Speaker 1: At the same time, the economy is not balanced. So
the top ten percent of earners represent almost fifty percent
of all consumer spending well. With the stock market doing well,
home prices are of fifty percent in the last five years.
Those people continue to spend. The bottom thirty to fifty
percent have been under the gun. They don't benefit really
from AI spending. They have been getting squeezed because the
rent went up by forty percent or so.
Speaker 2: You're listening to Carrie let'sa'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
Network now more than ever. Go to Financial Survivalnetwork dot
com and get your free newsletter and gift. Financial Survival
Network now more than ever.
Speaker 3: And welcome you are listening to and watching the Financial
Survival Network. I'm your host, Carrie Let's. Hey, we're in
January twentieth and the market's getting slammed like never before.
To quote somebody and the Jim wils is with us
macrotides dot com. Jim, great to have you back. So
what is going on with the market here and is
it caused for alarm?
Speaker 1: I don't think so for a number of reasons. A,
the US economies in decent shape. GDP's growing around two
and a half percent. I think that's going to continue
for a while to carry a because a number of factors.
The government will run a deficit close to six percent
this year, so a lot of that spending is a
buttress for economic growth. AI spending is going to add
or amount to about one point seven percent of GDP
this year. The one what you that seven wow, five
hundred and thirty billion dollars is what the five hyperscalers
have pledged. Now that's up thirty four percent from last year.
Last year the increase was sixty five percent. Next year
slated to drop from thirty three percent in twenty twenty
six to about fourteen percent in twenty twenty seven. So
the risk to the stock market I don't think carry
is that or the economy is that they're going to
dial that back. They believe they are in an arms
race those companies, and so that's I don't think they're
going to cut back on spending, and it is a
significant prop under the economy. At the same time, the
economy is not balanced. So the top ten percent of
earners represent almost fifty percent of all consumer spending. Well
with the stock market doing well, home prices are up
fifty percent in the last five years. Those people continue
to spend. The bottom thirty to fifty percent have been
under the gun. They don't benefit really from AI spending.
They have been getting squeezed because the rent went up
by forty percent or so. They don't own a house,
so they're just out of pocket. Insurance costs for their
car and property has gone up very significantly. Food prices
have gone up very significantly, so they're continuing to be squeezed.
So that's why when I said in balance, those are
some of the reasons. But in terms of GDP and
the overall economy, it's going to continue to be on
pretty firm footing in the first half of this year,
which means earnings are going to be decent. And it
explains why despite today's weakness, and there may be a
little bit more to come. The advanced decline line which
measures how many stacks go up every day versus down,
and historically, Carrie, when the advanced decline line is making
higher highs, which it has been doing, that's, you know,
shows innate strength under the surface, and it usually means
corrections will be limited to the three to five percent
variety as opposed to ten percent or more historically big
corrections like last year in February, and I think we
probably talked about it. The advanced de klinlid was not
making a new high in February of last year as
the S and P was, and to me, that meant
the market was vulnerable to a decent sized correction. When
President Trump introduced his terrorists and was pretty aggressive about it,
the S and P fell by twenty percent. So all
those things are you know, to me suggests that, all right,
we've seen a knee jerk reaction to news about Greenland,
but I don't think it has serious economic impact, and
I think it's going to resolve itself, much like a
lot of things in Trump's dealing with Europe have over
the last seven eight years. Yeah. Well, you know, it's funny.
Speaker 3: There was a economists named Harry Brown, if you remember him,
I know, yeah, like twenty thirty years ago, Yeah, yeah,
And he used to say the United States is the
accommodating loser and whether it comes to defending Europe or
you know, whether it's holding up markets, propping up markets.
The US is the accommodating loser, and I think we're
finished with that role.
Speaker 1: That's very clear. I mean in twenty eighteen, and this
is the parallel I'm going to draw to today with Greenland,
President Trump criticized the European countries in NATO for not
honoring their commitment to spend two percent of GDP on defense.
At that time, Poland was the only country doing it.
Everyone else was around one percent. And of course they've
you know, with there was articles in the New York Times,
old Trump right, need to pull out a NATO and
all the rest of it. Well, lo and behold, last
year the European countries committed not to just increase spending
to two percent, increase it to five percent. Yeah, and
you know, an outcome that very few would have been
able to predict seven eight years ago. But President Trump
pressured them and threatened them, like, hey, we've been providing
this defense umbrella for you guys for decades and you
haven't been paying for it. Times up, you got to
start doing it. So I think this thing with Greenland
Terry is going to be similar in the sense of, well,
if we have to go in there militarily and take
it over. It's bluster, you know, but and you know
they've over the weekend a number of leaders in Europe
gave speeches. You know how awful it was to say that,
and blah blah blah, blah blah. But at the end
of the day, I think they're going to recognize this
strategic value that Greenland has for pertecting against another Russian incursion,
like in Crimea in twenty fourteen. Russia went in there.
They gave a bunch of speeches at the UN denouncing it.
And guess what, Russia is still controlling Crimea. And the
risk is they could do the same thing in Greenland,
not tomorrow, but at some point in time. So I
think President Trump is thinking strategically. I think Europe will
come around to accepting that, and then, you know, kind
of grudgingly, all right, let's work together to try to
accomplish the goal, which is to fortify Greenland and put
more military assets there for the strategic value it has.
So this is being a play out. I think similarly,
you just got to go through the Bobby and Weaving.
Speaker 3: I think, you know, we've based on what I've read,
we've already got the right to pretty much do whatever
we want there. I just think it's going to be
something like a lease or some type of license or
something that's indefinite in duration, because what's bringing it about
is climate change. When regardless how you believe that climate
change is happening, it is happening, or right, let's say
the cause of it. But you know, as a result,
all those passages around Greenland are going to be free
of ice. And that kind of opens up the chess board.
So this is a recognition. Even though Trump the climate
change and carbon credits and all that good stuff, he
acknowledges the reality of it.
Speaker 1: Yeah, well again it creates an opportunity for not just
the US, but for Russia and anybody else to seize Greenland.
And for a lot of people, their knee jerk reaction
is as Trump blah blah blah blah blah. The reality
is he's thinking out over the next twenty years, not
next twenty months. And you know there's a group of
people that no matter what Trump does, they're immediately opposed
to it, critical thinking why bother? You know, Trump said this,
so I'm going to do the opposite, And you know,
I don't think it. You know, they've been proven wrong.
I mean, in twenty eighteen, Trump gave a speech at
the UN and criticized Germany for their growing dependence on
Russia for that gas in oil. Yeah, the delegation was
seen laughing at him. Well, they stopped laughing after Russia
invaded Ukraine and turned the spiccots off. So all of
a sudden, Germany, he's scrambling for energy. So again, people
like to make fun of the guy. You know, the
way he comes across. I get it. You know, he's obnoxious,
he's in your face, he's in a New Yorker eaggerates everything,
you know, and so yeah, I mean that's his best friend,
you know. So you got to be able to separate
all that bolgoney and just peel that away instead of
reacting with emotion. Okay, what's this guy really saying? Does
it make any sense whatsoever? And you know, in terms
of Europe, I think they've learned their lesson over the
you know, since he was present in the first term,
that the guy was right about some strategic things, and
they've come around to it. And I just think, as
you were saying, whether it's a lease or whatever, it is,
there'll be some negotiation, and I don't think we're going
to be sending military to take over Greenland, you know.
Speaker 3: Well, you know it freaks them out, is he says
he won't take any option off the table. But of course,
but that really isn't an option per se right, No,
Well again, in twenty eighteen, you know he there was stories.
Speaker 1: The New York Times ran with it frequently. You know,
he's threatening to leave NATO. Well, you know, again, if
you're trying to applied leverage and you're trying to make
your point, we have been providing a defensive umbrella for
you against Russia and any other bad actor for decades,
and you haven't honored your commitment. So maybe we'll just
pull the plut WHOA no, no, no, dona b no no, no,
you don't have to do that. You know. That's the
way he negotiates. You know, it's obnoxious. You may not
like it. But if he I think, obviously, if he
has conviction about a position, he's gonna push you to
the wall, you know, And so people react negatively to
the way he does stuff. I get it, you know,
but nonetheless, So anyway, today's knee jerk reaction to Greenland
and all this blah blah. I think that will pass
and they're not too distant future.
Speaker 3: It did knock down the dollar though, like nothing else
before it has done.
Speaker 1: You know, yeah, has down I think about one percent,
which is not an insignificant move. But you know, we
have to remember that since April the dollar has been
trading between primarily ninety seven and a little bit over
one hundred, So we've got what eight months sideways chop.
We're still in the middle part of that range. And
as I noted in recent writings of my Weavy Technical
Review and the monthly macrotides that dollar shorts have been increasing. Historically,
big rallies and the dollar have followed when short positions
have built up. So that implies to me, Carrie, that
the likelihood of the dollar dropping below the recent low,
which I think was ninety six thirty seven possibly, I
think are low, and if those short positions continue to
get built up, I think it increases the risk the
dollar is going to break out above one hundred point
three nine, and you know that would project and move
to one oh four to one oh five. So that's
my take is I think this sideways chop is like
a base being built, and that the dollar will emerge
to the upside. And the other thing I'll note, you know,
as I said earlier about the economy being in good shape, Well,
that the economy continues to run in pretty good shape,
it kind of negates the need for the Federal Reserve
to cut raids anytime soon. Well, that kind of becomes
at least a small tailwind for the dollar. I mean,
they cut rates one hundred and seventy five basis points,
and the main reason that both the Doves and Hawks
could agree on Carrie was well, the dollar or the
Fed funds rate is comfortably above the neutral rate, so
policy is restrictive, and that was the main reason why
they kept lowering. Well after one hundred and seventy five
basis points, you know, policy surely isn't very restrictive. And
then you know growing concern about the labor market. Well,
recent data coming out on the labor market, so it's stabilizing.
So as long as the labor market is okay, then
those who don't want to cut rates are not going
to continue to agree to cut rates because policies restrictive,
It isn't restrictive or very little restrictions and is one.
So again, those are the reasons why the dollar could benefit.
And you know, I think a stronger dollar would have
some implications for the metals, especially after the gigantic run
they've made. You just need a headwind to show up.
And you know, before we started, we were talking about
President Trump criticizing chair Pal, you know, relentlessly and then
bringing this you know, recent potential investigation into his testimony
about the overrun. You know, to me, it is ironic.
Has there ever been a program or building that was
built in Washington, DC that didn't on the origion.
Speaker 3: I mean, it's a small building for three boil out, but.
Speaker 1: The original astbent was one point nine trillion or billion.
Now they're at two and a half billion.
Speaker 3: But it's a small building. It shouldn't have been at
one end point nine.
Speaker 1: But not that he's carry I'm not defending. I'm just
saying that the excuse to go after Trump in a
city where overruns are like commonplace all the time is
a little silly. But I think that's been a you know,
a lift for the medals and part of the idea
President Trump potentially could really remove fed independence a He's
got two people on the board already from twenty eighteen.
He put Mirn on the board after Klug. I think,
you know, we resigned in August, So whether he'll stay
after January because that term ends in January, it doesn't
matter whether he's there. Somebody else said Trump points will
be there. Powell term ends in May. His chair who'll
get to point another person? So that's four out of
the seven seats on the board. And then Lisa Cook,
who's being investigated for mortgage fraud. You know, if she
has to leave, he had five out of seven. So
I think that has been one of the things that
people are like, Oh my god, the Fed is going
to lose his independence. He's going to push for rates
to be three hundred bass points lower. Man, that's going
to be good for the medals. I think that's one
of the sub stories.
Speaker 3: Okay, I'll buy it. I'll buy it. Uh So, I
guess the question is where do you if you're scared,
where do you put your money?
Speaker 1: Well, you know, A, I wouldn't chase the metals here.
I mean, they could obviously keep going like they have
because I would have said that. We talked a few
weeks ago. Lind Silver was, you know, seventy five, I
would have said the same thing, all right, But the
price pattern on gold and even silver suggests we're going
back to December twenty fifteen. On gold, they made a
low at about one thousand and forty six, and the
pattern looks like at Randall a little over two thousand,
had a pullback to one thousand, six hundred and sixteen
in September of twenty two. And this has been one
massive third wave that appears to be nearing the end.
And what that suggests carry is there will be a
wave for pullback that will be you know, maybe twenty percent,
but after that pullback there'll be another push to higher highs.
I just think we're on the cusp getting closer to
the point in time where gold and silver will subsequently
experience a twenty percent pullback. On gold, it could be
the low four thousand, between four thousand to forty two hundred,
It could be a little bit deeper. Silver could pull
back to the mid seventies, tventy five, seventy two, something
like that. So I can't I'm not comfortable saying, hey,
you know, by the medals, treasury bonds, the tenure just
broke out. It spent months going sideways under four to twenty.
On Friday it took it out. It's moving up even more,
so I wouldn't be a buyer of long dated bonds.
Spreads between corporate bonds and treasuries is the most narrow
since two thousand and seven. So the idea here again
is the economy looking pretty good. I don't have to
worry about credit risk and so forth, so their look
a little overpriced. So my answer would be the Russell
two thousand has its relative strength to the s and
P was weak from the summer of twenty twenty one
until about two three months ago, especially after chat GPT
was introduced in November of twenty two. You know, as
money flowed into the AI stocks, it lifted the SMP
significantly rather to the Russell. So you put it all together,
the economy looks like it's on firmer footing. There's been
questions raised about AI spending and the ability to build
data centers, you know, willy nilly. You know, communities are
pushing the cost of energy is being driven higher by AI,
so there's some real blowback that has started to develop,
and so money is leaving that sector, which has done
exceedingly well, and it's rotating into the rest of the market.
As I noted earlier, the eight lines making new highs,
the Russell's making new highs. Today the Russell was holding
up much better than the yeah and so to me,
that's showing that that rotation is happening continuing. And so
to me, the Russell two thousand looks like you could
make it to twenty seven seventy. That would be like
an initial like I think if we get there, and
then how it gets there will indicate can it go
even higher? Yet? So to me, that's the one area
to buy on weakness, because I think it's going to
continue to be resilient as we're seeing today, and I
think it will continue to lead the charge. I think
at some point in time this year the ai AI
stocks are going to get hit harder Carrie, because people
are going to realize, as I said earlier, spending last
year was up sixty five percent, thirty three percent next
year is fourteen. You know, all of a sudden, you
see that kind of acceleration, people are going to like,
you know what, And I think it's already happening. It's
part of weakness. Maybe I need to lighten up, and
so I think there can be a disconnect economicity. They're
going to keep spending the money sentiment wise in the
stock market. These stocks aren't cheap. There's reasons to think that,
you know what, this freight train slowing down just to
take some money off the chips. So I think you
can have a decent sized correction in the stock market
after the rustle goes up some more it's extended, then
it's going to have a normal size pullback and the
AI stocks, I think potentially could get hit harder. So
I think there's going to be, you know, some decent
level of volatility this year. And then the last thing,
the midterm election is to bedia closer to summer. The
odds of the Republicans hanging on to the House, the
odds aren't great, you know, And I think the market
has responded favorably to a lot of what President Trump
has been doing and the idea that the Republicans could
potentially lose the House. If it looks like that's going
to be the reality, and we really won't know that
until you get closer to labor day, I think that
that's kind of a negative, you know, for him advancing
his agenda introducing new stuff, because what that means is
the next two years we're just you know, stuck in
the water. You know, the Democrats aren't going to vote
for anything that'll make the economy better. Sadly, that's where
we're at, you.
Speaker 3: Know, ridiculous. But all right, Jim, how do we subscribe
to macro tides.
Speaker 1: You go to macrotides dot com if you want a
recent publication, my January macro Tides, which you know covered
some of this tough Carrey and I just talked about
the weekly technical Review. Send me an email, Jim Welsh
macro at gmail. Tell me you heard me on carry show,
and I'll be happy to send you some recent reports
so you can kind of get a better idea of
how I blend fundamental analysis the technical analysis. You'll see
a lot of charts along with a lot of you
know analysis a monetary policy and the economy and so on.
Speaker 3: All right, Hey, link is in the show notes to
this interview on Financial Survival Network dot com, which is
now officially substack column. And the couple things. We've got
a report coming out on Greenland. The true story behind it,
not what the headlines are telling you which are completely
deceptive and really irrelevant. And a silver report coming up
next week. Jim, always appreciate you coming on the show.
We'll talk to you again soon. Any questions comments, Kltcarrie
LUTs dot com Jim, be well.
Speaker 1: You do the same, carry and happy New Year by
the way.
Speaker 2: Likewise, of course, 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,