Speaker 1: Welcome to another episode of the Chicks on the Right
Speaker 1: podcast where we talk to our friend and sponsor of
Speaker 1: the show, Zach Abraham from Bulwark Capital Management. And there's
Speaker 1: always chitter chatter in the market from experts that a
Speaker 1: recession is coming, or a recession isn't coming or whatever.
Speaker 1: The how the economy is doing is always up a
Speaker 1: topic of debate, and right now there are grumblings about
Speaker 1: a potential recession. And apparently there are signs that don't
Speaker 1: have anything to do with actual economic indicators that do
Speaker 1: indicate recessions that we are just learning about. This is
Speaker 1: according to an article at NPR. So some of the
Speaker 1: most famous unofficial indicators include maybe you've heard of this,
Speaker 1: the hemline index, never heard? Have you heard of this?
Speaker 2: I have you have? Really isn't a thing.
Speaker 1: So apparently shorter skirts equals good economy, Longer skirts equals
Speaker 1: a down term.
Speaker 2: Why I don't get that. I don't know. It actually
Speaker 2: goes another way.
Speaker 3: You can look at you can look at suit sales.
Speaker 3: So in Boom Times the Cell, the sale of men's
Speaker 3: suits go down. In recessions, they start going back up.
Speaker 2: Oh my gosh.
Speaker 3: Yeah, it's a lot of weird It's one of the
Speaker 3: thought fascinating things about economics and markets, and it's one
Speaker 3: of the reasons I fell in love with them. There's
Speaker 3: there's so much human behavior involved and people don't really
Speaker 3: realize that psychology. Yeah, yeah, so so think of like,
Speaker 3: so an easy way to think about it is like
Speaker 3: the Roaring twenties, right, and the and the what do
Speaker 3: they they what I'm blanking out the flappers?
Speaker 2: Flappers?
Speaker 3: Yeah right, okay, remember that was like those skirts were
Speaker 3: short back then, and that was out there, right.
Speaker 2: It was an economic boom.
Speaker 3: Time things are good, people are feeling loose, right, They've
Speaker 3: got extra money, they're drinking more, they're partying, right, all
Speaker 3: that kind of stuff, and so when bad times hit,
Speaker 3: you're not as worried about where you're going on a
Speaker 3: Friday night. You're worried about you know what I mean. So, yeah,
Speaker 3: it's it's it's a really fascinating thing.
Speaker 2: So interesting. The first four I had.
Speaker 3: Had into that was seeing men's suit sales up against
Speaker 3: the economy, and I remember just going that is wild.
Speaker 1: Well, they say it's true about men's underwear sales also,
Speaker 1: because if underwear sales drop, apparently, then that means people
Speaker 1: are cutting back on even their basic essentials, which that
Speaker 1: makes sense to me. That the short skirts and the
Speaker 1: long skirts, that's a little bit more difficult to wrap
Speaker 1: my head around. But the you know, giving up essentials
Speaker 1: and buying less essentials, that makes sense to me. And
Speaker 1: apparently frozen pizza sales, that's.
Speaker 2: That's what was really interesting to me.
Speaker 1: Too, that because yeah, comfort food spikes. When budgets are tighter,
Speaker 1: you reach for the comfort food more and probably just
Speaker 1: junk food because it's cheaper, right right.
Speaker 3: Well, that the minu you said that, I thought, you
Speaker 3: know what, that's a great one because you're doing that
Speaker 3: instead of ordering, yeah, instead of ordering a pizza totally
Speaker 3: like and how many fans. That's probably actually a very
Speaker 3: good indicator. I'm actually gonna have one of Miami think
Speaker 3: about it.
Speaker 1: Think about all the times that you're like, Mom, I
Speaker 1: want McDonald's.
Speaker 2: She's like, we have McDonald's at home. Yep, we really don't. Ever,
Speaker 2: we really don't have.
Speaker 1: We have your you're lame burger that you're going to.
Speaker 2: Like try to put special sauce on hold on in
Speaker 2: my house.
Speaker 3: My kids are like, oh, it's not the same, And
Speaker 3: I'm like, dude, we've got woggy ground beef for.
Speaker 1: Oh my god.
Speaker 3: And I'm sitting there just know McDonald's. I'm like, your
Speaker 3: don right McDonald's. Man, this isn't going to kill you,
Speaker 3: right No? So yeah, no, that that's legit though there's
Speaker 3: it's just it's member markets's made up of people.
Speaker 1: And so what are the like the actual ones that
Speaker 1: are actually legit economic indicators?
Speaker 2: Like what do you look for in your world?
Speaker 1: What do you what do you see that you're like,
Speaker 1: uh oh, I don't like that sign.
Speaker 2: So that's changed a lot.
Speaker 3: Prior to the last ten years, well actually prior to
Speaker 3: last five years, I would have told you that the
Speaker 3: most dependable metric is the yield curve, which means what
Speaker 3: is the so like, if we're looking at a two
Speaker 3: year US government treasury and a thirty year US government treasury,
Speaker 3: what is the space between them? Where's the ten you're at?
Speaker 3: Where's all these things at? And in the past, whenever
Speaker 3: you'd see the yield curve go flat, which means you'd
Speaker 3: have a thirty year trading paying a very similar amount
Speaker 3: of interest to like a two year treasury. That was
Speaker 3: a precursor and then the last stage right before you
Speaker 3: entered recession, you'd actually invert, so you'd have two year
Speaker 3: yield would be higher than a thirty year. It is
Speaker 3: actually the two in the ten we're the most. The
Speaker 3: two in the ten year were for the most. But
Speaker 3: literally those indicators had predicted every single recession in the
Speaker 3: history of our economy with perfect record. Right, it didn't
Speaker 3: this last time and is the first time it broke.
Speaker 3: But it makes all the sense in the world because
Speaker 3: what did we start after two thousand and eight. Two
Speaker 3: thousand and nine we started doing quantitative easing, which is
Speaker 3: effectively the FED controlling the yield curve.
Speaker 2: So one of the things that we.
Speaker 3: Were worried about is we were like, we don't know
Speaker 3: if we can trust this indicator anymore, because this indicator
Speaker 3: used to tell us exactly what investors wanted. And one
Speaker 3: of our big believers of the reason the yield curve
Speaker 3: would invert is because when you go into recessions, interest
Speaker 3: rates go down and bonds go up in value. Well
Speaker 3: the longer the duration of your bond, So if interest
Speaker 3: rates go down, the value of your thirty year bond
Speaker 3: is going to go up a lot more than the
Speaker 3: value of your five year bond.
Speaker 2: Okay. So my thought was.
Speaker 3: Always the reason you see the yield curve invert is
Speaker 3: because smart money is selling stocks and buying long dated bonds, right,
Speaker 3: and so that's kind of telling you the smart money's
Speaker 3: getting out of the game.
Speaker 2: Look at the yield on the thirty year it's dropping.
Speaker 3: That means people are buying it, and that means that
Speaker 3: they're going to ride this thing out, wait till stocks
Speaker 3: get knocked down, and then step back in there and.
Speaker 2: Buy them cheaper. So are because they Well, no, because
Speaker 2: I don't.
Speaker 3: Because that indicator, because I believe because of what the
Speaker 3: FED had done for the last fifteen years, it broke.
Speaker 3: It doesn't tell us anything. But what I will say
Speaker 3: is that I have never seen and I'm not trying
Speaker 3: to alarm anybody, but unless something changes drastically and extraordinarily fast,
Speaker 3: you're looking at a one hundred percent certainty of a
Speaker 3: global recession.
Speaker 2: Okay, just book it.
Speaker 3: You're you're looking at a situation right now that's pernicious
Speaker 3: enough to where you may be hearing about people not
Speaker 3: able to get an MRI in the next three months
Speaker 3: because you need helium.
Speaker 2: You need helium for MRIs.
Speaker 3: Okay, our helium supplies are going to zero because it's
Speaker 3: a distill it it gets produced, it's a byproduct of
Speaker 3: distilling petroleum.
Speaker 2: Okay.
Speaker 3: Aluminum shot up through the roof because they hit an
Speaker 3: aluminum refinery in Israel.
Speaker 2: Okay. So like there's damage.
Speaker 3: Being done to the global economy that cannot get undone.
Speaker 3: Like everybody's saying always this gonna get is this gonna
Speaker 3: get bad?
Speaker 2: It's horrible right now.
Speaker 3: Our our markets are sleep walking through this, okay, Like
Speaker 3: this stock market is gonna get hammered.
Speaker 2: And we're not hearing about it, like this is this is.
Speaker 3: It's the it's the look the analogy I use the
Speaker 3: other day as I was like, this would be like
Speaker 3: if the stock market had not dropped significantly two weeks
Speaker 3: into lockdowns in COVID, this is the greatest shock in
Speaker 3: energy markets in history.
Speaker 2: And it's not It's not close.
Speaker 3: I know we've been I've been trying to like ring
Speaker 3: the alarm bell now for weeks and everybody's like, is
Speaker 3: it gonna get bad? And I'm like, is it? People
Speaker 3: are gonna die, Like hundreds of people will die from this,
Speaker 3: if not millions. You've got Australia right now, their farmers
Speaker 3: are not planting, they're out of diesel. Oh okay, Like
Speaker 3: you're gonna have food shortages. You're gonna I'm just telling people, like,
Speaker 3: and here's the deal. If if Trump were, if they
Speaker 3: were to walk away today and open up the straight,
Speaker 3: a lot of this stuff's already gonna happen anyway. But
Speaker 3: every single day the straight is closed, you are compounding
Speaker 3: this pain on the back end and everybody's sleepwalking through it.
Speaker 3: And I'm sitting there going, this is nuts. This is nuts.
Speaker 3: I've never seen anything this crazy in my career. And
Speaker 3: you need to be very careful. I will, like, you're
Speaker 3: in an environment right now where literally, if the stock
Speaker 3: market drop fifteen percent in the next ten days, that
Speaker 3: would make a lot more sense.
Speaker 2: Than what's going on right now. So wow, I mean
Speaker 2: you can literally just do it.
Speaker 3: And I can sit there and go, okay, we're oil
Speaker 3: is going to be higher for longer. This is going
Speaker 3: to hit earnings SMP like, and you're going, okay, we
Speaker 3: know that there's been this much damage done.
Speaker 2: Then you look at the market and you're like, what, like,
Speaker 2: what are you what are you guys doing? Oh my god,
Speaker 2: this is bad, guys, It's really bad.
Speaker 3: And no one's talking about it, and I don't think
Speaker 3: people You're like, oh, hell's this going to affect tech,
Speaker 3: And you're like.
Speaker 2: It affects ever guys.
Speaker 3: Yeah, Like one of their biggest costs now is going
Speaker 3: to be the energy to drive these data centers. Their
Speaker 3: energy costs just doubled, like like no one paying attention.
Speaker 2: It's really scary. Currently the biggest recession indicator is you, well, no,
Speaker 2: I'm not taking it. Yeah, but I just talk this.
Speaker 3: So we we in the industry, like, so people like
Speaker 3: me that manage money, we're talking about it and just
Speaker 3: nobody's listening and we're looking around at each other.
Speaker 2: Let me let me this is just this is straight legit, Okay.
Speaker 3: So we used to talk about in the energy market
Speaker 3: the straight of horror moves being closed was the equivalent
Speaker 3: of an atomic bomb going off somewhere in the world.
Speaker 2: Meaning oh my god.
Speaker 3: That we always looked at that as a worst case
Speaker 3: scenario in energy markets. I mean, I'm talking for decades
Speaker 3: like this isn't I Ran I Ran did a similar
Speaker 3: thing back in nineteen eighty, but we hadn't they we
Speaker 3: have threatened straight closures before twenty percent of global oil
Speaker 3: supply comes out of there every single day and you
Speaker 3: can't just reroute it. There's no way to inject it
Speaker 3: back in. And so like, for instance, if we undid
Speaker 3: this today, everybody's like the problem to be over. No,
Speaker 3: you've had production shut ins. So even if you unlock
Speaker 3: the straight ohor moves today, we're only producing ninety percent
Speaker 3: of what we need. Wow, global oil storages are almost zero.
Speaker 1: Okay, I'm I regret having this conversation.
Speaker 3: And here's the crazy thing.
Speaker 2: Here's the crazy thing. Like I told you, we're up
Speaker 2: fifteen percent, and that's our main this is this is
Speaker 2: gonna be.
Speaker 3: All we did is we just bought a bunch of
Speaker 3: oil and natural gas companies that were super cheap, paying
Speaker 3: good dividends, and we own some goal. That's why we're
Speaker 3: up fifteen percent. Gold positions have been hit a little bit,
Speaker 3: but the energy side of it's carried through. And everybody's like,
Speaker 3: why'd you load up on energy?
Speaker 4: And I'm like, they just close the straight guys, like
Speaker 4: the bomb went off right, Like yeah, and it's just
Speaker 4: and these things were cheap anyway, paying us solid dividends.
Speaker 2: You're like, okay, I'll take that. Okay, it's not good.
Speaker 1: It was horrible, But like, this is what makes me
Speaker 1: glad that you do these webinars, and that's when you
Speaker 1: are telling people who wouldn't ordinarily hear it from the
Speaker 1: news what's going on. And this is why we're constantly
Speaker 1: telling our audience, I need to be paying attention and
Speaker 1: going to these free webinars. How can people find them
Speaker 1: and find you?
Speaker 3: H Yeah, Bullworkcapitalmanagement dot Com. The other thing is, again
Speaker 3: not trying to too my own horn, but we've been
Speaker 3: pounding the table on this on our daily show.
Speaker 2: Yeah Daily Dots on YouTube. Just go look for Know
Speaker 2: Your Risk podcasts on YouTube. We got our video feed
Speaker 2: up there every day. We're on every podcast station.
Speaker 3: But I'm really not saying that to pump our own thing,
Speaker 3: but we really make a focused effort to have on specialists,
Speaker 3: Like we had probably one of the pre eminent oil
Speaker 3: specialists in the world on a week and a half
Speaker 3: ago and we did a long form interview with him
Speaker 3: and he walked through this whole thing.
Speaker 2: So we're not getting this news from news anchors on TV.
Speaker 3: They don't know anything, right, So we're actually trying to
Speaker 3: bring you the So if you want to know how
Speaker 3: we deal with it. Af you're one of our clients,
Speaker 3: sign up for the roadshow Bullworkcapital Management dot com. But
Speaker 3: if you want to hear what's really going on in
Speaker 3: the world, just google Know Your Risk podcast and you'll
Speaker 3: find us.
Speaker 2: No problem awesome.
Speaker 1: Thank you, Zank, you Zach for Thank you, ladies pressing
Speaker 1: us the best Love It.
Speaker 3: Investment advisory services offered through TREK Financial loc and SEC
Speaker 3: registered investment advisor. The opinions expressed in this programmer for
Speaker 3: general informational purposes only, and are not intended to provide
Speaker 3: specific advice or recommendations for any individual or on any
Speaker 3: specific security. Any references to performance of security so it
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Speaker 3: investments involved risk and are not guaranteed. Past performance doesn't
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Speaker 2: Trek twenty four three zero eight