Episode summary
Live From Excell With Dr. David Kelly (Ep. 153)
Facts vs Feelings
· · Hosts: Ryan Detrick, Sonu Varghese · Guests: David Kelly
Summary
Dr. David Kelly argued that the labor market is slowing, but the headline jobs data are being distorted by repeated revisions and weak survey response rates. He said the Bureau of Labor Statistics is likely undercounting or overcounting at first, then correcting later, and that the bigger story is not layoffs but a sharp reduction in hiring driven by weaker labor supply from immigration declines, deportations, and falling visa inflows.
He also said productivity can improve in a tight labor market, but AI is more likely to widen income inequality than to create mass unemployment. Looking ahead, he expects a tricky policy mix: inflation still running above the Fed’s target because of tariffs, unemployment only drifting modestly higher, and the Fed likely cutting rates anyway to show unity and preserve independence.
On portfolio positioning, Kelly argued that rate cuts may be less stimulative than investors assume because they reduce income for savers more than they reduce borrowing costs. He also highlighted a likely early-2026 tax refund boost from the OBBBA changes, and said investors should think more seriously about international equities and alternatives as a weaker dollar and higher debt make the traditional 60/40 mix less reliable.
Key takeaways
- Kelly said the labor market is not collapsing, but hiring is slowing sharply because labor supply is constrained by immigration and visa changes.
- He argued the Fed may cut 25 basis points even though inflation remains too high and unemployment has not risen enough to justify easing.
- Kelly expects rate cuts to be less stimulative than advertised because they lower interest income for savers much more than they reduce existing borrowing costs.
- He said the 2025 tax changes could create a large refund season in early 2026, with average refunds potentially rising above $4,000.
- Kelly thinks a weaker dollar could support international equities, which he said remain widely underowned by U.S. investors.
- He said alternatives deserve more attention because debt, inflation and market correlations have made bonds less reliable as a portfolio hedge.
Notable quotes
“the economy is adding fewer jobs. It's it's barely adding jobs at all at this stage”
“the big thing we're seeing is a reduction in hiring”
“I don't think they should. I don't I think the Fed I don't think there's anything unreasonable about a 4 and a quarter 4 and a half% rate”
“there is no evidence that cutting interest rates, short-term interest rates, actually stimulates the economy at all”
How the episode opens
Welcome to the Facts Versus Feelings podcast. I'm your host Ryan Dietrich and I'm joined by my co-host Sonu Vargis. Cutting through the noise in 30 minutes each week with Ryan Dietrich, chief market strategist and Sona Vargis, VP global macro strategist.
Taking out the boring and helping investors focus on what really matters. A quick note before we start the show. Investment advisory services offered through CWM LLC, an SEC registered investment advisor.
Carson Partners, a division of CWM LLC, is a nationwide partnership of adviserss. Please welcome Chief Market Strategist Carson Group, Ryan Dietrich, Chief Global Strategist JP Morgan Asset Management, Dr. David Kelly and vice president global macro strategist Carson Group Sonu Vargas.
Morning everybody. How we doing? — All right. — The last day at Excel. First things first. Didn't you get the memo? — Yeah, I know. — I know. You're a little underdressed, I suppose. very inadequate here. — So, yeah, welcome everyone. Thank you for being here. Welcome to Facts Versus Feelings, episode 153. I think it's 153. 153. We thrilled to be here. We're pumped to have a very special guest, Dr. David Kelly. Welcome, sir.
Very glad to be here. — Yeah. — Yeah. We We've followed Dr. Kelly for years. Who out there has heard of Dr. Kelly? Use his Guide to the Markets? Just clap. We can't see. I mean, he's we are we're so excited. I believe this is definitely the second time you're on our podcast. I don't think you've been three. So, you're a repeat offender. So, thank you.
Um, let's start high level. Let's start high level. Guide to the markets because I think people hear Dr. Kelly, they know you, but then they hear Guide to the Markets. I saw the last couple days he's Guide to the Markets.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- jobs data revisions
- labor market supply constraints
- ai and productivity
- fed rate outlook
- portfolio and tax refund stimulus effects
Companies and tickers mentioned
- JPM
- J.P. Morgan Asset Management
Watch the episode
Watch “Live From Excell With Dr. David Kelly (Ep. 153)” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
More from Facts vs Feelings
Facts vs Feelings, this episode and its artwork belong to Carson Investment Research. Octagon is not affiliated with the show; this page is an independent summary.
