There's no question Jerome Powell needs to reconsider this two percent inflation target that he
has because, in my opinion, he is very much losing this battle.
And and and it's with a lot of areas that the FED cannot control,
like the cost of insurance has gone up so much, the cost of oil,
and the cost to you know, escort it by navy, you know
fleet, you know, as we're going three thousand new nautical miles around Africa
because we can't go through the normal channels because of new terrorist attacks, et
cetera. So there is a lot of inflationary data coming to right now,
and it leaves the FED in a very very very difficult spot, but one
that I think that we should ultimately talk about and have some conversations about because
the consequences of having that so wrong could be devastating. You are listening to
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Carrie Lutz got some big numbers out. PPI inflation is up quite five percent.
Experts were surprised. I don't know who these experts are, David Strazuski,
but obviously it's nobody I know, because all the experts I know,
Uh, we're only surprised it wasn't higher. Maybe that's what the experts are
really surprised about. Yeah, you know, it's it's always great to be
with you carry you know, when we talk about PPI, yeah, I
mean inflation in general. If people are not noticing right now that the season
is changed and that a lot of this economic data that's coming out is beginning
to deteriorate from this goldie locks everything's perfect rosy and we're going to have a
soft landing scenario. So we can't recognize the seasons change. I think that
we probably need to examine our eyes. So, yeah, with the PPI
numbers, you know, that's otherwise said is the wholesale prices that producers or
employers pay to create things. And so when we see inflation there, well,
then we know that that ultimately comes to the economy for CPI as well,
and we'll get a new reading on that here tomorrow. A couple of
things to note those that this is the third consecutive monthly read that is higher
than the month prior to it. And why is that a really big deal?
Well, because this talks about how sticky inflation ultimately is right now and
also gives us a forecast for where we're headed. I think it's really big
deal to note that if you actually, you know, total up the last
three months worth of inflation, that equals one percent at times that by four,
that gives us a trajectory for four percent on And this is PPI numbers
here. The CPI numbers are between four point four and four point five based
on how I calculated that. But that is a much higher inflationary environment than
where we set right now. So there's no question Jerome Powell needs to reconsider
this two percent inflation target that he has because in my opinion, he is
very much losing this battle. And and and it's with a lot of areas
that the Fed cannot control, like the cost of insurance has gone up so
much, the cost of oil, and and and the cost to you know,
escort it by navy, you know fleet, you know, as we're
going three thousand new nautical miles around Africa because we can't go through the normal
channels because of new terrorist attacks, et cetera. So, uh, there
is a lot of inflationary data coming to right now, and it leaves the
FED in a very very very difficult spot, but one that I think that
we should ultimately talk of out and have some conversations about because the consequences of
having that so wrong could be devastating. Hey, you know, inflation is
sticky, like like when the mob gives somebody a pair of cement shoes,
right exactly. It's not just sticky. Sticky is like flypaper. Now,
this is like a monster glue on steroids. Here, this sticky right right,
Well and candidly, Carrie, you know, over the last year we
actually look at inflation and CPI or sorry PPI, we're not really seeing,
you know, significant divergence in the numbers. You know, CPI has been
sitting in the threes for over a year. It's not going down. It's
been flatlined and just sort of leveled out here, by the way, as
we look at oil prices right now in commodity prices. They've gone up significantly,
and I believe that they will be, you know, leading the rise
in the sinflationary environment, therefore making it more expensive to produce things. You
know. Another really really big one that came out here just this last week
is that both the ISM and the PMI indicators went negative. And what are
those They basically speak to the manufacturing and the servicing sector here in the United
States, and when they go below fifty, it's recessionary. And when either
of them go below fifty, we tend to have hiccups and challenges in the
market. Today, both of them are negative. That's only the second time
that this has ever happened in the history. The two previous times were the
dot com and then two thousand and eight Great Financial Crisis. So if any
of these two precursors are indicative of what the future might look like, or
if they rhyme, if you will, then I think that we are headed
for some major challenges here. And this is going to disrupt the thesis of
so many today that have just bought long and they're all in. I mean,
there's literally more bullish sentiment right now in the stock market than I guess
going back to two thousand and twenty one when everything was rally into the top
here and we hid all time high. So I think that when these two
ideas of it's going to be really great and then only smokes, it's actually
not catch up, I think that we could find ourselves in a yeah,
real surprise moment here that could be you know, devastating, especially if you're
nearing or entering retirement, like most of the families are that we work with.
Hey, so right, So your feeling is the Fed's gonna cut,
but they're not going to cut until they absolutely one hundred percent have to right,
absolutely right. So the FED is at a very difficult spot here,
and so I think that they're going to be forced to cut rates in order
to avoid a banking crisis. And I say that in all humility because these
are very serious matters that we're discussing here. But with inflation being too high
for the FED to cut rates, they're going to you know, have to
be remain higher for longer, just like they told us that they would,
even though we were you know, pretty much guaranteed according to statistics, that
we were going to get cuts as of last July so that didn't manifest anyway.
We're in this higher for longer place right now. So I think that
the FED is stuck between preventing a banking crisis and preventing inslation from getting more
out of control. Because if they drop rates right now, basically the top
twenty percent of Americans as far as financial goes, they've got money in the
market, they're doing well, and they're going to you know, be off
to the races. We'll see all new all time highs. That's very inflationary.
You know. Eighty percent of the economy though, in my opinion,
is actually in a recession right now. And you know, I think that
we probably need to even consider how are we defining recessions because that would also
ultimately determine how FED policy and monetary policy, you know, might be implemented
in the economy. And I define it as or I think it should be
defined as, when the middle class is doing better or worse for two or
three quarters at a time, we can see a trend in a positive or
a negative direction and ultimately point back to the why behind it. Right now,
the why is so many different things. It's actually difficult to even keep
up on it. But getting back to that that banking crisis right now.
You know, when we raise interest rates the way that the CETA Reserve is
done, this flips the entire credit cycle. This it flips the entire market.
You know, the United States, all sectors, all families use credit
to function in daily life. And so that our banking industry is incredibly important
in what's taken place here is with higher interest rates. I'll just even point
to the numbers that came out from realtor dot com and that was in twenty
twenty three, we had lower housing sales than the worst point in two thousand
and eight. That's a staggering bit of information very few people are actually even
sharing talking about right now. But you know, the challenge is, you
know, when you go from a three percent mortgage environment to seven point five
two I believe it is today, you know, people have to come up
with either forty percent more money as income or they got to they're going to
be their purchasing power has been reduced by forty percent plus in that example.
And so the housing market is is certainly, at least across the United States,
in a very tenuous moment. We've obviously had a lot of big institutionals
purchasing over the years. But I think that I think that that we're seeing
this crisis begin right now in housing, and no one's going to be able
to really get loans. These local regional banks are not going to be remittabolizing
office space. And if you look at the office space numbers right now,
it's it's a staggering number. Just to not name more facts here, but
in April, forty three percent of small businesses in the United States we're unable
to pay their office lease. Forty three percent. I can't even imagine that
over one thousand companies have announced that they are going to be shutting down locations
this year. Over one thousand. Is that a really pro growth economy or
is this a resassin economy? If we have eyes to sen, ears to
hear, we can recognize this is slowing down. It's slowing down dramatically,
and I fear that it happens all at one time in this convergence and we
will not be prepared for it. Hey, I just saw today and this
is in I believe Fort Worth, Texas. A high rise, forty story
building went for twelve dollars a foot. Now I'm black thirty Back in nineteen
ninety eight, I think I was paying ten dollars a foot in New York
City. So if I had just waited, I could have bought that place
in Fort Worth exactly. And so there's there's places in our economy that there's
going to be deflation because of the interest rate challenges. So those prices have
to come down because the sellers want to sell where and the buyers want to
buy. They don't have a choice, and so they need something for it.
And so there's always a market that's being made. And actually, if
I could just parallel that idea to one of the concerns that I have today,
and that is with the fact that we're printing one trillion dollars every one
hundred days, and if we understand how supply and demand work, or inflation
actually works. Inflation is literally a phenomenon that's created by central banks as a
result that they're printing and basically giving us the tax of least resistance, So
instead of raising our taxes, they print more money. Well, so someone's
got to buy that, and so Chi they used to be the biggest net
buyer, they're a seller. Saudi Arabia used to be a net buyer.
They're no longer doing that. In fact, they've just joins the bricks nations
as of January first, and so they're no longer excited about the US dollar
and they're trading now outside of the US dollar for oil and gas. If
we look at all of these things kind of collectively coming together here, this
is a This is a very concerning time for us to be looking at at
the world and where we're headed. Because in the world of you know,
having to sell new treasuries, if we don't have a new buyer's like as
an example, Japan's a lugger buying, well, what happens to the price
If there's a buyer, the price will go higher where the yield has to
go higher in order for somebody to say, okay, it's worth it now,
I'll fix some money, I'll put some money into into there. And
instead of being in the stock market and thinking that everything is going to be
running so I think that you'll see people flee back into treasuries right now and
it'll get bought for a little bit. But I think as we get closer
to the end of the summer September to fall October and we've got more expenses
coming in, more printing going on, more deterioration, and the numbers that
we could find ourselves in a moment where we have a very very significant hiccup
the treasury market. And that's when you see real challenges because you know,
we're going to over a trillion dollars this year the nation in treasury debt,
the US sax bearers on the hooks for that. You know, the Fed,
you know, is going to keep these rates higher. In act,
they could go higher even yet uh if if if what I just shared place
true. So again, when there's more supply than than there are buyers,
the price has to go up. And that is a devastating idea for bond
holders today, especially those that are nearing an entering retirement and don't have time
to recover from these losses. All right, well, uh, definitely interesting
times ahead. Uh so what are you supposed to do? Bitcoin? Gold,
silver, diamonds, bananas? What do you do? You know?
I think everyone's kind of asking some questions right now, and that is what
is real money. I personally believe that real money is gold and silver.
Uh and uh, you know, it takes just more dollars to purchase real
money gold and silver, uh you know then than it did just six months
ago twenty percent more. So I think that that gold has led to a
new high, and I think that it will break thirty four hundred year probably
even within the next thirty days. And and once that does, just watch
because silver is going to rally very hard and through the end of the year.
I believe that silver is going to outperform gold at least two to one.
I think that oil per barrel you're looking at one hundred dollars a barrel
by year end, could be higher than that, if I can be honest,
especially with new tensions in the Middle East, we're obviously seeing you know,
other metals like copper and steel. See, you know, very very
significant upswings right now, and so you know, more of a commodities based
approach I think is going to be valuable. But let's just be clear about
this as well. Running AI and everything associated with evs, it's going to
take a lot of electricity. So I think that there's some value and some
utilities as well. And so I got a couple of thoughts as it relates
to that and how to play that. But you know, metal liners be
good as well, given the fact that their pe ratios are are lower.
They've been undervalued basically for two decades, and I think that they're about to
get repriced and really be seen for the value that they have. We'll see
if the Biden administration lets them drill and figure some things out, but you
know, and until that occurs, we've got what we got. And in
the last part there is that you know, those oil producers, I don't
think that they will cut their dividends. And so for those that are looking
for income, the dividends from from certain oil producers, I think they're going
to be consistent. And uh, they've got plenty of margin in there based
on what the costs are to produce relative to what uh you know, we're
paying that for the pump here. And that's even if there's a slowdown,
We're we're going to see any of those ideas I believe continue to grow and
and continue to take off. So yeah, there's some thoughts. So all
right, well, hey, I'm a huge utility bull. I was a
big bowl before the AI thing hit now because I'm figuring, hey, the
evs AND's that's inexorable trend as more and more go, we're going to see
demand increase. What's good about EV's is that most of them get charged at
night, least if you're in a home charger situation. So it's perfect for
the utility companies. They don't really need to increase capacity to service this new
fleet of cars. But AI is a whole another story. I think the
AI combined with the megabattery pacts really going to be where it's at where you
can store up the electricity, get it at night. Beauty is the ability
of those things is to buy energy at the lowest possible price, Like in
Florida here just for a home seven cents of killowot hour regular tag thir thirteen
cents of killo what hour. So stock up all that energy and then basically
use it during the day when you need it. Actually they use it twenty
four to seven. But my point is that's going to be invaluable. It's
going to help pay for those things for sure. Yeah, all right,
David. Always great to have you on tell us, where do we find
you on the web? How do we connect with you? Yeah? So
our website is my spg dot com. I've also got to a site out
their offerings and great information, and that is fed bubble dot com. Fed
bubble dot com bubble. And you know, you've got to name the perpetrator
who causes pop, so that is the Federal Server. And I think that
we should be critical of those who have the ability to affect our lives in
such significant ways. So there's been big mistakes that have been made and we
have absolute bubbles that are amongst us right now. So you know, just
hopeful that people can certainly you know, survive in these financial times. And
so appreciate your time here today and the opportunity to be on your show,
as this is a key, key time to be having the right answers and
to be understanding what the future is going to be holding. Couldn't agree with
you more, Hey, David, Always appreciate you coming on. Got a
question for David or myself. The email address is kl atcarrieluts dot com.
You'll find a link to fedbubble dot com in the show notes to this interview
on Financial Survival Network dot com. We just asked if you visit, please
sign up for your free newsletter. David. Always a pleasure. We'll talk
to you again soon. Appreciate you carry Thanks so much talking said. Thanks
for listening to Carrie Letz's Financial Survival Network, your solution to today's trying times.
For the latest, go to Financial Survivalnetwork dot com. Financial Survival Network
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