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Speaker 1: Expectations are very high for President Trump, pro growth policies,

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cutting back on regulation, wanting to drive the price of

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energy down by half, and so forth. The problem, I think, Carrie,

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is that expectations are likely to be disappointed for a

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period of time, because all those things may have great

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value longer term, but it's going to take time to

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actually make progress, get them to be operational, if you

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will in the real world.

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Speaker 2: You're listening to Carrie.

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Speaker 3: Let'sa's financial survival Network where you get valuable information you

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just can't find anywhere else to thrive in today's trying times.

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You need the Financial Survival Network now more than ever.

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Go to Financial Survivalnetwork dot com and get your free

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newsletter and gift. Financial Survival Network now more than ever.

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Speaker 2: And welcome. This is Financial Survival Network. You're listening to

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your host here, Carrie Lutz, and we're at the be

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first just the first week of the month, literally, and

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we've got Jim Welshawan from macrotides dot com. Got a

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question for Jim myself? Shoot me an email kl at

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Carrie LUTs dot com. Jim, Hey, welcome back, Happy new year.

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What can we look forward to in this new era? Well, Harry.

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Speaker 4: Great to be joining you.

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Speaker 1: A happy new Year to you and all your listeners,

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and I'd like to offer the January issue of Macro Tides.

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All they have to do is send me an email

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Jim Welsh Macro at Gmail, and I'm happy to send

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that out to them because it does address some of

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the things we're going to be talking about. And more so,

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I think there's a number of themes that I have

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felt will play a role this year. Expectations are very

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high for President Trump, pro growth policies, cutting back on regulation,

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wanting to drive the price of energy down by half,

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and so forth. The problem, I think, Carrie, is that

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expectations are likely to be disappointed for a period of time,

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because all those things may have great value longer term,

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but it's going to take time to actually make progress

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to get them to be operational, if you will, in

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the real world, for those benefits to show up. So

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I think one of the things early on this year

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potentially is going to be disappointment at how quickly some

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of the goals are going to be.

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Speaker 4: Addressed.

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Speaker 2: Yeah, well, some things can be done by executive action, though,

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right they can.

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Speaker 1: At the same time, you know, I'll take one of

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the energy idea of cutting energy costs, and so President

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Trump is going to try to encourage and incentivize oil

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companies to produce more natural gas and oil. The problem

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is that over the last five, seven, eight years, oil

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companies have deviated from historically what they've done. Historically, you

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go back to prior forty years, anytime oil prices were high,

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they aggressively increased exploration. With that increased cash flow, and

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the net result, oil supply increased pretty dramatically. Three to

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five years later, oil prices came down. In the last

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five years or so, the emphasis carry has been in

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not spent doing as much exploration, saving that cash flow

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and paying dividends and buying backstock. So shareholders were yelling

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at oil executives for a long time, telling them, don't

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be stupid, don't drill to drive the price of oil down,

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and they in fact have been doing that. So I

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think when President Trump asks them to increase exploration, I

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think they will. I just don't know that it's going

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to be to the extent that will bring oil prices

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down by fifty percent. So that is again some of

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the headwinds and just kind of a reality check that

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you know, has to be faced, and that I think

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is as he was campaigning, bringing energy prices down was

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a big pitch to those who were most impacted by

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the high cost of living, lower income families and so forth.

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And I think they heard that pitch carry because that's

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why we saw a lot of people who had never

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voted for a Republican in their life voted for Trump

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on the notion that, Okay, he's going to bring my

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They don't think of it an cost of living, They're

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just going to make He's just going to make my

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life a little bit easier. My paychecko stretch, Maybe my

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rent is going to come down, you know, food costs

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are going to come down.

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Speaker 4: And I think that's.

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Speaker 1: Part of the latent problem in that it's very difficult

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to accomplish that, especially in a two year window when

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we have midterm elections and historically the party in power

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loses seats, and right now the Republicans I think have

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a majority in the House of four seats. So those

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are some of the challenges that I think are kind

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of going to, you know, come up during twenty twenty

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five and.

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Speaker 4: Encounter to where.

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Speaker 1: The expectations are. I think that generates some disappointment.

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Speaker 2: Okay, well, you know, normally I don't have any expectations

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or any hopes. It's always the same thing.

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Speaker 4: We're talking politicians, right, But we do.

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Speaker 2: Have to confess that in twenty sixteen Trump's first term

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things were quite different. Now, what about this concept of

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the deep state as they seem to run everything. People

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you think are like totally normal or embedded in the

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deep state, and the idea of purging these people out.

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They've kind of kept the game running since World War Two,

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I would say, at least.

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Speaker 4: For a long time.

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Speaker 1: I mean, if you look at a lot of the

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agencies and the people that are been run by President

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Biden passed more economically significant rules than any other administration history.

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And an economically significant rule is anything that's going to

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cost over one hundred million dollars. And so, you know

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what we have, to your point, are embedded people that

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have been in these agencies for a long time.

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Speaker 4: And so, yeah, you get rid of the top.

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Speaker 5: Guy, but the philosophy of those who are working within

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that agency doesn't necessarily change just because you change the

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top one or two people.

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Speaker 1: And so it really comes down to an embedded again,

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philosophy or people government should be doing more. And so

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one hallmark of the Biden administration was that the number

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of his agencies that were taken to court and then

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lost is extraordinary.

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Speaker 4: So what we saw.

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Speaker 1: Was in you know, Congress passes a rule on law,

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the agencies have some latitude in interpretating that law, and

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under President Biden, those agencies stretched the law so far

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that they got the risk slapped in court. And so

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just because President Trump is going to try to make

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some of these changes, I just think the philosophy that

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has been embedded in these agencies for a long time

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is just going to be hard to completely eradicate. I mean,

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I think for a lot of these folks it's like, well,

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we'll just wait you out now. And I think that's

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the risk here is that President Trump won a convincing

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campaign and election, but he's got, in my mind a

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two year window. Well, and if he loses the House

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in two years, then all of a sudden, a lot

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of the things that he wants to get accomplished Carrie

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become that much more difficult.

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Speaker 2: So two interesting points here. The court overruled the Chevron doctrine,

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which that courts have to defer to agencies when they

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pass new regulations and rules, and there's a presumption that

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they're proper and correct, and basically that gives him the

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right to dismantle virtually eighty percent of the administrative state

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because Congress creates these agencies. But then they never really

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never go away. Yeah, they passed, they passed the law

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that creates the agency. Say eyes, you're on your own,

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have fun right now. And normally the administration would have

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to justify rolling back the rules, so they put it

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out for public comment. Now they've got the basis to

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get rid of eighty percent of these regulations in many

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of these places because they were all based on regulatory creep,

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the Chevron doctrine, and that that's gone, and man like,

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of course, like the media doesn't report these is the

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important stories the way they should.

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Speaker 1: The other they're going to report that the Chevron reversal

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was a huge loss for the American people.

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Speaker 2: You know, So, like people think that countryes diminishing, we're weakening,

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And I do think there's an argument to be made.

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But I've printed out a chart here. Do you know

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what the USA share of global GDP was in the

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twenty eleven it's.

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Speaker 1: A good I'm gonna guess twenty it was about twenty

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one percent. Okay, do you know what it was in

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twenty twenty four? Twenty seven percent.

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Speaker 2: Oh, you're close, better than me, close to twenty six percent.

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So the US's share of global GDP, and granted that

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isn't the best market, right, but it's the only one

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we really have, has gone up almost twenty five percent

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in thirteen years years, right. Yeah, So what does that

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tell you?

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Speaker 1: Well, it tells us that the United States has the

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capacity to innovate way more than Europe. As much as

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we have regulation in the United States, Europe is like

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in a class by themselves. And the net result is

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many companies are able to come up with a great

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idea and then turn it into reality that then creates jobs,

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improves productivity, and so that's the energy that needs.

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Speaker 4: To be retained.

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Speaker 1: And again, that's a great statistic carrier because it tells

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us more than one thing. Not only is us doing well,

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but we're doing well in part because other countries have

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fallen behind. I think the ECB came up about six

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months ago, and I think it was Mario Draghi who

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was involved with doing this. Project of what do we

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need to change to become better? And one of the

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issues was we need to be able to roll back regulation,

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we need to open up markets and so forth.

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Speaker 4: In other words, we.

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Speaker 1: Need to follow the example of the US. So those

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are our tremendous strings. The problem that I think is

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very important is the amount of debt that we're running

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every single year. So last year the deficit was six

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point four percent of GDP and for a lot of people,

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what does that actually mean. But to put it in perspective,

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Carrie is you probably know the only time the deficit

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has been above six percent of GDP was during World

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War two, War two, Yeah, the financial crisis of two

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thousand and eight and the pandemic. So you know, we

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had a really bad recession in nineteen eighty two, seventy three,

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seventy four long recessions. Guess what, we didn't even get close. Yes,

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So that shows how extraordinary the amount of government spending

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has been. And so the Treasury Secretary nominee the Cent

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has said, well, we're going to cut that from six

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to four down to three. That's one of our goals.

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It's the right goal. It's important to get to accomplished.

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But if you take away a trillion dollars worth of

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spending that represents three percent of GDP, the economy is

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going to slow as that is done. Now they're hoping

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that by cutting regulation, improving incentives for investment and so forth,

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that they can offset some of that. It's just that

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I think the timing aspect is a little mismatched in

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the sense that as they cut the deficit, the improvement

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from regulation and so forth will take longer to completely manifest.

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And the other issue is the economy has been growing

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about two and a half percent or so if we

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indeed slow, whether it's later this year next year, it's

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going to be more difficult to get the deficit down.

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So my point is the goal of cutting the deficit

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is the right goal, except the economic repercussions are going

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to be a political liability because you know what will

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happen is if the economy starts to slow and starts

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growing under two percent, we'll be fed NonStop by Democrats

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in the media. Well, when President Biden was around that

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GDP was two and a half percent, he handed all,

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if there's wonderful economy, and that kind of stuff does

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weigh on how.

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Speaker 4: People perceive.

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Speaker 2: The reality.

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Speaker 1: So it's a you know, I hope he's more successful

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than most people think he will be. I just think

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the challenges are really significant.

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Speaker 2: Well, if we pick up Canada, that should be a

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big boots to the economy, right and there Greenland. I

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think there's more to Greenland that they were really talking about.

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There's something there that's way more important than rare earth

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metals and you know whatever. I think there's something strategic

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there and it is strategic for sure. You know.

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Speaker 1: Now again the media is going to make fun of

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them and all the rest of that for these ideas,

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of course, but you know, we'll see, hopefully you can

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pull some of that stuff off. But for a lot

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of people who voted for President Trump, for them, it

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all matters is is my rent, what's happening to my rent,

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what's happening to my energy costs? What's happening when I

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go to the grocery store and those That's where the

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rubber meets the road carrier, and that's where I think.

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I hope they focus on that. I'm sure they will,

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But that's the key I think in terms of what

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happens in two years with the midterm elections, and if

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you need a longer runway to accomplish some of the

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things that I think they're trying to accomplish so that

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they last a generation, not just this little blip. And

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I think so many companies have gone through the union

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yang of democratic white House Republican white house philosophies go

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back and forth, and they're trying to bridge that volatility

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in terms of how they run their companies. So I

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think they've learned is I'm not going to lean too

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heavily one way or the other because in four years

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this all can change, and you know, that's the reality

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that they've been forced to live by over the last

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ten fifteen years.

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Speaker 2: I will buy it all, right, So, yeah, what's the

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stock market going to do here, Jim, this is what

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you got spot on. And what's inflation going to be?

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Speaker 1: Yeah, well, I'll talk about inflation because right now, obviously

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people are expecting inflation to go up be difficult to

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come down because of the tariffs and so forth. The

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thing about the tariffs is it is a negotiating tool

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to get bring people to the table and hopefully come

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to some kind of a compromise. So I don't think

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the tariff inflation aspect is going to be as bad

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as people are thinking. Number two, inflation is going to

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come down in the next four months. As you remember,

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in the first part of twenty twenty four, the first

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four months of inflation were really bad numbers. In fact,

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if you add up those four four months for the

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CPI and the Personal Consumption Expenditure Index the PCE, it

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was one hundred and forty basis points. So the way

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they do the calculation on these things carry is they

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take away what happened twelve months ago and they add

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in what number comes now. So what we know is

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these inflation metrics are going to have a takeaway values

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of one hundred and forty basis points. So if each

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of these average month to month inflation of point two five,

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well that means you're taking away one forty and you're

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adding one hundred, which means almost all these metrics. I

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think by the time we get the last report in

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May for April inflation, we're going to see them decline

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by at least four tenths of a percent, and so

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I think that's one of the Again the counterpoint too,

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where perceptions are today, I don't think the inflation problem

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is going to be.

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Speaker 4: As big as people are worried about.

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Speaker 1: In terms of the equity market, the problem is valuations

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are incredibly stretched. Forty percent of the S and P's

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value is just top the top ten stocks, and so

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they've been pulling the market up. And I think at

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some point in time in Nvidia and these other companies

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that are at the forefront of artificial intelligence, the growth

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rates are going to start to slow and those companies

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are going to be vulnerable to fairly significant corrections. So

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my take has been the last month that we're going

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to see probably something close to a ten percent correction

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come into play. And then it comes down to is

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if the S and P takes out forty nine point fifty,

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then we're probably in a new bear mark it So

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I think based on valuations expectations, the advanced declin line

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has been lagging historically that has been a really good

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tell prior to significant correction and or bear market. So

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I'm pretty cautious in the near term, Curry, because I

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think the market has the you know, there's more downside

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risk than upside potential at this point in time.

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Speaker 2: Okay, all right, understand what you're saying so one thing, like,

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I guess a lot of it depends upon sentiment, right,

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so you basically think that the bullish sentiment's kind of

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going to peter out, then huh yeah.

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Speaker 1: I mean, in other words, it's just gotten excessive. And typically, again,

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I think the table set for a retrenchment in that.

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All right, when President Trump takes office, he's got to

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get his cabinet through. There's going to be some bumps

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along the way. The trade negotiations are not going to

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go smoothly. I mean, think about it. If you're a

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politician of another country and now you're sitting down at

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the negotiating table with Trump, you need to have something

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that you can take back to your people to say, hey.

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Speaker 4: I didn't roll over for Trump. I got us this.

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And I just think that's the reality.

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Speaker 2: Now.

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Speaker 1: Trump, I think is very good at understanding that, and

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I go, okay, you give me this. I'm happy to

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give you that. But it just takes time for all

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that to take place. So again, I think expectations are

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so high that that's a problem. The other thing that

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I think could be very significant is the dollar. You know,

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people are of the mind that Trump's pro growth policies

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are going to be bullish for the dollar. And to me,

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there are again a number of reasons why I take

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the opposite side of that.

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Speaker 4: One is, Trump is not in favor of a.

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Speaker 1: Strong dollar, right if you look at when for right, well,

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I would go against that. I mean Robert Rumin in

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Clinton's administration was very sincere and consistent a strong dollar

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is in the best interests of the United States, all right,

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So there have been times when you know that has

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been supported. But my point is President Trump wants to

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strengthen the US. Well, if you have thirty percent of

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the revenue of SMP companies comes from international sales, well,

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a stronger dollar makes our prices less competitive with other

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competitors around the world.

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Speaker 4: So a weaker dollar helps that.

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Speaker 1: And so I think somewhere in the not through distant future,

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those sentiments are going to get expressed. You know, in

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theory is strong dollar sounds good, but in.

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Speaker 4: Reality not so good.

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Speaker 1: The other thing from a chart analysis, and this I

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go into the January macro time looking at the long

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term picture of the dollar index. I think it's on

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the cusp of a decline that will take it below

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ninety five. So the dollars trading up around one oh

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eight up to one oh nine. I think we're going

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to see a decline of about fifteen points. And the reason,

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in part is when the dollar hit its high in

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October of twenty two at one fourteen and change, it

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then quickly dropped fifteen points to ninety nine and change.

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And so to me, I just think that the synergy

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between a big decline followed by choppiness that we've seen

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over the last two years, and then another leg down.

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I think the fundamental story ties with what the technical

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picture is. So as long as the dollar doesn't close

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over let's say one ten, I think that's the outlook

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for the dollar, and you know, I think that has

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implications for obviously other markets. Historically, in the last handful

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of years, there's been a strong correlation between treasure yields

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and the dollars. So as yields went up, the dollar strengthened.

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When the dollar has pulled back, yields came down. So

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I think right now the consensus is we're going to

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see yields keep going. I think there's a decent shot

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that treasure yields are in the process of topping out

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right now. And if I'm right about the economy three

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six months from now showing more signs of slowing inflation

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remaining more under control than people expect, I think you

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can see a rally in treasury yields where they will

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drop below where they were in December of last year.

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In terms of tot which is the long bond ETF

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it's got down below eighty five today. I think we're

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near trading low and I think ultimately it's going to

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rally close to one oh five. So there's a trading

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opportunity I think developing there. And in goal last but

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mount least, I think it's in a bull market. In October,

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I turned kind of cautious negative in the sense of sentiment,

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was very very bullish. Positioning reflected that sentiment, and I said,

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I think we're going to see a decent sized pullback,

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and I believe gold will trade below twenty five forty one,

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which is the last low that it hit of any

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significance in the last four to six weeks, and could

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trade down as low as twenty four hundred once this

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correction is over. No matter where it ends, gold I

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believe will go to a new all time high. So

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it's just a question of looking for an entry point after.

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I think we see more weakness from the low and gold,

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and I think it was in nineteen twenty twenty two.

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Speaker 4: One up two down.

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Speaker 1: Wave two lasted about four months, and then the high

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at twenty seven eighty nine would be Wave three, and

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00:25:01,640 --> 00:25:05,799
way four and two have often a similarity in terms

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00:25:05,799 --> 00:25:09,279
of time. So my guess carry is that this correction

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can last into mid February, maybe into mid March timely.

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Speaker 2: So it's a correction, not a bear market.

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Speaker 4: Absolutely. Yeah. I think again, if I'm right about the.

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Speaker 1: Dollar working its way lower over the next twelve months

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or so to ninety five, that would be a big

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tail when I think for gold.

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Speaker 2: Yeah, yeah, I could see that. And yeah, I tend

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to agree that you're you're thinking right on this.

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Speaker 1: So all right, hopefully two great minds burning in a

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small circle.

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Speaker 2: Yeah, wells baller the better, right, Yeah?

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Speaker 4: Right, So we looked like a dot.

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Speaker 2: Yeah no, no, I gotcha, I got you. So all right,

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Well just at a macrotides dot com to Jim get

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00:26:01,279 --> 00:26:03,880
a free copy. Tell us your email address again.

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00:26:03,720 --> 00:26:07,079
Speaker 4: Jim, Jim Welsh macro at gmail.

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Speaker 2: Okay, Jim Welsh macro at gmail dot com, and if

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00:26:13,200 --> 00:26:15,880
you got any questions comments for Jen myself, shoot me

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00:26:15,920 --> 00:26:19,319
an email kl at carrielots dot com. You find a

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00:26:19,400 --> 00:26:22,240
link to macrotides dot com in the show notes to

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00:26:22,240 --> 00:26:26,279
this interview on Financial Survival Network dot com. We just

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00:26:26,400 --> 00:26:28,200
ask while you're there, you please sign up for your

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00:26:28,240 --> 00:26:32,039
free email newsletters. It goes out roughly weekly. I've been

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00:26:32,079 --> 00:26:35,640
pretty faithful on it for years now, and like I said,

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00:26:35,680 --> 00:26:39,440
it's free. Sign up for it, join over sixty five

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00:26:39,559 --> 00:26:45,440
thousand other FSN community members who receive it, and amazingly enough,

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00:26:45,839 --> 00:26:49,039
over forty percent of you out there, nearly forty percent.

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00:26:49,480 --> 00:26:51,960
I think it was like thirty eight point nine. The

430
00:26:52,039 --> 00:26:54,880
last one I sent out actually opened it and read

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00:26:54,920 --> 00:26:57,160
some of it, so it's good to know that reading

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00:26:57,240 --> 00:27:00,519
is not yet dead. Jim, A pleasure being a healthy

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00:27:00,559 --> 00:27:02,440
new year to you and yours. We'll talk to you

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00:27:02,440 --> 00:27:03,200
again real soon.

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00:27:03,359 --> 00:27:05,039
Speaker 4: Thanks Terry and enjoying our conversation.

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00:27:05,400 --> 00:27:09,559
Speaker 3: Thanks for listening to Carrie Letz's Financial Survival Network your

437
00:27:09,640 --> 00:27:13,440
solution to today's trying times. For the latest, go to

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Financial Survivalnetwork dot com. Financial Survival Network now more than

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