1 00:00:00,120 --> 00:00:02,600 Speaker 1: And I believe a recession is going to take hold. 2 00:00:02,759 --> 00:00:05,240 You know, the slow down in the economy has been very, 3 00:00:05,360 --> 00:00:08,679 very gradual. I think it's going to persist. There's the 4 00:00:08,720 --> 00:00:11,039 next couple of charts just down below where we are. 5 00:00:11,519 --> 00:00:15,880 Carrie underscores this in terms of again looking at the 6 00:00:15,960 --> 00:00:20,480 labor market. You know, the savings rate now, for instance, 7 00:00:20,519 --> 00:00:23,559 is down to two point nine percent. Prior to the pandemic, 8 00:00:23,600 --> 00:00:25,879 it was about five and a half percent, between five 9 00:00:25,920 --> 00:00:29,719 and six percent. So the economy's still moving forward, but 10 00:00:29,800 --> 00:00:32,200 there's a whole lot of people that are spending, but 11 00:00:32,280 --> 00:00:35,520 they're not saving because they don't have the extra income 12 00:00:35,520 --> 00:00:36,479 to be able to do it. 13 00:00:36,600 --> 00:00:37,799 Speaker 2: You're listening to Carrie. 14 00:00:37,840 --> 00:00:41,960 Speaker 3: Let'sa's financial survival network where you get valuable information you 15 00:00:42,159 --> 00:00:46,439 just can't find anywhere else to thrive in today's trying times. 16 00:00:46,640 --> 00:00:50,640 You need the Financial Survival Network now more than ever. 17 00:00:51,240 --> 00:00:54,719 Go to Financial Survivalnetwork dot com and get your free 18 00:00:54,799 --> 00:00:58,920 newsletter and gift. Financial Survival Network. 19 00:00:58,840 --> 00:01:05,959 Speaker 2: Now more than ever, and welcome you are listening to 20 00:01:06,120 --> 00:01:10,280 and watching the Financial Survival Network. I'm your host, Carrie Lutz. Hey, 21 00:01:10,439 --> 00:01:14,400 Jim Wilsh of macrotides dot com is with us today, 22 00:01:14,840 --> 00:01:19,519 he's got some revised charts hot off the out off 23 00:01:19,560 --> 00:01:24,519 the Excel spreadsheet. However, he's doing it, and you're definitely 24 00:01:24,519 --> 00:01:29,799 going to want to look dealing with market with latest in, 25 00:01:30,359 --> 00:01:35,879 latest employment numbers, what it all means. Jim, welcome back. 26 00:01:35,920 --> 00:01:38,079 How are you. It's great to join you, Carrie. 27 00:01:38,120 --> 00:01:41,200 Speaker 1: I'm doing well. I hope you are too. Okay, So 28 00:01:41,280 --> 00:01:44,040 let's get down and dirty. Here we got these charts. 29 00:01:44,040 --> 00:01:46,519 By the way, if you're listening on the podcast, there 30 00:01:46,560 --> 00:01:48,799 will be a link in the show notes so you 31 00:01:48,840 --> 00:01:56,040 can download his latest Jim's latest update here so you 32 00:01:56,079 --> 00:01:59,159 can take a look at it firsthand. So what am 33 00:01:59,159 --> 00:02:03,319 I looking at here? Well, basically, Carrie, you know the 34 00:02:03,359 --> 00:02:06,560 Fed meets on September eighteen. They're going to cut the 35 00:02:06,560 --> 00:02:09,879 funds rate. The open question is, well how much are 36 00:02:09,879 --> 00:02:12,199 they going to cut it? But I just thought for 37 00:02:12,639 --> 00:02:15,479 those listening in as well as if they go and 38 00:02:15,520 --> 00:02:17,759 I get the piece that can look at this, you 39 00:02:17,800 --> 00:02:21,159 know what is the debate going to center around as 40 00:02:21,240 --> 00:02:24,639 the hawks and the doves on the FMC discuss all 41 00:02:24,719 --> 00:02:26,919 this stuff. So the first one is a neutral rate, 42 00:02:27,439 --> 00:02:30,840 which is a theoretical concept of where is the fund 43 00:02:30,960 --> 00:02:33,479 where is the level of the funds rate that is 44 00:02:33,599 --> 00:02:38,439 neither restrictive nor accommodata. There's no exact formula, so this 45 00:02:38,520 --> 00:02:41,039 is a best guess thing, and right now the best 46 00:02:41,080 --> 00:02:44,319 guess is around two and a half percent. So what 47 00:02:44,439 --> 00:02:47,520 we can see is in the pandemic, the Fed lowered 48 00:02:47,560 --> 00:02:51,159 the funds rate way below the neutral rate to you know, 49 00:02:51,159 --> 00:02:54,840 support the economy and so forth. When inflation broke out, 50 00:02:55,120 --> 00:02:58,479 they raised it comfortably above the neutral rate, which is 51 00:02:58,520 --> 00:03:02,280 a measure of how restrict of the FMC is. What's 52 00:03:02,319 --> 00:03:05,280 interesting Carry is the Doves think it might be closer 53 00:03:05,319 --> 00:03:07,879 to two percent and the Hawks think the neutral rate 54 00:03:07,879 --> 00:03:10,639 could be closer to three. And the reason why that 55 00:03:10,680 --> 00:03:14,439 debate is important is you measure the difference between the 56 00:03:14,520 --> 00:03:19,159 current funds rate and the neutral rate to determine just 57 00:03:19,199 --> 00:03:22,680 how restrictive policy is. But the bottom line here is 58 00:03:22,719 --> 00:03:26,599 both the Hawks and the Doves Carry agree that the 59 00:03:26,599 --> 00:03:30,520 current level of the funds rate is a restrictive level, 60 00:03:30,879 --> 00:03:34,159 which is why both Camps, Buwks and Dove are on 61 00:03:34,280 --> 00:03:38,000 board to cutting the funds rate in coming meetings. So 62 00:03:38,520 --> 00:03:41,840 that's what they're going to be talking about. And then 63 00:03:42,560 --> 00:03:45,319 one of the things that they've talked about in prior meetings, 64 00:03:45,680 --> 00:03:48,639 and again this is more the doves fucking point, but 65 00:03:48,680 --> 00:03:51,360 the Hawks acknowledge it is that if you look at 66 00:03:51,360 --> 00:03:57,280 the core PCE, which is the Personal Consumption Expenditures Index, 67 00:03:57,319 --> 00:04:01,680 it excludes food and energy. That is the inflation metric 68 00:04:01,800 --> 00:04:05,560 that the FMC pays more attention to than just about 69 00:04:05,599 --> 00:04:09,240 any other metric like the CPI and so forth. So 70 00:04:09,319 --> 00:04:12,560 the point that they've made is that in July of 71 00:04:12,680 --> 00:04:18,199 last year, inflation was I think around four percent. It's 72 00:04:18,319 --> 00:04:21,560 dropped about one hundred and fifty basis points, and the 73 00:04:21,639 --> 00:04:24,399 idea is, okay, the fund rate hasn't been changed at 74 00:04:24,439 --> 00:04:29,279 five and three eighths, but as inflation declines, the real rate, 75 00:04:29,639 --> 00:04:32,839 how much the funds rate is above the core PC 76 00:04:33,319 --> 00:04:36,879 has increased, and that in a sense represents policy tightening. 77 00:04:37,160 --> 00:04:41,680 This is another point of agreement between the Doves and Hawks, like, okay, 78 00:04:42,120 --> 00:04:44,759 policy even though we haven't done anything with the funds 79 00:04:44,839 --> 00:04:48,839 rate since July of last year, has been tightening because 80 00:04:48,879 --> 00:04:50,839 the real fund rate is going up. So these are 81 00:04:50,879 --> 00:04:54,240 the reasons why Auks and Doves are both on board 82 00:04:54,680 --> 00:04:59,319 to lower the funds rate in not just in September, 83 00:05:00,040 --> 00:05:02,560 but incoming meetings. All right, let me ask you one 84 00:05:02,639 --> 00:05:06,839 question first. When you say the neutral rate, would that 85 00:05:06,920 --> 00:05:11,600 also be construed as the natural rate if they weren't 86 00:05:11,720 --> 00:05:15,319 messing around with interest rates in the first place, which 87 00:05:15,839 --> 00:05:18,920 maybe we would all be better off for Yeah, I 88 00:05:18,959 --> 00:05:22,120 agree with that point in terms of historically, the Fed 89 00:05:22,360 --> 00:05:25,240 really and its best efforts, has not done a wonderful 90 00:05:25,319 --> 00:05:31,680 job in terms of the outcomes that have generated the 91 00:05:31,800 --> 00:05:35,560 natural rate. Again, what it is is what's the level 92 00:05:35,600 --> 00:05:41,639 of the funds rate that is neither restrictive or accommodative. 93 00:05:42,240 --> 00:05:45,199 And to me, calling the natural rate makes sense too. 94 00:05:45,839 --> 00:05:50,040 Speaker 2: Okay, So that would be if there was no federal reserve. 95 00:05:50,560 --> 00:05:54,120 This is what it would be. And so we think 96 00:05:54,160 --> 00:05:57,079 it's somewhere around. 97 00:05:57,439 --> 00:06:00,920 Speaker 1: Two and a half percent. Yeah, now, for what it's worth, 98 00:06:01,000 --> 00:06:03,480 before the financial crisis, it was closer to four and 99 00:06:03,519 --> 00:06:07,519 a half. So this thing changes. Obviously, we went through 100 00:06:07,519 --> 00:06:12,399 after the financial crisis an extended period of really muted inflation, 101 00:06:12,720 --> 00:06:17,319 you know, sub two percent, and things like productivity would 102 00:06:17,360 --> 00:06:20,879 also enter into it, you know. So it isn't, like 103 00:06:20,920 --> 00:06:24,399 I said, there is no precise formula. This is the 104 00:06:24,480 --> 00:06:25,839 best guess estimate. 105 00:06:26,279 --> 00:06:29,240 Speaker 2: Okay. So yeah, because you can't know that, because you 106 00:06:29,240 --> 00:06:31,519 would have to have a free market that would actually 107 00:06:31,639 --> 00:06:34,800 set it. So in other words, you're saying that the 108 00:06:34,800 --> 00:06:39,879 FED is like, according to this, it should be basically 109 00:06:40,000 --> 00:06:42,759 two point eight seven five percent. 110 00:06:43,319 --> 00:06:45,560 Speaker 1: Well, two and a half would be the dead neutral 111 00:06:45,879 --> 00:06:48,160 if you believe two and a half is the natural 112 00:06:48,279 --> 00:06:50,720 or neutral rate, the funds rate would be down there. 113 00:06:50,800 --> 00:06:53,240 So that kind of tells us where is it going 114 00:06:53,319 --> 00:06:56,600 over the next twelve eighteen months as they reduced the 115 00:06:56,720 --> 00:07:01,399 level of restrictiveness, that would be an endpoint of where 116 00:07:01,439 --> 00:07:05,000 they might get to the speed with which they move 117 00:07:05,040 --> 00:07:07,759 from where they currently are down towards that two and 118 00:07:07,800 --> 00:07:10,399 a half is going to be dictated by how much 119 00:07:10,439 --> 00:07:12,879 the economy slows and whether or not it goes into 120 00:07:12,920 --> 00:07:14,120 a recession and. 121 00:07:14,079 --> 00:07:18,160 Speaker 2: How much they panic. And you can't of course political 122 00:07:18,199 --> 00:07:22,079 considerations here. They got to do something because the only 123 00:07:22,399 --> 00:07:25,959 bright spot somewhat on the economic horizon has been the 124 00:07:26,000 --> 00:07:29,240 stock market. If it's going to start tanking, they're going 125 00:07:29,319 --> 00:07:34,839 to panic. We already have green Span on on on 126 00:07:34,959 --> 00:07:38,240 the audio saying that I'm not green Span I'm sorry, 127 00:07:38,240 --> 00:07:45,360 and I'm dating myself here. Powell Powell, Yes, Jerom Powell, 128 00:07:45,399 --> 00:07:47,879 I did know that so we already got Powell on 129 00:07:47,920 --> 00:07:54,560 the record in background, you know, somebody somebody talking to 130 00:07:54,680 --> 00:07:58,600 like Project Veritas or something saying that he hates Trump 131 00:07:59,240 --> 00:08:03,079 and do anything to stop them from getting elected. So 132 00:08:03,680 --> 00:08:09,240 when we take into consideration the political backdrop and that 133 00:08:09,399 --> 00:08:13,399 now they could really bring it the rate down to zero, 134 00:08:13,600 --> 00:08:16,120 but there isn't that much time before the election, only 135 00:08:16,160 --> 00:08:18,439 two months. Don't you think they got to go for 136 00:08:18,480 --> 00:08:21,720 the biggest bang for the buck. I'm not in that camp, 137 00:08:21,920 --> 00:08:24,759 in part because we've seen evidence like the employment report 138 00:08:24,800 --> 00:08:28,480 that came out today, Kerrie. You know, last week I 139 00:08:28,519 --> 00:08:31,000 wrote that, hey, we're going to see the unemployment rate 140 00:08:31,160 --> 00:08:34,360 probably chick down, job growth kick up. So job growth 141 00:08:34,399 --> 00:08:36,639 went from one hundred and fourteen thousand to one hundred 142 00:08:36,639 --> 00:08:42,559 and forty two. Oh wow, twenty eight thousand increased. Right, Well, 143 00:08:43,080 --> 00:08:44,600 they revised July. 144 00:08:44,440 --> 00:08:47,960 Speaker 1: And June down by eighty six thousand, and I think 145 00:08:48,159 --> 00:08:53,039 the stock market is responding to that weakness that rule. 146 00:08:53,159 --> 00:08:56,240 Wait a second, that number headline looks fine, but underneath 147 00:08:56,320 --> 00:08:57,159 it not so good. 148 00:08:57,639 --> 00:08:59,600 Speaker 2: So my point is is, if. 149 00:08:59,440 --> 00:09:04,080 Speaker 1: The Fed moves, even if they go fifty basis points, 150 00:09:04,120 --> 00:09:06,879 I think they're gonna go twenty five. But even if 151 00:09:06,919 --> 00:09:09,519 they go fifty, some people might start to think, hmm, 152 00:09:10,200 --> 00:09:12,720 what does the FED see that we don't see? In 153 00:09:12,759 --> 00:09:16,000 other words, is the economy slower than expected? So it 154 00:09:16,080 --> 00:09:19,559 perversely if they went more aggressively at this point in time, 155 00:09:20,039 --> 00:09:24,279 I think the stock market would react more negatively, not positive. 156 00:09:25,120 --> 00:09:28,480 If they go twenty five, one interpretation can be okay, 157 00:09:28,840 --> 00:09:32,200 the Fed still thinks everything is okay, No need to 158 00:09:32,240 --> 00:09:33,519 go more than twenty five. 159 00:09:34,879 --> 00:09:36,559 Speaker 2: So that's my tape. 160 00:09:36,960 --> 00:09:41,600 Speaker 1: I really again, I play very close attention to the 161 00:09:41,639 --> 00:09:43,519 minutes of the FED and all the rest of it. 162 00:09:43,960 --> 00:09:46,759 I've been probably more right than most people in the country. 163 00:09:47,240 --> 00:09:50,679 Speaker 2: I agree with that. Well' see no no argument. But 164 00:09:51,399 --> 00:09:54,519 you know, I'll just go back, and we've talked about 165 00:09:54,519 --> 00:09:58,559 this before to the late great Alan Abelson, who was 166 00:09:59,080 --> 00:10:04,440 a it was the chief editor at Baron's. I remember 167 00:10:04,600 --> 00:10:07,559 one's comments and saying, the FED is doing what it 168 00:10:07,600 --> 00:10:13,000 does best, which is getting a president reelected. And hey, 169 00:10:13,399 --> 00:10:16,600 everybody in Washington wants to increase their own power and 170 00:10:16,679 --> 00:10:20,440 be able to doever they want with minimal oversight, and 171 00:10:21,440 --> 00:10:24,960 you know their allegiances here are very obvious. 172 00:10:25,080 --> 00:10:31,919 Speaker 1: Jim, I'm nuts, you know again, I'm pretty confident that 173 00:10:32,240 --> 00:10:35,200 each of the FED members has their own political bias. 174 00:10:36,639 --> 00:10:40,039 Maybe I'm naive enough to think that they're in a 175 00:10:40,080 --> 00:10:43,120 position where they're looking out over the next one to 176 00:10:43,240 --> 00:10:46,799 three years in terms of me and that they're going 177 00:10:46,840 --> 00:10:48,720 to try to do the right thing right now. The 178 00:10:48,799 --> 00:10:51,480 right thing is cutting by twenty five. If we get 179 00:10:51,480 --> 00:10:54,000 some more data, that is, we could than expect it. 180 00:10:54,639 --> 00:10:58,080 Maybe they go fifty. I just don't see. I will 181 00:10:58,120 --> 00:11:00,399 wrestle and the next meeting is until after is the 182 00:11:00,480 --> 00:11:02,519 day after the election, right, so. 183 00:11:02,440 --> 00:11:04,840 Speaker 2: They got to do it now. They need that market 184 00:11:04,960 --> 00:11:09,279 to jump. I will bet you a latte, and my 185 00:11:09,399 --> 00:11:12,919 latte at Starbucks is currently five dollars and sixty two 186 00:11:13,000 --> 00:11:18,559 cents get his increat from around four bucks two years ago. 187 00:11:18,960 --> 00:11:23,519 And they've cut back on their rewards for their their 188 00:11:23,559 --> 00:11:27,399 customer disloyalty program. We're it's supposed to be loyal to them. 189 00:11:27,759 --> 00:11:32,120 They're disloyal to honest. Yeah, but that's business in America today, right, 190 00:11:32,360 --> 00:11:35,519 all right, it's trying to make your buck. You know, Hey, 191 00:11:35,720 --> 00:11:38,440 they got to do something here. Yeah, this is the 192 00:11:38,480 --> 00:11:41,279 only thing they got. Well, I guess they could just 193 00:11:41,399 --> 00:11:43,960 print up a couple of trillion dollars and just dump 194 00:11:44,000 --> 00:11:44,879 it into the market. 195 00:11:45,000 --> 00:11:48,879 Speaker 1: Right, Well, that's coming, I mean during the next recession. 196 00:11:49,080 --> 00:11:51,559 And I believe a recession is going to take hold. 197 00:11:51,759 --> 00:11:54,240 You know, the slow down in the economy has been very, 198 00:11:54,360 --> 00:11:57,639 very gradual. I think it's going to persist. There's the 199 00:11:57,720 --> 00:12:02,120 next couple charts just down below. Over reard Carry underscores 200 00:12:02,240 --> 00:12:05,799 this in terms of again looking at the labor market. 201 00:12:07,159 --> 00:12:09,799 You know, the savings rate now, for instance, is down 202 00:12:09,799 --> 00:12:12,639 to two point nine percent. Prior to the pandemic, it 203 00:12:12,759 --> 00:12:15,000 was about five and a half percent, between five and 204 00:12:15,080 --> 00:12:18,720 six percent. So the economy is still moving forward, but 205 00:12:18,759 --> 00:12:21,159 there's a whole lot of people that are spending, but 206 00:12:21,279 --> 00:12:24,480 they're not saving because they don't have the extra income 207 00:12:24,519 --> 00:12:26,879 to be able to do it. So there are stresses 208 00:12:27,320 --> 00:12:30,080 building in the economy. And if you could just tick 209 00:12:30,159 --> 00:12:36,320 down to the next two charts, because you know this, okay, 210 00:12:36,360 --> 00:12:40,080 So the one on the left is diffusion index. It's 211 00:12:40,159 --> 00:12:43,879 kind of like, okay, how many sectors are really contributing 212 00:12:44,159 --> 00:12:47,840 to employment? Bro Well, it drop below fifty percent last month. 213 00:12:47,919 --> 00:12:50,360 I haven't seen the number for the most recent month. 214 00:12:50,960 --> 00:12:55,159 So again you look back in time when fewer and 215 00:12:55,200 --> 00:13:00,480 fewer industries are adding jobs. You're on the cusp of 216 00:13:01,440 --> 00:13:06,159 a recession. The monthly hours work you can see, you know, 217 00:13:06,440 --> 00:13:10,559 that's a that's slowing, and that is progressive. I think 218 00:13:10,639 --> 00:13:13,759 that's going to continue. So my point is irrespectable of 219 00:13:13,799 --> 00:13:17,200 today's number. If the die is cast as far as 220 00:13:17,200 --> 00:13:20,039 I'm concerned, Donald, then rate's going to tick up, and 221 00:13:20,559 --> 00:13:23,120 you know, the labor market's going to weekend and ultimately 222 00:13:23,159 --> 00:13:24,919 I think we go into a recession as we get 223 00:13:24,919 --> 00:13:25,600 into next year. 224 00:13:25,960 --> 00:13:29,159 Speaker 2: Hey, well, don't worry about it, because AI is coming 225 00:13:29,200 --> 00:13:32,759 to save the day. Jam. We're all going to be saved. 226 00:13:32,759 --> 00:13:36,080 It will save the US economy, the global economy, because 227 00:13:36,080 --> 00:13:37,799 Elon Musk says, so right. 228 00:13:38,919 --> 00:13:43,279 Speaker 1: I don't agree with that, but you know what, you 229 00:13:43,519 --> 00:13:46,440 know again, AI is going to make a difference. The 230 00:13:46,559 --> 00:13:48,679 problem is, and I wrote about this a couple of 231 00:13:48,679 --> 00:13:52,159 months ago and talking about the semiconductor stocks and Nvidia. 232 00:13:52,919 --> 00:13:56,559 That is, fifty billion dollars were spent on Nvidia chips 233 00:13:56,840 --> 00:14:02,039 so far companies employing have generated three billion in revenue. 234 00:14:02,559 --> 00:14:04,320 So that we're at a point where people are going 235 00:14:04,399 --> 00:14:08,000 to start to question, gee, we're spending all this money 236 00:14:08,039 --> 00:14:10,399 and we're not really seeing much bank for our book, 237 00:14:10,639 --> 00:14:14,320 which then begs less spending. I think that's the technology 238 00:14:14,639 --> 00:14:19,080 weakness we've seen carry is people are waking up to like, ooh, 239 00:14:19,200 --> 00:14:21,360 maybe we're not going to get the return on all 240 00:14:21,399 --> 00:14:23,399 this money as quickly as we thought. 241 00:14:23,840 --> 00:14:28,440 Speaker 2: Well, one industry that is really cashing in on the 242 00:14:28,480 --> 00:14:33,600 AI boom is the energy industry, the electrical industry. Now, 243 00:14:34,600 --> 00:14:37,000 I don't usually tell people when I buy stocks when 244 00:14:37,000 --> 00:14:40,120 I sell them, because I'm not a financial advisor. I 245 00:14:40,120 --> 00:14:45,320 don't give advice, and you know I'm no expert on it. 246 00:14:45,360 --> 00:14:47,559 But I did happen to buy this stock a couple 247 00:14:47,639 --> 00:14:51,519 months ago, called Dominion Energy. And I didn't buy it 248 00:14:51,600 --> 00:14:57,440 because it's financials. It's a solid mid tier electrical utility 249 00:14:57,799 --> 00:15:01,240 that pays the divid end of I don't know, two 250 00:15:01,320 --> 00:15:05,000 point seven percent something like that. The reason I bought 251 00:15:05,000 --> 00:15:09,960 it is because all the government data centers are in 252 00:15:10,720 --> 00:15:15,559 like Langley, Virginia, in that CIA strip over there, and 253 00:15:16,240 --> 00:15:19,799 they are piling and they're probably buying more Nvidia chips 254 00:15:19,879 --> 00:15:26,000 than Tesla and Musk combined. And sure enough, I was 255 00:15:26,000 --> 00:15:28,759 starting to wonder, it's only up like ten percent and 256 00:15:29,120 --> 00:15:32,080 what the market's been doing. Plus I got paid to wait. 257 00:15:33,080 --> 00:15:37,480 Sure enough, there was a news release saying that, hey, 258 00:15:38,120 --> 00:15:40,600 if you want to build a data center here, you 259 00:15:40,679 --> 00:15:43,799 got to make a reservation because we're all booked up. 260 00:15:44,200 --> 00:15:46,519 You can't just build one because they use like five 261 00:15:46,600 --> 00:15:51,320 hundred megawatts, which is like enough to power the state 262 00:15:51,360 --> 00:15:56,000 of Rhode Island, you know, and they're cashing in on 263 00:15:56,080 --> 00:16:00,720 it obviously for intelligence and such. Hey just get rid 264 00:16:00,720 --> 00:16:03,480 of like all those analysts who just to take up 265 00:16:03,519 --> 00:16:05,240 space and right. 266 00:16:05,799 --> 00:16:08,360 Speaker 1: But I was definitely at the goringsouch that people when 267 00:16:08,399 --> 00:16:10,720 they made money in the Gold Rush, for the people 268 00:16:10,720 --> 00:16:13,799 who sold the pickets and doubles, the troubles and all the. 269 00:16:13,759 --> 00:16:17,240 Speaker 2: Rest and le stress. Don't forget Levi Strauss got to 270 00:16:17,279 --> 00:16:18,279 have some g's baby. 271 00:16:18,600 --> 00:16:21,919 Speaker 1: So you know, the utility are seeing a huge ramp 272 00:16:22,000 --> 00:16:26,600 up in demand for energy and they should be beneficiaries 273 00:16:27,480 --> 00:16:30,200 and at least at the same time, if the economy 274 00:16:30,240 --> 00:16:35,240 does slow, the decrease in demand, because the economy slowing 275 00:16:35,720 --> 00:16:38,159 is going to be offset to some extent by the 276 00:16:38,240 --> 00:16:41,440 increase in demand to be able to power AI and 277 00:16:41,480 --> 00:16:44,639 everything associated with it. Well, that was a good camber 278 00:16:44,679 --> 00:16:45,440 you too. 279 00:16:45,720 --> 00:16:48,240 Speaker 2: I mean, the robots are coming and I have no 280 00:16:48,360 --> 00:16:52,679 doubt those robots are going to be super useful, especially 281 00:16:52,679 --> 00:16:56,399 in Florida here. They Hey, I can't walk, but my 282 00:16:56,559 --> 00:17:00,519 robot can go like being a cigar, right, and lighten 283 00:17:00,639 --> 00:17:03,639 for me. Cut the tip. That's the that's the robot. 284 00:17:03,679 --> 00:17:06,039 I want the one that will pick out the cigar. 285 00:17:06,440 --> 00:17:09,039 Cut the tip, put it in my mouth. I lighten it. 286 00:17:09,319 --> 00:17:12,039 I can't do anything here, jemmy, you know, and then 287 00:17:12,119 --> 00:17:17,839 flick the ash. Yeah, to flick the ash, lean up 288 00:17:17,880 --> 00:17:20,720 after me, because of course I'm you know, infirmed, I 289 00:17:20,759 --> 00:17:25,440 can't like do everything. But seriously, those robots are common. 290 00:17:25,640 --> 00:17:29,359 There's the right question, and it's going to be revolutionary. 291 00:17:29,640 --> 00:17:32,759 You know, we're like, we're right when the dot com 292 00:17:32,759 --> 00:17:36,960 bust happened, right, nobody thought the after that the Internet's 293 00:17:37,039 --> 00:17:39,440 not going to amount to anything yet. You know, these 294 00:17:39,559 --> 00:17:43,839 trillion dollar companies all all came about as a result 295 00:17:43,880 --> 00:17:46,960 of that. That's where we're at now, where the return 296 00:17:47,160 --> 00:17:50,240 is going to lag the investment. But then when it 297 00:17:50,359 --> 00:17:52,880 kicks in, you know, I see it with the Tesla cars. 298 00:17:52,920 --> 00:17:55,519 You know, I have a Tesla, big Tesla fan. Not 299 00:17:55,640 --> 00:17:58,240 because I say it. I think I'm saving the planet. 300 00:17:58,480 --> 00:18:01,599 Uh furthest thing from my mind. But the tech and 301 00:18:01,640 --> 00:18:05,240 that thing basically ninety percent of the time. Jeff, it's 302 00:18:05,319 --> 00:18:09,680 driving itself. Sure, I'm monitoring it. I'm like the pilot, 303 00:18:09,960 --> 00:18:12,839 so that the pilot is the car and I'm the 304 00:18:12,920 --> 00:18:16,200 monitoring driver. And when it does something I don't like, 305 00:18:16,680 --> 00:18:20,200 I'd knock it off and I'd take the control. We're 306 00:18:20,200 --> 00:18:23,240 not that far here, and according to Musk, we're going 307 00:18:23,319 --> 00:18:26,119 to be having these things. Yeah. No, I mean all 308 00:18:26,160 --> 00:18:27,279 those things are coming. 309 00:18:27,319 --> 00:18:30,440 Speaker 1: As you point out, I tell the story about RCA 310 00:18:31,519 --> 00:18:35,680 because I think it's applicable. You know, radio was a 311 00:18:35,799 --> 00:18:38,599 huge thing when it showed up, and RCA was at 312 00:18:38,599 --> 00:18:42,079 the forefront of radio at radio stations all over the country. 313 00:18:42,119 --> 00:18:45,440 In nineteen twenty one, OURCA stock was eight dollars a share. 314 00:18:45,799 --> 00:18:50,000 By nineteen twenty nine it was four hundred and sixty 315 00:18:50,079 --> 00:18:52,920 seven dollars a share, and it went up because people 316 00:18:52,920 --> 00:18:54,160 are like, oh God, they're going to be able to 317 00:18:54,240 --> 00:18:56,519 send pictures and you'll be able to see people talking, 318 00:18:56,640 --> 00:18:57,359 not just listen. 319 00:18:57,640 --> 00:18:58,200 Speaker 2: I'm okay. 320 00:18:58,480 --> 00:19:02,079 Speaker 1: In thirty nineteen thirty two fifteen dollars a share. Now, 321 00:19:02,119 --> 00:19:04,039 obviously the depression had little something to do with it. 322 00:19:04,279 --> 00:19:08,559 My point though, is did TV stations happen. Did rca 323 00:19:09,000 --> 00:19:11,960 fulfill if you will, the promise of the twenties in 324 00:19:12,039 --> 00:19:13,519 terms of what was coming next? 325 00:19:14,000 --> 00:19:14,640 Speaker 2: They did. 326 00:19:15,079 --> 00:19:17,559 Speaker 1: So what happens, though, is you get into these phases 327 00:19:18,079 --> 00:19:20,799 where people get so enamored about what might be coming 328 00:19:20,839 --> 00:19:24,119 down the road they're more than willing to overpay in 329 00:19:24,200 --> 00:19:24,960 the shortcot. 330 00:19:25,559 --> 00:19:26,119 Speaker 2: And I'll just. 331 00:19:26,039 --> 00:19:29,279 Speaker 1: Think that's where we've kind of been. And ultimately what 332 00:19:29,440 --> 00:19:33,200 you're talking about will like the Internet, you know, after 333 00:19:33,240 --> 00:19:36,279 the unwined between two thousand and two thousand and two, 334 00:19:36,319 --> 00:19:38,960 and then you flash forward twenty years and you've got 335 00:19:39,000 --> 00:19:42,039 several companies that are worth three trillion dollars. 336 00:19:42,200 --> 00:19:46,160 Speaker 2: Okay, so, and that is so true because it's the 337 00:19:46,240 --> 00:19:50,519 lag between the promise and the delivery. And we'll buy 338 00:19:50,559 --> 00:19:55,880 the sizzle, not the steak. So Buffet's dumped seven billion 339 00:19:55,960 --> 00:19:59,680 dollars worth of boa, he sold off half his Apple holdings. 340 00:20:00,279 --> 00:20:02,880 You know, he's got two hundred and seventy seven billion 341 00:20:02,960 --> 00:20:07,000 dollars in cash right now. So you can basically buy 342 00:20:07,119 --> 00:20:10,640 elon Musk, you know, and put them on a raft 343 00:20:10,680 --> 00:20:14,400 out to Africa or whatever. Are we going to see 344 00:20:14,400 --> 00:20:19,319 a return to real value investing here? Yeah, it's going 345 00:20:19,359 --> 00:20:19,880 to take time. 346 00:20:20,000 --> 00:20:21,759 Speaker 1: I mean at the beginning of the piece that you're 347 00:20:21,759 --> 00:20:25,480 posting on your side is I'm offering a special report 348 00:20:26,359 --> 00:20:30,319 the coming secular bear market. And in that piece, Terry, 349 00:20:30,359 --> 00:20:33,160 I go back through history and then look at what's 350 00:20:33,200 --> 00:20:36,279 going on in our economy that has been going on 351 00:20:38,000 --> 00:20:41,480 that is going to require, if you will, a big adjustment. 352 00:20:42,000 --> 00:20:44,720 And that adjustment is going to be valuations are going 353 00:20:44,759 --> 00:20:48,599 to drop from very very high levels from an historical 354 00:20:48,640 --> 00:20:54,160 standpoint to a much more reasonable level. And as we 355 00:20:54,240 --> 00:20:57,079 deal with these problems, the economy is going to grow 356 00:20:57,119 --> 00:20:59,839 more slowly. Well, that means earnings are going to be less, 357 00:21:00,119 --> 00:21:03,559 So you get a combination of factors that bring stock 358 00:21:03,640 --> 00:21:06,920 valuations down. The parallel I would make is between nineteen 359 00:21:06,960 --> 00:21:09,960 sixty six nineteen eighty two, the Dow got to one 360 00:21:10,000 --> 00:21:14,319 thousand in nineteen sixty six. In nineteen eighty two it 361 00:21:14,480 --> 00:21:18,759 was trading under one hundred, a party under eight hundred. Yeah, 362 00:21:19,000 --> 00:21:22,240 except years later at something I remember, yeah, yeah, you 363 00:21:22,279 --> 00:21:24,240 know so. But it took a long time, and there 364 00:21:24,240 --> 00:21:26,519 were a lot of ups and downs. Is that process 365 00:21:26,599 --> 00:21:29,240 got worked through. I think we're on a cusp over 366 00:21:29,279 --> 00:21:32,079 the next ten to fifteen years where we're going to 367 00:21:32,079 --> 00:21:35,319 see a secular bear market. There's no way the government 368 00:21:35,359 --> 00:21:38,680 can continue to spend and have a deficit seven percent 369 00:21:38,720 --> 00:21:43,400 a year while the economy's growing one hundred and twenty 370 00:21:43,400 --> 00:21:46,359 five percent of debt to GDP and it's going higher. 371 00:21:47,079 --> 00:21:50,000 Those things have to be addressed and will be addressed. 372 00:21:50,279 --> 00:21:52,920 And I think the outcome is that equity valuations are 373 00:21:52,920 --> 00:21:56,839 going to get compressed. Hey, So just to let you know, AI, 374 00:21:56,920 --> 00:22:00,200 I solved the budget problem, by the way, until at 375 00:22:00,279 --> 00:22:03,720 GPT to cut three trillion off the budget. And the 376 00:22:03,720 --> 00:22:06,839 first thing it does, because it has a certain leaning, 377 00:22:06,960 --> 00:22:10,000 is it doesn't say anything about budget cuts. It wants 378 00:22:10,000 --> 00:22:12,759 to raise the tax rate on business from twenty one 379 00:22:12,799 --> 00:22:15,759 to twenty eight percent. So I said, do not, under 380 00:22:15,799 --> 00:22:17,759 any circumstances. 381 00:22:17,039 --> 00:22:20,799 Speaker 2: Raise taxes, all right, And then I said get rid 382 00:22:20,799 --> 00:22:24,440 of one hundred government agencies. And you know what, I 383 00:22:24,559 --> 00:22:27,000 save trillions of dollars here, man, and I didn't even 384 00:22:27,079 --> 00:22:29,440 have to look at it. Yeah. 385 00:22:30,160 --> 00:22:32,839 Speaker 1: The reality is, Kerry, I mean to be serious about 386 00:22:32,839 --> 00:22:35,720 it in the sense is we got through this problem 387 00:22:35,799 --> 00:22:41,559 because of too much spending, no question about it, and 388 00:22:41,880 --> 00:22:45,680 tax levels are lower. I just think, if you want 389 00:22:45,720 --> 00:22:48,920 to get serious about bringing the deficit down, you have 390 00:22:48,960 --> 00:22:52,000 to curb spending and you need to increase some taxes. 391 00:22:52,319 --> 00:22:58,759 Of course, I mean it's painful ideologically surgery. 392 00:22:57,359 --> 00:23:00,559 Speaker 2: It isn't. I mean, ideology a part of me. 393 00:23:00,640 --> 00:23:03,640 Speaker 1: Ideologically, the Dems aren't going to go for the spending 394 00:23:03,640 --> 00:23:05,319 cuts and the republic Ms aren't going to go for 395 00:23:05,359 --> 00:23:07,519 the taxing creases, which is how we got to do 396 00:23:08,039 --> 00:23:12,000 so that if indeed that happens, you spend less money, 397 00:23:12,079 --> 00:23:15,240 you raise taxes, there is going to be slower economic growth. 398 00:23:15,319 --> 00:23:18,799 Speaker 2: If we had cut spending twenty years ago by ten 399 00:23:18,880 --> 00:23:23,960 percent and just we wouldn't even have these deficits now, 400 00:23:24,319 --> 00:23:27,599 you know, yeah, no, I mean, you know it's called discipline. 401 00:23:27,599 --> 00:23:30,359 Speaker 1: I think going to last fifty years, tax receipts have 402 00:23:30,440 --> 00:23:34,319 averaged about seventeen and a half percent of GDP. Spending 403 00:23:34,359 --> 00:23:36,839 is around twenty percent, so you still had a deficit. 404 00:23:37,440 --> 00:23:39,920 But we're at twenty three percent to twenty four percent 405 00:23:39,920 --> 00:23:43,559 of GDP in terms of spending. So if there was 406 00:23:44,200 --> 00:23:47,240 no thing we're disciplined on the spending side, the deficits 407 00:23:47,279 --> 00:23:51,039 would not have been or be now. And the sad 408 00:23:51,079 --> 00:23:54,400 thing is both candidates are not talking about. 409 00:23:54,319 --> 00:23:59,559 Speaker 2: Reducing deficits whatsoever. Well, Trump is to the extent of 410 00:24:00,079 --> 00:24:04,680 wants to put Elon Musk in charge of Cost Savings Commission. 411 00:24:05,039 --> 00:24:09,480 But yeah, yeah, Like, I think there's a realization that's 412 00:24:09,559 --> 00:24:13,599 dawning that it's the deed's going to have to be done. 413 00:24:14,279 --> 00:24:17,880 And that's the problem when you like, don't discipline your 414 00:24:17,960 --> 00:24:22,200 child when they're six, when they're twenty and they're in 415 00:24:22,319 --> 00:24:27,440 college and they're not going to class, it becomes impossible. Anyways, Hey, 416 00:24:28,000 --> 00:24:31,319 let's just look at it, Charity. I want to look 417 00:24:31,359 --> 00:24:32,640 at the old gold. 418 00:24:32,680 --> 00:24:36,279 Speaker 1: Yeah, gold all right, from the low of last year 419 00:24:36,440 --> 00:24:40,839 goal bottom of eighteen twelve. I think we're nearing the 420 00:24:40,960 --> 00:24:44,200 end of that big move up from eighteen twelve. I 421 00:24:44,240 --> 00:24:47,559 still think there's a potential for one more pop above 422 00:24:47,640 --> 00:24:51,880 the twenty five twenty nine high that happened a few weeks. 423 00:24:51,720 --> 00:24:53,960 Speaker 2: Ago to complete this move. 424 00:24:54,839 --> 00:24:58,680 Speaker 1: If gold trades bowl twenty four to seventy, that probably 425 00:24:59,319 --> 00:25:02,880 reduces the the chance for another pop. My guess is well, 426 00:25:03,240 --> 00:25:06,160 and part of this too, besides just the price pattern 427 00:25:06,400 --> 00:25:10,200 bullistes on gold is quite high positioning is you know, 428 00:25:10,359 --> 00:25:14,319 large speculators have a very big position long in gold. 429 00:25:14,519 --> 00:25:16,400 Because people who have been talking about gold going to 430 00:25:16,440 --> 00:25:19,400 three thousand. It may indeed go to three thousand. I 431 00:25:19,480 --> 00:25:22,480 just think in the short term people are over extended 432 00:25:22,519 --> 00:25:25,279 toward gold. I think we're going to see a pullback 433 00:25:25,279 --> 00:25:30,240 in gold twenty three hundred and twenty three fifty. Consolidation, yeah, 434 00:25:30,359 --> 00:25:33,400 more consolidation than oh, my goodness, the sky's falling. In 435 00:25:33,480 --> 00:25:37,319 terms of the dollar, I think the dollars headed toward 436 00:25:37,359 --> 00:25:41,279 the mid nineties. I think near term you might see 437 00:25:41,279 --> 00:25:43,400 a little bit more strength, but I think we're going 438 00:25:43,440 --> 00:25:45,880 to take out that recent low then they'll be into 439 00:25:45,920 --> 00:25:50,559 their bouts. But ultimately I think carry the dollar dropped 440 00:25:50,559 --> 00:25:53,119 about thirteen and a half dollars from one fourteen to 441 00:25:53,160 --> 00:25:55,839 one oh one. You take thirteen dollars from that high 442 00:25:55,880 --> 00:25:59,599 at one oh seven ninety four. So nowther words, two 443 00:25:59,640 --> 00:26:02,799 decline that are relatively equal, and that's how you get 444 00:26:02,799 --> 00:26:05,480 down towards ninety five. If I'm right about the economy 445 00:26:05,599 --> 00:26:09,160 slowing more going into recession, FED being forced to probably 446 00:26:09,240 --> 00:26:13,319 accelerate rate cuts. I think that's what is why I 447 00:26:13,359 --> 00:26:15,880 felt really for the last two three months the trend 448 00:26:15,920 --> 00:26:18,039 in the dollar was down. It was just how we 449 00:26:18,079 --> 00:26:22,480 were going to get towards the mid nineties. Okay, all right, hey, 450 00:26:23,480 --> 00:26:24,480 you got more charts. 451 00:26:24,599 --> 00:26:27,839 Speaker 2: We're going to cook to just TLFT again. 452 00:26:27,880 --> 00:26:31,160 Speaker 1: I put these charts together a couple hours ago and 453 00:26:31,599 --> 00:26:35,319 Waller made some comments he's an f OMC governor, so 454 00:26:35,480 --> 00:26:38,680 tlt rallied above. I think he got up to maybe 455 00:26:38,680 --> 00:26:43,079 one hundred point seventy. What I basically told my subscribers 456 00:26:43,119 --> 00:26:46,920 to a macrotites briefly texteds to review. We've been long 457 00:26:47,519 --> 00:26:50,759 since the spring at ninety one thirteen to sell a 458 00:26:50,799 --> 00:26:54,319 third of their position above that ninety nine ninety three 459 00:26:54,720 --> 00:26:58,920 because we're getting a little overextended in the short term 460 00:26:59,119 --> 00:27:03,359 onl and you know, sell the news. The Fed does 461 00:27:03,400 --> 00:27:05,920 cut the rates I did. Potentially if they only go 462 00:27:06,000 --> 00:27:08,359 twenty five not fifty, that gives people a reason to 463 00:27:09,559 --> 00:27:12,319 fell into the news, so to speak. A longer term, 464 00:27:12,359 --> 00:27:14,640 I still think one oh five, one oh nine, and 465 00:27:14,680 --> 00:27:17,480 the possibility is if we really do go into recession, 466 00:27:18,160 --> 00:27:22,000 one nineteen is possible. So I'm looking to be a 467 00:27:22,039 --> 00:27:25,119 buyer on a pullback over the next you know, a 468 00:27:25,160 --> 00:27:28,680 couple of months. Uh at that panel and finally the 469 00:27:28,799 --> 00:27:32,759 SMP once it dropped goal of fifty five sixty one, 470 00:27:33,559 --> 00:27:36,559 you can see that's important support that held it twice. 471 00:27:37,839 --> 00:27:41,240 There's still the chance that the SMP will be able 472 00:27:41,240 --> 00:27:44,079 to go up one more time to a new hot. Now, 473 00:27:44,119 --> 00:27:47,000 what I said in Monday's Weekly Technical Review is if 474 00:27:47,039 --> 00:27:50,400 we do get the rally above fifty seven hundred, that's 475 00:27:50,440 --> 00:27:52,480 going to set the stage for a decline to fifty 476 00:27:52,519 --> 00:27:56,200 one fifty to forty nine eighty. In other words, that 477 00:27:56,240 --> 00:27:58,759 while we saw in April, I think if we did 478 00:27:58,799 --> 00:28:01,400 get this pop, we're going going down there. We may 479 00:28:01,400 --> 00:28:03,480 not get the pop. We may be just going down 480 00:28:03,519 --> 00:28:07,200 there directly because people are realizing, you know, oh great, 481 00:28:07,400 --> 00:28:09,839 they may cut more if the economy is weak. And 482 00:28:09,880 --> 00:28:11,960 the premise of this rally the last two months or 483 00:28:12,000 --> 00:28:15,599 so Jerry was, hey, the economy's okay, we don't have 484 00:28:15,599 --> 00:28:18,640 to worry about intercession, and the Fed's going to cut rates. Well, 485 00:28:18,680 --> 00:28:21,279 now all of a sudden, the idea that the economy's fine, 486 00:28:21,279 --> 00:28:24,119 I think, is being called into question. And even if 487 00:28:24,119 --> 00:28:26,480 the Fed is going to cut rates, people are looking 488 00:28:26,519 --> 00:28:29,720 at that as like that glass looks half empty, not 489 00:28:29,839 --> 00:28:30,400 half full. 490 00:28:30,799 --> 00:28:34,079 Speaker 2: So you know, okay, I'm buying. I think, all right, Jim, 491 00:28:34,200 --> 00:28:37,880 we got to run now, Matt, it's dot com. The 492 00:28:38,119 --> 00:28:41,599 link to these charts. If you're listening on the podcast 493 00:28:42,119 --> 00:28:45,319 is in the show notes. Just click it. You'll get 494 00:28:45,319 --> 00:28:49,039 it from my dropbox right to you and look go 495 00:28:49,200 --> 00:28:52,720 subscribe macro tides dot com. You can send me an 496 00:28:52,720 --> 00:28:55,480 email at kl at Carrie lets dot com if you 497 00:28:55,559 --> 00:29:00,640 got a question or comment. Very interesting conversation, Jim. As always, 498 00:29:00,640 --> 00:29:04,400 we appreciate your joining us here and we'll talk to 499 00:29:04,440 --> 00:29:07,880 you again when the fallout happens. If we're not all 500 00:29:07,960 --> 00:29:10,279 in our fallout shelters, well we'll see what the FED 501 00:29:10,319 --> 00:29:13,720 does on September eighteenth. This was a fun conversation, Carrie. 502 00:29:13,759 --> 00:29:17,960 I enjoyed it and I hopefully might rise listeners as well. Always. Hey, 503 00:29:18,200 --> 00:29:21,759 by the way, you'll find a link to macrotides dot 504 00:29:21,799 --> 00:29:24,920 com in the show notes to this interview on Financial 505 00:29:25,039 --> 00:29:28,720 Survival Network dot com. Hey, while you're there, please sign 506 00:29:28,799 --> 00:29:32,200 up for your free newsletter so you get information like this. Jim, 507 00:29:32,279 --> 00:29:34,640 you have been ahead of the curve. We've been talking 508 00:29:34,680 --> 00:29:37,079 about this for like a year and a half and 509 00:29:37,279 --> 00:29:40,640 it's all coming to fruition. Appreciate you. Thanks very much, Carrie, 510 00:29:40,759 --> 00:29:41,599 have a great weekend. 511 00:29:41,960 --> 00:29:46,079 Speaker 3: Thanks for listening to Carrie Lets's Financial Survival Network. Your 512 00:29:46,160 --> 00:29:50,000 solution to today's trying times. For the latest, go to 513 00:29:50,160 --> 00:29:56,079 Financial Survivalnetwork dot com. Financial Survival Network now more than 514 00:29:56,160 --> 00:29:56,559 ever