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Speaker 1: Welcome to another episode of the Chicks on the Right show.

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We have our special guest friend and sponsor of the show,

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Zach Abraham from Bulwark Capital Management with us and it's

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a very we live in interesting times, Zach as.

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Speaker 2: I, so you know, it's a good way to put it.

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Speaker 1: And today there was a recently there was this article

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on the Daily Mail about a fellow by the name

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of Mark Spitznagel who is the president and CIO of

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Universa Investments, and he is like mister doom and gloom

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Man in this article saying that we should basically be

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all like holding on to our hats because there's going

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to be a crash. And I want to know your

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take about that.

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Speaker 3: Well, So Spitznagel is one of those guys that I

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don't think that you brush off. There's a lot of

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guys that talk a lot in this industry, and it's

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his much marketing, or maybe even more marketing than it

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is substance. He is not traditionally one of those guys,

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so I definitely think he's someone to listen to. Look

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and you know, this is something that we've been trying

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to talk to our clients about. I think It's really

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hard for people to understand because you know, markets keep

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going up, and you know, greed or missing out on

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potential gains gets people do a lot of stupid stuff.

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But the bottom line is is that you have big

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swaths of this market, and the parts of this market

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that have really driven the market, they're just really disconnected

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from any sense of risk or any sense of underlying

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fundamentals they've got priced into them, just complete optimism. Again,

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I've said over and over it is not the same

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as ninety nine, right, the difference being that I think

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a lot of what's driven this is you have really

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good companies that are just at valuations that don't make sense.

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So the companies are really good, there's no knock on them.

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But remember, at the end of the day, you get

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into these periods of times where a business pays you.

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If you invest in a business, you get paid by

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profit right, and if you pay too much for that business,

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it takes you way too long to get your money back,

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right because investors, technically speaking, we don't begin making profit

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until our original investment has returned to us. Right. Well,

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when you when you approach that, when you use that

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kind of valuation method, to look at some of these companies,

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there's just a disconnect there. It's just nobody would nobody

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would pay, you know, nobody would pay for a company

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that has a point six percent earning yield. Meaning if

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I invest one hundred dollars into the company, my profit

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I'm getting off that per year is sixty cents. Right.

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When a company is growing at twenty five percent a

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year or thirty percent a year, that's a really good

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growth rate. Okay, but you do the math real quick,

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and if I'm paying, if I'm buying it at a

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point six percent earn that growth rate better keep up

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for a really long time, because I needed to in

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order for it to make any sense. Right, So when

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you look at it from what Mark Spitznegel's talking about,

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the length of this run, look at debt levels, you

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look at all these different things, I agree with them

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at the same time, you know, and it will culminate

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in the crash at some point right now, though my

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anticipation would be that it's going to get crazier before

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it before we see that crash. And at the end

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of the day, you've just got this dynamic going on

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where when you have all this money printing going on.

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When you're running deficits that are six and a half

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to seven percent the entire size of the economy, that

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money has to go somewhere.

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Speaker 2: Yeah, so like right, all right, So then Mack is

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buying a house, and there's all sorts of stuff, I mean,

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interest rates like because there's say I call them the

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people with the big heads that get together and they

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sit at the table and they decide that, So what

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do you think indust rates are going to do in September?

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Speaker 3: So I think that you can just bet your bottom

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dollar at the very least, I will be shocked if

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you don't see a cut of twenty five basis points cut. Yeah,

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you're oh, they're.

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Speaker 1: Gonna cut for sure, and then twenty five point.

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Speaker 3: Probably that'd be my guest. Twenty five to fifty. I

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would say the odds are at twenty five because remember

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that you still have, like you see, areas of weakness,

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but all of the areas like unemployment, retail sales, all

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of the stuff that's really supposed to be you know,

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probably the most important inputs for these interest rate decisions.

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Those things are not really in a position where traditionally

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you would be waving a flag going, oh, we got

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to cut rates, we gotta cut rates. Right. That being said,

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the longer we're at these higher interest rates, you know,

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you know, the more things are gonna the more bad

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things I would anticipate popping up. So the way you

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look at this, though, is it's really easy. I think

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people put a lot of ambiguity around interest rates. Markets

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have markets have all this stuff priced right, So what

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you can do is you can look into the interest

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rate futures markets, okay, which you're looking at interest rates

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out and right now those markets are pricing a thirty

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two basis point hike or cut excuse me, in September, Okay,

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So that's why we're saying. Basically, the market is saying

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odds are twenty five, could be fifty, right, That's why

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it's at thirty one or thirty two basis points. Only

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one time in the last twenty five years has the

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FED made an interest rate decision that wasn't told to

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us ahead of time in the futures markets. Okay, so

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once in the last twenty five years. So when you

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go into Fed day, whatever is priced in in the

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futures markets, you've got about a ninety six to ninety

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seven percent chance. And that's a real number, ninety six

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to ninety seven percent chance that that's going to be

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what the decision is. So I would say, you know,

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there's a lot of ambiguity. Are they gonna cut? Are

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they going to raise? They're not, They're not raising, they

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are gonna cut. The question is twenty five to fifty

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basis points. I think you got a ninety percent chance

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that it's twenty five bass.

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Speaker 1: So that Spitznagel guy, which I just love his name.

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Speaker 3: Yeah, he's a sharp guy too.

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Speaker 2: Not to be confused with Mark Spitz.

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Speaker 1: Yes, probably different different marks.

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Speaker 2: Different mark right right, But part of.

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Speaker 1: That article was him saying that the reason that he's

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predicting this giant crash is because of the Feds. Like

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how long they've kept interest rates so high? Do you

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think that's true? Like should they have already lowered them?

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Are they too late? I mean, is it going to

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do anything? Is it going to matter?

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Speaker 3: You know, this is such a this is such a

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complicated conversation because if you put me in the FED

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seat right now, Like so if I took your own

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Powell's chair right now, looking at what he's looking at,

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I would cut by twenty five basis points. Okay, But

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that being said, we should never have been here, right,

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They should have raised way quicker, way earlier that it

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would have allowed them probably to raise less. But here's

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the other side of it. We shouldn't have been at

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zero percent interest rates for twelve or thirteen bloody years

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to begin with. Inky, So zero it was zero, it

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was yeah. So the yeah, the Fed funds.

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Speaker 1: Okay, yeah, because I see what you're saying, because like

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bank interest rates were like nothing, right.

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Speaker 3: Right, So the Fed funds rate, which is think about that,

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the Fed funds rate. If the economy is the house,

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the Fed funds rates the foundation, right, So that's the

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base interest rate that impacts everything else. Well, that is

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the rate that we were at coming out. I think

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we went to zero in eight toward the end of

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eight we didn't. We came out of zero for a

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couple months. In twenty eighteen, we went right back to

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zero or twenty five basis points, you know, effectively zero.

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So you know, if you look at it, what are

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we at like twelve of the last last fourteen years,

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you've been at zero percent rates. So that to me

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was the big anomaly. That was the big and one

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of the reasons you say that is because you knew. Look,

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at some point, when inflation shows up, you're probably going

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to have to hike higher than you should and faster

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than you should. And that's certainly what's happened. But here's

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the thing, like, and I agree with guys like Spitznagel,

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but I think that I think that we have to

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throw something else in here. Look at what happened last year. Okay,

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so everybody is just whistling past this, but last year,

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had the FED not intervened with an additional three hundred

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and fifty billion dollars that they just printed out of

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thin air, the entire regional banking system would have collapsed.

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And I'm not being hyperbolic, because what happens we're all

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of those banks insolvent. No, we're all of those banks

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is irresponsible as Silicon Valley bank. No, But what happens

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when two or three banks collapse. Everybody else runs, right.

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Remember it's a wonderful life, right, Everybody else runs to

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the bank, pulls their money out, and it's a bank run. Right.

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You were in the early innings of an absolute national

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bank run on regional banks. So everybody's like could hire

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interest rates damage things? And I'm like, you darn't. You

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had to use artificial means and three hundred and fifty

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billion dollars worth of printed money. To put that in perspective,

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Remember Occupy Wall Street. Oh ye, we're throwing fits over

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the bailouts that happened NOWETO nine that was over eight

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hundred and eighty billion. Right. The FED just threw three

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hundred and fifty billion about it, and it barely made

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the nightly news last year. Right, So where I look

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at a guy like Spitznagel and I go, I agree

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one hundred percent. But as long as the problems that

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we are facing can be fixed with printed money, that's

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what they're going to do. And they've showed us that

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right at every turn. Oh, reality is starting to set

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in and they're like, we'll print some more money, right,

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So I don't see that coming to an end anytime soon.

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But what I would say, and this is what we're

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telling people, look at where you're at right now. Go

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look at gold. Gold hits another all time high today.

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We look at gold miner stocks this year, everybody's so

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you know, focused on you know, all these other companies

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that oh, attacking. Look at the Nasdaq nasdak's up seventeen

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eighteen percent on the year. Gold companies are up twenty

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eight percent on the year. Right, So what that now? Look,

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it's not what it's telling people though. And what I

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do think is that this age of there's only ten

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stocks that matter in the world and nothing else matters,

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that seems to be changing. The other side of it

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that we've been talking to you guys about and all

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the people on our on our webinars and everything is Hey,

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I'm not telling you we know exactly what's going to happen,

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but what you do need in this environment is thea

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for now anyway, the days of zero percent rates are over,

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Inflation is here, macroeconomics are, macroeconomic indicators are becoming a

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big thing. China's got some issues, right, things matter again,

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And so you look at the average portfolio. You know

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how much the average retirement portfolio has itosed to those

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gold companies that are up almost thirty percent on the

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AAR zero, Right, do you know how much? Historically speaking,

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in a time of inflation, it would make sense to

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have more exposure to commodities and natural resources, right, So,

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historically speaking, if you owe the S and P five.

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If you own the S and P five hundred, that

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would give you a twelve to thirteen percent exposure to

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energy stocks. Today it's about three and a half percent, right,

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So you have maximum exposure to all the things that

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have worked and historically low exposure to all the things

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that are starting to And the brilliant thing about those

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things that are starting to work, they're still ridiculously cheap,

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especially when you compare them to the rest of the market. So,

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you know, I think I agree with Fitznagel. I see

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all the dangers, but I just look at it and

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I'm like, until there is an issue that doesn't get

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fixed with printed money, they're just going to keep going

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back to the well and printing money.

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Speaker 1: Well, so you mentioned your seminars. How can people join

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in on those reindeer games because those are super important?

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Speaker 3: Yes, I like that term reindeer games. So you can

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go to Bullwardcapitalmanagement dot com, Know your Risk Radio dot

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com and sign up. We've got another one coming up.

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I want to say, like at the end of this

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month or early next month anyway, free of charge, and

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we just basically what we show you is look at Okay,

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here's the market, here's what the vast majority of all

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of your portfolios are based off of. Here's what the

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market looks normally like, here's where it's at today, and

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you just see it for what it is, right, because

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the reason people invest in the stock market is because

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it's automatic diversification. Except today it's not. Today, it's just

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a giant tech fund. So it's a one way bet

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and you're betting on the most extended, the most expensive

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part of the market. Where we're looking out and going

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there's phenomenal valuations to be had out there. The catches

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is just nobody owns that stuff.

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Speaker 2: Interesting. I love this.

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Speaker 1: Yeah, well, thank you once again, Zach for all the

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insight and people should definitely check you out Know your

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Risk Radio dot com.

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Speaker 3: Thanks Thanks Lady un As always, investment advisory service is

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offered through Trek Financial LLC and SEC Registered Investment Advisor.

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Information presentative is for educational purposes only. It should not

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be considered specific investment advice, does not take into consideration

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your specific situation, and does not intend to make an

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offer or solicitation for the sale or purchase of any

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securities or investment strategies. Investments involve risk and are not guaranteed.

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At past performance is no guarantee of future results. For

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specific tax advice on strategy, consult with a qualified tax

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professional before implementing any strategy discussed here in IT