Lark Davis on September events and global liquidity

Transcript

GM good morning welcome to the milk Road show The Daily crypto show where our crypto insights are as sharp as the pencils on the first day of school I'm your host Jay Hamilton and today we're joined by expert investor Lark Davis in today's episode we'll discuss what events and key dates will have the biggest impact on markets in September Global money supply just hit a new all-time high what does that mean and will the US economy get the soft Landing everyone is talking about before we jump into today's episode we just need to take a minute to hear from our awesome sponsors over at Gemini and kelp Dow discover Gemini The us-based Exchange

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out for yourself today just head over to milk.com kelp gain and get started Lark welcome back to the show September is a big month in the calendar right now everyone's a little bit scared after a summer of chop and everyone wants to know when does number go up again when is it finally going to start can you walk us through I don't tell you expect you to tell us when it's going to start but there is some big items in the calendar this month from unemployment data which actually came out last week which we'll touch on quickly and a few other dates let's start with the

unemployment data that came out last Friday what did you see from that unemployment data that you liked what didn't you like the unemployment data was really interesting that was a very volatile day for the markets Bitcoin went down a lot as it always does stock markets went down quite a bit too but what's interesting in the unemployment data is that it was good and the Market's freaked out anyway now there's a reason why the Market's freaked out but first let's talk about the unemployment at the unemployment rate in USA went from 4.3% in August well from I guess July and then the August numbers came down to 4.2% so unemployment's trending back down at least in the short term we'll see what happens over the next few months obviously and unemployment data will remain a very key indicator to watch it's worth keeping in mind that

essentially we are just coming now off of historical lows of unemployment right and that 4.2 or 4.3% is well below the historical average usually you're looking at something between five and six% as being like a normal level of unemployment okay so this is one thing to keep in mind here and I know people going to start talking yeah well it's not about the actual number it's about the trend it's about the speed that we're seeing that happen and that's true right if we see unemployment Spike to 5% next month 6% the month after that 10% the month after that we got a real crisis on our hands but we don't have it yet that's the key thing to keep in mind so look here's what's very interesting is that the estimated jobs were coming in at 160 the US missed at 140 now here's the interesting thing

that's still 140,000 new jobs for the US economy it's not negative it's not like the US economy lost 200,000 jobs last month I can see people freaking out about that man but no we're still growing we're just growing a bit slower right now which is what again is spooking the market people are starting look starting to cool down we're starting to slow is this the beginning of the end we also did have and this is probably really spooked markets downward revisions of previous job numbers so the June July numbers actually were revised lower again still positive still growing still around 100,000 100,000 plus but revised down so the US economy particularly in the labor markets showing bits of weakness in particular

sectors as well there's a lot of sectors that are doing quite well Hospitality sectors and stuff like that whereas manufacturing's not doing that awesome but I remember seeing a great chart the other day that the US economy is made up of something like 12% manufacturing but it's a much heavier service industry these days and that the service Industries are actually doing pretty okay so interesting to look at what's doing well what's not doing well and I feel like anytime there are positive numbers because there's plenty of positive numbers and plenty of positive things real Freight traffic up stuff like this the market doesn't like to talk about that stuff they're much more interested in the the Doom corn right so unemployment on the whole is

it's kind of a mixed message right now it depends on which way you look at it everything seems positive but there's this fear that maybe the jobs Market is Cooling off and it might not go our Direction but as you said right now everything still seems positive so no need to panic yet that's for sure the other major events coming up we've got the Trump Harris debate tomorrow today if you're listening to this because we're recording this on Monday the Trump Harris debate is on Tuesday uh We've also got CPI coming out later this week uh and then we've got PPI coming out later this week and then next week we have the FED interest rate decision amongst those events what are you

watching for of course the election is going to be very interesting basically if and again people can vote for whoever they want to we're talking about policies that are specifically going to affect markets here right I know it's complicated yeah I get it okay but the policies that are being proposed by Harris as well as her sort of continued moves against the cryptocurrency industry probably not going to be great for crypto markets aren't going to like it broader Equity markets aren't going to like a Harris presid presidency and with all of our tax proposals and stuff like whether it happens or not a lot of stuff probably won't happen the fact that it's being proposed is problematic and I would expect the war from the SEC against crypto to continue and we had

the Open Sea ruling recently and I just thought man it'd be so easy for her to shut that down she's the candidate all she has to do pick up the phone call Gary over at the SEC say hey Gary would you like be my treasury secretary one day oh you would well then cut the crap out man stop going after these people we want their money want their donor money it's that easy it's that easy and if she doesn't have the political stvy to make that kind of deal how the heck is she gonna be a president man the flip side is Trump's of course packed his team with Pro crypto people RFK Jr Tulsi gabard VC JD Vance these are all pro crypto people a lot of them own significant amounts of cryptocurrency so that's like the pro crypto team uh the canor Fitzgerald guy he's like you know

big wealth fund manager he's coming on as an advisor apparently so you got a lot of very very Pro people coming in here and look right now Trump is ahead and most polls especially in the Battleground States so it's really I guess Trump's debate to lose right if he screws up somehow or whatever but he's so practiced he talks to everybody all the time so that's going to be a big event for the markets I think the markets will continue pricing in assuming everything goes in Trump's favor during this debate the potential for a trump presidency which generally the markets tend to like the markets like the idea of a trump president again I I don't care about your opinions about Trump or Harris that's all fine you're allowed to have think whatever way you want we're not telling anybody to vote anyway here we're just looking at purely

how the markets are reacting to the potential of one candidate or the other and so I think that's a really big thing to watch out for what about CPI PPI later this week and then obviously the big Fed rate interest rate decision uh next week September 18th next week yes inflation's a beast that's largely been damed hopefully um look if inflation starts peing back up in any significant way that's problematic for the the market the fed's then in a really tough position because they need to cut rates to get the labor market stimulated but if they start cutting rates and inflation's going back up it's probably going to mean more inflation this is this comes back to the idea that I've been thinking of that we

might even have that sort of q1 Market top something like this and I don't know it's hard to predict that far out what's going to go hard to predict what's gonna happen tomorrow let alone that far out right but once the rate Cuts start coming that could actually bring inflationary forces back into play which could let's say complicate things a little bit but I I would expect that inflation this week will continue to be cool or cooling so I don't think that's a big issue right now even the feds come out and said hey look the inflation thing not that big of a deal currently so don't worry too much about it we're focused on labor markets now which is of course the big point to watching out for what's going on at the labor markets so inflation currently not a problem unless it starts Trucking back up but there's

been so many deflationary forces right now that I would be surprised to see inflation really popping back off oil's down and a lot of other things down there's certain costs that are going back up but for the most part outside of things like orange juice which has like had the craziest we should have all invested in orange juice Futures ma'am we screwed up big time holding Bitcoin sh an orange juice Futures the other orange orange coin I guess but outside of some specific products most prices are coming down a lot of things so it's good for the consumer and it's bringing down inflation and then of course the interest rate next week so it's massive yeah and I think everybody expects the interest rate to be dropped whether it's 25 base points 50 base points unknown

clearly so long as it drops everything's going according to plan I don't think it matters so much if it drops 25 or 50 as long as it drops if it didn't drop that would be a major red alarm for everybody let's go on to big news that came out end of last week is that Global money supply has hit all-time highs what is leading Global liquidity to be rising to all-time highs right now and what do you think that will lead to in terms of impact moving forward on the markets Global liquidity the tide that lifts all boats right now we're seeing a lot of different things in terms of global liquidity but in terms of the global liquidity index keeps Rising as we see more and more central banks cutting interest rates around the world when money becomes easier to get for

companies and people and stuff like that us is kind of a lagger when it comes to cutting interest rates quite a few other banks have already started doing that the Reserve Bank of New Zealand for example did it two weeks ago I think they cut their interest rate we've already seen multiple cuts and other major places ECB started cutting a few months ago so it's already kind of happening money's getting a bit easier right now we did have an announcement recently I think China's injecting another $420 billion dollars into its let's say lagging economy right now Chinese stocks are crushed Chinese real estate's crushed right but um the Chinese economy remains one of the most important economies in the world of course and to an EXT ENT I've even seen theories that the whole conversation

right now shouldn't really be about a US recession problem the US was doing okay for all intents and purposes not the best roaring economy in the world but it's fine it's cruising along it's treading water but the real problem is in China and China is going through a bit of a crisis right now in multiple fronts and that's where liquidity is really being pumped in right now but there's all kinds of liquidity injections surreptitiously happening in the background whether it's more direct from this Bank China Dro it in you know almost half a trillion dollars or if you see stuff like what's going with the FED right now there or actually the treasury the treasury is doing a $50 billion Bond buyback I think in the month of September they're supposed to do like 15 billion next month they're doing like 35 billion or something like that so it's

50 billion in total but a lot of money sloshing around the system out there and as more money enters the system more liquidity enters the system it tends to be good for risk assets AKA Bitcoin and the rest of your crypto coins okay so that's the main Point liquidity is that it will be the tide that lifts all boats and the other thing that's coming is Q4 is coming I mean obviously time time keeps moving forward but I say that because Q4 is often a period that has an impact on markets why is Q4 seasonality such a big deal that people are predicting could impact markets forward Q4 is really interesting and it's it's fascinating to see how seasonality works out and you start

think about the reasons behind seasonality and it kind of starts to make sense like the first week of August tends to be the worst week in markets of the year and why is that the case is it could it be that everybody all the Big Wall Street dudes and all the investors and stuff they're all sitting on the Amalfi Coast they're not dialing in 247 looking at the charts probably probably right markets are just more susceptible to news there's less liquidity there's a little less interest people are just not paying as much attention during that time September tends to be a bad month as well people come back they start repositioning catching up on the news whatever things don't happen as fast as you think they would but then October comes right we talk about September is usually being WT and October as being up

toober so look q4's got a lot of great seasonality for a variety of reasons weather starts to turning in northern hemisphere what else are people going to do are you gon to go out for a walk no you're going to stay in and trade crypto coins man that's what you're gonna do it's raining outside it's cold come on let's go let's trade some coins so you get a bit of this effect as well just the simple reality that 90% of the world's population lives in Northern Hemisphere and there are goingon to be a lot of people up in those regions who are now off the beach and back in the office and doing stuff right and paying attention to markets it's kind of simplistic but it kind of makes sense we also have a few other bits of wind in the sale for our talk here on

seasonality because everything's happening in Q4 this year rate cuts are coming in September okay so that doesn't have like day one like massive impact takes a while for the reality of rate cuts to sort their way through the economy but the markets will probably like us straight away and that sets us up I mean it's happening December 18th right almost Q4 week way so that sets us up for Smooth Sailing well let's say wind in the sales not necessarily smooth sailing uh for Q4 I'm sure we have plenty of volatility with everything going on generally speaking as long as we get rate Cuts outside of a recession and there is no recession in the USA right now it's unlikely to happen in the next eight days okay guys then it's usually a bullish event for markets okay

there's so many things not pricing in a recession right now we can still have something break and recession come sooner than a lot of people expect but it's probably not going to happen in the next 8s which means that we're probably going to get some positive force from the rate cuts when they come in which speaks well for the end of the year the Q4 narrative we have the elections coming in Q4 again if we see Trump taking the crown here then markets probing like that going into the end of November and into December so there's a lot of things here working in the favor of the potential for a big Q4 rally this year of course nothing certain guys we only talk about our models what has worked in the past what could work this time around markets are chaos as we all know and any little tiny event could

derail all of this at any time so we're optimistic but maintaining a little bit of H caution in the background when we talked earlier about the soft Landing which seems to be the term that is most used on crypto Twitter right now everyone's talking about the soft Landing not just crypto Twitter the entire equity all asset markets are talking about the soft landing and will it happen how do we know if the Soft Landing happens or not soft Landing happens if the US doesn't get a recession basically the hard Landing is the recession right the soft Landing is the cooling bringing the inflation back down and the stuff without it making trigger recession now recessions happen

they're Norm part of the business cycle etc etc and we might see recession a year or something from now not necessarily related to this specific thing which mean the Fed off on its end what they claim to be the sof landing and then something else breaks credit markets or gosh knows what who knows right but that's basically the main idea here is that we're going to be able to pull off all this that the inflation has come down which the FED has done the FED has managed to get inflation down and they've so far done it without breaking the labor market now the labor Market's showing signs of softening the labor Market's showing signs of stress but it's not broken yet which of course puts key pressure on the FED to cut the dam interest rates already man and they probably need to cut significantly by

the end of the year the worry now is that the fed's not going to do enough soon enough and that it's not going to have enough of an impact because let's keep it real guys a 25 basis point Cut's not going to really help all that many people out all that much right it's oh oh your interest rates just went down by 0.25% thanks a lot great we're GNA need more and so where do we end up with interest rate cuts by q1 next year we could could be down to 4% or something like that or three and a half% it's hard to say how we're going to go and I'm sure the fed's going to continue to update us uh on where they see the economy going as we go through the process but if we get down to three and a half to 4% that becomes much more

manageable for businesses for Real Estate speculators all this kind of stuff the current rates are just like that little bit too high that just puts too much pressure on companies and stuff like this which moves us closer to a very weak labor market it's weakening it's not the weakest it could be far from it in fact but we're trending in the wrong direction which is what continues to worry the markets so we've got a bit of a a wait and see moment right now wait and see what happens over the next few weeks I hate to say it because I feel like we've been saying wait and see for a few months but as you said seasonality here we are every year this happens and we're back in this position again but unlike the last few years this year everything is lining up

for what is looking like a good Q4 which is why we're feeling good we'll keep you guys updated on all these things the debate what comes out of that the CPI later this week and of course the FED announcement next week and so much more thanks so much for tuning in everybody we'll see you next week with Lark and we'll see you tomorrow we got Kyle back on the show have a wicked awesome day as always if you liked today's episode please hit subscribe and make sure you follow us so you don't miss out on the next one there's also a link in the the description through our free 5 minute daily newsletter where we simplify crypto for you while making you laugh and if you're willing to step up your

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