• The jobs numbers came in looking weak until you dig deeper.
• Revisions to the last two months showed 258,000 fewer jobs than originally reported.
• But most of those job losses came from government positions and foreign-born workers—two areas directly targeted by Trump’s policy goals.
• The unemployment rate ticked up, but mostly because the labor force got smaller, not because of major layoffs.
• So, while the headlines looked scary, the actual data doesn’t point to a collapsing job market.
• Still, the market dropped—likely more due to profit-taking after recent highs and seasonal weakness than real economic concerns.
• Meanwhile, bond investors are cheering. The weaker job data increases the odds of Fed rate cuts this year.
• We may see two rate cuts in 2025, which would be great news for bond prices.
• Our bond portfolio is positioned to benefit:
  • The aggregate bond position (BKAG) tends to rise as interest rates fall.
  • The high yield bonds (BKHY) are more sensitive to economic strength than interest rates, and they’re currently holding steady.
• If high yield bonds start falling, that may signal deeper economic trouble but we’re not seeing that yet.
• Consumer sentiment is rebounding, and inflation appears stable, so we remain cautiously optimistic.
• The housing market is still frozen due to high mortgage rates but lower rates could thaw that and spark renewed economic activity.
• Tariffs remain a wild card, but the real effects on consumers may still be ahead.
• Bottom line: this was just one data point, and there are still plenty of reasons to feel optimistic as we head into the second half of the year. We’re keeping a close eye on things, so you don’t have to.
• Most importantly, our Invest and Protect Strategy is always at work behind the scenes helping to guard your hard-earned savings, no matter what the market throws our way. You focus on enjoying retirement and we’ll handle the gray hairs.

Transcript:

Ken Moraif
Hello everyone, and welcome to our market alert video for today, which is the first day of August of 2025 and man, do we have a lot to talk about? The jobs numbers came in really, really bad, or did they? So we’re going to get some clarity on that. We’re going to talk about our bond portfolio, because when interest rates and jobs numbers all kind of look at what the Fed’s going to do, and that affects the bond market, and we’re going to talk about that. And of course, we’ll talk about where we go from here and all of that good stuff. But before we get started, I want to just say I hope this video finds you healthy, wealthy and wise, and all of you out there in squibber nation, I hope you are squimpering your tails off. I hope you are enjoying the summer and doing all the fun stuff that you’re supposed to do when you are retired. That’s what we want for you. Let us get the gray hair I was just looking at, you know, this hair, it’s getting kind of gray. I’m getting worried, you know, I’m gonna have to start doing something about that. But anyway, let me bring Jordan into the conversation. Jordan Roach, our Chief Investment Officer, how are you doing?

Jordan Roach
I’m great, though August is my least favorite month of the year, and maybe the markets as well. I

Ken Moraif
think August is like perennially the worst month, and September is like the second worst month. Yes, or vice versa, I don’t know. So we’re off to a really as starting correctly as we record this August is living up to its billing. It sure is. So, yeah, so let’s dive in. Okay, let’s, let’s go after it. So first of all, the revision. So this is really interesting, the revisions, what they did is they go back and they look at the numbers and they say, oops, what we thought was the numbers, is now not the numbers, and they revised the jobs for the last two months down 258,000

Jordan Roach
jobs. Not a small revision. That’s a pretty sizable one. That’s a big one. Yeah.

Ken Moraif
And so what do you take from that? What is that? Well, like with a lot of data, other other than how lousy are they at knowing what the jobs numbers are? I remember last year, there was one month where they were off by a million jobs. Yeah, you almost

Jordan Roach
can’t take the first reading series. It’s

Ken Moraif
like, geez, can you guys do your math? Yes, they’re off quite

Jordan Roach
a bit. So what I take is you always gonna look under the hood of anything, right? So we talk about this, sometimes when the market’s up, you wanna look on under the hood of what part of the market’s up. When data comes out about unemployment statistics you want to see? Well, what does that actually mean? What’s under under that? And, you know, looking at it, I don’t know if it’s that surprising in terms of which part of the data set is contracting, which part of the economy, which part of, you know, unemployment sector, is the part that’s showing some weakness,

Ken Moraif
right? And so what we saw, if you peel back the onion, or look under the hood, or whichever cliche you want to use, is that primarily the job reductions are in government jobs and in foreign born workers, which are both essentially what Donald Trump’s trying to do, right? He’s trying to reduce the labor force in the government, and he wants to, you know, deport people that are here, you know, illegally. So if you start reducing that workforce, then that’s going to create unemployment numbers.

Jordan Roach
That is it. That’s exactly right. So, you know, you have a labor supply and labor demand that we got to find an equilibrium there. But it looks like the parts that are contracting. I don’t know how, you know, surprised the market should really be about

Ken Moraif
that. Yeah. I mean, that’s what Trump is doing, right? The thing that you know, I think a lot of people don’t know, is how the unemployment rate is calculated. And so basically, what you do is you take all the unemployed people and you divide it by the labor force. Okay, so if you how many people are in the labor force, and so the labor force, because of the reduction in government people and foreign born people. So the denominator has shrunk.

Jordan Roach
The number of jobs open is just shrinking, yeah, but we

Ken Moraif
haven’t seen layoffs. And so the numerator kind of stayed the same, but the denominator got smaller. And if you do that, the number is going to go up just a math equation. So therefore it doesn’t appear that this is really terribly bad news, right? So why is the stock market down so much then? Well, I think there’s

Jordan Roach
a number of reasons, right? I think one is, you know, the market has been, there’s been this sub narrative for a while. Of you know, we’ve been talking about inflation, but at what point does the labor force, does the economy show weakness, right? And even if it’s not real weakness, if there’s even maybe a sign, it can give the market as a reason to say, You know what, let’s book some profits. Let’s take some time off. Let’s go to the sidelines. So I think it’s probably some of that, given that we are just at all time highs,

Ken Moraif
so profit taking, then more so than worry about we’re headed into a recession and the economy is going to collapse.

Jordan Roach
I mean, I think so you go into a seasonally weak time. So if you go 2423 even 22 and 21 that July through September period were pretty weak across the board. So you’re already at all time highs. You’re going into historically, a seasoning seasonally weak time. You get a little bit of weakness there. And Marcus says, You know what, let’s, let’s take some time off.

Ken Moraif
Okay. So this morning, when I was watching all this stuff, you know, all the bond people, boy, are they excited. They’re really happy right now. They’ve been like, when is the Fed going to lower interest rates and we’re going to see bond prices, you know, go up. We’ve been waiting so long, and now it looks like, with these numbers, most likely the Fed now there that probably there’s like a 70% chance of two rate cuts this year. It’s moving quickly. And if that happens, you know, we always said, you know, the bond market tends to have an inverse relationship to interest rates. That’s right, right? So if interest rates go down, bond values tend to go up. So bonds may be the best investment here for a while.

Jordan Roach
They very well, you know very well, could be they’ve been basically range bound for quite for like, all year. Meaning, you know, there’s a certain level of yield interest rates that the market moves up to, and then it hits that against the ceiling, and they come back down, they find a floor, and we’ve just been knocking up and down for a better part of a year. So maybe this could be the thing start the market resetting those, you know, floor and ceiling rates.

Ken Moraif
So let’s talk about the bond portion of our portfolio for our clients to get some clarity. So we have two main components of our bond pardon me, our bond portfolio, yes, BK, AG, which is the aggregate bond, right? And then b, k, h, y, which is high yield bonds. So let’s talk about each one of those separately. Let’s start with B CAG, as we call it, the aggregate.

Jordan Roach
So bcag is very well going to move based on where the market sees seven to 10 year interest rates going federal interest rates. And so what we see here is, if the market is seeing maybe some economic weakness, maybe the Fed pull down rates, what happens is yields will come down. The market is pulling yields down, which means, like BKG, or aggregate bond market in the US, price starts going up. It’s favorable. And as we’re seeing as we record, that’s right, we’re seeing that. And even even up till today, I think the market was starting to start pricing it in a little bit, and we’ve seen it

Ken Moraif
come up. That’s right. So the environment now is, you know, 10 trending towards the Fed, lowering interest rates. So be CAC should do well for us, because it’s longer term bonds, right? It’s more in the five to 10 year range. And because of that, those bonds 10 it’s kind of like a teeter totter. So as a lower bond, lower rates go down the longer the bond market on the upper side, on the longer side, usually it magnifies that. That’s right. So that’s potentially a very good thing for us. What about the high yield bonds? So high yield bonds are corporate bonds, right? These are companies that are borrowing money, yes, and they tend to pay a higher interest rate because they’re higher risk than the government, presumably, and

Jordan Roach
higher risk and even very safe companies. We’re talking about companies that maybe already are under a little bit of duress, not perceived as safe as you know, maybe a Berkshire Hathaway. And so what happens is, when they want to go borrow money, investors demand more yield for that. Yeah, so that

Ken Moraif
risk. So are they affected the high yield bonds by interest rates going up and down as not as much as we can not

Jordan Roach
necessarily the same. They’re going to be affected far more than if we proceed to have economic strength or weakness. So if there’s perceived economic weakness, that means eventually the market says companies are under trouble. They lay off workers. Profits compress. That means that part of the market, usually high yield market, see some strain too. So you typically see high yield bonds moving much more in lockstep with broad stocks, with the broad

Ken Moraif
stock market. That’s right, so that’s really interesting. So you had these high yield bonds, they’re bonds, but yet they behave like stocks, absolutely. And the reason behind that is because if companies are bar, if you’re lending money to a company, then the health of that company is the most important thing to you. Yes, more so than maybe what the prevailing interest rates are, whether the Fed is raising or lowering interest rates, absolutely. So if the economy is weakening, you’re like, pretty scared of those people. So you may sell those bonds. Economies improving, or get are strong, then you’re like, okay, they’re gonna be able to pay me back. So those high yield bonds become more valuable. So at this point, as we record this, they’re kind of flat. Can’t, can’t seem to decide which way to go, right? I would say if the high yield bonds start to go down significantly. Then what does that tell you?

Jordan Roach
Typically, that is the perceived where the market’s looking at it, saying, We see pain ahead. We see problems. Don’t know the magnitude of it, but typically, when you start seeing high yield bonds sell off, or investors demand a lot more premium for high yield bonds versus a treasury bond, that is the market signaling, I see trouble ahead.

Ken Moraif
Yeah, but that hasn’t happened yet. But that’s something to keep Oh, that’s not saying. This is just at this point, I would say, you know, for all of our clients and squibbers, our perspective is we’re not really worried. This is one data point first of all. But then secondly, the consumer still okay. Consumer, you told me the consumer sentiment is coming back up again. Yeah, so the consumer seems to be okay unemployment, you know, maybe it’s recalibrating with all the government workers that are, you know, being laid off, and then also, and it’s going to get worse, because a lot of the government employees were given, like, severance packages, and until they come off the severance, they’re not considered unemployed. So there’s a whole bunch of. Government people that are going to be unemployed soon. Yes, even though they’re they’re technically unemployed, but not actually. So that number may still, you know, again, that that denominator and the numerator relationship, but overall, the unemployment rate should be okay, and inflation right now is okay too. It doesn’t seem to go so let’s talk about tariffs, just real quickly. Okay, you know, there’s still a concern, and we voiced it where, you know, yes, so far we haven’t seen it, but it may be too soon to tell whether. You know, the companies and foreigners are absorbing the cost so far. But how long can they keep doing it before they start passing it on to consumer

Jordan Roach
Yes, I think we’re seeing that. I mean, I think right now you’re starting to seeing some of the and some buying activity of consumers getting a little bit more picky. We talked about ones that don’t care and they want what they want. They’re gonna buy. They’re gonna absorb. You see companies that are having to gage are the consumers, is my clientele, gonna absorb price hikes? And so there’s this push in the pull mechanism right now that we’ll start seeing where this settles. But I certainly think the Fed, at least the chair Powell keeps saying we haven’t seen enough yet. It’s a wait and see approach.

Ken Moraif
Yeah. And by the way, ladies and gentlemen, if you haven’t seen our podcast on tariffs, you have missed out. I’d go find it on our YouTube Library. In fact, Jeremy, is there some way we can put that to where people can just find it easily? Why don’t you put it up there so they can click on it? I think it’s one of the best podcasts on tariffs ever created by mankind. I think what’s going to happen is the Smithsonian is going to put that in their library as one of the greatest tariff podcasts ever. So future generations can look back to see the historic moment of that tariff discussion. I think it’s just great. All right, so outlook still positive for the second half, if they cut rates, 20% of our economy is real estate, construction, housing and everything that goes with that. Right now it’s on hold because nobody can move right. They’re stuck. They got 3% interest rates. They’re not moving. They’re not going to get out of that. And so the real estate market’s frozen. They start cutting rates, that could unleash the real estate market, and that could just really change the whole picture.

Jordan Roach
If you look at broad economic you know, economic signal data points, signal points, sectors. I mean, the one thing that showed weakness, that it’s kind of been something that’s acting differently than, than what past cycles will show would be the real estate market, yeah. And we’ve seen a stall, stagnant activity out there strain, even if you will, with activity for quite a while. Yeah, but it hadn’t broken everything, and

Ken Moraif
it’s a huge part of our economy. And I think you know, if they, if they lower interest rates, that could open up a significant amount of employment, and job, you know,

Jordan Roach
employment, jobs, how much you can help consumer? Yes, people can refinance in that. It frees up cash.

Ken Moraif
So that’s a silver lining, if you will, to these numbers, sure. So, ladies and gentlemen, that’s our outlook. Now I want to, I want to talk about something because, you know, we have now thanks to you guys watching our podcasts and our mark Lord videos, and it’s been interesting to me. I’ve kind of not been looking at the comments section of the thing, but I’ve been seeing comments. And so what I find interesting is, and flattering, I guess, is that, you know, we’re talking about all this economic stuff, and what people are saying is that I shouldn’t be wearing a button down shirt to do this. It’s like, old fashioned. Okay, so that’s what you’ve been telling

Speaker 1
I’ve been saying it. I like, you know what? You’re gonna double down now, aren’t you? Oh man, you know

Ken Moraif
I have, like, you look sharp, like, 12 button down shirts, and I bought them for like, $45 each. The shirts you’re wearing are like, what? $90 I’m not spending $90 for a shirt. I’m not doing that. I’m gonna I’m gonna wear. And then the other thing is, you know, they’re like, the Apple Watch. One commenter said, I need to be wearing a Submariner.

Unknown Speaker
Okay, I like this. $27,000

Ken Moraif
watch. Are you kidding me? Okay, look,

Speaker 1
very good taste, talk to my wife, because very good taste. I like

Ken Moraif
this. No way she’s gonna let me wear a $27,000

Speaker 1
watch. Totally. I support all these, all these comments, fully supportive. And then,

Ken Moraif
and then somebody said, Actually, I like that you wear the Apple Watch because I can see what time it is when you’re recording. Oh, that’s interesting. This is a cis this person needs to be like on the investigations, and that’s an attention to that’s pretty good. So anyway, thank you for your comments. I really appreciate them. And so that’s it for us today, Jordan, thanks for everything. And again, as always, I hope this video found you healthy, wealthy and wise, and yes, the markets all over the place and getting excited. But let us do the worrying for you, so that you don’t have to. Let me get the gray hair. He’s gonna get them too. He’s starting to know. He’s catching up. And so I hope this all is good. You’re having a great summer. And those of you who are not squibber. Yet our goal is to get you there so you can enjoy that second childhood without parental supervision. So again, thanks for watching, and we’ll talk soon. You.

Please note: transcript has been modified after the time of recording. 

Economic indicators and stock market performance cannot be predicted. Opinions expressed regarding the economy and the stock market belong solely to Ken Moraif on behalf of Retirement Planners of America and may not accurately portray actual future performance of the economy or stock market outcomes. Opinions expressed in this video is intended to be for informational purposes only and is not intended to be used as investment advice for individuals who are not clients of Retirement Planners of America. All content provided is the opinion of Ken Moraif, CEO and Founder of RPOA Advisors, Inc. (d/b/a Retirement Planners of America ) (“Retirement Planners of America”, “RPOA”). ©Copyright 2023