1 00:00:00,160 --> 00:00:06,080 Speaker 1: Well, the shorthand is two consecutive quarters of negative GDP growth. However, 2 00:00:06,360 --> 00:00:10,000 we had that in twenty twenty two and I wasn't 3 00:00:10,000 --> 00:00:13,480 in the recession camp because and we just saw this 4 00:00:13,480 --> 00:00:18,160 this week, the trade deficit for January exploded as companies 5 00:00:18,199 --> 00:00:19,640 and consumers bought stuff. 6 00:00:19,719 --> 00:00:20,879 Speaker 2: Yeah, they're front end loaded. 7 00:00:21,160 --> 00:00:24,960 Speaker 3: You were listening to Carrie Letz's Financial Survival Network, where 8 00:00:24,960 --> 00:00:28,399 you get valuable information. You just can't find anywhere else 9 00:00:28,960 --> 00:00:32,560 to thrive in today's trying times. You need the Financial 10 00:00:32,640 --> 00:00:37,719 Survival Network now more than ever. Go to Financial Survivalnetwork 11 00:00:37,759 --> 00:00:41,479 dot com and get your free newsletter and gift. Financial 12 00:00:41,600 --> 00:00:45,079 Survival Network now more than ever. 13 00:00:48,479 --> 00:00:51,640 Speaker 2: And welcome you are listening to and watching the Financial 14 00:00:51,719 --> 00:00:55,640 Survival Network. I'm your host, Carrie Leutz. Well, what's doing 15 00:00:55,679 --> 00:00:59,479 with these markets? Are we heading into a recession? And 16 00:01:00,159 --> 00:01:04,400 are we in the midst of a nascent bear market? 17 00:01:04,840 --> 00:01:08,519 Let's find out. Jim Welsh is with us macrotides dot 18 00:01:08,560 --> 00:01:12,400 com And if you're listening to this on the podcast, 19 00:01:12,799 --> 00:01:17,040 in the show notes, there's a link to his latest newsletter, 20 00:01:17,079 --> 00:01:19,760 which we will be going over. Jim, great to have 21 00:01:19,840 --> 00:01:23,439 you back. So what's the verdict? Is this the bear 22 00:01:23,519 --> 00:01:24,760 market you were talking. 23 00:01:24,519 --> 00:01:28,079 Speaker 1: About, Well, we'll see. I think the danger and the 24 00:01:28,159 --> 00:01:31,079 risk is there. As I've been writing over the last 25 00:01:31,159 --> 00:01:34,120 number of weeks, one of the things that has provided 26 00:01:34,159 --> 00:01:38,760 a cautionary signal is the scoop has been making new highs, 27 00:01:38,799 --> 00:01:41,959 marginal new highs at that, but the Advance Decline line 28 00:01:42,280 --> 00:01:44,719 has not confirmed. It made its high back in November 29 00:01:44,760 --> 00:01:47,560 twenty ninth. And the reason why this is important, Carrie, 30 00:01:47,680 --> 00:01:51,319 is going back to like nineteen twenty eight, every single 31 00:01:51,480 --> 00:01:55,200 major bear market and declines of you know, ten to 32 00:01:55,239 --> 00:02:01,719 fifteen percent have been preceded by a negative divergence between 33 00:02:01,719 --> 00:02:04,200 the S and P making a higher high and the 34 00:02:04,280 --> 00:02:07,400 ad line not making a new high. So to me, 35 00:02:07,560 --> 00:02:10,719 that was a warning sign that the market was vulnerable. 36 00:02:11,080 --> 00:02:13,719 And then it's just a question of does a reason 37 00:02:14,000 --> 00:02:17,960 to sell materialize this because Wall Street is a kind 38 00:02:17,960 --> 00:02:23,039 of long bias. Mutual funds, pension funds, financial advisors tell people, 39 00:02:23,080 --> 00:02:26,080 hey buy and hold for the long term. So in 40 00:02:26,199 --> 00:02:28,599 order to get people to sell, they have to be 41 00:02:28,639 --> 00:02:31,599 given a pretty good reason. And I thought the tariff 42 00:02:31,639 --> 00:02:35,800 stuff would provide a reason. A lot of people thought 43 00:02:35,840 --> 00:02:37,759 that Trump was just yeah, it's going to be like 44 00:02:37,800 --> 00:02:41,599 two thousand, as any team be a lot of bluster 45 00:02:41,719 --> 00:02:44,280 but not really making you know, an impact. And my 46 00:02:44,360 --> 00:02:47,000 belief has been is no, he and his team are 47 00:02:47,080 --> 00:02:50,240 serious about terrorists and it is going to have economic 48 00:02:50,479 --> 00:02:54,800 repercussions that could get us to the point of a recession. 49 00:02:55,759 --> 00:02:58,919 We just obviously have to see it play out. How 50 00:02:59,000 --> 00:03:01,919 far do they go, how far do other countries respond 51 00:03:02,000 --> 00:03:06,560 with retaliatory terroriffts. But the bottom line is the uncertainty 52 00:03:06,599 --> 00:03:09,560 alone is causing businesses and consumers to pull back a 53 00:03:09,599 --> 00:03:13,000 little bit, Carrie, and consumers are worried about in fishing. 54 00:03:13,039 --> 00:03:19,479 The recent University of Michigan confidence survey showed inflation expectations 55 00:03:19,560 --> 00:03:22,960 over the last three four months have jumped from three 56 00:03:23,000 --> 00:03:25,439 to three to four three. That's a big move, you know, 57 00:03:25,919 --> 00:03:28,759 And so they actually that's an anticipation of terrence. When 58 00:03:28,759 --> 00:03:31,840 we start to see price levels go up because of teriffs, 59 00:03:32,080 --> 00:03:33,199 that's just going to think and. 60 00:03:33,360 --> 00:03:38,319 Speaker 2: Reinforce that, Hey, what's some tariffs among friends? 61 00:03:38,400 --> 00:03:42,360 Speaker 1: Though, well, the problem is that even friends aren't going 62 00:03:42,439 --> 00:03:46,400 to appreciate it. And I get what President Trump is 63 00:03:46,479 --> 00:03:49,400 trying to do in terms of created a more level 64 00:03:49,759 --> 00:03:53,560 playing field between our trading partners and the United States 65 00:03:54,199 --> 00:03:58,080 the problem and I've written about this extensively. Historically, terroriffs 66 00:03:58,240 --> 00:04:00,879 have not worked out well. The last time we had 67 00:04:00,919 --> 00:04:03,840 a big terror for was started and initiated by the 68 00:04:04,039 --> 00:04:08,639 US back in nineteen thirty with the initiation of the 69 00:04:11,400 --> 00:04:20,000 smoothhually spare of laws. And historically globalization has provided a 70 00:04:20,160 --> 00:04:24,839 plus for global GDP growth, which has in turn raised 71 00:04:25,600 --> 00:04:32,319 living standards. Yeah, for billions of people. It lifted a 72 00:04:32,360 --> 00:04:36,240 lot of people out of poverty. So to me, I'm 73 00:04:36,279 --> 00:04:38,680 not in favor of tariffs in twenty eighteen since we 74 00:04:38,759 --> 00:04:41,639 have a recent example to go buy the Federal Reserve 75 00:04:41,639 --> 00:04:47,560 of other entities have done in analysis and guess yeah what. 76 00:04:48,519 --> 00:04:51,399 It didn't increase jobs, especially in manufacturing, which is one 77 00:04:51,399 --> 00:04:54,399 of the stated goals, and inflation did go up, granted 78 00:04:54,439 --> 00:04:57,839 it was out a very narrow basket of goods based 79 00:04:57,879 --> 00:05:01,600 on the tariffs from twenty eighteen who stated goals were achieved. 80 00:05:01,720 --> 00:05:06,319 So doing this in a much more broad way, I 81 00:05:06,399 --> 00:05:11,079 don't see that it's going to generate the results that 82 00:05:11,240 --> 00:05:16,160 President Trump is hoping for. But you know, this is 83 00:05:16,439 --> 00:05:19,360 his belief system and he's going to run with it. 84 00:05:20,399 --> 00:05:25,319 Speaker 2: So but you know, when we look the government needs 85 00:05:25,439 --> 00:05:30,600 more revenue, right yep. And in theory, you know, like 86 00:05:30,839 --> 00:05:35,000 I remember when we had the so called voluntary auto 87 00:05:36,759 --> 00:05:45,120 import restrictions from Japan, BA, Do you remember what the companies? 88 00:05:45,639 --> 00:05:49,000 Remember what the car companies did? All they did, they 89 00:05:49,040 --> 00:05:53,120 didn't increase their production. They just raised their prices and 90 00:05:53,360 --> 00:05:57,240 increase their margins. So then they're going to be the 91 00:05:57,319 --> 00:05:59,399 same thing. Back to the future here. 92 00:06:01,519 --> 00:06:04,319 Speaker 1: Well, again, it's a little bit more complicated relative to 93 00:06:04,439 --> 00:06:08,199 nineteen eighty because about I think at least a quarter 94 00:06:09,000 --> 00:06:13,480 of all cars sold in the US are manufactured primarily 95 00:06:13,839 --> 00:06:19,040 in Mexico and some in Canada. And what happens Carrie is, 96 00:06:20,000 --> 00:06:21,920 in a sense the parts go back and forth across 97 00:06:22,000 --> 00:06:27,560 the border more than once as this production process is unfolded. 98 00:06:28,120 --> 00:06:33,000 So it's a little, yeah, a little bit more complicated 99 00:06:33,079 --> 00:06:36,560 than back in the nineteen eighties. But President Trump thinks, 100 00:06:37,120 --> 00:06:39,800 I take two things, and Scott Bess, his Treasury secretary, 101 00:06:39,879 --> 00:06:43,720 has kind of emphasized from their point of view, extending 102 00:06:43,800 --> 00:06:50,480 the twenty seventeen tax cuts is critically important to generate 103 00:06:50,639 --> 00:06:54,879 more growth. What you don't want is effectively a tax 104 00:06:55,120 --> 00:06:58,800 increase between four and four and a half trillion that 105 00:06:58,879 --> 00:07:03,079 would happen over the following ten years. But to your point, 106 00:07:03,319 --> 00:07:07,079 tariffs provide revenue, and I think what they're hoping to 107 00:07:07,240 --> 00:07:12,720 achieve is by increasing tariffs on just about everything that 108 00:07:12,800 --> 00:07:16,680 comes in this country, it will generate close to the 109 00:07:17,040 --> 00:07:19,720 four to four and a half trillion dollar tax cut, 110 00:07:20,040 --> 00:07:22,959 so effectively, that's what they're going to pay for it. 111 00:07:23,319 --> 00:07:27,800 But the reality is most companies I think are going 112 00:07:27,879 --> 00:07:31,600 to be more inclined this time around than in twenty 113 00:07:31,800 --> 00:07:37,600 eighteen to pass along a greater proportion for the increase 114 00:07:37,639 --> 00:07:39,560 in the cost. In twenty eight years, remember we had 115 00:07:39,680 --> 00:07:42,120 years you know, six seven years are very low inflation. 116 00:07:43,000 --> 00:07:45,160 Companies were competing for market share, so the idea of 117 00:07:45,240 --> 00:07:47,040 raising prices was like, oh, we don't want to do that. 118 00:07:47,720 --> 00:07:51,120 But after the inflation experience we had and companies having 119 00:07:51,199 --> 00:07:53,319 success in raising prices, I just think more of them 120 00:07:53,319 --> 00:07:56,759 are going to be tempted to say, all right, we'll 121 00:07:57,240 --> 00:07:59,920 absorb twenty percent, but we're going to pass along eighty percent. 122 00:08:00,639 --> 00:08:03,199 So there is going to be a jump in inflation 123 00:08:03,920 --> 00:08:07,360 from the tariffs, and that I think is a negative 124 00:08:07,399 --> 00:08:12,199 for the economy because we're so bifurcated. The top ten 125 00:08:12,279 --> 00:08:15,879 percent of Yeah, of wag jenners now making more than 126 00:08:15,920 --> 00:08:19,040 two hundred and fifty thousand carry provide about fifty percent 127 00:08:19,120 --> 00:08:22,920 of all spending. The other eighty percent have not been 128 00:08:23,319 --> 00:08:26,120 increasing their spending at the same level. So they're under 129 00:08:26,160 --> 00:08:29,199 the gun, and I think higher prices for whatever reason 130 00:08:29,600 --> 00:08:31,839 is going to make their lives more difficult and they're 131 00:08:31,879 --> 00:08:32,879 likely to pull back. 132 00:08:33,559 --> 00:08:36,960 Speaker 2: Yeah, I think so, huh, Well, I guess well, and 133 00:08:37,159 --> 00:08:37,600 the real. 134 00:08:37,559 --> 00:08:40,120 Speaker 1: Risk is, you know what's keeping the economy going. I 135 00:08:40,200 --> 00:08:44,440 think between September twenty three and September twenty four, that 136 00:08:44,600 --> 00:08:48,879 top to ten percent of waggeners increase they're spending by 137 00:08:48,919 --> 00:08:52,399 twelve percent. The bottom eighty percent that twelve month window 138 00:08:52,799 --> 00:08:56,639 they're spending actually declined. So you know what's fueling the 139 00:08:56,720 --> 00:08:59,639 spending of the top is ascidet values have gone off 140 00:08:59,679 --> 00:09:03,039 a lot. So if you have a stock portfolio over 141 00:09:03,039 --> 00:09:05,120 the last five years, you're in good shake. If you 142 00:09:05,159 --> 00:09:07,600 own a home, that's going up forty fifty percent. But 143 00:09:07,679 --> 00:09:10,080 if you're renting now you don't have a stock portfolio, 144 00:09:10,399 --> 00:09:13,200 you're much more you know, paycheck to paycheck, and I 145 00:09:13,240 --> 00:09:15,399 think that explains it. But the risk is that if 146 00:09:15,440 --> 00:09:18,000 we see a significant decline in the stock market, some 147 00:09:18,159 --> 00:09:22,120 of those top ten percent right vendors will also pull back. 148 00:09:22,360 --> 00:09:24,360 So that's I think the risk for the second half 149 00:09:24,399 --> 00:09:26,759 of this year in terms of the economy potentially going 150 00:09:26,759 --> 00:09:29,919 into recession, is that you get this initial slow down 151 00:09:30,159 --> 00:09:32,840 as a reaction to the tariff war, whatever it turns 152 00:09:32,840 --> 00:09:36,480 out to be, and then if the markets react negatively, 153 00:09:37,200 --> 00:09:40,039 you know, you see a cutback anybody, those who have 154 00:09:40,080 --> 00:09:40,720 been spending most. 155 00:09:41,240 --> 00:09:45,519 Speaker 2: I gotcha, I gotcha. So effectively, though, you could make 156 00:09:45,600 --> 00:09:49,240 the argument that a tariff is simply a consumption tax, right. 157 00:09:49,399 --> 00:09:52,159 Speaker 1: Yeah, someone's paying for it. Yeah, I mean it just 158 00:09:52,240 --> 00:09:56,200 comes down to, all right, well, the originating exporting country 159 00:09:56,679 --> 00:10:00,559 pay for some of it, Okay, and not a lot, 160 00:10:00,639 --> 00:10:03,000 but they'll pay for some. The company that imported the 161 00:10:03,080 --> 00:10:06,360 goods they pay for some. But twenty five percent is 162 00:10:06,360 --> 00:10:10,000 a big number. So yeah, right, it's a consumption tax. 163 00:10:10,879 --> 00:10:16,559 Speaker 2: Right, So going under another name, Yeah, well all right, 164 00:10:16,759 --> 00:10:22,720 so let's say this happens now. So, uh, is it 165 00:10:22,919 --> 00:10:24,120 necessarily negative? 166 00:10:24,799 --> 00:10:28,240 Speaker 1: Well, the market stock market at least is priced for 167 00:10:29,000 --> 00:10:32,320 economic growth. I mean, up until just the last few weeks, 168 00:10:32,840 --> 00:10:35,200 people were on board with this is going to be 169 00:10:35,279 --> 00:10:37,399 good for the economy. The economy's growing two and a 170 00:10:37,440 --> 00:10:40,919 half three percent, might be a little speed bump from tariffs, 171 00:10:40,960 --> 00:10:44,360 but no big deal. So the fact that all of 172 00:10:44,440 --> 00:10:47,559 a sudden we're seeing economic gated come in before the 173 00:10:47,679 --> 00:10:52,000 tariffs already showing signs of slowly, that's kind of challenged 174 00:10:52,279 --> 00:10:56,320 that Sanwine outlook. And I think you know, in terms 175 00:10:56,399 --> 00:10:59,399 of the stock market, it's selling at a very high 176 00:10:59,519 --> 00:11:04,159 level in terms of P. All right, but Jen, look, 177 00:11:04,759 --> 00:11:09,720 but other measures of evaluation, just so you know, well. 178 00:11:09,639 --> 00:11:12,320 Speaker 2: How do you how do you define a recession? What's 179 00:11:12,360 --> 00:11:13,080 your definition? 180 00:11:13,759 --> 00:11:19,559 Speaker 1: Well, the shorthand is two consecutive quarters of negative GDP growth. However, 181 00:11:20,000 --> 00:11:23,559 we had that in twenty twenty two, and I wasn't 182 00:11:23,600 --> 00:11:26,840 in the recession camp because and we just saw this 183 00:11:27,080 --> 00:11:31,759 this week, the trade deficit for January exploded as companies 184 00:11:31,799 --> 00:11:33,159 and consumers bought stuff. 185 00:11:33,320 --> 00:11:35,799 Speaker 2: Yeah, they're front end loaded exactly. 186 00:11:35,639 --> 00:11:39,159 Speaker 1: And so you know the short run, what happens the 187 00:11:39,200 --> 00:11:43,480 way they calculate GDP, it's gross domestic production, So everything 188 00:11:43,559 --> 00:11:48,200 that we import, they actually subtract that from GDP. So 189 00:11:48,320 --> 00:11:51,159 the Atlanta Fed has their GDP now thing, and it 190 00:11:51,279 --> 00:11:53,240 was like two and a half percent, and then after 191 00:11:53,320 --> 00:11:56,080 a Friday when the trade deficit was reported, they went 192 00:11:56,120 --> 00:11:57,960 from two and a half to a minus one and 193 00:11:58,000 --> 00:12:02,120 a half percent because of trade. Now, the point I've 194 00:12:02,240 --> 00:12:04,480 made back in twenty twenty two and would make today 195 00:12:05,320 --> 00:12:10,120 is that represents demand. In other words, the economy isn't 196 00:12:10,240 --> 00:12:13,840 weakening because people are pulling back on spending. It's just 197 00:12:13,960 --> 00:12:18,120 the opposite. They're increasing their spending and it's causing imports 198 00:12:18,360 --> 00:12:23,320 to spike. Now what that means isn't coming months. I 199 00:12:23,440 --> 00:12:27,360 think you'll see the trade deficit come down fairly significantly 200 00:12:27,720 --> 00:12:30,799 because you had this burst of buying pulling demand forward, 201 00:12:31,360 --> 00:12:35,600 and so we'll see GDP rebound as that takes place. 202 00:12:36,159 --> 00:12:39,159 The other thing is that inventories are going to increase, 203 00:12:39,639 --> 00:12:43,240 which adds to GDP. So you've got a lot of 204 00:12:43,480 --> 00:12:45,960 noise going on, and that's what happened in twenty twenty two. 205 00:12:47,440 --> 00:12:50,799 Carry is, in the first quarter, trade brought the GDP 206 00:12:51,000 --> 00:12:53,759 to a negative. In the second quarter of twenty twenty two, 207 00:12:54,200 --> 00:12:59,639 Walmart Target slashed inventories enough to cause the second quarter 208 00:12:59,720 --> 00:13:03,720 GDP twenty twenty two to be negative. So one has 209 00:13:03,799 --> 00:13:08,279 to kind of look beyond the headlines. When GDP movements 210 00:13:08,759 --> 00:13:12,159 are the result of big swings in trade and or inventories. 211 00:13:12,720 --> 00:13:15,080 As long as consumer spending, which I was holding up 212 00:13:15,120 --> 00:13:19,000 in twenty twenty two, holds in there. But then you know, 213 00:13:19,120 --> 00:13:21,879 we'll be okay for a little while. But I am 214 00:13:22,919 --> 00:13:26,720 pretty cautious that I think if President Trump follows through 215 00:13:27,159 --> 00:13:31,000 on what his stated plans are, economic growth is going 216 00:13:31,080 --> 00:13:35,279 to slow more than most people are expecting. 217 00:13:36,120 --> 00:13:40,879 Speaker 2: All right, So but look, you agree that the actual 218 00:13:41,039 --> 00:13:47,320 underlying inflation rate has been understated. Yeah, all right, So 219 00:13:47,480 --> 00:13:52,320 if we actually were to apply the proper GDP deflator 220 00:13:52,840 --> 00:13:56,320 and we've had und a recession for four years, what's 221 00:13:56,399 --> 00:13:57,200 the difference here? 222 00:13:57,879 --> 00:14:01,039 Speaker 1: Yeah, Well, the difference is talking about is you know, 223 00:14:01,519 --> 00:14:06,519 a significantly higher you know, amplifying inflation by at least 224 00:14:06,519 --> 00:14:08,440 two and a half percent a year, since that's what 225 00:14:08,639 --> 00:14:11,159 GDP has been kind of doing. I'm growing at two 226 00:14:11,200 --> 00:14:14,000 and a half percent. I'm not willing to go that far. 227 00:14:14,159 --> 00:14:17,799 But your main point is the economy has been struggling 228 00:14:18,440 --> 00:14:21,200 and weaker than what the state of GDP numbers are. 229 00:14:21,320 --> 00:14:23,799 I would agree with that, and again it's because of 230 00:14:23,879 --> 00:14:26,360 two things. The government ran a deficit of six point 231 00:14:26,399 --> 00:14:30,000 four percent last year of GDP. Okay, we grew two 232 00:14:30,039 --> 00:14:32,279 and a half percent, will be but a lot of 233 00:14:32,360 --> 00:14:34,879 it was because of government spending. One of the things 234 00:14:34,919 --> 00:14:37,840 that Besson has said there goal is to cut the 235 00:14:37,960 --> 00:14:41,440 deficit from two trillion to one trillion. Yeah, and then 236 00:14:41,480 --> 00:14:44,639 the point I made is, hey, that's a worthy goal. 237 00:14:45,120 --> 00:14:48,679 It's hopefully they will accomplish it. But when you cut 238 00:14:48,919 --> 00:14:53,559 spending in the economy by three percent or more, I 239 00:14:53,600 --> 00:14:56,039 guess what's going to happen to grow. It's going to slow. 240 00:14:56,519 --> 00:14:59,080 So these are all the things that I think will 241 00:14:59,120 --> 00:15:02,440 take time to play out. But the combination of cutting 242 00:15:02,480 --> 00:15:06,679 government spending and uh, you know, consumers pulling back because 243 00:15:06,679 --> 00:15:10,080 of higher prices, I think we're headed toward a soft 244 00:15:10,159 --> 00:15:15,000 spot in the economy. Doesn't fulfill the official definition of 245 00:15:15,120 --> 00:15:19,159 a recession. We'll see, but I don't think that the 246 00:15:19,320 --> 00:15:25,399 equity market has been priced for, you know, a significant 247 00:15:25,440 --> 00:15:29,399 slowdown in the economy, and potentially later this year people 248 00:15:29,480 --> 00:15:31,600 beginning to worry about, oh my goodness, maybe we're going 249 00:15:31,679 --> 00:15:35,000 into a recession. Historically, the average bear market during a 250 00:15:35,080 --> 00:15:39,799 recession takes the SMP down thirty six percent. Mm. 251 00:15:40,879 --> 00:15:45,080 Speaker 2: Okay, well, so you're why vote you're unploded to elect 252 00:15:45,080 --> 00:15:46,879 your mind old, all of a sudden, have a really 253 00:15:46,919 --> 00:15:47,639 good reason to sell. 254 00:15:48,759 --> 00:15:52,000 Speaker 1: Well, hey, you got to be realistic, you know. I mean, 255 00:15:52,120 --> 00:15:55,039 I you know, one of the things that I'll touch on, 256 00:15:55,600 --> 00:15:59,360 because the Republican has passed a budget lasts through the 257 00:15:59,399 --> 00:16:02,919 House last week, and immediately the Democrats said, oh my god, 258 00:16:03,000 --> 00:16:06,600 they're slashing and burning medicaid spending. They're cutting eight hundred 259 00:16:06,600 --> 00:16:10,559 and eighty billion dollars. It's going to be a catastrophe 260 00:16:10,720 --> 00:16:13,879 for everybody, all right. And what you know, when you 261 00:16:13,960 --> 00:16:15,799 and I talk, you know, you say, well, you know, 262 00:16:15,879 --> 00:16:18,120 I spent a couple thousand dollars on meat last year. 263 00:16:18,120 --> 00:16:20,519 I think I'm going to cut back. We would say, okay, 264 00:16:20,720 --> 00:16:23,159 I mean I'll spend nineteen hundred or eighteen hundred dollars 265 00:16:23,240 --> 00:16:25,639 this year. That's not how it works in Washington. They 266 00:16:25,720 --> 00:16:29,240 develop a baseline of spending for the next seven years, 267 00:16:30,000 --> 00:16:33,120 and so if they project medicaid spending to rise by 268 00:16:33,559 --> 00:16:36,919 let's say five percent a year, and all of a sudden, 269 00:16:36,960 --> 00:16:40,440 the Republicans said, well, no, let's only allow it to 270 00:16:40,600 --> 00:16:44,279 rise by two percent. So spending on Medicaid in the 271 00:16:44,399 --> 00:16:48,200 next decade will increase by one and a half trillion 272 00:16:49,000 --> 00:16:52,399 but the Democrats are calling that, you know, a disastrous 273 00:16:52,559 --> 00:16:55,919 cut because the baseline haded going up by two point 274 00:16:56,240 --> 00:16:59,480 three tray in. But other words, spending is going up 275 00:17:00,120 --> 00:17:02,799 one and a half troyon, and yet the Democrats are 276 00:17:02,840 --> 00:17:07,160 calling that a cut of eight hundred billion. Welliot Washington, 277 00:17:07,240 --> 00:17:08,480 can a spending increase be. 278 00:17:08,599 --> 00:17:12,200 Speaker 2: Termed a cop So back to their same old tricks. 279 00:17:12,759 --> 00:17:16,400 Speaker 1: Yeah, yeah, you know, tax cuts the other thing. Oh 280 00:17:16,519 --> 00:17:18,680 my god, it's all for. They just want to give 281 00:17:18,720 --> 00:17:21,440 the billionaires and they're rich at tax cut, and the 282 00:17:21,559 --> 00:17:24,000 hell would everybody else? Well, here's the reality, and most 283 00:17:24,039 --> 00:17:29,359 people don't know this. In last year, of the bottom 284 00:17:29,440 --> 00:17:34,039 fifty percent of wagerners paid three percent of the total 285 00:17:34,119 --> 00:17:37,680 income taxes collected. So that leans the top fifty percent 286 00:17:37,759 --> 00:17:41,160 of wagerners pay ninety seven percent, with the bulk of 287 00:17:41,240 --> 00:17:43,480 that going in the top twenty five. How can you 288 00:17:43,559 --> 00:17:46,160 give a tax cut to people who haven't paid, that 289 00:17:46,240 --> 00:17:48,000 aren't paying taxes. You know what. 290 00:17:48,119 --> 00:17:52,240 Speaker 2: That's called a negative tax cut, Jim. And that's called 291 00:17:52,279 --> 00:17:52,920 a general whack. 292 00:17:53,559 --> 00:17:54,480 Speaker 1: That's called a giveaway. 293 00:17:55,160 --> 00:18:02,759 Speaker 2: But in all seriousness, they are raising taxes on the rich. 294 00:18:03,279 --> 00:18:06,319 If you own a sports franchise, you know, you're not 295 00:18:06,440 --> 00:18:09,640 going to be able to like depreciate your quarterback's arm, 296 00:18:09,799 --> 00:18:13,759 or your pitcher's arm, or your kicker's foot, and carried 297 00:18:13,839 --> 00:18:18,039 interest for hedge's Yeah, that's going to end, and a 298 00:18:18,079 --> 00:18:21,240 couple of other things. So, I mean, it really doesn't 299 00:18:21,240 --> 00:18:23,480 amount to a row of pins in the scheme of things. 300 00:18:24,039 --> 00:18:27,720 But at least it's like, hey, the rich are paying 301 00:18:27,799 --> 00:18:31,559 their quote unquote fair share. But what about Trump's desire 302 00:18:31,759 --> 00:18:35,079 just to get rid of the irs. How if we 303 00:18:35,200 --> 00:18:40,160 had a consumption tax of say fifteen or twenty percent national, 304 00:18:40,480 --> 00:18:42,559 would that be enough to make up for it? 305 00:18:43,200 --> 00:18:47,720 Speaker 1: I don't know, but again that would be the argument 306 00:18:47,799 --> 00:18:51,519 against it. Carry is that at fifty percent, if you 307 00:18:51,599 --> 00:18:55,160 had a fifteen percent tax on someone who's making fifty 308 00:18:55,279 --> 00:19:02,039 or sixty thousand dollars, that's a larger burden than oh, 309 00:19:02,119 --> 00:19:05,559 a fifteen percent tax on somebody making a million. Yeah, 310 00:19:05,680 --> 00:19:08,440 and they're spending a million, Okay, And I would quite 311 00:19:08,440 --> 00:19:11,680 honestly agree with that. Our tax system as it is 312 00:19:11,759 --> 00:19:16,880 today is really fairly aggressive. You just have people are 313 00:19:17,000 --> 00:19:21,519 just not knowledgeable to know that in fact, it is progressive, 314 00:19:22,160 --> 00:19:26,519 and it's. 315 00:19:24,559 --> 00:19:29,079 Speaker 2: Counter three percent of income tadgets, and it really doesn't 316 00:19:29,119 --> 00:19:30,079 achieve its purpose. 317 00:19:30,279 --> 00:19:34,440 Speaker 1: It's like mushroom management, you know, mushroom management. Keep dark 318 00:19:34,680 --> 00:19:36,799 in the dark, beat him a lot of fertilizer. 319 00:19:37,079 --> 00:19:39,799 Speaker 2: Yeah, then can them a lot of excrement. The more 320 00:19:40,400 --> 00:19:41,119 excrement to. 321 00:19:41,160 --> 00:19:45,079 Speaker 1: Get, the better it is, right, decided to know the 322 00:19:45,160 --> 00:19:50,160 higher road fertilizer. All right. So but we're at the 323 00:19:50,200 --> 00:19:52,480 same place, right, So my only point is that you 324 00:19:52,599 --> 00:19:55,640 have you know, the Democrats will do everything they possibly 325 00:19:55,759 --> 00:19:59,279 can to undermine what President Trump is doing and some 326 00:19:59,400 --> 00:20:01,599 of the things. You know that the thing I point 327 00:20:01,640 --> 00:20:05,839 out in the March letter macrotized letter is the GAO. 328 00:20:06,079 --> 00:20:08,799 Last April Kerry came out and said, you know what, 329 00:20:09,000 --> 00:20:11,880 somewhere between two hundred and thirty and five hundred and 330 00:20:12,000 --> 00:20:17,920 twenty billion dollars of fraud and waste exists every single 331 00:20:18,000 --> 00:20:21,960 year in government spending. So all right, So here you 332 00:20:22,079 --> 00:20:26,680 have Doze and Elon Musk trying to do some due 333 00:20:26,720 --> 00:20:31,480 dilences and identify some of that fraud and waste. And 334 00:20:31,559 --> 00:20:33,400 the Democrats are going out of their minds. 335 00:20:33,640 --> 00:20:37,160 Speaker 2: Yeah, because they're the recipients. Because they're the direct recipients 336 00:20:37,720 --> 00:20:42,160 of that fraud which we've seen from USAID has sprinkled 337 00:20:42,319 --> 00:20:44,559 all throughout the government, all over the place. 338 00:20:44,839 --> 00:20:49,119 Speaker 1: Right. So my point is, unfortunately, you know, must pulling 339 00:20:49,160 --> 00:20:53,200 out a chainsaw not probably the right look. You know, 340 00:20:53,960 --> 00:20:56,880 just take a serious be serious. Well I like it. 341 00:20:57,119 --> 00:21:00,640 I laughed too. At the same time, you're giving political 342 00:21:00,720 --> 00:21:04,480 fodder to the opposition to be able to say, look 343 00:21:04,519 --> 00:21:07,400 at this guy, he's trying to take your Medicare, you're 344 00:21:07,440 --> 00:21:09,240 social Security, you're Medicaid. 345 00:21:09,440 --> 00:21:11,079 Speaker 2: No one's buying that stuff, Jim. 346 00:21:11,720 --> 00:21:11,839 Speaker 1: Oh. 347 00:21:11,880 --> 00:21:16,039 Speaker 2: The Democrats are Oh, it's they're a minority, and you know, 348 00:21:16,559 --> 00:21:20,319 they've viewed so many laws here. And not that the 349 00:21:20,440 --> 00:21:26,279 Republicans are so innocent either, but they've controlled the government 350 00:21:26,400 --> 00:21:30,440 for twelve out of the last sixteen years, and all 351 00:21:30,519 --> 00:21:33,839 this fraud escalated. And one thing we learned from Doge 352 00:21:34,480 --> 00:21:37,680 is that you always knew what was happening, but it's 353 00:21:37,720 --> 00:21:41,039 way worse than you ever thought it could possibly be. Right, 354 00:21:42,799 --> 00:21:46,039 you know, we see it. So they've lost their credibility, 355 00:21:46,119 --> 00:21:49,000 they lost their moral high ground if they ever had 356 00:21:49,119 --> 00:21:53,559 such a thing before. And now the fun begins because 357 00:21:53,599 --> 00:21:58,039 we just scratched the surface here. The fraud is rampant. 358 00:21:58,759 --> 00:22:02,319 And I don't know about you, but if I had 359 00:22:02,359 --> 00:22:05,559 to take a guess at how much money the government 360 00:22:05,680 --> 00:22:09,759 wastes every year and how much is stolen and whatever 361 00:22:09,880 --> 00:22:13,039 that falls into the sinkhole. I think it's thirty five 362 00:22:13,480 --> 00:22:18,119 or fifty percent. I think that's a reasonable guesstimate. And 363 00:22:18,279 --> 00:22:22,200 nothing I've seen so far from Doge has convinced me otherwise. 364 00:22:22,880 --> 00:22:27,079 Speaker 1: You yeah, no, I mean again, I think the goal 365 00:22:27,319 --> 00:22:32,480 of burning out waste and fraud is absolutely necessary, required, 366 00:22:32,759 --> 00:22:37,440 and it's sacrilegious that it hasn't really happened. In yeah, 367 00:22:37,799 --> 00:22:40,920 very very long waiting for the only thing I will say. 368 00:22:41,000 --> 00:22:44,440 You say is though you say, okay, they lost credibility, 369 00:22:45,720 --> 00:22:49,359 not with the Democrats, Okay. In other words, the Democrats, 370 00:22:49,440 --> 00:22:51,599 I mean, get most of their information from the New 371 00:22:51,680 --> 00:22:54,240 York Times. The New York Times is going to say 372 00:22:55,039 --> 00:22:58,000 stuff that may not be attached to reality, but it's 373 00:22:58,039 --> 00:23:01,400 the spoon feeding of the faithful that they're going to bleed. 374 00:23:01,720 --> 00:23:04,240 Here's a pill. Gallup came out with a poll that 375 00:23:04,440 --> 00:23:08,240 was taken on February nineteenth, asking people what kind of 376 00:23:08,319 --> 00:23:11,240 job you think President trumb is doing so far? The 377 00:23:11,359 --> 00:23:16,599 Republicans were ninety three percent approval, The Democrats were four percent. 378 00:23:17,599 --> 00:23:20,640 So what I wrote about in the March Macro times. 379 00:23:21,119 --> 00:23:23,839 But this shows me is there's a whole bunch of 380 00:23:23,839 --> 00:23:27,039 people in the Republican Party who think, you know, Trump 381 00:23:27,160 --> 00:23:30,200 is the second coming of the Messiah, They're gonna do 382 00:23:30,319 --> 00:23:33,880 no wrong. And in the Democrats, he's the devil incarnate 383 00:23:34,000 --> 00:23:35,039 who can only do evil. 384 00:23:35,920 --> 00:23:41,359 Speaker 2: Really no power. Now the Democrats co opted out. 385 00:23:43,160 --> 00:23:43,279 Speaker 1: Right. 386 00:23:44,200 --> 00:23:48,240 Speaker 2: What's the majority in the House for the Republicans. Yeah, well, 387 00:23:48,319 --> 00:23:50,880 but then we get into voter fraud and other things. 388 00:23:51,960 --> 00:23:53,720 Speaker 1: Four seats. What do you think is going to happen 389 00:23:53,759 --> 00:23:56,559 in remember of twenty six I think they're going to 390 00:23:56,640 --> 00:23:59,079 lose those They're going to lose that majority, I lay 391 00:23:59,079 --> 00:24:04,799 out if Again, my only point here is that you 392 00:24:05,039 --> 00:24:08,200 have both camps or people in the Republican Party and 393 00:24:08,279 --> 00:24:12,640 the Democratic Party that are incapable of critical thinking. Yeah, 394 00:24:13,039 --> 00:24:18,319 so that's the problem. I think that. But so come 395 00:24:18,359 --> 00:24:19,039 on the fraud. 396 00:24:19,559 --> 00:24:22,240 Speaker 2: It's not just the budget where the fraud's rampant. We 397 00:24:22,440 --> 00:24:25,759 know it's rampant in the electoral process here too. 398 00:24:27,240 --> 00:24:30,519 Speaker 1: Again that has to be proven beyond the shadow of 399 00:24:30,559 --> 00:24:33,960 it down there's no quote, you can get hardcore people 400 00:24:34,440 --> 00:24:39,079 who are Dems to believe any of that. They're just again, 401 00:24:39,119 --> 00:24:41,319 they're going to believe that, oh, they're just making all 402 00:24:41,400 --> 00:24:44,200 this stuff up and they're hurting a lot of people 403 00:24:44,279 --> 00:24:48,240 around the world. Yeah, I have I have relatives that 404 00:24:48,319 --> 00:24:51,200 are really liberal, and that's what they tell me. 405 00:24:52,519 --> 00:24:56,240 Speaker 2: Yeah, they're not critical thinkers. I agree with all the happening, 406 00:24:56,480 --> 00:25:03,839 but the mindset, yeah, you know, you know, I think 407 00:25:03,880 --> 00:25:07,839 it's interesting that there's been no discussion at all of 408 00:25:08,000 --> 00:25:11,160 voter fraud and cracking down on it, other than there's 409 00:25:11,200 --> 00:25:15,480 a couple scattered cases, one in Florida, which actually details 410 00:25:15,559 --> 00:25:20,160 how the fraud takes place by this voter registration cloning. 411 00:25:20,519 --> 00:25:24,240 So it's too early to make predictions for twenty six, 412 00:25:24,920 --> 00:25:29,160 but you know, recession, we've already we've already been there 413 00:25:29,200 --> 00:25:31,839 and done it. So it'll get a little worse. But 414 00:25:32,599 --> 00:25:35,359 people don't even understand it, you know, they they don't 415 00:25:35,480 --> 00:25:40,559 understand Jim, that they're purchasing power and the dollar has 416 00:25:40,640 --> 00:25:44,640 lost ninety eight percent since twenty thirteen, maybe ninety nine, 417 00:25:45,000 --> 00:25:48,599 I mean since nineteen thirteen, rather in the one hundred 418 00:25:50,240 --> 00:25:53,119 years of the Fan, twelve years of the FED. The 419 00:25:53,200 --> 00:25:55,200 fact that they've carried it on as long as they 420 00:25:55,240 --> 00:26:02,160 have is pretty remarkable. Okay, so the market, what do 421 00:26:02,240 --> 00:26:03,599 you think the decline. 422 00:26:03,279 --> 00:26:06,160 Speaker 1: Is going to be here? I think we're gonna get 423 00:26:06,200 --> 00:26:09,119 a bounce in the short term. The S and P 424 00:26:09,680 --> 00:26:12,039 this morning got down near the two hundred day average. 425 00:26:12,920 --> 00:26:15,000 That for some people like, Okay, this is the place 426 00:26:15,079 --> 00:26:19,880 to buy. Yeah, I think right, and then some short 427 00:26:20,000 --> 00:26:23,680 covering kicks in. But my take is whatever bounce that happens, 428 00:26:24,000 --> 00:26:27,119 I think is going to be followed by another leg 429 00:26:27,519 --> 00:26:30,319 down because I think Trump is serious about the tariffs 430 00:26:30,359 --> 00:26:33,799 that they're going to enact on April second. So to me, 431 00:26:34,200 --> 00:26:38,319 if the market got stretched, SMP dropped like two hundred 432 00:26:38,319 --> 00:26:41,839 and fifty points from yesterday morning to this morning. That's 433 00:26:41,880 --> 00:26:43,839 a heck of a move in a very short period 434 00:26:43,839 --> 00:26:46,240 of time. So you get a snap back rally. I 435 00:26:46,319 --> 00:26:51,119 think there's another leg down that's coming. And if you know, 436 00:26:51,279 --> 00:26:55,079 things blow up into a full blown trade war, you know, 437 00:26:55,240 --> 00:26:58,880 twenty percent. I think that's possible. So we're talking about 438 00:26:59,519 --> 00:27:02,920 a move on a forty nine hundred, fifty one hundred 439 00:27:02,960 --> 00:27:07,119 potentially on the S and P. So you know, I've 440 00:27:07,160 --> 00:27:10,960 been cautioning my subscribers that, hey, things are weakening, we're 441 00:27:11,000 --> 00:27:13,599 going to have a reason to sell. It's going to 442 00:27:13,640 --> 00:27:16,839 get a little ugged. In terms of gold. I think 443 00:27:16,880 --> 00:27:18,920 gold is near an important high. 444 00:27:19,519 --> 00:27:21,279 Speaker 2: Yeah, I was going to ask you about that. So 445 00:27:21,400 --> 00:27:24,359 we're getting close to three thousand. Every time it gets 446 00:27:24,440 --> 00:27:26,559 close it gets slammed, right. 447 00:27:27,160 --> 00:27:29,720 Speaker 1: Yeah, I mean just from the price pattern from the 448 00:27:29,839 --> 00:27:34,200 low back in September of twenty twenty two at a 449 00:27:34,240 --> 00:27:37,039 gold bottom up, I think one thy six hundred and twelve. 450 00:27:38,200 --> 00:27:41,000 To me, price pattern wise, it looks like we're completing 451 00:27:41,359 --> 00:27:45,200 the fifth leg of that rally. And we're in the 452 00:27:45,319 --> 00:27:48,599 fifth leg, and there's one more pop to take gold 453 00:27:48,640 --> 00:27:51,559 above twenty nine to fifty four. But I think that 454 00:27:51,759 --> 00:27:55,119 sets the table for a pullback that could take it 455 00:27:55,240 --> 00:27:58,160 under twenty six hundred. The first target would be the 456 00:27:58,279 --> 00:28:01,319 most recent law at twenty five fourty one. So I 457 00:28:01,480 --> 00:28:04,960 think this is a place to be lighting up on gold, 458 00:28:06,039 --> 00:28:06,400 all right. 459 00:28:07,039 --> 00:28:10,440 Speaker 2: And so what do you invest in bitcoin? 460 00:28:12,559 --> 00:28:15,640 Speaker 1: I think you know, when Bidfoy was playing trading in 461 00:28:15,680 --> 00:28:20,400 one hundred and three thousand, I basically said, I think 462 00:28:20,440 --> 00:28:23,319 it's going to seventy three thousand. Haven't gotten there yet, 463 00:28:23,359 --> 00:28:27,920 but I still think that's not an unreasonable target. So 464 00:28:28,519 --> 00:28:33,000 I think bitcoin, like the SMP, we're working our way 465 00:28:33,119 --> 00:28:36,559 down to a lower price, and so you get a hit, 466 00:28:36,680 --> 00:28:41,440 you get a rebound. Okay, you get hit, you get 467 00:28:41,440 --> 00:28:46,839 a rebound. I think it's called lower oil. The Saudi 468 00:28:46,880 --> 00:28:50,240 Arabia and the Opex that they're going to increase production 469 00:28:50,559 --> 00:28:53,240 a very very small amount. The main thing is that 470 00:28:53,359 --> 00:28:56,720 the economy slows carry I think that means less demand 471 00:28:58,279 --> 00:29:01,640 for oil might take is that oil as a shot 472 00:29:01,759 --> 00:29:04,960 for sixty sixty two? Then I guess ready here on 473 00:29:05,079 --> 00:29:05,920 sixty seven. 474 00:29:08,519 --> 00:29:12,279 Speaker 2: Oh geez, is anything going to go up besides inflation? 475 00:29:12,559 --> 00:29:16,359 You know, this reminds me of Will Rogers investing inflation. 476 00:29:16,559 --> 00:29:17,759 It's the only thing going up. 477 00:29:19,359 --> 00:29:21,519 Speaker 1: Well again, I think the thing is if we have 478 00:29:22,279 --> 00:29:25,240 a full blown recession, what's going to happen is you're 479 00:29:25,240 --> 00:29:30,160 going to get this pop in inflation from the tariffs. 480 00:29:30,759 --> 00:29:33,279 But that's a one time adjustment. It's so of like, hey, 481 00:29:33,279 --> 00:29:35,079 we're going to do all this again next year or 482 00:29:35,079 --> 00:29:38,200 the year after. It's a one time adjustment. So I 483 00:29:38,279 --> 00:29:40,240 think what happens You get to pop int of inflation, 484 00:29:40,960 --> 00:29:44,319 and then as the economy slows, that inflation starts to 485 00:29:44,400 --> 00:29:49,000 melt away because demand will drop as people pull back. 486 00:29:49,519 --> 00:29:54,319 So you know, again I think near term, that's problematic. 487 00:29:55,079 --> 00:29:58,720 I think the biggest risk is if the CPI gets 488 00:29:58,799 --> 00:30:01,480 up in there, yeah or four percent, which it very 489 00:30:01,519 --> 00:30:04,960 well might. As we get towards the summertime. You know 490 00:30:05,079 --> 00:30:07,480 that Fed it has to make a decision. In twenty eighteen, 491 00:30:07,519 --> 00:30:10,880 they decided to look through the terraffs eight they weren't 492 00:30:11,279 --> 00:30:14,160 you know, the tariff increases were relatively small compared to 493 00:30:14,240 --> 00:30:17,079 what we're talking about today, and at one time nature 494 00:30:17,119 --> 00:30:19,279 of them, they thought, okay, it's going to pay right, 495 00:30:19,880 --> 00:30:23,799 that's through. Plus, inflation expectations were really well controlled and 496 00:30:23,880 --> 00:30:26,319 had been for years. So the Fed might have a 497 00:30:26,440 --> 00:30:30,960 real tough decision. But I think I don't see them 498 00:30:31,039 --> 00:30:34,519 raising rates carry It just comes down to delaying any 499 00:30:34,640 --> 00:30:40,480 cuts for a while longer. Okay, So so. 500 00:30:42,480 --> 00:30:44,680 Speaker 2: Rate cuts they'll put off as long as they can 501 00:30:44,880 --> 00:30:45,559 or what do you think? 502 00:30:45,680 --> 00:30:48,680 Speaker 1: Yeah? Yeah, I mean again, you're gonna need to see 503 00:30:49,839 --> 00:30:53,640 the unemployment rate really took up. That's what will get 504 00:30:53,759 --> 00:30:57,680 them and prompt them to make a decision to lower rates. 505 00:30:59,039 --> 00:31:02,440 Plus at that point in time, they will have a 506 00:31:02,559 --> 00:31:05,759 much better handle like all the rest of us. How 507 00:31:05,839 --> 00:31:09,839 far are the tariffs going, what is the size? How 508 00:31:09,880 --> 00:31:11,559 long are they going to remain in place and so 509 00:31:11,799 --> 00:31:13,799 forth the FED. Then we'll be able to do some 510 00:31:14,000 --> 00:31:17,319 modeling to guestimate, all right, how big of a pop 511 00:31:17,440 --> 00:31:20,000 and inflation are we going to get? How long will 512 00:31:20,079 --> 00:31:23,960 that potentially last? So you know, they're flying in the 513 00:31:24,039 --> 00:31:27,359 dark like everyone else. You know, we have no noune knowns. 514 00:31:27,480 --> 00:31:32,000 The problem is they're still unknown. So I think the 515 00:31:32,079 --> 00:31:36,519 FED bias is to lower rates, but they're going to 516 00:31:36,640 --> 00:31:40,720 need the kind of evidence, if you will, in justification 517 00:31:40,880 --> 00:31:44,759 to do so, especially if we see inflation ticking up. 518 00:31:44,960 --> 00:31:47,160 The only thing that can justify it. To me, it 519 00:31:47,200 --> 00:31:50,880 would be the unemployment rate ticking up to four point three, 520 00:31:51,119 --> 00:31:55,319 four point four, four point five. Then they're going to. 521 00:31:55,359 --> 00:32:03,559 Speaker 2: Act interesting interesting, all right, well so but then we 522 00:32:03,680 --> 00:32:05,039 have the inflation right. 523 00:32:05,279 --> 00:32:13,200 Speaker 1: So well again, economic slowing in recessions historically always bring 524 00:32:13,240 --> 00:32:17,160 inflation downe yeah, I mean that's the pain, that's the 525 00:32:17,279 --> 00:32:20,279 trade off. That's painful. Okay, we got inflation, don't But 526 00:32:20,480 --> 00:32:23,400 the unemployment rate went from four to five or whatever 527 00:32:23,440 --> 00:32:26,920 the numbers are, you know, and the FED has been 528 00:32:26,960 --> 00:32:31,200 trying to avoid that over the last three years, and 529 00:32:31,680 --> 00:32:35,039 fortunately energy prices came down a lot. If we see 530 00:32:35,079 --> 00:32:40,160 oil prices drop down towards sixty and stay there. That'll 531 00:32:40,200 --> 00:32:44,240 help in terms of headline inflation. You know, President Trump 532 00:32:44,279 --> 00:32:48,200 has said he wants oil companies to increase production and 533 00:32:48,720 --> 00:32:52,359 so that the daily production level goes from thirteen to 534 00:32:52,440 --> 00:32:56,039 sixteen million barrels a day. And the problem is that 535 00:32:56,759 --> 00:32:59,119 oil companies have changed the way they do business in 536 00:32:59,200 --> 00:33:00,960 the last three to five years. It used to be 537 00:33:01,000 --> 00:33:03,839 people with high prices were high. Okay, let's drill like crazy. 538 00:33:04,240 --> 00:33:06,400 Well Cheryl has gone mad and said no, no, no, no, 539 00:33:07,240 --> 00:33:10,440 when prices are up, just you can keep drilling the 540 00:33:10,519 --> 00:33:15,200 same amount, but pay us more in terms of shareolds 541 00:33:15,279 --> 00:33:19,559 by buying backstock and dividends ivid ends. So will oil 542 00:33:19,640 --> 00:33:23,079 companies respond to Presidents Trump asking hey, I want you 543 00:33:23,119 --> 00:33:26,640 to increase you know, drilling, And yes they will. I 544 00:33:26,799 --> 00:33:29,079 just don't think they're going to be aggressive to the 545 00:33:29,200 --> 00:33:32,720 extent of causing production to go from thirteen to sixteen 546 00:33:32,799 --> 00:33:33,480 million barrels. 547 00:33:33,920 --> 00:33:39,039 Speaker 2: Let's not forget, though, that most of the fracking revolution 548 00:33:39,279 --> 00:33:43,400 did not come from the majors. All the majors aren't 549 00:33:43,440 --> 00:33:45,000 going to be the ones that find the oil. 550 00:33:45,440 --> 00:33:45,880 Speaker 1: They don't. 551 00:33:46,440 --> 00:33:52,839 Speaker 2: It's the wildcatters and those hot, big, small ones to 552 00:33:53,359 --> 00:33:56,599 small medium ones. Those are the ones. And we have 553 00:33:56,720 --> 00:33:59,920 a new technology that hasn't been written about at all 554 00:34:00,119 --> 00:34:04,319 because everyone knows about fracking, and we assume that the fracking. 555 00:34:04,039 --> 00:34:05,160 Speaker 1: Revolution was over. 556 00:34:05,640 --> 00:34:09,239 Speaker 2: But then they've got this new thing called refracking, right, 557 00:34:09,920 --> 00:34:12,559 and that's bringing out even more oil than the initial 558 00:34:12,679 --> 00:34:18,800 frack did. So what the problem has been is that 559 00:34:19,440 --> 00:34:23,400 the capital was like choked off from these markets by 560 00:34:23,880 --> 00:34:30,280 that's g and the yeah and whatever, you know, the 561 00:34:30,679 --> 00:34:34,199 new grain deal. That's not going to be the case now. 562 00:34:34,960 --> 00:34:37,639 And that's what I find kind of interesting is. 563 00:34:38,239 --> 00:34:41,119 Speaker 1: I had not heard about refracking. Thank you for mentioning that. 564 00:34:41,159 --> 00:34:42,800 I'm going to look that up. You know, what thing 565 00:34:42,880 --> 00:34:45,159 will tell you is over the last three to five years, 566 00:34:45,800 --> 00:34:49,960 a lot of the major companies have bought some of 567 00:34:50,000 --> 00:34:53,760 the wildcatters down in the program basin, you know, so 568 00:34:54,719 --> 00:34:59,119 their impact is less than what it was four or 569 00:34:59,159 --> 00:35:01,960 five years ago, but there's still some of them are 570 00:35:02,000 --> 00:35:04,519 going to pursue an aggressive strategy. But obviously if a 571 00:35:04,559 --> 00:35:08,199 new technology makes a difference in terms of producing more 572 00:35:08,280 --> 00:35:10,679 out out of existing wells, that's a big deal. 573 00:35:11,239 --> 00:35:14,960 Speaker 2: Yeah, They're refracking is a big deal. They actually go 574 00:35:15,119 --> 00:35:17,639 back into the well. That's you know, because the whole 575 00:35:17,719 --> 00:35:22,280 thing was the production cycle was you know, real high, 576 00:35:22,639 --> 00:35:25,400 and then it dips off and then eventually it's down 577 00:35:25,480 --> 00:35:31,920 to like a stripper well doing you know, ten barrels 578 00:35:31,960 --> 00:35:34,840 a day, and that's what they anticipated for all of 579 00:35:35,760 --> 00:35:42,960 North Dakota. But refracking, and I will refracking it's kind 580 00:35:43,000 --> 00:35:48,679 of the same as fracking, except they go back and 581 00:35:48,760 --> 00:35:53,840 they fracked it, frack it again and it turns out 582 00:35:53,920 --> 00:35:58,039 it you know, it winds up here. It can double 583 00:35:58,119 --> 00:36:00,880 or triple the output of an existing way well cost 584 00:36:01,000 --> 00:36:04,280 up to forty percent less than drilling a new will Yeah, 585 00:36:04,320 --> 00:36:09,360 doesn't require additional state permits, less disruptive to the environment 586 00:36:09,400 --> 00:36:12,880 because the environment's already been disrupted. You know, you're just 587 00:36:13,000 --> 00:36:14,119 going back to the old wall. 588 00:36:14,280 --> 00:36:17,159 Speaker 1: Yeah, yeah. Yeah. So now it'll be interesting to see 589 00:36:17,719 --> 00:36:21,239 the longevity of those wells. Okay, they can get a 590 00:36:21,280 --> 00:36:24,360 boost of thirty to forty percent because it is it 591 00:36:24,480 --> 00:36:27,360 maintained for three years or is it more like eighteen months? 592 00:36:27,559 --> 00:36:30,039 You know, I mean that that'll be another factor. Okay, 593 00:36:30,159 --> 00:36:32,960 well here here we have an answer for you. There, Jim, 594 00:36:34,159 --> 00:36:35,880 I came to the right place. You got it? 595 00:36:36,039 --> 00:36:41,599 Speaker 2: Then, refracking can significantly extend its lifespan, potentially adding several 596 00:36:41,679 --> 00:36:44,679 years of production to a will that would otherwise be 597 00:36:44,840 --> 00:36:48,440 nearing the end of its productive life, allowing a longer 598 00:36:48,559 --> 00:36:53,760 overall extraction period compared to single fracking. However, the exact 599 00:36:53,840 --> 00:36:59,159 longevity depends on factors like initial well quality, reservoir and 600 00:36:59,400 --> 00:36:59,880 the text. 601 00:37:00,800 --> 00:37:04,360 Speaker 1: Somewells may last three years to the eighteen months it compars. 602 00:37:04,480 --> 00:37:07,480 Speaker 2: And my guess is they will come up with something 603 00:37:07,559 --> 00:37:10,320 else after refracking, because. 604 00:37:10,159 --> 00:37:11,960 Speaker 1: There's the holes correctly been the history. 605 00:37:12,320 --> 00:37:16,000 Speaker 2: Yeah, yeah, you know so, but it is interesting to 606 00:37:16,559 --> 00:37:22,440 think about it. Yeah, all right, So macrotides dot com 607 00:37:22,960 --> 00:37:26,360 side on correct Jim's service there. Make sure you click 608 00:37:26,440 --> 00:37:28,199 the link in the show notes. If you're doing the 609 00:37:28,320 --> 00:37:32,480 podcast or the video, you can view all of the 610 00:37:32,679 --> 00:37:36,960 Jim's forecasts in one place. Appreciate you coming on, Jim. 611 00:37:37,079 --> 00:37:40,239 You've got a question, shoot us an email kl at 612 00:37:40,320 --> 00:37:42,880 Carrie Leuts dot com. We'll get you an answer and 613 00:37:44,679 --> 00:37:47,480 the link to Jim's site in the show notes. This 614 00:37:47,599 --> 00:37:50,360 interview on Financial Survival Network dot com. 615 00:37:50,800 --> 00:37:51,000 Speaker 1: Jim. 616 00:37:51,079 --> 00:37:53,800 Speaker 2: Appreciate you stopping by, so. 617 00:37:53,960 --> 00:37:57,039 Speaker 1: You carry any if you want. You can tell your 618 00:37:58,000 --> 00:38:00,960 viewers and listeners that if they send me an email 619 00:38:01,119 --> 00:38:04,639 Jim Welsh Macro at Gmail, I'll send them the March 620 00:38:04,880 --> 00:38:08,760 Macro tides that just went out on Monday, even. 621 00:38:08,639 --> 00:38:12,239 Speaker 2: Though okay, even be all right, so great, great joining you, 622 00:38:12,679 --> 00:38:15,400 all right, take care, we'll talk to you, so stay well. 623 00:38:15,719 --> 00:38:19,840 Speaker 3: Thanks for listening to Carrie Letz's Financial Survival Network, your 624 00:38:19,960 --> 00:38:23,719 solution to today's trying times. For the latest, go to 625 00:38:23,960 --> 00:38:30,119 Financial Survivalnetwork dot com. Financial Survival Network now more than ever,