You're listening to Carrie Lets's Financial Survival Network, where you get valuable information you
just can't find anywhere else to thrive in today's trying times. You need the
Financial Survival Network now more than ever. Go to Financial Survival Network dot com
and get your free newsletter in gift Financial Survival Network now more than ever,
And welcome. You aren't listening to watching the Financial Survival Network, I'm your
host Carrie Let's Well. Consumer sentiment numbers, consumer confidence numbers are out.
They're low and heading lower. David Skurzwski is with us and now, and
David, it's great to have you back on the show, and you find
him at myspg dot com. So what do you make of the numbers?
Where's the rate hikes? Are they going to be over soon? What about
the stock more we're heading for a major correction, all these questions, what
are your thoughts? David, Hey, good morning and great to be with
you here Carrie. So, yeah, the consumer confidence numbers are are down.
So in our opinion, what we're watching right now is the deterioration of
this information. Now, these numbers are always looking in the rearview mirror,
which is kind of a weird way to be driving the metaphoric car. You
know, we're always looking a month behind, etc. But this particular consumer
confidence poll was done on April third, so just a couple of weeks after
the banking crisis had begun, and so it's reflective of a weaker consumer sentiment
on what's actually going to be taking place and going on here. So to
kind of summarize those those next questions, I think if you follow the consumer
and understand where they're going, you're going to actually understand where economy is headed
next. As seventy percent of our economy has been sumer driven based upon our
spending. I'll say one of the things that was really interesting with this particular
survey is that they were talking about those who are under the age of fifty
five and are making more than fifty thousand dollars per year, so a little
bit younger, higher earners tend to be those those greater spenders, and one
of the things that they noted is that there was a significant deterioration in those
in the sentiment of those particular individuals, and so that tells me that we're
we're definitely seeing things change in a very considerable way. Right now. So
you know, we saw last year the market had its downturn, and we've
got a mixed you know signals right now. Some people, you know,
I could, I could speak out of both sides of my mouth. I
could tell you that we're in the middle of the beginning of a new bowl
market. And I can also let you know that, you know, my
personal opinion is that anyone who's objective is going to ultimately be looking at things
and guess what, We're not out of the woods here. We've got way
too many things that are uh signaling downturns, that are that are ahead of
us. Now, what's interesting is understanding, um that you know, we
haven't hit the last leg of a downturn, which is typically called capitulation.
And that's where of course everybody is hating the market. They hate real estate
like we saw in two thousand and eight, nine and ten, and they
just you know, are running from it. And so I personally don't think
that we have hit capitulation yet, uh And I don't think that we have
seen the sentiment numbers you know, really get as low as they're going to
be, uh likely over the next couple of months here. So, um,
what one of the things that I think that the average person looking at
these markets UH is not aware of is that many are expecting a quick downturn,
just kind of like we saw in two thousand and eight. Um.
I think it's actually going to be more similar to what we saw on like
the year two thousand and two thousand and one with the dot com bubble,
where it's going to be a more of a rolling recession that's going to take
place and play out over time. And see, the real big key here
is that we just began a banking crisis. You know, we're we're we're
a little bit beyond a month into that today. But you know, if
we look at what Lehman and Bear and UH, you know, Washington Mutual
all went through in two thousand and eight and nine that took over a year
to develop, you know, we saw these banks collapse faster than any banks
have collapsed before, you know, forty eight hours, which ultimately speaks to
the systemic challenges that are that are throughout the the financial world in our economy
today. And so I'm personally calling this the Federal Reserve bubble, and I
believe that we have bubbles in both the stock market, the bond market as
well as the real estate market, and all three of those things coming together
at one particular place and time that has not happened historically very of often,
in fact, if ever. And so we need to be very very very
cautious right now as we're looking here towards the future. Absolutely, And they
had two other bubbles or three credit card bubble, and auto loan bubble and
student loan bubble, so we got six of them going on here, David,
let's talk about the banking crisis. So we all know that No.
Eight, No. Nine, the biggest mistake the government made was allowing Lehman
Brothers to collapse. Right by far in retrospect, nobody would have done it
that way. It created a collapse, a global collapse by any description,
even though when you read the books, the history books of the time,
they won't refer to it as that. They're just call it a financial crisis.
But it was a collapse globally and started with subprime mortgages. Here they
made noise is about letting letting it go, letting the banks fend for themselves.
But then that all change, right, Yeah, all of a sudden
they stepped up and they bailed them out, not so much the shareholders and
the deadholders like last time, but the depositors more importantly, as they realize
the concept of the bail in now is dead, meaning that when the bank
comes up short on capital, all the depositors chip in and they take a
hit. This comes from the maritime concept, the general average, where when
the part ship is in danger of sinking and they've got a jettison cargo to
stabilize it, all of the interested parties, the fellows, shippers, everybody
chips in to make the injured party whole. But that doesn't work with the
banking system, because the banking system replies one on confidence. And like I
like to say, the root of the word confidence is con right. Yeah,
the two bank to fail idea, I think is what you're even alluding
to here. And so, um, you know, the banking crisis that
we have today is rooted in, of course, the rate of change that
the Federal Reserve has increased, uh, the interest rates. You know.
So I've been calling this now for this bond bubble crisis for for several years,
just understanding that we cannot and we could not maintain zero interests like this
uh, in the in the lending sector. So in all these banks put
money into long term treasuries. They've told everything was transitory by the you know,
the FED, and of course the FED had it dead wrong, and
uh, you know, we get these major increases, and of course we
we then find you know that these assets you know, are down thirty percent
from where they were just even twelve months ago. And our entire economy is
based upon credit, I mean globally, and so when when we look at
this from a from a global standpoint and we recognize that, you know,
fractional reserve lending has allowed banks to leverage up for every one thousand dollars that
they've been able to take in, they've been able to leverage ten thousand dollars
in lending. And so when when people begin to take deposits out, uh,
specifically from these local regionals, which are massive, you know, they
are the backbone right now of how we metabolize debt inside of corporations. Seventy
percent in fact, of all corporate lending and real estate lending in corporate uh
dollars there are from these local regionals, not from the big banks right now.
And so I think that We've got a very very very significant issue that
is still on our hands right now. And just like you you were sharing,
Hey, as we see some of these things wash out, the impacts
on these things, the ripple effects of these things can be uh, you
know, worldwide. And now I want to draw one different contrast here.
There are recessions and then there are also financial crisises. They are separate ideas,
but the two of them happening at the same time, that is a
very rare phenomenon. Now that happened in two thousand and eight, which the
it was a financial crisis that we saw with the the the lending and the
banks and the fallout that you just knowed there and it led to a recession.
Well, we could be finding ourselves in a very different side of this.
And again, as I was saying this rolling recession, I believe that
we're going to see different times that we're going to see part of our economies
hit our bottoms. And it's not just going to be all at once.
You know. These components and banks are very critical again to commercial office space,
and we have a one point four trillion dollars that needs to be metabolized
this year as well. As next year. That is the record, by
the way, for debt that has to be metabolized, and we're having to
do it at a timeframe when they're paying four or five six percent higher than
what they were originally financing for just a few years back. And so if
you weren't able to be more credit worthy, let's just say, when you
had three and four percent loans, how on earth are they planning on doing
it with seven, eight, nine, ten to twelve percent loans that are
that are mandated now in order to reset that debt. And so these are
the concerns that need to be on people's minds as we look forward to the
future. I mean, hey, we can talk about sentiment numbers, and
that's interesting and it's also helpful to tell us where we're going, But we
need to look at the handwriting on the wall and have a little bit larger
macro perspective of how these changes are ultimately going to have ripple effects kind of
flowing out and so it's going to affect real estate, it's going to infect
corporate earnings, which we're in the middle earning season right now. First republics
having a horrible time. Is that about one hundred billion dollars leave them.
And you know, here's one of the challenges as well. We raise interest
rates like this, Well, the treasury doesn't have FDIC limits like two fifty
like a bank does, and is paying a lot higher than a basic bank
is. And so why wouldn't I just put all my cash in the treasury?
You know, getting near five percent on three month commitments of time or
you know, you know, four better than four percent no FDIC. If
I do more than a year, I've got you know, long term capital
gains instead of ten ninety nine income. I mean, there's a lot of
advantages that the treasuries have today going direct as opposed to investing in banks.
And so anyone who's got real money, they understand this idea, and they
have moved these assets. And so I expect a corporate earnings recession here to
play out Q two and then Q three this year, which is ultimately going
to lead to more bad news, more market lows. And again I think
it's going to happen as things go out over time. We're looking at a
global financial depression here. Don't just survive the financial survival network. Fury Gold
Mines is a Canada focused exploration and development company committed to aggressively growing its scalable,
high grade gold assets, with major drill campaigns planned across its three point
five million ounced portfolio. Furies led by a management team of proven explorers and
developers with the track record of success in advancing and financing project development. Fury
gold Mines is well positioned to create value for investors with low risk development growth
and the potential for a new major discovery. Fury gold Mines trades on the
TSX and NYS American under the ticker fu Ry. To learn more, go
to Fury gold Mines dot com. That's Fury gold Mines dot com. This
is the financial survival network. The information you need to throw now more than
so interesting that you say that. So one of the things that we would
follow would be the ISM indicators. So these are the indicators for manufacturing.
We can look at them in the United States, which is where I tend
to focus most of my attention, but I was looking up these indicators actually
on an international basis. And so when we break below fifty, that is
like literally a point in time where there's an expectation we're going to have a
recession within the next twelve months. Well, we've been below fifty in the
United States since September last year, and so that's that's a big deal.
But if we look at this in a global standpoint, nearly every nation across
the globe is either below fifty or slightly above it right now, and so
no one is looking super healthy, including China. We have just the whole
globe is slowing down as people are spending less, they're saving more quote unquote
if they have it to say, let's just be honest about that. And
we're watching a deterioration here that I think that it's just, you know,
the math just begins to add up. Wall Street wants to rally really hard.
So you know, is this going to be a bowl trap? I
mean, I vote the market goes up forever. Here's the reality. This
is not the time to fall asleep at the wheel on the information, the
expectations. We need to understand where we are in cycles, especially if someone
is nearing to entering retirement. Yeah. I could not agree with you more,
David, And I think this is a global meltdown, an implosion taking
place. We're going to reach the panic stop where they're going to cut rates
and I don't know that the interest rates will come down as a result of
the FED cutting. Yeah, short term, but what you described is zero
percent interest rate policy past decade. It's all coming home to roost. In
Austrian economics, we have a concept that is totally devoid in the Keynesian economics.
It's called malinvestment. And all that free money went into real estate that
we didn't necessarily need to see through office buildings. The pandemic kind of brought
all that home to roost. You know, in China they've got ghost cities,
dozens of them all over all from malinvestment and central planning. This is
always the net result of it, isn't it. Yeah, Yeah, absolutely,
I mean the whole China real estate market that could be potentially the largest
Ponzi scheme in the world. You know, they only allow their people to
invest in three different things their currency, real estate, or their stock market,
which we know is rigged. And they don't you know, report accurately
based upon Gibbs reporting like we have to hear. And so everyone's putting all
this money into these these ghost cities that you know, hey, they're paying
their mortgages on these condos that have never actually been fully built. I saw
statistic. I hate to quote something without the specific data in front of me,
but we had over a decade worth of information. It was like,
you know, two thousand and twelve to twenty twenty two, there had been
like sixty five percent of all real estate purchased by the average consumer in China
that had never been completed, sixty five percent. And so you know,
he's the here's the concern of the Chinese over there. Why am I paying
on a mortgage for a property that was supposed to be an income property and
you're supposed to be doing all this great industry there and oh we've moved on
now to the next one. And so at some point people capitulate and they
say we're done. We're throwing up our hands. And so I think that's
the big issue there with Evergrand, which is their largest real estate producer,
and the reason why it's having such solvency challenges. And you know, the
back to your point on will the Fed drop rates? You know, here's
the thing. If the Fed drops rates, is that bullish for the stock
market? Well it could be, but the reason why they would drop rates
is only because of massive systemic challenges that are going to mandate that the FED
has to get to this easy money stuff again. And if we have to
and we're forced to do that, then things have broken a lot further than
I think that most people would have expected to see a bull market moment again.
And so this is where we just don't want to fall asleep at the
wheel. We need to be able to ride bull markets and tame bear markets.
That's our little phrase here on investing, riding bulls and taming bears.
The goal of seventy to eighty percent of the game while missing seventy to eighty
percent of the pain. You easier said than done. But there are investment
strategies that help us to play both offense as well as defense, and we
need to be able to do both of those very very very effectively. Biggest
concern that I have right now, though, is in the bond market,
and that is that bonds lose money in five different ways. And so we
talked earlier about the inverse relationship between interest rates rising value bonds falling, especially
the longer duration ones. But you know, credit worthiness is another one of
these things that we look at. You know, hey, what if these
corporations can't metabolize their debt or they have an earning compression and they go from
being credit worthy to not credit worthy. Well, you're going to lose a
ton of money in your bonds. What if these companies are ghost companies at
this point and they're getting replaced by new technology like chat, GPT, maybe
their supply chain challenges that are still going on. I personally foresee many Chapter
eleven bankruptcies going forward. Now, that doesn't mean that they're completely insolvent.
That means that they need to reassess their debt relative to the commitments that they
made previously. And so if you do a Chapter eleven, well, guess
what the value of your bond is going to be going down, if not
go to zero as those changes begin to adjust, because bonds are debt instruments.
And then the last one on that is that we look at the fact
that inflation is higher than what we're actually receiving on those sixed assets today.
And so this is this is an important concept for us to understand because we
need to look at our after inflation rates of return. You know, we've
got two different investors. One that's trying to beat inflation because they need to
keep their money relevant, and the other that's just trying to avoid a major
downturn through a recession or a financial crisis in order to remain buoyant that they've
got the dry powder to rellocate back in when everything goes on sale. And
so, you know, the point here is that we have to be patient,
and we have to recognize that bear markets are bear markets are bear markets,
and they all play out in a very similar way. But this bond
bubble that we're in, it is systemic, it's worldwide. The challenges could
be devastating. And again for those who are near and the entering retirement that
don't have the working years ahead of them to be contributing more in they're just
going to be riding the tide of whatever the market gives or takes away.
And so this is where it becomes really important to understand where are those places
to allocate right now in order to avoid sleepless nights that that big recession downturn
that we're all fearing, we know is coming, when's the shoe going to
drop? And then but ultimately we need to be able to outperform and beat
inflation as well as these these challenges because Hey, most people are going to
be around for you know, twenty thirty forty years, even within retirement,
and and so this is the concern on their mind, running out of money
before they run out of time. I think we'll leave it at that.
But basically I agree it's just about everything you said, and you can't really
rely upon the government A to give you this straight information and be to actually
try to protect you. Not what the system's about. As George Parlin said,
it's all a big club and you aren't in it, and you're not
going to be protecting you. The one thing I will say is if we
get to the point where there's mass defaults on mortgages, there will not be
another fordclosure crisis, all right. There is no appetite by the public and
the government to see ten million, twenty million homes were closed upon. There
will be This will be what we would call a workout depression. All these
loans will be worked out, they'll be reduced, they'll be liquidated because nobody
is going to have the money to pay their debts. And in San Francisco
they said the number of cell phone calls in downtown San Francisco. There's an
article in zero hedge down thirty one percent of what it was pre pandemic.
And the only reason why cell phone calls are down is because the number of
people there is down. That's just one example that David, just tell us
how we find you again, how we get you on the web. Yeah,
and the last point on this, I agree with you. I believe
people and individuals will get bailed out. Corporations, however, will not.
There's less of a desire to bail out corporations. So that's why understanding the
office space and the corporate channel is with debt, I think are very,
very very important because we're at risk of losing a lot of them. Folks
can find us on my website myspg dot com or Ready to Retire dot com.
I got a number of websites, different information out there to teach educational
courses on retirement planning, maximizing so security, minimizing taxes, and you know,
just really trying to help people to be able to focus on the areas
that they can change, because there's so many places in this life that we're
just going to have to figure out, Hey, what comes next, So
let's focus on the areas that we can Yeah, it's a veritable financial tsunami,
and the only way to survive a sosunami is to be away from the
title wave when it hits. Yes, sir, that's what you need to
be thinking about, David. Appreciate it. Hey, you've got a question
from David, Shoot me and email kl at Kerreluts dot com and you'll find
the link to David's site on our show notes on Financial Survival Network dot com.
While you're there, sign up for your for your newsletter David. Always
a pleasure. Appreciate your stopping by. Hey, appreciate your carry. Thank
you for so much for your time. Thanks for listening to Carrie Letz's Financial
Survival Network, your solution to today's trying times. For the latest, go
to Financial Survival Network dot com. Financial Survival Network now more than ever,