Peak Prosperity - Are Markets Delusional, or is This Time Truly Different?

Episode Date: December 6, 2024

Are we in an economic “kayfabe” that will lead to a “Minsky moment?” Catch up on all the latest economic jargon with Paul and Chris!

Nothing in this program should be considered investment advice. It is for educational purposes only. Please hit pause and read this disclaimer in full. Is the deep state going to, you know, like rats turn on each other and try to be the first to come up with a plea deal and give up? Are they going to eat each other up or are they going to fight to the brutal end between now and January 20th? The following is the audio version of a video released at peakprosperity.com. Visit peakprosperity.com to watch the video and to find other insightful content such as articles, discussion forums, and exclusive subscriber-only content. Hello and welcome to this edition of Finance U. I am your host, Chris Martinson, here again with Paul Kiker of Kiker Wealth Management. Hey, Paul, how are you today?

Hi, Chris. I'm doing well. Good to see you again. Great. So much to talk about. We're going to be talking about markets, obviously, things finance-related. Got a bunch of stuff going on. I want to start here with this. This is the S&P over time. You and I talked about something mysterious happening back here on October 30th. That's ruler straight advance, barely counted as a correction, huge advance. This got a little dodgy for a second, but it's since broken out again. And by the way, Paul, this is kind of a global thing, you know, and we could note that the German DAX breaking out, smashing through above 20,000. And I say that with that incredulity because my economic data, Paul, coming out of Germany is smells like rotten eggs. It's not good layoffs, bad out of Germany, it smells like rotten eggs. It's not good. Layoffs,

bad earnings, you name it. So I don't know how to make sense of that, except in my old school way, which is, I guess there's ample liquidity. More buyers than sellers. That's all I can figure. It sure seems that way. I don't understand at all what's taking place in Germany. Because of just what's taking place, their economy has been gutted. Now, in the U.S., I still believe that we're kind of in that speculative phase. But a lot of it makes sense because I think more than 60 percent of the population actually has hope again that this Trump administration is going to break up the monopolies, those that are in the ivory tower closest to the money printers

and closest to the regulation process that have been protecting monopolies. And, of course, you've shared what Mark Andreessen had talked about on the Joe Rogan podcast. And I was kind of surprised by that because it's not that often that I'm not cynical enough. And so, but I do see the hope that's out there. I see people that have hope that the small businesses are going to have a chance again. And if we get the, with the Chevron ruling and get regulation out of the way and the monopolies don't have this unfair advantage, if the rules to the

game come back to the same, then we're going to have innovation. The middle class is going to come back. We're going to have small business innovation. So I get the hope. I don't think the markets are going to continue to be as resilient going forward. Maybe, maybe not. But I don't understand anything about what's taking place in Germany yet, because there's not been any major innovation. It just seems to be liquidity or pure speculation. Yeah, you know, I've seen this. This isn't my first rodeo. So, Paul, I analyze almost everything through that liquidity gauge. Now, remember, the stock market is supposed to be this forward discounting machine. Yes. And it's the sum of all this intelligence. But

I actually think that was truer back in the day when there were humans involved. Can we be honest about this? 90% of all the trades that go through that drive the market this way and that way have nothing to do with humans, except for the humans that programmed the algorithms that circulate through the silica chips. But they don't do greed and fear, those algorithms, Paul. They don't. Remember, you know, all of the technical analysis that you cut your teeth on that I did too, it was there because if you peered at the charts, you understood basically the sum of all fears and hopes and greed, right?

I don't know that algorithms do that kind of stuff. They don't really care. No, they don't. But the question that I have, Chris, is those algorithms, the programs are put together by humans with the weaknesses that we have, right? So the question is, is that built into the algorithms or is it just the fact that they're going off of past historical data? This happened in the past, so this is what's going to happen in the future. So, you know, that kind of brings to mind something that I had here to share, if I can find it. Yes, this. The cycle of market emotions. And I know people have seen this,

you know, time and time again, but it still applies. So if you can see this, I want to give credit to the Twitter post. So Finance A Lot, at Finance A Lot, you know, what stage are we at now? What would you anticipate the stage we're in right now, Chris? Oh, we're, we're on near the top over there on the left, somewhere past greed. We're in delusion. Maybe we're in agreement. I'm thinking we're in the delusion area. Yeah, that feels about right. Yeah. So for those of you listening, you know, bull markets tend to go through these phases. So the first phase is the stealth phase. That's where the smart money starts to move.

Well, to put that in perspective, a lot of your insiders are net sellers right now. So we're starting to see the smart money is not necessarily accumulating. But then the bull market takes off once the smart money moves in. Then you get in the awareness phase and you'll typically have the first sell off in that awareness phase because everybody's still scared. Then you start to enter that mania phase. You know, it starts to get media attention. Then you get some enthusiasm. That's where the public really starts to join. And then you get the greed and then you get the delusion. And quite frankly, the delusion

is understandable within the U.S. right now. There's a lot of hope that things are going to change, but we have a tremendous amount of hurdles to overcome. And then the final stage, which I don't think we're there yet, but if this market runs into the spring, I think it's going to be, hey, here's the new paradigm. And that's the blow-off phase and the point of greatest risk, frankly. So I'm in agreement with you. I think we're in the delusion phase right now. Yeah, that's how I see it. But, you know, these algorithms, Paul, they're remorseless. It's kind of like, you know, if I had to stand in a machine gun nest and there was a tank shooting at me, I'm going to display a lot of fear, right?

But I could program an algorithm that would just sit there and keep shooting, and it wouldn't flinch, right? That's right, mate. You know, because it just doesn't, it's, I don't know. You know, it's hard to get a number, but last I heard, something like 75% to 80% of all trades on the market were by high-frequency trading firms. They're not even holding these stocks, Paul, because of good earnings or delusions or stories or narratives. They're holding them for about 10 microseconds to a few hundred milliseconds. And they'll continue as long as the market momentum continues to go up. They just keep buying, regardless if there's the

threat of escalation of war, anything of that nature, they just don't care. No. No, they don't care. Now, I'd like to introduce the views of Paul Tudor Jones, pretty famous, pretty legendary investor kind of guy, and he's introducing a term here, CAFEBI, which I wasn't that familiar with. But kefabe is that state of agreement that exists between WWF performers and the audience where everybody knows it's fake, but they agree not to talk about that. That's kefabe, okay? That state of suspended disbelief that exists within the pro wrestling world.

All right, so let me just make sure I got this dialed up loud enough so we can hear That state of suspended disbelief that exists within the pro wrestling world. All right. So let me just make sure I got this dialed up loud enough so we can hear this and go. A term that I'd never heard of called K-Fab. And in wrestling parlance, that represents the unspoken, unwritten, tacit agreement between the wrestlers and the fans about the illusion that's going on in the ring, the suspension of disbelief that what's going on in the ring is actually, we know it's scripted, and we know it's a performance, but they ask us to think it's genuine and real. And that's what you think this is? Yeah, we're in an economic K-fab right now. And it's genuine and real and that's what you think this is yeah

we're in an economic k-fab right now and it's not just the united states we're in it in the in the uk and france greece italy japan japan being the biggest of all it's this economic k-fab and the question is is after this election will we have a minsky moment here in the United States and U.S. debt markets? Will we have a Minsky moment where all of a sudden there's a point of recognition that what's going to happen or what they're talking about is actually fiscally impossible, financially impossible? So are you betting on a Minsky moment? I am clearly not going to own any fixed income, and I'm going to be short the back end of fixed income because it's just completely the wrong price. Hmm.

I had not heard that. And Paul Tudor Jones is brilliant, for those of you that don't know him. Yeah, economic KFAB. So two things to decode for people. The Minsky moment, Hyman Minsky termed this thing that sort of, I'm going to paraphrase it badly, but the way I understand it, Paul, and add to this, if you can, that everything sort of persists along until that moment when people recognize that it wasn't what they thought it was, and then you get these sudden sharp shocks to the system. A Minsky moment is sort of like everybody deciding that the dollar is way overvalued and running for the exits all at once, and the exit's only going to be this big. I'm holding my fingers up in a little circle.

But it's interesting. He took that saying, listen, this KFAB is existing across all these economies. But he interpreted that to say, I'm not holding fixed income. How do you read that? Yes. Well, that tells me that in his estimation, that the fixed income market is completely in underpriced, which, you know, we've always been told that the bond traders are the smartest individuals in the room, and they are. They really are. But the bond market, in his assessment, I'm assuming based on what he says, has not priced the long-term risk to the capital from default, whether that's corporate or inflationary pressures from government spending, because something is going to have to break.

That would be my assumption. What would your assumption be, Chris? That it's clearly obvious, regardless of whatever might come in with Trump and the Department of Governmental Efficiency with Elon and Vivek, regardless of whatever they might do, like when you really peel it back, Paul, there's not a lot you can do. Because when you look at what we call fixed expenditures of the U.S. government compared to discretionary, there ain't that much discretionary. You know, and so you're not going to do, you can't just decide not to pay the $1.25 trillion interest payments this year.

That's fixed. If you don't pay that, worse things result. So that's getting paid. Social Security, Medicare, Medicaid, not much you can do about that stuff. You could try and find some efficiency in there, I suppose, but that's long and slow. I guess you could cut defense heavy, but of course that has its own economic impacts, and congressmen scream, and all the Raytheon and Lockheed Martin lobbyists scream, and that's a hard fight, too.

So I think what he's basically saying is look we have a fiscal problem coming and i don't think the bond market has recognized it and therefore i don't want to if anything i'm not not only am i not owning these i'm going to be constructively short the long end of this thing meaning you know the 10 paper 20 or 30 year paper whatever those pieces are he wants to be short that that that's where he's at now. Guys like Paul Tudor talking their book all the time, right? You know, let's leave open the possibility, Paul, that he's saying that, but buying the long end of the curve. Always leave that possibility open. That is a possibility. That is possible. But I'm absolutely

terrified of the long end. And I don't, you know, just because of the fundamentals of what's taking place out there. If the Trump administration isn't able to pull this off perfectly, or, you know, what's going to happen within the deep state right now? I mean, it's clear that they're coming after, they're trying to have full disclosure, lay it before the American people. So is the deep state going to, you know, like rats turn on each other and try to be the first to come up with a plea deal and give up? Are they going to eat each other up? Are they going to fight to the brutal end between now and January 20th? And if the reality comes out that our liabilities are far greater than what are known right now, which is another possibility, then that could be really devastating to the long end. Because if we get into a situation where the government has to print, that there's no other option, or they choose to print, right, then that's going to absolutely crush the longer end of the yield curve,

and that means rates are higher, and he would be right to be short those long end. Now, in the short run, it looks to me like we're going to see a rally, which may be a tradable rally in the 20-year. I don't know. That's only for professionals only, not a recommendation. But when you look out longer, I would lean to the side that he is. I'm more concerned about our fixed income portfolios navigating the days ahead correctly, which we have the rules in place.

They have their rules in place. We're shorter on the yield curve right now. But I'm more concerned about that over the next three to five years than I am the equity side of the portfolio. Well, I honestly, Paul, I mean, I understand how it could happen from fiduciary certain aspects. But if you sat me down and said, would you buy 30 year government paper at 4.5% interest? I'm like, no, no, no, I have to be confident that that 30 year paper is going to be worth what do they say it's worth by the year 2054? Not a chance. Not a chance. There's no way there's too much risk. I mean, the Biden administration already lit the fuse for the

to come up with their alternative payment system, whether they roll out the unit or not. And I thought it was quite interesting. The first thing that, did you hear about Trump and his threat to the BRICS if they roll out their own currency, that it'll be 100% tariffs? Yep. And the only thing that I could think of at that point is we are to the point in our country where we have to threaten with force, you know, verbally from that standpoint, that if you do this, you know, we're going to do everything that we can to fight you tooth and nail. Well, with a couple of things, I mean, he can say that,

but let's get down to reality real quick. We are 100% import dependent on China for about 18 critical minerals right gallium germanium titanium like like just pretty much 100 also uh we get something stupid like half of our uranium comes from russia so that's fine but you know the uranium the nuclear power plant industry is going to be dude you just made our our fuel go up 100%. That's going to have impacts, right, obviously. So it's one thing to say 100% tariffs. It's another when you get down to the details. That's right.

Well, and think about the inflationary impacts that that's going to have. If, let's say, he actually does that, that's going to be highly inflationary until we can rebuild within the United States. And then that's going to be inflationary in itself because our labor is a lot more expensive than what it is, at least for now, in the other countries that are out there. So there's going to be a period of time, and that God's grace to come out of this without any bumps or bruises or catastrophic events. Yeah. Well, it certainly requires being nimble and, you know, having a risk-managed approach. I got to tell you, Paul, this is embarrassing, but probably every other night for the past three or four weeks, I wake up at 2 in the morning. I just have to turn my phone on.

I just look at the futures. I'm just like, has anything happened? Because I'm kind of expecting something to happen, and nothing happens, nothing, nothing. And that nothing actually alarms me more than a something, a 5% or 10% correction would actually make me feel better. But we have things like the Oreshnik-Hazel, you know, non-nuclear tip ballistic missile being fired, and the market just kind of goes up, you know? It just absolutely feels like you said delusional, right? Where a delusion is there's reality and you're disconnected from it.

That's delusional. So I feel like these markets don't have much grounding in what I would call geopolitical risk, risky risk, cycle risk, because we used to have these things called cycles. I'm old enough. Do you remember these things? Yes, I do. You know, that was one of the hardest things for me from a nerd, from a follow the rules of our strategy. But you're like, this cycle is really overextended. It's really overextended. It's really overextended. And then, and it seems like these cycles have gone away due to the government intervention that's occurred in the past and train investors like Pavlov's dog or the algorithms. Let's put it that way.

Yeah. Yeah. Now speaking to your, your chart where you said under that delusional part it was sort of you said i think there was a stealth then there was a smart money and then retail right retail was the third big block of that so again you and i have talked about this in the past um but this is from uh sober look and it looks like uh retail has never been this giddy on stocks they have never never been this certain about things um so so that's that's the retail participation and this is an astonishing. And how do you get a U-turn? Like, I mean, that's a what happened in late 2022 to cause that to happen? Fear of missing out.

And, you know, so I think what happened in late 2022, and I think this has been something that's just slowly worked on the psyche of so many individuals. Because, Chris, they get to the point where passive money flows or they are not price-sensitive buyers. It goes to work no matter what. So the employment's been pretty good. Investors are herding into the S&P 500. There's all kinds of metrics that are saying, you know, the U.S. in relation to the rest of the world markets is the

most distorted that it's ever been. So the one theory that I have that's changed, I think this cycle is going to end with the U.S. being like Japan in the late 1980s. Nobody ever believed that it would change. But they had the largest capitalization of global stocks. And then 35 years later, you know, it took, the market wasn't even back to where it was in 1989. I think this cycle is going to end that way for U.S. equities. But I believe it's also, I mean, look, the Fed stepped in with quantitative easing and what was it? QE one and 2003 or operation twist was around 2013. Then there was QE one QE two. I forgot how many quantitative easing.

So they keep stepping. And then it was all falling apart in September of 2019, but yes, thankfully COVID came along and gave them an opportunity to throw five trail into the, into the kitty. Yeah. So they cut interest rates and you've got more computers

trading now than what you had back in 2013. So the computers are studying on looking at market behavior when the Fed intervened or they cut rates and then poof, it's off to the races. And then in late 2022, it really looked like the market was going to start to come apart. It finds a bottom. I think Yellen started doing some things with treasury, which caused liquidity to pick back up again. And then now you've got a lot of investors, especially retail, that are just like, hey, I've been watching this thing run. I thought that it was going to end. I can't take it anymore. I'm going to get in. So there's a huge amount of fear of missing out that's in the psychology of the retail investor right now. There's a lot of greed.

There's a lot of delusion because nobody's really paying attention to the weakness that's potentially under the surface. And what makes it hard to manage your money is, Chris, we don't know if this is going to run to January 6th. Is it going to run into April? Is this going to be like the late 1990s to where Trump's able to do enough initially to where the economy holds up a lot stronger? Or are we going to get this Minsky moment where bonds crater in value, yields jump,

and then all of a sudden the market, like it did in 1973, says, uh-oh, and then we have this 40, 50, 60% decline? I mean, mathematically, we should. But the question is, and what's so hard in managing money right now, you got to play the game by the rules that are forced upon you. And you've got to participate some because what if it lasts three years, but this is a highly risky rally. And there's all kinds of indications around the edge that the professionals are using this delusion and fear of missing out to offload their shares onto the average retail investor. And so I believe for the average retail investor, this is probably the most dangerous market that we have seen in my 26-year career.

Well, the former big pillars, so this was easier to analyze when I was younger because there was autos, homes, and retail, right? And if you just understood those three things, you directionally got pretty much what was happening. Now, obviously, the government is a very large player in this market. They are a big, big chunk of the economy. So now you got it. That's a fourth leg of the stool.

And then there's all this other AIE stuff, you know, AI, this and that, which we've talked about before. Again, we'll see what that really turns into. But speaking of the retail, I mean, the housing section, from the Kobasi letter, new home sales in the most recent report dropped by 128,000 in October to 610,000, lowest in a couple of years, significantly below expectations of selling 725,000 new homes. You can see the little tick down there. Not an emergency. Not an emergency, but it's leading to not an emergency.

This is an emergency. But you can clearly see that the number of new completed single-family houses for sale has been spiking pretty hard here with the rise in interest rates. No surprise there. But still, you know, normally this would have been something you could look at and go, well, that's a sign of economic weakness right there. You're not selling houses. They're stacking up. It doesn't seem to matter anymore. I'm not sure what, there must be other legs on the stool. I don't understand. I haven't found them yet. Well, I think it doesn't matter just because the average individual thinks that everything is going to be instantly fixed over the next 12 months.

I really do believe that. And I know, look, he won the popular vote, but I think it's well more than 60 to 70 percent of the populace, just based on my observation, that have all this hope that things are going to be great and Trump's going to be able to solve all of our problems immediately. But there's some massive hurdles to overcome. So that optimism is an indication of the delusion that we're in because it's okay to be optimistic. I'm optimistic. If Chevron's done, if we release all this information for the American people instead of our politicians serving themselves, they move back to serving the American populace. Chris, the innovation that we're going to have come out when these monopolies are no longer protected is going to be incredible. Because you've been in the business world.

Monopolies don't want innovation. They want to milk every penny that they can out of the product that they have until they're forced to do something else because it costs money to change that process and reinvest back in. So if we can eliminate the protection around the monopolies, our quality of life, I believe, as U.S. citizens are going to increase dramatically. We're going to have better products, small businesses, middle class are going to come thriving back again. But at the same time, that's going to change because when you've got what is it? I can't remember the numbers right now, but the you know, the top stocks are 35 to 37 percent of the S&P 500. So if their protection is gone, then then that's going to cause a major difference in the overall markets,

and the market should be lower at some point. But the average investor is ignoring that right now, and they're spending like it's going to be all sunshine and rainbows because they have this optimism, but they are not taking the time to really think about the risks associated under the surface that could cause us to stumble and fall and, you know, have some bumps and bruises. So I think a big area is going to be particularly, I'm really looking forward to getting some rationality back in our health care system. And we're going to be having a food webinar coming up because, you know, here's what we've learned, Paul. We've learned that in the United States, the FDA has been absolutely in bed with industry and has just allowed any practice

to go through to the point that, you know, we've got toxins in our foods, various dyes and colors that don't need to be there, that Europe doesn't use, that you could use natural colorings like beet juice instead of red dye number 10, whatever. So we've learned all of that. And I'm hopeful that we can get rid of a lot of unnecessary health care spending. Now, of course, this is going to hit the pharma industry. But just to show you the power of this already, did you hear this? It turns out that Froot Loops sales are down over 50% week over week just because of that news that came out

about all of that rfk jr got on there put a little thing out showed a package up he's like why is all this junk and fruit loops and parents caught on and it went viral this is not something you're going to read about in the mainstream news because their job is to protect the sales of this company. You know? Kellogg, got to protect Kellogg. Despite that, Kellogg's inarguably been putting stuff in their cereal that's indefensible. Like, why? Why? Why put these nasty chemicals in there?

Well, you already said it, Paul, because they have a monopoly on it, and because they can. Nobody's forced them to spend the extra half a penny per box to do it the right way. That's why. You know, when you shared that, the only thing that I could think of is in the Bible where it says my people die for lack of knowledge and all that secrecy and all that protection. So now the knowledge comes out, points it at the parents and the ones that care about their kids immediately make a decision to do something different. That's what we need. That's what America is supposed to be. And that's why the truth is so important. And I hadn't heard that, but it doesn't surprise me because I'm,

I'm starting to see, of course, Brittany, one of, one of my team just had her second child. McKenzie's got four kids and they're having these conversations as you've been talking about food webinar and things I've shared with them at the annual summit and they're reading labels now paying attention sharing information with each other and it's hopeful and especially with the with the food webinar you come you have coming up I cannot wait to sit in and listen and learn well it's important stuff I mean if you haven't got your health, you know, none of it matters. So, and there's ways we can be lots healthier. So, so we'll, we'll see how that all turns out.

But again, it, you're right. This, this, that's what, that's why I sort of object to watching whoever it is. I know they have, it's very important to them. Markets have to go up, right? And they spend a lot of time massaging that and it's a whole machinery and I get their rationale. And maybe I'd have the same one sitting in their hot seat, Paul, I don't know. But I look at it and it's just not the truth, right? You know, the truth is letting real people sort of hash stuff out and settle on what they consider to be reality at that point in time.

So we have a lot of unreality out there. I worry that people are going to be harmed for lack of access to information. Yes. That's why I do what I do, right? It's like this information is out there. That's a ridiculously important role. I mean, the lives that the people that I've talked to, hundreds of people around the nation that say you saved their lives with the information that you shared with them in COVID. You may not get to hear that all the time, but I hear all the different areas that you've shared information that's made life changing impacts on those who have listened to you.

And that's a that's a big deal. You know, Chris, one thing that I'm concerned about is especially with Biden comes out and says, I will not pardon my son. I will not pardon my son. I will not pardon my son. And I know I'm going down a rabbit trail, but I'm headed to a point here. And then all of a sudden he comes out with this blanket pardon. And I want to table that for a minute because it's just absolutely unbelievable. So what I'm worried about is we know how the media acts. It's all on technicalities, right? Oh, Biden created all these jobs after the COVID restart. You know, he claims all these jobs and

wants to make himself look great compared to all the presidents in history, but a lot of it was just restarting the economy again, okay? In technicality, they were jobs. What I'm concerned about is, are there forces right now that are driving this market into the end of the year and into the inauguration that once Trump gets there, Lord willing he does, the rug comes out, and then all of a sudden you've got the next three to four years where the media doesn't change their ways. And they're like, hey, you know, these stats were the best in the world while Biden and the Democrats were in there. And this is what you're facing now. I just see all of this planning and deception and telling, I'm going to tell you one thing and I'm doing something else. And maybe I'm being overly cynical because I mean, it looks like the momentum

is going to be positive in the end of the year. All indicators are pointing to that. Yeah, we need a correction. But that's one of the concerns that I have in the background is this all setting up for some technicality to where as soon as Trump gets in there, whatever forces are causing this delusional momentum in the markets, get rug pulled. And then the media forces spend the next three to four years saying, oh, you had it so much better before you had it so much better before. I don't know. That's just a thought that came to mind. What's your thought about that? Well, look, let's be completely honest. Trump is going to be inheriting a box of lies. Yeah.

They were lying about the job market, right? They were lying about the strength of the economy. They were lying about inflation. They were lying about all of it. Who knows what we'll find if we really dig under all of that, right? And you mentioned, you know, the whole jobs thing. Like, oh, look at all the jobs that Biden created. Presidents don't create jobs in the private sector, but they can influence jobs at the federal sector. So Lynn Alden put this up just the other day. Would you look at this? Billions of dollars that are spent on, you know, interest payments. You look at this, you look at this explosion right dollars that are spent on um you know interest payments you look at this you

look at this explosion right here right well the federal jobs has almost the exact same explosion during that same rate if you look at total federal jobs over time they really like i think we piled on like another one and a half almost two million jobs in the last uh few years here so at a minimum if i was just coming in to try and rationalize all this i would say you know what we're just we're just rewinding whoever you hired i don't care what department you are i don't care whether you have contracts on these people um whoever you hired since 2020 just undo it just start there just we're rewinding right and don't make me mad because I'll make you rewind to 2015. Right? You know? Just get it done.

That's good. But you look at this and just the shape of that chart, that ought to really scare people, Paul. It really should because that's just, this looks runaway. And, you know, I thought you probably saw it too today. We saw that the Federal Reserve is putting out their first trial balloons to walk back the idea that they're going to be more interest rate cuts. They're having a hard time justifying because inflation is on the rise again and stock markets are at all-time highs and hot powering higher. It's kind of hard to make a strong statement that we're having, you know, that we're non-permissive, like we have a liquidity problem, you know? My man my man sven henrik points out here you know policy is still restrictive enough this in purple this is jnk and the blue is is the s&p

500 and look at this paul tick for tick junk bonds high quality stocks same story yeah that's not restrictive policy that's the feds just got the floodgates and now they're starting to make their first signs that they're like well people have started to notice maybe we shouldn't cut quite as quickly um and so those are already beginning to come off the table a little bit which means just to back it right up that this isn't going to be correcting anytime soon because this is being driven by the rate of interest that the u.s government principally on the short end of the curve has to pay and if they're not going to cut then this isn't going to come down this is going

to keep doing that um why because the government's adding two trillion of new debt that needs to be serviced to this pile every single year. So even if it was at 4%, if you could somehow get paper out the door at 4%, you sold all 10 years, 4% of $1 trillion is another $40 billion a year. So another $80 billion would go on to this, which would be a pretty good chunk. Minimum.

And most debt is pulling future consumption forward. So you're spending your future today by borrowing money. Now, if you invest into something that can generate a tremendous amount of income, that's great. You're investing in manufacturing where it can produce more than the debt that you're paying. But all I can think of in that chart right there is, you know, I've been doing some due diligence for some clients that are looking to buy some businesses. So in that due diligence, you're trying to pour through everything that you can,

because every business owner in the three to four years prior to selling the business is going to do everything they can to paint those books as good as possible. If I saw a debt chart like that on any business that a client was wanting to invest into, you know what I'd tell them, Chris? I'd say, look, I'd take a chance on somebody else buying this, but how about you just sit back and wait until they get into financial trouble and go buy them for pennies on the dollar when they have to go into bankruptcy? Because that's not a chart that I would be aggressively, you know, recommending any client aggressively buy. I'd wait until the inevitable pain and the consequences of their decisions came to fruition

and then take advantage of buying it so you're not stuck with it. Corrections can happen. It's fine. I actually like them. I do too. It takes the deadwood out you know i actually i'm this guy i thought gm should have been allowed to go under back in the day um and like oh we would lose so much like well elon showed you could come along and create a whole new car company um you know if you had a new innovator come in and i mean honestly i think somebody ought to just say whoever built the 2005 toy Toyota Camry, hire them, because those things won't die.

Dude, those things, they're still on the road. They're so boring. You go out every morning, they turn on, and they go where they're supposed to go, and that's the end of the story, right? That's the whole thing, you know? They operate, and I'm sure they're stolen, but, you you know they're not the first car that somebody looks to steal so there's a good chance in a bad area that you can come out and still get in the car so yeah yeah yeah that 2005 camry that that is like the dragonfly of car evolution right like now we got it like don't even change it just just keep making those you know until somebody exceeds that level of reliability. Yes.

One thing I did want to share, too. So Tavi Costa, and I like him. I know you've referenced him more in the past. He points out, you know, and I've talked about this before, about how the U.S. has just been, you know, accounting for the large majority. It's been the only game in town. The major index is basically since 2008, what, for the past 16 years. It's up dramatically, and I can show that chart in a minute.

But he says U.S. stocks currently account for 73% of the MSCI world index, the highest single country weighting ever recorded in its history. And, of course, the overwhelming dominance of U.S. equities have attracted the majority of global capital, leaving the rest of the world largely overlooked and underfunded. At what point does the tide shift? We have no clue, but look at this chart. So this is as of October, November the 27th, 73% compared to all of the rest of the countries of the world. So, you know, one thing that our strategy is designed to do that I'm waiting patiently until the day that it tells us to shift our focus is when the U.S. is in the lead and you're winning, overweight the U.S. But when the day comes that some of those other countries take off and those other economies take off, then you can underweight the U.S. and overweight the others.

But think about that. You know, when capital's easy, you can be sloppy. You can be lazy. You don't have to run everything efficiently and fine. But the rest of these countries in the world, not all of them, I mean, we look at what Germany's doing. But you look at South America, some of the BRICS and these others, Portugal has been quite amazing what they've been, Poland and Portugal, what they've been doing has been quite amazing. So they're fine-tuned machines. So whenever this bubble and this chasing of U.S. equities,

because now there is no alternative. Back when interest rates were lowS. equities because now there is no alternative. Back when interest rates were low, buy equities because of TINA. There is no alternative. Now everybody's saying the TINA is you've got to buy U.S. equities because there is no alternative. It's unsustainable. It really is. We don't know when it breaks, but again, for those investors who are adaptive,

it's going to be the opportunity of a lifetime. Something freaked out. I don't know why, but the Federal Reserve is desperately afraid of a correction. And we almost had one in October of 23. But then it just woke up one night, literally, I was one of those 2.30 in the morning, I see the green on my futures, I'm like, what's happening? So somebody at 2. 30 in the morning decided that's enough of that nonsense and we went the other direction but it didn't it wasn't just a wasn't just a little thing so again the kobasi letter here talking about not just the strongest stock market we've had in a while but in decades s&p up 26.5 this year bet on track for best annual

performance in 26 years paul this year like of all the things happening this year, I'm like, this is our best year ever. Like, try and make sense of that fundamentally. But again, that doesn't matter at this stage because we're in a different part of the story. But since that October low, the S&P is now up an incredible 47%. Here are all those years going back since 1998. Every year tracked is a gray squiggle.

And here's this year on top of it. It's now the best ever at this time of the year and might finish is the best stock market ever since 1998. That is wild. Isn't that wild? It is, especially with the backdrop. Yeah. Well, what happened after 1998? That momentum carried for another two years,

but then we had the 47% decline from 2000 to 2003, rallied back to even, had the 57% decline in 2008, and the S&P 500 went sideways from 2000 to 2014, late 2013. So, you know, it was all sunshine and rainbows until it wasn't. And I just don't see how we don't, you know, this cycle is going to be different. My concern is, is that we're going to break every historical record depending upon, you know, what happens over the next 6, 12, 24 months. But, you know, fundamentals are going to come back and reality is going to come back into play at some point in the future. For now, we have to participate really with fear and trembling.

So speaking of the bricks, you know, we, you know, as you know, I track a lot of things because I think everything connects. And so at peak prosperity, I'm often tracking things like what's happening in Ukraine or what's going on in the oil markets or how these things connect. And so, you know, I was very worried there for a while, Paul, because we saw the U.S. and the U.K. and then France dialing up to just shoot long-range missiles into Russia, and I thought that was a bad idea. Yes. Because I think I'm allowed to have that opinion. And so yesterday I find out that Tucker Carlson's back in Moscow because he's going to go straight to the source, and he found out while he was there that Jake Sullivan cut off all contact between

the U.S. and Russia over two years ago. We have no back-channel diplomacy, no front-door diplomacy, nothing, no communication, and we're lobbing missiles in to Russia. So those of us who thought that was a bad idea. So then Russia shoots this Ereshnik missile, and I think more than a few of the cognoscenti among the West were like, oh, oh, that's a different risk. I'm actually at risk now. Our bunkers are no longer safe. So things calmed down.

Well, you know what that immediately got replaced by? And I did this for my subscribers yesterday. So the ruble's now finally getting smoked. Yeah. So in the BRICS, this is the R in the B-R-I-C-S, right? And the dollar matters less and less on a percentage basis. They're doing more in ruble terms and yuan terms. But still, you know, it's not unimportant.

Russian bonds are now around 25.5%. Ouch, right? Imagine that. But now we're turning to the I in the BRICS. The rupee hits an all-time new low, just coincidentally. Brazil, which is the B in BRICS, is now over 6, which is a line they've been defending for a long time, and it just smashed right on through that. And the Chinese yuan, lowest it's been in this cycle.

They contain it as tightly as they can, but as you can see with that red dotted line down there, this is the lowest it's been. So wouldn't you know it, Paul, after they failed to stoke a world war by lobbing a bunch of hot stuff into Russia, I wake up the next week and I'm like, oh, every BRICS currency is getting smoked right now. Maybe it's a coincidence.

I don't know. How would you look at that? Too cynical? Not cynical enough? I don't know where to play myself anymore. I don't think you're too cynical in that case that's i don't believe that that's a coincidence now look i mean i'm i don't do it for clients but i really enjoyed currency trading up until about 2013 when something came in and completely distorted the currency markets so i still enjoy following them. That's not something

that would just happen out of the blue. I mean, what's the economic reason behind it? You know, that happens to come through. I mean, that's a warfare tactic is to go after their currency. And when you look at, you hear of what's taking place out of Russia and how their economy is holding up far better than what anybody anticipated. You know, China's got all kinds of problems. So I can understand China a little bit more. But Brazil, India, they're plugging along just fine based on all the data that we're looking at. That doesn't make sense that if it was just China, I wouldn't be, you know, that wouldn't raise my eyebrows that much and wouldn't lead me to our cynicism.

But when you're showing we've got the ruble and the rupee and the real Brazilian real that I don't think that's a coincidence. Well, it just says that, look, you know, that is warfare by any other name. And I get it. International trade is bare knuckled brawling. Um, and you got Trump in, in place now, which I, if you saw Canada was complaining about some tariffs or something, he said, Hey, how about if you just become our 51st state, and Trudeau, you can be governor, right? He just plays it. He definitely, Trump has got the art of the deal down.

You know, he just doesn't play the nice game like you're supposed to. No, that was pure. Oh, well, we are a long tradition between our two countries, and we value each other, and we're going to look for a long and fruitful way to. He doesn't do that. He's like, how about you become the 51st state? Right. But I think he's I think he's I think he's playing hardball, getting ready to play hardball with with all these countries out there. And so. and so well i mean he's gonna he's gonna have to because you can see most of most of them have been

in support of the deep state and exactly what they've been doing you know from what canada did to the truckers that's they had the ability to do it a lot easier than what we could have in the united states i guess with with with our laws at this point um so i don't blame him for playing hardball i looked at it and i was like, oh, he just gaslit the media. I can only imagine how this, you know, I told my wife, I said, we got to watch the media this afternoon and see what they're saying about this. And we did. And I came home and I was like, look, I don't want to watch the media.

So let's just turn it off. Yeah. Well, you know, let me tell you what I'm hopeful about, though. I am really hopeful that we can start to reverse this administrative state, you know, let me tell you what I'm hopeful about, though. I am really hopeful that we can start to reverse this administrative state, you know, where 1,000 pages of rules becomes 10,000, becomes 70,000, becomes whatever. I heard somebody, I forget who it was, but some organization, maybe a think tank, anyway, they'd added up, maybe a heritage organization said how many laws or rules acting like laws does the federal government have and the answer is 300 000

300 000 wow 300 000 ways to get in trouble right you know and um and so that's just it's just way past the apogee of that. So hopefully we can get some rationality back in on this. You know, quick example, not to pick on my town, but bless their hearts. They put a rule in against tiny homes. They're like, no, we don't want those. Right. And our town, by the way, could use any help it could get at this stage. Right. But somebody decided that was

a bad thing because you know they i think it was a tax decision like you know we can only tax tiny they're going to be worth less so we can only can't tax them enough so not on balance they're going to cost us i guess but i'm over here looking at it like look if young people can't afford starter homes why would you pass a rule to say we don't want young people in our town? It's just, I don't, it's very, it just, they didn't think it all the way through, you know, that's the kind of rules that just sort of come forward, make sense to somebody. And next thing you know, you have to live under it. And I would submit that my town is a fractal representation of all the towns out there.

And we're suffering because of the rules that we've imposed upon ourselves. They're not helpful anymore. Nobody can even justify them like this rule. How does it make your life better or my life better? Like it's a stumper. Doesn't make sense. So our local County, the County that I grew up in did the same thing about two years ago.

They banned the tiny homes. And I don't, I don't understand that. Like, if you want to live in a tiny home, that doesn't even go with the narrative of, you know, going green and reduce your carbon footprint and all that because a tiny home reduces the carbon footprint. So why in the world are you trying to stop people from having affordable homes?

I don't understand that in any way whatsoever because they're telling us, reduce your carbon footprint, but oh, you can't reduce your carbon footprint. That doesn't make sense at all. No, it doesn't. I have dim memories of it because we moved out when I was six,

but I'm pretty sure now that I'm an adult, I can add it up. Two bedrooms, sort of a split-level-y thing, come down into a living room and there was a kitchen, that was it. Bathroom. Maybe 1,000 square feet? Maybe.

That's the home I grew up in. There were four of us in there. You had four in there. In two bedrooms? So you shared a bedroom with a sibling, didn't you? Yep. Yep. Yep, 1,000 square Yep. Yep. Yep.

Thousand square feet. People would not get living that anymore. That's my garage. Did they ban a thousand square foot home in your local municipality? I can't remember what the square footage is here locally. I can't remember what the square footage is here locally. I can't remember what it is, but it was the tiny home designation, which I think is somewhere in the 400 to 500 square foot zone. But again, if somebody wants to solo live in that, you get a bedroom, you have a kitchen, you got a bathroom. Why not? Why would you not allow somebody to live in something?

I don't even understand and but it gets me back to my earlier point which is i actually paul if i could support something we would do away with income tax and property tax i think neither of them is is rightful neither of them comport with this idea of freedom or liberty i rent from my local government you rent from your local government everybody who has a property rents it from their local government. And by which I mean, if you don't pay your taxes, they take it from you. That's a rental arrangement. Yes, they do. And it'll go to the courthouse steps and it'll be sold for the back taxes. And then if you don't deal with it within one year, then is it one year? I think you have one

year to deal with it. And maybe in the second year, you forfeit the property. I can't remember the details exactly, but you can lose a paid for home because you get into a bind and you don't pay your property taxes. Let me go further. You will lose your home. Oh, yeah. You will lose your home. You're right. You know, and the sad part is, Chris, all of this government money printing to party like it's 1999, you know, I do, unfortunately, in my business, in my world, we deal with people who have money, right?

I mean, fortunately and unfortunately. who just don't have money to be able to work with somebody like us, because they're not going to get access. Unless I volunteer my time, they're not going to get access to somebody that can help them make some tough decisions. And usually what happens is they're dealing with those individuals that are selling these high commission products to where they invest $10,000 and the person makes $1,000 off of whatever goes in there. So I make sure I spend some time. And one of the saddest things for me, especially working through the local food pantry and some of the others is individuals that are in their eighties. They, they didn't come from a home

that taught them how to manage money. They didn't go to a college that, I mean, the schools don't teach anybody how to manage money anymore, but they but they just didn't have the knowledge, right? So they end up in a situation where the only thing that they have is Social Security, but they did fight tooth and nail to get their home paid for. You know, and here they are. They can't go back to work. Social Security isn't keeping up with the cost of living. They're having higher medical expenses because even, you know, the medical system is raping those who are unfortunate as well. Yes, it covers things, but there's still extra costs that add up over time.

And all they're trying to do is figure out how to keep their homes and keep their properties to cover their property and casualty insurance and their property taxes. And unfortunately, several of them, the only option that they had to be able to make in meets is do these reverse mortgages on the property that they shouldn't have to. So we're fortunate because in our area, or Gilmer County, the one area in North Georgia, those over 65 don't pay school taxes. So that reduces that burden a lot. But still, taxes are going up so fast in a lot of these areas because of poor investments in the past that it's crushing those that are overlooked in our society because they don't have the ability to generate revenue for most people to be able to pay attention to them. And it's heartbreaking. That's not what we're supposed to do as a society. That's not what we're supposed to do as a people. And I haven't thought hard about how to fix it, but that's a problem that needs to be

dealt with. So doing away with property taxes is one way to deal with it. Well, I was talking with a gentleman recently who's from cook county uh in illinois so that's chicago his yearly property tax in his home is more than the purchase price of the home when he bought it in the 70s oh my goodness on a yearly basis i forget he paid 23 grand or something now it's 24 grand in property taxes per year right that's crazy like you can't you can't get by with that but um but beyond that you know this brings us back to the rule of 72. So we just had this in our town, you know, the, the local school board and these people are Nazis. You know, they, they will, as soon as you don't give them exactly what they want, which

is a 5% increase on a yearly basis. This year they were asking for 4.9, you know, they throw a hissy fit and they cut the most popular afterschool program. So the parents get all mad and, you know, for 4.9. You know, they throw a hissy fit and they cut the most popular after-school program so the parents get all mad and, you know, apply pressure, right? They don't talk about the fact that it used to be, you know, if this is the growth in students and this is the growth in teachers, this is the growth in administrators, right? So we've got a lot of administrators, $250,000 salaries. I'm like, maybe we could just trim, I don't know.

What would happen if no administrator showed up? Would kids not learn that day? I'm't know what would happen if no administrator showed up would kids not learn that day i'm not clear what would happen but you know so they got their little thing they're running but but this is the rule of 72 if a five percent increase per year that means that school budget is going to be twice as large every 14 years that's how compounding works twice as large so if you're spending 20 000 per student which is a thing that happens now that used to be private tuition paul this public schools are demanding 20 grand a student right it's 19.6 in our area here not a fancy area wow well that'll be 40 grand a student and then it'll be 80 grand a few more doubling cycles right? And so the question is, well, eventually that just breaks.

Anybody can see that. It's just math. And you're saying it is already breaking for a lot of elderly people. It is. I mean, what are you getting on Social Security? I'll round. $3,000 a month? Well, if you're lucky, there's individuals that are out there that are in their 80s right now.

They're only getting $1,600, $1,700 a month. Yes, there is. That could be property tax, 100%, if you're that poor guy in Chicago. It sure could be. You know, and at a minimum, if that individual in Chicago, if he purchased that house in 1978 and he didn't move, then he shouldn't be charged a higher appraised value at this point. I do believe that that's criminal. And that's just another way that the government creeps in.

But it's a machine. They don't really care. And you're right. That's one of the things I've looked at in our local community. And my wife gives me a hard time. She's like, I'm in the school system, so be quiet. And I'm like, honey, you know me. I can't be quiet, but I will be respectful.

There's way too many administrators. And they're a bunch of paper pushers to please the government. And that brings me to a conversation I had today. Pretty interesting. So I sit down with a client and I have the capacity for whatever reason, to be able to get along with both sides in most cases. So client sits down and I knew it was coming. And I'll say, I'll say he, he or she, it doesn't matter, looks at me and says, so are you going to help me move out of the country now that Trump's elected? And I said, I can't remember what I said.

I said something along the lines like, well, you're wanting to leave the country? And they were like, not really. You know, I've got too many family and things like that, but I'm really worried that it's going to be a mess. All of these people that he's bringing in are unqualified. And I said, I said, really? I said, well, I said, let me ask you this. Do you agree that change needs to take place the direction we're headed? And they were like, yes.

And I said, so, you know, you're concerned that they're not educated in the way that things have been done. But the way that things have been done are leading us in the wrong direction. So are we not better off just to pick somebody off the street and put them in that position so that they're not educated in the wrong direction and make a change? And they looked at me for a second and they thought, you know, that's a pretty good point, but I'm still scared to death. And I said, yeah, there's a lot of hurdles to overcome. I said, but we've got to make a different decision. And, you know, and that could have gone bad, but it really had not crossed their mind that having somebody with a different set of eyes in there and a different education, maybe not quite trained to the point that they have to follow the same

path could be better. And, you know, maybe I'm fortunate that they are open-minded enough to have that conversation, but, you know, there's this belief that you have to have all these administrators. Well, a really good superintendent and a really good secretary is about all you need in the administrative area of the school system, except for the fact that you've got all these government regulations that you've got to push papers for to fill out and all these measurements to take place. And if we could gut those government regulations, then we could get that cost out of the education system. But unfortunately, there's going to be a lot of people lose their jobs in that case, too. And we need that, Chris. We've got to endure that pain to move people into creative, productive positions instead of paper-pushing positions.

And just because you're trained with some certificate that puts you in the administrative halls of power in the school system doesn't mean that you're serving the students or the people. I agree. You know what, Paul? I just want to unleash the good people of this country to just do what they're going to do, right? Yeah. And so we saw there's lots of—I know it's out of the news cycle, but I just did this on my Signal Hour podcast, just came out and talking about what's going on in Western North Carolina. And it turns out, oh, there's still 5,000 displaced families and FEMA's doing nothing

and all of this stuff. But, and that's not true. FEMA's doing one thing. They're seeking to install a $280,000 gate to prevent people from using the road that the West Virginia miners magically rebuilt when everybody said it couldn't be done. These guys are like, oh, yeah, we'll get that done. We work with loose soil all the time. We're miners, right?

And they just, they built this road back up to Batcave so the people could at least get back and forth. It's, you know, it's not pretty. I'm sure it's bumpy, but it works. So the government's role, instead of going, wow, we should learn from this, a little embarrassed we didn't know how to do this, now let's put a gate on it, stop people from using it. No way. That is so ridiculous. It's evil.

That's evil. You're exactly right. It's full on evil. That's evil. Instead of going, hey, you guys just pulled off something. Come over here and help us because we've got to get to these people. We're educated and we're better than you, so get out of our way. We're going to shut it down.

None of that makes sense to me. The only word that works is you're right, Chris. That's evil. Well, speaking of, this is when I know that I'm just so astonished with what people can do, is this. So this is the Blue Lagoon here where I've been, you know, it's this beautiful hot tubby area in Iceland, and it's being attacked by this volcano. And it's like, there's all this lava headed a certain direction. Well, wouldn't you know it, the people in Reykjavik figured out how to take the lava, and they sprayed a whole bunch of water on it, and they hardened it up in one direction

and got it to go another direction, and they saved their tourist attraction, okay? Wow. So, I learned that if you give people a volcano, well, they'll figure out what they need to do. You get some smart guys and gals on there. They start spraying water on it and they start, Oh, if I cool it this way, it starts to bend a little. You got, there's like people who can put it on their resume. Now I'm a professional lava handler.

Like this is awesome, right? It didn't require a government to write regulations and books and training manuals and assess fent penalties and fees with a licensing operation, you know, and a permit. They just got out there and said, what needs doing? And they fixed it. I believe in people. I don't believe in organizations, clumps of people that we call government to fix stuff.

I just don't. I'm with you. And it's a level of arrogance, Chris. They need to, we need to unleash the American people. But there are people that dropped out of school in the eighth grade because they had to take care of their families. I have three clients that had an eighth grade education, and they've accumulated a massive amount of wealth because they were humble enough to ask a lot of questions. They didn't really, they didn't still to this day,

don't feel educated enough to where they feel smart, but they're brilliant because they ask a lot of questions. They're voracious learners, and they're problem solvers. So you've got these individuals that somebody that graduates with these degrees and gets this certificate and, hey, you should hire me because I'm from this institution, look down upon the person that graduated the eighth grade, or then they're jealous, you know, they justify it and say, you know, well, they were lucky, you know, they couldn't have done that smart. And we're missing out on so many people that are a part of this country. One thing about Americans is we're fighters, we're innovative, we're creative. And if you unleash the American people and stop predicting these monopolies,

it's going to be far better regardless of what the markets do. And quite frankly, I'd rather have the markets go sideways for 12 years and hope in the middle class come back and have small businesses where when I travel over to Alabama or another town, hey, there's this great new

business that's not a Walmart that has these innovative products that I may not be able to find somewhere else and open up the power of the American people and bring back the joy of the middle class instead of, you know, kind of like the Hunger Games where you've got the capital that's so detached from everybody else and they've got their boot on the small business trying to hold back that innovation to protect their own position because quite capital that's so detached from everybody else, and they've got their boot on the small business trying to hold back that innovation to protect their own position, because quite frankly, most of them inherited it. They didn't earn it. And that's the problem that we have right now. I agree. I bet we could poll a lot of people individually, sort of my age, and ask them,

would you take a big old decline in the stock market if it meant your kids could start out their investing life from a reasonable valuation? I'd say, yeah, do it. I wouldn't even think about it. Like, yep. Yeah. Yep. But I got to tell you, Paul, these people, you know, I'll speak for my generation for

the moment, really disappointed, you know, with the boomers who are just they're just so greedy. Like, I got mine and they want to keep it and they want to, you know, that's what, that's what the Federal Reserve did. Can we just be clear about this? They didn't rescue the markets. They rescued asset holders, whether you held real estate or you held stocks and bonds, that's who they rescued. They bailed them out. Fine. But when you sort of look at that from a sociological standpoint, you find out that was a, that's a narrow band. That isn't everybody. That's a very narrow band of people of a specific age, right? So they basically said this little box, we're going to, we're going to save this little box of people. Why was it debated? Was it discussed? Did you

vote for it? No, no, and no. It was just what they did. Yeah. You know? Yeah. Well, and there's a belief that there's the trickle-down economics. And quite frankly, Chris, there was a period of time where there was a lot of trickle-down economics. And I know there's some truth to that. But it's been distorted at this point. Because here's the thing. You take my team. Renee has worked with me for 20 years.

Kerry has worked with me for 20 years. Brittany's for 15. Dylan for 12. We're a family, right? So the better that we do in the business, the better they do across the board. I don't, you know, my head's on the chopping block. If something goes wrong, I'm the one that everybody comes after. So, yes, I have to reserve a little bit larger part of the pie because I'm carrying that extra risk.

That's just part of the pie because I'm carrying that extra risk. That's just part of what happens in business. But we make sure that they're very well compensated. And I've seen so many businesses and business owners that built that business, that had those employees that were just as crucial to that business being built, that were overpaying all of their employees when they sold the practice. And then private equity or somebody else comes in, and you know what the first thing they do, Chris, is they gut all of the high-paid, long-time foundation employees that are the most valuable that's in that business

so that they can strip the profits out for their own pocket. There was a time where there was integrity. When you had a lot of small businesses in our country, I believe that top-down, trickle-down economics worked because there was the integrity to take care of those people. But for whatever reason, we've moved into a point in time in our country now where we're so self-serving in the corporate business model that it's, hey, I'm going to go buy that business and I'm going to be efficient,

which means I'm going to gut all of the high-paced employees. Because I'm a monopoly, right, and I have not much competition because I have access to capital on Wall Street that the person next to me doesn't have, I'm going to cut my services, your service is going to be worse. Your product is going to be worse, but man, my profitability is going to be great. And look, that's the world that I have to swim in because I have to help people grow their money. But we have a moral problem in our country that I'm hoping will change. And all we have to do, Chris, is get the government regulations out of the way because they're protecting the monopolies.

They're not protecting the environment. For every one that's protecting the environment, and I'm just picking this number out of thin air, there's probably 25 that are protecting a monopoly. And even the banking system, you know, after all the banks went down in 2008, they've raised the barrier of entry to start a new local bank to the point that you can't do it. It's just not worth the risk associated. So now you've got a few banks that are making decisions out of a town or a city hundreds of miles away to impact your local community. And it doesn't matter what your reputation is in the local community because a handshake and your character doesn't matter when you go to get a loan anymore. What matters is what that central planner at that monopolized bank in another city thinks should take place in your local area.

And we've got to get that fixed. I don't know how they fix it, but I hope they do. Me too. That was what was so frightening about that Marc Andreessen interview on Joe Rogan, which was he talked about, at least in one part of that, that the plan that they told him about at the White House was to create this overarching AI control layer with just a few companies in charge of everything interfacing with the government to make sure the right things are done. And as we learned recently, right things

often mean my political opponents are targeted, harassed, and process as punishment, you know, drag them down, not really charged with anything, you know. But you have to defend yourself. Very expensive in time and money, you know. So that's, yeah, no, let's not go that direction. But wasn't that the fundamental thing between people who want freedom and people who want more authority, right? That's the fundamental break that happened there. I think people just said, you know, I'm done.

I'm tired of the gaslighting. I'm tired of being lied to. You know, this was really offensive to me. Just yesterday, I find out that Biden, somehow they flew his old self to Africa, and he pledged a billion dollars to help Africa rebuild from floods. And nothing is being done. Virtually nothing is being done for our own American citizens in North Carolina. Except for building gates to reduce the innovation and access to individuals. Right.

I was heartbroken over that. I don't understand. You know, Chris, what that reminds me of is a family where you have this one individual that is probably the worst narcissist in the world, right? That goes out and paints this great picture to everybody else, but treats their family like hell at home. And that's what it is, that there's no caring for the American people. It's like, oh, let's go make myself look good in Africa, and maybe they'll record me good in their books. I mean, maybe I'm too cynical in thinking that, but it's absolutely ridiculous.

You know, I mean, it's so ridiculous. The first question that comes to my mind is, okay, the evidence tells us Ukraine's a money laundering program, so who in Africa is he paying off to have it lying back into his own pockets? Like literally, that's all I can think of because we've got good people in North Carolina, not even what happened in Hawaii, and they're abandoning them. Why do we not spend resources on our own people? A billion dollars.

I can't remember how many $450,000 houses. I can't remember if it was a billion or 8 billion. That math's not necessarily easy to do y'all, but. Well, for a billion, that would be, I'm just in the top of my head, 2,200 roughly. Yeah. 2,000, 2,222. Yeah. So, I mean, that's a dramatic impact that can be made in that local community. We have to take care of our own people first before, because it's their responsibility to take care of them. Once our family's taken care of, yes, we can be generous and step out and take and help another family, but we have to take care of our own people first. And that just makes me so ridiculously angry. Well, that's the first thing I would do if I was, well, I would do a lot of first things if I was Trump.

First thing I would do is I would just have a full-blown federal investigation into election, election practices. Any fraud I found, I don't care if it was a GOP person, a DNC, I don't care. Libertarian, I don't care. But I'd be coming in hard and find people who were committing fraud, and that would be the end of that. Long prison sentences, very public trials. Make sure everybody sort of understood what they just witnessed. Stop that. So that would be part one.

But anything that we could do now? So, you know, we've talked about it before, but I am really impressed with what Javier Millet has managed to do in just a little over a year in Argentina. They're going to have 8.5% GDP growth this year. The Vaca Muerta shale is on pace now to have a million barrels a year. They're going to be an oil exporter. They were an energy waste roll, you know, an importing impoverished nation.

He fired, he just axed like half the government agencies. Just gone, you know? Like, I got to be be honest i would wake up and i would have a double fist pump of cheer if i wake up read the newspaper and it's like department of energy disbanded you know department of education disbanded like just start just like just get rid of them as a starting point potentially see what happens right yeah hey my favorite video clip that i saw is when javier Millay goes in there and he's got all these, I guess they were magnetic strips, and he's grabbing them. Gone.

Gone. I was like, yes, let's see how this goes. But he set the precedent. I mean, really, he's a path cutter. So he comes in there and just absolutely upends. Of course, Elon Musk goes in and buys Twitter and just guts the whole place, and everybody said that it would be impossible. And Twitter's far X. X.

It should be X. That takes me forever to learn that. But it is so far superior to anything that it ever has been in the past that it's amazing. And it keeps getting better every week and every month. So now that should lead the, you know, give confidence to the Trump administration, the Doge council and everybody that's there just wrecked the whole system because it's not working for the American people. And what is working will clearly rise to the top. You know, if they just, you know, if we wake up and they said, we're going to have a moratorium

on building codes in Massachusetts for the next five five years see what happens you know what happened nothing except for building probably that's right well i if i'm if i'm having a house built it's in my interest to make sure that it's not built in a shoddy way that it's going to fall down i don't need codes to tell me that right no you know i know what i'm looking at people i trust people will do what what's in their best interest you know they sure will if you do it bad then when you try and sell it you guess what you can get a bad price because somebody's gonna have that thing looked at and say no i don't want that's right by that but anyway that's i i really i'm hoping we can get to that point. Because you know what, Paul?

I talk about this a lot in my other life, which is that we have a math problem built into our overall system of money at this point in time. It's gone exponential on the debt, and we're just doing all this stuff. And so there's going to have to be some kind of a reset at some point. It's going to be a little painful um and it's rooted in this crazy austrian school of economics idea which is that if you live too far beyond your means for a period of time you got to live below your means for a little period of time just how it is and we've been living way beyond our means pretending like it doesn't matter right so it will and i know then you have to translate that into actual tactics that people would pursue because what do you do with that information you know if our money system is really

that math problem me what do you do right and uh yeah it's tricky right it's not even a coin flip for me or this coin has eight heads and just two tails, right? There's at least an 80 plus percent chance in my mind that we just try and print our way out of it because that's what we're going to do. Yeah. Which means inflation. And that leaves that Minsky moment that we started out, you started out talking about with Paul Tudor Jones, you know, and what's interesting is if you're going to be short the long end of the curve, what's the one thing that you should be long in the interim period, which has not been great in its performance since the election? This is not a recommendation. I've got to back out of that a little bit.

But one would be inclined to be long gold on the shorter end if you're going to be short those treasuries on the longer end. Because, one, it's either default risk that he's talking about, right? And gold has no creditor. So it'll maintain that purchasing power if we did have a deflationary environment. So you don't have to worry about the default on the other side. And if it's inflationary, which I'm assuming that that's what he's pointing to, that's what the math looks like it's going to end up being, then that gold, silver would be hedges. And one thing that's interesting, now look, I mean, I'm open. I struggle with the cryptocurrencies, the Bitcoin. Is this like it's not been tested? But one thing it is telling us from a longer term standpoint with its move and gold's longer term move where

it is here, the monetary system is changing. And we're only going to know exactly how it changes before too long. But gold and the crypto for some seem to be the area that a lot of individuals are going into to say, hey, I'd rather own this than the U.S. dollars at this point or any other currency. So we won't know what it's telling us until we have the benefit of hindsight. But there's a lot of things bubbling under the surface that leads me to believe that this is a pause in precious metals for a while. And that, you know, from my opinion, you should talk to an advisor, not a recommendation. This is just my opinion for educational purposes, that you should

seriously consider buying any dips that arise over the next six months. Agreed. So if this plays out like, say, 2009, remember? So we had the big dip, but then there was this recovery, and then there was this huge dip back into the spring. This feels a little like 07 to me, I guess, this stage, right? You just have this climb, this relentless climb. But if you look underneath and you see the insiders selling

and the volumes kind of disappearing and drying up and starting to get over-concentrated and a couple of big names and all of that. Yeah, because I don't want to be just like that ever-s, but I'm watching all this excitement over AI, and I'm just like, well, where's the business case? I use it. I use AI. I use it to help me structure things, but I'm looking at it like, really, what is the business case? And at best, I can come up with a neutral business case, which is it helps a company fire a lot of workers. So that's good for the company, but it's not good for the workers.

That's right. It's good for the company, but it might not be good for the economy, which is still structured around this idea that we all have productive jobs and we go out. And because of that, we're individual economic units and we do things like take out mortgages on houses and buy cars and things like that. So I'm still waiting for that thing that says ai is going to create brand new wealth that is then shared liberally with everybody somehow i haven't figured it out yet but if you have a you have an idea on

that let me know i i can see how it can be spectacularly good for individual companies but it's gonna that's because it's gonna allow them to either do a lot more with less or fire a lot of people. Well, inherently technology is deflationary. So, so if it, let's say it's that good, Chris, and now nobody has a job, right? And you've got a hand, you got five individuals. Well, now all of a sudden they're, you sudden, they own it all, right? That's not where we want to be as individuals. But let's say if it's not that great, but it does eliminate 20% of the workforce that's out there. Well, that is deflationary, where their job is going to go.

The American people are innovative, right? But still, if AI is that good across the board, it can take away a lot of innovation. So that is deflationary. So yeah, it might be good towards the company's bottom line, but if they can't sell more, if they're selling 20% less products because there's 20% less people employed and 20% less ability to spend money, then that is going to impact the bottom line in the markets at some point down the road. And then it is going to impact the bottom line in the markets at some point down the road. And then it's going to compound on itself as time goes along. So I'm, I know that it's useful. It shortcuts several things for me, but it's nowhere near the point

that I don't have, you know, that I don't need all the staff that I have now. It just makes them a little more efficient at their jobs. So still waiting for that killer business case. They're spending as if that's a proven thing, but I'm not clear it's a business driver here. This may be more of a political, even defense driver at this stage. Because there's this idea of what's called a digital canyon that the first country or entity that cracks over into some sort of like super AI will always remain so far ahead of its competitors. Because by the time they've cracked that same territory, you're already well beyond. It creates a digital canyon that can't be crossed anymore.

That's the idea. I don't actually know what it fully means in practice, but we'll see. I hate to say this, but there is a book that tells us that there's a point in the future that if you don't agree, that you will not be able to buy, sell, trade, or do anything. And all I can think of is with the computing power of AI, it really could monitor every behavior of every person around the entire globe. So to an extent, it's absolutely terrifying to me. Was this a bestselling book by any chance?

Yes, it's the historical bestselling book that's out there. I think it is. Yes. Of all books sold throughout history or given away, it is the number one. And it happens to be in a book called Revelation, which is actually very interesting. Also, I believe it has a distinction of being the first book mass produced on the Gutenberg press. So a lot of firsts there. You know, I actually did not know that, Chris, and I'm ashamed to admit that.

So it was the first book to be mass produced. That makes sense, though. It really does. But I didn't know that statistic. I believe that's correct. I'll look that back up again just to be i heard that a long time ago um but uh well sorry yeah i don't dark real quick well you know i don't so you maybe you've seen but before my subscribers atity, we've had this just wonderful conversation. I started it up by doing a piece on this thing called Mousetopia, which was a social experiment run with mice where they created a utopia.

No predators, all the food you could want, all the water, cages cleaned, no pressures on the mice, none. So predictably, they bred up until they sort of occupied the space. It got a little crowded. And then, Paul, it turns out they lost their will to live for some reason, and the population crashed to zero. And then somebody else at the site was commenting that they'd done the same experiment with worms, in know, given the choice between taking a path that would take them to a desiccated death or a moist survival, eventually they just choose death. Right. And so the idea is that what if natural law God has programmed into us the need to struggle, the need to have an edge, the need to be challenged in some way, shape, or form. And so there, even the illustrious allure of AI to me sounds like a dystopia because it's basically saying, oh, don't worry. You won't have to make decisions anymore. You won't have to remember what you even like. It'll order things for you. You won't have to remember to, you won't, like, it's basically the promise of AI is

to take away all the challenges of life. I'm pretty sure that leads to organisms losing their sense of meaning and purpose. Right? Right? I forget who it was. It might have been Hayek. Or was it Nietzsche? Who said that, he said, ah, it's easy to trip up socialists.

They say, oh, we're going to create this utopia. And I say, great. When humans finally get to utopia, the last about 20 minutes before they just revolt. They're going to need some drama in their life. They're going to need a little something, something, you know, and and, you you know, they'll have to, they'll have to recreate that. So I actually think that's part of the other tension. I said, freedom versus authoritarianism, but there are people who understand that, that you build character, you build a good life, any, your relationship with your wife, your partner, your relationship with your kids, what you do as a business person, all of it is defined by how much you put into it.

The greatest impacts that I've had in my life at the moment are the greatest lessons that I've learned that have shaped me for the better at the time were the darkest days that I'd had in my life. And I didn't think things could get better. And on the other side of it, I look back and I thank the Lord for taking me through those periods of time because either I was prepared to be able to help somebody walk through their dark day, or I was better prepared and stronger for something down the road that was coming that I couldn't see. And so I do believe that that struggle and it gives us meaning to life, right?

Like we battled, we overcame, or we even battled and lost, but we battled and that's the most important thing. We strive for a better future. And I love the Optimist Creed. I haven't had time to participate in the Optimist Club locally, but the one part of their creed I'll never forget. We learn from the mistakes of the past and we press on to the greater achievements of the future. You know, to forget, learn and forget the mistakes of the past and press on to the greater achievements of the future. And that's what makes it so wonderful to live in a place like the United States, and that's what made it so wonderful to build our country foundation, because you didn't have the monopolies with their boot on the neck of the average individual or shoulder holding them down. That's what our founders left. But now we have, as a country, allowed that same risk to creep back into the system.

Of course, Marc Andreessen laid out that it was a lot worse than any of us anticipated it to be. The debanking thing, Chris, I did not realize that it was that bad. I've known of a few people that have been debanked because they were real popular. I had no clue that it was that prevalent in our country. And that's evil. Yeah, and I had a banking person sort of reach out and explain the details of it. And there's a lot of nuance and complexity back there. And they do have some real issues they have to struggle with.

But at the end of it, I said to her, yeah, but the like the FLCCC or, or children's health defense, like, like they, like companies that were just, you know, entities that are just sort of ideologically against whatever the pharma people were up to when they're getting debanked, that has nothing to do with trying to make the world a better place. You know, that's something else. So, so I think that's again, bifurcate everything, good and evil. I think that that's really, you know, people just got fed up with all the lies, all the gaslighting, all the anti-human behaviors, and frankly, anti-democratic and anti-capitalist, like anti-a lot of things, basically anti-American.

That just crept too far, and now we're in the process of cleaning that up. And I hope we can do it quickly. And more like Javier Millay, people got upset, beat some pots and pans, but got on with their lives. I hope that's about as noisy as it gets when we do the same thing. And I hope we can get it done, you know? I hope so, too. I am hopeful.

And I'm excited that we don't have groupthink coming into a lot of these positions that are out there. We need a fresh set of eyes. We need a fresh set of individuals to come in. And I can't tell you how many times that I'll pull somebody in that has no investment experience at all. And I'm like, look, I want your opinion. Here's why we do what we do. What am I missing?

And every now and then, I guess this is about seven years ago, I had somebody ask me a question. Well, why don't you do it that way? And I was like, how would you do it? And they shared an idea, and I was like, oh, that's brilliant. Because, you know, you're trained in the industry, and sometimes you get these blinders on, and everybody has something to offer, Chris. Even the most foolish individual has something to offer, and that's the problem. We don't respect individuals anymore or respect our average individuals. There's this level of pride that we have, especially in the halls of power, that I know better than you.

And that reminds me there's a way that seems right to a man, and in the end it leads to death. So I'm hopeful that we're going to get in there, they're going to get in there, the Trump administration is going to get in, do what they say they do, roll up their sleeves, fight what fights need to be fought. I know Elon Musk is not scared of a fight. And do what's right for the American people

and get the government serving the American people again. And you know how I know that it'll be working is when we pick up the phone and call Social Security and they go, hi, how can I help you? Instead of hello, hold on just a second. I got to finish this phone call. Sorry, I couldn't help it. Well, I'm hopeful too. We got to make it to January 20th at this point in time. We're recording this early December here. So let's hope that everything just goes along and we get some fresh people in and we just can keep moving. That's my sincere hope in this holiday season. So with that, thanks everyone for listening. Paul, thanks for your time. Anybody who wants to talk to Paul and or his amazing team, please go to peakfinancialinvesting.com.

Fill out the form. Somebody will be back in touch with you within about 48 business hours, a couple of days. You could have a one-on-one with Paul and his team, and it's so worth it. Such a great thing. So Paul, thanks for your time today. And gosh, I guess we'll see you next week. Yes. See you next week. I look forward to it, Chris. All right. Until then, bye, everybody. Hope you enjoyed this, and we'll see you next week. Yes. See you next week. I look forward to it, Chris. All right. Until then, bye, everybody. Hope you enjoyed this, and we'll be back.