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Rates may come down in some trading
function. The longer term is there because

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of repricing of risk. And if
the fete wants to do it, he'll

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kill a dollar and maybe they'll sacrifice
the dollar they bring. If they charge

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down these rates, inflation will be
back because it takes a while to kill

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it. And if inflation comes back, what are they going to do?

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And if they drive them down,
the dollar will go down and they don't

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want that. You're listening to carry
Lets's Financial Survival Network where you get valuable

8
00:00:27,000 --> 00:00:32,439
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Network dot com and get your free
newsletter and gift. Financial Survival Network now

11
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more than ever. And welcome you
are watching listening to the Financial Survival Network.

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00:00:54,000 --> 00:00:57,039
I'm your host, Harry Lutz.
Well, we've got Gordon too Long

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on with us now. Gordon,
we've been talking about collateral, the quality

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of collateral, or what the banks
will take, what the federal take,

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and why you should care about it
basically, and we're having this banking crisis,

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banking collapse. U. Some of
my guests say that the banking system

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as we know it is going extinct. This is an extinction event or the

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system. What is your take on
it. I would lean towards what they're

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what they're saying. I'm not maybe
it quite as negative that, but this

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is an unusual situation that we're in
and it keeps cascading, and it's like

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shocks and shock waves that are that
are coming at us. So we're still

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in the early stages. Off you
and you would call two thousand and eight

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when we first when when bear Stearns
hit. We went on for close to

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a year with little failures all of
the lending operation before finally Lehman collapsed and

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AIG was collapsed and we but it
just kept getting worse and worse and then

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suddenly collapse. It's like uh uh
famous writer in a prin Key West,

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he said, you know, going
bankruptcy. Bankruptcy was was slow at first

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and then sudden at last, or
suddenly and first then quickly and then quick

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that and and that's kind of what
I sense. We're it's going the same

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thing. We got these serious shocks
that are hitting um that are like a

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waterfall, and they but they keep
expanding, they keep growing, you know

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right now, they're they're in the
banks, they're in the lenders that are

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supporting out there that are not banks
but still lenders. We're seeing it in

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the credit and the commercial real estate
market. Um, and now it's moving

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into other areas like the zombies the
bonds, not the sovereign debt, which

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is not a discussion we'll get into, but the zombies we're seeing. A

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small business has got a problem,
and I see just here in the last

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week shipping and packaging company. They're
starting to feel it. So it just

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keeps, it's broadening, and it's
getting it's getting worse. So there's some

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major concerns here. And the FED
reducing the interest rates, which everybody thinks

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is the panacea, I don't.
I don't see it as being the panacea,

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as actually could see it accelerating the
problems. Initially there may be you

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know, a lot of excitement,
but then it starts to break down.

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Her not to go on. But
the problem we're facing is we have a

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systemic, long term structural problem that
we failed to address. We kind of

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nibbled at OFTO two thousand and eight. We've been we've excess leverage and have

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easy credit. We know the story, I mean all your listeners eat know

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the story. But we've changed.
I call it the Great Moderation others due

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to that. We had forty fifty
years where we had globalization that reduced costs,

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so you know, labor arbitrage.
We had financialization which took interest rates

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down, made so made interest rates
cheap to finance products zero bound. And

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then we had mercantilism you remember that
with Japan and serving with China, where

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they take all their profits money,
send it back to America buyer bonds,

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drive our interest rates down, drive
the value of the dollar up, and

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they win and we become a seventy
percent So all consumption kind of all that

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is now changed, and it hasn't
ended, but it's slowed. And that

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shift that we're going into brings with
it a whole series of new things,

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and that for example, stagnation I
can talk about it, but there's a

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change in risk premiums, risk cremiums
that are in the process of changing of

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a repricing risk of risk premiums associated
with the bonds, primarily the bonds you're

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seeing it, but also it's going
to come in intiquities and with those changing

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because we've had that. COVID was
a destabilizing event. Ukraine was a destabilizing

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event, but from not from the
Ukraine stuffook from the sanctions that we're opposed.

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And then we've had the most craziest
period in history of a policy,

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this goal public monetary policy that frankly
just is bizarre. And so then that's

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what's created the shock of shock waves
COVID, Then we had the supply shock,

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that we had the inflation shock,
then we had a credit shock.

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Now we're in the middle of a
banking shock. I think the liquidity one

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is just only beginning. And then
after that and the one that terrifies me,

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as we just said at the beginning, a collateral shock, almost a

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reverse wealth effect. Your comments,
you am, I you're with me on

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this. So the question is,
like all these countries around the world,

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all these industry they borrowed in dollars
expecting the dollar to lose its value.

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The exact opposite happened. That's led
to massive insolvencies in China, all over

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the place, and it seems to
just be getting worse. It is and

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it will get worse. You know. The dollars. If you travel in

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the world and say, the dollar
is so overvalued relative to what you can

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get when you travel, so it
seems like you can't buy anything with it

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here in the States. But it's
so overvalued. That does not mean the

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bottom is going to follow. I've
been writing about dedollarization, etc. But

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that does not mean it's imminent.
A matter of fact, I can see

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some serious strengthening of the dollar only
because the problems in Europe are as bad

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or worse in our specifically in their
banking industry, their pension system. The

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issues in Japan are only getting going. I don't mean to get negative,

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and China is just not coming out
of this lockdowns the way we were everybody

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was anticipating. So it's irrelative.
The dollar looks still look like a currently

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a safe havens longer term, that's
a whole different story on the dollar.

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So let's let's bring this to the
Big MAC index, all right, Yeah,

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they're a good example. There are
two indexes that I like to follow.

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Number one is the cost of a
Thanksgiving meal, because I find that

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to be a much better indication or
indicator of food inflation than anything the government

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releases, and because it's a consistent
basket. It's not like one Thanksgiving the

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price of cranberries goes up so they
substitute blueberries. It's the same basket every

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single year. There's no substitution.
And the Big Mac Index, which basically

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measures the relative cost of a big
Mac in dollars country by country. Interestingly

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enough, the latest one as of
January twenty twenty three, the most expensive

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big Mac was in Switzerland for seven
dollars and twenty six cents, and the

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cheapest big Mac was in Venezuela or
a dollar seventy six. So if you

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could kind of arbitrage Big Max,
you could really make a tidy profit here,

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couldn't you, Gordon, Yeah,
well, just substitute Big Max for

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other things. And there's there is
a lot of that going on. Yeah,

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arbitrage. Yeah, and it is
being arbitrage, make no doubt about

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it. You know, at the
end of the game, at the end

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of the day. You know,
things like equities are like the tail and

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the dog. The money. The
money is first in the credit and the

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second in the dollar in the bombs, and and that's a that's a game

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of arbitrage between countries right now.
Just we're getting a little off track.

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But that's that's what I see it. But we have inflation is still with

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us. You know, we keep
saying, well, it's down, it's

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falling. CPI is coming down,
cores, not CPI is coming down.

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Well just a minute, Okay,
it was eight percent and six percent.

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Now we're you know, down,
getting into the five percent era. Whoa

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on core? Oh, whoa,
just a minute. It doesn't mean inflace

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showing away. It's just another five
percent on top of five percent. And

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so pete the consumer in America in
a seventy percent consumption economy, it's it

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just can't can't keep absorbing this.
They just can't. And now carry what

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I saw on the conference calls.
The corporations can't pass it on. They

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pushed, they've tried. They can't
pass it on because people are substituting.

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They're they're they're moving away from brands. I mean you know this, well,

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they're they're moving away from brands.
They're going to know names, they're

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they're they're they're stopping. I mean, look at Tyson Foods. They're the

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biggest supplier of protein, of meat, and they got serious financial problems.

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The costs that they have to cut. They have to get their costs down

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because their costs are going up.
But they can't. They can't raise the

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price. But the they're not losing
share, just the product isn't moving,

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So that says people can't afford meat. That's an example of it. But

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you know, you made a really
good point carry about the numbers, the

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00:10:11,600 --> 00:10:16,039
government numbers versus the big mac The
government numbers have always been this leading,

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especially in inflation. You know,
substitution. You mentioned we have imputation,

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we have hedonics, we have substance. There's so many games and they keep

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going on. But I have never
seen since January, and Frankly, the

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Secretary of Labor resigned. He was
the former Boston mayor. He was only

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there briefly. I gotta believe he
just wasn't going along with it. But

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we the BLS, the numbers that
they keep putting out make no sense.

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If you spend any time looking at
the labor numbers, unemployment, employment rates,

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labor rates that are coming out,
they're just I mean, it's not

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just me Goldman screaming about it,
Morgan, all the major players are saying

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this. They don't still make any
sense. But they're buying. They're using

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these numbers to buy time, and
that's that's a whole discussion to sell.

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00:11:07,120 --> 00:11:11,200
But I you're better to use a
big mach I agree with you. So

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00:11:11,320 --> 00:11:16,320
how high our interest rate's gonna go, where they're going to dip for a

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00:11:16,360 --> 00:11:22,080
little bit because it's safe to go
outside or what? You know? Curry

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00:11:22,120 --> 00:11:26,679
that that that is the question right
now. And you know, and I'm

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00:11:26,759 --> 00:11:31,759
a year ago I decided personally,
we came to the conclusion at three and

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00:11:31,759 --> 00:11:37,240
a half percent on the long bond
or the Daniere was was where we were

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going to be, and we're going
to be there for we didn't know how

147
00:11:39,360 --> 00:11:41,519
long, but we're going to stabilize
in there. And so we we've been

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playing a game. And actually,
and I accredited this to Googen, I'm

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00:11:46,039 --> 00:11:50,600
Scott Mitritt, who subsequently died not
a lot after um. He was very

150
00:11:50,639 --> 00:11:54,080
strong in that three and a half
percent and he and he pretty well convinced

151
00:11:54,120 --> 00:11:58,320
me in our study that this is
where we needed to be. So we've

152
00:11:58,320 --> 00:12:01,879
been trading. If it gets up
to three point six five, we're out,

153
00:12:03,080 --> 00:12:05,600
or rather we're in. If it
gets down to three point to three

154
00:12:05,720 --> 00:12:11,360
five fifteen percent bandwidth we get in. So we've been finding ourselves that has

155
00:12:11,360 --> 00:12:15,519
been really, really effective. So
they answer your question, where's it going?

156
00:12:15,799 --> 00:12:18,720
We think the risk premiums on bonds
are only going to go up.

157
00:12:20,159 --> 00:12:22,080
We think that it's going to take
us up to four. We think we're

158
00:12:22,080 --> 00:12:26,840
going to have to get into the
four percent range because right now that Fed

159
00:12:26,879 --> 00:12:31,279
funds rate with the core come that
the PCPI is down just a little hair

160
00:12:31,360 --> 00:12:35,120
below now the Fed Funds rate,
but it's that core, and I don't

161
00:12:35,159 --> 00:12:39,279
know how much more time they can. They need more time to buy it

162
00:12:39,360 --> 00:12:41,799
to get inflation to fall down.
They won't. I think we've stopped with

163
00:12:41,879 --> 00:12:45,919
rates going up, but I think
the premiums will push it up now.

164
00:12:45,960 --> 00:12:50,080
Having said that, you know,
when the set FED starts to signal and

165
00:12:50,159 --> 00:12:52,679
starts to come in the bond,
you know the yield will drop and prices

166
00:12:52,679 --> 00:12:56,639
will go up. But but sure
a little bit longer after that, you

167
00:12:56,679 --> 00:13:01,360
know, it depends how they do
it. Think we still think we'll see

168
00:13:01,360 --> 00:13:05,480
four percent for a protracted period on
the ten year and a shorter termed a

169
00:13:05,480 --> 00:13:09,360
whole different game. Right now we're
two years. This morning was trading over

170
00:13:09,440 --> 00:13:15,240
four percent as usual did I answer
the question there for you or I think

171
00:13:15,320 --> 00:13:20,440
so? So it could stove up. The rates are not coming. Rates

172
00:13:20,480 --> 00:13:24,600
may come down in some trading function. The longer term is there because of

173
00:13:24,759 --> 00:13:28,240
repricing of risk. And if the
fete wants to do it, it'll kill

174
00:13:28,240 --> 00:13:31,399
a dollar, and maybe they'll sacrifice
the dollar they bring. If they charged

175
00:13:31,440 --> 00:13:35,799
down these rates, inflation will be
back because it takes a while to kill

176
00:13:35,840 --> 00:13:39,200
it. And if inflation comes back, what are they going to do?

177
00:13:39,279 --> 00:13:41,559
And if they drive them down,
the dollar will go down, and they

178
00:13:41,559 --> 00:13:46,399
don't want that because the issue is
right now the debt. That's not the

179
00:13:46,440 --> 00:13:50,200
debt ceiling, it's the absolute value
of the debt. So the interest rates,

180
00:13:50,440 --> 00:13:52,559
they want them down, but they
also you know, it's it's a

181
00:13:52,639 --> 00:13:56,159
dollar value of it. They can't
kill a dollar. It's the golden boose.

182
00:13:58,200 --> 00:14:01,639
Yeah, So so they're op bacts
gold by the way, so they're

183
00:14:01,679 --> 00:14:07,840
opting to destroy the economy, the
global economy, rather than the dollar more

184
00:14:07,960 --> 00:14:11,720
or less, because they are just
it is destroying them. They're they're trying

185
00:14:11,759 --> 00:14:16,840
to get as far as far along
as they possibly can. They're the damage

186
00:14:16,919 --> 00:14:20,919
is as I just said, with
cascading and these these shockwaves is going on.

187
00:14:22,679 --> 00:14:26,879
They just they just got to be
able to get conflation under somewhat under

188
00:14:26,919 --> 00:14:31,000
control. And they know that they're
going to damage the economy. They they've

189
00:14:31,039 --> 00:14:35,840
already they know that, but they
don't want to. If unemployment starts shooting

190
00:14:35,919 --> 00:14:41,559
up, Andy, it will Congress
will be screaming beyond belief and demanding it.

191
00:14:41,799 --> 00:14:43,600
So they'll have to confitul them.
So they're buying a little bit of

192
00:14:43,639 --> 00:14:48,279
time. They got to kill the
village to save it. Yeah, more

193
00:14:48,320 --> 00:14:50,279
or less, that's what they have
to do. Well, they've known that

194
00:14:50,360 --> 00:14:52,080
right from the get go. Yeah, that they were going to have to

195
00:14:52,120 --> 00:14:56,279
take us into a recession. I
guess the point I'm trying to make is

196
00:14:56,639 --> 00:15:01,399
they're hoping it will be a decent
recession, not a hard landing. And

197
00:15:01,559 --> 00:15:05,559
I would have went along with that
as a possibility maybe four months ago,

198
00:15:05,519 --> 00:15:09,759
in spite of the hall of negative
I see if China had come back stronger.

199
00:15:11,240 --> 00:15:15,240
But China is just not. It's
not China. Their their imports are

200
00:15:15,360 --> 00:15:20,120
way way down. It they just
don't have the demand. There's no global

201
00:15:20,200 --> 00:15:24,639
there's not enough global demand. Look
at Wales down. The commodities are down.

202
00:15:24,080 --> 00:15:28,240
The demand isn't there, and it's
slowing up dramatically. I just read

203
00:15:28,279 --> 00:15:33,080
the empire Um empire fed numbers here
a few months ago. It's like,

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whoa, what's going on here?
Was it? Dude? There's a complete

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collapse now that's manufacturing. No,
let's face it, in the United States

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is not really the leader in manufacturing
anymore. We have clearly we have a

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presence, but it's it's still it
is reflective a slowing economy. I see

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it up here in the Northeast.
There's just no question things are slowing.

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Sure, yeah, you can tell
a little not so much here in Florida,

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although there's a little bit more inventory
in the real estate market. But

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but the houses are selling because people
are still fleeing, uh your neck of

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the woods to come here. Oh, yes, very much so. And

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even up here, by the way, the housing is still moving. I

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see listings and the houses within days
are gone, maybe weeks, but they're

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if they're not staying on the market
that long, they're moving, even at

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the higher rates. And I've new
construction still going, so that's not that's

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not an indicator where the credits coming
from. They're still building is still quite

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evident. But I do see,
you know, I've seen rams on residential

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apartment rents which were through the roof. They are starting to weaken because I

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think up here they overbuilt yea.
So it's there are so many mixed signals

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out there right now, and I
think we have to carry get up to

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a higher plane and see. And
it's like you don't see an iceberg move,

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but it moves. And so we're
just gradually just keep moving and moving

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and moving it and things keep getting
more difficult. And because the economy,

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because the market, which is but
the only thing that looks good, has

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been holding up. We think things
are fine, but if you take the

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market out, everything is serious problems. So if the markets suddenly drop,

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you know, down to maybe thirty
two hundred thirty six hundred on the s

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and p all of a sudden,
we have a whole different view of things.

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And you know, and as you
well know too, with the you

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know, we've got eight stocks holding
up the market, eat stocks literally literally.

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And then why that's the other Why
are they holding it up? Why

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are people flooding it in, you
know, fear of missing out. We

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can you know, we all understand
it. But I learned on the conference

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calls, they're all pushing, they're
all going to artificial intelligence. They really

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believe it's the big productivity hit that
they can get because they got to figure

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out how to solve their margins.
Yeah, and I sensed on the conference

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00:18:07,279 --> 00:18:12,319
call that the analysts are all buying
into it, especially when IBM came out.

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You probably saw their headlines. They're
going to get rid of They're not

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00:18:15,640 --> 00:18:21,319
They're going to get rid of six
thousand people by avoidance of hiring the artificial

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00:18:21,359 --> 00:18:25,000
intelligence. That's what they think,
Gordon, Let's say, Oh, it

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00:18:25,160 --> 00:18:30,720
just that's what they think they're going
to table And that's the perception and others

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00:18:30,759 --> 00:18:36,880
from Amazon through from the analysts and
therefore these eight companies. A big part

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00:18:36,880 --> 00:18:41,480
of it is this this Belwie is
giving people enough confidence and you know,

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00:18:41,599 --> 00:18:45,279
fear of missing out are in the
market. If something punctures at Balloon,

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00:18:47,119 --> 00:18:49,960
there's no breath in the market.
There's just no breath. Have we been

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00:18:51,000 --> 00:18:53,400
here before? Remember the fifty fifties, I remember what it was like in

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00:18:53,440 --> 00:18:56,599
two thousand. I guess I'm getting
here and I've been through this so many

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00:18:56,680 --> 00:19:03,480
times before. When the market gets
this narial with just the generals get to

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00:19:03,519 --> 00:19:07,000
be fewer and fewer of them out
there. Suddenly one of the one of

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00:19:07,039 --> 00:19:10,720
the general's fails and everything comes down. Hey that's what I'm looking at.

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Fifty stocks Xerox, where are they
now? Yip? Exactly? Go through

253
00:19:17,039 --> 00:19:22,440
them and hey, where's a Kodak? Right, yes, where's Kodak?

254
00:19:22,559 --> 00:19:26,039
Now? I haven't heard much about
them lately, have you? Well,

255
00:19:26,119 --> 00:19:30,240
actually we did, but it was
basically some scam thing, right, I

256
00:19:30,279 --> 00:19:37,359
haven't haven't heard anything out. My
former boss, George Fisher left us at

257
00:19:37,440 --> 00:19:41,480
Motorola to take it over. He
had these great designs of what he was

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going to do with digital, digital
technology and getting out of the yellow box

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00:19:45,359 --> 00:19:48,680
business. I haven't seen a yellow
box in years. It's all digital.

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But Kodaks never did it right.
They owned it, remember when they own

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Oh god, yeah they have them
market and yeah rocks about an all but

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00:19:57,759 --> 00:20:03,319
franchise. Well, look at IBM, and IBM owned the market. I

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worked at IBM, you know,
and then in the seventies we owned the

264
00:20:07,319 --> 00:20:11,839
market. Now they're fighting for their
life and it wasn't for buy backs and

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00:20:11,039 --> 00:20:15,839
borrowing money to pay dividends. There's
nothing, I believe, there's no value

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00:20:15,839 --> 00:20:19,200
in the stock. No, it's
it's just a melk cash cow game that's

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going on institutions. Mind, I
don't mean to be that negative. I

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mean it's great company, great ploys, is bad strategy more. Yeah,

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they were shortsighted they could stop their
profit per share of profit by buy backs.

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Well, it was here, it
was, it was, It was

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a having been. It was a
tough game we were making. The margins

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00:20:41,480 --> 00:20:47,440
were so good on mainframe, why
would you come out and start selling smaller

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products. So we enibbled in the
pcason but there's no margins and it's all

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00:20:51,240 --> 00:20:52,720
volume. So you play a game, you keep dragging it out, but

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other guys come in and take the
business. We didn't believe that. Senior

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people did not believe there was money
in the in the in the software business.

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So this little guy, Bill Gates
suddenly owns the operating system in the

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PC. Restless history Microscott, Microsoft's
market kapit is compared to IBM one,

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yeah, double trimple four times.
Yeah, and look at and look at

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Google, you know, and Apple
and all of them, you know.

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Well, being a kind of negative
fun on this movement to artificial intelligence.

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But the movement where potential that we
see there. I see two is stunning.

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It's not going to be as fast, it's going to be a little

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different. And I actually when you
you were the first one at actually with

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chat GDP a GPT that you were
playing around with it. I remember the

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00:21:45,200 --> 00:21:49,400
last time we talked, we had
five hundred million people bring down BATA.

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There's one point six billion using it
now. Is it riddle full of problem?

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00:21:55,039 --> 00:21:59,480
Without question? But you know that's
what happens to pioneers. I get

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00:21:59,559 --> 00:22:03,440
arrows in the baggage. But when
this app market, the people that developed

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00:22:03,440 --> 00:22:08,319
the apps for the bones and they
depablet, they start to take that technology

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00:22:08,400 --> 00:22:15,799
and the next generation and target it
and clean it up. It's I just

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00:22:15,839 --> 00:22:21,079
put out a video called the the
End of the Cubicle Class. Yeah,

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00:22:21,160 --> 00:22:26,519
I saw that. I enjoyed that
too, And I may be over exaggerating

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00:22:26,559 --> 00:22:30,480
it, but there's just so many
I mean, you're a lawyer, just

295
00:22:30,559 --> 00:22:33,839
think of what you can do in
you know, it's just putting briefs together,

296
00:22:34,160 --> 00:22:37,440
doing the just pulling it out of
the database, putting that GMPT,

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00:22:37,759 --> 00:22:45,440
write the thing just about exactly.
I had an I had a recommendation letter

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00:22:45,480 --> 00:22:48,839
I needed to write for somebody,
and I said, you know, I'm

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00:22:48,880 --> 00:22:55,799
a total nitpicker over how I do
this stuff. And I said, well,

300
00:22:55,920 --> 00:23:00,240
let's try to shut GPT. See
how it will actually write a recommendation

301
00:23:00,359 --> 00:23:04,640
letter. And it was about eighty
five percent as good as what I can

302
00:23:04,680 --> 00:23:08,319
write, which in this case was
enough, and it saved me a half

303
00:23:08,359 --> 00:23:14,359
hour of editing, basically perfect.
It's better to be able to pay somebody

304
00:23:14,400 --> 00:23:18,279
to prove something than writing it from
scratch when it's just donkey work anyway,

305
00:23:18,400 --> 00:23:22,200
right, you know, there was
an article in Kenya that is like the

306
00:23:22,400 --> 00:23:30,920
number one the epicenter of cheats for
hire for like, yeah, you know,

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00:23:32,039 --> 00:23:36,799
papers, term papers, college,
the thesis and all that. I

308
00:23:36,799 --> 00:23:40,519
don't know that people really do their
master's thesis with them, but they do

309
00:23:41,160 --> 00:23:45,359
papers. And they were bemoaning the
fact that chat GPT had cut their earnings

310
00:23:45,359 --> 00:23:51,319
by two thirds for these professional cheaters, and Kenya as to them, what

311
00:23:51,359 --> 00:23:55,400
does it mean, right, it's
an income source. They don't care about

312
00:23:55,440 --> 00:24:00,480
the academic dishonesty. You know,
they've got to eat. And I don't

313
00:24:00,480 --> 00:24:06,599
blame them, but but you know
that's an unintended consequence here, Gordon Kerry,

314
00:24:06,640 --> 00:24:10,559
I did a lot of work on
productivity and as you know, the

315
00:24:10,680 --> 00:24:15,039
productivity and not only America but in
the development is in free fall, has

316
00:24:15,079 --> 00:24:18,319
been here for a year and a
half. It's a major issue. And

317
00:24:18,400 --> 00:24:23,160
the squeeze that are on the corporations
right now that's centered from inflation, also

318
00:24:23,240 --> 00:24:26,680
going to be about money being tighter
to get it on, not whole on

319
00:24:26,799 --> 00:24:33,920
highly leveraged balance sheets. Not having
invested in the future is going to force

320
00:24:34,000 --> 00:24:40,319
them to chase As I said,
this artificial intelligence and derivatives from it in

321
00:24:40,359 --> 00:24:44,880
a massive way. And if Goldman
Sachs who said they thought there was going

322
00:24:44,920 --> 00:24:48,200
to be upwards of three hundred million
people that were going to lose their jobs,

323
00:24:48,599 --> 00:24:53,319
don't believe that. But you know, twenty five thirty forty million people

324
00:24:53,440 --> 00:25:00,519
over the next three four years,
high paying jobs. That's the issue.

325
00:25:00,000 --> 00:25:06,160
They're not hourly workers. They're they're
they're they're they're higher middle income workers and

326
00:25:06,359 --> 00:25:11,720
higher the skill That is going to
be incredibly a big hit to an economy

327
00:25:11,960 --> 00:25:15,440
that's going into stagulation. That's that's
the problem there, But it's it's coming.

328
00:25:15,519 --> 00:25:19,200
So picking the winners in this in
this arena, which is always difficult.

329
00:25:19,880 --> 00:25:25,079
Um you know, there's a there's
a new there's another Google, there's

330
00:25:25,079 --> 00:25:29,720
another Amazon, there's another Microsoft in
that crowd. Yeah, Well, interestingly,

331
00:25:29,839 --> 00:25:34,279
enough is watching a video of two
pilots discussing AI. Can it replace

332
00:25:34,359 --> 00:25:38,920
a pilot? And the thing is
like, but they say, AI does?

333
00:25:40,319 --> 00:25:45,039
Is? It guesses? And the
quality of the guess is like you

334
00:25:45,200 --> 00:25:48,599
ask it a question and then it
follows it with words. It's about eighty

335
00:25:48,680 --> 00:25:53,359
percent correct, but you come up
with some ridiculous results that are inaccurate and

336
00:25:53,519 --> 00:25:59,079
untrue. And the thing is,
it's not self aware. It doesn't know

337
00:25:59,839 --> 00:26:03,279
that it's making the mistakes. It
doesn't even know what it's doing. My

338
00:26:03,440 --> 00:26:06,920
brother once said, you know,
you could teach a monkey to play Beethoven

339
00:26:07,880 --> 00:26:11,200
on an organ, but it's never
going to know that it's playing Beethoven.

340
00:26:11,640 --> 00:26:17,279
And I think AI at its current
phase is very useful, don't get me

341
00:26:17,319 --> 00:26:23,200
wrong. Especially the ability to analyze
huge amounts of data, almost unimaginable amounts,

342
00:26:23,559 --> 00:26:27,119
at a rapid clip, and then
come up with an answer to a

343
00:26:27,240 --> 00:26:32,319
question. There's definitely an application for
it. It's way better than what we

344
00:26:32,400 --> 00:26:37,279
have now. But phil it becomes
self aware, it's going to be it's

345
00:26:37,319 --> 00:26:42,240
going to have its limits. It's
not replacing pilots. Maybe it can augment

346
00:26:42,880 --> 00:26:48,559
or mostly supplant drivers and cars.
I mean, I love my Tesla so

347
00:26:48,759 --> 00:26:53,880
called full full self driving beta.
It's not there yet. I mean,

348
00:26:53,960 --> 00:26:57,680
it makes a lot of mistakes.
When it first came out, I said

349
00:26:57,720 --> 00:27:03,599
it was the equivalent to a sixteen
year old who just got their license.

350
00:27:06,079 --> 00:27:08,599
It had the confidence of a sixteen
year old who just got her license,

351
00:27:10,079 --> 00:27:15,519
but not the actual judgment. You
know. And it's gotten a lot better,

352
00:27:15,599 --> 00:27:19,079
I'll say that, But you can't
trust the thing. And you can't

353
00:27:19,160 --> 00:27:23,480
trust these things either at the current
point. Not that you won't be able

354
00:27:23,519 --> 00:27:27,960
to later. Well, it's it's
always exactly. It's always like that.

355
00:27:29,359 --> 00:27:33,519
My days at IBM, Mike was
convinced we did beta sites by selling the

356
00:27:33,599 --> 00:27:37,279
equipment and putting it out there and
in fixing the problems when the customers site.

357
00:27:37,799 --> 00:27:44,599
Um there was the mainframe rare was
there were so many problems you just

358
00:27:44,680 --> 00:27:48,160
could You couldn't believe it, but
you had to saw You saw them after

359
00:27:48,319 --> 00:27:51,079
the fact, and then you got
better and better and better at it.

360
00:27:51,519 --> 00:27:56,119
Yeah, and that's that's what comes
with new technology. So I'm not trying

361
00:27:56,160 --> 00:27:59,279
to in no way. I'm saying
there's going to be changed with it,

362
00:27:59,599 --> 00:28:02,599
and there's going to be some real
winners in it. Uh, and it

363
00:28:02,759 --> 00:28:07,000
is going to make its mark.
But it's not a panacea tomorrow, next,

364
00:28:07,200 --> 00:28:11,039
next, twenty four forty eight months. But I do see in it

365
00:28:11,440 --> 00:28:15,680
though, Kerry Is, I've been
watched looking at patents and and I don't

366
00:28:15,680 --> 00:28:19,400
know if you've been well, the
number of patents that are being produced in

367
00:28:19,440 --> 00:28:22,559
America. It's just we're not doing
it. They're just plummeted. They're coming

368
00:28:22,640 --> 00:28:27,039
in China, they're coming in India, they're coming in all other countries right

369
00:28:27,079 --> 00:28:33,079
across the board. Not just in
technology. We're not investing in newer technologies.

370
00:28:33,240 --> 00:28:37,039
Now AI who's going to be the
leader in it, will say wow,

371
00:28:37,160 --> 00:28:40,000
Google, and we'll need some players. They'll be some American player.

372
00:28:40,720 --> 00:28:44,599
This the bigger players could come out
of will come out of other countries.

373
00:28:45,240 --> 00:28:48,279
And so where is the investment for
America? And this could end up being

374
00:28:48,359 --> 00:28:53,079
a believed for us where it gives
us some productivity advantages. But our company,

375
00:28:53,160 --> 00:28:57,039
our company is going to survive.
It's it's it's like it's like batteries.

376
00:28:57,039 --> 00:29:00,799
It's like batteries. On the av
We're gonna go to electoral bolt.

377
00:29:00,839 --> 00:29:04,799
What was making to make all the
money on evs in China? They own

378
00:29:04,839 --> 00:29:08,279
the lithium mines, they own the
cobalt lines. They got a lock on

379
00:29:08,400 --> 00:29:11,680
it. So always just said,
well we'll bv be hydrogen. They got

380
00:29:11,720 --> 00:29:15,920
a lock on that. So you
know, where's our leadership that That's the

381
00:29:17,000 --> 00:29:18,559
thing that I spent a lot of
time at trying to figure out where a

382
00:29:18,640 --> 00:29:23,720
sustaining competitive advantage is. And it's
getting narrower and narrower. And I see

383
00:29:23,720 --> 00:29:29,160
it again because I said on patents, I see it on these spacks.

384
00:29:29,720 --> 00:29:32,359
You know, you know they ad
the legitimate I used to be in private

385
00:29:32,440 --> 00:29:34,960
equity and you know we you know, take a company public is a very

386
00:29:36,039 --> 00:29:41,039
complex process through the financing bro We
don't do that anymore because Sarbanes oxy we

387
00:29:41,119 --> 00:29:45,559
get around it with spacks. I'm
seeing unicorns, but they're not producing,

388
00:29:45,599 --> 00:29:48,680
they don't sustain, and then they're
getting taken off shore. How many IPOs

389
00:29:48,720 --> 00:29:53,000
are we doing anymore? So that's
worrying me in a big way too right

390
00:29:53,079 --> 00:29:56,400
now of really trying to sustain our
economy. And the goals goes back to

391
00:29:57,079 --> 00:30:00,839
we're talking about the beginning. I'm
a really positive guy here today. All

392
00:30:00,920 --> 00:30:06,039
right, You're a breath of fresh
air. That's because I spend so much

393
00:30:06,119 --> 00:30:10,119
time in the credit our case.
You gotta stop looking at though, gotta

394
00:30:10,160 --> 00:30:14,559
stop looking well exactly that. I
think you've given us a lot to chew

395
00:30:14,680 --> 00:30:18,480
over here. Just tell us where
we find your work. How we subscribe

396
00:30:18,480 --> 00:30:21,640
to you? Yeah, thank you
very much, Kerry. Yeah. I

397
00:30:22,079 --> 00:30:26,480
exclusively put over all our research up
at Matta mattasii dot com. That's m

398
00:30:26,519 --> 00:30:36,319
Apa SII dot com. Videos,
newsletters, and we do them more as

399
00:30:36,359 --> 00:30:40,480
part of our research process, and
they're there. There is part they're free.

400
00:30:41,240 --> 00:30:44,680
There is a subscription business for other
unique pieces. But I can encourage

401
00:30:44,680 --> 00:30:48,759
everybody to join us. The only
thing we ask is feedback on it because

402
00:30:48,799 --> 00:30:51,880
we learn a lot from from Frankly, the people that are reading our work.

403
00:30:52,279 --> 00:30:55,000
All right, well that's what we'd
like to hear. I've got a

404
00:30:55,119 --> 00:30:59,680
questions recording myself k l at krylods
dot com. Write your comments on the

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