People are distracted right now. They're you know, Thanksgiving, Christmas, Halloween,
New Year's They're not paying attention to the underlying currents. What's going on
in the banking industry, the treasury auctions haven't been going very well. Other
areas, you know, the national debt is going up. A couple of
banks blew up two weeks ago. So there's a lot of stuff going on.
The consumer just isn't paying attention to it. And welcome you are listening
to and watching the Financial Survival Network. I'm your host, Carrie Lutz.
Well, hey, we're in the last day of November. Today, we
got good numbers coming out on the economy on consumer confidence, good numbers at
least at first blush. But what is the real story? And the real
story, like they say, the devils in the details, Well, the
real story is in the revisions. Russell Stone is with us now, Russell,
great to have you back. So consumer confidence inched up for people like
US fifty five plus, but for the rest of the world it looks like
it's heading straight down. Yeah, that would be out great. You know,
when I send my notes over, I said consumer confidence hasn't gotten the
memo yet. All right. It's kind of like it's the lagging indicator in
a lot of ways because people are distracted right now. They're you know,
Thanksgiving, Christmas, Halloween, New Year's. They're not paying attention to the
underlying currents. What's going on in the banking industry. The treasury auctions haven't
been going very well. Other areas, you know, the national debt is
going up. A couple of banks blew up two weeks ago. So there's
a lot of stuff going on. The consumer just isn't paying attention to it.
It is going to catch up. There will be an alignment of the
market reality and the consumer confidence. Well, if you look just like auto
sales, right, you know, subprime auto bubble repossessions, all of that,
it shows that interest rates, higher rates are definitely impacting the auto bubble
market. It's no longer a core market. Some bubble marketing, all right,
you know, just tell us what your thoughts are on. Right bye.
On my way to work, I drive it by a very large auto
auctioned parking lot. It's extremely large Southern and you can tell because you know,
seven eighth nine those park lots were filled to the brand and then slowly
over time that park lot emptied out as the economy got better and those cars
were sold off and the repossessed cars were less and less and less. Now
that park lot is filling up again, right, And last year the auto
industry repossessed one million, seven hundred thousand automobiles. Right, So that's an
indicator all by itself, say, with foreclosures on the house, and the
foreclosures are way up right, because between inflation and between the rights and interest
rates, the consumer can't do everything right. Something's got to go, and
when they start balling behind on paying their bills, it's to death spiral eventually,
so repossession or foreclosure. Right. So so you got to look beyond
the numbers in other words, because you know what they say, statistics lie
and liars use statistics right, absolutely absolutely, like the leading economic indicators if
you look at them all right, for the US, the leading at Kinneplic
indicators are mostly pointed down right right. Give you some example, new orders
were down point two two. Weekly average initial claims were down point one eight
building permits private housing or it looks like they was actually positive building permits private
house and negative point one or interest rate spread on the Fed funds against a
tenure that was down point eighty five. Those are all that and about twenty
five other indicators are all pointed down, not up. So that's why there
is a a conflict between consumer competence and the real numbers. So the real
world and the world of statisticians, there's a disconnect. Huh, absolutely absolutely,
And you think about it in your own world. You know you're looking
at it. Most people looking at four and ks and bank statements, well,
those haven't been badly impacted over the last six months because the markets trended
up in twenty twenty two, so it kind of blosts over the downturn from
twenty twenty one. But at what's going on is the speculation is off the
charts. The day trader speculation is off the charts. They have all sorts
of investments that are coming to the forefront right now that are pure respected that
they have derivative derivative. Right, So they have a derivative that is based
on a derivative, right, Yeah, and people are buying them up.
Let them right. It doesn't make sense. There's no raptional sense the markets
right now. The evaluation of the S and P five hundred is seven times
what it should be. Right, that's a powerful statement. It can't keep
this up, and it's going to be it's going to be forced back into
reality. As the credit bubble continues to contract, the supply of money is
being destroyed. And that's what's happening. As the money supply, the end
to money supply contracts, they've lost in money right now is lower than it
was in nineteen thirty. So all these things are telling us that there's bad
news come. Yeah, so bad news is coming. But the government's job
is to put that bad news off as long as it possibly can and keep
you buying and acting in the so called best interests of the economy. Right
yeah. But at some point they can't hide it anymore because pretty soon you'll,
as they say, you know, if your neighbor loses his job,
it's a recession. It's you to lose your job, it's a depression.
Right yeah. Government can't hide one point two trillion dollars in interest pamments.
They can't hide thirty four trillion dollars in debt. They can't that the unfunded
liabilities are now at two hundred and fourteen trillion dollars and the failed bond auctions
are getting into the headlines now as well. All right, the bond vigilantes
have made their presence known. Huh yeah, what what do you think will
happen when the interest rates go down to the you know, junk bond aread
and stay like b rated and C rated bonds, They're going to get abliterated,
all right. So there isn't a win win here until the credit bubble
comes into alignment with the consumer's expectation for value. Okay, so uh yeah,
you know it's their job is to keep the party going. It used
to be to take the punch bowl away, which they've already done, but
they're trying to make you think that the punch bowl is still there, right,
yeah, keep in mind carry it's an election here as well. Almost
forgot you could. All right, So what is you what are you telling
your clients? What are you as an investor doing here? Well? You
know, I expect, you know, in this environment, that we're going
to see this year as an unposed and my expectation is December is going to
be a very disappointed month economically in the numbers. And with that expectation,
you're going to see the political policy. People change directions rapidly because it's an
election year, so they're going to start promising us what we want to hear,
right, So they're going to start rapidly changing their positions and the focus
on what they're talking about. But it's not going to stop. What's going
to happen within the markets. The consumer is going to revolt against the government's
policies and the corporate greed, right, and they're going to revolt just by
They're going to pull back on their spending. They're going to pull back on
new cars, houses, vacations, camper boats, planes, trains, and
automobiles. They're going to pull back and that will cause enough pain that will
force a change in direction. Our country is going to be humbled right before
restored, right, and we have to go through the humbling process because of
all this debt and all the mismanagement has to be dealt with. Okay,
So tell me Russell, what's your take on rising gold and precious metals prices.
I would be a buyer of silver first, not gold, but eventually
when that ratio from eighty seven right now goes back to fifteen, sell your
silver, buy more gold. But right now, I would be a buyer
of gold or silver, but preferably silver. Okay, silver, the shiny
metal as we call it. And how the question that you ask carry is
how high will it go? Well, if you do any research, there's
a lot of speculation anywhere from one hundred dollars an ounce on silver. I've
seen one thousand dollars announce on silver. That seems like pine in the sky,
but it's not not if you understand that it's been suppressed for sixty years
and the dollar is in trouble. So if we have a combination of the
dollars no longer the world's currency reserve and it's devalued significantly, suddenly those commodities
are going to look really, really attracted to a whole bunch of investors and
consumers. All Right, So we've seen the oil gyrating quite a bit,
but it's getting back up to eighty dollars the barrel. The world seems to
be happy with that price. If gold and silver go up, then you
think oil is going to follow a suit. No, here's why, because
they got that oil to go back up by cutting back on the supply of
oil, right, but the demand is going down. So if to track
the demand. The demand is going down, and the other way they can
compensate for that is to increase or decrease. That's supply right now. Okay,
So you know, I read an interesting article a few weeks back that
in spite of the current occupants antipathy towards petroleum, oil and all forms of
so called fossil fuels, although I've never seen a fossil come out of the
out of the pump at the gas station, but hey, be that,
Oh wow, have you seen fossils come out? But be that as it
may. American production is actually at all time record highs thirteen million barrels per
day and with no decline in sight, even with lower ring counts. You
know, OPEC's hands are kind of tied, aren't they. Well, we're
not using our capabilities not only in oil, but in also gold, silver,
and all the other refined metals because there's so much bureaucracy to get these
new discoveries to the market. It takes six eight years to get the mineral
discoveries to the market. Same with oil. We're not using our oil wealth
as a weapon to lower the oil prices, right, We're using it to
fulfill our need for oil within our country, but we're not exporting into the
world to force the price to silver down in the Key Saudi Arabia, in
Russia and China and check mm hm. And we should be and we could,
we could be, and we should be doing that. Okay, I'll
buy that. So again we look for harder assets. What's your take on
real estate? To you know, supply is down, but certainly the markets
down. The homebuilders last week just reached a five year high. To me,
the homebuilders are like the perfect analogue for interest rates. My problem with
the homebuilders what data are you reading and who supplied the data on that information?
Right? I do not trust the home builder as information if it came
from them, because they have invested interest in keeping the price of houses up.
They have a thousand houses under construction that they need to sell and if
you look at all the big owned builders in this country, they have a
big stake in this to keep the house prices up. I don't trust the
data if it comes from that. I look at what's going on and I
will see the inventories and in lots of these beacon Why would somebody sell a
house with a three percent mortgage to move into a house with a seven or
eight percent mortgage doesn't make sense, I know, but I know what you're
saying. But people actually do these things, right, Yeah, some people
do. I just sold my house carried and it's going to be the worst
investment those two young people ever made. Yeah. Oh well, cave on
ampter right. Yep, yep, yep. My heart goes out to people
that are buying houses now. So to answer your question, Kerry, yeah,
I would be saving money so that I can buy in another year when
the market is down, all right. I wouldn't be in by in real
estate until you can get a good deal on it. It's not now.
There's still the prizes are still inflative. Okay, So there's lots of good
news ahead and buy things of value. Obviously not all housing markets will be
affected equally on this, not but you know it's it's actually the housing market.
It's a bunch of sub markets scattered across the country, hundreds of them
really, So good time to sell a house though, huh. But fire
Just take eight, right, and remember what eight felt like in nine the
beginning of nine, and just multiply that by four or five times and then
acts us up. Do I really want to be a part of that?
The answer is no. Eight oh nine was a real estate bubble. This
is a global financial bubble. Look what's going on in China. Look what's
going on in very Commony. Look what's going on in Germany and Europe.
There is no in the world that anybody can convince me that how we report
information in this country, Uh lines up with those economies. It doesn't.
Yeah, there's a definite disconnect. Eh, absolutely, absolutely, So three
sparts over booksmarts. Yeah. Well, experience is often the best teacher,
but often the most brutal teacher as well. Right. You know, if
our kids never learned some hard lessons, they wouldn't have a whole lot of
character. So life is full of hard lessons. That's how we get our
character. Yeah, and stuff happens, right, it does, all right?
Hey, tell us where we find you? How do we connect with
you? On the web. You can find me at a screen FG dot
com from my website Grand Financial Group in self ones or Connecticut. That's where
I put my desk and in the other way that you want to contact me.
So eight six oh sixty two three five five seven is my phone number.
All right, hey, I've got a question for Russell myself. Shoot
me an email kl at Terry Lutts dot com. The Russell's u ur L
will be in the show notes of this interview on Financial Survival Network dot com.
I'd urge you to go and subscribe if you haven't done it already.
Russell A pleasure is always thanks for stopping by. All right, Merry Christmas.
Guide into your audience.