Speaker 1: Yeah, I mean there really is a tail of two cities, right.
You know, you've got the difference between Main Street and
Wall Street. And you're talking about the working poor, Well,
the reality is, I mean the middle class they're becoming
the working poor. You know, here in Ohio they passed
a rating increase just for power electricity that kicked in
the summer, and so people's utility bills went up as
much as thirty percent. You know, not to mention the increase.
You know, every time we go to the pumps and
to the grocery store. So in taxes, right, I mean,
the property taxes, everything has just been increasing, and so
you know, people continue. We've had more people borrow against
the retirement accounts. They're four to one keys now than
they did. You know in two thousand and eight and
two thousand and nine.
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Speaker 3: And welcome you are listening to and watching the Financial
Survival Network. I'm your host, Carrie Letz. Hey, it's August sixth.
This first week of August has been mind blowing here.
The brash in the markets, I mean, I guess it
qualifies as a crash. Is this the start of something bigger?
Or is there something else afoot here? And Sidell is
with us now, Ed. It's great to have you back. Hey.
I'd like to be laughing like our vice president here,
but I just can't find it in myself.
Speaker 1: Oh yeah, there's not a whole lot of things to
be laughing at for for sure, But thanks for having
me back. Yeah. You know, I think what we're seeing
right now, Carrie, is you know, we saw some profit
taking followed by by panic, and honestly, I think this
is what the feds. I mean, they've been reactionary the
whole time. They've never been proactive under Pal's leadership or
lack of it, And you know, but it does give
them the ability to lower rates and dumb more money
into the system, do some more quantitative easing I think
is going to happen as well. But I think they're
going to lower rates as much as one percent if
not a little bit more before the end of the year.
Speaker 3: Hey, so is this good for gold? Is it good
for stocks? What do you do? Because the average person
out there, which I feel like I'm one of them,
is not really sure what to do. My gut field
tells me this little mini crash here, the fact that's
happening in August, the fact that you know, they were
leaning towards cutting rates the FED, but they didn't do
it yet. There's something afoot here.
Speaker 1: Yeah, yeah, you know, I mean we were expecting a
correction as far back as is March April, you know,
and we did. We hit correction, you know, territory, we
you know, we almost did bear territory with a with
a Nasdaq. But again, you know, I think it was
this this panic you know, the the the panic index,
the VICS that that went up like one hundred and
whatever it was one hundred and fifty percent, one hundred
and sixty percent or one hundred and eighty percent whatever was,
you know, in a in a seven eight hour period,
you know, just showed that.
Speaker 3: The sell off.
Speaker 1: You know, I don't want to say that it was planned,
but you know, those the powers that be, you know,
the these hedge funds, these large institutional investors. You know,
they were taking profits knowing that you know, the the
FEDS would be able to come back in law rates,
you know, do some more easing and then have the
ability to uh uh, you know, turn around and make
some more money. But I think the reason that they're
going to lower rates as a bigger picture thing from
an election cycle standpoint, is to have the market rally
right before the election and say, see, I told you so,
everything's great.
Speaker 3: You could very well be correct there. I certainly wouldn't
put it past them, But you know, little things like inflation. Now,
I'll admit I'm affected by it just like you, but
not so much as the people, the working poor, the
middle class. Those people are being decimated, being crushed. Yeah, yeah,
I mean there really is a tail of two cities, right.
You know, you've got the difference between Main Street and
Wall Street, and you're talking about the working poor. Well,
the reality is, I mean the middle class, they're becoming
the working poor. You know, here in Ohio they passed
a rating increase just for for power electricity that kicked
in the summer, and so people's utility bills went up
as much as thirty percent, you know, not to mention
the increase you know every time we go to the
pumps into the grocery store. So in taxes, right, I mean,
the property taxes, everything has just been increasing, and so
you know, people continue We've had more people borrow against
the retirement accounts. They're four to one keys now than
they did, you know, in in two thousand and eight
and two thousand and nine. You know, we've got you know,
bankruptcies up, We've we've got repossessions on vehicles up. So
all of these.
Speaker 1: Things that we continue to look at. I say it
all the time, right, the dead bubble, and it just
keeps mounting and mounting and mounting. And we're just talking
about lower rates. You know, all that is going to
do is continue to kick the keyn down the road,
and inflation is going to you know, just get higher
and higher, especially under the current economic policies were lack thereof.
So we may get temporary relief as far as the
market goes, but Main Street, I mean it's really it's
not going to benefit them nearly as much as it is.
Speaker 3: You know, Wall Street, for sure, main Street's bleeding. Wall
Street is profiting right as usual, right, Yeah, which is typical. Yeah,
well that's the way the system is designed. I hate
to say that everything's rigged, but everything is rigged. Yeah.
Speaker 1: You know when when you see the same hands being dealt,
you know, it's it's cyclical.
Speaker 3: You know.
Speaker 1: We we saw it, you know, in in the you know,
early eighties, we saw it the tech bubble with the
housing bubble, and you know, we're we're kind of seeing
it right now.
Speaker 3: You know, every.
Speaker 1: Every couple of years there there seems to be a
reset where we get to a certain point and you know,
things back off, and you know, those who make money
make more, and you know those who don't, you know,
they they don't, they lose out. And so that's I
think that's why, you know, having a strong economic policy
and in a more importantly strong energy policy and bringing
manufacturing back to the US is going to be so
very important in order to have the you know, the
the American dream be reinstituted, be because I think it's
faltering right now.
Speaker 3: I think you are correct on that one for sure.
So this looks like it's going to be good for gold,
precious metals. Maybe crypto crypto even got hit ed.
Speaker 1: Yeah, crushed, Yeah, I saw a gain all the way
down to forty nine thousand. Obviously bounced back up, but
then you know that was a pretty steep drop. Gold
went down a little bit. But you know, I think, uh,
with what we're seeing right now, the US dollar, you know, dropping,
not getting a little bit weaker, you know that's going
to be good for gold. I mean, that's telling us
that there's some inflationary pressure still on the horizon. You know,
everyone's so focused on the jobs numbers, and you know
those I think those stats are skewed. You know, goes
back if you hold saying. My economic professor used to
say all the time, right, there's lies, there's damn lies,
and there's statistics.
Speaker 3: Mindset that break. We have the same we got to
the same school there we mayn't.
Speaker 1: And you know, so you really have to do your
own research. You really have to look at the big picture.
You know, everyone's just so myopic and they're thinking until yesterday,
right when you know the market was tumbling and you know, well,
you know, now's the time to run, you know, go
ahead and cash in your chips and everything else. Well
by that time, it's already too late, right, those in
the know already got out, you know, and but I
think there's still some good buys out there.
Speaker 3: But well, i'll tell you what, if you have.
Speaker 1: Cash shitting on the sidelines. I don't think this is
done yet. I think there's still going to be some
yo yoing going on and until they lower rates, and
I think that that's going to cause a rally in
the near term, right.
Speaker 3: So between now and the end of the year.
Speaker 1: But I'm telling you, I, in my heart of hearts,
I think the election is going to have a huge
effect on the outcome of not just the economy, but
the markets that everyone's retirement savings.
Speaker 3: Eight. I want to talk about housing for a minute,
because that got his hand in hand with rate cuts.
Already got inventory shortage. Although as rates have gone higher,
less people buying, but the inventory is so low. We
do have pockets and weakness like in Miami, in Florida
the condom market for different reasons. Those are localized reasons,
you know, due to state law requirements, insurance crisis in Florida.
But I will point you to we're talking here. August sixth,
lenaar just made a new all time high all right
or close to it. It's all time high fifty two
week high it was what eighty two fifty three, it's
barely under that at one seventy four. You know, it's
the same with like you look at the h Horton
and all of the all of if you look at
the charts on them, all of them are going higher
as of today. So what does that tell you? Huh?
Speaker 1: Well, absolutely, And I think that's part and parcel to
you know, the you know, the bonds going down, the
treasure US treasuries, the two year and the ten year,
you know, dipping down so much. I saw yesterday where
you know, uh, thirty year fixed rate mortgage. You know
it's five point eight percent, you know, and and and
so I think that's spurring on okay, you know people
that may have been waiting on the sidelines, but you know,
housing is so unaffordable. In order to make it more affordable,
you know, interest rates have to come down. You know,
it's a double edged sword. But then the prices are
go back up, right, So it's and it's supplying demand.
You know, you were talking about inventory, you know here
in our area, I mean there's hardly any inventory. I
mean people are knocking on doors, you know, hey, do
you want to sell your home because there just isn't
anything out there. There's definitely not anything affordable. I mean,
you know, you're lucky if you can find any kind
of a home under a half a million dollars in
any neighborhood. And that's you know, when the average price
of our home four or five years ago was you know,
just a couple hundred thousand. Now, and don't get me wrong,
that's a lot of money too, but to have it,
you know, more than double in such a short period
of time, you know, that's telling you that there's something
else afoot for sure.
Speaker 3: Yeah. Yeah, So once the election madness is over, we're
going to have a real crash or rate's going to
be firmly rate cuts ensconced. We go on and on,
and how does this fit in with the carry trade
as well?
Speaker 1: So, you know, I think the outcome of the election, right,
if if the current economic policies it's the current administration
and the current policy caes are being furthered on, it's
going to create a huge economic downturn and I think
the market is going to suffer dramatically.
Speaker 3: You know, if there is a change in the.
Speaker 1: Administration and more imporly the economic policy and we we
become energy independent again. Uh you know, I I think
that's we're gonna see, you know, a spurt of economic
growth that's going to be continued on, you know. I
you know, talking about the the carry trade, especially as
it relates to the end, you know, I I don't
think that that's what caused the the huge fear issue.
Speaker 3: Uh yesterday and the and the big decline.
Speaker 1: It was the first time that the Nasdaq was ever
down a thousand points, you know, in in one day,
ever at any point in time, you know. And so
when Japan raised their rates, you know, it shrunked that
arbitrage and and so a lot of people were buying
that on margin. So they were borrowing money from foreign
banks and Japanese banks especially in buying it in the end,
and you know, paying er point one percent or quarter percent,
and you know, even putting it in the US treasuries
at you know, five percent and that you know, that's
a huge arbitrage. But then when you margin that account
and you're having to pay interest on top of the loan,
now all of a sudden you have a negative arbitrage.
Speaker 3: You know.
Speaker 1: As as they went Japan raised rates and so that
affected the end. So I think that added insult to injury,
you know. But when you look at the global scale,
you know, the the global economy, you know, there is
you know, continued inflation everywhere. Uh, you know, we already
saw the EU, you know, lower rates. I think everyone's
kind of waiting on the US because if the US
economy falters, it's going to affect the you know, the
the global economy as well. So I think that will again,
you know, lower the end, you know, so as not
as low as what it was. But you know, there's
all these things that we have to look at. But
as a standalone, you know that carry trade, I don't
think that that was the cause that affected the huge
decrease over the last couple of days in the markets.
Speaker 3: Yeah, it's a kind of a pile on effect, I think, yeah, absolutely.
You know, one thing that nobody's covering is the implosion
of the Chinese economy, the the solution of the Chinese
economic miracle over the past forty years. It's going it
went up like that and now it's going down like that.
It's it's downright scary, and like you said about statistics,
as much as you can't believe US government economic statistics,
you can't believe anything the Chinese say, well exactly.
Speaker 1: I mean, you know that's why, you know, investing in
Chinese companies I think is so risky because they don't
follow the you know, the gap principles, so you don't
really know what the underlying profitability of these companies are.
And you know, so having our pensions and you know
sometimes a lot of government pensions in the and these
funds that they have that are investing in these Chinese companies,
I think is you know, the lack of a really
good fiduciary standard. I you know, I don't think that
it's it's proper because you know, I think they're at
a tipping point. You know, you still have all these
cities in China that that are completely vacant and they're struggling.
So I think they're faltering way more so than we
are right now.
Speaker 3: I couldn't agree more. And the massive bloods they've been
having downright biblical business leading Shanghai the really the business
capital of the country. And you know, they said somewhere
around a million restaurants have closed in China and all
of these problems multi did you say a million restaurants?
Million restaurants in China.
Speaker 1: Have Okay, but I knew it was a lot, I
didn't that. Well, okay, that's significant no matter how you
cut it. I mean that's huge. Mm.
Speaker 3: Yeah, so a lot of things. But of course the
American press doesn't cover any of this, so it really
is only giving giving you like a small portion of
the story and then blaming it on sun spots or something.
Speaker 1: Well, yeah, I mean we all have like we're surprise, right,
you know, it's it's yeah, you know what, Oh my gosh,
now my mind went playing acount and now you know
the rest of the story. Well, you know, we're not
being told the rest of the story.
Speaker 3: That's that's the problem, multiple stories on China. That's one
million restaurant enclosures this year, just this year, been many
many more in prior years. But of course, again that's
the rest of this story. So it's the global economy
here the only thing holding it up, but really is
the United States. And that's another reason why this stock
market is doing better here because yeah, there's a lot
of monkey business going on, but there's a lot of
flight capital and you can only own so much goal
that physically account for it, and then you've got to
put it into paper to some extent.
Speaker 1: And yeah, because you have to be able to I
mean currency, you have to be able to spend it.
And that's why you know, Brisa is is a big deal. Right,
I'm not mitigating that at all, but you know it's
I do not right now if depending on the outcome
of the election. You know, I do not foresee the
US dollar being surpassed as the reserve currency, because where
else are you going to put your money?
Speaker 3: I mean you know there is an alternative? Right? Yeah? Well,
quite a mess they've gotten us into, hopefully, like go, well,
Rogers said, ignorance got us into this mess, and ignorance
I'll get us out right, well said, well set So
all right, ED, just tell us where do we find you?
How do we connect with you on the web.
Speaker 1: Yeah, you can find us at egsifinancial dot com. That's
the best place to find.
Speaker 3: Us, excellent, And that link is in the shut out
to this interview on Financial Survival Network dot com. When
you go there, please sign up for your free newsletter.
You just click Ed's link you get to a site
find out all about it. Ed I like your approach.
You're not locked into stocks which sometimes are really a
four letter word like yesterday. And you know you got
to keep an open an open attitude, an open mindset
when you're looking for the long term, because things change
and therefore your investments need to change with them. Absolutely
all right, we'll see you soon. Thanks for stopping by it.
Speaker 2: Thanks for having me, Thanks for listening to Carey Leuxes.
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,