Everything going on the markets right now, that's not add up to what we've
seen going on in the world. Right China's economy is half of what it
was a year ago as far as their gross domestic product. Our economy is
slowing down. Europe is slowing down drastically. What is going good? What
is going right? What would tell you looking at the asternal figures that this
market should be going up? Well? Tesla is doing well? Right?
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I'm your host, Carrie lets Well, what are we seeing the market?
Is it going to melt up or is it gonna melt down? I think
everybody is wondering about that. We're close to peak than the dow. Hey,
let's talk with our good friend Russell Stone. Get your take on things,
Russell. It looks like everybody has a funny thing happened on the way
to the recession. Everybody foot, everybody has forgotten that there was going to
be a recession. Is this just hopeful wishful thinking? Or have we dodged
the bullet here, Russell, We have not dodged the bullet night at all.
The metrics and the data that people chase after are very highly manipulated.
Think about this, right back, say twenty thirty years ago, who was
the investor competing against in the marketing place? For christ, they were competing
against pretty much themselves in the performance of the companies that they're buying. But
now you're competing against algorithms. They're competing against day traders, they're competing against
high speed computers. There's competing against just thrive quite honestly in a lot of
areas. So the average investor is looking at a rising market that they have
no chance of really been able to be successful unless they guess correctly, or
if they go long term and then just cross their fingers and hope for the
best. Everything going on in the markets right now does not add up to
what we've seem going on in the world right China's economy is half of what
it was a year ago as far as their gross domestic product. Our economy
is slowing down. Europe is slowing down drastically. What is going good?
What is going right? What would tell you looking at the esternal figures that
this market should be going out well? Tesla is doing well? Right,
take away six stocks out of the Dow or the SMP five hundred and the
whole thing collapses. Take away one or two stocks. You take away Tesla,
you take away Apple, you take away any of the large six major
drivers of the NASSAT and the down in the SMP five hundred, and everybody
else is doing negative or flat right, There is no no impressive. Everybody's
chasing after the six that are leading the way. You're you're sounding downright pessimistic
here, but as we're talking, hey, it's the first day of August.
We had a nice rally in gold. Golds down twenty three bucks announced.
Now silver is down half a buck. Where do you do you put
it into metals? I mean, the medals have been they have been strong
as of late, but they're not trading at record levels right, And my
viewing medals is this, I'm not buying metals right now, precious metals from
my own portfolio based on what I think the price is going to do in
the next week, two weeks, or a month or even two months.
I'm buying it for walk term. I'm focused on the dollar. What is
going to happen to the dollar in August twenty second when the bricks nations getting
and decide their next move right right? If you really think that the dollars
on solid ground, then I would think again. And if you don't.
If you do think the dollar is a kept me that it's being attacked by
the brick dollar or in other courses, do you really need to prepare fed?
How do you prepare that crisis? Metals silver over gold? Because the
ratio was eighty three to one right now? Well, whatever happened to that
saying sound as a dollar? Well, when the elevated goal to a Tier
one asset right next to the dollar, that was the clear signal that we
better start moving in another direction the dollars. Where does the strength of the
dollar come from? Is it because of the goal that backs it? Now,
there is no goal that backs it. Plant my point the fact that
it's accepted. It's like your credit card, your American Express or master card.
It's accepted worldwide. Right, But why is it accepted because they have
good faith that American Express will pay the bill? Right. Well, we're
thirty two trillion dollars in dead The interest on the debt alone this year is
going to exceed a trillion dollars, bigger than our military budget. Right.
The unfunded liabilities add up to one hundred and ninety two trillion dollars. Right,
So where's that faith going? All right? FDSC Insurance has one point
two pennies stored up for every dollar that are obligated to protect. How much
face do people have in the banking system? I don't know. You're making
me feel a little downright pessimistic here or else? All yeah, but look
at the end of my notes carry all right, what does it say?
Right? Said? Bye bye bye? But when a year a year out,
maybe eighteen months out, with markets shed all this excess debt and the
world has returned to a normal valuation. Right, The valuation of the side
market was greatly inflated when the interest rates were held low. Incorporations were buying
back their own stock with their own money borrowed money. Yeah, a low
rates. It guts. They can't do that orbitrage anymore. Artific should be
boost their per share earnings, and therefore the share price would go up,
and all sorts of great things happened if you were in management right. Correct.
And one of the things that people throw up there all the time is
that the government just prints money. The government can't adjust print money. They
only can print to the demand through the commercial lending banks. So the commercial
banks are not lending too corporations. They can't print money. Right. But
look back at the three months and the six month friends and the treasury the
t bills, right, and you can see last month that the Fed was
not going to raise indust rates because the interest rates did not go up.
You can see last month or you know, this current month when they did
raise them, the interest rates started to go up again. The February serve
only follows the market, they don't precede the market. Right. So if
you just attract the three into six month treasury bills, you will understand what's
going to happen at the Fed. They're going to raise the indust rates as
the indust rates continue the client Okay, so you don't see any end in
sight for interest rate increases, they're gonna be there's gonna be a series of
increases, pauses, increases positive. But when fear enters the system and the
fear of default within the system starts to elevate, you're going to see the
X start to react to that, and people are going to start to demand
a higher interest rate for the risk that they're taken within the bond market and
stock marketing. So then that's going to result in I guess the stock market
coming down because you're going to get a higher quote unquote risk free return in
the bond and fixed income markets, right, yeah, because think about it.
If you can get a higher yield by going to quality bonds, individual
bonds that pay a higher yield, right and get a six seven eight percent
you know, look at all the people going after government treasury funds that are
paying five percent right now, Well, bank can compete with that, they
can't. Hey, And we see that the amount of loans they're making is
dropping dramatically. Loan standards are higher, and as these regional banks each one
goes under, there's less yep. Interest in making in making wise loans to
growing enterprises, in my mind, was a purpose of the banking system in
the first place. Russell, right, absolutely, I mean there should have
been higher standards. In Canada, you have to put twenty percent down and
the longest you can finance a house for is seven in fifteen years, correct
me if wrong, but it's no longer than fifteen. Most of the houses
are finance on a seven year don't why you have equity in it. It's
less likely that you're going to walk away from the property. People in America
can still finance ninety seven percent of the properties right in a lot of cases.
More right doesn't make sense. It just makes it easy for them to
walk away. Think about the used car market. Right during COVID, if
you qualified for a stimulus check, you could go in there at twenty four
years old, say, and borrow thirty thousand dollars to buy a Mustang or
a Camaro, and you wouldn't have to make a payment for two years.
Those payments are now being expected, just like the student loan debt. You
realize that the largest asset on the US balance sheet is student loan debt.
Isn't that crazy? The largest asset is debt that is hamstringing our young people
from being able to go out and participate in the economy. Hey, so
what's your thought about housing, Russell. You know, so many of you
out there bought new homes, upgraded whatever over the past five years of low
interest rates three percent interest rates, and now like, I would like to
downsize, but it's going to cost me more to downsize than it and it's
costing me to stay where I am. Yeah, my convonces to those people
buy houses in the last three years, they're in a predicament. They're gonna
be underwater no time. Hopefully you didn't put a lot of money down on
the house. But if you're if you're in a position where you put a
lot of money down and you need that value to be intact, you've got
a tough decision to make exit out of that house and into a smaller house,
or even rent a house for a year or for a while the house
and prices come down. Uh, that is not a bad maneuver. Sell,
rent by Yeah, well, you know, you know then you have
to move. You're gonna have to move two times, you know. But
look at the long term. The biggest for stakes that people make is with
the real estate. All right. Uh, they one day think that real
estate is an investment. It's really just a bad savings account at the end
of the day, unless you're flipping houses for a living. But this is
one of those tikers where if the value of the stock market goes down to
the percentages that we think it's going to and the real estate market goes down
similar to what it did in twenty ten, then you really want to make
a tough decision of bold decision as to what you want to do with your
house, and if your kids are on the way to college, you can
downsize. I'm going to that right now. My house is going to the
market in a few weeks, and when it does, I'm hoping that it
will sell at a good price, but also that the sale would get to
the closing, because you've got to hope that something doesn't blow up in the
world that will stop the banks from freezing those loans and saying no, yeah,
Well, banks will always want to loan on real estate for some reason
that I can't understand, but I guess maybe the fact that virtually all of
the home loans, certainly in the affordable areas, are basically guaranteed by Uncle
Sam. Yeah, but when the four closes will start to build up,
and Uncle Sam is paying you five percent plus not to loan money out in
the interbank lending. Right, Why on earth am I going to go out
there and take the fault risk. When I can earn five percent and do
nothing, I'll just come back from my staff and cut down on my expenses
and write it out. And when I can buy those houses at rock bottom
prices, that's fine. Well, I think one point you're missing here,
Russell, is we're never going to have a foreclosure crisis like we had last
time, yelling we might have millions of people underwater in their homes, but
you know, there's no appetite in this country, uh for millions of foreclosures
like we had last time. So just like they've normalized shoplifting and legalized it
in a bunch of places around the country, basically you'll stay in your home
and they'll they'll do a workout, there's just not going to be these foreclosures
to kind of I'm telling you politically, the Congress is just not willing to
take that hit again. Yeah, but my problem, insist is that we're
kind of at the end of the rope of kicking the can down the road.
Where is the government going to get money if if the foreign countries are
not borrowing our treasury to create a pair of dollars, how is the government
going to pay their bills? Because the world line's up to buy oil in
our dollars. If Opex says we no longer require the world just to use
dollars, it will allow them to use brick or euro something else. Guess
what. The government's not gonna have a whole lot of money to work with,
and they're gonna have to print money in order to make it happy.
Yeah, well that's why the attriu believe is inevitable. Yeah, it's not.
In my opinion, it's not doom loom. It's opportunity. Right.
This correction is going to recalibrate the value of everything that we see, which
is greatly distorted. So like watching everything with big co classes, everything's distorted,
right, But now all of a sudden, we're gonna have twenty forty
vision when it comes to the asset value of things, and then the investments.
We're going to come back into the market like they did in nineteen thirty
two, and they're gonna we'll have happier times. Cash the king guys Yeah,
it's like Lauren Buffett said, you don't know who's swimming naked until the
pide goes out, right, correct, absolutely, all right, great people
go out with the time. So you've given us something to chew over here,
Russell, appreciate you coming on. Best place to find you is Scranton
FG dot com. Right all right, and there's a link in the show
notes to this interview on Financial Survival Network dot com. Just go there,
sun up for your free newsletter. Russell. Always a pleasure, Thanks so
much, Thank you, thanks for listening to carry Lets'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,