Investor's Edge with Gary Kaltbaum - Powell Speaks

Episode Date: March 8, 2023

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Terms apply. Lounge access is subject to change. See Capital One.com for detail. Investor's Edge with Gary Coltbaum. Straight talk about you and your money. Now from the BizTalk Studios, here is Gary Cultbaum. And welcome once again to Investors Edge. Gary Colbom, your host, a thanks for being with us today.

Glad you here, ladies and gentlemen, happy that you are listening. It's Tuesday, March 7, 2023. And we're here to talk about the cage, the cage that these markets are in. The cage that Jay Powell, yeah, I got to bring him up today. He was front and center. Is forcing this market to be in. I'm going to try to explain it as best as someone can on a radio show where you don't see me but just hear me. And hopefully the way I explain it comes out where you completely get the point I am trying to make because, I will tell you, and I mean this very much so, without putting anybody else down. I don't think most understand the importance of what we're seeing and the movement of what we're seeing and what matters in what we are seeing.

So in case you don't know, first off, we're pre-taping this show. Usually after the market closed, but right now it's 3.43 p.m. We're going to do a segment. I go on TV with Neil Kavut on Fox News, which you're not going to know about because I'll already be on after this show airs. And then we'll do the rest of the show. But the big story today, listen carefully.

Jay Powell caused inflation with $9 trillion up to $9 trillion of printing money. He didn't do the whole $9 trillion. He got his European counterpart to do the same. Japan was already doing it. You had easy money elsewhere. and there's a simple definition of inflation, too much money chasing nothing or too few hands. And they set records. We warned of this.

I'm just a doofus. I'm not an economist, but I'm logical. And we warned about distortions from printing $9 trillion. It created the bubbles and all that. But I want to fast forward to where we are now. So the inflation came, they didn't know about it, didn't see it. When it hit, they said no biggie. When it hit worse, they said it was transitory.

And they fell way behind. What do we mean by falling way behind? Will there's something called the real market? You know what the real market is? It's the markets without them. Just remember, he printed up to $9 trillion to rig and manipulate interest rates to take them down as far as possible. on the long end, and then rigged and manipulated short-term rates down to zero, so screwing savers. And again, that created all these bubbles.

And when inflation hit and yields started going up, anyhow, they were slow to act, because they are basically easy money dolts. But as time went on, they realized, holy crap, we're now forced to. to do things we never want to do. Hopefully other people got the blame. And of course, yeah, Biden blamed Putin. Republicans blamed Biden. Biden was a part of the blame for all the spending, but it was a combination of central banks and the spending.

And you can throw in Russia a little bit with oil, but that didn't last too long. And you can throw in commodity prices, but commodity prices are plunged because of the, with the war. Anyway. So, yield skyrocketed. And we watch the 10-year yield most because it is the mortgage rates. And the 10-year yield, get this, went from, and we're not making this up.

.39, that's less than 1%, 0.39 up to 4.33% from March of 20 to October of 22. finally they started raising rates their fed funds rates go go look what that means it's just what banks charged each other it affects the prime rate it affects credit cards it just affects the whole freaking thing auto loans and the 10 year affects mortgage rates so finally they got caught up their fed funds rates were equivalent to the 10 year year yield. But that doesn't usually cure the problem. So they went to 4%. Four and a quarter. Now they're at four and a half percent on Fed funds. Four and a half percent dash four and three quarters. Fed funds rates. And you should look it up what what it means. But the 10 year yield is only

at 3.975. So the question is, are they tightening two? much are they going too far? Well, walking into today, we heard some verbiage out of the Fed recently about another half point in March, not a quarter point as expected, which would take us to five, five and a quarter, which by the way is right where the one-year yield is. And why is the one-year paying more than the 10-year when everybody knows it, the longer you go out on the curve, you're supposed to get paid more? Well, because the markets make a bet that those shorter rates are going to come down markedly because of an impending recession. That's the bet. So they're going to go to 5%, but some of the talk out of Powell

today was pretty harsh. And when we mean harsh, maybe he's going to go to 5.5% on Fed funds. And if the 10 year is less than 4, is he now going to go to 5.5% on Fed funds? And if the 10 year is less than 4, is he now going too far the other way. Remember, he went too far on the printing money, causes all kinds of distortions. Now is he going to do it the other way, which will cause other problems, mainly, guess what? The economy. Because of cost of capital skyrockets, tougher to get an auto loan, tougher to get a mortgage, credit cards, which, by the way, credit card usage is now at a record, those numbers go higher. And of course, we have our federal debt, which same thing goes on. And that's what happened today.

So we're not going to give you the market wrap. We're going to give you the moving market wrap right now because it's still 11 minutes before the market closes. It's brought to you by Investment-Dashmodels.com. That's Jim Moraback, one of the great market timers. No gray areas with the man you're either in or out of the market, but is proprietary indicators. Go check it out. Investment-dash-models.com. Well, the 10-year yield is actually down a little bit today, but the Dow is down 558, S&P, down 60, NASDAQ, down 1-6.

NASDAQ down 140. On a bad NASDAQ day with the Dow down 560, it would be down 300. So the NASDAQ's actually holding up better in relation. And of course, that can change tomorrow. Transport's down 171. Advanced declines are terrible. New yearly highs are less than new yearly lows on the New York and more than double on the NASDAQ, new yearly lows. So just a very bad day, this is all J. Powell reaction.

because I got Newsfea the last couple days off of lower rates the market was moving but he still has what we call influence and when they went too far on the easy we warned you well we're warning you again if going too far hard the other way you already have a debt-laden economy you already have consumers and this is fact credit card usage is skyrocketing while savings rates are plunging and this consumer is 65 to 70% of the economy. The job market's strong. But I got news for you. That can change. So to be watched very closely because I am news for you, these people have never gotten right. They're just a bunch of easy money adults that have to turn into very tight monetary policy dolts because, of what they caused.

And that's the story. Everything's about they were too far low on yields versus when yields were higher. And now we have to think about are they going to go too high on their yields when real yields are lower? That's the best way I can put it. They're supposed to be uniform in uniform with markets. they don't understand that. Their ego takes over. Their thoughts on their legacy takes over.

They're so worried about inflation. Now, by the way, rightfully so. Damn, you know, I do the food shopping and wow. Wow. So that was today, simple as that. Market did not like anything he really had to say. And I must tell you that how about this for a investor's edge alert? I agreed with Elizabeth Warren today on some of her questioning of him.

Gary, you agreed with Elizabeth Warren? Are you smoking? No, we don't smoke weed. Anyway, up next, we'll be doing some TV. You won't know it. And then we'll be back after. Market will be closed. I'm Gary. This is the one known the Investor's Edge. Hi, I'm Gary Kalbaum, hosted a nationally syndicated radio show Investors Edge. We're not just handsome radio people. We manage investors' money for a living, specializing in fee-based discretionary money management. No big commissions, just a fee on the assets that's managed. We also provide a full range of personalized services,

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The last bastion of quality programming. With Gary Coltbaum. It doesn't get better than this. And what once again to Investors Edge. So, Steely Dan, man. As we said earlier, we just took a time out, finished with Neil Cavuto's Your World on Fox News. Did a little deep dive into Chairman Powell today

and what he had to say. And just to be on the repetitive side, the economy is you and I. The economy is you and I and 200 million or so people going to work every day, to do better for ourselves and our families for upward mobility. The economy is the magnificent productivity gains

and the technological advancements and the advancements in medicine and everything else out there. The economy is the our ability to start a business today, hopefully without a lot of headwinds, though some states are insane, and that's why we do have 50 states. But there are things that affect the economy. And number one is interest rates. When I was just on with Neil, he said just a year ago, yields were zero. They're now four and five in change. So when you go to get a mortgage now, instead of three, you're paying seven.

Go look. Get an amortization table. Get a 30-year amortization table on a quarter million dollar home, or a half million, whatever you want to do. Go plug in three and a half percent and go plug in seven percent. and just go look how much more you're spending each month and throughout the life. The same for auto loans. Credit cards, all borrowings. And in case you don't know, in a debt-laden society,

which is not necessarily bad unless it's a lot of it, it matters. It's big bucks being spent on interest that otherwise would be principal or in your pocket. And when every asset price, every data point, every economic statistic, every decision of consumers and businesses, small, medium and large, pay attention to these numbers, you get different reactions when the numbers go higher. Now there's a good side to this. Savers, which were just completely screwed. Jay Powell took out the big gigantic middle finger and stuck at savers and said, you went getting paid squat. And in fact, ha ha, you know who's getting that money?

The banks and the lenders and things like that up yours. That's what Jay Powell did. Jay Powell does not want to raise rates. he's forced to raise rates. And what of the outcomes have been already? Well, mortgage applications have just fallen through the bottom. Big time. What's happened?

A ton of people in the mortgage business has been fired. That's how it works. It's a chain reaction. Crypto, the business is way down. employment. Why? The bubble popped. Technology. Facebook announcing thousands more being fired on top of the thousands already. That was a surprise today. Why? Well, they hired too much. Or maybe the ad business sucks right now because interest rates are higher and people are doing less in business. the chain reaction.

That is why it is so important to watch. And if I said for months, and I will say it a thousand times, and I think I said it twice to kneel, just watch the job market. If we lose the job market, we are going to go into a pretty darn good recession. Because at that point,

they're going to have to go on unemployment insurance, which takes from the coffers of you and I. Well, I take that back. People, the business is, you know, put in money for unemployment, but it's still coming from the same. But unemployment insurance is a lot less than what people are making. The chain reaction. So that's what I'm watching most. The consumer, which has been, by all intents and purposes, have been strong based on the stats.

There's a fine line between great and bad with the consumer. And as I've stated to you, go look at a chart of credit cards. Go look at a chart of savings. One's skyrocketing. One's plunging it. You want it to be the other way around. So what happens when savings run out and you maxed out your credit card? You got to get another one if you can.

But more debt. That's the vicious cycle. And we're not predicting that. We are 100% saying the ingredients for it are hovering. Are hovering. And I can tell you people are still traveling. People are still spending. But I want to repeat, there is one hell of a fine line on that.

And unfortunately, and I've said this a thousand times, if this man, one man's whims that cause the bubbles and the inflation, if one man's whims go too far the other way, he will indeed cause problems the other way, big time. And that's why I've stated to you on this show. The best thing I've ever said to any of you on this show was about what, six, nine months ago when we told you, all of you that are employees that work for others,

make yourself so vitally important to that business that they would never get rid of you. Make yourself the go-to person. Get their early leave late. Put in the time. Learn more. And show it. Up next, we're going to have a little bit more of this just in case you, your jobs, the markets, your money. This is the one only investor's edge.

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See Capital One.com for details. This episode is brought to you by Spreaker. The platform responsible for a rapidly spreading condition known as podcast brain. Symptoms include buying microphones you don't need, explaining RSS feeds to confused relatives, and saying things like, sorry, I can't talk right now, I'm editing audio. If this sounds familiar, you're probably already a podcaster. The good news is Spreaker makes the whole process simple. You record your show, upload it once,

and Spreaker distributes it everywhere people listen. Apple Podcasts, Spotify, and about a dozen apps your cousin swears are the next big thing. Even better, Spreaker helps you monetize your show with ads, meaning your podcast might someday pay for, well, more microphones. Start your show today at spreeker.com. Sprinker, because if you're going to talk to yourself for an hour, you might as well publish it. This message is brought to you by the Capital One Venture X card. Venture X offers the premium benefits you expect, like a $300 annual Capital One travel credit for less than you expect.

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He's got to be pleased with that The crowd is just on his feet here He's a Cinderella boy With Gary Coltbaum Comes highly recommended You're gonna feel better if you talk to him And welcome once again to Investors Edge So continuing with it

I taught my sons And taught I told my sons When you're the employee You don't tell them how good you are you don't tell them how hard you're working. You don't tell them how smart you are. You just show it.

Simple as that. You come in early, you leave a little bit late. You learn the business. Remember what we've told you here. When I was a kid, I had the Encyclopedia Britannica. One year old. If I wanted to look up World War I, I'd probably have two or three pages.

Now, not only World War, War I, we'll have two or three, we'll have three million pages, videos, interviews, you name it. It'll be covered. There's never, no excuse anymore to not learn your business that you're in back and forth, up and around, all around. You need to do business in Europe, in Italy. You know how easy it is to learn Italian right now? Or any language? No excuse.

And then on the other end, if you're the employer, you lead by example. If the employers work in their tail off, the employees would mostly follow suit. So just giving you a little hint, little thought process, because I really think there is quite the fine line right now in a very thin line on the job market. and we told you, what was it about 10 days ago? I came out and said timing is everything. I think we're about 90 days away for trouble on the jobs front. That's what I said. Now, we know about it in certain areas, and that's norm.

It's normal for those areas to get to lose people. and the reason why the job market stays strong the farthest and drops the latest is because the employers don't want to get into position where they let go of a bunch of people and oh wait a minute hold on crap didn't happen i got to get them back because it is much cheaper to keep someone than hire someone. Most all employers know that. So just some words to the wise as we walk through what we're walking through. The huge worry is this guy, and look, I say with no joy and it's nothing personal. I'm sure he's a nice man. He doesn't know what he's doing. Just so you know, they used to predict. The central banks used to predict what was going to happen. Remember when

Ben Bernanke said subprime lending is just fine and the housing market never goes down because housing prices never goes down. The economy is strong and then it crapped the bed. Well, after that they realized they better shut the hell up on predicting and that's where they came up with these two words data dependent. Now, what's so good about being data dependent? That means you are reactionary to things that happen, not in front of things that happen. and how is it me? I don't have a staff of a thousand.

I don't have the economic statistics that they have. How is I able in real time tell you? Inflation was common because I've studied history. And I do the smart things that they don't do. I go out in the real world. I don't have a sheet of paper that says 3.2 or 4.7. I don't read a poll of 1,000 people when there's 200 million people working. It's my favorite thing of polls.

A poll of 984 people says, what is it, 350 million people in this country? 200 million workers, what, 250 million adults? And they're trying to tell us 984 people give us exactly what's going on in the world. 984 people says this candidate's going to win. So we'll keep paying attention. It's just, give me a bull or bear market. What we're seeing here is just a cage, bouncing in and out of a cage. Thursday, really nice reversal.

Friday, a very good confirmation. Yesterday we reversed down, and today we get cheese for 574 points. By the way, on words. Now, you know our other troubles. Earning stink. They really do. earnings stink. Dick's sporting goods

today announced earnings. Now they guided a little bit better, but Dick's sporting goods today closed at an all-time high. Their last four-quarters earnings down 25, down 28, down 18, and down 20. Let's call that an average about 23%. And it's in an all-time high, which means there had better be an earnings recovery or valuations are going to be way in the trees.

And you know what happens when valuations are way in the trees and then the market turns down? Oopsie. And of course we have highlighted Seagate technology. They ran this stock up on 93% drop in airstreeper. earnings, 39% drop in sales. Well, they're running it back down now. In case you don't know, it's gone from 74 to 62 in the last four weeks. After going from 62 to 74 on those horrible earnings, and that was coming off an even

horrible earnings report the quarter before. So stay tuned. When all is said and done, ladies and gentlemen, it will be about interest rates, value and earnings. Earnings stink. Valuations in the trees and interest rates look like. They may go higher than, even I thought, on Jay Powell's end. And unfortunately, he matters.

I hate saying that. It depresses the hell out of me. He matters. He had the ability with no oversight or accountability to print up the $9 trillion. I know it's just some three, words, $9 trillion, but I'm not so sure anybody can fathom how much cake that is. Well, we found out by all the bubbles, didn't we? So just a little bit of the words to the wise from your handsome and buffed host, Gary,

on you, the economy, markets, and let's not forget what's going on federal budget. Oh, geez. Talking about the big middle finger. That's a King Kong middle finger, ladies and gentlemen, what they are doing. Nevertheless, we'll be watching the markets. And simply put, a break below, last Thursday's low, will not look good on a resume.

A hold provides some opportunity. hopefully we can go higher. Today, not a good day. Maybe tomorrow's better. We're out mostly of earnings season. There's a few more, but the big ones are done. I'm trying to think what else comes up. Oh, we got into jobs number on Friday after the Bafo jobs number last month.

And I believe we have an ADP number. Tomorrow, maybe Thursday. I listed today areas that are bare. There's still plenty. And I must add today financials. We already mentioned the regional banks to you. The big ones are starting to get icky too. Up next.

News of the day. Much more. I'm Gary. This is the one only investors edge. This message is brought to you by the Capital One Venture X card. Venture X offers the premium benefits you expect, like a $300 annual Capital One travel credit for less than you expect. Elevate your earn with unlimited double miles on every purchase, bringing you one step closer to your next dream destination.

Plus, enjoy access to over 1,000 airport lounges worldwide. The Capital One Venture X card. What's in your wallet? Terms apply, lounge access is subject to change. See Capital One.com for details. This episode is brought to you by Spreaker. The platform responsible for a rapidly spreading condition known as podcast brain. Symptoms include buying microphones you don't need, explaining RSS feeds to confuse.

used relatives, and saying things like, Sorry, I can't talk right now, I'm editing audio. If this sounds familiar, you're probably already a podcaster. The good news is Spreaker makes the whole process simple. You record your show, upload it once, and Spreaker distributes it everywhere people listen. Apple Podcasts, Spotify, and about a dozen apps your cousin's swears are the next big thing. Even better, Spreaker helps you monetize your show with ads, meaning your podcast might someday pay for, well, more microphones.

Start your show today at spreeker.com. Spreaker, because if you're going to talk to yourself for an hour, you might as well publish it. This message is brought to you by the Capital One VentureX card. Venture X offers the premium benefits you expect, like a $300 annual Capital One travel credit for less than you expect. Elevate your earn with unlimited double miles on every purchase, bringing you one step closer to your next dream destination. Plus, enjoy access to over 1,000 airport lounges worldwide. The Capital One Venture X card. What's in your wallet?

Terms apply. Lounge Access is subject to change. See Capital One.com for details. You're listening to. What are we waiting for? Well, what are you waiting for? One, two, ready, go. Action!

In The Bester's Edge. With Gary Culpa. You know, I got about 50 emails from you guys asking about, where I'm going in Mexico because you were worried about me because you read about this story that two American tourists were killed where I'm going is far away from trouble and I'm going to one of these areas that says the safest safe can be I'm more worried about getting to the place I'm going than at the place I'm going but keep in mind that while these things get headlines and it really stays thinks, it's not happening like every minute of every day as some people think. Anyway, I really appreciate you guys having an interest in my safety. I thank you big time for that. Big time.

In the news, the Biden budget is going to lay out a plan to extend a Medicare trust fund. Interesting. And of course, guess what he's going to do? the magic number. If you make 400,000 a year or more, up yours. Your Medicare tax is going to go up. It's just so you know this is not going to happen because the Republicans have the house.

That's the good news. But we know where this Marxist is. Remember what Marxists do, they control. and they do it by telling you your greater good is because of them. And because of them, you will be better. And because of the rich and successful, you're being screwed. And that's the big lie. They're very good at the marketing.

Anyway, they're just talking about raising taxes on the wealthy and the rich and blah, blah, blah, blah, blah, blah. Just remember, all Medicare, Medicaid, Social Security are pretty much going to be bankrupt. sooner rather than later. These are government run by government people that did not prepare for the future because they don't know what the hell they're doing. And I told you the story, right? If I didn't, I'm about to tell you.

In 2004, George Bush won the re-election. So I guess it was 2005. After you won re-election, I was asked another radio shows to come to the White House and do a radio show. And this would be the second one we did. We were going to interview the Bush administration because they wanted to move forward on at least just talking about Social Security.

That they want to save it for life. They got to do something. We went there, did the interviews, and they were never really specific, but just they wanted to have a dialogue. A week later, I got called by my contact. They're dropping it. And I think his exact words were, I can't begin to tell you. the fire we took from all ends.

Why? Because once you're done with the four-year election, you got midterms in two years and you can't do Social Security. But of course, now you're going to have to. And you know who's going to end up paying, we, the people. Oh, but they're not going to go after people that don't make this amount of money. Oh, it affects everybody. Just remember, it all flushes down to a certain extent. Under current law for Medicare taxes, which come on top of regular income taxes,

most employers and workers each pay 1.45% payroll tax for total of 2.9%. Self-employed pay both sides. Top earners are going to go higher. Well, they're not going higher, but the proposal is to go higher because Marxists love to take away from the wealthy and successful because they hate wealth and success unless it's their own. Thus, they are Marxists. Here's one. Dark money rulings anchored defense in Ohio political corruption trial. You ready for this? What do we tell you about politics and money and money in politics and Wall Street and politics and all that?

An Ohio jury is about to decide whether politicians enlisted by an energy company to seek a $1.3 billion state bail out of its two failing nuclear plants pushed the bounds of campaign spending too far. You ready for this? Akron-based First Energy Corp secretly spent more than 60 million, beginning in 2018, to then help Republican State Representative Larry House Holden the Ohio House Speakership and secure the bailout. Federal prosecutors called the arrangement an illegal pay-to-play bribery scheme. Much of the company's donations flowed through an organization called Generation Now and Other Notices. nonprofit groups organized under 501C4 of the tax code. How is that not corruption? How is that not pay to play?

Let me tell you how it's not. It's normal in D.C. Companies and their lobbyists give bazillions of dollars to these politicians to garner their votes, whether those politicians liked their vote or not. It's the money-changing hands. It's the pay to play. And that's how you get to $32 trillion of debt because that's their mother's milk.

They're spending. That's our middle finger. And it just so happens. One guy was caught in the soup and was indicted. But this is normal. Ilhan Omar, $3 million of our campaign funds. were given to her husband and his business. What do you call that?

That's paying yourself campaign funds if you're married to that person, but not in Washington, D.C. And that's how you get to $32 trillion of debt. They being able to get away with things that we go to jail for. The insider trading is obscene. what they do. And by the way, they do it in plain sight. They don't care what it looks like. So just a little tidbit for you to read on.

Go read about it. Dark money rulings anchored defense in Ohio corruption trial. Wall Street Journal. Check it out. Hey, tomorrow, you'll have a great evening. Drive carefully. And when you get home, do like we do. It's quite simple.

Make sure you hug your family. Make sure you hug your children. They will feel better. better. I promise you. Until tomorrow's same time, peace out all. Stay well, be well. Have a great night. Bye-bye. This has been Investors Edge with Gary Cult Bomb on BizTalk. To listen to past episodes or to get in contact with Gary, go to GaryK.com. That's GaryK.com.