Peak Prosperity - Finance U: Fed Cuts Rates with Stock and Home Prices at ATHs!

Episode Date: September 19, 2024

The “apolitical” Fed cut rates by an emergency amount just 6 weeks before a major and contentious election thereby rewarding incumbents. As always, they did this even though it will reward existing asset owners and punish the young who are starting out in life. It’s just who they are, to their bones.

Nothing in this program should be considered investment advice. It is for educational purposes only. Please hit pause and read this disclaimer in full. They love their families. They love their country. They love freedom. And they want what's best for others. And I would be willing to state that nearly every single person there,

if they could lay their life down to change the path that we're on right now, would do it, especially for their own families, to make the future better. 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, everyone. Welcome to this edition of Finance U. I'm your host, Chris Martinson, and I'm the CEO of Peak Financial Investing, also peakprosperity.com. And with me today again, Paul Kuyker of Kuyker And with me today again, Paul Kiker of Kiker Wealth Management. Hey, Paul. Hi, Chris. Good to see you again. Great to fellowship in person over the weekend at the annual summit. What an amazing event. What an amazing event. So yeah, we're seeing each other virtually, but we just saw each other in person and a lot of fun. And as well, I mean, that was so good. I just love getting together with people you have to be

together with people i already got a call from somebody like it really changed them like they'd been sort of on the fence thinking should i do i have to take action what am i going to do they were sort of on the fence but being around other people who were already on that vibe something must have gotten in by osmosis absorption and they just said that's it i'm i'm getting busy getting ready because people need to get ready paul as you and i were talking before we started recording um yes things are popping popping creaking popping sounds geopolitically financially here and there and today is rate cut wednesday the fed has started the rate cuts which means the fat lady is singing, as they say in opera terms.

That means it's over. This is usually when markets pop for a tiny bit and then take a dive, take a rest, however you want to look at that. Yeah, sheer vertical move on the upside. I noticed it and I was like, of course, the news didn't come out and I wasn't watching the press release. So I was like and I like just watching what the market does initially. And I'm like, OK, we got 50 bips of cuts. And then and then it starts to sell off on the other side. But this is what's so ridiculous about there's a couple of things that I noticed. One, all of a sudden this week, everybody's coming out and saying we've jumped.

You know, we're going to go 50 bips on the cut. Goldman, traders. So, you know, the question is, is did the market basically force that position because they took so many bets that it would have caused a lot of pain for a lot of people? Or the cynical part in me is, you know, have they floated this out there to the most connected people so that they could be prepared for it and ready? I mean, look, I know they're not supposed to let that out there but you know there's enough smoke there's fire and i always wonder about that but chris i gotta ask you right all-time highs on on housing prices markets right at all-time highs the inflation numbers have come out and surprised to the upside here recently when everybody was expecting them to be lower the macro data has started surprising to the upside here recently when everybody was expecting them to be lower. The macro data has started surprising to the upside again. And the growth data is starting to surprise the upside again.

So why in the world has the Fed got to have a near panic 50-bit rate cut, half a point rate cut right now? And another thing is the dot plot changed dramatically. So it moved to meet street expectations but um it just doesn't seem to make sense is it really needed now well i have an explanation for that and the fed people watching this aren't going to like my explanation very much because it's a little dismissive of them. So it turns out that the Fed doesn't set rates. It follows them.

So was it going to be 50? Was it not going to be 50? I was positive it was going to be 50. Here's a nice chart put out by Zero Hedge. Okay. And can you see my, is my cursor showing on here? It is. I can see it.

Okay. So we got two things on this chart. Let's look at the top one. It's the green wiggly line. And then this underlying blue, little bit more chunky line. The green is the two year yield. So that's the two year treasury yield. So whatever that is, like it's got a yield of 8%, 5, 2, 3, whatever. So this would be 2% here. And then the blue line is a chunky line underneath, which is the Fed funds rate, which is the one they announce and the gnashing of teeth.

And will they cut? Are they going to raise? Where are they going? Well, if you look at this chart carefully, you'll notice something. Before the Fed starts raising rates on this blue line back here, the green line is already screaming higher. So the Fed comes up. And even before, see, the Fed's still rising here, the green line started to come down already.

And so it comes down and then eventually the blue line follows that. As you look along here, you will see that every time the green line starts up first, the blue line follows. So the Fed is basically following what the two-year Treasury is doing. And you can see here, this is the largest gap on record here right and they had to follow that and so this red line is just looking at that difference between the two and the and and the fed fund right so at zero they're all lined up everybody's cool when the red line's above zero the two year is higher than the fed funds right so that drags rates up but when it's below zero it drags rates down again it was way down here just took out what they call the 2008 wides this is as wide as that gap had ever been

but it was back here in 2008 obvious you know great financial crisis here it is taking that out so am i saying i'm not does i'm not saying we're entering a 2008-style financial crisis, but I'm not not saying it. No, I'm just, the point is the Fed follows. The two-year sets the stage. All this sturm und drang, and they come out and go, oh, we decided, and dot plots. The two-year was telling you what to do. Tom McClellan put out one as well, that similar chart that I actually thought about using in the presentation on Saturday, but I didn't want to get that deep

into the weeds. But here we are, we have central planning, distorts the markets in various ways. Why don't we just let the bond market do it on the two-year and let the market determine where the interest rates are supposed to be? That would be far better from a longer term standpoint well wouldn't it and of course Milton Friedman said we don't need a federal reserve we can run monetary policy with a laptop he's absolutely right let the market set the rates I love this idea good idea so here's the question I hate to be so cynical, but you get, what, 818,000 revision to the headline numbers and payroll that's happened recently. We're getting all this rosy economic data that's out there. The bond market's telling us that the Fed's behind the curve and the rates need to be cut, and then the Fed comes out and cuts. So you've got, you know,

the political powers, which obviously that's for their own benefit, telling us things are great, but yet the Fed and the bond market's telling us that things could be, you know, assume your crash positions basically. Now I'm not saying the market's going to crash right here, but typically in a market environment like this, you want to hold the markets until the first Fed rate cut, and then you want to sidestep. So you go back to 2008, which was the last time that we've had – was it 2008? 2007, excuse me. September 18, 2007 was the last time the Fed had a meeting and a cut on September the 18th market had its all time high around October, November, and then 12 months later, you know, uh, uh, all hell, excuse me, broke loose.

And then you go back. What was that? That greatest spread. This broke the record going back to 2008, right? So there's a lot of things that are lining up in here. You've got officials that are coming out and saying things are rosy, but you're acting like, you know, we're headed into a recession. And more than anything, we've had, you know, substantial deviations from a historical perspective about headline numbers and revisions. So honesty is not loved by this administration or any political administration that's out there right now.

And that means that we cannot be passive. I just don't think you can be passive in this environment. No, you can't. You got to be fairly activist and and dodge things. And by the way, you know, I'd be remiss if I didn't point out. So this is Wednesday, September 18th. It looks like here on my on my clock. So just yesterday, we had this stuff go on where the Middle East is firing up, where there was some really interesting thing going on, where Israel apparently, obviously, torched off a bunch of little bomblets all over Lebanon that were in the form of pagers. Turns out today we're finding out walkie talkies are also going up. There's reports as yet unconfirmed that solar systems are going up. So if there's anything

that's connected to the internet that has a battery in it and that's a hackable attack vector, it's a problem. And then on the heels of that, a very large ammunition depot more than 300 miles into russia from ukraine's border got hit hit hard last night so so all of these things paul if these turn into from a financial standpoint if we see oil suddenly double or triple i was really taken with luke roman's thesis that says there's a maximum price of oil an over leveraged system can afford right because of all the leverage all the debt right so if you have an over like if i have a household and i've got this huge credit card bill i have to pay and i have to drive a long way to work and suddenly my gas price is double triple all that it creates more stress on that ability

to repay so that's what he's talking about. Energy, oil feeds into the costs for everything. So if our gas bill, our gasoline bill in this story goes up, could really be a shock to the system. Things are looking a little dicey out there. How are you reading this and what can people do to prepare? Well, we're going to have to really take a look at our situation. Now, as far as how I'm reading it, how am I reading it? I think the markets are just disconnected from the risks that are out there. The feds bailed us out to the point, the buy the dip, and you've just got a disconnected group from the reality of what's taking place in society.

And it's my understanding, right, that we had to use these long-range missiles to hit that ammunition depot. So Putin comes out over the weekend, and he explains clearly that this is a line that you can't cross. And it just reminds me of a situation. So a couple years ago, I'll try to keep it as vague as possible. Somebody that was in a very protected class comes into the public school system. We've got a good public school system here, but basically just kind of crossed all boundaries and finally got smacked in the mouth. Right. And of course, everybody gets a lot of trouble. And I was getting the feedback from, from, from my children. They're like, look, he just is used to pushing people around and used to getting away with, with what he wanted and been bailed out every time he's crossed that line. And I really don't think that he anticipated that somebody was going to stand

up to them. And that's what worries me about our politicians now is they think that, you know, there are no consequences to their actions, but the problem is we're all going to suffer the consequences for those actions. And, and I believe what we have to do right now is we have to really question the path that we've taken over the past 10, 15, and 20 years and what has worked and question if that's going to work going forward again. And one of the things that I just can't help stop thinking about is the definition of passive. That's something that coming into the weekend, I was like, how do you really explain the difference? So the definition of passive is accepting or allowing what happens or what others do without active response or resistance. So, you know, one of the things that's clear and I think people can see is, is we've been passive in health care. And look what's happened. We've been passive in education. Look what's happened. How many of us really want to be passive in raising our families?

And I think the biggest reason from the investing markets and where I'm looking at here is, you know, the reason why most people are passive is because they have a lack of understanding of strategy or a lack of discipline in following the strategy. And it's kind of like we've gone from one extreme, oh, day trading, people realize doesn't work, so now I'm just going to be passive. But to go down that trail, and I know I'm deviating just a little bit, I want to show one thing and just kind of ask this question. So Warren Buffett's a legendary investor. We can all agree with that. So I want to share my screen here. And what I want to go back and look at is, can you see this chart here, Chris, very well?

Sure can, yeah. Is there anything passive about, so this is the Berkshire Hathaway cash on hand chart, and this is from CompaniesMarketCap.com. Going back to, what is this, 1996. Now, he was pretty fully invested coming into the year 2000, but where we look at we are right now, there's nothing passive about that. You know, he did raise a little bit of cash in 2010. He's allocated. But look where he is right now compared to history, right? That's a substantial move as of June of 2024.

And from my perspective, when you see that go up, it looks to me like Warren Buffett is assuming crash position at this point. I'm not saying the markets are going to crash right now, but when you've got the most legendary investor in the industry that people pay attention to nearly every word that he puts out is actively preparing his portfolio to be in a position to take advantage of opportunity, I believe that's a warning that people really need to question what they're doing and really need to look around and say, okay, what safety nets do I have in place? Food and emergency funds. And what if things go awry?

What if, you know, we've been painted this wonderful picture going into the election for political purposes and And on the other side of it, what incentive do they have to paint that picture? Because somebody is going to be in control for the next four years. Well, they've been lying through their teeth for a while. The jobs report, inflation, on and on and on. Gaslighting is almost a national pastime in the United States. But, you know, something you said, I'm really concerned about this because people sort of default to how things have just been. The word for it is habituation, right? Like if you first come into a place and there's a really strong odor over time,

you don't notice it anymore. And, you know, if you grow up in New York City, you don't even hear the sirens going by, you know, after a period of time. You just get used to stuff. So what was interesting, Paul, we have 300 very smart people from all over the world in a room. And we're on that panel, right? And I forget who asked the question, but the question was, how many people here think that if the markets get in trouble, the Fed will just bail it out. Every hand went up. Every single hand.

Yes. It's like we're all on the same side of the boat. Like we all know this to be true. What if it's not? Well, that was actually what caused me a sheer kind of moment of panic. Because, you know, and we're at the point there when, when that panel discussion was taking place that I'd had a lot of conversations and, and the people there were curious, they're courageous,

they're open-minded, they're smart. And every, anybody who's open-minded and curious is smart, right? Like they're, they're looking at everything, trying to figure out. And, and more than anything, the one common thing, they love their families. They love their country. They love freedom. And they want what's best for others. And I would be willing to state that nearly every single person there, if they could lay their life down to change the path that we're on right now, would do it, especially for their own families, to make the future better.

So when everybody assumed that, I was with you, I was worried. It's like, what if they don't step in and bell it down this time? Because now everybody's been conditioned to go all in, to put all of their faith on the fed. And that could be the greatest surprise because it goes back to Thomas Jefferson. First by inflation, then by deflation, they will rob you of all your wealth. And look, if we get half a point, guess what that does? Hey, you know, off to the races, let's be levered. You know, they're going to come in. Next thing is going to be quantitative easing. And what if they don't? You're right. That's something we have to take into consideration. What if they don't? And if they don't, for the market to go back to normal historical measures, Chris, that's 50% below where we are right here. And that's not outside of possibility.

And John Hussman explains eloquently and clearly that it could be as much as a 67%, 70% decline. And I know, look, when I say that, I'm like, seriously, what does the world look like if we have a 70% decline? So I know there's listeners out there that's like, really? But the reality is it's not outside the realm of mathematical calculations and just basic business school mathematics. Yep. Well, as we've been covering for a while these are not just slightly expensive markets these are historically expensive markets we have to use 1929 and 2001 as our comparators to even find markets that sort of remotely are this expensive and um these are

still the most expensive markets so now we have to default into that crazy thought that this time is different and the only thing that's really different is the fed shown that it's really absolutely 100 committed to do whatever it takes to get it there overnight right fedex you know their motto and when it absolutely has to get there over overnight right the federal reserve that on. When you absolutely positively have to print a trillion overnight, right? They're there delivering on that motto. And everybody knows that to be true. The thing that I'm concerned about is what if they can't? So what's the forcing function? What would possibly cause the Federal Reserve to get its hands tied and say, we'd like to print, but we can't. The only thing I can think

is if for some reason internationally something happens, like the price of oil really spikes or people start saying, I don't want U.S. dollars for some reason on an international basis, and they're flooding the world with those. And the Fed has to absorb those. But the only way you can is by raising interest rates, which would be not what they want to do. Right. So I don't know. That's the only thing I can think is we got to be prepared for the idea with everybody on one side of the boat. What if the Fed can't? I think in their hearts they want to just bail everything out.

What if they can't? Yeah. You know, what's your strategy? How do you approach that? Well, how we would approach it is basically asset class by asset class and position by position. So going back to 2022 as an example, 2008, when we get a defensive position, we overweight treasuries and bonds, you know, during that period of time. Now, this was a long time ago, but that's the strategy. So 2022, late 2021, when the market starts coming into 2022, we get an indication that the market's going to start to sell off. So we're getting sell signals across the board.

So my immediate reaction is, hey, let's buy five or 10 year treasuries or maybe let's buy 20 year treasuries, because the farther you out on that curve, if you get a recession and they have to respond by rates coming down, then, then you're going to protect that part of the portfolio. But our tools kept saying, no, park it in money market, treasury only money market. Well, I was actually a little disappointed by that, but those, but that protected us because what did we end up with in 2022 bonds were down 20% and stocks were down 20%. So if they let inflation get out of control right now, whether it's outside of their control mechanisms, because Russia says, okay, we told you not to use your long range missiles. We told you that we know that it's Western and NATO countries

that have the technology to be able to deliver these things. So, you know, and we're so open with our strategic petroleum reserves at a low i don't know how they do it right they're a lot smarter than than than i can be as far as looking at our weaknesses but they attack us all goes through the roof and now you got bonds crashing and stocks crashing too and your traditional modern portfolio theory passive investment is not going to protect people if that's the outcome we get. Do you see any wrong thinking in that logic there, Chris? No, I think, you know, obviously you got to go with with history and the Fed is proven that they'll print it the drop of a hat.

Right. And they don't care if they cause record homelessness as a consequence, record wealth gap. They don't care if it turns out that household formation doesn't happen. They don't care if younger generations are so demoralized by the whole prospect that they don't have children. All they care about is making sure that their precious markets are stable, which is going up and to the right. That's really all they seem to care about, right? They don't care about anything else. And by the way, that whole litany of things, those are all direct effects of what the Fed does.

They monkey around with fancy-sounding monetary policy, but they end up rewarding one generation, punishing another, and that has an effect. And honestly, we should be talking about that as a culture, but that's a separate issue. In the meantime, no, I think, Paul, this is about time. People are going to have to assume the crash positions at some point here, some point, I think.

And that's the hard part about the markets. It's impossible to determine exactly where that's going to happen, but you can tell when that trend changes and that tide changes. So to answer a little bit more specifically, how do we handle that? I look at every tool in the toolbox. Okay, there's no tool that we're unwilling to use to protect our clients and to help fight off inflation. And that may be currencies, that may be treasuries, that may be bonds, that may be stocks, it may be commodities, it may be energy stocks, it may be utilities. But what we can see is in money flow and price action, that battle between

supply and demand tells us what asset classes are holding up when everything else is going down. And you basically pull those tools out. Now currencies are, you know, God forbid it causes a currency crisis or the introduction of the unit, which I'm really curious to see if there is an announcement that comes out in October. There's a lot of evidence that it will be, but we don't know. We've heard that before in the past. But if there's an alternative to the dollar and asset prices are going down, then maybe foreign currencies are something we need to use.

And quite frankly, we've only used those for maybe six months out of the past 20 years. But when we used them, they were the most important tool in the toolbox. So that's basically what we're doing is just monitoring everything, looking and looking for safe havens and being ready to move. And essentially, with a lot of positions right now, it's just kind of riding the wave until that wave starts to subside. And we're never going to pick the top, but you don't have to pick the top because if you're trying to pick the top, you're going to

get out way too early. And then when the information changes, we'll act and adapt. So, you know, I was explaining to somebody that the most simple explanation is like, we were headed to my in-laws in Atlanta not too long ago. And I don't ever use Google Maps, but my wife does because she likes to know exactly how long it's going to take to get there. Well, Google Maps says there's been a bad wreck on 75 in Atlanta. It's a two-hour delay. But if you take this alternate path, it's going to take you 30 minutes longer, but it's going to save you an hour and a half.

So that's the way we have to approach markets now is know where your end destination is, but be willing to take these side roads and get away from the herd and take that path less traveled to make sure you're successful because this is not going to end well. Yeah. It's just breathe in, breathe out normal cycles. Um, you know, the other model for this that I use all the time is that it's like, turned out Smokey the Bear, we all like Smokey the Bear. I saw him on the signs, you know, when you go into the national park, he's got his shovel and it sounded like a great idea. You know, you got to prevent forest fires. That's the whole Smokey the Bear thing. So we did the Smokey the Bear thing as a nation for a while. And then we discovered, oops, you kind of need the fires to

come through on a routine basis. Because if you let the fire tinder build up, now it jumps into the crown and becomes a crown fire. And it's much worse than if you hadn't prevented the fires. So the whole Smokey the Bear thing sounded good, but it wasn't a good idea. So same thing. Fed's been Smokey the Bear. Oh, it's never a good time to have a recession. Maybe we can limit the downside, like as if it's even their job, right? Because a recession gives you Joseph Schumpeter's creative destruction.

Bad companies need to go out of business. They don't need saving. They need that underbrush needs to be cleared away so you can get some fresh growth in that economy. Anyway, the Fed's been forestalling this for so long. I think now they're terrified. I think they're afraid. They're afraid that this is going to be a crown fire this time. So they don't dare let a recession really start. And sooner or later, you get the lightning strike. You can't stop it. It happens anyway. But now you've got a crown fire. I think that's what they're worried about here personally. Makes sense. I mean it i have a point is surprising

with the data that we've had here recently the market's telling them and i know the two-year treasury bond market's telling them it needs to be done but it just doesn't fit the narrative but hey i come back i get frustrated i lose my temper i'll yell and yell at the scream and it's funny because tippet my australian shepherd that's here he'll'll end up in Brittany's office, you know, for a few minutes. And she's like, oh, did the Fed cut more than you thought they would? I'm joking. She didn't send me that message. But, you know, and then I have to sit down and say, look, I can't change the rules of this game.

I'm forced to play by the rules that are forced upon us. And we're going to roll up our sleeves and we're going to do the best that we can do to make sure that we can help people get through this as unscathed as possible. The bad thing, Chris, like you said, I don't think anybody's going to come out of this completely unscathed, but there are some people that are going to come out with a few minor bumps and bruises, and there's a lot of people that are going to be wiped out when this end game arrives. Yeah. Now, this is sort of intraday noise, Paul. You know, day trading is not what we're here to discuss necessarily, but this is interesting.

Half a point cut, right? So Wall Street was supposed to be all excited. You're mentioning, I don't know, maybe Wall Street front ran this whole thing for a bit because, you know, it wasn't exact. They also have the two-year data. They're like pretty sure. Like people who are following this closely already kind of knew it was going to be a half point cut. What's interesting is the cut happens. We have this initial exuberant algo burst.

We're already in the red here. Not a lot, you know, point one, one percent, just six down six, but I mean, on the S&P, but that's not the exuberant party that we were, many people may have been expecting. No, that is not the exuberant party at all. And that's what a lot of these big, you know, the Mad King and his research reports and several of these big professionals are saying, sell the first cut. So you hold on until that first cut, and that's when you sell. And look, we may have a sell-off and move up higher, but here's what I've discovered about really successful long-term investors in these big institutions. Buffett, for example, he's at an all-time high on cash levels. He didn't wait until the first cut to sell. He was selling into that on the top side. They're looking at being in a position over the next 12 to 24 months. They're

not really worried about what happens to their portfolio and whether they're number one over the next six months. They want to make sure that they're in a position and they have to do that. And that's the interesting thing about it, Chris. You and I can move quick. The average person can move quick. If you're investing, you know, if your portfolio is less than a hundred million dollars, and even really probably more than that, you can move relatively quickly in your portfolio. But when you're at the levels that these big institutions are in the, in the multi billions, you have to move ahead of the herd and you have to look from a long-term standpoint. So that's why we can glimmer a little bit of wisdom by watching what individuals like Buffett and these others are doing, because they have to unload positions while there's a lot

of demand for it. And then they want to be in a position where there's a lot of supply, where your average retail investor is puking because they realize they made a mistake too late. And usually the way this thing happens, you've seen the psychology before market drops and turns oh I'm a long-term investor I'll wait till it rises you know and you get a little bit of a you know it's down 10% you get two or three percent up then it's down another 10% well I'll wait till it gets back to where I was before and it rises five percent it doesn't quite get there and before you know it you're down 50% you lose your job you haven't had you know it, you're down 50%. You lose your job,

you haven't had an emergency fund, or you're in retirement. And now you realize you were too aggressively invested because you crept into a more aggressive portfolio. And then it's life changing. You know, then you're, you're hoping that the Fed's going to be able to turn things around. And what if it's 25 years before the market gets back to even? Or what if it's like the Nikkei happened in late 1999, and then money moves somewhere else, and there's a bubble? So this is a dangerous environment for the passive investor. Well, it is. And wow, that's volatile. So when we were there, we were also at this summit with the CEO of GoldCore, right? And so I like talking with them because, you know, you get to ask questions like, who's buying, who's selling, what are the actual flows, what's really going on,

you know, seeing anything funky coming out of the refineries. You know, you get some really good intel. And what was interesting, to your point, they said that as gold came up and started getting to new all-time highs, they were actually seeing more selling from retail. So this whole everything we're seeing and buying around gold isn't retail. Retail did that investor psychology thing, hung on. The people are in like, well, now I'll lighten up. I'll get out, right?

And meanwhile, it just keeps kind of powering higher here, you know, and proves amazingly resilient, all things said. So we'll see. But, yeah, that's kind of that's interesting. So, you know, while we were there, gold closed it at 626.08 on that Friday. And normally, because I've been in gold for a long time, these would be victory laps. You know, like when Bitcoin hits a new all-time high, like your Twitter feed is just lit up laser eyes and you have fun being poor all you none. There's all this gloating that happens, right? Which is never a good sign, by the way. No, it's not. Never is.

But I had none. I had zero gold gloating. I had nobody, like nobody even mentioned it to me, right? It was like the quietest new all-time high ever, which I kind of like in my contrarian sort of way. Well, you know, the funny thing is, is you stated that and I was like, seriously? Because I hadn't looked. And two or three people around me are like, I look at gold all the time and I didn't even realize it. So you're right. And that, that, that's a lot

of the psychology that tells us we've got higher prices. And if you don't mind, I'm going to share just a gold chart here in the short run, just to look at that because I like this. So now this is OUNZ. I'm just tracking it. So OUNZ is the VanEck Merck Gold Trust. So it's physically backed gold. So this is a daily chart and you can see, you know, we've been digesting that major move since March of last year. And then we consolidated, set a level of support. So what you see with this red and green, this is support resistance line. So green, it's staying above that. And then we break out a little bit and I'll go ahead and draw another one in here just so that you can see that horizontal support.

So, well, I went back to the wrong chart. Bear with me. All the support and resistance. So you can see there we had some resistance and then we break out. And I was reading Fred Hickey's high-tech newsletter. Fred does phenomenal work. For those of you that want to have a good subscription, I highly recommend it.

It's affordable. He does a great job. But one of the things that he pointed out was typically in September, you'll see gold prices down. I've noticed that historically. It's not a favorable month. But here we are after consolidation,

had more resistance and breakout to the top side. So I'll get rid of that a little bit just to see, but for educational purposes, and we're selling off a little bit today, but, but this is showing tremendous amounts of strength in a period of time. And like you said, retail, I've not had any just average retail call and say, Hey, I'd really like to have gold. Nobody's complaining about having it in their portfolio. And I get a few comments about how good it's done. But when we topped back in 2012 for the first time after 2008, I mean, if I'd have advertised, I'd have had lines three miles down the street,

people coming in to buy gold. We're not in that environment yet, so that tells me that the path of least resistance is higher and that if you don't have enough adequate exposure for your circumstances, this is not advised. Any pullbacks is an opportunity to build a position or increase your position. I totally agree. I like silver, too. Oh, that's what I was about to say.

I was hoping you were going to say you like silver because I do like silver, too. I'm really starting to like silver a lot. Again, not a recommendation for some people. It may not be appropriate, but I really do like what I'm seeing in silver and the potential upside that is there long term. Now, what's the usual impact on markets around elections? I mean, obviously, we've got a very contentious election this time, about as polarized as anything I've ever seen. I don't think that's entirely organic. I think that there's been a lot of help by a very complicit media to whip up the divisions and dissension and create a lot of fracturing. But, you know, the way I see it, Paul, no matter how it turns out, half the country roughly is going to be pretty disappointed.

And so I'm just wondering, like, what can we expect from in our markets due to elections? That's a really good question. Normally in the past, I'll tell people, look, don't worry about the election. The markets are going to ignore it. Historically, what I've said and what has taken place is October tends to be a little down. And then the market kind of figures out who wins or they figured out the policies on both sides. And and really don't worry. They start investing in one area and the markets will start taking off. So I'm not exactly sure how it's going to pan out this time. You know, it may follow that just because of the reaction function of your big institutional investors. But this is the first time I'm telling people that I agree. You have a reason to be

worried about what's taking place, the potential division on the other side. What if we don't get a clear winner at any time soon? My biggest concern is this, Chris. My biggest concern is what the bond market is telling us and the stock market is being oblivious to is if you are putting out deceptive numbers for political purposes and under the surface the bond market is telling us that the economy is slowing. Individuals like Professor Plum, Mike Green is stating, hey, you know, I think we're potentially in a recession. I'm not taking him out of context, but he's pointing to the fact that a recession risk is really high. So let's say he's saying that the recession risk is really high. If you're artificially presenting these numbers and you have revisions on the other side,

I'm not so sure that it matters who wins. I think that the markets are probably going to have a lot of problems after the election into this time next year. That's just an educated guess. I'm not making investment decisions based on that educated guess. I'll let the market tell us what we need to do, but that's what I'm prepared for. Yeah. You know, I'm not going to put a whole lot into this next thing i'm going to show everybody because you hear it all the time if x wins i'll leave the country if y wins i'll leave the country

nobody ever actually leaves um but this was interesting so hedge fund manager john polson came out today and said that he would withdraw his investments from the markets and move into cash and gold if Kamala wins the presidential election, presumably on the basis of her tax policies, which you and I have discussed. Paul, I think her tax policies are are destructive and ruinous personally, because the way I look at it, they're very sort of socialist in their construct, which is like there are these rich people. We have to take their stuff so that these other deserving people can have their stuff. That's never been a recipe for success historically. I think it's really a bad policy, but it's probably good politics, particularly if you've got a lot of people who want stuff, who think that's a good plan.

Anyway, do you think he would? Would he take what he moved to cash and gold? He's not the type of person that's just going to say something unless he really means it. So I believe that he probably wins the election and there's enough of a shift in the Congress for her to be able to pull off what she's wanting to pull or any chance that she can pull it off, then I cannot in good conscience not be calling clients and saying, look, you've got to make a choice. Do you go ahead and sell right now and harvest some capital gains at the rates that you know they'll be or do you do them later? So, yeah, I do believe that he'll do exactly what he said he'd do and that yep and that may force you know and especially from an estate planning purposes like i'm already talking to people right now you really have to go ahead and start meeting with your estate planning

attorneys and have conversations about what you're going to do and don't wait till the last minute because you're not going to be able to get in and see somebody at the last minute. Because if she wins, then we know at a minimum the Trump tax cuts are going to sunset at the end of 2025. So you're going to have a period of time. And what happens if your deduction goes from $13.2 million down to six million or back to 800 000. i mean there's so many ways that they can get us now state taxes income taxes and capital gains taxes so yeah i mean i think if she's a clear winner not him and many others are probably going to be doing the same thing yes i do yeah this is a thing i'm going to have to talk about more

completely with with uh subscribers at Peak Prosperity. But one of the other pieces of data that's been troubling me a lot lately is just how many reports I'm hearing about data centers going in. And there's so many. Like, Paul, I heard from four separate people saying, oh, right up the road for me. This was Illinois. This was Georgia. This was Arizona. This was Texas sayingxas saying oh yeah we got these massive data centers they're just throwing these things in like crazy and um they're massive they're huge the one i heard about in georgia has its own cement plant because they need that much to continue doing what they're doing so here's my concern um my concern is that the government's been helping to fund some of those things i think um because obviously they have an interest in in these sorts of data centers

coming in and here's here's how i connect it so um steph pomboy writing here holy budget deficit batman august deficit comes in 90 billion ahead of the estimate. Okay. They thought, they thought it was only going to be $292 billion deficit. It turned out to be a $380 billion deficit. How do you miss by 90 billion? Where did that 90 billion go? What is it being spent on? Well, you know, we can't actually find out because some of it's hidden in secret programs so they won't tell us. So I don't know where that money's going, but as a taxpayer, this really bothers me a lot. As somebody who's worried about the future we're leaving to our children, this is ruinous. You can't do that.

$300, $380 billion for a month. A single month. That's incredible. A single month. That used to be a whole year's worth of deficit number. That's just one 12th, isn't it? Yeah, that's incredible. Well, here's what I can think of.

Do they know? So I'm not a fan of Nancy Pelosi and I can understand a lot of the trades that she's making over time. And, and, and I thought, well, she's pretty aggressive. But here recently after NVIDIA has moved like it has, and then she's buying these massive call options. I mean, I'm like, this lady's a gambler or she really knows something on the inside. So if you're a politician and you know that there's assistance to some of these companies to put forth political agendas, then you would confidently be putting a lot of money on the line to buy these.

Look, they have access to insider information. They have access to budgets and things like that, and I don't think there's anybody more connected than what Nancy Pelosi is in the political swamp. So that in itself gives you enough indication that that is certainly a possibility. Since I don't know of any overt government programs that would support the buying of NVIDIA calls, I would have to surmise there's some covert programs. Right, right. You would have to assume. Hey, and what was it you did that report over the fact that there was something for national security purposes that they could not report numbers? which as we know they classify like a billion documents a year as sensitive it's like everything everything pertains to national security including anything that might help nancy pelosi be a better

stock picker um so so we know we all know that everybody laughs about it at this point because it's just an obvious point of corruption but yeah pass up 56 which is the financial federal financial accounting standards board or whatever said yeah they passed this rule that said, you know, under certain limited circumstances, the government doesn't have to report everything it actually spent, even though constitutionally you have to. Because in theory, it's of, by, and for the people, so that's all public money, right? It's like the government can't say you can't come in this building it's a government building actually it's my building right anyway so that sort of crept away from the mission over time and now they have this thing where they say oh yeah we don't have to tell people what we're spending money on and i think that happens because paul i guarantee it's going to happen in 2024 but here's 2023 numbers they said we had a deficit of 1.6 trillion but then i wander over to the debt numbers and i find out the total amount of debt

went up by 2.1 trillion so i'm like where's that other 500 billion right where did where it is and i'm pretty sure it's some of that is is caught up in this program we're talking about well a lot of money and look i mean if you're helping corporate earn if it's some of that is, is caught up in this program we're talking about. Well, a lot of money. And look, I mean, if you're helping corporate earn, if it's a mutually beneficial relationship where you're able to get data

centers to track Americans, you know, um, or whatever you want to track with it, um, outside of, you know, anyway.

So then, and it happens to be those technology stocks that are largest cap weighted that happens to keep the markets going. Yeah, I don't know. But I am concerned about, I just wish the government would be clear 100%, like across the board.

Like that's what they hold us to the standard too. You fully disclose fees, you make sure everybody knows everything. There's no secrets, there's no conflict of interest, but it's rules for thee and none for me. And unfortunately, that passive attitude in our country has allowed us to get to this point. And there's no way that we can be passive and change the tide at this point. No, no, we're going to have to get active on a lot of fronts here. Right. But I do wish that people would get a lot more active.

And, you know, obviously financial freedom is very important because it gives you lots of freedom and flexibility. We saw that with COVID, right? So a lot of people with financial freedom weren't coerced into doing things they didn't want to do. And, you know know we had the we had the uh the powerpoint class staying home because they were non-essential but somehow the essential people were all the people who had to get out of bed get in their car and deliver the

door dash to these people who got to stay at home it was very it was a very odd split you know um and and when you looked at it it turned out all the essential jobs you kind of had to keep working those are all the ones that you kind of had to keep working. Those are all the ones that you kind of those are all the lower paying jobs. Right. Those are those are the people who you kind of need to make sure the trash gets picked up and the gas stations are open and you can still buy liquor. And it was just the weirdest thing, you know, what they declared for me. So you can serve me. Right. Yeah. That was the whole, that's, what a strange period, you know, to think back on that, Paul. That was bizarre. Just very weird.

It's hard for me to forget it. I know some people are trying to move past it, but. It is me too. Carrie and I were talking yesterday. So Carrie handles opening accounts and transfers and distributions. And Carrie's great. We work together coming up on 21 years now. And we were talking about that the other day. And she said, you remember what I told you in the midst of COVID because we stayed open. And I'm like, look,

if y'all want to stay home, you can, but I'm coming into the office. We're going to be talking to clients and having conversations. And she looked at me at one point, she says, you know, if you fire me and send me home and I get unemployment, I'll make more. And I was like, really? I mean, yeah, I mean, I knew it it but i didn't think about it and i said well is that is that what you want she's like no i'd rather be here i'd rather be here trying to talk to people and make a difference and then of course that led into a conversation about how ridiculous that was but um but anyway yeah it was a bizarre bizarre time where you know you're worried about somebody coming in the front door whether you've got your, you know, you're worried about somebody coming in the front door, whether you've got your I'm open, but you're worried about somebody coming in for the lot quote liability you might have unless you don't have a disclosure up.

And just we lost our minds then. And I still don't think that we've gained them back completely as a nation. Yeah, we'll see. But but these markets just as nuts, I think. And it's not just U.S. I mean, it's just sort of something that's happened in the Western sphere. I am really surprised by the German stock market, which is, again, also pointing around near its all time highs, sort of flopping along up there. And the German economy, every time I open my stuff up, Paul, we could we could talk about it again. It is just nose diving germany's mainly an

industrial country and they live a lot off of their exports which is a fine way to live value add good jobs all that um and their exports are absolutely tanking and to the point that that vw because they made a really large somewhat ill-advised move into evs now they're having to trim that back they're actually going to shut down plants which they haven't done in forever because things are that bad and somehow the stock market in germany is just like floating along you know totally like i thought they were supposed to connect to i thought it was a reflection of the economy now it's nah, that's so old school. I don't know.

Something else. It's supposed to be. That doesn't make sense to me at all either. And that's the terrifying situation of what happens if that's what we get into here in the U.S. to where investors are just allocating money into the markets regardless of what the underlying economy is. And then that makes it truly different this time until it's not. And it may be truly different for a short period of time, but that just puts people at such risk when the markets are not honestly anticipating and discounting cash flows and debt loads

and just relying upon the central banks of the world to keep everything okay. That's just bizarre to me. Well, we'll have to keep an eye on that. I will note that here in the early going, the half-point rate cut is somehow not friendly to gold. It had a gold pop, but that has gone away while we're talking about it. I watch this over and over and over again, Paul. Gold gets a little frisky, and somebody just says, nothing but sell orders. And that's the oldest pattern in the book.

This is Western. This is the U.S., European, whatever. We sell gold. That's our moniker. And as you and I have talked about in the past, I could dredge up the chart, but if you just bought silver while the U.S. market was open, you would have lost money. It has negative value over the past 20 years. But if you'd bought it and held it while the U.S. markets were not open,

just in the overnight when the rest of the world's buying silver is apparently worth 373 an ounce and it's only not there because somebody sells it and they don't sell silver you and i both know this but they sell our paper contract not even paper what they sell are electronic representations of paper contracts by whatever quantities are necessary to make the price do what they think is right. So, you know, I'm old enough, Paul, that I grew up and I remember that it used to be this old joke, like, you know, a Soviet crop report back when the Soviet Union was a thing was this fiction. Right. And, you know, they would say, how many bushels is your comrade? You know, and how many should they be be right and and they were just so they would

set a target which was fictitious and then they would set a a production value which was fictitious and they always matched and it was pure fiction and everybody knew it was just a lie right soviet crop reports right well the price of gold in the united states markets is a soviet crop report it's it's whatever they decide it needs to be. They just sell as much as is necessary. And and it's a thing. So I don't actually pay much attention anymore to their gyration. I used to get really, really upset by watch because I like fairness. I like things to be open. I want them to be transparent.

And I believe in free markets. And whoever is fiddling with this doesn't believe in free markets that's fine yeah but they're leading people astray and i think they're setting us up for one of those smoky bear crown fires you know i'm really worried about this and um so i well yeah i like free markets well and here's here here's the other side of that too we're seeing massive amounts of gold leave the west and head to China, Russia, India, the BRICS nations. I mean, the central banks of the world are buying back massive amounts of gold across the board. And that's one of the things that Dave made the comment was central banks are big buyers of gold across the board. Well, we also know that retail is selling. So if there wasn't this artificial paper suppression or, you know, imagine paper suppression, which I believe that there's clear evidence from the court cases with J.P. Morgan and some of these others that it has been.

Do you think U.S. citizens are going to be selling their gold at $10,000 an ounce if that's what the price is right now and it's moved that quickly because of what's taking place in the background. So by artificially suppressing these prices, you're hurting the U.S. citizens because they're selling when they otherwise wouldn't be because the average person has advertised the S&P 500 and passive investing every day on TV, so they're watching that, and then they're looking at the little bit of gold they have, and they're like, am I making the right decision? Is it wrong? Because if they don't have honest markets, they can't make good decisions without going and having to do tremendous amounts of research themselves and filter through all of the Google search algorithms. And now it's to the point, unless you really know how to search on Google,

you're just going to have to go 50 pages down to find what's not paid for at the top or what their agendas are that they want you to see yeah well you know this whole thing i presented the evidence a while ago on this program which was that when they first were setting up the futures market so this was a cable from a british diplomat to back to the u.s that got foiled and released and they said part of the reason for setting up this gold futures market is we can manipulate the paper markets and thereby manipulate investor sentiment. So if we want people to lose interest in something, they said it clear as day in the cable. We just keep hammering on the price until people kind of lose interest in that. And we make them sell out and all this

stuff. Right. So so if you like, don't like to be your contrarian and you don't like somebody else sort of manipulating you into what to do, that's why I think you have to get fundamental. You got to look at these things. You got to start really understanding. And by the way, this is why I actually really like commodities at this stage broadly, because the fundamentals, Paul, were supply and demand, massive mismatches across all different kinds of things, grains, metals, energy, you name it. It's profound. And I keep looking at it going, when is this reality going to catch up again?

But these paper, these electronic paper people have been controlling reality for so long that I don't even know if they know what it is anymore. Right. It's just a game that they're playing that they've become really good at. That's it. Hey, and really, and I think commodities are some of the most undervalued assets from a long

term standpoint. Now our tools aren't telling us to pile into them heavy outside of, you know, gold exposure and some silver exposure, but I'm ready and watching and can't wait till that day comes because there's going to be massive upside on the rebalancing both there and in your emerging market economies that are, that are largely commodity producers. So, um, you know, it, it's, it's an interesting environment for the patient investor who's willing to wake up, to look at the facts, has the courage to be curious, and they're going to be well rewarded in the future. time and time again the most popular statement or that I hear everybody mention because they'll take distributions from accounts and time to

help grandkids or their kids for a car is hey it's got all the safety features it's got the airbags it's got everything there investors need to look at that and say hey if I went back three years ago and I had three months worth of food and I was rotating my shelves Chris that was a pretty good use of those funds because food prices are up substantially over the past three years. Emergency food supplies from a long-term standpoint, think of it like airbags in your personal life to provide some cushion if things spin out of control. Because right now, unfortunately, we have to take serious what Putin said. And if we've used our technology to reach deep inside of Russia, then we don't know what that reaction will be. But at some point, you know, I grew up in a small town back at the point where you could stand up and smack a bully in the mouth. And there was always the bully, right?

And there was always the individual that did not want to get into a conflict, and I happened to be one of those, but would draw a line in the sand and say, if you don't back down, you might kick my rear end, but I'm going to give you at least one lick that you'll remember for the rest of your life. And that's human nature. And unfortunately, we're being bullies. And unfortunately, our political individuals think that they're above consequences. And life can tell us over and over again, they're not above consequences. Now, Paul, I'm going to put you on the spot. We're going to have some instant analysis here about this Fed rate cut, because I'm looking at something now that I don't understand. So I'm just going to full screen this for a second. So this is a whole variety of different charts here on FinViz.

The 30-year bond, so when it's going up, it's going up in price, right? So that, yep, up in price, yield is down. So it pops on the news, and the 30-year bond then starts to sell off. 10-year note pops, and it sells off. Five-year pops and sells off off five-year pops and sells off two-year pops sells off but not it's it's still above where it popped from right five years about even but the 30-year and the 10-year were both a little bit below where they were so the dollar sells off comes back you can see the euros doing the same thing gold and silver did so i don't understand

what's happening here where i like why would the market have said oh we didn't expect the five you know point five it's right back to where it started from it looks like the only way i can interpret this i see what you think the market's not surprised at all. There was some algo-driven stuff, but it's right back to where it started from. This news was leaked out or known about in advance. Well, based on all of a sudden, you know, Goldman and everybody coming out and saying, expect a half-point rate cut, or 50-bit rate cut, and here's why, half a percent rate cut and here's or 50 bit base 50 bits bait cut rate cut and here's why half a percent rate cut and and the reaction here yeah i don't i don't there's no surprise all right and i was looking at another graph here just to see um is that no that's in today so i don't have real time

on that one chart because i look at interest rates and how they're moving. So I'll have to see the end of the day before I can really analyze what's taking place. Yep. Well, let's see. And also, bizarrely, oil's going nowhere on this news. Zero. Nothing. There's nothing happening in the Middle East. Nothing going on.

Oil is one of the most disconnected markets I've seen in a long time. I don't get it. It doesn't make sense to me. Yeah, oil has just been in the doldrums. I mean, it's just been just miserable. And everything that oil seems to be looking at, it's like we've got a recession around the corner. And it is certainly unpopular. It's certainly been overlooked and certainly not taken into consideration all the risks that are out there right now.

So I'm looking at oil as it must be said. Best I can think is it's telling me that there is a recession coming, but I'm going to guess weakness in China. Because China is by far the number one importer of oil. So they drive the price on the open market more than any other country by a long shot at this stage yeah i read some pretty interesting analysis which is a good point that after the covid lockdown and the openings that you know u.s fund managers were all giddy over china well china's data has been pretty ugly here recently and and uh fund managers big fund managers are just fleeing from china it's possible that they've reached the point where where they could potentially turn and if they start expanding that would dramatically change the oil outlook from their consumption i was just sure could be some

of these other spaces to see see anything major a lot of what i track is in the day, so it won't show up for another 3.40, so it won't show up until probably 5 o'clock where I get the data. Interestingly, maybe we'll close with this because this is just sort of a moment here, where it turns out a bunch of senators have written to Vice President Kamala Harris over mismanagement. They spent $42 billion to expand the internet, and it turns out, I know government's inefficient, Paul, but this is a little striking even to me, not a single person has been connected to the internet. I'm just going to laugh about that one.

That's pretty interesting. You know, when that news came out and that bill came through, I called the local cause where we built I'm a mile. It's a little over a mile from the closest fiber line. And that's it at a shortcut. So the cost to run fiber to our, our location was going to be incomprehensible. So I'm like, Hey, doesn't the government have a program to connect?

Because there's a couple of other houses that are coming out here, and they're like, Paul, we didn't get any of that. Like, we've not gotten any of that money. So Starlink solved the problem, and now that they've got extra satellites up, that service has been really good. But, you know, at least the local telephone company is saying we've not gotten any of that for expansion in the local network.

Well, one wonders where that $42 billion went. And, of course, grafting corruption would be the correct answer. You know, it's so sad. And one thing is the mainstream media, they're really good at causing division, and they're really good at deception. And there's nothing good about truth and honesty and fairness and justice and righteousness in them at all. Yeah. And it's just ridiculously disappointing.

Yeah, the fourth estate is more like a shack on the back, tar paper shack. It's not what it used to be. Yeah. All right, well, we're going to call it there so again if if anybody if you are interested in talking with paul and his team please go to peakfinancialinvesting.com fill out a simple form somebody will be in touch within 48 business hours and um it's been a just all going along smoothly and you may have to get in line actually. So Paul, thanks so much for your time today.

And thank you so much for what you do in the world. It's my honor, Chris. Thank you. It's my honor. So good. All right, everybody, we will see you next time. Let us know what you think down in the comments below. And if there's any topics you want us to talk about, we'd be happy to do that.

Again, Chris Martinson of FinanceU and Peak Financial Investing, signing off for now.