Trump LOSES CONTROL of Economy as FATAL MOVES Catch Up…

What this episode is about

The discussion centers on the deteriorating state of the U.S. economy, particularly highlighting troubling labor market data amid a recent government shutdown and chaotic hearings on Capitol Hill. Key points include the lack of effective oversight by Congress and the ineffectiveness of the current administration's economic strategies, leading to a growing disconnect between policymaking and the realities faced by the American public.

Key takeaways

• Capitol Hill's hearings: where political theater meets the circus of incompetence—bring your popcorn!
• AI's arrival is swift, but claims of job apocalypse are exaggerated; we might be more resilient than we think.
• Big Tech's capex surge signals ambition, but investors are sweating over the economy's AI dependency—talk about a double-edged sword!
• Software stocks plummeted as AI tools threaten entry-level jobs; welcome to the job market's rollercoaster—hold on tight!
• GDP growth sounds great on paper, but underlying issues—like aging health care costs—suggest it's more smoke than fire.

Who speaks in this episode?

• Max (Guest) · 18 min speaking
• Rick Reer (Guest) · 2 min speaking

What is discussed, and when

1. 0:00 – 5:00: Midas Touch Network, Scott Besson, Alphabet Inc., Amazon
2. 5:00 – 10:00: Rick Reer, Financial Times
3. 10:00 – 15:00: Challenger Gray and Christmas
4. 15:00 – 20:00: Washington Post, Midas Touch Network, Challenger Gray and Christmas

Notable quotes from "Trump LOSES CONTROL of Economy as FATAL MOVES Catch Up…"

• Jump to another meeting. It's just a fiasco. So, here's the one clip that sums up Scott Besson's time reporting on the affairs of the Treasury.

  about Scott Besson · at 1:05

• Software stocks after it rolled out that new AI automation tool. the numbers are gargantuan. I think it's something like $2 trillion been wiped off that Goldman Sachs software index more broadly since its highs.

  about Goldman Sachs · at 2:12

• Announcements of capital expenditures or capex toward data centers and AI research. So companies like Meta, Alphabet and Amazon all announced greater than expected projections…

  about Alphabet Inc. · at 4:17

• Boost tourism and manufacturing. And yet we lost 70,000 manufacturing jobs in 2025 alone. And according to the Financial Times, travel to the United States from out outside of…

  about Financial Times · at 7:13

• Now, Reer is arguably the most important bond trader in the world because he manages a $2.5 trillion portfolio of fixed income for Black Rockck. Now, you might recognize his…

  about Rick Reer · at 8:49

• Picture. So, as a benchmark, let's start with the wrap to 2025 from Challenger Gray and Christmas. Now that the final tally is in, you can see in the private labor market that…

  about Challenger Gray and Christmas · at 13:55

• We have just learned that the Washington Post is laying off its entire sports department and most of its overseas journalists. The AP says a third of the paper staff will be affected.

  about Washington Post · at 17:30

• Newsletter at UNFR.com and you can follow me on YouTube and Blue Sky UNFR. Thanks as always to the Midas Mighty for having me here and I'll catch you online. Want to stay…

  about Midas Touch Network · at 19:42

Who and what is mentioned in this episode?

People

• Rick Reer — Person · Referenced expert (via Bloomberg clip) · 1 mention · first at 8:44
  Used as an authoritative market voice to support the episode’s thesis that productivity/capex can look strong while the labor market contracts; presented as a major fixed-income decision-maker.
• Scott Besson — Person · Referenced government official (Treasury Secretary) discussed in hearings · 2 mentions · first at 0:44
  Central to the ‘Capitol Hill’ segment: committee hearings are used to illustrate political theater and market-facing governance; his testimony is contrasted with worsening labor data.

Companies & orgs

• Midas Touch Network — Company · Business focus · 3 mentions · first at 0:00
  The podcast is produced for the Midas Touch Network, indicating a close relationship with the content.
• Black Rock — Company · Referenced expert · 4 mentions
  BlackRock is mentioned in the context of its significant role in the financial markets and its insights on the economy.
  Now, Reer is arguably the most important bond trader in the world because he manages a $2.5 trillion portfolio of fixed income for Black Rockck. Now, you might recognize his name as one of the.
• Challenger Gray and Christmas — Company · Case study · 2 mentions · first at 13:58
  Challenger Gray and Christmas is referenced for its data on layoffs and job market trends, providing critical insights into the labor market.
• Goldman Sachs — Company · Referenced expert · 1 mention · first at 2:20
  Goldman Sachs is mentioned in the context of its software index and the impact of AI on the stock market.
• Alphabet Inc. — Company · Case study · 1 mention · first at 4:22
  Alphabet is mentioned alongside other tech giants for its significant capital expenditures in AI and data centers.
• Amazon — Company · Case study · 1 mention · first at 4:22
  Amazon is referenced for its investment in AI and data centers, contributing to the broader discussion on tech industry trends.
  Announcements of capital expenditures or capex toward data centers and AI research. So companies like Meta, Alphabet and Amazon all announced greater than expected projections…
• Meta — Company · Case study · 1 mention · first at 4:22
  Meta is mentioned as part of the big tech companies investing heavily in AI and data centers, impacting the stock market.
  Announcements of capital expenditures or capex toward data centers and AI research. So companies like Meta, Alphabet and Amazon all announced greater than expected projections…
• Washington Post — Company · Case study · 2 mentions · first at 17:30
  The Washington Post is mentioned in the context of layoffs, highlighting challenges in the media industry.

Media & podcasts

• Financial Times — Media · Referenced expert · 1 mention · first at 7:22
  The Financial Times is cited for its reporting on tourism trends, providing data that supports the discussion on economic impacts.

Full transcript with timestamps

0:00 Hey, this is Max from UNFR for the Midas Touch Network. And boy oh boy, do we have a lot to go over. Despite the brief government shutdown this week, there was a trickle of government economic data to put on top of the private releases that came out. None of it was good as far as the labor market is concerned, which is our focus for today. But there were some other developments in the capital markets and fireworks on Capitol Hill. So all that and more on this week's macro take only for the Midas Touch.

0:39 Somebody call a doctor because there's blood all over Capitol Hill. That's right. Your and my favorite Treasury Secretary spent the week getting alternately bodied and boosted by Democrats and Republicans, respectively, first in the House and then in the Senate. So, you might think that this is my focus today, but honestly, these committee hearings have become parodies of themselves with members showing up to get their viral clips in before they jump to another meeting. It's just a fiasco. So, here's the one clip that sums up Scott Besson's time reporting on the affairs of the Treasury.

1:13 So, I'm not going to ask you any questions because I think it would be useless, but I was just going to say, Mr. Chairman, we've had some very good hearings recently. This was not one of them. This is not your finest day and it's too bad because I think you're a very competent person. I disagree with some of your policies, but you're a very competent person. President has put in some people in very important places that are sort of caricatures of incompetence. That's not you. Today was not your finest day. And with that, I yield back. This whole thing is just toy because at this point, the administration is just steamrolling over the American people and only responding to the markets. So, let's address what was going on in the real world outside of this Kabuki theater. Labor is our top story today, but there was movement in the stock market with the earnings season upon us for the big tech

2:04 companies, and it provides a salient backdrop to what we're going to talk about when it comes to jobs.

2:09 Anthropic, it accelerated the selloff in software stocks after it rolled out that new AI automation tool. I mean, the numbers are gargantuan. I think it's something like $2 trillion been wiped off that Goldman Sachs software index more broadly since its highs.

2:23 So yeah, there was a massive sell-off of software stocks for a couple of reasons that might seem inongruous, but it makes sense if you zoom out a bit. So the big SAS companies or software as a service got absolutely hammered for two reasons. The first was the release of anthropic models in the legal and the financial sectors that sent shock waves through the market because the models are finally beginning to demonstrate some level of capability in sector specific disciplines that many interpret as the beginning of the end of the entry-level job. So with just a few prompts, anthropics models appear to be able to complete complex clerical tasks with a lot, you know, far greater ease than some of the prior releases. So, think about college age entry-level roles that might be potentially disrupted. And this had the unintended consequence of hammering the software stocks because these coding models also had the ability

3:18 to kind of mimic some of the more popular platforms out there like Salesforce and Monday.com. Although I would argue that this is a complete overreaction, there's no question that these AI tools are going to increase productivity, but they're light years away from being able to displace SAS platforms, but that's for another day. This selloff, though, impacted more than just the software industry. And this is where it starts to bleed out and be important. The private credit market also took a beating because many of these shadow credit giants that we've spent a lot of time talking about are heavily weighted towards software investments. So any degradation in this sector has a ripple effect that we don't really see on the headline numbers. Now the other phenomenon that had market observers scratching their heads was an initial selloff of the big tech companies who basically beat all their earnings

4:11 projections. So the reason for the sell-off although many of the names have since recovered was a reaction to these announcements of capital expenditures or capex toward data centers and AI research. So companies like Meta, Alphabet and Amazon all announced greater than expected projections for capex in 2026 bringing the total investment among these companies to around $650 billion for 2026 alone. So, in prior years, these announcements tended to boost stock prices and boost optimism surrounding AI. But all of a sudden, the market seems to have cooled on this idea heading into 2026. And I think there's two forces at play here.

4:52 Now, the first we can address now. And the second will make a little more sense when we get into the labor story. So, tuck that one away for now. So the reason the market is jittery about this concentration of capital is the growing realization that our economy is so dependent on the promise of AI but has yet to realize the benefits of it. So this is a dicey area that I want to spend a minute talking through so that we get an idea of the internal struggles that are going on behind the scenes of the administration but also on Wall Street. So you have this administration claiming that GDP growth is robust at over 4% in the third quarter and predictions that it's going to be closer to five for Q4. But there's enough research out there to inform us that this figure would be close to zero if not for capex and AI. And even more research out there that suggests that the areas of growth that we are

5:43 experiencing are actually indicators of an economy in decline because they're for health care for an aging population, government spending, and stock market returns. These are all contributors to GDP, sure, but they don't necessarily reflect a healthy economy. So the fact that these companies are doubling and tripling down on investments designed to increase productivity is beginning to cause some serious alarm. See, productivity is defined as doing more with less. And in this case, the less is us. It's people. So the market is catching on to this quandry that the AI race, if it succeeds, means that we don't need as many people in the labor force. And if it loses, then we've just flushed trillions of dollars down the drain. So, this is one of the reasons that Democrats were justifiably agitated during Bessant's hearings, if you caught any of them, because beyond the performative outbursts for the viral

6:39 social clips, if you want to grow an economy beyond health care, beyond government spending and stock market gains, you need the so-called real economy to come along for the ride. But areas like travel and tourism and manufacturing that contribute to GDP and real wages are down because of Trump's behavior. So think about this for a second. The dollar is down 10% since Trump took office. And it's a deliberate policy move on the part of the administration to debase the dollar to boost tourism and manufacturing. And yet we lost 70,000 manufacturing jobs in 2025 alone. And according to the Financial Times, travel to the United States from out outside of the United States dropped 4.2% in 2025. A $50 billion loss in tourism spending. Why?

7:36 Well, on the manufacturing front, we've talked about this before. We don't have an industrial policy. and the administration's actions are so erratic that no one wants to invest new capital in anything related to manufacturing. Now, changes to the depreciation and amortization in the tax code have allowed for existing manufacturers to invest in upgrading equipment, but no one wants to invest in building something totally net new, knowing that the president might start a war with an ally or impose a 100% tariff on a supplier or just call the whole thing off. So despite this dip in the dollar, we can't spur new investments into manufacturing. And even though global tourism was through the roof last year and the dollar decline technically made the US more attractive than ever, we wound up as the outlier with a substantial decline in tourism. Now, taking a deep breath, I know it's a lot to ask to sort of keep this all in your

8:32 mind as we head into the next section, but all of this is important to bear in mind as we contextualize the labor data that just came out. I'm going to play a couple of Bloomberg clips on a guy named Rick Reer to kind of kick things off and set the table. Now, Reer is arguably the most important bond trader in the world because he manages a $2.5 trillion portfolio of fixed income for Black Rockck. Now, you might recognize his name as one of the darkhorse candidates for Fed chair before Kevin Walsh was selected, but his prior support for increasing corporate taxes and some Democratic political donations probably sunk them. Anyway, let's take a listen to what he says here before I dig into the numbers. And I highlighted a couple of clips for you, so we'll just run them all together.

9:19 Well, so first of all, I the uh it hasn't been jobs day in a number of months anyway because we're we're not getting any of those. I think the ne last three months we've had negative you know we had a government shutdown but you still had negative negative jobs. You look at what we got yesterday look at the Jolts report. You look at the challenger job cuts. You look at the claims data. You look at the ISM services in terms of jobs. Like there's no ambiguity around where we are in the in the jobs market. We're we're having a really tough time. We're watching productivity explode higher in uh in terms of growth being really good. But a job market that's that's really tricky.

9:55 You've got an economy that's operating incredibly well, but only on a couple or three cylinders. Today, you've got, like you pointed out, you've got capex that is robust. It will continue. You've got consumption that is robust, but it's driven by wealthier, older savers. And it's part of why that, you know, the interest rate tool is not is not nearly as effective as it used to be because that cohort is doing extremely well. where the burden today is is in terms of lowincome, small business, younger people. It's actually this is an economy that's more asset oriented than labor oriented. And that cohort I I don't want to understate understate this. We have a problem in terms we need to employ more people. We like EM a lot. The dollar will stay contained and so EM the yield differential between EM and high yield is as good as it's ever been.

10:46 Okay. So, if you work in equities on Wall Street, you're probably going to be a little offended by what I'm about to say. But here's the thing about bond traders and fixed income investors. It's not the sexy part of Wall Street. But these guys have to follow macroeconomic trends and see the bigger picture. They're not stock pickers. They don't fall for hype. And in the world of finance, you have clowns like Jim Kramer on one side, but the grown-ups live in fixed income on the other side. And I'm sorry if that is offensive to anybody, but fixed income is orders of magnitude way bigger than the stock market. So reader is hitting the nail on the head here that our economy is doing well if all you're concerned with is GDP growth for the sake of growth. Capital going to capital. But it's interesting that he's most bullish on emerging markets. And that's because of our dollar weakness for sure, but also because of a

11:41 structural issue with a mature economy like the United States. See, this incessant focus on productivity, like we said before, doing more with less, is good for earnings and growth of big multinational corporations, but it comes directly at the expense of our working class. Now, the administration will poo poo this argument saying that if the working class was doing so poorly, then why is consumption up? But Reer correctly identifies that it's up because the upper end of the economy is doing most of the consumption. And to the extent that the middle and lower classes are participating, it's largely on credit. And that's a bad sign. But it also explains why he would be investing in emerging markets because that's where the consumption gains are ultimately going to be made. Now, the Trump administration has defended its workingclass bonafides by bragging about things like passing no tax on overtime

12:36 and no tax on tips. But let's think about that before we look into more numbers here. The no tax on overtime provision was for the half of the time and a half. So, it really only applies to onethird of overtime. That's just a fact. But let's give them their due and say that it's better than nothing. The rub about having a policy that revolves around only two ideas though, a weak dollar and capex and AI is that a weaker dollar means that it buys less, not more. And that's inflation. Inflation that disproportionately impacts lower and middle inome wage earners. And productivity gains from investments into AI are designed to limit the number of hours spent working, which is why we're already seeing a decline in the hours worked. as you can see here. So, thanks for nothing. And no tax on tips is awesome if hospitality is booming, but only high-end dining is booming. And the administration has murdered tourism. So,

13:37 again, thanks for nothing. Labor is the biggest casualty in the Trump economy, and the numbers this week did nothing to deflect from this reality. So, while the big non-farm data will have to wait until next week due to the shutdown delay, we have enough from private sources to paint a pretty ugly picture. So, as a benchmark, let's start with the wrap to 2025 from Challenger Gray and Christmas. Now that the final tally is in, you can see in the private labor market that 2025 was the biggest year for layoffs outside of COVID in a decade. And not by a little. These figures are staggering when you consider the slow growth and hiring on the other side of the equation. So let's look at what ADP and Challenger have so far this year. Challenger and ADP measure different areas of the market, although there's probably a good deal of overlap.

14:27 So the Challenger forward-looking information is based upon surveys from CEOs in their data set. So the information can also change through the year. And that's why it's important to to pair it with other sources. That's also why there's so many revisions to jobs data. Anyway, let's take a look at this chart to give you an idea of what's coming in the private sector. This is the lowest number of planned hires announced in January. Again, going back a decade. So, we're starting off in a pretty big hole relative to prior years and would need to see a significant rebound in the coming months to start working up that average. But that seems unlikely considering all of the other factors that we're about to discuss. So now moving over to ADP, the headline figure here is also pretty anemic. As Nila Richardson from ADP notes in this release, private employers only added 398,000 jobs last year, which is down from 771

15:24 in Biden's final year. And to kick off in January, only 22,000 jobs were added. But it's where they were added that tells the story. So you can see the mixed results in services with professional services getting hammered but education and health care seeing the largest growth. And when you drill further into it, it's health care that dominates this segment which as we've said time and again is a reflection of the aging population requiring more care. This isn't a GDP production boost. Now, financial services and utilities are up, as you can see here, driven by the insurance sector and financials and the increased power draw from the growth of data centers. Again, these are not the areas that you would necessarily want to see increasing in isolation.

16:13 It's one thing if they're moving up in tandem with other areas, but when you put them in the context of manufacturing, as you see here, then that's a real problem. Now, we also got Jolts data and initial claims from the Department of Labor. So, we should run through those quickly as well. Remember that Jolts measures total job openings and turnover and the DO tracks initial jobless claims on a rolling basis. So, for the week ending January 31st, initial claims increased to 231,000. That's 22,000 over the prior week. But here's the kicker. The number of job openings in the Jolts data trended down by nearly 400,000 in December to 6 a.5 million and year-over-year openings are down by 966,000.

17:00 These are stunning numbers that show what reader and pretty much everyone else who doesn't work for Donald Trump understand that the labor market is contracting. And even good news is bad news when the good news is increased productivity because it just means that more layoffs are coming. And that's exactly what we got from the updated challenger report. Now, before we get there, just a moment to acknowledge what I think is the most disgusting layoff announcement coming from a media background.

17:30 We have just learned that the Washington Post is laying off its entire sports department and most of its overseas journalists. The AP says a third of the paper staff will be affected.

17:40 Now, I know it's not lost on anyone that Jeff Bezos's company released a $50 million documentary about our first lady moments before he liquidated 300 jobs at the Washington Post. And I'm sure you've seen and read and heard enough about all of it to experience the appropriate level of rage. Now, 300 jobs is a ton of jobs, especially for a single news organization. Unfortunately, it's a drop in the bucket compared to the challenger numbers that we just got. US employers announced 108,000 job cuts in January. That's 118% increase from last January, and it's up 200% over December. So, there you have the not so good, bad, and ugly start to the second year of what feels like the longest presidential term in history. And I think the big takeaway from all of this is what Reer was alluding to. How the economy in the eyes of the administration and the investor class is doing okay. Because if you

18:40 measure the economy by capital flows, it gives the appearance of continuity if not health. And this is what's masking the underlying issue that threatens to tear it all down. You can't have an economy built on capital flows alone. Just like he can't point to health care as your sole labor victory because it's a reflection of an aging population. I mean, ask Japan how that worked out for the last 30 years. That words and actions matter. As in the case of Trump's erratic behavior. People don't want to build new manufacturing in a country with no industrial policy, a crazy head of state, lack of government subsidies for startups, and no long-term vision. And people don't want to travel to a hostile nation that imprisons and murders its own citizens unapologetically, no matter how attractive the exchange rate is. No tax on tips and overtime doesn't mean much if you're getting fewer tips and your

19:36 overtime is being cut. For the Midas Touch Network, I'm Max from UNFR. You can sign up for my free weekly newsletter at UNFR.com and you can follow me on YouTube and Blue Sky UNFR. Thanks as always to the Midas Mighty for having me here and I'll catch you online. Want to stay plugged in? Become a subscriber to our Substack at midasplus.com. You'll get daily recaps from Ron Philowski, ad free episodes of our podcast, and more exclusive content only available at midasplus.com.

Questions about this episode

Who speaks in "Trump LOSES CONTROL of Economy as FATAL MOVES Catch Up…"?

Max (Guest), Rick Reer (Guest).

What is "Trump LOSES CONTROL of Economy as FATAL MOVES Catch Up…" about?

The discussion centers on the deteriorating state of the U.S. economy, particularly highlighting troubling labor market data amid a recent government shutdown and chaotic hearings on Capitol Hill. Key points include the lack of effective oversight by Congress and the ineffectiveness of the current administration's economic strategies, leading to a growing disconnect between policymaking and the…

What is mentioned in this MeidasTouch episode?

11 people, works and ideas are mentioned, including Midas Touch Network, Rick Reer, Black Rock, Scott Besson, Challenger Gray and Christmas, Goldman Sachs. Each one on this page links to its own page with every episode that mentions it.

How long is "Trump LOSES CONTROL of Economy as FATAL MOVES Catch Up…"?

The episode runs 20 min; the transcript is about 3,480 words in 27 timestamped sections.

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