Peak Prosperity - Market Divergences, Consumer Weakness, and Monster Deficits

Episode Date: October 25, 2024

Chris Martenson and Paul Kiker discuss financial developments, including rising interest rates post-Fed cut, government debt, market trends, and the potential benefits of investing in commodities and precious metals.

Nothing in this program should be considered investment advice. It is for educational purposes only. Please hit pause and read this disclaimer in full. Retail is not interested in precious metals. Retail is interested in NVIDIA, Apple, Mag7, and technology, and the belief that housing is never going to have any troubles. 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. I am Chris Martinson of Peak Financial Investing back, back with our regular Finance U episodes. And I'm back here with Paul Kiker of Kiker Wealth Management. Paul, so good to see you again. Did you miss me? I did. i missed you too i was like i missed my conversations with chris this is great to have you back i'm so glad you guys had a wonderful time and and got a chance to get away and and uh well a lot's happened hasn't it well a lot has happened we'll get to that in just a second but i did want to show you um this uh we spent the first week in, uh, Westport, Massachusetts, and this is on a river. So this is kind of brackish and that's a shad. Um, and, uh, the shad were, were, if you had two hooks on a line, you were getting two

at a time. There was about an hour. It was just an unbelievable shad run. Um, and so those are fun. There were blue crabs there and and there were some stripers, but I never quite got one to take the bait, as it were. Ooh, would you take a shad and fish with a shad for a striper? Absolutely.

Oh, I can only imagine that would be quite the adventure. Yep, yep. And then let's see, what else? So, yeah, when we were here, this is around Lake Jenny. So those are the Tetons back there. And that's Evie, you know, who I just married. So that's an awesome picture. She looks like a model in an outdoor magazine in that picture there. Sure, sure does. Sure does. So that was just unbelievable unbelievable fun how'd you like lake jenny that's such a beautiful area loved it loved it i mean it caused me a little stress because i wasn't out on

it fishing but other than that i i did enjoy it yeah no i i would definitely i gotta get i gotta get out there with a boat next time um not just for that, but for all other things. So it's just great. I liked it. I really, I thought the Teton area was fantastic. The only hard part, which you probably know, is that it's at 6,800 feet. So the first three days, this always happens to me when I get altitude, I have the craziest dreams. Like just super involved, very active uh all kinds of crazy

stuff happening they're very vivid uh i find that happens to me at altitude every time really i've never had i wake up if i don't drink a lot of water the first day like i have to focus as soon as i land drink a gallon of water the first day i'll have a headache the next day but i've never had vivid dreams like that it hasn't affected me that way. That's interesting. Yeah, it does for me. Where do we start? So I'm seeing the markets are selling off a bit at this point in time. This is a screenshot of just from the future side. So not everybody, Texas Instruments seems to be doing fine. NVIDIA is down three, AVGO down three. Apple down three-ish. Google made it.

So this really looks like the big seven are selling off a bit here. Everything else is kind of a mix that I'm seeing here. Nothing really too much to report on that. So what are you seeing in there? Well, the thing that's been the most interesting for me is how interest rates have been moving since the Fed cut. Oh, yeah. I'll share this screen here. It's quite shocking if you're not looking at it every day and you jump back and realize.

So what I've got on the screen here, can you see that now, Chris? I sure can. So this is the three-month, the one-year, these are all treasuries, three-month, the one-year, the two-year, the three-year, five-year, 10-year, 20-year, and 30-year. And I've annotated here on the screen, this is September 18th when we got the Fed rate cut. So as you can see, interest rates have been on a tear higher in a massive way since the Fed rate cut, which is quite interesting. It might be small for people watching. So when those squiggly lines are moving down, that means interest rates are going down. Yes. And when those lines are squiggling

higher, that means interest rates are going up. So where you drew that line, it looks to me like interest rates were moving down in anticipation of the most widely telegraphed Fed rate cut in history since the last one. And but then, yeah, that's weird that you would think they would keep moving down. Is this a sell the rumor, buy the news kind of thing? But in the inverse, buy the rumor, sell the news? It appears to be that way. It really does. I mean, obviously, they telegraphed it and the market had priced it in and continued to price it in until the actual cut. And now we've reverted back in many cases, you know, some of the longer term yields back to

where we were back in July. So, you know, I just find that interesting that I'm not exactly sure what that's saying. There's conversation out there about that's, you know, inflation expectations are going to be coming back. You know, the bond market starting to have some volatility, long term yields are starting to move up. So here we go, we get an interest rate cut, and look at 30 year mortgages right now. So so this is is not going to be helping the housing market, which is already essentially frozen based on all the data we look at. You've got 30-year fixed as of today, back up to 7.373. This morning, it was 7.33. So this is your average rates right now as of today, 15-year back to 6.3, and your arm, uh, back to 7.88. So I'm not exactly sure

what this means. We'll find out three to four months from now, but the market is telling us something. Um, and well, you know, prices move up when there's more buyers than sellers and, um, and vice versa, prices move move down for sellers and buyers. So how about this then? This is a total U.S. Treasury yet total public debt outstanding. Now that includes intra-governmental holdings. So this line can move up if the government just steals, sorry, borrows from the Social Security Fund

and calls that intra-governmental debt. But leaving that wonky subtlety aside, $500 billion of new stuff in a matter of weeks. And when I calculated it out, we've seen here in September when you said the rate cut happened, another $150 billion of U.S. debt went out the window. This is the public stuff that went out. And another hundred billion through the 21st of October, which is when the data was cured to when I got to it this morning. So so hundreds and hundreds of billions of dollars going out the door here. Maybe that helps account for what we're seeing. I don't know. It's it's it's interesting. So I

didn't realize, you know, it's it's amazing the things you pay attention to and you don't know. It's, it, it, it's, it's interesting. So I didn't realize, you know, it's, it's amazing the things you pay attention to and you don't, you know, in the background, but it's my understanding, the new fiscal year for the government starts on October the 1st, correct? So that was, that was one of the arguments, you know, everybody's saying, Hey, bring Congress back together so that we can pass this special spending for, to take care of the people in North Carolina, the president's administration was, you know, arguing back and forth. But the reality is they already had it in their budget that they could spend on October the 1st. So when you see that huge spike that starts to occur after October the 1st, is it like, are you just front running? And where's this money going? Why are we deploying

that much capital to begin with? You know, and where's it going? Because $750 per household, even if there were a million households, that's only $750 million. That's right. That's right. Yeah, we're talking hundreds of billions. There we're talking about a single billion. So I don't understand. I don't know that that's a a legit i can't imagine the government's going to spend waste uh fritter away more than four or five billion on disaster relief i'd be surprised if it's more than that right it's sad that we're

sending it all these other places when our when our individuals are in need it's yes sad it's it's immoral it's wrong it is well and is it? We've spent $80 billion we've sent overseas to Ukraine. Is that the number, Chris? I can't remember exactly what the number is. It varies. It depends how you're counting. So it's a tricky number to get your arms around because a little bit of his direct cash, most of it doesn't actually go to Ukraine. It goes from a server in new york to another server in new york it goes from a treasury account at the at the fed or new york fed probably and then

it goes to raytheon's bank account um you know it very when they say we sent another two billion to ukraine it nothing got on a pallet and a plane and a took a ride most of it most of it can be found in a new backyard swimming pool in Bethesda. I think, I think that's how that works. Well, I mean that the prizes they're paying, it makes sense, but yeah, you know, 17,000 houses could be, I know we said this before, but 17,000, $450,000 houses could be built for $8 billion, $177,000 for 80. And, um, yeah. So, but now you gotta go, you know, those poor victims have to go on and fill out online where they don't have wifi and cell phone service in most places to get their $750. Yeah. Well, um, so these markets, you and I, nothing changed while I was gone for those two weeks, uh, in terms of these markets,

just being bulletproof, just marching higher, no matter what, uh, I, nothing changed while I was gone for those two weeks in terms of these markets just being bulletproof, just marching higher no matter what. I'm always suspicious, Paul, when I see them mostly march up in the overnight futures market and then the cash market sort of locks in whatever advance had been put forward. I've seen that a lot. That's consistent with, we'll call them well-liquified markets. We can all postulate as to the source of the liquidity, but I've seen this over and over again. I've been watching this for 15 years now. It's a pattern that's been in place since the great financial crisis. And I do think that, you know, I think that it's important to somebody somewhere that the markets send the right signals, right? And so that's fine. But when we look

beneath the surface a little bit here, global markets investor reporting on the 14th of October that U.S. auto loan serious delinquencies are now skyrocketing. So here we are on the 23rd of October. So yeah. So serious delinquenciesencies about the same as coming off of the great financial crisis where they spiked a lot higher they were up here at whatever that's almost 3.5 percent uh and here we are 288. still that's against the idea that it's 2.88 of 1.6 trillion dollars of auto loan debt when did when did we crack that trillion dollar trillion 1.6 trillion of car borrowing that's goodness you know so that that's showing some weakness there that that's a little odd of course it was really odd that the last hot good employment report we had included a record 785,000 new government jobs. I'm not a big fan. I think that like any business, you need to rationalize your hires. There's not a chance in the world you threw in 785,000 people in a month. and that was like a well thought through careful deliberate process and then finally uh in that weakness story i have steph pomboy reporting that it's not just the quantity of jobs but quality is

an issue jobs are of such low quality in terms of wages that multiple job holders that's a category people who have more than one job could be several part-time jobs a full-time plus a part-time two full-time jobs whatever they got uh just notched a new record so that kind of flies in the face of the idea that we have this robust strong economy that um uh supports ever rising equity prices um just a little odd it is it is odd but one of the things that i'm seeing around just in conversations over the past couple of weeks is I've been in pretty, you know, in public places. I'm like you. I like to have conversations, ask people how they're, what they're doing, especially here locally. I get a lot of conversations about the market because they know greed is what I've seen in retail. Even at the peak of the housing market in 2007 in this area, I didn't just see this level of greed and complacency and fear of missing out.

It's substantial here. And I'll share this with you. I should be able to find it here really quickly. I hope. The University of Michigan has, and I've never really paid this much attention to it. Neither has the, one of the guys I follow on Twitter here, but I'll share with you because the picture explains well what I'm seeing and what I'm hearing and what it looks like what's taking place in the market. You know, professional investors are worried. That's true. Hedge funds are underweight, and yet we keep going higher. So who is so bullish out there? Now, one answer is retail. And of course, AG Trader says,

admittedly, I've never looked at the University of Michigan Stock Market Investments Index. I've got to admit that, too. But it was released a week or so ago, and they've been doing this survey back to the year 2000. And the survey question is, quote, considering all of your family's investments in the stock market, how much do you expect them to be worth coming up here soon? And the answer was significantly above anything we've ever seen. Look at this. This is just kind of all in. That's that mentality that we've got out there right now.

So I believe that this is a very dangerous situation. Somewhere I've got Cinematrader. So this is Jason Goatfort with Cinematrader. I subscribe to his service. It does a great job of just statistics in the market. He said, you know, who's not chasing stocks here is insiders. Corporate executives among S and P 500 firms have been some of the least open market purchases in 13 years. So if you go back and take a look at this, you can see they're not, they're not chasing. They were chasing, you know, after all that money

came in during COVID, their purchase increased dramatically, slowed down for a short period of time before we got the correction in 2022. And now we're back to low. So we're seeing this big divergence between retail, who is speculating, and professionals who are being extremely conservative right now. And I believe that that's very important to pay attention to because most of these are professionals. That's their career. They got damaged in 2008, but they survived 2008. And they don't think it's necessarily different this time. It's just impossible to tell when things finally start cracking.

But I'm starting to see more sign under the surface that we're still in a topping process. Well, I think we discussed this last time. So in 2007, when we finally got that first rate cut, it was just, what, three weeks later that markets finally rolled? But people didn't know it at the time, right? There was a big sort of a roll-off and then a plunge, but then some buying, dead cat bounces, or short covering, whatever you call those things. But, you know, things don't ever move in a straight line.

But I do remember that it took a little time after the rate cut started. But this is weird that they cut rates and now we're seeing interest rates higher. Yes. I don't know how to interpret that yet. That's a new note in the symphony for me. I don't either. And I'm not sure what that means.

Now, it could be inflation expectations. It could be that neither candidate that we can tell is going to be fiscally responsible. Even if they are, you've got all of our politicians. Nobody seems to care about the national debt. And that's a big issue. We're reaching the point of no return. So maybe that's it.

Now, Stan Druckenmiller came out. He said that market participants have concluded that Trump's going to win the election because of all the sectors. And I like to pay attention to what Stanley Druckenmiller says. He's wise, especially since he got sucked. You know, he shares the story of how he got sucked into knowing he shouldn't. The technology bubble there at the worst part of it in the year 2000, right at the last minute as the market turned. And that's a professional that got pulled in there.

The difference is he didn't ride it all the way down. So, you know, I'm not exactly sure. Or, you know, the question is, is it a credit issue with the U.S.? You know, is it an inflation issue? I'm not exactly sure what it would be. Do you have any ideas? We'll know six to nine months from now what the market's telling telling us? And, but only in hindsight, do I think we'll really know? I'm of two minds about this. So the, the first is that it used to be, you could track the consumer

and you would know what was going on because the consumer is the economy. Okay. And so what you and I just reviewed, look, people are holding multiple jobs. They're delinquent on their auto loans. I didn't show it, but they're delinquent on their credit cards. We have mortgage delinquency starting to tick up, not crisis levels, but not going in a healthy direction. And then we also have from my connections at gold and silver stores saying that retail is still selling into all these rising prices we have other data that suggests big money starting to move in but little money is stressed and they need cash and so they're moving out and so i i get that but but collectively i have nothing but signs

potentially that the consumer is sort of out but still things are resilient and so i have to sort of sneak into this mode that you know we have a government that is spending deficit spending at crisis levels. And that's what they report to us. Can I show you something? I just this just I just put this out as a quick scouting report. So if somebody just watch my other report, you're going to see this anyway. But but this this bothers me a lot um so this is this is let me supersize this this is what was just reported so the government just closed out their fiscal year this is what you just saw if you go to google or something it says fiscal year 2024 which ended on september 30th government spending was 6.75 but revenue is only 492 So that's a deficit of 1.83 trillion. And that comes from the Department of Treasury.

1.83. Here's my problem with that. I can also go to the Department of Treasury and find out that national debt spiked by 2.297. Let's call that 2.3 trillion. I can do simple math. There's 467 billion missing dollars between those two numbers and it's not in the cash balance at the treasury there's a little cash there but not that much um so how do we account for that how do you go that that would be like i like if you're a

household you would say well i earned a hundred thousand but i spent ten thousand more on my credit card and then i look at your credit card statement i go but it's actually 20 000 on your credit card what's up paul right you know it's it's it just doesn't add up even slightly so this is secret government spending right here it's undisclosed and where's it going and what's it being used for well we don't we don't we don't know but um if i take you back like this is a little blast to the past remember as fast 56 the government allowed itself to spend money that it didn't have to disclose i mean that's what it says right yeah says it permits this rule permits

government agencies to modify public financial statements and then it gets worse when you look at how it's being analyzed in commercial real estate. They said it also it's a rule that allows companies to alter and misrepresent their financial statements if it's deemed to be in the best interest of national security. So, you know, and I think you and I discussed this before, that isn't it just a little odd that what we saw was the Magnificent Seven had all these earnings revisions for in fourth quarter of 2023 which would be part of 2024 government year right because of how they count when you saw the other 493 companies in the s&p collectively report a 15 earnings erosion

why why why are these how is it that these seven are doing something that the other 493 can't pull off? Right? That's a good question. It sure makes it, you know, when you think about it from that perspective, and Nancy Pelosi, after NVIDIA has been on quite some run, and professionals are scared to touch it, she's loading up on the stock. Well, you could justify, well, we got to compete with China, so we're going to spend all this money on these artificial intelligence, maybe. Let's say that's what they're doing. You should still let us know. But obviously, from an inside standpoint, she has access to information we don't.

But the added benefit might be because the market's so cap-weighted and heavy right now and run by the Magnificent Seven, as long as they're running right now. That's what a lot of people are watching. As long as they're running, the hope is we're going to get an equalization. You're going to have the Russell 2000 catch up, the other stocks catch up, the equal weight catch up. And the benefit is it just might happen to keep the markets up into the election, which removes one more potential hurdle for Kamala to overcome coming into the election. So I just I hate the fact that I'm cynical from that standpoint, but they could justify it in any way.

Of course, national security. That's what they'll say. You can put anything under that aegis. But the point is there's four hundred and sixty7 billion missing between these two numbers, right? And I think there ought to be like just some basic accounting for that. But to your point, if it turns out Nancy Pelosi sitting in secret meetings, she knows another $50 billion is going to go to NVIDIA. This is going to hold up the stock market, which is then going to favor incumbents because keeping everything stable is going to favor the incumbents. Right. They get to voting time, say, hey, look, economy is doing good. Stock market's doing good.

What are you complaining about? People say, OK, I guess you're right. They vote for that. But if it turns out that that was all being propped up with public money that was undisclosed, this is an undisclosed campaign finance contribution as far as i'm concerned for both parties right right for all incumbents but it's it's it's that's a possibility too i just needs answering you know and i'm going to keep digging until i get an answer i probably will get frustrated but i like my answers so we'll take a look at that. It's a lot of money. Four hundred sixty seven billion of undisclosed spending. So four sixty seven. Hang on. I like putting it in this. And I know I'm on this kick. So bear with me. Four sixty seven divided by eight. So be fifty eight. So seventeen thousand seven hundred seventy seven houses times 58, you could build a million, $31,450,000 homes for 476 billion.

To put it in perspective for the viewers out there, that'd go a million. More than a million. How many? A million, 31,000. A million. To be exact. So 1,031,066 homes at $450,000 you could build for that missing $476 billion. If you were spending it on your own people. If you were spending it on your own people.

Yeah. But at a minimum, you know, I would want them to say, okay, this is for defense. We still need to have a line item in there that says what this is going for. Okay. You want to be secretive about it. There's still got to be some accountability in there where the American people can look in. Okay. We spent this on defense or we spent it on, you know, whatever. If Nancy Pelosi has inside information, if they happen to be spending it with Nvidia or some of these others, the average American should be able to have access to that. Or at a minimum, if the average American can't, she has no business buying that stock because that's, that's grifting the American people from her position of power. And I know we all know that

they do it, but it's still not right. Yeah. Well, now, you know, I'm a little bit, we'll have to see what comes with this this because remember there was a supreme court ruling earlier this year that that struck down the chevron defense which basically said look administrative bodies can't set rules that operate like laws so i chased this down as far as i could as fast you know the the financial accounting standards board for the government can can decide that it's okay for the government to lie and hide public spending. But that's a rule. I can't find the law that allows that to happen because the laws I find are pretty clear about this. The government has to account for its spending. It's not a thing. The government isn't the secret agency. It's it's a public institution. I'm the public. So because of how the laws are written, they go all the way back to the Constitution.

I should be able to ask and be answered where my money went. Yes, absolutely. That's the law still. But they're acting as if, but we have this rule that says we can hide it. Like, uh. Well, when you have that many Americans that are having to work two jobs to make ends meet. And this weekend I've got a, uh, I saw a good friend of ours, a school teacher, great young family. She's trying to stay at home with the two kids.

Um, he's working at teaching during the week, selling real estate on afternoons and the weekend, working seven days a week outside of going to church in the morning to try to make things better for their family and their lives. The good thing is, is you've got the ability to do it. But the bad thing is we're taxed on our income. We're taxed on our licenses. We're taxed on our income. Then we're taxed on with a sales tax on what we buy. And then we're taxed on what we own. It's just tax, tax, tax, tax, tax. And that's one thing if we need to do it as a

nation to make it better for all of us, and we're borrowing money at 4% to generate a return at 10%. That always makes sense. I always tell my kids, look, if you can borrow money for a business venture, it makes sense, but don't go borrow money to buy you a toy, right? Pay cash for the toy when you can afford to do it. Borrow money to make money off of it. But our government's not doing that. And our people are making sacrifices in huge ways. And they're able to do whatever without any accountability.

And the courts just don't seem to be doing anything for justice, more so political lawfare. Well, and this happens all the way down to the municipal level. So remember, I did this interview with Mitch Bexler. I got to get him back on because he's been sending me more data. And Mitch talked about how there had been fraud around how house appraisals were being conducted where they're supposed to use a formula it's all written out in law and there's codified but instead of following that process they instead would wander over to the county budget office uh and they would say yeah we need seven percent more next year and they would just run over and ratchet everybody's home values

up seven percent so they could get 7% more. Right. And so that, that, that obviously it violates laws and Mitch has all that stuff. So if anybody wants to watch that episode, really cool, because it probably applies, unfortunately, to where you live. Well, he's since followed up with that, Paul, and he sent me this other thing. So he went into one County, Denton County, Texas, and I think that's where he lives and asked a question in it. He had to FOIA this because they wouldn't tell him again, public records. He said, I need to know how much debt we have outstanding. And they would show him a number. He was like, that can't be all of it.

And it turned out they were rolling debt and accumulating it, but only showing the overrides and not the actual amount. So anyway, so he gets gets the actual amount puts it in a simple spreadsheet denton county is a big county in texas very prosperous but it has 93 billion in debt and he said look if we spread that across households each household has an additional 1.3 million dollars that they are responsible for just to pay off what we already spent this money on because that's debt it's out the door that money has been spent so he said just to carry that for 30 years each household would need to have an additional nine thousand dollars in monthly income in order to pay that off so he just added it up he's like we can't pay this off and like you say if you if you invest in a business venture that's fine but you know they put it into 150 million dollar schools and 100 million dollar sports stadiums for the middle

school or whatever they were doing you know just whoo not you know not my money uh kind of stuff but he added it up paul i i was shocked i'm gonna have to get him back on because you look at that and you just say there's not a chance in the world this can be paid back no so then what does the fed buy it all is this sort of like a bear stearns maiden lane three sort of you know just accumulate like a s-pack you know like how does how does this like if this starts to break and it turns out this one county is just a metaphor for most of the counties out there. They've all been running the same same shtick. How do we how do we begin to account for that? We can't. It either happens through deflationary bankruptcies or the government has the ability to inflate it away if if they can.

You know, and that just reminds me, you know, I think of my grandfather and how they, they came through the great depression, that whole generation abhorred debt because of the roaring twenties and the fact that nobody took that debt seriously. They justified all the debt they had and then it collapsed on, on itself. So I mean, a million dollars per household in the, and that's just the municipality. That's that one county. They do it at the county level there in Texas. But for that county, they can be pretty big counties.

But still, a million three per existing household of just in debt, just dividing the amount of debt by the households because, you know, the county doesn't pay anything back. It taxes people. Can you imagine? And they're obviously accumulating more and more and more as they go on. So, you know, that would be if they froze everything and decided they wanted to try and sell their, you know, get their work, their debt out. But it just doesn't pencil out. Well, I mean, at a minimum, if it's $9,000 just to service that debt to make a payment, you should expect your property taxes to go up by $9,000 to help cover that from that point forward. And I know that's an oversimplification, but that's incredible. It is, but that's the number if you wanted to pay it off in 30 years, right? Yeah.

But nobody has any plans to pay anything off. They just plan to accumulate more, roll more and keep going. And that's the game. And so that's, you know, that's what I talk about a lot, of course, in the crash course is is this mindset of we can just keep rolling this all to the future. And it just gets larger and larger and it never actually becomes a problem as long as we just keep kicking that can. I think that's what people are starting to sense is the can has kind of found a curb at the end of the road. And it's getting harder. You know, it's getting harder to persist in this delusion. But can I just say this isn't political? Neither party right now is talking about those debt issues I just showed you.

The fact that we're at $35.7 trillion trillion going to 50 plus in the next X years. And nobody's talking about it. Nobody's talking about it. And there seems to be no care in the world about it whatsoever. But I mean, think about it. If you're surrounded by lobbyists all the time and you're, you're in this little feedback loop and your halls of power, you know, the lobbyists are your buddies buying you dinner, you know, know everything about your kids. Cause that's what they're paid to do. And, and they don't have any concerns because the, the people they're lobbying for want those extra profits, you know,

because how much is enough, but you know, what are we, what are we doing to future generations? I mean, we are parents as a country right now, those that are cutting holes in the rafts of our future generation. Instead of putting them in better shape, we're cutting holes in the raft, and they're not even mature enough to really understand what they're getting into yet. So, so we're, you know, at what point, what, how is history going to remember the worst generation in America and those people who refuse to stand up against it? Because it's because we're getting closer to the absolute worst generation that, that history books in the future with other countries that have moved into the position of power will study how foolish we have been and question why

the american people didn't didn't stand up and demand more from their politicians yeah do you ever hear the saying your name is mud yes i have do you know where that comes from no i don't i've always wondered actually so it turns out when john wilkes booth shot lincoln jumps off breaks his leg but still manages to hobble off and he finds a doctor to treat him the doctor apparently didn't know what had happened and all that but still he treated him and the doctor's name was mudd and his reputation was ruined his practice was ruined uh just because of that circumstance and so when they say your name is, it means you've done something for which there is no recovery from a from a reputational standpoint. So prediction at some point in the future, Boomer is an epithet.

It's hurled at people and it will be a catch all phrase, meaning monumental narcissistic self-absorption and colossal stupidity. Sort of wrapped into a single... You need to go ahead and make that definition so that the future generations will use it. Because at this point, they don't seem to be concerned about much. No. No, but you want to talk about that echo bubble and the lobbyists and being all that? Yes. This is just a short little clip. This is the governor of Wisconsin.

Let's listen in. People are still supporting Donald Trump despite what you're saying. His message is getting through. Donald Trump has done nothing for the state of Wisconsin. And, you know, we have the best economy we've ever had the largest budget budget work that we've ever had the best economy we've ever had the largest budget did you see him like struggle with that because you know the next word was supposed to be deficit largest budget budget work we've ever had oh that's great budget work thank you you're an awesome governor dude budget we've we have the largest budget work we've ever had oh that's great budget work thank you you're an awesome governor dude budget we've

we have the largest budget work we've ever had this is what we're talking about is how diluted do you have to be to have these words coming out your mouth right now i don't i don't understand you know and and i've been i've been struggling with that. How? Because there's a subset of the American populace that absolutely refuses to think critically. And I've had conversations with people just asking questions, you know, okay, so tell me exactly what you like. What have they done for you? How are things better? Nobody can answer those questions and they get frustrated. So why is it that they, you know, it's, it's all down to, they just really believe that, that, um, this administration is, are they convincing themselves of their own lie? I don't understand. They're refusing to see the danger right in front and they're refusing to be stewards of, and fiduciaries of the people who put them in the position that they're in. And look, I get it from the media.

They're just as corrupt as they can possibly be. But these politicians, and I know I have an ideal, but at what point do they not wake up and realize that not only are they going to pay the price, but their family lines forever are going to pay the price in the aftermath of what occurs. Well, I do think it's time for people to be prudent. You know, I mean, that's obviously something I believe in. I know you do too, because we both have farms and cows and stuff like that.

But there's another reason I think we... So as they say, stocks are for show, bonds are for dough. If it turns out the whole stock market's being held up by just seven and we have concerns that maybe some of that is not entirely legitimate, meaning public and transparent and fully disclosed, if that's a possibility. And of course, I've got trust issues these days, like most people, Paul. What have they not lied to me about that shorter List than the other one and and so I at any rate with that But if stocks are for show bonds are for dough the bonds you showed

Actually did it went the other direction post cut and then there's one more thing. I want to talk about I picked this up from Jim Bianco I first learned about the move index from danielle de martino booth at a conference and i didn't even know what it was and i still can't tell you how it's constructed i've never built a move index i don't know what really is in it but it measures here according to jim bianco um it's the bond market equivalent of the vix index which some people will be familiar with watching this which measures volatility in the stock markets okay so it measures the implied volatility of one month options from the two-year note to the 30-year bond so you have options you can option to buy so this is measuring it not

directly in the in the interest rate itself but this is from people again bonds are for dough the smart people out there and options players are typically got a lot of really smart people they're busy trying to figure out the overall risk structure now versus later you do that with options and so it's the implied volatility and so that would be probably in one of the greeks right in the options you know you have your volatility greek number letter in there. So anyway, it comes up with a number. Today closed was 153.9. And so what he's showing here is this. This is the move index over time. This gray shaded area is two standard deviations of movement.

Okay. So if you're outside of two standard deviations, it's getting a little weird. So how many times has it poked its little head, move index well it did here with the long-term capital management failure which was fundamentally a bond market puke that happened around russian bonds we have the september 11th 2020 i'm sorry um 2000 uh aftermath you've got worldcom bankruptcy right here you got the iraq war of course you have the tarp bailout the great financial crisis and here you have the pandemic lockdowns here we are and we're at a higher level than at any other time except for the great financial crisis in um volatility in those bonds so so is a, this is a signal that I think people ought to pay some

attention to because it means we're, we're really in some not uncharted territory, but rare territory. This is a 30 year chart. We're at the second highest reading in 30 years. And that tells you that the smartest people in the room, and, and I know you've been around bond traders before Chris, but, and I've been around bond traders before, Chris, and I've been around bond traders, their ability to do math off the top of their head is stunning. They're brilliant. They really are. They're brilliant people. And that's telling us that the smartest people in the room right now, the ones who have to make, they can't make big errors because their profits are small compared to what can happen.

I mean, yeah, you can make money on bonds if you buy them in the right manner, but they have to do it the hard way or paying up right now. My assumption is, is just like VIX, they're paying a premium for the concerns that they see out there. And that's something that we should pay attention to when the markets are just oblivious. Retail's going all in. People have become complacent, you know, that they think that all the government's just going to be able to bail us out. Well, interest rates rising are telling us that's not the case right now. Red Lobster's been bankrupt. We've seen all these bankruptcies in the restaurant industry. new construction data is coming out less than expected.

So things aren't as rosy as they seem. And my concern is, is we're less than two weeks away from any major reason to have a plastic face and sell you a movie scene, right? Reality can come in after this election is behind us, assuming that we have a clear winner on the other side of that. But that leads me to one thing that we've not talked about that I did want to talk about, unless you want to stay on that for a little bit longer, because give me a second. Um, uh, I'm trying to find something here. Um, because, and it was a few months ago, so this might, well, take your, take your time looking because I want to put a warning out there for our listeners.

Okay. Cause we've taught, I don't think we've talked about the Oklahoma bank failing. So, um, go there and I'll find this cause I think this is important. We'll come back to this other thing. All right. So for those of you that are listening out there last year, and even at the worst part of 2008, so you had all of that are listening out there, last year, and even at the worst part of 2008, so you had all of the banks that were taken down in 2008, and the FDIC stepped in and covered deposits over the FDIC limits.

Then last year, you had Silicon Valley Bank fell. You know, all your billionaires were there, and there was angst around whether the Fed was going to, the FDIC was going to cover all those deposits. Well, they did, which I believe increased moral hazard on the other side. But now we get this news on October the 18th, an Oklahoma bank failed. And I want to give credit to Encouraging Angels and the work that they do there, Stan Simanski. So October 18th last year, this year, excuse me, Oklahoma bank failed and the FDIC stated that they were only going to make a 50% of the funds available above the FDIC limits to uninsured depositors. That's the uninsured part of that.

So it was reported. The FDIC came out with the following statement with one of their local news channels. For uninsured deposits, the FDIC has announced it will make 50% of those funds available to depositors starting Monday, October 21st, 2024, with the possibility of increasing that amount as assets from the failed bank are sold. So what I'm concerned about is I have seen a lot of people that have been very complacent about what they have over those FDIC limits. And I believe that that's a foolish thing to do right now. There's no reason not to take a little extra effort and either move to Treasury Direct, and not that long term that's the perfect solution right treasuries have issues but stay in the shorter term i'm not a fan of the longer term right now you've just got too many risks that the market's telling us about but treasuries are backed by the full faith and credit of the government so as long as they stand they should

they you know in theory and in law they're stronger FDIC, which is a government agency that could theoretically fail, but the government still stand. But more than anything, that's a warning. We're getting a lot of warning shots across the bow. limits, then I highly encourage you to sooner rather than later, go out and diversify that or get you some treasuries so that you're not over those limits because you are at risk. They literally just told us if times were that good, why is an Oklahoma bank failing right now? Okay. Now it could just be foolish management. And based on the article, they've been foolish. But that's a warning, I believe, that should be important, that people out there should heed and take action upon. Yeah, and just how instructive, right, that the big bank with hedge funds in it, they bailed them out 100 cents on the dollar, right? Yeah.

That other one's in a farming community. It's probably farmers. So, yeah, that's going to be really hard how could we possibly we have rules we could never you know there'll be a lot of discussion about that that's the easy hard framework paul right when it comes to helping our own people our good hard work and god fear and people it's always hard but sending money off to hedge funders who produce nothing for this country uh Ukraine to blow stuff up, that's easy. Right. So that's literally the system we have right now.

And people have just started to detect that. And, you know, it's it's definitely weighing on on this political cycle and everything. So what I was trying to find, I didn't find it was an interview with Tucker Carlson, J.D. Vance. And he sat down and he said, hey, J.D., if you guys win, what do you do? Right. You know, who do you put in positions of power? And J.D. said, I'm going to tell you why we're trying to like why the Treasury secretary position is so important, because we know we faced some ridiculous lawfare last time. Right. And this whole thing of this Russian hoax thing that went on on and and all of that he said we know we're going to face pushback from the system the deep state whatever you call it and he said one of the things that we know we're exposed at as a country is if our treasury market if our if that market gets um hamstrung in some way right this creates

huge amounts of problems so he was already opining in war gaming how they had to get somebody in who really understood the markets because that might be an attack vector so it's that's the world we live in right now and i don't think that risk that that there are people out there who would willingly harm this great country because politics or whatever it is they exist they've been fairly effective in some sectors. But what if that same thought infected the market side of things? That's a risk at this point. That's a huge risk.

Well, you know, and here recently, the BRICS Pay, they were testing it at a business venture, their new payment system, which is called the Bricks Pay. I haven't had a chance to do anything outside of read the article, but I wanted to dig into that, which is a part of that processing system, financial system behind the unit, which, what is it, today through the 25th or 26th, the Bricks have their meeting that's going on over the next week. You know, the problem is, I know a lot of U.S. investors that if they could buy an investment that was 40 or 50 or 60 percent backed by gold, they would rather have that than a fiat currency backed system. So, you know, that's kind of smart from a long-term standpoint. Maybe they even recognize that if there is a competitive alternative to the U.S. Treasury system, that's going to reduce the demand for treasuries dramatically, which means our interest costs go up, which means it further accelerates our debt growth or the reduction in spending. And if all of this government spending

is what's keeping everything going, you know, uh, and they can't spend like that, maybe there's 700 and what, 92,000 or 700 and something thousand government employees that don't keep their job very long. Well, it's, it's obviously a, uh, a disturbing situation that we're at wartime spending deficit spending and there's no war no officially declared one um but of course we are fighting a variety of wars and all around the world uh by proxy and also directly i mean you remember so it was while i was on my honeymoon i kept in touch a little bit and i wake up one day and find out that the u.s very excitedly with b2 bombers we bombed yemen i'm like yes who voted on that and there's just somebody just made a rule and decided let's go do this and like

like there's no i thought that before you bombed another country, you had to go through Congress and decide that was a good idea. But apparently not. I thought so, too. I thought so, too. And that was concerning to me. And let me see. Did you did you hear the headline that President Xi? I didn't get a chance to go verify it, but it came out on the BRICS News page.

Chinese President Xi Jinping orders the military to prepare for war the chinese military yeah yes oh so that came out and i've followed the bricks news because they put out a lot of great information quite frankly but uh so this came out on october the 19th that he told the uh the and apparently it was in response to the leak Israeli attack documents on Iran, wherever that came from. And how in the world does our government allow that to be leaked? That's just amazing to me. Regardless whether you agree with it or not, military plans should not be leaked. So anyway, so this came out.

The rumor is it was in response to that and of course there's one more piece down here I won't make y'all go through me looking at that but you know Bricks is talking about all of the function and the testing around the new bricks pay the unit I mean they're talking about this a lot all over Brazil, Russia, China, India, South Africa, and all of the other alliance that's coming in. So this has been something in the background for a while that's coming to the forefront. So who knows whether it's another year or not, but as soon as that is introduced and official and they're acting on it,

then I'm really curious to see what's going to happen in the treasury market. And I'll really be interested if we find out this week or a month from now that they're rolling it out already. And then it's going to make sense to me that treasury yields started moving so quickly and the move index has started moving so quickly. Because that means people in the halls of power know. I'll tell you another thing that's related to all this that made my eyebrows shoot up on my forehead was waking up and reading that the Bank of America, Bank of America, all people, all entities, was warning that gold is the last safe haven as treasuries face risks from soaring United States debt. Saying the quiet part out loud loud they never say this stuff i don't know how to interpret this paul this like i want to fade this now if b of a is saying this

my instincts are to buy treasuries and sell gold uh that's how much i don't trust these guys but but that's a weird thing for them to say you don't normally cast shade on the u.s treasury market if you're a primary dealer which which they are. Odd thing. You really don't unless you're trying to preserve your clientele for the future. The question is, have they started allocating their clients' cookie-cutter, modern portfolio theory approach through their broker-dealer side to higher exposure of gold? If so, then they're putting their money where their mouth is. Otherwise, somebody may just be protecting their career. Either way, that's a huge announcement. I'm cynical on it, right? But that's a huge announcement. And that kind of brings me back.

I got to talk about this because I think it's a pretty big deal, if you don't mind. I don't mind. Earlier in the year, we had this discussion about the big breakout, and I just saw this, so I'll share it. Okay, so I'm going to talk about Apple lately, but we talked about treasury yields and what happened with the Fed rate cut. So this is the U.S. dollar index. This is the Fed rate cut on September 18th. The dollar has been a rocket ship higher so far since the 18th. Okay. Which is quite interesting because you would think that that would cause a weaker dollar, but it hasn't. So I'm getting down to what I want to talk about here in just a second. So let's go back. You

remember earlier in the year when we had that breakout in gold and that's something that we were talking about in the spring and how big a deal that was. Just to go back and reference that, and I know this is a longer-term chart on the monthly, but this was around April that you and I were talking about it, and I thought that was a pretty big deal. You did as well because we spent this time breaking through. I've been concerned about silver because silver has not followed through yet. So what I'm showing here is the Aberdeen Physical Silver ETF. Again, this is not a recommendation.

This is just conversation and educational purposes only. But here we go back in May, we started to try to follow through and we had this resistance. We failed several times, came back down, tested a few of the moving averages and had this nice little rounded bottom that's in place, and I could argue an inverse head and shoulders. We tried to break out back at the

first October, failed, and then boom. I mean, that's a big breakout. That's way more than 3% to the upside to get a confirmed breakout. Now, we've got a correction today. Obviously, we're a little overbought in the short run. It should be pulling back. But I mean the same thing from a longer term standpoint. If we look at weekly, we did try to break out of resistance earlier and then it failed and then we clearly have moved straight through any prior resistance. And if we go back on a longer term standpoint, this is an area that we failed and struggled with back in 2020 it was support for a period of time after the massive move in 2012 and then once it collapsed below so you know prior support becomes resistance so this was support

we broke down the first time we got to it it was resistance set a higher low now this is from 2020 till today so this has taken four and a half five years to pan out the longer that it takes for it to to break those patterns the better we broke through kind of came through and have clearly moved through on the top side so that doesn't mean that prices are going to continue to go up you know indefinitely from here into the end of the year i'm hearing you know people say silver is going to be 50 by the end of the year but that's a big deal from a long-term standpoint and i believe that this is another confirming piece to the precious metals just like the breakout to gold was earlier in the

in the year in the spring so um so I think that's a pretty big deal. This is one of the biggest things that I've seen on the radar here in quite some time. You've got metals telling us something. We know the fundamentals are there, but the metals are finally price action is starting to tell us that it wants to go higher. And, you know, and at least for a short period of time, some of those shorts probably got really worried. And I would assume that they're going to be changing their allocation positions right here, because this is a line that struggled and struggled and struggled and has clearly broken through. So not a recommendation, but to me,

that's an indication that the path of least resistance is higher for silver, just like it has been for gold. Yeah. Two things. I'm a fundamental guy. So the first thing is that, and I haven't managed to confirm this through with him yet, but I'll give Mike a call later, Michael Maloney of GoldSilver. He tweeted out a couple days ago he said we have recently completed several nine figure transactions for gold and silver so that is huge that is big money um so far retail is quiet he says you know uh so that's a big deal

right there nine figure nine figure that's it and then the other thing um yeah let me just go to this guy i love this i thought maybe you would like it too so um one of the fundamental things you can look at is the gold to silver ratio and here they have it through history i'm hiding the lower lower piece here um one to three back three 3200 BC, 1 to 9, 1 to 2. If we were at a 1 to 10 ratio of silver price to gold price, as they had in Egypt in 1000 BC, today, silver would be $270 an ounce. Just saying, just comparing apples to apples here. 1 to 12, 1 to 15, 1 to 8, 1 to 13. I mean, now we're over 2 000 years of history and we

basically bounce from one to two as a low one to 15 as a high but you can sort of see the range one to eight coming into the 1300s one to 15 one to 10 again in 1497 um in japan one to five but then uh let's uh let's let's come on through the current um one to 14 one to 10 one 12 one to five, but then let's, let's, let's come on through to current one to 14, one to 10, one to 12, one to 15. And, and today one to 91. I love the clown face on there. That's great. Is it one to 91 right now? Yeah. Goodness gracious. It might not be that height as of this exact moment. Let me get my little calculator out. But about five years ago, before all that, was it five years ago? Maybe eight years ago, before the kids got out of the house and silver was in the dumps, I had them do some work for me and paid them for a weekend.

And I sat him down and I said, so do you want to be paid in fiat or do you want to be paid in metal? And, you know, and I told him they needed to keep, you know, keep it. And, of course, all of them looked at me and was like, Dad, what am I supposed to say? And I'm like, you want to be paid in metal because you don't need to spend this money. Set it aside. And, of course, it's done good since that period of time. And they're all, you know, talking about it. More than anything, it's taught them to pay attention to it.

But if it goes to one to three, that's probably the best pay they could have ever gotten. Absolutely. I just calculated 1 to 83. 1 to 83. Wow. So it's somewhere between 1 and 80 and 1 and 90 for all this year bouncing around as I've been tracking it. But, I mean, it's just a silly ratio. And here's the other part.

Through every other one of those parts of history, Paul, gold and silver, once you got them out of the ground, and I think it's a 1 to seven ratio in the ground. So that's why you should sort of be somewhere bouncing around that number because it's just a rarity thing. But through all periods of history prior to the industrialization, if you took it out of the ground, you still kind of had it, you know, because they don't corrode. That's why their money and all that stuff, because they're awesome. And but today it's not true I think there's about as much gold above ground as there is silver one-to-one reason being we use silver industrially it's not a monetary metal really anywhere anymore so we use it you

know it goes into all of our cell phones it's woven into you know fibers and clothes now for antimicrobial, anti-smell sort of reasons. It's painted on the walls of hospitals for the same antimicrobial reasons. It's used everywhere. But when it's used, Paul, it's lost. So if you said, stop, no more mining, add it all up, we might find that there's a bit more silver than gold once we got all the jewelry back and silverware back out of drawers but uh we'd probably find best guess one to three

that's what we got kicking around the rest has been lost yeah it's amazing takes a lot of patience in that area but fundamentally fundamentally it looks attractive and that's one of those things that i believe is going to be suddenly and then all at once. But talking about retail, I want to share this. So in 2012, and I've told this story several times, our long-term indicators gave a sell signal. So I wanted to sell my original investment and what I had put into silver and hold the extra ounces. And I did the same thing for the gold that I did. So I just went trim my positions back down. So, um, but there were so many people locally that were wanting to buy retail was really all in on silver. So my clients weren't buying anymore,

but I had somebody come off the street and they had heard that I had, that I could get silver for people. So I had this individual come in and I told him, I said, look, this is my personal silver. Okay. I'm going to sell it at your discount. I'm going to have you sign a piece of paper. I think the price is going to drop to 32. I don't want you to think that I took advantage of you. I mean, that's, that's just the right thing to do, right? Cause I'm licensed. I deal with the people. So, you know, if I was you, I wouldn't buy this, but you know, I'll sell it to an institution if you want. So the guy kind of mumbled and made a couple of smart comments and signed the piece of paper.

Well, I never crossed their paths again, but it was funny because walking out the door, he made the comment about me being an idiot or something like that. And I was like, well, I may be, you know, I'm thinking in my head, I'm like, I may be, but, you know, my tools are telling me this is the case. So I didn't think anything about it long-term. I've told that story several times and I was an idiot because silver didn't go to 32. It went all the way to what, $9 at the worst part, you know, uh, over the ensuing years. Well, I got a phone call the other day from, uh, uh, pretty much same person. And it's like, I want to sell our silver. You know, we finally waited on it to get back. And I didn't realize who it was

till the other side of it. And I made the comment, I said, look, I remember this conversation clearly. And I said, I may be wrong. And I'll buy it from you if you want to sell it. But I'm telling you right now, you know, I asked them, I said, do you need it? They're like, no, you know, they're older now, but they don't sell it. But I'm telling you right now, you know, I asked them, I said, do you need it? They're like, no, you know, they're old, they're older now, but they don't need it. I said,

you'd be good on emergency funds. You know, you know, she's like, no, we just, I just want to get rid of it. Cause it's not done good for the longest time. We're just about back to what we paid for it. And I'm afraid it's going to go back down again. I said, well, it might. I said, but if this is something that you're planning on leaving for your heirs or you down the road is last, you know, 10 years from now, I would, I would keep it if I were you. And, uh, and I've told three retail individuals that in the past, you know, two weeks, you know, and of course I quantify to make sure that they can, this is not advice. This is just kind of sharing what I'm seeing out there. Retail is not interested in precious metals. Retail is interested in Nvidia, Apple, Mag7, and technology and the belief that why one of the reasons I have silver. It's for the legacy.

So this is just in Reddit under r slash coins. And people post these things and they say, oh, my grandpa died. My dad found hundreds of pounds of silver hidden under the stairs. You know, what should I do? And they start looking at it and they fondle it and they remember it. And invariably the comments underneath are um you know how lucky you are you know you don't sell it it's it's this is going to be you know this is this this is how you remember them um so you you leave somebody a couple thousand dollars and that comes in a bank account you leave them a couple thousand dollars in silver and and that they may

hang on to that for a long time because it's it's part of your memory that you have this person like like these like this is just loaded with people you know and every oh i'm so jealous i wish my grandpa and grandma did that you know and um it's a real connection so it has another value besides cash value i just wanted to say that um hey and in the future you never know there might be one of those rare carson city minted coins that equivalent that you end up leaving somebody i had a client that their grandfather passed away and i think it was like a thousand ounces of silver coins and they were all you know the older coins and we were kind of flipping through them they brought them in we're asking my opinion i'm flipping through them. They brought them in and were asking my opinion, and I'm flipping through them, and I'm like,

I think this is a Carson City error. And that coin at the time was worth like $5,000 or $6,000. So you never know. And they had no clue they had it. It was just all lumped in there. So that's actually a really good legacy to leave people. I like that story, and I agree. They're a very fortunate person to have had that much,

hundreds of pounds of silver sitting back there. It's awesome stuff. I mean, I had a simple, when I first started collecting silver, I'd been over at the British Museum. It's a cool thing. You know, a lot of stolen antiquities from other countries. But one of the things they had was this hoard of beautiful Viking silver, Swedish heritage. So a little attracted attracted that and they had this one horde they found somebody buried a bag and died or forgot about it um probably died who

forgets about a horde like this anyway all these beautiful torques these uh armbands and necklaces and hack silver where they chop off pieces and you know various stuff uh uh stolen from churches all crumpled up you know cross because who needs that they're pagans right whatever so all i remember though is that in the corner it said you know that the total weight of this horde was 44 kilograms i'm like okay that's about 90 pounds goal number one i need to have 45 kilograms because i want to have a private stash that is more than the largest hoard ever discovered right that's great your goals you gotta have goals uh so that's good i like that but um but yeah that's it's fascinating that we're having this conversation and and it's just crickets kind of

in the media with everything that's taking place. And even gold prices moving hasn't really gotten that much attention in the overall media. I was actually shocked that you found that Bank of America article. But they're telling us something. They always tell us. They always have a hedge in there so they can come back later and say, see, we told you, right? Well, you know, they say, you know, darned if you do, darned if you don't, right? You get caught in these Hobbesian dilemmas. Right. Where there is no good answer. You just got to pick your poison.

Which side of the knife edge do you want to fall off of? Right. So it's look, we're way over the tips of our skis financially. This is just a math problem. It has nothing to do with politics. It's just math. I can prove to anybody with a few minutes of time and a calculator, maybe a spreadsheet, that we are in the exponential blow off stage where they have the Hobbesian choice, which, what do you want to do? Do you want to default on all this debt or do you want to inflate it away? One way or the other, again, those are both versions of default, right? When you default directly, you're defaulting directly between you and the bar and the person who was your creditor right so it might be china we don't want to pay you anymore because you've done something that made us angry right so that's that happens um but that's a direct sort of a

default a soft default of course is the inflation path because inflation is the hidden tax and you inflate it away but that's really where did that get paid off? The answer is from every single person who has or uses your cash is now taking a clip off their coin, as it were, getting a haircut on their dollar units to chip into taking care of paying off that debt. But they're both forms of default. One is hidden a little bit. One's more direct. Fine. There's no way out of this besides one of those two forms of default and i know that to your friend at the

beginning of this whole conversation he says well he's pretty confident that these things are going to go higher he may not be wrong in the sense that you know i know what should happen but what will happen is different so what will happen i think is they're gonna get some sort of a scare uh that might be the market going down for a little while potentially but i have every confidence that that if the choice is a deflationary wreckage mad max ruin and or the alternative which is print more they're going to choose the Printmore. I agree. I agree. It's the path of least resistance for them. And the American people can remember their grandparents talking about what happened during the Great Deflation and why they

wouldn't borrow any money. The American people don't have anybody that's telling stories about how atrocious inflation is. And if they had both of those stories to compare to each other, they would choose deflation over inflation. But at the same time, if you were a German citizen, their stock market went up, did good until it didn't. You know, after the war, when they actually got real price discovery, it went down 99% immediately. However, I think some assets are going to go up more than others. And it's all about potential risk versus reward. And I know I've shown this before, but I believe it's very important. That's the reason why I continue to

show is just major asset classes. Let me pull up the chart here. You know, if I had to pick a category, and thank goodness nobody's got a gun to my head, but if they did, if I did, what I'm showing here is the major index is going back to January 1st, 2008 on the left-hand side. This is today. So this is as of today's price. The black line is the S&P 500 index. The blue line is the Goldman Sachs Commodity Index. The red line is the S&P 500 index. The blue line is the Goldman Sachs Commodity Index. The red line is the Morgan Stanley IFA Developed Market Index. And then the Emerging Market Index. So what you can see is the only game in town has been the U.S. So we've seen this before in the past, but this can continue to go up if we get the inflationary, you know, the masks come off

and it's clear as day that they're just going to absolutely print us into oblivion and we're going to choose that path, then the things we need are going to go up a lot faster than the things we want to have. So, you know, there's a lot of fundamental value, not a recommendation. I'm just pointing out the divergences in the system for educational purposes. People need to do their own research, talk to an advisor. But, you know, if I had to pick and choose something for 10 years from now, it's certainly not going to be the number one thing because in the 1990s, we had something similar. Now, these these graphs i didn't pay the extra cost to go all the way back here it doesn't make that big of a difference but they're

not exact so this just gives you those same indexes gives you an indication from the year 1990 to the year 2000 of what we experienced then tech bubble everything lines with the year 2000 and 1929 and what did the government do on the other side of the year 2000? They slammed interest rates to zero, created the housing bubble. And then ever since they've been printing, printing, printing. So they've been down this path trying to keep this can going. But from 2000 to 2007, commodities was the number one performing asset up 213%. And it got hammered in the initial part, but it started turning well before the U.S. markets did.

And you had emerging markets, which Latin America was an unbelievable place to be invested into there because they're very commodity heavy and natural resource industry. And we're starting to get some breakouts in Peru and signs of life in those other categories. So I'm starting to see some heartbeats starting to get some breakouts in Peru and signs of life in those other categories. So I'm starting to see some heartbeats starting to develop to put them on our radar.

So this is just 2000 to 2007. But I still also want to go down here and point out, even after the massive decline in 2008 to 2009, so just commodities got just taken out to the woodshed and beat like a pulp, right, in 2009. But from 2000 to 2010, commodities were up 227 percent. Emerging markets were up 136. And U.S. equities through the S&P 500 index were down 14.4 over that technically 11-year period of time. So it can happen again. And this is recently, even with all the stimulus that the government put in there through cutting interest rates first, and then all

that they printed in 2009. Now that's reversed. Will we rebalance and will the next 10 years look like this? I don't know. Nobody knows. We won't know until we get to the end of it. But I can tell you there's a lot more value in these undervalued assets that have done nothing, and really most of them are still below. I mean, commodities in general are 11% below what they were January 1, 2008 on the index 16 years ago. But yet our national debt has grown. The cost of living, the cost of everything has gone through the roof. Deglobalization is taking place. Everything that has caused those to be down,

you know, inflationary pressures to subside over the period of time of shipping, manufacturing overseas is waning. So it's an area that I think investors should at least be doing their research on and paying attention to because I believe that even if the U.S. markets go up in inflation, some assets are going to do a lot better than others. And if you're operating under a strategy that will allow you to confidently overweight those categories, once they take off, you're going to survive it better than what the average cookie cutter approach is going to. And, um, of course, this is what you help people do

all the time. I love that you run a risk managed strategy. If people don't know what that is, you probably ought to talk to Paul about that and find out because this, what a time, well, you know, we've just been categorizing some of the risks that are out there. It could go either way, but man, you got to be nimble. You got to have a few gray hairs. You have to have seen this radio before. And I think people are going to have to be exceedingly careful where, you know, Paul, I have a scenario in my head where he who loses least wins most.

Oh, absolutely. I can't, I haven't read enough to talk about it, but I've started reading, uh, the end of everything. And of course, historically, let me see. I can't, um, um, I want to tell you the author of the book and I know him. I just can't think of his name right now. Victor Davis Hanson. So I started reading that book. And I actually spent 45 minutes making notes on just the introduction.

And I'm into the first chapter. But I've always talked about historical cycles. First time I read Bible front to back, it's like, what are wrong with these Israelites, right? They seek God, they live morally correct. And then they're blessed. And then they start living immorally. And then it collapses. And you see that cycle. I see the cycle in the markets. I didn't see the cycle in empires. I've just never studied history like that. And that's what he's talking about. So I have no clue what the conclusion is at this point, but I'm like, Oh my gosh, we're susceptible to that, especially when he lays it out the way that he does. But the point being is we're in a period of time where you have to be

adaptable. I believe we have to manage risk and we have to be open-minded and we have to really look clearly and problem-solving going forward. and that's what we do in our approach, is work with individuals, determine risk. I'm not afraid to take risk. Volatility, I'm not afraid of. Volatility can be your friend. That's how you make money if you're in the right place. But volatility can also be a warning that things are coming apart, and fundamentals matter. At our heart, we're fundamental, but we have to play the game by the rules that are forced upon us. Our strategy gives us the ability to stay invested, even though our fundamentals don't justify the price of stocks of where they are. We're watching for that exit when that money flow starts moving. And one of the things that I'm starting to see a little more clearly than what we've seen in the past is retails moving all in and the

professionals are selling into these strengths. You know, you can look at Apple's hit resistance, hit resistance, hit resistance. That's professional selling. And then all of a sudden you get this news that they're not going to sell as many or produce as many as they thought. And the stock starts to break down. Now we need more information to know whether this is the top or not or if it's just a short-term scare. But at some point, you've got to head for the exits on Apple or you're going to give back all the profits that you put in there that you've gotten over the past several years.

Or maybe it's a good stop because inflation is so severe going forward, but you're still losing purchasing power where something like commodities is keeping up with it because inflation is an equal opportunity punisher. It's just those that are wise enough to make smart adaptations and allocate the resources in a better place are going to be, have severe bumps and bruises instead of decapitated limbs for, for son. So, um, so that's what our attempt is do the best that we can, that no matter what is, that's our goal, do better what we can for the individuals, help them understand the risks that they need to carry only carry enough risk to be successful and accomplish their goals and develop plans in

place to make sure that they can navigate this for themselves and their future generations better than the average individual walking down the sidewalk expecting nothing but sunshine and rainbows when they get hit in the mouth with a baseball bat exactly that doesn't sound pleasant at all not Not at all. Not at all. But I believe that's what's coming at some point. We just don't know yet. Yeah. Well, it's a math problem. We have a math problem and the rest is a social construct and a political thing. So the fact that nobody's talking about this politically is, I know why, there's no good answer to it. So what do you do? Politics is not about dealing with

troublesome things. They'd much rather have rainbows and unicorns and all that. So with that, anybody interested in talking with Paul, his amazing team, please go to peakfinancialinvesting.com. There's a short form to fill out, and you can then be on the path to having a risk-managed approach, but at a minimum,, no obligation review of your situation, which Paul and his team will be happy to conduct in a very professional, courteous way. So everybody, how could you not like that?

So with that, Paul, thanks so much for your time today. Glad to be back. Can't wait to do this again. Me too. I missed the fellowship and look forward to next week. So good to see you, Chris. Until next time, everyone. Bye-bye.