Apr 3 • General discussion
4/3 Market Update: Key Events to Watch For This Year
Okay so here's my take about where things actually stand right now into the year and what most people are completely missing.
As we saw, BTC dropped below the area we discussed last week but does it go lower? What about the rest of the year? If it doesn't then what are we waiting on? When does the market turn? So let me give you my honest read, because the picture is more complex than "wait for the Fed to cut."
Here's kind of what's going on beneath the surface:
Let me start with this....the blue collar labor crisis in the US is becoming a bigger macro catalyst than people give it credit for.
- 50,000 plumbers short by 2027.
- 500,000 construction workers shortage today.
- 193,000 nursing vacancies every single year through 2032.
- 800,000 electricians needed by 2030
Electrician employment alone is growing twice as fast as any other occupation and nearly 30% of union electricians are about to retire on top of that.
So my point is:
- We have a ⬇️ workforce as baby boomers retire
- We have have a ⬆️ demand for more workers
- We have an ⬆️ ongoing AI race with China
- We have ⬆️ costs to get people into these jobs (largely university taught - not trades/skills population)
- We have ⬇️ money available due to high borrowing costs/interest rates
What I'm saying is - you can't re-shore manufacturing, build out AI infrastructure, and wire a robust energy grid with a workforce that doesn't exist. The demand is locked in. The supply can't respond fast enough. That is a spending mandate whether anyone in Washington wants to admit it or not.
But another thing - the ISM
----- ISM (Institute for Supply Management) Manufacturing PMI is a monthly survey of the people actually placing orders, managing supply chains, and making hiring decisions etc etc etc...It's one of the most closely watched leading economic indicators on Wall Street because it reflects real business conditions before they show up in GDP or jobs reports -------------------- okay continue
The Manufacturing PMI just hit 52.7 .... the strongest reading since August 2022. 3rd straight month of growth (on paper). On the surface that sounds like good news. Companies are producing more but the problem is they're refusing to hire so the labor problem stays the same. 17 out of 18 industries reported higher input costs in March due to tariffs and now the Iran War with oil constraints globally.
What does that mean in plain English? The economy is coiled. Production is expanding. Orders are coming in. But businesses are frozen holding headcount, waiting for clarity on tariffs and the Iran situation before they commit to hiring and risk expanding their business.
BUT IMPORTANTLY --- this means the pathway is clear for growth once the pressure gets let off.
The Iran conflict is still the chart that matters though and here's the part nobody's talking about.
Oil-driven inflation and stimulus-driven inflation are not the same thing. This matters more than almost anything else in the current setup.
When the Fed raises rates to fight inflation, it works on demand-pull inflation. When people have too much money chasing too few goods, making credit expensive slows things down. That's what worked in 2022.
But oil inflation is cost-push. It hits every supply chain simultaneously .... like trucking, manufacturing, food, energy, chemicals. The Fed cannot drill oil. It cannot reopen the Strait of Hormuz. Raising rates when inflation is coming from a supply shock doesn't fix the problem it just crushes the economy on top of the shock. The prices that oil touched on the way up don't fully come down when oil cools. The damage has already been done to the cost structure.
So here's the setup of the problem:
- When the Iran conflict eventually resolves.... and it will.... oil cools.
- Markets move up but not completely, because the inflation oil caused doesn't fully reverse.
- The jobs market is already cracking from AI displacement and spending cuts.
- And the blue collar shortage means the productive capacity to recover isn't there.
What's the Fed's only fast lever? Rate cuts.
Kevin Warsh, the new fed chair takes over in May and he's seen as bad for markets. People say he's not going to cut rates just because the market or Trump wants him to..... but I think he's going to be out of options. After all, would Trump really appoint someone who wouldn't align with his views? We don't think so, not long term anyway. A horribly cracking labor market and sticky oil inflation he won't be able to actually change is the two things that changes Warsh's traditional calculations.
So what clues are we looking for? What events should we be paying attention to?
- Iran resolves or gets priced in as the new normal.
- Oil pulls back from $100+. Markets rally.
- Warsh uses that window of lower inflation optics to justify a cut in Q3/Q4.
- The coiled spring in manufacturing and construction finally releases.
- Rate cuts ---> borrowing and spending job expansion.
- The blue collar shortage creates a wage surge.
Bitcoin continues upward, not largely because the Clarity Bill passed (although it would definitely help), but because the monetary response to all of this structurally weakens the dollar and remember, it's not the Bitcoin getting stronger... it's the dollar become worth-less....
If you want to go deeper on any of this, drop your questions below. I'll be posting the video next week and answering any questions!
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4/3 Market Update: Key Events to Watch For This Year
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