To keep roaring . Our next guest says all good things must come to an end before that, lets start with the jobs report. Just 187,000 jobs added, but better signs on the Unemployment Rate which dropped to 3. 5 , and what to make in the surprise uptick in wages. Who better to ask about this, that would be the chief economist diane swan, who came within 6,000 of the number last month. And shes watching three events that could send shockwaves through the economy. Shes back with us with steve liesman. Your own forecasting chops arent bad either, steve i havent been forecasting since the pandemic, but i think the question for diane is obvious why did she miss by 7,000 . I mean, what went wrong, diane you sound like my dad thats what my dad used to say. Why did you get that a minus, diane . Why 95 and not 100 . Do you think youre picking up do you think its just tell me a little more about this and what your reactions were to the report oh, i was extremely pleased with the report. It was exciting, because were seeing continued this would have been a blowout month in the 2010s. The labor market, weve got job gains continuing, the Unemployment Rate back down to 3. 5 , wages at 4. 4 , the same as they were in may but productivity growth has accelerated. The data suggests that it accelerated even more than what we saw in the Second Quarter thats the elixir that makes us able to retain these wage gains as workers, and not have it threaten the fed as a spillover into inflation and so the idea that with fewer workers, were still at a low Unemployment Rate, and wages were, you know, still there. Thats just wonderful news i mean, im leaning into this report im worried about the bond market and the blood bath we have seen there, and whats going on but for the moment, im going to take this win. Can i be the goldilocks spoiler and point out some of the things we could be more alarmed about. Payroll revisions looking lower, what are some of the other things temp jobs, thats been an issue for quite some time. Just the general desscelerationi hiring a couple things i was looking at the history of these things is this a situation where payrolls decline and stop declining . There have been some situations like that. Middle of 85 and 95 was a situation like that. Soft landings are not the rule but they can and have happened in the past. Leisure and hospitality, interestingly, has leveled off and has been a huge source of job gains for the past several months and now its down to like 10,000 or so. And theyre stopping some 300,000 short of where they were before the pandemic. That may end as a source of job growth i dont like this rate that leveled off at 62. 6. I would hope it could be attracting more people into the workforce. That does not appear to be happening. Thats potentially significant so those are some of the weaknesses out there but we keep talking about this idea of this asynconicity of the economy. Look at what happened to health care, 63,000 workers i saw someone calling these mini recessions, saying we had a housing recession, manufacturing. Where do we go from here what we have seen is, the fed saw fighting inflation as a marathon, not a sprint and here we are getting from 3 inflation down to 2 , and its becoming a relay race. Thats the important thing, because the labor market is held up as weaker sectors have handed off the baton to stronger sectors. And overall, employment gains are slowing to a pace that would have been considered extremely good in the 2010s. At this level of unemployment, still very good. On the participation rate, one of the things i would encouraged by was the strong pickup in the over 65 crowd. Thats something thats been missing since the pandemic, and driven by women. So there are still some signs out there that we can get more workers that were bringing in, but we do have retirements, we do have an aging demographic we dont have the same immigration that we did prior to the pandemic and even prior to the 2016 era and i think thats important, as well but right now, things look very good remember, soft landings are to borrow jay powells phrase from march 22, softish landings are not without pain pain is a euphemism for unemployment im going to call you after this session, because i want to call you about a story we are working on for monday. We have missing or zombie workers, because we keep adding a lot of workers, double what we should be adding, but were not bringing any more workers into the workforce. I dont know where theyre coming from. Theyre coming in the workforce if youre going theyre showing up but not in the households august 23rd, right that down, i want to what are we preparing for is the big announcement that theyre going to stop hiking we havent talked to you about fitch and some of the issues there. I want to talk about one thing, i dont want you to lose the powerful bond market rally going on today when we hit 4. 20 earlier on, they were sweating take a look at the tenyear theres been a pretty strong rally. Maybe fitch got people a little nervous. So the street must have been short duration, and then they said wait a second, this is an allcheer signal to fulfill orders or whatever was going on. But now youre back down to 4. 07, which is where my conversation with rick santelli, he said if we get to 4, all hell is going to break loose. Its powering the stock and bond market you ask is it too hot, too cold, or just right . The stock market and bond market is telling you that goldilocks found the right bowl of porage and no more hikes its not in the cards right now, guys. I think were at a 13 or Something Like that probability. What is that number . Those are all down a couple points wow so the higher odds of another hike is in november. Diane, quick last word you know, this is ive got to savor the moment. Theres still risk ahead, we noted those, and i think the economy is going to slow and soft landings are not without consequences this is a relay race that said, ill take a relay race to get across the finish line if it means more of us get to cross working absolutely. Thank you both very much on this jobs day we appreciate it the data may be just enough to fuel the market euphoria we have been seeing so far this year my next guest says thats the problem. Its getting harder to find bargains he says there are still good names out there. Joining me is the chief Investment Officer at smeed capital. Bill, welcome. Thank you for having me do you want to react to the jobs report and what you think is going on here we made the argument over the last couple of years that the millennial dominance that would take over in the marketplace of economics would make it hard to slow the economy down, even with a severe fed tightening. We have talked about this over the last couple of years the housing recession didnt last very long, because theres too many people with too much money chasing too few houses so that was going to be a factor the irony is, that led us to think it would make it more difficult on stocks, but this is such an amazing euphoria episode, nothing stops stocks. Crypto didnt stop stocks, beyond meat and peloton didnt stop stocks. And now a company can report 55 cents a be worth 140 a share. You have everything you want in this particular media. That was an amazon reference . Slight humorous amazon reference. Im just making sure. We talked about whether that part of the market is overvalued, and everything we have seen with names like tupperware and the rest taking off, where do you want to be positioned if youre still in stocks, obviously. But you want to avoid anything that might look frothy in retrospect yeah, heres a fun one to keep an eye on so joe biden did kind of a brilliant thing by selling a whole bunch of oil at high prices the reason that was brilliant is that what you pay at the pump is probably ten times as important psychologically to peoples read on inflation as it is on actual inflation. Because what you pay at the pump is a very small part of your personal consumption expenditures in the last 50 years. Were down to 2. 5 , and it used to be up to 5 but psychologically, its americans main read on inflation. If you go to the gas pump, if the price is down, you think its down. If its up, guess what were back to 83 a barrel, and the gas stations are going to be charging quite a bit more at 83 a barrel than they were at 66 a few months ago so that is going to be interesting, because theyre all betting that that game was over. But the most important psychological thing is about to hit the other direction. Thats where i would differ with diane. I dont see us getting to 2 if we do, it would be the most temporary 2 in the history of mankind. I noticed, maybe this is just my store, my town, but milk, egg, chicken Prices Higher by about 1 or so so i found that a little unusual. Speaking of oil, though, you do own oxy. So from the investor side of this, what are the plays here . Well, its we own oxy, apa, obb, devon energy the more the merrier, right . Its just going to be a great era, because the prices are only going to go up if you are someone that wants a quicker clean energy transition, the higher the oil price gets, the quicker the transition so 125 or 150 barrel oil would cause people to make the switch sooner, but it wont cause us to not need gas so well just get cleaner use of it so oxy is at the forefront of the best combination thats why buffet likes it so much hes going to store carbon in the ground through oxcci and hae a delightful time selling oil and gas for the next 20 years. So i want to ask you the two final questions. I want to mention barbie because Warner Brothers is a stock that you like. Although you dont strike me as someone that wants to invest on a Box Office Hit its just the tonic this company needed there isnt ever seem to be any good news that would indicate that their effort to get back to copious Free Cash Flow and improving the Balance Sheet enough to allow the earnings to show up in a big way and ive already seen it twice i think its the best intellectual satire movie since mel brooks i wonder if mel brooks was a consultant, because i just busted a gut both times. Its a brilliant movie with serious legs all right so let me ask you my last question, which circles back to the market you say we continue to believe this financial episode is going to get solved with difficulty. When you say solved with difficulty, are you talking about rate hikes, a market crash, what kind of difficulties do you foresee unfortunately, euphoria episodes are incredibly good right up until theyre terrible. It wont end well. In fact, my only concern for berkshire hathaway, in our management of our strategy, we sell maniacal pricing. And 40yearold companies that are mature, we would consider 30 to 40 times earnings maniacal. And that hasnt bit people yet, because anything at high quality they have stuck with so thats the big risk at some point, you come in, and the historical market multiple is 15, the market goes to 13, and those stocks go to 18 times earnings and you get some serious damage. Right, although you would feel comfortable in that case where you are positioned riding it out so youre telling me that apple, amazon, you know, meta, 18 times earnings, that could happen in the next 12 months yeah, and remember, a lot of people confuse this, disney and coke were 89 and 60 times earnings in 1972, and the companies did spectacularly the next ten years and their stocks did terrible. So dont confuse corporate success with stock success a lot of times the stock price, all the future success comes very early do you think the high rates would be the reason for a big market repricing i think seth carman was saying free money caused an everything bubble, and hes right. But the pricetoearnings ratio is adjusting you can buy a sixmonth tbill at 5. 25 somehow its reassuring to hear this from you bill, as always, thank you so much for your time today thanks for having me. Bill smead. For more investing ideas, mike santoli and josh brown will wrap up the earnings week and explore some different ideas coming up, the battle between the s. E. C. And coinbase is heating up, as the company asks a judge to dismiss the law sought lawsuit its one of the hottest companies in health care not a drugmaker, no, nothing weight loss or alzheimers the cofounder of figgs will join me. And here is a quick check on the markets. Nasdaq is leading the way with a 1 gain. i was having relationship issues with my old bank. Next to no interest, the fees sfx [typing] it was just take, take, take. So i broke up with bad banking and moved to sofi checking and savings. Now i get higher interest, pay no account fees, and get my paycheck two days early. Get up to 4. 50 apy, pay no account fees, and up to 2m in fdic insurance. Download the sofi app and earn up to 250 when you set up direct deposit. Sofi. Get your money right. Ah, these bills are crazy. She has no idea shes sitting on a goldmine. Well she doesnt know that if she owns a Life Insurance policy of 100,000 or more she can sell all or part of it to coventry for cash. Even a term policy. Even a term policy . Even a term policy find out if youre ing on a goldmine. Call Coventry Direct today at the number on your screen, or visit coventrydirect. Com. Welcome back coinbase asking a judge to dismiss the suit brought by the s. E. C. Coinbase just reported a narrower than expected loss and were optimistic on the earnings release, shares up a fraction of a percent. Joining us now is coinbase chief policy officer with our senior washington correspondent who has been closely following the crypto clash in d. C. Welcome to both of you so you guys have taken an aggressive stance in defending yourself here. Do you think its going to pay off . I think so. Its an area where regulatory clarity is needed. You have bipartisan support in congress, the house, and the senate were excited to be a part of that the court cases are a part of that, but really congress is going to have to pick up the gavel and get the work done. We have big bipartisan progress the last week, so that was pretty exciting. Do you want to jump in on that how do you think coinbase will separate itself from the field, if it will, and what are the odds of shrugging off an s. E. C. Lawsuit, which is typically one of the worst things that can happen to a company. Were in unchartered territory here take a big step back youre arguing to the s. E. C. That crypto and these other things are not securities, right . But i think the big philosophical question is what are they and what are they good for . What is the actual purpose of crypto when it was developed, it was going to be a currency, and you can buy things with it you cant really buy a lot of stuff with crypto. Youre saying its not really a security this will be an investible asset, that makes sense. But its also is it a commodity . Not really, because when you buy pork bellies or something, theres an actual pork belly under that contract that you can eat. Theres nothing like that with crypto so what is crypto . Whats it good for yeah, great question. So the answer, if you take yet another step back and look at the rest of the world, they have answered this clearly. Virtually every other major economy has created a new asset classicaled crypto asset class so the eu, very high standards, very, you know, sophisticated Regulatory Environment they passed a piece of legislation called the market and Crypto Assets regulation the issue we have in the United States is we have two different market regulators, and their jurisdiction is defined by whether something is a commodity or a security. So what we have in the u. S. Is not a big philosophical question, we have a turf battle that Congress Needs to resolve on the use case, the answer is clear. On the internet, we all live our lives on the internet. The early stage of the internet, you can get on there and read content, the second stage you can read and write, but you havent been able to translate value. Crypto allows you to transmit value, and that value can be concert tickets, gaming points, it can be a security or it can be the token itself in terms of how it allows you to navigate a particular protocol so i dont think its that complicated and we should just be careful not to let turf disputes decide something. No question theres a turf dispute going on here in washington, and thats endemic of washington being washington the question about the asset, if you talk about the core value of crypto, what is to prevent this asset from just going to zero . Is it an asset that depends on the greater theory that somebody else will pay more than i paid for it or is it an asset that has core value like that pork belly, which there is something way below those derivative contracts, is there something there that you can eat with bitcoin or crypto in general well, there is different use cases. So when you hear about like the 25,000 open source code block Chain Developers hard at work, theyre developing applications on different protocols the tokens are the mechanism by which you navigate the protocols. So people, you know, are buying these tokens because of the function what value is that creating is the question . I mean, is it a video game nav dating the network i say that tongue in cheek but what value to consumers does that create at the end of the day . Well, the value can be in different forms. You can have a token thats ultimately a piece of artwork. You can have a token that is a concert ticket its the application that determines the value crypto itself is just simply a technology its a way to permanently record an ownership interest. Thats a really big deal, a profound thing. So well see the applications develop, whether its identity solutions, storing of carbon credits, land titling. When we were in colorado, we had hunting and fishing licenses on the block chain, each represented by a token one question about the administrations approach here, which we have seen for instance on mergers they have gotten some pushback in court about their intentions there. Could we see similar pushback . Obviously, the coinbase is appealing to a federal judge to push back against the ftc here how likely could a pushback like that be to prevail in court . You have to look at the politics of this, kelly. Crypto is an enormously popular thing. There are a lot of people who care deeply about whats going on in crypto those people vote, they express themselves on social media im sure well get some tweets or xs after this segment that is part of the political power of the crypto ecosystem. I think for the Biden Administration, the challenge is, how do you regulate this without il y alienating all those people thats the polit