I am not a registered financial professional and your risk is your own. Invest at your own peril.

So, per my last post, it looks like I get to brag a bit: economic weakness was in with a miserable jobs revision to the last two months of numbers. To make matters worse, even the BLS-reported numbers for July came in far less than expected. Employment is weakening at a rapid pace and I suspect that we’ll get our first negative print in years by year’s end.

We’ve gotten some initial weakness out of this reporting, with $SPY turning in a lackluster performance since. Still, a retracement of 1.54 percent over the past seven days isn’t what I’d call a true downturn. If anything, I think there’s probably a lot of people still buying the dip because it’s worked consistently for the past three years. Maybe those people are right in the short-term, but is the risk-reward in their favor? You’ll have to be the judge of that.

I’ve not really reported the data I’m about to show you because I didn’t want to be labeled a prognosticator. But I’ve been following this for some time, and the similarities to 2008 are abundantly clear. We had rate cuts in 2007 that signaled economic weakness, but the Federal Reserve was too late and too slow. Compare where we were then to where we are now, and something has to give—and soon. We got a couple small cuts last year that managed to reignite investor sentiment without causing too much worry about economic conditions, but with the job numbers in-frame, I doubt that future cuts will be received quite as well.

The wildcard here are tariffs, which have yet to prove themselves in or deflationary. The argument from bulls seems to be that tariffs will increase inflation, thereby pushing investors back to markets as the dollar continues to lose value. Bears are of the mind that the tariffs will cause temporary inflation—a result of companies front-loading supply—that is met by a massive slowdown in CAPEX by these corporations. The economic slowdown in this scenario would be met by rising unemployment and deflation, which would be a double-whammy for American households. According to recent data from the Fed, Americans currently allocate almost 45 percent of their liquidity to financial markets. What happens when a downturn happens here?

But what’s the case for the bulls? Well, primarily, it’s that M2 Money Supply continues to increase even as the Fed holds rates high. The Treasury continues to provide liquidity as the situation worsens for everyday people. We are really living in a K-shaped economy, where the rich are doing great and the poor are suffering. This chart represents the rug being pulled out from under future generations: