podcast. I think that might do it. Um, Jamie Diamond, in his, I believe it was a 49-page annual report, which I know, Sony, you love digging into 49-page reports uh more than most. He did say skunk at the party was inflation. So we'll we'll talk more about that. All right, we'll kind of get there. But let's let's hold, we'll put a pen in that. Let's do small talking a little bit. Let's go to the latest. And here's one problem, everybody, with the podcast that we do in terms of when we record. We're recording on Tuesday. We know eight o'clock Eastern time open the straight, President Trump. So by the time people listen to this, we are aware. Um, things might be different, or they might not be, you know. So just give us a give us give us grace, give us grace there. But what a taco Tuesday or escalation Wednesday, right? We'll have it. We could have egg on our face.

SPEAKER_02 1:35

I mean, I've I'm praying, honestly, like yeah, I have progressively gotten a little more worried. You know, markets set that aside, generally speaking. I mean, for everyone, for the whole world. But I'm just hoping, goodness, we need to find a resolution sooner rather than later. This can't continue.

SPEAKER_00 1:51

No, I mean it is just just an hour ago, President Trump he keeps sending out comments and tweets and truth socials that are getting more and more aggressive. So listen, we we don't know. But what's let's just start with what we know now. The time we're recording this is about 10 10 eastern time, give or take, on Tuesday, uh the 7th. Um, oh, by the way, well, before we do that, no, we'll save, I'll save that one. It's a silly one. Let's just let's let's let's start serious, everything going on. Sonu, what is what's the latest? I mean, as we know it at the time we're doing this, what's the latest you think? I think the latest is look, uh, the easiest metric, and you and I are you know very deeply involved in markets.

SPEAKER_02 2:26

Maybe we're biased towards looking at markets. What's the message of the market? Yeah, use that because that's where you know people are putting money on the line too, right? And uh oil's going up, oil prices are up, WTI is up to $115 a barrel. Drew, we can put this chart up of uh of WTI. It's up 101% here to date, it's up 73% since the crisis started, since February 27th. It's up 14% of the past week. We can talk about equity markets. What's interesting, last week oil continued to go up, but equities rallied. So that's a little bit of a difference from what we've seen. But right now, oil's up another three percent to hit 115, 116 a barrel. You look at uh, and that's WTI. You look at Brent now. Brent is tricky because you know, uh when we quote oil prices, we're talking about front month futures. WTI is when I say 115, 116 a barrel, that's May futures. Brent front front month futures are actually June, and it's about 111 now. But delivery, a lot of people want oil today. Front immediate physical delivery, not front month futures, immediate physical delivery. Last week rent was up to $141 a barrel. That tells you there's a crunch, there's a shortage of oil. I mean, there's an anecdote. Obviously, I was asking my parents in India. I hope you have enough gas for the next several months, and they have enough for about four months. But that's a situation where everyone literally around the world is do we have enough?

SPEAKER_00 4:03

Your parents literally have just four months' worth of gasoline just for house.

SPEAKER_02 4:09

For cooking, oh, for cooking. Oh this is for cooking, yes. They use gas for cooking, yeah.

SPEAKER_00 4:13

Yeah, I'm like okay, that makes a lot more.

SPEAKER_02 4:15

I mean, in India, you don't need gas, like there's no furniture, it's hot, right? You know, you need electricity, but a lot of that comes from thermal power, coal, and things like that, where hydropower is well, where they are. So electricity is okay, but they need gas for cooking. Uh, okay.

SPEAKER_00 4:31

About four months of that. So let's see here. So we'll kind of weave in markets at tad. So crude oil or WTI, WTI was up 10% last week. Uh, yet the SP was higher, had its best week of the year, over three percent. So we'll get more market, we'll get more into the markets. We know we were oversold coming to this. Uh, like you said, Wednesday was the big up day last week. Wednesday was the big up day, had a really nice, nice rally um across the board. You and I were traveling, so I'm I'm guessing I mean you know the crazy thing is no, I I mean, really, there was not like some oh, that's why it happened. You know, it just it is what it is. They had the big rally, but even even when we had the rally, you know, late last early last week, you had like we were talking about on our team here at Carson, crude was still higher. I was like, you know, if this really was optimism over the war ending, you'd think crude would be tanking, and you pointed out no, but now I will say that's something for everybody, XLE, not a recommendation, but energy sector, that was down, I believe, over five percent last week. Like all 10 other sectors are up. So you had crude oil up 10, XLE down. The way I learned it a long time ago was the commodities tend to follow the price of the equities. Now, no, this isn't perfect, I'll be very, very clear. But that's one thing that stood out to me. Uh, what else stood out? Maybe let's we'll get more Middle East. What else last week was an interesting week? Nice bounce. Anything else? What's what stood out from you from a markets point of view last week? So we did finally, after five down weeks in a row, we finally had an up week on equity markets.

SPEAKER_02 5:53

Equities are up, gold is up three and a half percent, right? And that gets to the connection between gold and even markets to rates to the bond market, yields are down. The 10-year yield fell about 10, 11 basis points, you know, uh 0.1, 0.11 percentage points to 432. Today it's back to 435. Uh, two-year yields were down about eight basis points, 0.08 percentage points, down to 383. By the way, when you say the two-year yield is at 383, the Fed funds rate right now is at a 363. It's average, it's between 350 to 375. The two-year rate essentially is the market's expectation of short-term rates over the next two years. The market's expectation of policy rates over the next two years. They're saying, wait a minute, that's higher than the Fed funds rates, which means, which immediately tells you markets aren't expecting goods. If anything, they may be expecting a rate, a rate hike, or maybe after rate hike, or something like that. But I think again, going back to the story of gold rallying, equities rallying, real rates, tips yields, for example, that fell. 10-year real yields. Uh, the prior week, March 27th, I was just looking at the numbers, was uh 213, 2.13 percent. That fell to 198. That's a big drop. 15 basis points, real yields fell. 30-year real yields fell from 278 to 265. Look, higher real rates means, and this gets to something a lot of people are saying about inflation. Speaking of the skunk at the party, it's like, look, inflation expectations are contained, and that's true, but that also means it's contained because markets buy into Fed credibility. They're telling us that the Fed's going to raise rates to fight inflation, and that's why inflation expectations are contained, and that's why over the last several weeks, real yields have actually gone up. On February 27th, the 10-year real rate was 172. It's 198, close to 2% now. Look, stocks are real assets. So your PE ratio, we'll talk about earnings and EPS and stuff like that. The PE ratio, you can think of that as a real inflation-adjusted measure that you compare to real interest rates, not nominal interest rates. A lot of people compare it to nominal interest rates. Before we came into the crisis, the PE ratio was 22, 22 times future earnings. You invert that E over P, that's like an earnings deal, that's four and a half percent. Well, if real rates go up, that competes with that. And then stocks have to go down. Valuations have to sort of correct. Now the PE ratio is about 19. You invert that one over 19, that translates to about 5.3 percent. So stocks have to sort of the valuation measure has to go down to make stocks more attractive compared to real rates. But last week, going back to what we started talking about, all this, I think real rates going down. Yep, that was a big positive. That's something I'm keeping an eye on right now. Yeah, because I think that connects the inflation picture, the Fed policy, to equities.

SPEAKER_00 8:53

No, it does. And you know, when we were you and I are on stage with our amazing Carson uh advisors out in California, out in San Diego, and we talked about you know what could upset the Apple cart, what could do, and you're like, listen, if real yields start going higher and the Fed turns a little more hawkish, and that could upset the Apple cart, and that's where we are. But here's the you know, we do have our new video series called the Glass Half Full. We've been sharing that a lot. It's some good views, so thank you. That's a client-approved uh five to well, six to eight minute video uh that we do. And and one of the things from a glass half pole full point of view, if you would have told me or you or anybody else out there that we'd have this war that's raging right now, you'd have crude oil you set up a hundred percent for the year. You'd have now I guess straight of harmizes closed straight of harm is closed, you'd have um what else was there? Um inflation, inflation, which has been broadening out. You've been talking about now, there's real inflation waste. Oh, by the way, the Fed apparently is now hawkish. If you stacked all that out there and you told us on January 1st that was the case, where do you think you'll be trading on April 7th? I would say we might be close to a bear market, probably. I said it real slowly as I'm thinking about so do the SP is down like three percent for the year. I mean, like, like like you know, there's a message of the market here that it is withstanding some incredibly bad things. Now, I still think we're in a bull market, right? Surprises happen in a bull market to the upside. We know we're up 24, 25 a couple years ago, 18 total return last year. Yeah, the US uh the SP is down, but look around the globe. The most other global markets are slightly higher on the year, not by a lot. Your gold's up ballpark eight percent, even Bitcoin. Okay, I mean, Bitcoin has been strengthening lately. It's above 70,000 the time we're doing this. So it's not a it's not perfect by any means out there, but there are some things that are working. You know, one other thing about last week specifically, what led technology, communication services, those did really well. Industrials hung in there. Uh you what lagged the defensive stuff, your staples, your utilities, again, kind of more, you know, maybe just risk off, if you will. One more for me, Sonu, that I think is intriguing. You look at the last three weeks, the number of stocks on the NYSE, New York Stock Exchange, that made a new 52-week low, it has decreased the last three weeks. So stocks had been like been going lower, but the number of stocks that were making new lows is actually improving. Now, that doesn't mean we're going to bottom tomorrow, but that is kind of a recipe for some potential strength. And we had a nine point. Let's put this one up. Yeah, let's put this one up, Drew. The one I sent late about midterm years. Mid, I got all these midterm years listed on the YouTube channel. I'll explain it to the listeners. So we went to all the midterm years going back to uh 1950. Listen, midterm years peaked the trough have the most volatility, the largest pullbacks. We've talked a lot about that. The uh your your average year bottoms around the middle of August, your median year more in September in a midterm year. No one knows when the low is going to be in a midterm year, let's be clear. But one year off those lows, Sonu, higher every single time, up over 30% on average. So no pain, no gain. It's an old saying, right? There's usually pain in midterm year. We felt some pain this midterm year, but one year off those lows, you're never lower, you're higher up over 30%. So who knows? Maybe did we just make the lows? I don't know. Maybe, maybe not. Listen, I like the way I did that. But the reality is if we get through the when when we get through this, there's still reasons, I think, to be uh kind of a glass half full. So we've kind of gone a few different ways. What do you want to add to that, Sonu?

SPEAKER_02 12:33

I I think uh when you think about equities, there's two pieces to it, and one is obviously valuations. We already talked about that. That that that's where the pressure from real rates come, right? Okay, even in 2022, you know, it was multiples. We talked about this last week, too, so we don't have to go back into it. Yeah, but look, multiples have been the drag this year.

SPEAKER_00 12:53

You know, so do I so do I was I was uh I was there with you last week, I don't even remember. So yeah, I don't know, whatever. You may do briefly, do do briefly, do briefly.

SPEAKER_02 13:01

Yeah, yeah, yeah.

SPEAKER_01 13:01

So multiples have been the drag.

SPEAKER_02 13:04

Uh the other side, where do uh you know returns come from? It's multiple expansion or contraction plus dividends, plus EPS growth, profit growth. That's been going pretty strong. So and you look at it, look at forward measures, forward estimates of EPS earnings per share for the SP 500. That's not coming down. That doesn't mean it won't come down, even you know, now back in 2022, they didn't start coming down until like May and June, right? Even though the Russia-Ukraine war, gas price, oil prices went up in March and April, it didn't start coming down until after that, right? But still, so far, 2026 EPS estimates over the last month, five weeks since the crisis started, that's up about 2.7 percent from $310 a share to $318 a share. 2027, which is also important now as we move across into the year for next 12-month earnings. Today, next 12-month earnings takes nine months of 2026 and three months of 2027. So 2027 starts to become increasingly important before the crisis, it was about $359 a share. Today it's about $370 a share, it's up 2.8%. Next 12-month earnings, Ryan, is up 4.3 percent to $330 a share. Like I said, it's a combination 2026 and 2027. As long as that 20 and so it's not even 2026. I'm keeping an eye on 2027 earnings estimates because the market, as you said, will look past it the moment they see some light at the end of the tunnel, and maybe tomorrow, maybe next week, and maybe next month, two months from now, whenever that is, it'll immediately like boom, we're gonna get out of this. 2027 is what we look forward to. That's why I'm keeping a big eye on rail rates and 2027.

SPEAKER_00 15:00

What's what's the old saying? Be careful at the light at the end of the tunnel.

SPEAKER_02 15:03

It could be a train coming at you, which maybe we'll somebody commented on that on our YouTube channel. It could be the light of the good one. That is true. That is true.

SPEAKER_00 15:11

That's why we stay diversified anyway. Um, so let's let's go to the title of this. We'll just we're just going all over. We just so people know, we don't prepare for these at all, literally. We just kind of wing it. We start talking to people. I don't know. We work all day on this stuff, trust me. Well, I mean, we work on this all the time, but in terms of how we flow, we just we just talk. Um, but it's funny because we start talking before we record it. Wait, wait, wait. Don't even tell me that. Let's talk about that live with uh with the record. So Jamie Diamond, Jamie Diamond, I guess he's the CEO, right? CEO over at uh JP Morgan. Yeah, we're fans of Jamie. Uh he's he's great. We were talking because he was known for economic hurricane back in 2022. He's very good at cockroaches. He started talking about cockroaches with the whole private credit thing last fall. Now he had a 49-page annual report. No, I did not read it all. Yes, I saw the headlines. Uh then the headline, Sonu, again, he said the skunk at the party is inflation. Now I'll do a little more and I'll hand it over to you.

SPEAKER_02 16:03

I swear, I I would have guessed he was going into private credit or something like that, but I guess not.

SPEAKER_00 16:08

Not yet. Uh he talked about private credit, but he talked about inflation. He talked about the near-term inflationary words of AI, just all the spending, the gobbling up and everything we're making. That's near, he's like, yes, inflation is, or I'm sorry, AI is deflationary longer term, but near term it's not. And then everything going with the war. He said inflation is going to upset this Apple cart, the skunk at the party. It's inflation which could you know upset the economy and upset the stock market. Now, I will also say though, he talked about private credit. He said it's fairly contained. He said private credit is 1.8 billion. Compare that to the investment grade corporate bond, which you know how big investment grade corporate bond market is by chance, Sona. You want to take a guess? Investment grade. So this is according to the Jamie Diamond's report, at least.

SPEAKER_02 16:48

Overall, this is purely like this is and maybe maybe it should be an educated guess coming from someone like me. But I'd say the total bond market is maybe the global bond bond market is about 80 trillion or so. Yeah, so maybe the treasury market is uh treasury MBS is a large part of that, but is it like 15 trillion?

SPEAKER_00 17:06

Wow, not bad. Not you should you might want to stick with your day job. You're doing pretty good. I'm impressed, my friend. This again, according to Jamie Diamond, so fact check about Jamie Diamond's 49 page report, he said 13 trillion. The investment grade corporate bond is third, so pretty good, Sonny. 13 trillion. Compare that again with private credit of 1.8 billion, you know. And again, he's not minimizing it, and trust me, he's the guy saying cockroaches last fall. But he did have more of a, I guess we'll say, an optimistic look on private credit. Um, he's what else is the other thing he's saying?

SPEAKER_02 17:35

And the other thing with private credit, not to go off on a complete tangent, is like I know people are like, oh, but subprime in 2007, nobody sucked money, it became a problem in 2008. I mean, even Bernanke in May of I think 2008 is like subprime is contained, contained wasn't. No, but subprime was levered to everyone's eyeballs. Yep, you had CDOs, CLOs, all this stuff, right? To lay in restaurants and people levering up. I don't think people are levering up on private credit. Yes, private credit employees leverage, sure. That's how debt works and things like that. Yep, but nobody's levering up on top of that, right? Well, and it is not as far as you know.

SPEAKER_00 18:09

Well, yeah, I'll just I'll just put it out there. Right. I mean, you know, by the what the rules were back before the GFC, I mean, companies could do 30 to 40 times leverage, banks are only allowed to do six or seven times leverage now, but the rules change, right? So, anyway, so that's that. Um, the other thing he talked about AI. He he um um he didn't think AI is in a speculative bubble, he doesn't think AI is like something speculative bubble. So he was he was fairly, I think I'd say a little more optimistic, measured, you know. I mean, but but he is really, really good at a lot of things, leading just one of the most influential companies in the world, and uh, but he's good at the media, obviously. He's good at leveraging media, getting in, getting out there. So when he says the skunk at the party is inflation, do you agree with them? What other things could be the skunk at the party that could really I mean, I think it's the war. I mean, listen, duh. But like besides the war, what other skunks are out there?

SPEAKER_02 18:57

Oh, I I think inflation and monetary policy, to be honest. I mean, look, I and I'll admit, I was in the camp that inflation will pass to this is two years ago, three years ago. Okay, it'll start going. I mean, we wrote that in Outlook, inflation's not gonna go down. 2023 we wrote that, 2024 we wrote that.

SPEAKER_01 19:16

2025 is a little different, and before you know, three months, what two months ago, three months ago, right now, uh uh you and I were talking about how inflation's sticky. Yep, it's a problem. Yeah, this is before all this happened, right?

SPEAKER_02 19:33

And we've written over the past several years we're in an inflationary regime. Doesn't mean we can predict what will be the cause, the next cause of an inflation spike. And goodness, this was you know, like something crazy. This is not on my bingo card, but still, it came. We've got so five shocks over five years. We've had COVID, Russia, Ukraine, we've had the immigration stall, we've had uh, what was it, the trade uh thing, tariffs, and now this, right? At some point you have to say, you know what, it's no longer transitory. This is just the way our world is right now. But that means look, you and I manage money and our all our advisors and maybe clients listening to this, we have to worry about inflation, right? Because you know, you want to maintain purchasing power, right? It institutions have a very long, you know, time frame. Like I said, stocks are real assets. Yeah, the best way, you know, I I don't want to say hedge against inflation because it doesn't perfectly hedge inflation, but a little long term profits rise, and you know, one person's profit margin increases is my yours and my inflation, but that's why it's stocks that are a real asset. But we run into something called sequence of returns risk, right? If I need money today, if you need money to send Susanna to college two years, you know, next year, two years from now, for example.

SPEAKER_00 20:56

And I and I do, by the way, I do need some money for that. Right.

SPEAKER_02 20:59

And then you're like, you know what? Maybe I won't put that money in the stock market. I mean, you're bullish, but we're like, you know what? I need that money soon. A sequence of recruited return risk. What are them, you know, the market suddenly goes down. I cannot pull that money for tuition. And so you invest in the bond market, right? Or cash or something like that. But that's where if you now if you have four percent, five percent inflation, you're losing purchasing power. That's a problem, right? And I think that is why I mean, yes, I I think inflation is a problem. We have gone five years now. CPI has averaged over the last five years, four and a half percent, PCE is averaged four percent. Right. I mean, now two years down the line, we're going to be like we're nowhere close to two percent inflation.

SPEAKER_00 21:40

Um, yeah, what I like what you you yeah, you laid it out perfectly there. I mean, you said we're not necessarily in a high inflation world, although I think we're we've we've said broke record more like a three percent to two percent, but a higher volatility inflation world. And I know, I mean, I you might not know this so I have a face or radio. It turns out I have a face radio, they they have me on TV all the time for some reason. But I I know like a month or two ago I was on TV and I actually brought up managed futures because we have some managed futures. You can buy it in a second. They're kind of boring, like most people you don't hear people on TV. Or they lose money, it's most people are like, why do you have this at the portfolio? This is losing money. That's a very good point. They have not worked all that. Well, but you know what? When they work, they work. And I actually mentioned managed futures on TV and I had a couple people reach out and said, Oh, that was neat. Like, thank you for pointing out something just a little different than you know, look at these tech stocks here, look at this over here. Um, and and and those are some things we've done. I know we sound like a broken record here, but diversify your diversifiers in the old days 60 stocks, 40 bonds. We're probably more with like 68 to 69 equities and the money we run. It's hard to pick one thing because we've run a lot of different uh different models, but let's just approximately call it like for a moderate portfolio, yes, exactly. Hair, hair under 70. So let's call it 32 left over. We are not just 32 bonds. We have some gold, we have some cash, we have shorter duration bonds. Yes, we have some bonds, yes. Um, but we also have a little bit of managed futures in there, has some hard assets, some real assets. I've said like a broken record, drop it, hit your foot, and it hurts. That might be something going on in your portfolio for the next couple years. You've said the same thing with the volatile inflation world. What's neat? Last comment from me, then back to you. You look at the world looking at the macro data and slicing and dicing it. I do too, but I also came from the idea that we're probably gonna have a little bit higher inflation because look at commodity prices. I mean, I'm not right, right. That's the message of the market, right? I'm from Springfield, Ohio. I'm not very smart, but I'm also not stupid, okay? I was like, look at all these commodity prices going up the last couple of years. So do I bet we have higher inflation? Well, and you call from a different angle. And we took that and constructed our models and explained to our advisors and everyone on this podcast why you maybe don't want to own a ton of bonds necessarily like you might have 10, 15 years ago. Maybe some other stuff makes sense. Uh, we've got off the rails a little. Want to get us back on the rails? What do you want to talk about now?

SPEAKER_01 23:46

Yeah, we could we could talk about the connect the Fed and the labor market.

SPEAKER_00 23:49

We can talk about payroll data. Payroll data, we just got that. Let me jump in on the Fed on this segue. Uh, we have a rule we have to mention Neil Dutta every time. So I'm gonna mention Neil, a shout to Neil over Rin Mac. Um, he actually said on his podcast, the great podcast, what's their podcast called? Whatever their Friday podcast, the Rin Mac podcast, great stuff. Uh he and Jeff and the team do great work. I'll I'll grab it. Neil literally said on his podcast that he could see the Fed cutting in July. I think I heard that.

SPEAKER_01 24:15

I heard that.

SPEAKER_00 24:15

I was like, I I I was like, oh boy, I'm gonna ask Sono on that. I mean, we think the world and Neil, but I don't think we quite think that. But I mean, what um what's your take on Neil's?

SPEAKER_02 24:23

I think Neil's pretty pessimistic about the economy. I mean, there is one group, and I just like Neil a lot. I think his thing is this oil shock, he already thought he was in the captain of the economy his week, and I'll come to the economy in our picture, which is very different from what Neil says. And but you know, I listen to Neil a lot. Uh I and so it's a good check on my own views. I'm like, wait, what am I getting wrong? Because I'm like, Neil's great, he's probably right, but so I want to check my work again, right? But so he's he was pessimistic. I think you know, he was down in the economy coming into this, and now we got the oil shock, so I'm not too surprised that he thinks, oh, this is going to be like real wages are going to go down, things like that, right? For sure. Uh in fact, we can look at um the Atlanta Fed GDP now, that's down to 1.6 percent. Now that's partly because of trade, right? Speaking of uh just speaking of the inflation impact, too. So we last week we got some trade numbers. I won't get into the boring details of it, but big picture, we're importing a ton of stuff for the AI build-out. Yeah, a lot of this is what we need for data centers. We're importing this stuff and it's ships, all sorts of things, right? And that's why when people say, oh, globalization is reducing, I'm like, no, it's not.

SPEAKER_01 25:34

We have a massive trade deficit and we're importing all this stuff, and now with all this stuff happening around the world, I'm assuming a lot of this comes by ship and freight and things like that.

SPEAKER_02 25:45

If costs go up for fuel oil and shipping costs and all of that, that's inflation, right? And that gets to what Jamie is Jamie Diamond was talking about inflation being the skunk of the party. So yeah, I think uh I like no, I I see logical consistency there in Neil's views for sure. Like they oh, if the economy is really weak, yeah. I I mean you could probably see a rate cut. I am not in that cap. I have made it a cap that I mean, I've looked somebody is telling me that uh actually I'll back up. I think last year's rate cuts are a mistake. Okay. Okay. Right? Not by too much, I don't think it's a big mistake, but I think you know, push cut to like given what we know now, and someone has asked me, weren't you advocating for rate cuts? I'm like, nobody cares what I advocate for, right?

SPEAKER_00 26:35

But you know, I I I'm so I care, I care, and I'm sure there's we have like you know, I don't know, thousands of people listen to this every week. I'm sure there's like four people that care. I'm sure there are. I'm sure they're out there. If at all if at all. Yeah, you you even my wife doesn't care. Oh, mine let me let me put it this way. Let me put this mine doesn't care what yours says, and mine doesn't necessarily care what I say either. So yeah, yeah, there you go. Yeah.

SPEAKER_02 27:00

So now look, uh I think given the picture of inflation, inflation being elevated, I think the rate cuts last year were a mistake. Okay, and uh, and especially now I know it's hindsight is 2020. I completely get that, but maybe I would have waited now instead of maybe 75 basis points of cuts, maybe 25 basis points. Given where what's happening in the labor market data, and we'll talk about that right now, yeah, yeah, right?

SPEAKER_01 27:26

Given where activity and you and I have been in the camp that we may see a little bit of a pickup in activity, and we have.

SPEAKER_02 27:32

Uh Drew, you can put this chart up of our own leading economic index, okay, the US L EI. This is something we populate, it's not the conference board. The conference board has predicted a recession for I don't know, three years now. Oh, yeah, right? Yeah, but we've been in the opposite camp.

SPEAKER_01 27:47

And we've seen actually the line has started to go up over the last few months.

SPEAKER_02 27:51

Last few months. The line's going up. You see, I mean, it's not crazy acceleration, it's still close to trend. And this is capturing the nominal picture, it's not real GDP. If anything, it's nominal GDP, but that's what uh the difference between us and a lot of other people. We connect what's happening in the macroeconomy to profits. Profits and revenue come from nominal growth, not you know, real GDP growth. Yes, it matters, but real GDP growth plus inflation. So, like I've been, yeah, I've gone to the view that last year's rate cuts were a mistake, especially when you look at the last five years history of what inflation's done, inflation being sticky. Now, 3% inflation doesn't sound like a lot. Like, if I were them, I would probably come out and say, you know what, we're okay with that. But the Fed is not okay with 3% inflation. They've consistently been like, B1 is going down to two. Hello, it's not going down to two, it's going the other way.

SPEAKER_01 28:45

Yeah.

SPEAKER_02 28:46

So, yeah, I'm not saying they should raise rates, but I think two months ago, I was like, the likelihood of rate cuts this year is very low. Okay. And now with everything that's happening, yeah, yeah, I I think you know, I'll just chime in.

SPEAKER_00 29:02

Because sometimes it's stuff's like, oh, obviously. No, trust me, when Sonu was saying that two months ago, you were about the only person I knew. I mean, you were saying maybe it's 50-50 chance. You were saying there's a much higher chance of no cuts this year. No cuts, yes. And I mean, when you said it, even I was kind of like I will never say 100-05.

SPEAKER_02 29:17

No, no.

SPEAKER_00 29:17

I was kind of like, Really, Sony? Really? Yeah, I'm let you do your thing. But I mean, once again, you're proven why you're Sonu. You're yeah, there's Madonna, there's Sonu, there's a lot, there's certain people with one name in the in the new LA.

SPEAKER_02 29:29

I'll take the Brazilian soccer player.

SPEAKER_00 29:31

There you go, there you go. Um, anyway, but no, that coming back, and yes, the what happened in the Middle East and is still happening is a big reason, but there were clues, there were tea leaves, and you discussed it repeatedly uh ahead of time. And thankfully, that's we've constructed portfolios. You know, people hear us, we can't give away too many specific numbers on this, but you think all those Carson guys, oh, they're just bullish, they're all in like Mag 7. No, if you listen to this podcast, you know that's not remotely true. You know, yes, we came into this year overweight equities, but you know, we manage what, like 12 different models and the Carson House view models, and majority of them are beating their benchmark by between 40 to 50 basis points after the first three months of this year. Because again, we've been diversified, yes, overweight equities, but for other parts of the globe are doing well. We talked about the other stuff, other diversifiers. There's a lot of ways that um, you know, we're still optimistic though. If you overweight equities, you still think stocks are gonna come back. I still think we're gonna go market, I still think we're gonna have a pretty good second half of the year. Yeah, we need a resolution. We can't have crude oil up 100% year over year. We need some resolution there.

SPEAKER_02 30:28

I mean, I feel like I'm in the gap that the out like this could get so bad that it cannot get this bad. Well, it has to turn. Yeah, otherwise, it's it's the the outcome is so horribly, terribly bad. And that's that's what worries me. It has to get better.

SPEAKER_00 30:43

That's what worries me if people listen to us tomorrow. With um, hopefully with the way we're talking, some of this makes sense. Um, I know exactly. So let's let's take a break. We're by halfway point. Um, so my wife is down with my daughter, Susanna. They're down on senior spring break for Susanna, down in Destin, apparently, at a house with like 14 girls. Emily said it's like the biggest house she's ever seen, a huge pool. They're having fun. I I said I haven't really heard from her for three days, so I guess they're having fun. I don't I don't know. So the boys and I are up here, man in the fort, and we're gonna go down the street. Have you checked your credit card? Yeah, well, yeah, they're having fun. Uh you know, that's a good point because she went to like, what is it? It's Publix, Publix, right? Okay, so I mean, she spent like $2,000 at Publix. And I'm kind of like, I said, what are you buying at Publix? She don't worry, don't worry, don't worry. Everyone's gonna pay us back. It's all split up. So, okay, good, because that's a lot of people. You mean everyone's gonna pay you back, not me back. That's a good point. Yeah, that's true. Yeah, she's been, I don't know, I don't know if Publix is publicly traded or not, but they're they're putting uh putting the hurt. It's like, did you tell them can you he has my Zell ID? Can you ask them to forward the payment payment to me? Not trying to. They're trying to eat in a decent amount, they're not screwing around buying a lot of food at the uh at the old Publix. But anyway, so what was I going with this? Oh, here's what I was going with this. So obviously, Easter holiday, hopefully, had nice Easter and and Passover and nice time with family last weekend. So I took the boys to go see Project Hail Mary. And I've heard it's really good. I heard it's pretty, you know, it's just uplifting. I don't know. I don't want to get too political on this stuff. I hate politics, by the way. But I just like fun movies that don't make you well, this one actually you think, but nonetheless, you know what I mean? Like just an uplifting message, feel good. I think it was why Maverick was so wildly popular a couple years ago. Just stop, you know, just give us a good old-fashioned movie, you know, without too much stuff around it. And this is Hollywood. Yes, just Hollywood, you know, whatever. We'll leave it there. But this movie was awesome. It really now I fell asleep a little bit. It's two and a half hours long. I mean, so I'm too old for this stuff. But but my boys liked it. It was really uplifting. I don't want to give too much away. It's a famous book. I want to see it. Astronaut wakes up in outer space, he's got to save the world. I didn't give anything away that you know, Ron Gosling makes a good athlete. Uh good, I say good athlete. Actor, astronauts are what I was looking for. Um but it's it's really good. Your kids, I mean, it's PG 13. I don't remember any bad words. I don't you know, I mean your kids might even like it, but two and a half hours. Whatever. They're fine, they're legit. Although there's no yeah, they're they're fine, they're fine. Yeah, I think it's a really good one. It's funny. I just I I enjoyed it. I see like one movie a year. Maybe you and I see a movie when we're together, we had a little free time. You know, we saw bad boys. Did we see bad boys together? What do we see? We saw bad boys. We saw bad boys. That's that's what I like. That's what I'm talking about. Bad boys. That's a good one. That's a good one.

SPEAKER_02 33:13

I think both of us probably fell asleep for a few minutes.

SPEAKER_00 33:16

We did, we did. I remember the people in front of us were talking or something. Oh, that's what drives me crazy. That's why I like watching movies in my own house anymore. The people around you making noise. But anyway, uh getting old, buddy. Yeah, two. That's true. That's true. Two thumbs up on uh Proje uh Project Hail Mary, which I'm not the only one saying that because that movie made a lot of money. All right, so anything fun from you personal wise? And let's wrap this up with some macro stuff. Anything going on?

SPEAKER_02 33:36

It was mostly just travel-related snap foods last year. I was flying back from LaGuardia to Chicago.

SPEAKER_00 33:42

And see, I almost forgot about flying two. It's always a blur, isn't it? I don't trust, trust me. I literally wake up at a hotel and I go, Where am I? I swear to god, I'm like, I don't remember where I am. Like you're just in a hotel.

SPEAKER_03 33:51

Yeah, yeah.

SPEAKER_02 33:52

And and everyone's dealing with TSA problem, but here it was like, I hate traveling in spring because spring weather is you know so iffy. There's a storm here, the tornado there, you know, suddenly the airport's shut. And if O'Hare is shut, that is just doom across the Midwest for travel.

SPEAKER_03 34:08

Yes.

SPEAKER_02 34:08

And so I find I got I got on the flight. It was only an hour delayed. And by the time no, my flight is cancelled. I had to get another flight. And so I picked that, I was flying in, and then they rerouted it to Indianapolis. No offense for Indianapolis, beautiful city, nice city. I mean, I went to Purdue. I you know, I like Indy, but I wanted to get home. This is this is Thursday night, it was before Good Friday, it was a three-day weekend. I was like, I'll get up late tomorrow, have a nice brunch with the kids and things like that. And here I am, 1 a.m., looking for a hotel in Indy, spent the night there, and I'm like, there's another flight at 5 a.m. I'm like, I'm not doing that. Yeah, I'm not I was you know, I took a 9:30 flight, came back to Chicago, but yeah, so travel. What can you say?

SPEAKER_01 34:56

No, it's it's it's has a TSA problem been solved or no?

SPEAKER_00 35:00

Is it still like I I mean for what it's worth, I have clear and clear is publicly traded, and that's not I did sign up for clear, by the way. Yeah, I've had no issues. I just do clear and whatever. Hey, see everybody later, but I'm not the only one. Everybody's going to clear. We need something new. Like clear doesn't even feel new now. Everybody's doing clear. So um, yeah. But all right. Well, we've got, I don't know, what 10, 10 minutes or so, 15 minutes. Uh, let's talk more macro, I guess. A few ways to take this. Maybe we'll start with the jobs number. On Friday, what's the joke? Um, I just heard, you know, if there's an economic report and nobody listens, does it really happen? Because it happened on Friday. Good Friday, good Friday. The economic data came out.

SPEAKER_02 35:35

I think I was only only a few of us are on. Yeah, yeah.

SPEAKER_00 35:38

You and I, you and I were like, we looked, we gave our we work with a PR firm. We gave them a quote or two. We're like, yeah, because nobody else is working, so we'll probably get some good quotes out of this. I wasn't an airport waiting for my flight. So I was like, kidnapped. Well, I mean, I think what, 178,000 expected to be 60 to 65. It's 11 months in a row now, alternating up, down, up, down, up, down. But I believe the last three months, so that's year to date, so no, about 68,000 jobs. I've set this up for you. What stood out in the labor market data that we saw last week? And you can overlay it with ADP and initial claims and all that stuff. What's it look like?

SPEAKER_01 36:10

No, it was solid.

SPEAKER_00 36:11

Okay.

SPEAKER_01 36:12

It was solid.

SPEAKER_02 36:13

There we go. It's about it. But look, all eyes are on inflation now, rightfully so. Like the skunk of the party. But that ugly inflation outlook, you know, leads to actually two questions, two important questions, I think, about what's happening on the labor market side. One is how strong was the labor market going into this crisis? Right? If you thought it was weak, and and maybe that's a cap Neil's in, you know, going back to what Neil was talking about. If you thought it was weak, if the economy is weak, yeah, now we have a shock and things get weaker. Uh, and so that's a an important question. How strong was the labor market before all this happened, right? Can the labor market withstand the shock? And yes, we do have a shock. Gas prices are at what $413 a gallon. Diesel prices are close to the highest you know, we saw in 2022, $565 a gallon, right? And then the other question is how will policymakers and the Fed balance the inflation outlook with the labor market? Because they have a dual mandate, low and stable prices. I mean, I'm laughing when I say low and stable prices. We haven't had that for five years now, and it's we're not gonna have that for the next year or two years. But the question is how far they'll go to get things back on track, if at all. And that depends on the labor market. I think when I was talking to like Barry and our team the other day last week, I was saying him and when push came to shuffle, when it came to picking a side from the Fed for Powell, especially the labor market or inflation, I think they favored the labor market. And at some point, people are like, hey buddy, guys, inflation's averaged four percent over the last five, seven, maybe eight, maybe nine years. This can't keep going like this, right? But anyway, coming to the labor market data, that's part of the issue, like right now, that doesn't look too bad. The economy, as you said, created 178,000 jobs in March. 65,000 was the forecast. Now we did get sizable revisions for January and February, but they sort of canceled each other. That's right. Take the three-month average. We know this stuff is going to get revised, right? Right now, the three-month average is at 68,000. Okay. And Drew, we could put this chart up monthly payroll growth, and you see this yo-yo positive month, negative month, positive, negative, positive, negative for 10 months now, right? Payroll growth has averaged 15,000 over the past six months, 22,000 over the last 12 per month. So the most recent three-month average, a 68, looks actually pretty good. But it could also be noise, right? So one thing is because of this collapse in immigration, the Dallas Fed, you know, uh researchers, they found that the break-even rate of employment, what is that? That is the number of jobs the economy has to create to keep up with population growth so that the unemployment rate doesn't go up. That breakeven rate, Ryan, in 2023, there was 250,000. That pulled down to 160,000 66,000 per month, visa per month in 2024. By July of 2025, that pulled down to 10,000. Wow. Okay. Now, these are all estimates. It could be all over the place, but you get the general trend line.

SPEAKER_01 39:21

Right now, they're saying between August and December 2025, the break-even is negative 3,000. Think of that. That is incredible.

SPEAKER_02 39:30

Declining population growth because stall and immigration means the economy doesn't have to create any net new jobs to keep the unemployment rate from going up. So the latest three-month average of 68,000 then looks like, wow, that's pretty good.

SPEAKER_03 39:44

That's good.

SPEAKER_02 39:45

Now the other thing is look, the payroll growth comes from a survey, right? Now it's a large survey, which is why it's much more quote-unquote reliable in some ways than ADP and things like that. It's a survey of 150,000 businesses, over 600,000 work sites. And only the BLS is able to practically pull this off, right? But it's a survey. There's a confidence interval. The 90% confidence interval is about 122,000 jobs a month. That means if the break-even rate is zero, we're going to see large positive and negative numbers, right? Exactly what we've gotten over the last 10 months. And that's why I'm a little skeptical of you know, reading too much into the payroll data. Focus on the ratios. Yeah. Right? You look at the household survey. Well, let me just I'll just chime in.

SPEAKER_00 40:27

Sorry, just don't chime for a second. No, go ahead. I think one other reason that we've seen huge revisions. Like you hear the number, and then and then two years later, three years, what's something like almost five years later we revise? So I'm not minimizing it either, but that's I think where I come down to. I like initial claims. Initial claims assume real time, they seem like they're a little more accurate. I mean, I'm not knocking the government's data, but maybe I kind of am, because they just revise it later anyway. Go ahead, son.

SPEAKER_02 40:51

Yeah, yeah, no, totally. And that's why you look at the ratios. What doesn't get revised? Unemployment rate. There you go. The unemployment rate. Now it comes from the household survey. The household survey is more noisy, actually, than the establishment survey, believe it or not. The confidence interval is about, I think, 600,000 plus minus 600,000 jobs. But then there you're dividing the numerator and denominator. There's noise on both, so the ratio remains sort of okay. And that's why it's not revised. The unemployment rate fell from 4.44% in February, two decimal places matter here, to 4.26%. Ah, here we go. In March. That's the lowest since last June. Now, one wrinkle here for all the you know glass half-empty types out there would be like, oh no, that's because a lot of people dropped out of the labor force and stopped looking for work. So they no longer counted as unemployed by the BLS. And you know, but big picture. Uh here's a chart, Drew. We can put the chart of the unemployment rate. The unemployment rate has been going up since 2023. That accelerated a little bit more in mid-2025 after Liberation Day. And that's essentially why the Fed cut 1.75 percentage points, 175 basis points over the last two years, right? But over the last four or five months, things have stabilized. That's the big picture here. But even if you say, you know what, I'm skeptical of the unemployment rate and thing, look at something we've always talked about, the prime age, 25 to 54-year-old employment population ratio. It divides uh how many people are employed in the prime working age years by population, it avoids issues around definitions of who's unemployed and things like that. And demographics, right? That ratio, Ryan, is at 80.7%. That's close to the peak we've seen in the cycle, 80.9%. And that's higher than anything we saw in the 2000s expansion, anything we saw in the 2010s expansion, right? Tells you more people in their prime working age years, as a percent of the population, are working now than at any point in the last two expansions. I mean, I like I don't know what to say. Like, this is a pretty decent, reasonable labor market. Of course, if you look at the headline payroll data, that's a little finely balanced, but that's got this whole thing of immigration installed and things like that.

SPEAKER_00 43:09

So I'm gonna we're gonna do an experiment, and this only is gonna work for the people on the YouTube channel because I want everyone to watch Sony's face. Sonu, but what about Challenger Gray? I had to do it. I had to look down and see your face. I know, I know, I know.

SPEAKER_01 43:23

I I say on that.

SPEAKER_00 43:24

So I led the witness, I know what you're about to say. Yeah, take it away, take it away.

SPEAKER_02 43:28

So the Challenger Gray tracks layoffs and headline layoffs, they're like 60,000 jobs lost at Amazon. I'm just I don't even know if that's true, but 20,000 jobs at Microsoft, things like that. The economy saw one point, we just got Joel's data, job opening and labor turnover survey from February, which is yes, the payroll report is from March, but that's only two weeks after the entire month of February. That's what Joel's data is for, right? Right. The economy saw 1.7 million, 1.7 million layoffs. Just last month. In February. Yeah, yeah.

SPEAKER_00 44:01

February.

SPEAKER_02 44:02

February. Yeah. Right? I mean it's probably the same thing in March when you get the Joel's data. Somewhere around 7.7. That's much higher, like two orders of magnitude, you know, several ma orders of magnitude above anything what Challenger Gray is telling us. And Challenger Gray tracks headlines, it doesn't track. Actual layoffs. Layoffs may have already happened, maybe happening in the future, may never happen, things like that.

SPEAKER_00 44:23

So or they took or they took a payout and said, you know what? Send me away. You know, like I'll take some money, I'll go off into the wilderness. Yeah, pay me to go away.

SPEAKER_01 44:31

Yeah, and that 1.7 million, by the way, before the pandemic in 2019, it was 1.8 million. And now we have a larger labor force. Right, right.

SPEAKER_02 44:39

So you look at the layoff rate, so that you normalize and compare apples to apples across time, that's at 1.1% right now. Before the pandemic is 1.2, 1.3%. Yes. We're well below. So it still comes back. It's a low-hiring, low-firing economy. I think a lot of companies overhired in 2021, 2022.

SPEAKER_03 44:59

Yeah.

SPEAKER_02 44:59

And now they're like, maybe partly because of that overhiring, but also this uncertainty with the economy. Yeah, tariffs last year, the energy crisis this year. Like, you know what? We don't want to hire anyone, and it's but we want to keep our workers.

SPEAKER_00 45:13

That's the story. No, that's a story you've been you've been saying for a while now. Low hire, low fire. You've been saying it, lots of people have, but the data keeps confirming. If you have a job, you're probably pretty safe. You probably do pretty well. Yes, if you're in the tech world, the AI world, there's definitely um some uneasiness for sure. But uh, that was the other thing. You shared the chart, I don't know if we had it, but just the unemployment rate of ages 20 to 24. For young people, right? Yeah, for young people ages 20 to 24 is 9.2 percent this time, what four or five months ago came in. In September, it was it peaked at 9.2%. And now it went down to 6.4%. Did you did you do have that chart? We can put it up. Yeah, we have that chart. The unemployment rate for 20 to 24 years. And I'll say a little more than turn it over to you, though. But I mean, we've heard for a while, and listen, I I get it. I I get it. I have a daughter going to college, but it's been a lot of money, and I'm like, in four years, she better have a job. Like, you know, like I mean, I've got friends, it's the same. We're a lot of people in this boat here. Um, AI is taking jobs, so then you see this data that it was up over nine percent, you know, like you said, back in September, and it's really tanked. Is there a rationale there? Is it as simple as people ages 20 to 24 are finding jobs, or are they leaving the labor market, or what what what do you think on that front? I think if you look at even the employment, I hope they're not leaving. By the way, if you're 20 to 24 leaving the labor market, shouldn't be labor marketing.

SPEAKER_02 46:25

I don't know, shouldn't be all no giving up and quitting and you know I'll ask you in four years. Living in your parents' basement. Yeah, I don't know. What your daughter is doing is no figures, she'll be good.

SPEAKER_00 46:34

Yeah, but look, uh the if you look at 16 to 24 years, so Prime Age is 25 to 54, which by the way, my daughter finally got a job. Shout out to Susanna, she works at McCall McAllisters. I don't have you ever been to McCallisters Feedback. Oh, yeah, so she's she's in the 16th group. I don't think she'd get too upset. She got like 300 and something bucks put in her checking account. She opened up. I was so happy. I was so happy. Did you say pass it over? Oh, yeah. Oh, she did on this very podcast we talked about when she went to Taylor Swift a couple years ago, the second time she was supposed to get a job and pay for. She still owes me like five grand for that. So yeah, and trust me, she she she owes me. She owes me. But uh live luck quick. Live and learn, live and learn. I should but congratulate her. She got a job. She's going to Penn State, she's growing up a little bit. No, that's awesome.

SPEAKER_02 47:20

Yeah, so that's that's that's that's fantastic. Yeah, look, 16 to 24 year olds. Uh the unemployment rate peaked at 10.6 percent in November. That's down to 8.5 percent. Most of it is actually driven by 20 to 24 year olds. Like you said, it was 9.2 percent unemployment rate in September of last year. That's down to 6.4 percent. That is the lowest since what April, no, since March of 2024. Okay, it's the lowest in two years, right? Remember, if you think recent college grads are going to be negatively impacted by AI, the unemployment rate for that age group should be going up. And it did go up, and I think that's why everyone is starting to get worried about AI. But since September, it's come down a lot. I mean, you can see the chart on the screen, Jewel put that up. So that's a positive there. The other positive, going back to the cyclical part of you know, the economy you were talking about. Where is the economy before we headed into this crisis? I mean, I know the payroll data is a little sketchy, but let's take the last three months. The economy created 205,000 jobs, 237,000 jobs in the private sector, that's not bad. Especially when you say the economy needs to create zero jobs to keep up with population growth. Now, 71, oh we've said this before, over the last year, year and a half, most of those jobs are in the healthcare industry. Yes, yes, yes, yes. And as was the case, out of 237,000, 169,000 was in healthcare and private education, 71%, but it was only 71%, it wasn't 100%. Last year was 100%, right? Over the last three months, you know, we've seen several cyclical areas gaining, you know, seeing stronger payroll growth. Construction, 58,000. Yeah, construction every month feels like it's strong. Yeah, yeah. Professional and business services, 45,000, leisure and hospitality, 38,000, retail and wholesale trade, 26,000. Manufacturing, Ryan, manufacturing payrolls have seen a bit of a pickup, 11,000 over the last three months. That was after losing 32,000 jobs in Q4 of 2025. Manufacturing actually lost 113,000 jobs in 2025 over the full year. So this pickup, 11,000 is not a lot, but it's better than losing jobs. So that's a big positive. Drew, we can put that chart up showing payroll growth over the last three months for you know the different industries. I have a typo there. I said breadth imporment instead of breadth improvement. But anyway, big picture. Are you seeing some breadth improvement? Always room for improvement. Always room for improvement. That's all right. There you go.

SPEAKER_01 49:51

Yeah, yeah. So I think, yeah, that's you know, going back to what you asked me, like, what do you think of the labor market? Looks pretty solid.

SPEAKER_00 49:59

Um, layering on a little bit, I think we've beat the dead horse in the labor market, by the way. More than we needed to, but anyway, uh, March ADP report came in better than expected, and we joke about the ADP, including myself. Came in 62,000 versus 40. But that's three months in a row positives. Hey, baby steps in the right direction. But small businesses, we've seen this from ADP for a while. Small businesses have been a little stronger. Small businesses accounted for 112,000 jobs out of that growth. So, anyway, lots of ways to slice and dice it. It's not perfect, no, but the labor market's solid. So, no, we've gone pretty long. Um, let's try to wrap things up soon. What have we missed? What else did you want to hit on before we wrap things up here in five minutes or so?

SPEAKER_02 50:37

I mean, all eyes is on the crisis, how long this continues. I mean, like I said at the top, uh, is it gonna be Taco Tuesday or escalation Wednesday? I mean, like this, yeah, I don't know. I like looking at some of the tweets, and I don't know, may I mean President Trump's always been in the camp of I think the strategy being I'm gonna escalate to de-escalate. So fingers crossed, praying for that, rather than both sides just escalating from here and then just becoming a crazy situation. But we are in that window six weeks. We are in the sixth week of the war, to get to six, seven weeks. This is when those shortages start. Commodities, going back to like the message of the market on commodity prices. Look at commodity prices, commodities price commodities are not future looking, right? Stocks are bonds too, like in future inflation, things like that. Commodities, no, right? Commodities look at what's happening right now, and we're already at $115 a barrel for WTI. Immediate physical delivery of rent is like $140 a barrel. That tells you the crunch is here. And if this goes on to next week, the week after, that crunch is not going to get any better. Last night, Iran attacked Saudi Arabia's biggest industrial complex where they pick, you know, seven to ten percent of the world's petrochemicals. You know, think about plastics packaging for medicines and food and all that. A lot of that stuff is made there. That's blown up.

SPEAKER_03 52:07

Wow.

SPEAKER_02 52:07

Right? So, yeah, this is not a good situation if it continues. So, yeah, I'm praying this ends sooner rather than later.

SPEAKER_00 52:14

No, we all are. Yes, exactly. You know, again, little clues, little nuggets for what maybe things are getting better. I mean, we're we're bel we're selling off a little bit the time we're doing this, not a shock with the big event tonight with President Trump and eight o'clock coming up, but the S excuse me, the SP 500 bounced, as we said, but right about his 200-day moving average, long-term trend line, finds a little resistance. I want to get above that 200 day and close above.

SPEAKER_01 52:38

Did we go above that on Monday?

SPEAKER_00 52:39

I know we rallied a little bit on Monday. I don't think we quite made it. I don't think we quite made it. No, not quite. But I mean, I'd like to see us close above that on a weekly basis on a Friday, it'd be nice. But also this year, Monday, Tuesday, Wednesday, are all up on average on an annualized basis. The problem is Thursday and Friday have just been bloodbaths. Now, Thursday, we actually higher. We were down nine Thursdays in a row. We were higher last Thursday. Remember last Thursday we came in. The market was down a ton to start. I remember I was actually in New York City at the New York Stock Exchange. You know, hit with NYSE live with Ashley, and that was really fun. Talking about how markets getting killed. Then I start running around, my phone's blowing up, like, hey, now we're green. It's like you wait an hour. It's like that's just you know, rumors and news, news, Trumps, charts, play on words, yes, but that's how I've learned it too. Um, but the reality, again, is this volatility is real, but maybe some late week strength would sure be another nice potential change. Now, the late week is a long way away. Friday actually is the CPI data. We've talked enough about inflation stuff. We'll probably dive more into that next week. That's a this is the first inflation data piece. Our listeners are going to get an overload on inflation data next week. Yes, yes. We just lost half our listeners.

SPEAKER_01 53:48

Next week, we may have used next week.

SPEAKER_00 53:51

Yes, yes, we do. It may not be related to commodity. Well, you want to let's just announce it. I mean, if it doesn't come up, don't shoot the message. You want to announce who it is? You want to say who it is? Let's let's keep the rest.

SPEAKER_02 54:01

Rory Johnston from commodity context. I've been reading his materials. Is he like probably one of the best analysts on you know oil and oil markets, things like that. And he's not always like usually oil analysts tend to be very bearish on the macroeconomy because they're like oil prices are gonna go up. He's not been in the camp when he came into this year. He was in the camp of we have a supply gut, right? That's bearish for oil. So he's you know, I think pretty measured. He's been in the camp that goodness, we have a crisis on our hands right now. Yeah, it's been invaluable research. I mean, from like charts and things like that. But so really pumped to have Rory on next week.

SPEAKER_00 54:42

Yes, and again, if listen, things can happen crazy, and maybe he can't join. But as of now, we are scheduled to record with him next Tuesday, and he was pumped and do it. That's one really cool thing about what we get to do. We just reach out to the smartest, most influential people in the industry. Like Rory is like the hottest thing out there right now. I mean, he he's like, it really is. I mean, he's amazing. He's showing up everywhere, his work is incredible, very thoughtful, got a little humor to him. You're gonna love, love, love that conversation. Um, but we just reached out to him, and within, I don't know what, 10 minutes, he's like, Yes. I mean, I don't think he knew us. I don't think he even knew us. We just like, hey, yeah, we've got a podcast, you want to talk? And he's like, Yes. So, so that's cool. But we've hit a lot of good downloads that listens. The YouTube channel's done really well. Give us likes, give us follows, positive reviews, negative reviews. We don't care. We just like interactions, um, and it helps the algorithms and having big guests like Rory, who maybe you don't quite know who he is, trust me, he's really, really big in the world that we live in right now with everything going on with energy and crude. So, new last comments from you, then I'll bring us home.

SPEAKER_02 55:38

Uh, look, I think this crisis, I mean, it's a cliche, diversify a portfolio, but especially now you already mentioned diversifying diversifiers, but even within equities, like I said, we are bullish on equities, even now, but we are diversified across the world, but across sectors, like across value growth, we are not all on one side of, let's say, the tech boom. I know we talk about riding the wave, but even then we were careful about the fact that we want to avoid the wipe out. You want to have things like one without going on about this, like one asset class that's done well recently is small value, small cap value stocks. You think about what's in there, he has the financials and industrials and things like that. You know, those are the kinds of things you want to be diversified into even within equities, not just the diversifying part of your basket.

SPEAKER_00 56:28

So yeah, and six months ago, trust me when I say this, nobody wanted to own a small cap value. It's all large cap growth, it's just the exact opposite. Uh, but that's kind of what's uh what's helped. And it is, I mean, I I did a TV hit before we joined, you know, a BNN. I'm I'm I think I joke, I'm huge in Canada. I don't know if any of you watches it, but BNN's Canadian, Bloomberg. The shout out to it. Rory is Canadian too, actually. Yeah, there you go. So anyway, I I talked about that. You know, just listen, I said I used to come on with you guys, and we were like, you know, over at equities, US, this is a bull market, and we're still in that camp. But the way we've been positioning and talking for for a while now is it's a little more boring, everybody, but sorry, we manage real money. We have to get through this period, be diversified, have some diversifiers, own lots of different stuff because you don't really know. We don't feel quite as strongly as we did two, three, two years ago, you know, one, three years ago that listen bull market US is gonna do well, just be in the US. Um, that's okay. You know, if you don't know, just get diversified, and we're gonna get through this, and we're gonna keep doing these facts versus feelings every single week. We have a lot of fun doing them. We're gonna be joined again by Rory next week. You're gonna love that conversation. And um, let's just cross our fingers and toes the next time we speak, Sonu. We have some good news out there, and hopefully things are uh calming down on the Middle Eastern front. We'll we'll we'll see. But with all that, everybody, again, hopefully everyone have a nice holiday. It's spring break week for a lot of people. A lot of people already had their spring break, but it is for me. Um, so I'm looking forward to a little break as well, and it never fails, Sono. When you or I take a little time off, things go nuts.

SPEAKER_02 57:53

So I'm fully aware that we might have to jump on a hopefully next week, this time you're talking to Rory about how soon or how long it'll take to get ourselves out of a hole as opposed to this thing bragging out.

SPEAKER_00 58:06

Yeah, well, we with the power of uh technology, you and I can jump on a spaces or a YouTube live or something real quickly if we have to, but uh just follow us on our social channels if we need to do that. But let's talk on wood, hope that's not the case. So, all right, everybody, it is 11 o'clock Eastern time. My boys are upstairs, which means they're probably still asleep. I need to go wake them up because they will sleep all day. My one dog Mabel, my great dane, she'll sleep all day too. So I need to get some people up, get some people moving. We're supposed to pack, we're supposed to get ready to travel uh tomorrow down the Charlotte. So with all that, everybody have a great week, Sonu. You and I will chat soon, I'm sure. Thank you to PodPony, our producer, as always. Um, yeah, see you by next week with Roy. Have a good one. Thank you. Goodbye. Information provided on facts versus feelings with Sonovar Gis and Ryan Dietrich are for general information only and are not intended to provide specific advice or recommendations for any individual. The statements and opinions of show guests may not be reflective of CWM LLC or its affiliates. Past performance is no guarantee of future results. All indices are unmanaged and may not be invested in directly. Investing involves risk, including possible loss of principal. No strategy assures success or protects against loss. To determine what may be appropriate for you, consult with your attorney, accountant, financial, or tax advisor prior to investing. Guests on facts versus feelings are not affiliated with CWM L L Cha.