Welcome to another edition of the Chicks on the Right podcast, where we bring
on our sponsor and BFF, Zach Abraham, to talk about all things financial.
So there's some haullabaloo in the news today, Zach about the City Group
chief economist, a fellow by the name of Andrew Hollenhorst, who is echoing
something that Jamie Diamond said very recently, which is that things are looking sketch
and we are in for a hard landing. So, first of all,
are they right? And second of all, should we even listen to what
Jamie Diamond says? I know everyone consults him all the time, but should
we man? So I actually know quite a bit on this topic. I
wrote a term paper about how Jamie Diamond came to power in college. No
way, Yeah, Yeah. He was the understudy of a guy named Sandy
Wild who at the time in direct violation of a law called Glass Stiegel that
was put together right after the Great Depression. Okay, so after the Great
Depression they passed a law called Glass Steagle, which in retrospect was probably a
pretty good law. And it said that different times of bank so like an
insurance an insurance investment company, and like a commercial bank and a consumer bank.
They can't become one empty, right, keep them split up, kind
of spread that risk out. And it's interesting that that law was repealed,
I want to say, in ninety eight ninety nine, and within nine years
of that law being repealed, you had the financial crisis, right, So
without glass Steagel being repealed, the financial crisis wouldn't happen anyway. That was
done by a guy named Sandy wil who was the mentor of Jamie Dimond a
City Bank, and at the time I remember it being big news, and
this kind of gives you an insight to where Jamie Diamond came from and what
he's about. So at the time Sandy Wilde merged City Bank with Travelers Insurance
Group and it was in direct violation of the glass Stegel room. And so
I remember the time sitting back and going, how can they do this?
Well, within six months or seven months something like that of them merging it,
Glass Stiegele was repealed, right, So they knew, right they inside
baseball, they knew they were going to get away with it. So I
think it kind of gives you insight into Jamie is a political animal. He
really knows the ropes and he's a very very smart bank or two. I
think that Jamie Diamond's hard landing message might have some political bend in it because
I think he's probably a guy He's never going to come out and say this,
but I think he's probably more in favor of a Trump presidency than he
has a Biden presidency. Interesting, yeah, because see he Diamond's more into
personal responsibility, and you can when you hear a when you hear a Wall
Street banker, go out there and not be woke. You know, you
know what I'm saying, Like, if they have any of those leanings,
they're going to be screaming them from the rooftops because it's you know, it
gets some invited to more cocktail parties and all that kind of stuff. Yeah.
Yeah, But I think his economic assessment is correct in the sense that
and you always have to caveat that with the government, meaning if they launch
any other stimulus or more handouts or something like that, that could really push
things off course. But I think when you look at the economy, it's
not so much an issue and we've been talking about this for a while,
it's not so much of an issue of a big collapse coming. But when
you think about the wind that was put underneath the wings of the economy,
right, the greatest monetary handouts in history, three hundred and fifty billion last
year to bail out the banks, you know, the Fed spent what two
and a half three trillion something like that. I think it's more of an
issue of unless you keep pumping artificial stimulus into this thing, it's gonna have
to sort of revert to more of a more normal footing. And I think
a return to a more normal footing will look more like a hard landing.
So I think so, and again I think you have to caveat this with
you know, if Trump gets elected, does he pass another kind of stimulus
or or or tax cut type situation that could change the calculus. So so
looking for more, you know, keeping an eye out and assuming that there
aren't going to be any more big injections of money or liquidity, it does
look like things are heading that way. That being said, the government is
still we're still running two point one two point two trillion dollar deficits, so
that is gonna that's gonna help booi things. But I think you're looking at
kind of I think what we're seeing right now is kind of a good indicator
of of what we think is going to be in place for a while,
which is, Look, there are parts of the economy that are absolutely in
recession, right like you look at you know, look at Red Lobster,
look at the Rubio's Tac Taco deal, right and there's and there's tons of
corporate and retail real estate. It's just getting flushed out right that they're experiencing
recessionary you know, uh conditions right now. The parts of the economy that
are are standing in the way or or associated with so much of the printed
money that's coming down, they look good. So it really is kind of
a tail of two cities right now. And yeah, barring government intervention,
I think some kind of recession is unavoidable. How hard that landing is is
really all dependent on government intervention, right, So we got to we got
to brace ourselves. Yeah, and I and and now the flip side of
that is is that I think regardless of who gets elected, you know,
it's not like Trump is some kind of really tight pursed fiscally, you know,
so he's going to keep the money flowing either be a way of handouts,
probably not so much that way, but certainly I would think in tax
cuts, so you know, and I think the other thing we've got to
consider too, is that I think COVID changed. I think COVID will kind
of be seen as like a miniature eight o nine in the sense that,
you know, eight o nine, nothing has really returned to normal since then.
I think COVID is going to be like that to a certain degree,
meaning every time there's a recession, I think the populace is going to be
looking at the government and going where's the money? Right, Yes, right.
I think they've changed the expectations going forward of their constituents and the electorate
at large. So I continue to believe. I think that we need to
brace ourselves against shocks, because we're definitely prone to those and could have one
at any moment looking at it the way things are laid out. But I
think that we always have to remember, you know, we want to guard
against those shocks, but when they happen, you probably need to resume investing,
because you know, they're not just gonna sit back and let things go
that way anymore, right, They're just gonna keep spending money. It's the
easiest thing to do right. Well, now, now I feel like I
can actually whenever I see Jamie Diamond in the headlines, I don't have to
go. I don't have to wonder if I'm like getting scammed. So you're
saying he's probably somebody that knows what's up. Yeah, well, he sure
is good at running a bank, I'll tell you that much. I think
he's, like I said, I think that he's very politically moderate compared to
his peers, which I find that somewhat comforting. I think he is more
of a free market guy, which I found, But he'll also slit your
throat. I mean, you know, he's the head Morgan, right,
This isn't a guy that i'd want. I mean, I wouldn't want my
grammar to get between him and a hundred dollars bill. Yeah right. I'm
not going to trust him with my you know, I'm not going to trust
him with my family. But he is very shrewd and very sharp. The
other thing is, think about the the head of JP Morgan. It doesn't
do him any good to be wrong, right true, And you think about
commercial lending and all that other kind of stuff that they're involved in. It
doesn't benefit him if there is a recession, but his bank touches so many
parts of the economy, he's not a guy to be He's not a guy
to be just summarily dismissed if he sees weakness in the economy. He's looking,
he's seeing it right. He's got credit cards, mortgages, business loans,
floating rate business loans. They have a really good picture of what's going
on in the economy and tons of data points. Yeah, he's not a
guy that should be dismissed for sure. Well, and neither are you.
And so this is why we always tell folks to attend your seminars and to
make sure that they're checking out your radio show. Tell people how they can
do that. Yeah, pretty easy to find. So you can just go
to any podcast site. You can find our show on our podcast just Know
your Risk Radio. It's free, no pay walls, and then go to
Buwardcapitalmanagement dot com. Know your Riskradio dot com. Just google that Know your
Risk Radio. We're pretty easy to find, so it shouldn't be tough.
Thank you so much, Zach, Thank you appreciate it. Investment advisory service
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