Jerome Powell's Labor Market Comments Decoded | Weekly Business Briefs w/ Martin Perdomo

Ever wondered how the latest US jobs report could reshape financial markets and impact your investments? In this episode, we're joined by Javier, a sharp developer from Tampa, to dissect Federal Reserve Chair Jerome Powell's comments on the cooling labor market. We scrutinize the prospects for interest rate cuts, pondering whether a quarter-point or half-point reduction is on the horizon, and speculate on how these potential changes might sway the stock market. We also dive into local Tampa real estate trends, noting a downturn in commercial deals, and question the revised unemployment figures that could heavily influence the Fed's upcoming decisions.

Shifting gears, we tackle the surge in gun sales in Texas amidst an escalating border crisis and discuss the broader economic ramifications, including the stability of the U.S. dollar and gold's recent surge. From personal safety concerns to political implications, we leave no stone unturned. Finally, we tackle affordable housing policies with a critical eye, sharing personal anecdotes of growing up in poverty and evaluating the practicality of Kamala Harris’s proposed $25,000 tax credit for homebuyers. Get ready for an insightful discussion that underscores the importance of localized, pragmatic solutions in addressing economic stability and housing affordability.

Chapters

• 0:01 Market Impact of US Jobs Report
• 7:08 Border Crisis Impact on Gun Sales
• 14:12 Affordable Housing Policy Impact Discussion

Transcript

Speaker 1: 0:01

it's wednesday, september 2024, and it's time to get down to business and dive into the top three news in this week's weekly business brief. Today I have my boy, javier, with me, and he's a developer in tampa and we're going to be kind of unpacking this business brief and see his thoughts. So, first up, the us job report could trigger a major market rally. Yeah, we'll see about that. We'll see, we'll see. The upcoming US job report is due out this Friday Actually, it's not today, it's actually on Friday. It's expected to be pivotal for the financial markets. Victoria Fernandez, chief marketing strategist at Crossmark Global Investment, emphasized the report's significance, calling it huge for the markets. It actually is. I actually believe it is, and we'll talk about that in a minute.

Speaker 1: 0:46

Investors are particularly focused on this report following the Federal Reserve Chair, jerome Powell's remarks at Jackson Hole, where he noted that the labor market has cooled considerably from its formerly overheated state. Potter also hinted that, with inflation significantly down from its 2022 peak, we hit 9-10% right. Yes, the Fed might begin cutting interest rates. The job report could be the deciding factor in whether the Fed opts for a quarter point or half a point rate cut at its September meeting. As investors Javi, it's nice to get that half a point as we're building the map, it would be nice to get that An that analyst, including those at Barclays, predict that the unemployment rate may have declined.

Speaker 1: 1:31

Interesting to FlarePoint2, in August, a stronger than expected jobs report could lead to an increase in the treasury monies and potentially spark a rally in the stock market. All three major US indexes, the S&P 500 and the Nasdaq Composite, closed higher last Friday as investors assessed a fresh inflation report that largely met expectations. The jobs data could thus serve as a critical indicator of the Fed's next move, with a nice report likely prompting a more modest rate cut and weaker report leading to more aggressive reductions.

Speaker 2: 2:04

I think that we are a little bit behind you. Remember that they had the readjusted numbers.

Speaker 1: 2:09

Yeah, yep 800,000. Yeah, and employment.

Speaker 2: 2:12

So I think by having this number that they say even just 10%, coming down from 4.3 to a 4.2, I think maybe instead of a half a point reduction we're probably going to be looking at a quarter point yeah, and it's a good excuse for them when they should have done a half a point at the beginning of the year. We're probably looking at something now, because every time you hear Jerome Powell he says we're looking at unemployment but we're also not wanting the market to get too excited. So I think that maybe that they put the unemployment numbers to avoid having to do a lot more aggressive rate reduction at the beginning of the year. So now I think everyone was hoping that we would have half a point. I think we'll probably expect a quarter point, just so nobody gets too excited. But they can at least start that reduction little by little by little.

Speaker 1: 2:51

I want you to consider. You said something really important. You said 800, right, that revision that they revisited. Right, the BLS, the Bureau of Labor Statistics. They revised their numbers of unemployment to an additional 800. So now what this report is saying is that they're expecting it to come down lower. So we're expecting to see unemployment down lower. That doesn't make a lot of sense to me. Like they're math-ing, math-ing, math-ing, math-ing. You know what I mean. Like how is that? How are you telling me, hey, we were short, sorry, we made a million million jobs mistake. The employment market was softer than we thought and now the unemployment goes down, like how did?

Speaker 2: 3:26

maybe they should go up if the federal reserve could go back and then lower the rates like they did? They readjusted the unemployment numbers. That would make a lot more sense right now that they can't go back on the unemployment numbers. We were hoping to do that. But now, with unemployment going down and I'm even concerned that they might not even raise rates, you mean lower rates. Lower rates because because the unemployment number is going down, that's a legit concern it is If the unemployment numbers come in.

Speaker 1: 3:49

That's just a project. There's an economist. They're human beings, just like us. They don't get it right. They're just doing the best they can. But I don't know, man, we'll have to wait and see how this plays out. I be the number. It just doesn't make sense. The math is half math. It's not math. How do we go? 800,000 jobs, less jobs, right, were created, that they anticipated. And then they're projecting the unemployment numbers to come down. Like, where is the math in that? It doesn't make any sense, it doesn't add up. But if this does happen, we're only going to see a quarter rate cut.

Speaker 2: 4:21

I think we all get excited about a half. I think it's going to be coming around a quarter point.

Speaker 1: 4:24

I'd love to see a half, because it's going to be really good for us as investors. It'll be the market. I think the market will welcome that. I think the stock market would rally. But you and I were just talking to some brokers here locally, right, and they gave us some data, some real important data of boots on the ground. You didn't tap on that type of Park. I'm going to share with the people. What did they say? 20? You go ahead and share. What was it 20? They did. This is a big commercial brokerage. I don't want to share the name with them. I'm going to go to the top ones in Tampa Tapo Commercial Brokerage. Go ahead and share the numbers.

Speaker 2: 4:58

What was it? How many deals they closed in 22? In 23 they had five, six. He said six, six, my bad six, six. They had six. And then you it's a day closing in the year. Today they've got another five, six, soon to be six, coming up you six.

Speaker 1: 5:10

They have six. I think he says six and then they got six on the contract. That just shows you the impact that the interest rate has, and this is multi-family 80 percent reduction and and deal volume. That's directing the impact, a direct impact from interest rate joy, because these houses, these assets are priced so high that the numbers just don't make any sense. The math doesn't matter. The math doesn't matter. So we need this rate cut. All right, let's move on to the next one, all right.

Speaker 2: 5:36

So the dollar drama is it happening? Is a major crash coming soon? Let's dive into that. So the US dollar has risen slightly in the early hours of Monday, but trading has been limited due to the Labor Day celebrations. I hope you guys had a great Labor Day. But in US and Canada the short-term pullback should find support. The pair may be forming a bottom pattern. The Bank of Japan cannot tighten monetary policy too much without damaging the Japanese economy, and Wall Street traders may be overestimating the likelihood of rate cuts. The consolidation or the significant bounce may be needed to return to a more realistic valuation, but the Federal Reserve expected to cut rates in September. Inflation is stickier than previously thought, so we might need to maintain a little bit tighter monetary policy for a little bit longer. I know you guys don't want to hear it, but maybe we have to. The carry trade could return, as traders quickly forget about the latest trend and focus on the next one. But, martin, let's dive into it, man.

Speaker 1: 6:26

Listen, you remember, a few weeks ago, right Early to mid-August, when the market went, took a major note. That was crazy, yeah, it was a little scary. And what happened was Japan increased their interest rate. Yeah, so American businesses and investors, investors around the world they tightened their monetary policies. We were borrowing money from Japan and then deploying the capital of Europe, which actually makes sense. That totally makes sense. That totally makes sense At a low interest rate, yeah, at a low interest rate. So when they increased their interest rate in Japan, then these investors realized their payment was going to go up. So everyone tightened up, right, these notes. It was going to cost them more money to make money, so that caused the issue in the stock market.

Speaker 1: 7:08

I think that, as it pertains to this, I don't know, I don't think a major crash is coming for the dollar. We've been talking about a major crash. There's been talks, you know, about a major crash coming for the dollar with Petrodollar, with the Brits, the Broics, a major crash coming for the dollar with petrodollar with the brazil, with the brits and brits, and all of that and all of that stuff. I still think dollar is king, I don't know for how long, because when you look at history right. The only monetary value that has sustained itself through the decades and the centuries is gold. I can think of that all. Yeah, it's gold. I was gold doing.

Speaker 1: 7:41

Gold is the highest it's actually been in ever in history. I actually saw an article an ounce of gold as of yesterday, I think, was twenty five hundred dollars per ounce is an ounce of gold. We also know bar, that's a million bucks. No, an ounce, brother, that's not a bar is a kilo. So an ounce twenty five,500, that's nuts. I remember in 2008-2009 where we had hit peaks then and it was like a thousand. I can't remember the exact number, but it was like 800, a thousand, and we were like, oh, like crab raising. And now here we are, 2024. It's now peaked to a new level.

Speaker 2: 8:16

I mean, I think, more than anything, we're in an election year.

Speaker 2: 8:19

We have more elections happening this entire year, so I think there's a lot of instability and I think that that what we're seeing here is is that the one thing that gave us a lot of chaos the last couple of weeks Japan.

Speaker 2: 8:28

Now they're saying Japan can't tighten anymore. I think now we're going to start coming to a little bit of point of stability. Now we're going to be ending out the year, so I think that we're going to be shaking out all the drama that's been happening this year and I think that we should be leading into some better tailwinds and not have so many surprises coming out at the beginning of the year. We're going to be able to know who's going to be running the country right, whether you like it or not. We're going to be able to have some stability for the next four years, and I think a lot of bets have been placed, or at least are being placed right now. From what I'm hearing here is that it doesn't seem like there's going to be a lot of surprises going on. Economy, as everyone says, is doing just fine If the biggest country right now, who had the lowest rates it, can't raise it anymore. It seems pretty confident to me that we don't have any surprises on the forefront.

Speaker 1: 9:12

We'll have to wait and see. I'm very optimistic in our economy. Here's what I said to someone that was in my house, my brother-in-law. We were talking about the election, right, I tend to lean a little bit. I'm center right Conservative policies. I like less government. I'm a business owner, right, so I like to get out of my way. Government. You're just in the way if you're trying to overregulate me. And I said to him I said, regardless of who wins this election, no one's coming to save me. I'm going to win anyways, right, because I'm going to figure out this strategy. I'm going to figure out their policies and I'm going to figure out how to make my moves according to their policies. I'm going to find a way. Yeah, because that's just who I am, and I think that would be sound advice that I would give to any of our listeners. Yeah, of our listeners. Yeah, hey, it's no matter who wins, you're responsible to figuring out what your next move is.

Speaker 2: 10:02

You know what it's coming to save you? No, sir, I think that's great. I think that we've been blessed to have very low interest rates for a very long time. So when we have people raise interest rates, we should expect some fluctuations to be happening. But I think right now it sounds like we're getting back to a little bit of normalcy. So good business principles are going to last always, always, always, all right.

Speaker 2: 10:22

So this week, on Election Watch 2024, we have gun sales surging in Texas as the border crisis escalates, and here's why Gary Umphries, a gun shop owner in Del Rio, texas, has noticed a significant uptick in gun sales due to the ongoing border crisis.

Speaker 2: 10:37

Many of these buyers are first-time gun owners, particularly women seeking handguns for self-defense. Humphreys describes the situation as increasingly dangerous, with local residents feeling the impact of border issues more intensely than those living farther away. He attributes the heightened sense of insecurity of the Biden-Harris administration border policies. He attributes the heightened sense of insecurity of the Biden-Harris administration border policies, which he claims have led to a rise in crime and personal safety concerns in that area, humbreads of many others in the Del Rio community. They're staunch supporters of former President Trump, believing that his approach to border security was much more effective, and a recent survey shows that the concerns about the border have grown, especially among younger voters, minorities and women. Many blame the Biden administration for the current border situation, with the majority favoriting stricter immigration policies, while Vice President Harris has expressed support for a bipartisan Senate border bill and critics argue that it lacks necessary provisions to effectively address the crisis. Martin, what do you think about all of this man?

Speaker 1: 11:38

Oh, this is a big one man. So here's my thoughts on this. This is not us. This is the actual people in the streets that live with the borders, right? So, guys, these are the people that actually live in these communities. This is not me here in Florida or Javi here in Florida saying, hey, this is what we think. These are the people that are actually dealing with it. Okay, let's just start there, right, because that's who we have to listen to. These are the people that we have to deal with, that are actually dealing with these illegal people coming through and full disclosure. Javi and I both come from immigrant families, right? Both of us do so. When you think about this, these are the people that are actually our boots on the ground, saying, hey, this is a problem.

Speaker 1: 12:20

Now I want to challenge some of our listeners. When President Biden assigned the border to Vice President Kamala Harris and it's been such a hit show, to say the least, that's a good way to put it it's been such a hit situation when it comes to immigration. I mean, they're giving people money in New York City, in Chicago, these big cities, these blue cities. They're giving people money, illegal immigrants money and the citizens are pissed. Yeah Right, the citizens, the people, that that's it. That's it they're like care about, but you're taking care to house these people and our president. Look guys, just I'm a logical guy. You're a logical guy. How are you, vice President Harris, going to fix something that you weren't taught well enough?

Speaker 2: 13:08

time and you did a shitty job with it, so why do you think they have to fix that? So everybody's telling me, if you have an employee who's been in play for three and a half years, yes, they want.

Speaker 1: 14:07

Right, and so that's my thought on this is like hey man, so we got. I'm just a logical, I'm a very logical guy. This is not me saying this. I'll be picking sides, although I have my tendencies. There's some policies that I tend to be left leaning and there are some policies I said to be right leaning. It depends. I come from poverty, so I am for social, some social services. I grew up in poverty, grew up on welfare, grew up on food stamps. I grew up on all of this stuff. Right, we need to have some of that. But then there's some stuff that isn't like oh, this doesn't make any sense. I'm going to promote you when you did a shitty job on the job that you already had. Like, how am I doing that? Does that make sense? What are your thoughts on this matter, man?

Speaker 2: 14:45

I'm just saying, if nothing changes, nothing changes changes, and and all we're hearing right now is you bring me in for another four years and I'm going to make sure it works. But we can only look at what has been done and it's the worst that we've ever seen. Our entire economy. I mean, we're talking about here just in texas, but we've seen places like colorado, like new york, chicago, a lot of these cities that have taken a lot of this sanctuary cities, and we're even, you know, looking at having to talk to property managers about, hey, how many illegal immigrants are you housing in these places? And and they're saying that they, that they don't even know how to keep track with people, because once somebody leaves a property is that there's no way to track this right.

Speaker 2: 15:28

So I think the problem about hey we're talking about the border currently but also as well, it's just like, you know, how do we fix our cities. I mean at this point, because we're giving our tax dollars that should be going to fixing everybody who's currently in our area, and our property taxes are increasing. Our, all of our taxes are increasing, but nothing's getting better. But it's all going to help, you know, people who haven't been paying taxes at this area. So I mean, it's a concern of, like you know, the safety of everybody who is there, but, I think, the wellbeing of our entire city. It's just like I'd be curious to hear of, like you know, what's her plan if she was to stay in office for another four years to actually help us to actually be able to increase the quality of life in our cities, because nothing's gotten better in the last four years. Everything's been getting a lot more expensive. Well, just look at the data.

Speaker 1: 16:17

We just went over some data with some of the brokers. What's happening? Right, inflation has been through the roof, and that's our elite. Some can say, well, trump administration started that. Well, you can say that, right, but it happened under this administration. It's a legacy that's going to happen. It's not been under this administration. Inflation hit 9% and that's crazy. So I'd like to get your feedback right.

Speaker 1: 16:37

So Kamala says she's going to give $25,000 in tax cuts, not as credits. That's her plan to give $25,000 in tax credits to developers and investors like us, right To create 3 million new units, affordable new units. I want to ask you this question as a developer, as an investor what impact do you think that will have? Is that the true fix? You're the boots on the street. Is that the true fix to the problem? There's a $25,000 tax incentive. Well, no, I'm sorry, I said I said correct. She's going to give twenty five thousand dollars tax credit to the buyers, right to the buyer, and that's what they're going to. They're going to give us some tax incentives, but they're going to give a twenty five thousand dollar tax incentive to the homeowners right to help them with the affordability crisis. What do you think that's going to do with Chadwick and that $25,000 that Amy is going to have on the housing crisis. Your opinion as an investor.

Speaker 2: 17:37

I think anytime the government tries to come in and solve somebody's problem, it never works out, because it sounds great from the top but by the time it gets down to us, you actually have to go through local, state and local zoning laws to actually be able to build this. So there's no clear path to actually getting to that affordability and housing. The problem that we have is actually housing. As far as units not necessarily the there's more than enough properties that are on the market to be able to buy. So I think being able to have that as a credit when you're down payment assistance, I think that that would probably be a lot better, because most people who are first-time homebuyers don't have a $25,000 exemption that's needed on their taxes right. It would actually help the developer a lot more so. So that doesn't actually make sense, because if you can't afford to get the house, how are you going to get the tax credit right? So that's the part for me is that the math doesn't math right. The math doesn't math From the top down the government. It sounds great to anybody who's thinking there but, like most people who are getting a first-time held buyers, don't even have $25,000 in taxes, right. Um, where?

Speaker 2: 18:36

On the other side, I think that what would make a lot more sense is that if there was a national government assistance to developers to be able to fast track more affordable housing, we can't be able to open up the opportunity zones like we did before. You know, that was able to bring a lot of actual affordable housing to the market. But at the same time, this is that it doesn't even make sense to buy a house If interest rates are going to be the highest that they are, if the cost of living is the highest that it's ever been. Right, just by taking out the taxes. You still have to pay for the house, you still have to maintain the house, you still have to pay for everything that goes into it.

Speaker 2: 19:10

You know, I think a national, federal, you know buyer program would be great to maybe stimulate some buying and be able to weed out some top end you know buyers who've taken out all of the starter homes in the market. That's probably a good place, but it doesn't really make sense as a developer Only for us it doesn't make sense to actually build rentals right now. It's just too expensive, it doesn't. It's cheaper to build a property than it is to hold. Yeah, so it's like on that. That just shows a further disconnection that our government has to actually what it is to actually live in america right now. Um it, for example, she ain't paying rent in the white house, so I'm not surprised that she doesn't know what it means to actually pay for any housing and that's the thing, right.

Speaker 1: 19:50

So okay. So if we're gonna give twenty five thousand dollars in credit, if the government not us, you know what the government is gonna give twenty five thousand dollars in credit to a first-time homeowner wonderful, if they can even afford to get in the house to begin with, right. So you gotta get to the root cause of the issue before you get to start giving throwing. Throwing people money, right, and gaslighting people like well, we're going to give you $25,000. That's gaslighting, because if I can't even get into the house to begin with, right, because groceries are so expensive, everything's so expensive, gasoline is so expensive that I can't even afford to live. Who cares about that? Right, when I went broke, when I didn't have shit, Right.

Speaker 1: 20:38

I didn't care you telling me like you're fucking gibberish. You know who cares about 25 000 credit when I'm trying to survive? So I think instead what should happen is, like you said, is these three million units that she's trying to create. Them to create more affordable housing is to figure out some way. A better policy would figure out some way to lower the cost of materials, so that then guys like you and I can say let's get out there and let's build it where it makes sense, because it's guys like us that solve. It's entrepreneurs that always solve the true issue. It's never the government. The government does everything poorly.

Speaker 2: 21:07

We have nothing to do with the government. They're never here to help, they just feel the spirit.

Speaker 1: 21:17

They do everything. So instead, what they need to do is figure out a way to work with the market race, to incentivize us to get creative and then go and create affordable housing like look man, we want to create affordable housing, we want to continue to invest, but if the numbers don't make sense, it doesn't make sense. So it doesn't matter what they offer. They could throw whatever thousands of in some tax incentives If it doesn't make sense.

Speaker 2: 21:40

it doesn't make sense. They're just trying to get votes, man.

Speaker 1: 21:42

So, at the end of the day, as investors and developers, we're looking at the bottom numbers. We've got investors we've got to report to, we've got, we got cash flow and we got a service of debt yeah, I mean, at the end of the day, everything's a high sentence everybody right now.

Speaker 2: 21:56

Once have they talked about trying to help with the people who actually create? Right? And that's the problem. They're trying to be the ones who create all of these things when, realistically, that you know us, the people who actually drive the economy right and creating these opportunity, jobs, right yeah, they're looking the complete other way and we're actually hearing the opposite. They actually want to tax us 20, they want to 20, they want to quote they want to tax us more, make it more expensive and then gaslight somebody to say, hey, this is something that, that it sounds good but, unfortunately, like, if you don't understand the tax code, if you don't understand that you might not even have $25,000 in taxes, but you actually still need to bring $25,000 to. You know, $50,000 to go close on a house. By the time that you realize that get in front of a house, either it's too late or it's more expensive.

Speaker 1: 22:46

Yeah, and what is that going to do to house prices, right? What it like? Who's going to really take advantage of the $25,000? The Afro-Wizard map, anyway, it's going to be the people with a little bit more money are the ones that are going to take advantage of this stuff, right?

Speaker 2: 23:01

It's going to be people that it really doesn't help the lower class or the middle class, and the truth of the matter is, real talk is who's going to be educated?

Speaker 1: 23:08

Like? Who's really paying attention to this? Like, look man, I know what it's like, man, to be in the circles of poor people, right, and most people that are poor, they're just not connected because they're so busy just trying to survive, right, right, they're so busy just trying to live, getting from work, paying the bills, taking the kids to school, doing this coming, you got no time to study, right, everyone's really studying this stuff. The affluence, yeah, right, the people that are affluent. So, anyways, that's our thoughts this week. Hope you guys enjoyed it. This week we had a little banter here and this has been your weekly business brief. I'll see you guys next week. Peace.