July non-farm payrolls were up 70,000, the largest monthly increase in almost 2 years. Average hourly earnings were up 3% month over month, and year over year, up 9%. But there was a massive downward revision to the 2nd quarter, and the unemployment rate moved up a tenth, from 4.1% to 4.2%. What does this mean for the economy and the Dow and S&P 500?
00:00:00.000I think tonight's a fairly historic night where I think you can go back and when you write the history, you'll say this is the night that the global free trade era begun by the United States in the post-war year led by the United States really came to an end.
00:00:15.660There is now, I think, a permanent tariff curtain around this country, whether that's for good or for ill.
00:00:23.400Well, we'll find out. But right now, what it means is that one person, one man has put in place the tariffs without Congress.
00:00:30.840There's some question about the legality of what he's done. But you can also say, I guess it was done democratically.
00:00:36.220If you voted for Donald Trump and didn't know he was going to put these tariffs on that were going to raise your prices and limit your choice.
00:00:43.080Well, you were either willfully or were just misinformed. So this is a big night.
00:00:48.520This is it. We are now in a place where there are tariffs that have gone up from what were three percent and an effort that went on for decades to reduce tariff barriers and increase free trade.
00:00:59.080It's over now. There's a tariff curtain around America.
00:01:01.980Welcome back to Squawk Box. Rick Santelli here with the big breaking news of the morning.
00:01:06.900The big July job, job, jobs report. Nonfarm payrolls up seventy three thousand.
00:01:13.120Definitely a bit light, but maybe it's the Goldilocks. We'll have to see how the market moves.
00:01:17.940Seventy three thousand. That would be the lightest rate of the year.
00:01:21.860You have to go back to October of last year to find a lower nonfarm pace at forty four thousand.
00:01:28.520Now, the revisions. Here's a biggie. The two month revision minus two hundred and fifty eight thousand.
00:01:36.120That is a biggie, a biggie. Average hourly earnings on month to month basis come in as expected.
00:01:42.540Up three tenths. And if we look at year over year perspective, up three point nine.
00:01:48.000That's important. That's a tenth higher than expected. Two tenths higher than three point seven in the rearview mirror.
00:01:54.320And that three point seven was the lowest year over year earnings rate going back to mid twenty one.
00:01:59.840If we look at the hours worked, hours work at thirty four point three.
00:02:04.200That's up a tenth. That's a good thing. The unemployment rate moves up a tenth.
00:02:09.460It moves up a tenth from four point one to four point two.
00:02:13.620And this makes it the one, two, three, the fourth four point two read of the year to find a higher reading.
00:02:20.300You're going way back. You're going all the way back to October of twenty one when it was four point five.
00:02:26.320Now, if we look at labor force participation comes in a tenth light.
00:02:30.760Sixty two point two. That's a tenth light in the rearview mirror and expectations.
00:02:35.940Sixty two point two to find a lower number. You're going back to the end of twenty two.
00:02:41.040And finally, the underemployment rate, which is called U six.
00:02:45.120That four point two is called U three. Seven point nine on the underemployment rate.
00:02:50.360That would equal where we were in March to find a higher one. You're going to February.
00:02:54.300What's the market doing? The market and interest rates is moving lower.
00:02:58.740Why is it moving lower? Because of the big revision would be my guess and maybe partially due to the light non farm.
00:03:06.060But it is the revision. We have moved down quite a bit.
00:03:09.900We're at four thirty two now. Pre number. We were hovering around four thirty nine ish.
00:03:15.680And if you look at where we said the last week in a ten, it was at four thirty nine.
00:03:20.520So we're now down about seven basis points on the week. A two year last week closed at three ninety three.
00:03:26.740It is now down ten basis points. And that's after closing at the highest level yesterday in the Jordan since mid June, of course, of this year.
00:03:36.480Pre opening equities. They're moving a bit lower, but they haven't made new lows in the Dow futures yet.
00:03:43.260So we want to monitor that. You know, there's there's a couple of things we've got to remember as we look at this data.
00:03:49.220One is the fact that these massive downward revisions are not new to this year.
00:03:54.740The idea that somehow this is because of staffing shortages doesn't explain why we had the massive downward revisions for the last four years.
00:04:02.640Basically, this is a post covid data collection problem when it comes to the jobs numbers.
00:04:08.640In fact, just earlier this week, we got the quarterly business employment dynamics report from the Bureau of Labor Statistics.
00:04:14.780And sure enough, that showed that twenty twenty four has another massive overestimation of the number of nonfarm payrolls.
00:04:22.120So next year, when we get the annual benchmark report for that that 12 month period from March to March, we're going to see another huge annual downward revision.
00:04:32.760And that's on top of the existing month to month downward revisions that we've already had and that we clearly continue to have.
00:04:40.860So, again, the idea that somehow there's something wrong with the data and it just started this year, that's not really new.
00:04:50.300The BLS probably needs to seriously rethink all of their models, whether it's whether it's nonfarm payrolls, inflation, you name it.
00:04:58.340The other good thing that I saw in this report, though, is the fact that a lot of the decreases that we've seen are actually coming from the federal government since January.
00:05:08.860Nonfarm payrolls at the federal level are down eighty four thousand.
00:05:13.260So they're they're clearly making good progress in terms of cutting the bureaucracy.
00:05:17.340This is the primal scream of a dying regime.
00:05:23.380Pray for our enemies, because we're going to medieval on these people.
00:05:28.380Here's the time I got a free shot, all these networks lying about the people, the people have had a belly full of it.
00:06:44.760I think what people are most concerned about are not the light number for the month of job pickups versus non-farm, but it's the revisions.
00:06:55.740And particularly, I think the concern is we haven't had a lot of time to go through it.
00:06:59.860It just got released, but the fact that it looks like the increases in jobs are coming in health care.
00:07:07.660Let's talk jobs first and then we'll talk tariffs because President Trump last night put out a whole new – not a whole new, but really, I think, threw down hard.
00:07:16.140We are reordering the world's trading relationships, and this is the way it's going to be.
00:07:20.480And this is very significant because today is the one August when he said everything was going to happen.
00:07:25.480Let's start with the jobs numbers, sir.
00:08:53.760I agree with all that, and particularly native-born versus non-native-born, real wage growth, all of it.
00:09:04.460The only caveat I would put, sir, and I realize this administration has taken a very different tact, and Silicon Valley has taken a very different tact.
00:09:13.900But traditional – your theory of the case on capital expenditures is based on a classical model where capital expenditures add to jobs.
00:09:22.920I would actually argue that most of this is coming in capital – a lot of it, not most of it.
00:09:27.960A lot of it is coming in capital expenditures related to artificial intelligence.
00:09:31.140And I get a sense that the lightness in some of these numbers you're starting to see, not just – you know, not just economy coming out of this horrible Biden ditch, right, but you're also seeing – beginning to see the impact of artificial intelligence.
00:09:45.220And my concern is the big capital expenditure may not lead to the actual employment growth that we anticipate given traditional models of CapEx to employment.
00:09:56.480But since so much of this is going into either data centers, energy for data centers, or in infrastructure around artificial intelligence, we will start to – we will not – you will not get the labor pickup, you think, particularly in entry-level white-collar jobs.
00:10:19.720And this is where I think the one big, beautiful bill is so innovative in that it actually gives 100 percent expensing to build those data centers, factories, and plants.
00:10:28.820And what it will mean, especially on the skilled labor side, where that pertains to a lot of blue-collar work, you'll see much faster wage gains because there will be real employment demand there.
00:10:39.220On the CapEx side, I hear what you're saying.
00:11:21.500It may have good soil and seeds, but it needs more than that.
00:11:24.280The corporate earnings were very good to great, but the employment numbers are not there.
00:11:31.900Are you concerned that we're going to have a lot of efficiencies coming to these corporations?
00:11:36.980They're going to get great top-line growth and even earnings growth, but that's going to come at the expense of high-value-added, high-paying jobs?
00:12:13.820Like, for example, we talked about the Genius Act, not so much on your show, but how innovative and all these new financial products and things come down the pike that will create demand for dollars, create new industries which are coming before our eyes.
00:12:26.940So I'm an optimist that we're going to have high-paying jobs, certainly on the blue-collar side, but also, Steve, on the white-collar side.
00:12:33.820It's just a lot of these industries are in their infancy, and we don't know what they're going to spawn, but I'm an optimist.
00:12:38.600OK. Joe, where can people go to your social media?
00:12:44.480Because I'm sure there's going to be a lot of updates today and different analysis and perspectives coming from Treasury.
00:12:51.920Where do people go to follow you guys today?
00:12:54.160Thank you, as always, Steve, at Livornianomics and, of course, at Secretary Besson as well.
00:13:00.680Either – well, Secretary Besson for sure.
00:13:02.560He's the main man, but you can follow me for those that want Livornianomics, and thank you again.
00:14:26.440And talk to Philip Patrick and the team over at Birch Gold.
00:14:30.660Now more than ever, like I said, you're going to hit a couple of speed bumps along the way in reordering the world's economy.
00:14:37.120It is the 83rd birthday of Jerry Garcia.
00:14:40.200So today we're going to have, in honor of Jerry Garcia, we're playing Jerry Garcia's music, coming in and going out.
00:14:48.860Also tonight, I think Dead and Company kick off a three-day visit.
00:14:54.560I think it's in San Francisco to the park there, the famous park.
00:14:59.360This July, there's a global summit of BRICS nations in Rio de Janeiro, the block of emerging superpowers, including China, Russia, India, and Persia, are meeting with the goal of displacing the United States dollar as the global currency.
00:15:18.380As BRICS nations push forward with their plans, global demand for U.S. dollars will decrease, bringing down the value of the dollar in your savings.
00:15:26.760While this transition won't not happen overnight, but trust me, it's going to start in Rio.
00:15:32.880The Rio reset in July marks a pivotal moment when BRICS objectives move decisively from a theoretical possibility towards an inevitable reality.
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00:16:02.380With an A-plus rating with the Better Business Bureau and tens of thousands of happy customers, let Birch Gold army with a free, no-obligation info kit on owning gold before July.
00:17:02.180If you want to see everything I'm putting up all night long and where our thinking is going and we put up counter arguments and a lot of articles from liberal and progressive publications just so people can understand narrative warfare, what's happening.
00:17:24.160Joe, especially on the 6 o'clock show last night, but it got so crammed.
00:17:28.240I did not want to just jam this thing in for Joe because it's too important.
00:17:32.480And since we've had the jobs report and we're doing some analysis right now to make sure that we got actually got facts.
00:17:39.320However, I have a feeling that some of this because you're seeing earnings go up and we've had great earnings, great earnings season so far by and large and but it's light on the employment side.
00:17:51.180And I think if you go back through these numbers, a lot of those numbers are tied to health care, which is not a great thing because health care has got so much government involvement in it.
00:17:59.720You want manufacturing increases, manufacturing jobs, all of it.
00:18:04.560My big concern about the rush to artificial intelligence, it's not a – as Brian Costello said, it's not a productivity model they're using in artificial intelligence.
00:18:17.280That means cutting out bodies, human beings to let artificial intelligence take over.
00:18:21.580This is why entry-level, administrative, managerial, and technical jobs, those three areas, I think are going to have a great impact.
00:18:32.260Over I think two months ago when we kind of profiled it, Axios, Jim Vanderhay particularly, was talking about the white-collar apocalypse coming from AI.
00:18:41.260I'm not saying today shows it, but there's got to be some reason for the softness here, and we're going to work throughout the day and tomorrow to get to the bottom of it, particularly on the revisions, which are pretty big.
00:18:51.860Joe Allen, here's what we're going to explain.
00:18:55.180I want to play the cold open of yours because you've had two individuals already at the leading edge of this come out and say that AGI, artificial general intelligence, at least the way I take that they're saying, is a thing that is going to be coming quite soon, much sooner than people thought.
00:19:16.840Steve, yeah, the most aggressive predictions are basically spreading like wildfire across San Francisco where the tech hub is.
00:19:28.240You know, no one has any idea what's going to be spit out the other end of, say, OpenAI's current project to produce GPT-5.
00:19:37.440But you're hearing again and again and again from Sam Altman, Mark Zuckerberg, Eric Schmidt, this promise that AGI is imminent.
00:19:49.400If they're wrong, then this is the most egregious and ridiculous bubble that anyone has yet pulled off.
00:19:58.620If they're right, then what they're talking about basically is creating a little G-God in a box, a system that will basically replace every intellectual job on the planet.
00:20:12.060Maybe not in a day, maybe not in a day, but every single one of them seem to have this vision that either you will be forced to use these systems, which is already happening in corporations and schools across the world, or you'll be outmoded.
00:20:29.500You won't be cognitively effective in the new digital ecosystem if you don't, in essence, merge with the AI.
00:20:37.280And just beyond that, of course, they promise superintelligence.
00:20:41.160As the AGI begins to improve itself, then the belief that they have, and as they scale these systems up, the belief is that they'll create something that is basically a big G-God in a box.
00:20:53.620It looks an awful lot like a UFO cult to me, Steve.
00:20:56.620They're promising an alien intelligence that is superior to humanity that will arrive any day now to relieve us of our toil and perhaps even our physical bodies themselves.
00:21:09.000If it was one of these cults, and I think you did a meme about this, which is quite powerful.
00:21:18.160It wouldn't have an impact or matter in people's daily lives.
00:21:21.440This is about to not have an impact on your life.
00:21:23.960This is going to overwhelm every aspect of your life, right, and actually change your life and probably change your life pretty dramatically.
00:21:43.840It'll give people incredible superpowers that were sort of science fiction only a couple of years ago.
00:21:48.640Okay, so we believe, as an industry, that in the next one year, the vast majority of programmers will be replaced by AI programmers.
00:21:59.340It probably would look like what you might consider a very attractive extraterrestrial.
00:22:06.460What I think an even more meaningful impact in our lives is going to come from everyone having a personal superintelligence that helps you achieve your goals, create what you want to see in the world, be a better friend, and grow to become the person that you aspire to be.
00:22:21.280Insects are slimy reptilians are eyes so big that you could fall into them.
00:22:27.000One way to say this is that within three to five years, we'll have what is called general intelligence, AGI, which can be defined as a system that is as smart as the smartest mathematician, physicist, artist, writer, thinker, politician.
00:22:44.300The people of open AI, Google, Meta, and countless startups are proving once again that America is impossible.
00:22:56.540I want to talk about our new effort, Meta Superintelligence Labs, and our vision to build personal superintelligence for everyone.
00:23:04.060The only real extraterrestrials have a body similar to human body.
00:23:09.560So now we're starting to look ahead to superintelligence, and even more than before, our focus must be on wide and fair access.
00:23:16.780What happens when every single one of us has the equivalent of the smartest human on every problem in our pocket?
00:23:24.620I think that personal devices like glasses that can see what we see, hear what we hear, and interact with us throughout the day, are going to become our main computing devices.
00:23:34.280In the next year or two, this foundation is being locked in, and we're not going to stop it.
00:23:42.160It gets much more interesting after that, because remember, the computers are now doing self-improvement.
00:23:47.760They're learning how to plan, and they don't have to listen to us anymore.
00:23:53.240We call that superintelligence or ASI, artificial superintelligence.
00:23:57.160And this is the theory that there will be computers that are smarter than the sum of humans.
00:24:04.360The San Francisco consensus is this occurs within six years.
00:24:08.940When the end of that occurs, then they have reached a condition of having overcome human behavior, human thinking, human desires, desiring only to be in the kingdom of heaven, in the evolutionary level above human.
00:24:22.660This is a kind of brain for the world.
00:25:31.600Well, that's not going to be that relevant anymore, since coding was like learning Sanskrit, and you had a bunch of kind of average coders or good coders, and it was the people who got jobs.
00:25:40.480And then you had the Einsteins, the handful of Einsteins up here.
00:25:43.700And Joe LaVarnia took a crack at answering the question.
00:25:49.400He took a crack at answering the question, and his response was, hey, this capital expenditure is going to – we're going to build data centers.
00:25:59.700The construction of this and all of that is going to have a big boost on blue-collar, that skill set, the skill set of people that work with their hands and their heads that know how to make things.
00:26:15.160However, the real question I was asking is on the other side, is that coming or not?
00:26:20.860And what is disturbing to me anyway is that in the last 24 hours, we've had Altman and Zuckerberg, and Zuckerberg is – he's now putting out contracts to try to get the AI superstars at levels of signing people to $100 million contracts.
00:26:41.220There's clearly something – Joe, take a minute here before we go to break.
00:26:44.360There's clearly something up of what they're seeing in the Frontier Labs because they're conditioning us now for a big development that is upon us.
00:26:57.340One of two things are happening there, Steve.
00:26:59.180Either they're conditioning us for what's about to be released from OpenAI or conditioning us to believe at the very least that these companies have this and are using it internally, or it's a major flop.
00:46:07.100The mass deportations, we're kind of hung up right now.
00:46:08.980We're still getting bad hombres out, but they're throwing up every legal challenge, and we haven't pivoted hard to the 10 to 20 million that got to go.
00:46:17.140If they don't go, we don't have a country.
00:46:20.880We can stop them all from coming in, and that's been extraordinary, what President Trump has done.
00:46:24.780But you have to have mass deportations.
00:46:27.120And James O'Keefe, you are basically telling the Justice Department and DHS, we're not going to have mass deportations until this problem is taken care of, right?
00:46:37.700This has got – we can't mess around with this.
00:46:39.720You've got to be – and you're in D.C.
00:46:41.240You should be over there being interviewed by these people right now and your investigative reporter.
00:48:10.620I will make sure as soon as I'm off the show, the people, the contacts I have, you've got to be talked to, interviewed.
00:48:16.140This thing with the NGOs and being supported, this is a direct thwarting of the will of the American people, what they voted for.
00:48:23.840This is anti-democratic and it's got to be stopped.
00:48:26.320James, all your different investigations, where do people go to contact you, where they contact you, where the social media, your website for O'Keefe Media Group, where they go?
00:48:46.680And, Steve, I promise we're working on some major things right now at various agencies, including the IRS and other agencies.
00:48:53.780And if people don't get arrested, I'm going to start investigating the people who are refusing to arrest these people because I've got some stuff that's insane.
00:49:23.560When you deliver the type of things you're delivering right there, which shows you there's a cabal of oligarchs and their cash with these NGOs.
00:49:32.480And, look, the NGOs, and you mentioned it, took the government money during Biden's time and worked – part of it worked to suppress the free media.
00:49:40.280The rest of it worked to exacerbate and work with this invasion of the country.
00:49:45.760We would have never had 10 to 20 million people in here if the NGOs weren't a major part of it.
00:49:49.760They're just working the other side of the street right now.
00:50:42.480First of all, they're going to kick down the door of wherever this place is.
00:50:45.540Have the reporter, yeah, this room, boom, kick down the door, cuff them all, take them down, throw them in a paddy wagon, take them down, you know, take them downtown, book them, let them stay down in the, you know, if it's in New York, let them stay in the tombs for a couple of nights, and then figure it out.
00:51:04.600But if either it's not going to stop until you make it stop, you can't play nice with these people.
00:51:13.200You see what they're doing right there?
00:51:14.500And remember, these databases, they want to dox the ICE officers.
00:51:21.240This is one of the reasons it's very tough to recruit for Customs and Borders, very tough to recruit for ICE, because they want to threaten these people's lives and their children's lives and their homes, all of it.
00:51:31.060This is why you're not, this is why you have to be masked if you're a nice officer.
00:51:35.200There is a massive, massive resistance to this, and it's funded by the same groups that are funding Mom Danny in New York City.
00:51:48.140It's that green, it's the Marxists and radical jihadists.
00:51:53.060And here you have these billionaires, or the ex-spouses of billionaires, can't figure out, you know, they've run through a couple of boy toys, so now they want to, you know, have these social justice warriors, and they're going to write big checks and support this.
00:53:07.240He's our wise man, a former CIA, Pentagon, and White House advisor with an unmatched grasp of geopolitics and capital markets.
00:53:15.460Jim predicted Trump's Electoral College victory exactly 312 to 226, down to the actual number itself.
00:53:24.840Now he's issuing a dire warning about April 11th, a moment that could define Trump's presidency in your financial future.
00:53:31.880His latest book, Money GPT, exposes how AI is setting the stage for financial chaos, bank runs at lightning speeds, algorithm-driven crashes, and even threats to national security.
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00:53:50.700This is Jim's flagship financial newsletter, Strategic Intelligence.