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Speaker 1: And it's like with houses, where houses are just unaffordable

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when you compare house prices to incomes. Same thing with cars.

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I mean, if you have to have an eleven hundred

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dollars car payment in order to get yourself into one

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of these new vehicles, most people are going to say,

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now that's what I pay on my house. I'm not

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going to pay that much on my car. So we've

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kind of reached the limit for that segment of the

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consumer market too. So that's another recession indicator. And yeah,

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we could go on and on about with recession indicators.

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Just fill up the show with those things, because it

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does feel like we're getting there.

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Speaker 2: You are listening to Carrie Letz's Financial Survival Network, where

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you get valuable information you just can't find anywhere else

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

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Survival Network now more than ever. Go to Financial Survivalnetwork

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dot com and get your free newsletter and gift. Financial

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Survival 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 Lutz. It's the day

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after voting Day in November November fifth, twenty twenty five. Well,

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John Rabino's with us and John. If there's one theme

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what's happening now is layoffs, layoffs, layoffs, right.

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Speaker 1: Hey, carry Yeah, that's you know, that's kind of been

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a low level thing for quite a while now. People

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have been talking about mass layoffs and tech and things

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like that, and now it's becoming a lot more broad

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based though, starting with the cardboard box indicator. You know,

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the guys who make cardboard boxes have a really good

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sense of which way the economy's going, because when people

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want a lot of boxes, that means they're selling a

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lot of stuff, and the opposite's happening now. The demand

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for cardboard boxes is tanking. And at the same time

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that's happening, a lot of other big companies are announcing

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massive layoffs. And remember we're heading into the holidays right now.

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This is Christmas time coming up when companies usually add staff,

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but they're laying off or at you know, at best

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keeping their head count stable. But a lot of them

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are just flat out laying off a lot of people,

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and you don't normally see that this time of year.

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So the question is is the economy just rolling over,

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like are we finally going to get the recession that's

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been overdue for a long time now, or is it

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AI eating a lot of these jobs, So it doesn't

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matter whether it's the Christmas shopping season or not. You know,

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people are being laid off by ais that can do

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their job better than them, and you know, it's probably

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a little bit of both. But we'll see in the

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coming year which one it is. But I think the

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recession that flows from this will happen sooner rather than later.

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You know, we won't necessarily know why the recession is happening,

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will just know that companies are laying people off, and

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you've got a lot of other things going to like

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the whole debt metric thing where whatever kind of consumer

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debt you want to look at, it's at record highs,

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and the stress metrics like defaults and ninety days late

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and things like that. But they're all going up too.

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So we've got people being laid off, we've got debt

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spiking and a lot of debt going bad at the

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same time. So that's the portrait of an economy that's

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rolling over into a recession. So yeah, let's see if

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that turns out to be true. In twenty twenty six,

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I think there's a decent chance that it does.

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Speaker 3: Yeah, and it's interesting you mentioned that. So another indicator

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generally of economic health is things like petroleum consumption, and

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in a rising economy, gasoline prices generally are going up.

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But here we see them sinking. And I think there's

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two reasons for this. If we buy into your recession

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premise that it's inevitable that they haven't figured out how

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to eliminate the business cycle yet, and this time is

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always different, we know that. But basically, if we have

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demand going down because of layoffs impending recession, and then

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there are now six point two million electric vehicles on

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the road, that's out of just under one hundred million,

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So that's six percent less gas being consumed. And I

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presume that they're newer cars, the electrics. Therefore, newer cars

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are driven more generally than older cars, because in your

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older car mix you've got like all the classics everything else. Anyway,

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meandering here, but the point is we got a double

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barrel recession coming. It's less petroleum consumption and less employment,

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which is driving that price of oil going down. It's

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at sixty dollars a barrel. Trump heralds that as a

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great accomplished, but it could be an indicator of something

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that he doesn't want to think about. We know.

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Speaker 1: The other thing regarding oil and cars and things like that,

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is that the car market is starting to roll over. CarMax,

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the big used car online dealer, just reported horrible numbers

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in their stock tanked. And there are all these videos

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online now where guys are walking around car dealerships and

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going look to the horizon, it's Dodge pickup trucks. Nobody's

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buying these things, you know, stuff like that. And the

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consensus among those guys who are on the ground doing

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their own research is that the used car market is

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kind of imploding right now, and the new car market

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is just way overpriced. You know, cars just got extremely

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expensive because of all the bells and whistles, like for instance,

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I have a Toyota Tacoma pickup truck and the newest version,

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the twenty twenty four is they were completely redesigned and

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they've got massive technology upgrades and everything, and they didn't

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sell well at first at all because nobody wanted to

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pay twenty extra thousand dollars for a pickup truck. They know,

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they knew how much a pickup truck was supposed to

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cost and here here the tacomas are coming out twenty

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thousand dollars more or more, you know, more than twenty

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thousand in some model configurations. And it's like with houses,

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where houses are just unaffordable when you compare house prices

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to incomes. Same thing with cars. I mean, if you

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have to have an eleven hundred dollars car payment in

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order to get yourself into one of these new vehicles,

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most people are going to say, now that's what I

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pay on my house. I'm not going to pay that

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much on my car. So we've kind of reached the

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limit for that segment of the consumer market too. So

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that's another recession indicator. And yeah, we could go on

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and on about with recession indicators. Just fill up the

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show with those things, because it does feel like we're

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getting there.

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Speaker 3: Yeah, it certainly does. And it's about time because the

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purpose or recessions get rid of excessive of speculation. Right

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in the Austrian frame, that's why we have these things

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because rates are too low, reckless investments and what happens

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The chickens come home to roost and then we have

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a recession to eliminate all that excess speculation. One thing

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I want to point out. It's not on our list,

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but I think it's really important. Vegas is in the pits.

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No one's gone to the place because it's gotten like

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twenty eight dollars for a bottle of water, and they say, well,

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we're just catering to the exclusive crowd, the whales, the

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people that could drop six figures and up on a

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weekend and not think twice about it. I'm not buying it.

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I think it used to be a great deal. You

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could go in a great vacation in Vegas, spend hardly anything,

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and whatever you lost at the tables, and if you

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didn't play the tables, you came out ahead. You know,

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you could feed the whole clan, you know, a family

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of five for like fifty bucks and leave a generous

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tip and still have money left in your pocket. Now

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it's one hundred dollars apiece for a low level buffe

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and there's just no value left in that town. And

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as a result, that town's in a recession, and Vegas

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is always a leading indicator for recessions throughout the rest

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of the country because gambling is purely, you know, discretionary.

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You don't have to gamble unless you're compulsive gambler, then

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you can't stop. But that's not the visitor count. You know,

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that's ten twenty percent of the total People gambling are

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out of control, but the rest are just there to

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have fun. So that is a troubling statistic. And I wonder,

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I wonder what's doing with cardboard boxes in Vegas? Does

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that mean there's less homeless people living in them? Is

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that what's going on?

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Speaker 1: Yeah, I was gonna say there would still be cardboard

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blocks demand in Vegas because people need somewhere to sleep

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if they get thrown out of their job as a

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blackjack dealer or whatever. But yeah, Vegas priced itself out

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of existence. It'll be interesting to see if it even

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exists five years from now in its current form, because

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that's another thing where you see a lot of videos

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online if people walking around Vegas going look, look, there's

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nobody on the street all the way to the horizon.

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There's not a single person here and it's Saturday.

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Speaker 3: Yeah.

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Speaker 1: So yeah, but that was just a stupid marketing mistake

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on Vegas's part, because you know, some casinos can cater

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to Wales, but the whole town can't do it. So yeah,

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And you know, the thing about Vegas is that its

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water situation is really precarious. It's on the verge of

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running out of water because the lake that feeds it,

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the level water is dropping to below the pipe. You know,

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that takes water out of Yeah, and so so that's

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that's a yeah like me. And that's a separate thing.

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You know, if water has to be has to be

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what's that word where you you just let some people

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have it and not other people rash anyhow, rash And

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if water has to be rationed, Yeah, then that's that

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means it's the farmers and versus the casinos.

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Speaker 3: Yeah, well the casinos are going to win, you know that.

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Speaker 1: Well, you know, I actually did a substack post on

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the whole water in the Southwest thing, and that that

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was kind of the conclusion that the research came to

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is that you know a lot of these places where

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the water is running out farm the desert, and you

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know you should never be doing that in the first place,

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but now the water's running out. So the question is

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do the cities get starved or do the farmers just

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have to go into other kinds of farming. And the demographics.

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The political demographics make it really clear that there are

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way more people in the cities, so they're going to

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vote for the farmers to lose their water rights and

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keep the water flowing for cities. And it works. The

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math works. If you make the farmers stop farming, then

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there's plenty of water leftover for the cities. Anyhow, this

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is a big digression, but it's an interesting part of

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the story.

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Speaker 3: What you're describing is the movie Chinatown. Remember I've never

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seen that movie. It's one of the greatest movies ever

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made because it's all about Mulholland and basically stealing all

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the water doing a pipeline from the farmers in the

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north to feed growing Los Angeles. And if it hadn't

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been done that way, Los Angeles would be a fraction

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of itself because Los Angeles is desert. Oh my god,

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you got to do that. You got to get on Netflix,

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you got to watch it immediately. Plus the acting is

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you know, it's Jack Nicholson, right, and it was his

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breakthrough role. I think, yeah, one of them and yeah,

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like that is an absolute must for all of you

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out there if you haven't watched Chinatown, because it's the

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water wars, but it's the water wars in the twenty

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first century, and the farmers are going to lose just

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like they lost last time, because even though they have

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more political clout now, they don't have the clout that

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the cities have. But you know, I guess the concept

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of a city and why it originally came about and

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why it exists now, I think that's something that we

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really have to rethink. John.

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Speaker 1: You know, Yeah, there's an awful lot about this society

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that's been able to exist and to flourish because of

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the easy money and really easily accessible natural resources. So

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if the water's running out and the money's running out,

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then things have to change in a big way.

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Speaker 3: You know.

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Speaker 1: James Howard Kunstler has written a lot of books about that.

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I think he has one called World Made by Hand,

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about how we're going to have to go back to

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making our own stuff because mass production is just not

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in suburbia, et cetera, et cetera. Those things won't survive

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the next twenty years. That's probably overstating it, but conceptually,

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I think that makes a lot of sense. That just

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a lot of things that we think of as normal

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now are going to turn out to be based on

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unsustainable things and they'll have to change. So, you know,

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there's a million investment theses in that process. So we

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still make money while it's happening, you know, but for

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a lot of people it's going to be really wrenching.

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Actually it's in particular.

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Speaker 3: I think it's actually easier to make money now using

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AI et cetera than it's ever been before. You know,

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I really think that in many ways. But you have

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to know how to use it, and you can't just

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ask it dumb questions and expect smart answers.

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Speaker 1: Right well, Garry, the easiest money in AI right now

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is shorting the whole industry. I'm talking Michael Burry's book here. Yeah,

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you know, because he's a famous guy from The Big Short,

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the movie on the book. It was just announced that

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his hedge fund is majority short. In other words, most

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of its assets are in put options against one AI

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related company, Palanteer. So he's he's betting basically the farm

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on the AI bubble bursting pretty soon. So and that

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kind of spooch. In the last couple of days since

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that came out, the the AI stocks have been really volatile.

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So we'll see what that name. Maybe that is the

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end of the bubble, because it is a bubble, you know,

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and the question is how much money will it take

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flowing into that sector to keep it going from here?

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And with all the vendor financing they're already doing and

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stuff where one of them gives a billion dollars to

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another one who promises to buy a billion dollars worth

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of the first one.

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Speaker 3: Stuff. You know, that's that's.

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Speaker 1: Kind of end of cycle activity, and it's happening big

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time in AI. So well, you know, I haven't figured

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out how I want to short that yet, but a

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lot of other people seem to have figured out how

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they want to do it.

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Speaker 3: Yeah, it's a well need to be laughing. But we've

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seen this movie before and the movie as never changes

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and it always ends the same way, right always where

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well there's a few winners and a lot of losers,

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but you want to avoid shortening the winners. That's the

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that's the tricky thing. Like like I shorted Tesla three

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or four times on its I remember, and and and

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made money in the first couple of times from the

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fluctuations where they went up and they corrected and that

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that was fine, But the last time around, I just

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had to had to bail with a loss because it

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didn't correct. Yeah, and you know, since that time, it's

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gone way up. And I actually looked at how to

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short Nvidia earlier in its process, and luckily you couldn't

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use options to short it because the premiums on put

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options on in video were just astronomical. You know, there

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was no way to make that math work. So luckily

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I never did short that. But you know, the NASDAC

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right now just seems like a classic. You know, it

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seems like a nineteen ninety nine dot com bubble kind

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of market where the the leadership is so narrow. It

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is what now seven companies that is they yeah, well

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they true names for them. Yeah. Plus it's yeah, but

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so's it's those companies supporting the entire local economy. And

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last time that happened, and it was nineteen ninety nine

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with the dot COM's, And this time some of those

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companies have real sales and they're making real money, but

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they're also doing have them do financing thing where they

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owe each other insane amounts of money and you know, yeah,

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well it only takes one AI companies. You know, a

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builder of ais to go bankrupt and not pay in

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video back, and then the whole show falls apart because

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all of a sudden, everybody's watching this and going, oh,

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I see what they were doing. Yeah, all right, I'm out,

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you know, and that could happen. I've got the theme

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what sets off the next recession depression is a huge

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AI company. Everything's going great, the money's pouring in, but

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then they get this huge electric bill that they can't afford.

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The four company shuts off the lights and the data

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warehouse goes dark, and then they're out of business. And

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that's that's off a whole chain reaction, kind of like

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what happened in Kuwait I think in the early nineties

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where they were all giving each other post dated checks

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to buy stock and then somebody actually tried to cash

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one of those checks that came do And you know,

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I think they've been on budget plan with the utilities,

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and eventually they'll come off that budget billing, that level billing,

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and then they'll get hit with the bill and that'll

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be the end of the AI boom. Yeah.

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Speaker 1: Yeah, that's that's a completely reasonable way for it to go.

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I mean, you know, you look at open AI for instance,

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they have obligations of hundreds of billions of dollars and

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revenue of tens of billions of dollars, not even earnings,

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just revenue. So their debt is ten times their revenue

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and they're you know, it's not clear they're making any money.

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Oh no, they're not making money. They're actually losing money.

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So you've got a lot of profiles like that in

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the AI space right now, any one of which can

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blow up, so we'll see. On the other hand, it

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can keep going for five more years and bankrupt all

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the shorts before it finally blows up. So don't try

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the Michael Burry strategy at home, folks. Okay, you know,

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just because he did it doesn't mean he has lots

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of other money he can survive that. But yeah, a

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little bit of shorting, nibbling at some put options on

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these things, not a bad idea at all.

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Speaker 3: Yeah, don't go selling the miners short though, your silver

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and your gold miners. This little correction, algorithmically induced correction,

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it's not real. You just see premiums go up. You know,

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silver was at fifty four now it's at forty eight,

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close to forty eight. They knocked it down forty seven

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looks like the floor now for silver.

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Speaker 1: John Well, with precious metals, like with any bull market,

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you need to watch the underlying circumstances that made it

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a bull market in the first place. And in precious

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metals case, it's government's borrowing way too much money, interest

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costs on that debt going parabolic, and things like that,

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you know, and as long as that's still happening, which

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it is still happening, nobody has any way out of

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the debt bubble that's going on right now. Then gold

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and silver, which are the kinds of money that you

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move into when people are moving out of the currencies

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that are being inflated away, they will go up, or

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at least they'll be solid and stable, and then the

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mining stocks will do well too. So gold and silver,

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physical really high quality mining stocks, and the physical ETFs

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are all still great investments, even if they squiggle in

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the short run. You know, even if they have a

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little more of a corruption correction. The few occurrencies are

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still dying. And you know, a way to look at

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a potential high in the gold market is that if

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the dollar goes to zero, gold when priced in dollars,

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goes to infinity.

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Speaker 3: So you're up saying yeah, yeah.

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Speaker 1: There's your upside. You know that infinity in the currency

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that you're using to make that measurement.

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Speaker 3: So ride it for a while.

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Speaker 1: You know, this is this is going to be an

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epic bull market going forward, even starting from today's prices.

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Speaker 3: I've been buying up and then we're gonna have to

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cut it short. But I've been buying up forty percent

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silver Kennedy half dollars. I was doing it three four

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months ago. I was buying them at ten percent below

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melt value. Now there's no discount to melt on eBay.

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You're paying at melt or over and that's considered the

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junkiest of the junk silver, and yet it is now

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not so much junk. So that's something you've got to

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be aware of. A government shutdown, we could talk about

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that for a while. Have you been affected by the

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government shutdown yet, John.

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Speaker 1: No, I have not, you know, but it's it's it's

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gone on longer than any previous shutdown has gone on.

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So I assume those guys are feeling a lot of

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pressure from, you know, the people who don't get their

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food stamps anymore. And I guess the military is still

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being paid. You can never not pay the military. That's

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that's how revolutions happen when you try to stiff the soldiers, so.

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Speaker 3: They're getting guarded, you know.

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Speaker 1: So I'm not even sure who's not getting paid, probably

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like the park rangers and such. Who you can't. You

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can't stiff air traffic control doing that. Oh Jesus, Okay,

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Well it's good. I haven't had to fly anywhere yet,

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so I'm still alive, which means I haven't been affected

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by that part of the shutdown anyhow that I think

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they'll settle pretty soon. Your brump has some people around

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him who would just love to let this thing go

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on forever because it's their excuse for just firing everybody.

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And you know he's hearing that at meetings and stuff

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like that. I don't think he will consider that to

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be the highest probability bet, so they'll probably settle. And

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actually the Democrats are the ones who are keeping the

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Clean Continuing Resolution from being passed because they see this

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as an advantage that they can blame the guy in

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charge for the trouble that flows from that kind of

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an event. And you know they might be right. Trump's

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positive polling is going down, you know, his favorability ratings

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and everything.

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Speaker 3: So we'll see. But I think the pressure builds and

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they settle this pretty soon. Yeah. I tend to agree

403
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with you. And if they got to reduce a filibuster

404
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to fifty five votes, they'll do it because this can't

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go on any longer. And it's just people are getting

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upset food stamps. I mean, this is always our nightmare, John,

407
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when you went to the supermarket, plugged in the EBT

408
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cord and nothing happened, and we're almost there. Well, it's

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going to be interesting to see. Make sure you go

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over to on substack. It's Rabino dot substack dot com.

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00:24:04,279 --> 00:24:09,359
Ours work strictly substack. Now dump the website. It's khl

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00:24:09,759 --> 00:24:13,319
FSN dot substack dot com. John. We'll see you in

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a couple of weeks. Be well, Thanks, Garrey, see you soon.

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Speaker 2: Thanks for listening to Carrie Letz's Financial Survival Network, your

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00:24:20,400 --> 00:24:24,200
solution to today's trying times. For the latest, go to

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00:24:24,359 --> 00:24:30,279
Financial Survivalnetwork dot com. Financial Survival Network now more than

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00:24:30,359 --> 00:24:30,599
ever