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Financial Survival Network now more than ever,

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And welcome. You aren't listening to
watching the Financial Survival Network, I'm your

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host Carrie Let's Well. Consumer sentiment
numbers, consumer confidence numbers are out.

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They're low and heading lower. David
Skurzwski is with us and now, and

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David, it's great to have you
back on the show, and you find

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him at myspg dot com. So
what do you make of the numbers?

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Where's the rate hikes? Are they
going to be over soon? What about

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the stock more we're heading for a
major correction, all these questions, what

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are your thoughts? David, Hey, good morning and great to be with

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you here Carrie. So, yeah, the consumer confidence numbers are are down.

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So in our opinion, what we're
watching right now is the deterioration of

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this information. Now, these numbers
are always looking in the rearview mirror,

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which is kind of a weird way
to be driving the metaphoric car. You

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know, we're always looking a month
behind, etc. But this particular consumer

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confidence poll was done on April third, so just a couple of weeks after

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the banking crisis had begun, and
so it's reflective of a weaker consumer sentiment

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on what's actually going to be taking
place and going on here. So to

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kind of summarize those those next questions, I think if you follow the consumer

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and understand where they're going, you're
going to actually understand where economy is headed

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next. As seventy percent of our
economy has been sumer driven based upon our

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spending. I'll say one of the
things that was really interesting with this particular

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survey is that they were talking about
those who are under the age of fifty

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five and are making more than fifty
thousand dollars per year, so a little

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bit younger, higher earners tend to
be those those greater spenders, and one

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of the things that they noted is
that there was a significant deterioration in those

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in the sentiment of those particular individuals, and so that tells me that we're

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we're definitely seeing things change in a
very considerable way. Right now. So

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you know, we saw last year
the market had its downturn, and we've

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got a mixed you know signals right
now. Some people, you know,

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I could, I could speak out
of both sides of my mouth. I

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could tell you that we're in the
middle of the beginning of a new bowl

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market. And I can also let
you know that, you know, my

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personal opinion is that anyone who's objective
is going to ultimately be looking at things

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and guess what, We're not out
of the woods here. We've got way

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too many things that are uh signaling
downturns, that are that are ahead of

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us. Now, what's interesting is
understanding, um that you know, we

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haven't hit the last leg of a
downturn, which is typically called capitulation.

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And that's where of course everybody is
hating the market. They hate real estate

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like we saw in two thousand and
eight, nine and ten, and they

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just you know, are running from
it. And so I personally don't think

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that we have hit capitulation yet,
uh And I don't think that we have

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seen the sentiment numbers you know,
really get as low as they're going to

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be, uh likely over the next
couple of months here. So, um,

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what one of the things that I
think that the average person looking at

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these markets UH is not aware of
is that many are expecting a quick downturn,

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just kind of like we saw in
two thousand and eight. Um.

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I think it's actually going to be
more similar to what we saw on like

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the year two thousand and two thousand
and one with the dot com bubble,

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where it's going to be a more
of a rolling recession that's going to take

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place and play out over time.
And see, the real big key here

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is that we just began a banking
crisis. You know, we're we're we're

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a little bit beyond a month into
that today. But you know, if

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we look at what Lehman and Bear
and UH, you know, Washington Mutual

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all went through in two thousand and
eight and nine that took over a year

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to develop, you know, we
saw these banks collapse faster than any banks

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have collapsed before, you know,
forty eight hours, which ultimately speaks to

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the systemic challenges that are that are
throughout the the financial world in our economy

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today. And so I'm personally calling
this the Federal Reserve bubble, and I

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believe that we have bubbles in both
the stock market, the bond market as

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well as the real estate market,
and all three of those things coming together

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at one particular place and time that
has not happened historically very of often,

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in fact, if ever. And
so we need to be very very very

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cautious right now as we're looking here
towards the future. Absolutely, And they

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had two other bubbles or three credit
card bubble, and auto loan bubble and

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student loan bubble, so we got
six of them going on here, David,

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let's talk about the banking crisis.
So we all know that No.

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Eight, No. Nine, the
biggest mistake the government made was allowing Lehman

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Brothers to collapse. Right by far
in retrospect, nobody would have done it

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that way. It created a collapse, a global collapse by any description,

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even though when you read the books, the history books of the time,

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they won't refer to it as that. They're just call it a financial crisis.

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But it was a collapse globally and
started with subprime mortgages. Here they

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made noise is about letting letting it
go, letting the banks fend for themselves.

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But then that all change, right, Yeah, all of a sudden

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they stepped up and they bailed them
out, not so much the shareholders and

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the deadholders like last time, but
the depositors more importantly, as they realize

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the concept of the bail in now
is dead, meaning that when the bank

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comes up short on capital, all
the depositors chip in and they take a

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hit. This comes from the maritime
concept, the general average, where when

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the part ship is in danger of
sinking and they've got a jettison cargo to

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stabilize it, all of the interested
parties, the fellows, shippers, everybody

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chips in to make the injured party
whole. But that doesn't work with the

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banking system, because the banking system
replies one on confidence. And like I

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like to say, the root of
the word confidence is con right. Yeah,

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the two bank to fail idea,
I think is what you're even alluding

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to here. And so, um, you know, the banking crisis that

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we have today is rooted in,
of course, the rate of change that

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the Federal Reserve has increased, uh, the interest rates. You know.

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So I've been calling this now for
this bond bubble crisis for for several years,

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just understanding that we cannot and we
could not maintain zero interests like this

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uh, in the in the lending
sector. So in all these banks put

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money into long term treasuries. They've
told everything was transitory by the you know,

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the FED, and of course the
FED had it dead wrong, and

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uh, you know, we get
these major increases, and of course we

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we then find you know that these
assets you know, are down thirty percent

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from where they were just even twelve
months ago. And our entire economy is

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based upon credit, I mean globally, and so when when we look at

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this from a from a global standpoint
and we recognize that, you know,

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fractional reserve lending has allowed banks to
leverage up for every one thousand dollars that

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they've been able to take in,
they've been able to leverage ten thousand dollars

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in lending. And so when when
people begin to take deposits out, uh,

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specifically from these local regionals, which
are massive, you know, they

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are the backbone right now of how
we metabolize debt inside of corporations. Seventy

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percent in fact, of all corporate
lending and real estate lending in corporate uh

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dollars there are from these local regionals, not from the big banks right now.

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And so I think that We've got
a very very very significant issue that

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is still on our hands right now. And just like you you were sharing,

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Hey, as we see some of
these things wash out, the impacts

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on these things, the ripple effects
of these things can be uh, you

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know, worldwide. And now I
want to draw one different contrast here.

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There are recessions and then there are
also financial crisises. They are separate ideas,

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but the two of them happening at
the same time, that is a

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very rare phenomenon. Now that happened
in two thousand and eight, which the

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it was a financial crisis that we
saw with the the the lending and the

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banks and the fallout that you just
knowed there and it led to a recession.

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Well, we could be finding ourselves
in a very different side of this.

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And again, as I was saying
this rolling recession, I believe that

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we're going to see different times that
we're going to see part of our economies

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hit our bottoms. And it's not
just going to be all at once.

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You know. These components and banks
are very critical again to commercial office space,

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and we have a one point four
trillion dollars that needs to be metabolized

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this year as well. As next
year. That is the record, by

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the way, for debt that has
to be metabolized, and we're having to

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do it at a timeframe when they're
paying four or five six percent higher than

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what they were originally financing for just
a few years back. And so if

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you weren't able to be more credit
worthy, let's just say, when you

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had three and four percent loans,
how on earth are they planning on doing

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it with seven, eight, nine, ten to twelve percent loans that are

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that are mandated now in order to
reset that debt. And so these are

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the concerns that need to be on
people's minds as we look forward to the

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future. I mean, hey,
we can talk about sentiment numbers, and

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that's interesting and it's also helpful to
tell us where we're going, But we

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need to look at the handwriting on
the wall and have a little bit larger

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macro perspective of how these changes are
ultimately going to have ripple effects kind of

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flowing out and so it's going to
affect real estate, it's going to infect

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corporate earnings, which we're in the
middle earning season right now. First republics

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having a horrible time. Is that
about one hundred billion dollars leave them.

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And you know, here's one of
the challenges as well. We raise interest

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rates like this, Well, the
treasury doesn't have FDIC limits like two fifty

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like a bank does, and is
paying a lot higher than a basic bank

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is. And so why wouldn't I
just put all my cash in the treasury?

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You know, getting near five percent
on three month commitments of time or

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you know, you know, four
better than four percent no FDIC. If

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I do more than a year,
I've got you know, long term capital

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gains instead of ten ninety nine income. I mean, there's a lot of

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advantages that the treasuries have today going
direct as opposed to investing in banks.

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And so anyone who's got real money, they understand this idea, and they

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have moved these assets. And so
I expect a corporate earnings recession here to

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play out Q two and then Q
three this year, which is ultimately going

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to lead to more bad news,
more market lows. And again I think

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00:12:05,320 --> 00:12:09,720
it's going to happen as things go
out over time. We're looking at a

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00:12:09,840 --> 00:12:18,879
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is the financial survival network. The
information you need to throw now more than

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00:13:05,320 --> 00:13:07,559
so interesting that you say that.
So one of the things that we would

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follow would be the ISM indicators.
So these are the indicators for manufacturing.

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We can look at them in the
United States, which is where I tend

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to focus most of my attention,
but I was looking up these indicators actually

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on an international basis. And so
when we break below fifty, that is

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like literally a point in time where
there's an expectation we're going to have a

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recession within the next twelve months.
Well, we've been below fifty in the

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United States since September last year,
and so that's that's a big deal.

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But if we look at this in
a global standpoint, nearly every nation across

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the globe is either below fifty or
slightly above it right now, and so

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no one is looking super healthy,
including China. We have just the whole

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globe is slowing down as people are
spending less, they're saving more quote unquote

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if they have it to say,
let's just be honest about that. And

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we're watching a deterioration here that I
think that it's just, you know,

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the math just begins to add up. Wall Street wants to rally really hard.

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So you know, is this going
to be a bowl trap? I

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mean, I vote the market goes
up forever. Here's the reality. This

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is not the time to fall asleep
at the wheel on the information, the

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expectations. We need to understand where
we are in cycles, especially if someone

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is nearing to entering retirement. Yeah. I could not agree with you more,

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David, And I think this is
a global meltdown, an implosion taking

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place. We're going to reach the
panic stop where they're going to cut rates

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and I don't know that the interest
rates will come down as a result of

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the FED cutting. Yeah, short
term, but what you described is zero

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percent interest rate policy past decade.
It's all coming home to roost. In

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Austrian economics, we have a concept
that is totally devoid in the Keynesian economics.

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It's called malinvestment. And all that
free money went into real estate that

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we didn't necessarily need to see through
office buildings. The pandemic kind of brought

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all that home to roost. You
know, in China they've got ghost cities,

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dozens of them all over all from
malinvestment and central planning. This is

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always the net result of it,
isn't it. Yeah, Yeah, absolutely,

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I mean the whole China real estate
market that could be potentially the largest

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Ponzi scheme in the world. You
know, they only allow their people to

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invest in three different things their currency, real estate, or their stock market,

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which we know is rigged. And
they don't you know, report accurately

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based upon Gibbs reporting like we have
to hear. And so everyone's putting all

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this money into these these ghost cities
that you know, hey, they're paying

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their mortgages on these condos that have
never actually been fully built. I saw

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statistic. I hate to quote something
without the specific data in front of me,

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but we had over a decade worth
of information. It was like,

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you know, two thousand and twelve
to twenty twenty two, there had been

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like sixty five percent of all real
estate purchased by the average consumer in China

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that had never been completed, sixty
five percent. And so you know,

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he's the here's the concern of the
Chinese over there. Why am I paying

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on a mortgage for a property that
was supposed to be an income property and

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you're supposed to be doing all this
great industry there and oh we've moved on

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now to the next one. And
so at some point people capitulate and they

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say we're done. We're throwing up
our hands. And so I think that's

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the big issue there with Evergrand,
which is their largest real estate producer,

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and the reason why it's having such
solvency challenges. And you know, the

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back to your point on will the
Fed drop rates? You know, here's

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the thing. If the Fed drops
rates, is that bullish for the stock

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market? Well it could be,
but the reason why they would drop rates

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is only because of massive systemic challenges
that are going to mandate that the FED

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has to get to this easy money
stuff again. And if we have to

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and we're forced to do that,
then things have broken a lot further than

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I think that most people would have
expected to see a bull market moment again.

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And so this is where we just
don't want to fall asleep at the

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wheel. We need to be able
to ride bull markets and tame bear markets.

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That's our little phrase here on investing, riding bulls and taming bears.

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The goal of seventy to eighty percent
of the game while missing seventy to eighty

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percent of the pain. You easier
said than done. But there are investment

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strategies that help us to play both
offense as well as defense, and we

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need to be able to do both
of those very very very effectively. Biggest

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concern that I have right now,
though, is in the bond market,

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and that is that bonds lose money
in five different ways. And so we

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talked earlier about the inverse relationship between
interest rates rising value bonds falling, especially

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the longer duration ones. But you
know, credit worthiness is another one of

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these things that we look at.
You know, hey, what if these

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corporations can't metabolize their debt or they
have an earning compression and they go from

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being credit worthy to not credit worthy. Well, you're going to lose a

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ton of money in your bonds.
What if these companies are ghost companies at

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this point and they're getting replaced by
new technology like chat, GPT, maybe

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their supply chain challenges that are still
going on. I personally foresee many Chapter

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eleven bankruptcies going forward. Now,
that doesn't mean that they're completely insolvent.

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That means that they need to reassess
their debt relative to the commitments that they

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made previously. And so if you
do a Chapter eleven, well, guess

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what the value of your bond is
going to be going down, if not

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go to zero as those changes begin
to adjust, because bonds are debt instruments.

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And then the last one on that
is that we look at the fact

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that inflation is higher than what we're
actually receiving on those sixed assets today.

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And so this is this is an
important concept for us to understand because we

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need to look at our after inflation
rates of return. You know, we've

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got two different investors. One that's
trying to beat inflation because they need to

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keep their money relevant, and the
other that's just trying to avoid a major

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downturn through a recession or a financial
crisis in order to remain buoyant that they've

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got the dry powder to rellocate back
in when everything goes on sale. And

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so, you know, the point
here is that we have to be patient,

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and we have to recognize that bear
markets are bear markets are bear markets,

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and they all play out in a
very similar way. But this bond

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bubble that we're in, it is
systemic, it's worldwide. The challenges could

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be devastating. And again for those
who are near and the entering retirement that

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don't have the working years ahead of
them to be contributing more in they're just

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going to be riding the tide of
whatever the market gives or takes away.

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And so this is where it becomes
really important to understand where are those places

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to allocate right now in order to
avoid sleepless nights that that big recession downturn

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that we're all fearing, we know
is coming, when's the shoe going to

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drop? And then but ultimately we
need to be able to outperform and beat

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inflation as well as these these challenges
because Hey, most people are going to

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be around for you know, twenty
thirty forty years, even within retirement,

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and and so this is the concern
on their mind, running out of money

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before they run out of time.
I think we'll leave it at that.

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But basically I agree it's just about
everything you said, and you can't really

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rely upon the government A to give
you this straight information and be to actually

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try to protect you. Not what
the system's about. As George Parlin said,

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it's all a big club and you
aren't in it, and you're not

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going to be protecting you. The
one thing I will say is if we

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get to the point where there's mass
defaults on mortgages, there will not be

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another fordclosure crisis, all right.
There is no appetite by the public and

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the government to see ten million,
twenty million homes were closed upon. There

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will be This will be what we
would call a workout depression. All these

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loans will be worked out, they'll
be reduced, they'll be liquidated because nobody

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is going to have the money to
pay their debts. And in San Francisco

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they said the number of cell phone
calls in downtown San Francisco. There's an

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article in zero hedge down thirty one
percent of what it was pre pandemic.

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And the only reason why cell phone
calls are down is because the number of

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people there is down. That's just
one example that David, just tell us

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how we find you again, how
we get you on the web. Yeah,

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and the last point on this,
I agree with you. I believe

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people and individuals will get bailed out. Corporations, however, will not.

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There's less of a desire to bail
out corporations. So that's why understanding the

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office space and the corporate channel is
with debt, I think are very,

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very very important because we're at risk
of losing a lot of them. Folks

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can find us on my website myspg
dot com or Ready to Retire dot com.

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00:22:11,640 --> 00:22:15,480
I got a number of websites,
different information out there to teach educational

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courses on retirement planning, maximizing so
security, minimizing taxes, and you know,

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just really trying to help people to
be able to focus on the areas

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that they can change, because there's
so many places in this life that we're

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just going to have to figure out, Hey, what comes next, So

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let's focus on the areas that we
can Yeah, it's a veritable financial tsunami,

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and the only way to survive a
sosunami is to be away from the

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title wave when it hits. Yes, sir, that's what you need to

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be thinking about, David. Appreciate
it. Hey, you've got a question

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from David, Shoot me and email
kl at Kerreluts dot com and you'll find

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00:22:55,119 --> 00:22:59,920
the link to David's site on our
show notes on Financial Survival Network dot com.

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While you're there, sign up for
your for your newsletter David. Always

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00:23:03,240 --> 00:23:06,279
a pleasure. Appreciate your stopping by. Hey, appreciate your carry. Thank

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you for so much for your time. Thanks for listening to Carrie Letz's Financial

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00:23:10,559 --> 00:23:15,720
Survival Network, your solution to today's
trying times. For the latest, go

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00:23:15,839 --> 00:23:22,279
to Financial Survival Network dot com.
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