Speaker 1: You know Warren Buffett, you know he has three hundred
and forty seven billion dollars in cash. It's almost thirty
percent of his portfolio. Prior to the selloff in two
and two thousand and two he had about twenty percent.
Before two thousand and seven and eight nine he had
about twenty five percent. So his cash position is the
highest it's ever been as a percent of his portfolio.
Speaker 2: You're listening to Carrie Let's's Financial Survival Network where you
get valuable information you just can't find anywhere else to
thrive in today's trying times. You need the Financial Survival
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Speaker 3: And welcome you are listening to and watching the Financial
Survival Network. I'm your host, Carrie Letz and with us
today is Jim Welsh macrotides dot com. And where you
out there who are watching and listening. There's a link
in the show notes that will give you Jim's latest
to August missive and.
Speaker 4: Will will and be enlightening.
Speaker 3: You know, I've gone through it, and you know, like
it's a weird thing like if you don't like the
numbers that the system's putting out, rather than changing the system,
you just fire the person who's responsible for the numbers. Now, look,
those numbers are useless from month to month. They're kind
of useless because they're always being revised up or down,
and they're deceptive. Right, The employment numbers are completely deceptive
because if they wanted to the government really wanted to
give the true numbers, they've got the information in real
time in terms of withholding taxes and taxes being paid
from salaries, and then they could make adjustments for number
of self employed people and number of people in the
so called gig economy. Those people are supposed to be
paying quarterly self employment tax. So they can revamp this
system to make it much more accurate, and yet.
Speaker 4: They choose not to.
Speaker 1: What's your take on this, Well, you're touching in all
key points. What they don't do. The BLS Bureau Labor statistics,
they hadn't gotten to the twenty first century yet really,
because the survey they sent out to businesses is done
by mail, and so the net result carry is they're
surveying about twenty five percent of all jobs.
Speaker 4: If you're will that are right.
Speaker 1: Back in time for any given month, so they're only
getting about fifteen percent of the picture. So automatic you
have a built in problem where you're going to invite
revisions as opposed to using technology and getting the information
all the information very quickly. In addition, the birth death
model has been I think the biggest problem area. Back
in two thousand, the BLS said, you know what, we
can't keep track of all the companies that are starting
up and a lot of small companies that are disappearing,
and so we're going to come up with an estimate
of how many new companies are being formed each month,
how many are going away? And in recent years, in
twenty fifteen, I believe the number is the birth death
model created twenty eight percent.
Speaker 4: Of all the jobs.
Speaker 1: Last year it was forty nine percent. So you have
this one input, Carrie that I think is kind of,
you know, going crazy and creating a bunch of jobs
that don't exist. As the BLS gets subsequent surveys back
in and quarterly information, they then revise the numbers down marketly.
In addition to the muffing numbers that get revised, so
you one hundred percent right, There are ways that the
BLS can do this to make these data points more accurate,
more timely, because the bottom line is when a number
gets announced, well, you know, you created two hundred thousand
jobs or lost two hundred thousand jobs, financial markets move
on that data point. Sixty days later, six months later,
they get revised. Oh no, it wasn't two hundred thousand
plus or minus, it was only eighty four. So it's
integral that they get this stuff tied up. And my
guess is there will be an honest effort to do
that in the next you know, year or two.
Speaker 4: Yeah.
Speaker 3: Well, it seems to me they're about as efficient as
the FAA. You know, if you put the as in
charge of air traffic, we would have estimated airplanes landing
airports and we wouldn't know what the heck was going
on there. So maybe we should be grateful that a
person wasn't running the FAA.
Speaker 1: They're only doing the labor market.
Speaker 3: Yeah, they could do a lot less damage there than
managing metal in the sky. But yes, seriously, this is
a big problem because it's just like GDP. GDP includes debt,
so it's not really measuring true economic growth, and then
GDP is subject to error because the inflation rate really
is impossible to actually calculate under our presence system.
Speaker 1: Yeah, Now, basically you get nominal GDP, which is how
much the economy grew minus the inflation rate to get
the GDP number that they're reporting. So obviously, if you
report that inflation is less, that's going to boost GDP growth.
And conversely, if inflation's bigger, it subtracts from GDP growth.
So the other issue, and a lot of people I
don't think understand it, including a lot of people in
the business, is that inventories and trade are huge swing
factors within that report every month. So in the first
part of this year, we saw an enormous amount of
companies buy stuff ahead of the tariffs. Well, because that
production came from overseas, the Census Bureau subtracted i think
close to five percent or maybe it was four percent
from GDP because it's gross domestic production, so they subtract imports.
In the second quarter, imports dropped significantly and added more
than two percent to GDP. And inventories are the same way.
You know, a big boost inventories, oh, we're going to
add that to GDP. And so you had this year
especially Carrie. These swing factors are huge in terms of
these numbers, and there's not much you can do about that.
The methodology, to me is logical. We're measuring gross domestic product.
At the same time, a lot of people don't fully
comprehend that. I don't know that the media does a
good job of educating people to be aware, especially in
this environment that we've been in that to get the
true measure of GDP or growth, look at final sales.
To me, that's the number that gives you a better
indication of what's happening as opposed to the GDP number.
Speaker 3: Hey, well, I have an idea, And instead of celebrating
the job's numbers and the GDP numbers when they're released,
how about we don't even bother covering those numbers and
we only cover the revisions.
Speaker 4: Why not?
Speaker 1: You know, no bottom line does have to have to
be improved. Now, President Trump fired the BLSA BLS commissioner
because of these revisions, and he said it was all political.
But as I pointed out in my letter that in
August of last year, the BLS announced a big negative revision.
Over eight hundred thousand jobs disappeared, and that was about
two months before the election. So if you're going to
play fair, is fair. The reality is the BLS did
something two months before the election that made Biden look
his economy look a little less strong. So I think
the charge that is totally driven by politics and so forth.
You know, I don't buy it. The need to increase
better data, that's a legitimate criticism and needs to be addressed.
Speaker 3: Yeah, well, here's what the chat GPT said about that.
Ignore the first print, watch the revisions, and the benchmark
July seventy three k is within the statistical fog. Household
employment fell, participation slipped, and the last big benchmark took
eight hundred and eighteen thousand jobs off the books. The
birthday death plug likely overestimated. At the turn netnet, the
real job market is flat to slightly negative right now,
stall speed, not expansion. And that brings us to something.
I don't want to call it disturbing, because truth is
truth and truth doesn't care whether you're disturbed or not.
But you've got a secular bear market warning out there.
You're convinced most investors are unprepared buying hold will be
buy and lose. And in your special report, the theme
is the coming secular bear market.
Speaker 1: Yeah, basically, you know what I'm saying is, if you
look at from the thirty thousand foot level, you can
see sentiment is wildly bullish. You have rampant speculation. This
is hard to believe, Kerrie, but sixty percent of all
the options traded on individual stocks and indices are on
the instruments that expire in twenty four hours.
Speaker 3: That's nuts. Can only pros can make money that way,
and only the people writing them are making money.
Speaker 4: Why is it in the short term?
Speaker 1: Obviously, right now, on the short term, that strategy has
been working because if you're buying calls on Nvidia and
other AI related type stocks and so forth, you know,
the tailwind has been pretty strong. My point, though, is
that when someone buys a call option ten to fifteen
percent out of the money the dealer sells them that call.
Now the dealer is theoretically short that that stock and
have to take positions to hedge it. And so to
a certain extent, what's happening with this? Sixty million shares
or sixty million options have been trading a day, and
sixty percent of them are for twenty four hours or less.
So and it says you had the tail wagging the dog.
But from the bigger picture standpoint, these are all symptoms
of a lot of speculation. From the valuation standpoint. You know,
Warren Buffett, you know he has three hundred and forty
seven billion dollars in cash. It's almost thirty percent of
his portfolio. Prior to the selloff in two thousand and
two thousand and two, he had about twenty percent. Before
two thousand and seven and eight and nine he had
about twenty five percent. So his cash position is the
highest it's ever been as a percent of his portfolio.
And it's not a timing tool, but it's another one
of these symptoms carried that, oh, is the market at
a place where you want to be buy and holding
long term? And so my point and that special report
for those who request it, and the information will be
on your website. You know, looks at prior secular bear
markets like nineteen sixty six to nineteen eighty two, two
thousand to two thousand and nine, where the SMP goes
through corrections of thirty forty fifty percent and its stretched
over a decade in the case of sixty six eighty two,
sixteen years. So I think we're nearing that point where
we're likely to see one of these extended bear markets,
and most investors are oblivious to it. Understand, that's the
way markets work. At tops, everyone knows all the good
reasons why the market's in great shape and is just
going to keep going on up forever. And that's when
you need to pay more attention and be aware that
at you know there's danger at your door.
Speaker 4: If you think life is you know, the market's easy street.
We're not there yet.
Speaker 1: Things like the Advanced Decline Line continue to make higher
highs historically, that's a good guide post. In feber I
noted that the AD line was not making higher highs
relative to the high it had made in November of
last year, which suggested we were set up for a
pretty good correction. So I'm waiting for things like that
to more pinpoint the timing of when I think we're
going to see a much more significant correction and you
know it lasting longer. We're not there yet, but it's
always better to be prepared and be on the lookout.
And that's all I'm trying to do is just say, folks,
there are a lot of reasons why caution needs to
be exercised at this stage of the game.
Speaker 3: There's one indicator that I really like a lot. There's
been numerous indicators that predict recessions at every corner, every turn.
Occupancy rates in Las Vegas. Because Las Vegas, they should
call it the discretionary income parting, right grabaganza, Yeah, the
Lost Vegas right, yeah, yeah, yeah, you're you know, outside
of compulsive gamblers, which are a big problem, let's face it,
but Vegas isn't really built upon compulsive gamblers. I would
say they're the profit and the casual visitors pay the bills.
The problem is they're down double digits.
Speaker 4: Now.
Speaker 3: There are reasons for it, like it's become a ripoff,
extracted enterprise that doesn't provide value for the money that
you're paying, like thirty dollars bottles of water. And I
love it there, but I like the people watching in
the food I don't and the shows. But it's become
prohibitive to the point where you know, like the fast
food joints are mobbed and the really great restaurants are
fairly empty. So the fact that it's declining is really
an alarm bell, isn't it.
Speaker 1: Well again, it's you know, if you look at the
delinquencies on auto loans and credit cards, they're reaching like
ten and fifteen year highs. So one of the things
I've had is that the bifurcation in the economy. You
have the bottom fifty percent of wage runners who have
been getting squeezed by inflation. And some of those are
the people you're talking about who would maybe in the
past taking trip out to Vegas, but they look at
the prices and they can't afford to do that. As
a counterbalance though this, you know, over the fourth of
July weekend, I think you had three million people going
through TSA checkpoints. Something similar like that is going to
happen this weekend, and so you have this bifurcation. And
carry with those who have assets like stock portfolios on
their own home, they're feeling a pretty significant wealth effect
and have and that's one of the things that I
think is continuing in helping them to continue to keep spending.
But if you're a renter and your rent has gone
up forty percent but your rages haven't, you're really under
the gun. And so there's crack showing up. And what
you're citing in terms of Vegas is one of those cracks.
As I said, delinquencies on credit cards, auto loans, they're
up ten to fifteen year highs. So underneath the surface
there's weakness building. The number of corporate bankruptcies has moved
up pretty aggressively this year, so the signs are there.
So to me, this plays into what we just talked
about in terms of a secular bear market, where what's
feeding the beast is asset values. Well, if we see
a significant client in the equity market that lasts more
than two months, home prices coming down. I got to
report a couple months ago laying the groundwork of why
I think home prices are going to drop fifteen to
thirty percent over the next five years. So if you
see those hits to wealth, then those who have been
spending will become much more cautious. And so again, these
are the storm clouds out there in the future. In
the near term, you know, the market's technically in decent shape.
So I'm not saying, oh my god, this guy's about
to fall. I'm just saying that right now things are okay,
but there are some storm clouds out there that are
suggesting that the underpinnings of the economy may not be
quite as strong and rosy as a lot of people
like to think.
Speaker 3: Yeah, and you know, visitor volume in Vegas, just getting
back to that theme, is down the eleven percent year
over year in June and a year to date in
the I think as of July was down seven point
three percent, So you know, that's definitely an issue. Air traffic.
The only good thing to come in the air traffic
segment now is that you no longer have to take
your shoes off when you're going through TSA.
Speaker 4: I mean that's a big that's a mile, So that
act is.
Speaker 1: Right versus twenty five years ago, where you know, it
was very very much different. So, yeah, not having to
take your shoes off, thank you very much. Yeah, especially
you have high shoes and you're going to try to
make a plane pretty soon.
Speaker 3: They won't be confiscating your toothpaste and suntan lotion and
my contact lens solution which costs twenty bucks a.
Speaker 4: Bottle for two bottles.
Speaker 3: And denver Tsa thought that this was a threat, a
global threat to air transport, certainly in America, but perhaps
around the world. Because it's liquid, man, I could I
could be mixing it into all sorts of dastardly things.
Speaker 1: Right, Well, they took one look at you and they said,
we better check his bag really carefully.
Speaker 3: So you know, oh, man like why this is crazy systems,
But it's just indicative of a dysfunctional government that no
longer can accomplish its basic functions or has great difficulty
and expense in even attempting.
Speaker 4: To do that.
Speaker 3: So looking at what we talked about here, you know, buffets, cash, hoard, inflation,
and the fed secular bear market, a gold look at
gold and silver. Now's we got to talk about silver, copper,
potash just added or will be added shortly to the
government's official critical mineral list. This means a boom in
my opinion for the mining sector because because it's an
emergency and it's critical now, a lot of the environmental
reviews and the legal reviews that would take place ordinarily
are going to be basically cost.
Speaker 1: Right or expedited, you know, significantly faster than what they
have been in the past or whatever have been obviously
in the last administration. A couple of things that will
point out the chart pattern of gold. For instance, my
take has been since we hit that high in April,
you know, the markets correct.
Speaker 4: Either two ways.
Speaker 1: Either you get a decent size decline and a lot
of people are bush, or you get a sideways chop
where you just wear people out. And gold has been
doing the sideways chop. I think getting above thirty four
to oh three, which it did today, is the signal
that gold is on its way to a new all
time high. So my take has been the last few months, hey,
we're going through this correction. When it's over, we're going
about thirty four ninety six, My guess is thirty six
hundred and thirty seven hundred, And there's a lot of
things coming into it, Carrie, you know, perception about the
FED and all likely the hood the FED will cut
the fund rate at the September meeting. But you know,
inflation is at about three percent, so that.
Speaker 4: Data is not good.
Speaker 1: Look stated you know, President Trump, I'm sorry dated inflation.
Yeah well yeah, So I think those are the things
that psychologically feed into you know, and is a tailwind
for gold and silver, and so I think in the
near term to me, my analysis of the gold chart
suggests it's about to pop to the upside. We're going
to see silver obviously follow and probably as it has
been doing the last couple of months or so. I'll
perform gold to the upside. So near term, I think
finally we're getting indications that gold is ready finally to
make a move to the upside, and to it, you know,
a new all time high.
Speaker 3: Forty dollars silver right now as we speak, looking at
kit Goes ticker, which I don't really appreciate. But for
spot thirty nine two, we just broke thirty nine. That
is a huge technical spot. It's bounced back and forth
over it. But once we hit forty forty is like
the better circle the wagons, because those short positions there
are in real jeopardy and you can't just.
Speaker 4: At some point, you can't just up up your.
Speaker 3: Your price limit, you know, you just can't keep getting
run over, like resetting your options prices.
Speaker 1: I'm old enough to remember the spring of nineteen eighty
when the Hunt Brothers attempted to corner silver. It traded
up fifty maybe fifty one.
Speaker 3: Fifty might have tra it traded over fifty for a day,
but I think it closed fifty.
Speaker 1: Yeah, and then it dropped the ten bucks very quickly.
I mean, they basically screwed the Hunt Brothers as a
story there. We don't need to bother to cover it.
But my point is, you know, you get above something
like a forty, you have to start beginning to look
at well, that fifty from forty plus years ago is
out there and is a test of that coming. And
I would say there's a good shot that is going
to make a run at that fifty dollars mark at
some point in time, and maybe it could happen very
quickly given the setup that we have. There's another inflation
report that comes out tomorrow. I think the PCE it's
not going to be good news the next CPI. The
PPI report that came out for July was ugly, So
again my point is, you have a backdrop that inflation
is all already at three percent and the tariffs are
going to bleed through and cause more inflation on the
good side. The thing that I find interesting is that
in his Jackson Whole speech, Chair Paul acknowledged the good
side inflation but didn't reference services and both the ISM
service indicator was up to sixty nine percent. Historically, there's
a nice correlation between moves in that index and the CPI.
So my point, Carrie is that the inflation news is
going to get worse in the near term, and I
can't imagine that that won't be a tailwind for the metals.
Speaker 3: Okay, and I am in complete agreement with you. There
one interesting note going back to the eighties.
Speaker 4: You know, the.
Speaker 3: Last time silver hit fifty, it's the only commodity to
have not established a new high in over forty years. Yeah,
and that that alone makes you think. And then you
look at the price action. It's a coiled spring, it's
a jack in the box, and when it pops, especially now,
the fact that Uncle Sam has said it's a vital
critical mineral or metal, if you will, could.
Speaker 4: Just give it the impetus.
Speaker 3: And I don't think the government's going to nationalize silver mines,
but I think they will do exclusive supply contracts with
the big producers. There's only a few of them that
they have to bother with, and the US and Canada
and those companies can't exactly say no, but what they
can do is buy some futures to protect their margins
because the price of silver will once that gets out gent,
it's going to explode.
Speaker 4: Yeah.
Speaker 1: Well, and the other thing the point you made is
that silver hasn't made a new high where probably every
other commodity on the planet has in the last forty years.
You know, start to attract money. You know, you look
at gold, you say, wow, this made a big move already,
and I look at silver has kind of and now
it looks like it's coming to life. So that alone
starts to attract some money for the catch up trade.
Now I'm not talking to ketchup that you put on
your hot dog.
Speaker 3: Yeah, the catch up trade, well, we have wars over ketchup,
so I not have trades over it, you know, just
looking at it. The buffet warning, I mean that kind
of says it all. I'm surprised, but I'm not surprised
that Buffett isn't buying silver. The last time he tried
that little trick, Martin Armstrong exposed him and exposed the system,
and you know it took ten years to get over that,
even though nobody remembers it now. So so metals, you
got any feelings about bitcoin crypto? I mean I saw
it hit one hundred and nine thousand the other day,
back up to one eighteen now, which tells me another
coiled spring, another another potential short squeeze. Position because they're
gobbling up a bitcoin like they can't get enough these institutions.
Speaker 1: And you know, the allocation has been you know, very
very small. The Trump administration has kind of ordained bitcoin
or legitimize it, and so that is helping as well.
What I have observed, though, Carrie, is between the dollar, Bitcoin,
and gold, what has often happened is one of the
three will be running while the other two are either
going sideways or down. And if we're right that in
the near term, the metals are about to have the
light shine on them. Maybe Bitcoin, you know, it's head
heck of a move, Maybe it goes into a sideways
chop for a period of time. In terms of the dollar,
I think the dollar is nearing a very important low,
but near term it looks like it's going to go
down again and take out the low from a couple
months ago. So that will be another tailwind for gold.
But if I'm right, because positioning on the dollar is
very negative, a lot of shorts sentiments very negative. I've
seen more articles in the last couple of months. Well,
maybe the dollar status as a reserve currency will get
challenged and so forth goes to me, are all symptoms
from a contrary opinion perspective that all right, it's a
little late to be really negative the dollar. It's already
down eleven percent this year. From a price pattern standpoint,
I think the dollar will be completing the correction that
started after a peaked in October of twenty twenty two
at one hundred and fourteen to seventy five. So my
point is, I think there's a window for the medals
to have a pretty good run here the dollar goes
to a low or low. But if I'm right and
the dollar makes an fairly significant low, then the metals
will probably have a fairly good sized correction. And the
rally in gold that I'm talking about, I've been saying
we've got a wave five rally coming here to new highs.
So my point is, if all these pieces fall into
place near term, the metals have a great run. The
dollar makes a low over the next one to three months,
and if that unfolds, then that'll bring the backdrop of
why there'll be maybe six months to nine months from
now the beginnings of a significant correction in the metals,
So you know, near terms, some of these things are coming.
In the other thing, I'm going to point out is
treasure yields. I believe the long term trend in treasure
yields is up, and so we near trim, we might
see a little bit more relief. The tenure might get
down to about four oh seven, but after that, I
think it's going above five. A lot of supply continues
to come. President Trump has not really narrowed the deficit,
and if we see the economy slowing meaningfully at any
point in time in the next couple of years, the
deficit is going to jump to three trillion, that's a
lot of paper. At the same time, the Japanese thirty
year yield has made a new all time high. Germany
Great Britain yields are going up. So we're in an
environment carry where these other governments in Europe especially, they're
increasing defense spending from under two to five percent, so
that the world is going to be competing for investment
dollars as governments sell bonds, using out and tipically, if
you don't have enough demand, you got to raise rates,
rates go up to attract buyers. And I think that's
the world we're going to be in over the next
handful of years.
Speaker 4: And so.
Speaker 1: You know, that's another reason why I think the equity
market is going to experience a secular bear market. I
believe a secular bear market has already begun in the
bond market. Now, when I say secular in the bond market,
we're talking thirty five plus years. So this isn't something
oh yeah, four years now, it's going to be over now.
Three years from now will be where it becomes more obvious.
And on the tenure, I think the tenure goes to
seven and a half percent.
Speaker 4: All right, reason.
Speaker 1: Why it got over fifteen and a half in eighty
one down to fifty five basis points in twenty twenty.
The fifty percent retlacement of that move is about seven
and a half. So I'm not even talking about, oh
my god, treasure yields are going to take out there
nineteen eighty one highs. I'm just saying they're going to
retrace fifty percent. And as you noted, with all the
debt that we have out there, anything meaning for move
like that in treasure yields is going to be really
challenging for both the government and the economy.
Speaker 3: All right, Jim, that was exhaustive and I really appreciate it.
Anybody interested macrotides dot com. The link is in the
show notes so you can download the latest edition where
all of this is discussed and a lot more. If
you got a question for Jim myself, shoot me an email,
klatcarriets dot com. What do you think are we headed
for a secular bear market? Our interest rates going higher?
Are precious metals prices going higher?
Speaker 4: Why don't you put it in the.
Speaker 3: Q and a section on YouTube if you're watching it there,
or shoot me an email let me know your thoughts.
Obviously it's perception, but there's also reality behind that perception.
That's what you need to be thinking about. Jim always
a pleasure. Thanks for coming on.
Speaker 1: My pleasure as well. Carrie take West, stay well.
Speaker 2: 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 now more than
ever