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Speaker 1: At the same time, the economy is not balanced. So

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the top ten percent of earners represent almost fifty percent

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of all consumer spending well. With the stock market doing well,

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home prices are of fifty percent in the last five years.

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Those people continue to spend. The bottom thirty to fifty

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percent have been under the gun. They don't benefit really

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from AI spending. They have been getting squeezed because the

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rent went up by forty percent or so.

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Speaker 2: You're listening to Carrie let'sa's Financial Survival Network where you

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get valuable information. You just can't find anywhere else to

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thrive in today's trying times. You need the Financial Survival

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Network now more than ever. Go to Financial Survivalnetwork dot

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com and get your free newsletter and gift. Financial Survival

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Network now more than ever.

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Speaker 3: And welcome you are listening to and watching the Financial

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Survival Network. I'm your host, Carrie Let's. Hey, we're in

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January twentieth and the market's getting slammed like never before.

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To quote somebody and the Jim wils is with us

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macrotides dot com. Jim, great to have you back. So

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what is going on with the market here and is

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it caused for alarm?

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Speaker 1: I don't think so for a number of reasons. A,

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the US economies in decent shape. GDP's growing around two

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and a half percent. I think that's going to continue

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for a while to carry a because a number of factors.

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The government will run a deficit close to six percent

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this year, so a lot of that spending is a

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buttress for economic growth. AI spending is going to add

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or amount to about one point seven percent of GDP

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this year. The one what you that seven wow, five

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hundred and thirty billion dollars is what the five hyperscalers

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have pledged. Now that's up thirty four percent from last year.

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Last year the increase was sixty five percent. Next year

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slated to drop from thirty three percent in twenty twenty

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six to about fourteen percent in twenty twenty seven. So

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the risk to the stock market I don't think carry

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is that or the economy is that they're going to

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dial that back. They believe they are in an arms

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race those companies, and so that's I don't think they're

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going to cut back on spending, and it is a

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significant prop under the economy. At the same time, the

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economy is not balanced. So the top ten percent of

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earners represent almost fifty percent of all consumer spending. Well

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with the stock market doing well, home prices are up

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fifty percent in the last five years. Those people continue

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to spend. The bottom thirty to fifty percent have been

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under the gun. They don't benefit really from AI spending.

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They have been getting squeezed because the rent went up

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by forty percent or so. They don't own a house,

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so they're just out of pocket. Insurance costs for their

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car and property has gone up very significantly. Food prices

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have gone up very significantly, so they're continuing to be squeezed.

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So that's why when I said in balance, those are

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some of the reasons. But in terms of GDP and

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the overall economy, it's going to continue to be on

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pretty firm footing in the first half of this year,

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which means earnings are going to be decent. And it

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explains why despite today's weakness, and there may be a

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little bit more to come. The advanced decline line which

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measures how many stacks go up every day versus down,

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and historically, Carrie, when the advanced decline line is making

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higher highs, which it has been doing, that's, you know,

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shows innate strength under the surface, and it usually means

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corrections will be limited to the three to five percent

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variety as opposed to ten percent or more historically big

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corrections like last year in February, and I think we

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probably talked about it. The advanced de klinlid was not

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making a new high in February of last year as

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the S and P was, and to me, that meant

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the market was vulnerable to a decent sized correction. When

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President Trump introduced his terrorists and was pretty aggressive about it,

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the S and P fell by twenty percent. So all

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those things are you know, to me suggests that, all right,

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we've seen a knee jerk reaction to news about Greenland,

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but I don't think it has serious economic impact, and

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I think it's going to resolve itself, much like a

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lot of things in Trump's dealing with Europe have over

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the last seven eight years. Yeah. Well, you know, it's funny.

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Speaker 3: There was a economists named Harry Brown, if you remember him,

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I know, yeah, like twenty thirty years ago, Yeah, yeah,

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And he used to say the United States is the

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accommodating loser and whether it comes to defending Europe or

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you know, whether it's holding up markets, propping up markets.

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The US is the accommodating loser, and I think we're

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finished with that role.

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Speaker 1: That's very clear. I mean in twenty eighteen, and this

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is the parallel I'm going to draw to today with Greenland,

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President Trump criticized the European countries in NATO for not

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honoring their commitment to spend two percent of GDP on defense.

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At that time, Poland was the only country doing it.

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Everyone else was around one percent. And of course they've

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you know, with there was articles in the New York Times,

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old Trump right, need to pull out a NATO and

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all the rest of it. Well, lo and behold, last

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year the European countries committed not to just increase spending

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to two percent, increase it to five percent. Yeah, and

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you know, an outcome that very few would have been

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able to predict seven eight years ago. But President Trump

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pressured them and threatened them, like, hey, we've been providing

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this defense umbrella for you guys for decades and you

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haven't been paying for it. Times up, you got to

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start doing it. So I think this thing with Greenland

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Terry is going to be similar in the sense of, well,

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if we have to go in there militarily and take

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it over. It's bluster, you know, but and you know

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they've over the weekend a number of leaders in Europe

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gave speeches. You know how awful it was to say that,

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and blah blah blah, blah blah. But at the end

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of the day, I think they're going to recognize this

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strategic value that Greenland has for pertecting against another Russian incursion,

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like in Crimea in twenty fourteen. Russia went in there.

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They gave a bunch of speeches at the UN denouncing it.

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And guess what, Russia is still controlling Crimea. And the

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risk is they could do the same thing in Greenland,

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not tomorrow, but at some point in time. So I

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think President Trump is thinking strategically. I think Europe will

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come around to accepting that, and then, you know, kind

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of grudgingly, all right, let's work together to try to

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accomplish the goal, which is to fortify Greenland and put

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more military assets there for the strategic value it has.

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So this is being a play out. I think similarly,

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you just got to go through the Bobby and Weaving.

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Speaker 3: I think, you know, we've based on what I've read,

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we've already got the right to pretty much do whatever

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we want there. I just think it's going to be

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something like a lease or some type of license or

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something that's indefinite in duration, because what's bringing it about

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is climate change. When regardless how you believe that climate

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change is happening, it is happening, or right, let's say

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the cause of it. But you know, as a result,

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all those passages around Greenland are going to be free

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of ice. And that kind of opens up the chess board.

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So this is a recognition. Even though Trump the climate

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change and carbon credits and all that good stuff, he

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acknowledges the reality of it.

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Speaker 1: Yeah, well again it creates an opportunity for not just

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the US, but for Russia and anybody else to seize Greenland.

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And for a lot of people, their knee jerk reaction

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is as Trump blah blah blah blah blah. The reality

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is he's thinking out over the next twenty years, not

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next twenty months. And you know there's a group of

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people that no matter what Trump does, they're immediately opposed

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to it, critical thinking why bother? You know, Trump said this,

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so I'm going to do the opposite, And you know,

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I don't think it. You know, they've been proven wrong.

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I mean, in twenty eighteen, Trump gave a speech at

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the UN and criticized Germany for their growing dependence on

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Russia for that gas in oil. Yeah, the delegation was

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seen laughing at him. Well, they stopped laughing after Russia

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invaded Ukraine and turned the spiccots off. So all of

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a sudden, Germany, he's scrambling for energy. So again, people

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like to make fun of the guy. You know, the

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way he comes across. I get it. You know, he's obnoxious,

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he's in your face, he's in a New Yorker eaggerates everything,

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you know, and so yeah, I mean that's his best friend,

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you know. So you got to be able to separate

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all that bolgoney and just peel that away instead of

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reacting with emotion. Okay, what's this guy really saying? Does

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it make any sense whatsoever? And you know, in terms

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of Europe, I think they've learned their lesson over the

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you know, since he was present in the first term,

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that the guy was right about some strategic things, and

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they've come around to it. And I just think, as

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you were saying, whether it's a lease or whatever, it is,

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there'll be some negotiation, and I don't think we're going

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to be sending military to take over Greenland, you know.

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Speaker 3: Well, you know it freaks them out, is he says

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he won't take any option off the table. But of course,

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but that really isn't an option per se right, No,

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Well again, in twenty eighteen, you know he there was stories.

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Speaker 1: The New York Times ran with it frequently. You know,

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he's threatening to leave NATO. Well, you know, again, if

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you're trying to applied leverage and you're trying to make

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your point, we have been providing a defensive umbrella for

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you against Russia and any other bad actor for decades,

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and you haven't honored your commitment. So maybe we'll just

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pull the plut WHOA no, no, no, dona b no no, no,

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you don't have to do that. You know. That's the

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way he negotiates. You know, it's obnoxious. You may not

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like it. But if he I think, obviously, if he

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has conviction about a position, he's gonna push you to

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the wall, you know, And so people react negatively to

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the way he does stuff. I get it, you know,

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but nonetheless, So anyway, today's knee jerk reaction to Greenland

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and all this blah blah. I think that will pass

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and they're not too distant future.

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Speaker 3: It did knock down the dollar though, like nothing else

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before it has done.

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Speaker 1: You know, yeah, has down I think about one percent,

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which is not an insignificant move. But you know, we

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have to remember that since April the dollar has been

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trading between primarily ninety seven and a little bit over

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one hundred, So we've got what eight months sideways chop.

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We're still in the middle part of that range. And

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as I noted in recent writings of my Weavy Technical

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Review and the monthly macrotides that dollar shorts have been increasing. Historically,

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big rallies and the dollar have followed when short positions

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have built up. So that implies to me, Carrie, that

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the likelihood of the dollar dropping below the recent low,

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which I think was ninety six thirty seven possibly, I

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think are low, and if those short positions continue to

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get built up, I think it increases the risk the

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dollar is going to break out above one hundred point

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three nine, and you know that would project and move

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to one oh four to one oh five. So that's

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my take is I think this sideways chop is like

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a base being built, and that the dollar will emerge

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to the upside. And the other thing I'll note, you know,

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as I said earlier about the economy being in good shape, Well,

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that the economy continues to run in pretty good shape,

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it kind of negates the need for the Federal Reserve

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to cut raids anytime soon. Well, that kind of becomes

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at least a small tailwind for the dollar. I mean,

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they cut rates one hundred and seventy five basis points,

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and the main reason that both the Doves and Hawks

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could agree on Carrie was well, the dollar or the

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Fed funds rate is comfortably above the neutral rate, so

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policy is restrictive, and that was the main reason why

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they kept lowering. Well after one hundred and seventy five

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basis points, you know, policy surely isn't very restrictive. And

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then you know growing concern about the labor market. Well,

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recent data coming out on the labor market, so it's stabilizing.

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So as long as the labor market is okay, then

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those who don't want to cut rates are not going

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to continue to agree to cut rates because policies restrictive,

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It isn't restrictive or very little restrictions and is one.

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So again, those are the reasons why the dollar could benefit.

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And you know, I think a stronger dollar would have

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some implications for the metals, especially after the gigantic run

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they've made. You just need a headwind to show up.

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And you know, before we started, we were talking about

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President Trump criticizing chair Pal, you know, relentlessly and then

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bringing this you know, recent potential investigation into his testimony

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about the overrun. You know, to me, it is ironic.

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Has there ever been a program or building that was

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built in Washington, DC that didn't on the origion.

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Speaker 3: I mean, it's a small building for three boil out, but.

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Speaker 1: The original astbent was one point nine trillion or billion.

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Now they're at two and a half billion.

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Speaker 3: But it's a small building. It shouldn't have been at

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one end point nine.

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Speaker 1: But not that he's carry I'm not defending. I'm just

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saying that the excuse to go after Trump in a

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city where overruns are like commonplace all the time is

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a little silly. But I think that's been a you know,

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a lift for the medals and part of the idea

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President Trump potentially could really remove fed independence a He's

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got two people on the board already from twenty eighteen.

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He put Mirn on the board after Klug. I think,

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you know, we resigned in August, So whether he'll stay

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after January because that term ends in January, it doesn't

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matter whether he's there. Somebody else said Trump points will

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be there. Powell term ends in May. His chair who'll

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get to point another person? So that's four out of

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the seven seats on the board. And then Lisa Cook,

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who's being investigated for mortgage fraud. You know, if she

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has to leave, he had five out of seven. So

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I think that has been one of the things that

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people are like, Oh my god, the Fed is going

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to lose his independence. He's going to push for rates

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to be three hundred bass points lower. Man, that's going

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to be good for the medals. I think that's one

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of the sub stories.

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Speaker 3: Okay, I'll buy it. I'll buy it. Uh So, I

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guess the question is where do you if you're scared,

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where do you put your money?

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Speaker 1: Well, you know, A, I wouldn't chase the metals here.

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I mean, they could obviously keep going like they have

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because I would have said that. We talked a few

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weeks ago. Lind Silver was, you know, seventy five, I

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would have said the same thing, all right, But the

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price pattern on gold and even silver suggests we're going

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back to December twenty fifteen. On gold, they made a

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low at about one thousand and forty six, and the

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pattern looks like at Randall a little over two thousand,

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had a pullback to one thousand, six hundred and sixteen

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in September of twenty two. And this has been one

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massive third wave that appears to be nearing the end.

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And what that suggests carry is there will be a

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wave for pullback that will be you know, maybe twenty percent,

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but after that pullback there'll be another push to higher highs.

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I just think we're on the cusp getting closer to

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the point in time where gold and silver will subsequently

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experience a twenty percent pullback. On gold, it could be

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the low four thousand, between four thousand to forty two hundred,

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It could be a little bit deeper. Silver could pull

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back to the mid seventies, tventy five, seventy two, something

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like that. So I can't I'm not comfortable saying, hey,

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you know, by the medals, treasury bonds, the tenure just

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broke out. It spent months going sideways under four to twenty.

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On Friday it took it out. It's moving up even more,

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so I wouldn't be a buyer of long dated bonds.

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Spreads between corporate bonds and treasuries is the most narrow

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since two thousand and seven. So the idea here again

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is the economy looking pretty good. I don't have to

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worry about credit risk and so forth, so their look

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a little overpriced. So my answer would be the Russell

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two thousand has its relative strength to the s and

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P was weak from the summer of twenty twenty one

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until about two three months ago, especially after chat GPT

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was introduced in November of twenty two. You know, as

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money flowed into the AI stocks, it lifted the SMP

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significantly rather to the Russell. So you put it all together,

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the economy looks like it's on firmer footing. There's been

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questions raised about AI spending and the ability to build

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data centers, you know, willy nilly. You know, communities are

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pushing the cost of energy is being driven higher by AI,

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so there's some real blowback that has started to develop,

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and so money is leaving that sector, which has done

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exceedingly well, and it's rotating into the rest of the market.

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As I noted earlier, the eight lines making new highs,

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the Russell's making new highs. Today the Russell was holding

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up much better than the yeah and so to me,

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that's showing that that rotation is happening continuing. And so

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to me, the Russell two thousand looks like you could

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make it to twenty seven seventy. That would be like

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an initial like I think if we get there, and

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then how it gets there will indicate can it go

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even higher? Yet? So to me, that's the one area

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to buy on weakness, because I think it's going to

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continue to be resilient as we're seeing today, and I

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think it will continue to lead the charge. I think

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at some point in time this year the ai AI

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stocks are going to get hit harder Carrie, because people

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are going to realize, as I said earlier, spending last

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year was up sixty five percent, thirty three percent next

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year is fourteen. You know, all of a sudden, you

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see that kind of acceleration, people are going to like,

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you know what, And I think it's already happening. It's

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part of weakness. Maybe I need to lighten up, and

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so I think there can be a disconnect economicity. They're

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going to keep spending the money sentiment wise in the

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stock market. These stocks aren't cheap. There's reasons to think that,

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you know what, this freight train slowing down just to

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take some money off the chips. So I think you

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can have a decent sized correction in the stock market

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after the rustle goes up some more it's extended, then

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it's going to have a normal size pullback and the

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AI stocks, I think potentially could get hit harder. So

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I think there's going to be, you know, some decent

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level of volatility this year. And then the last thing,

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the midterm election is to bedia closer to summer. The

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odds of the Republicans hanging on to the House, the

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odds aren't great, you know, And I think the market

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has responded favorably to a lot of what President Trump

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has been doing and the idea that the Republicans could

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potentially lose the House. If it looks like that's going

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to be the reality, and we really won't know that

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until you get closer to labor day, I think that

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that's kind of a negative, you know, for him advancing

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his agenda introducing new stuff, because what that means is

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the next two years we're just you know, stuck in

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the water. You know, the Democrats aren't going to vote

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for anything that'll make the economy better. Sadly, that's where

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we're at, you.

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Speaker 3: Know, ridiculous. But all right, Jim, how do we subscribe

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to macro tides.

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Speaker 1: You go to macrotides dot com if you want a

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recent publication, my January macro Tides, which you know covered

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some of this tough Carrey and I just talked about

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the weekly technical Review. Send me an email, Jim Welsh

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macro at gmail. Tell me you heard me on carry show,

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and I'll be happy to send you some recent reports

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so you can kind of get a better idea of

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how I blend fundamental analysis the technical analysis. You'll see

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a lot of charts along with a lot of you

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know analysis a monetary policy and the economy and so on.

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Speaker 3: All right, Hey, link is in the show notes to

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this interview on Financial Survival Network dot com, which is

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now officially substack column. And the couple things. We've got

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a report coming out on Greenland. The true story behind it,

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not what the headlines are telling you which are completely

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deceptive and really irrelevant. And a silver report coming up

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next week. Jim, always appreciate you coming on the show.

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We'll talk to you again soon. Any questions comments, Kltcarrie

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LUTs dot com Jim, be well.

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Speaker 1: You do the same, carry and happy New Year by

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the way.

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Speaker 2: Likewise, of course, thanks for listening to Carrie Letz's Financial

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Survival Network, your solution to today's trying times. For the latest,

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go to Financial Survivalnetwork dot com. Financial Survival Network now

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more than ever,