September 22, 2025 • 47 mins
In my view, Jay Powell has become "a problem", though NOT because he’s a bad guy with evil intent. I do not believe that. In fact, he seems like a genuinely “nice guy”!
BUT, having said that, he IS an “egghead, an overthinking, theoretical, no action, no skin in the game, no blood-no foul, ACADEMIC.
Jerome Powell is a monetary PURIST and thus, beyond Employment and Inflation…NOTHING ELSE MATTERS!
The Consumer Cocoon…matters NOT, not until there is a recession.
The Credit Crunch and Delinquency Epidemic…matters NOT, not until there is a recession.
The DEFLATION in “real” Retail final demand…matters NOT, not until there is a recession.
The Housing Crisis…matters NOT, not until there is a recession.
The Economy, DEFLATION in the Service sector in particular…matters NOT, not until there is a recession.
Well, guess what, there IS ALREADY a RECESSION underway in ALL the above!
But it matters NOT, because the ECONOMY and the CONSUMER…matter NOT…not to eggheaded monetary purists like Jerome Powell, who FAIL when it comes to having vision, having the “stones” to be AHEAD of the curve!
Powell has MISSED EVERY “TURN” in his entire tenure as the Fed Chair, sorry, that is the SIMPLE FACT!
His Fed has been BEHIND THE MONETARY CURVE at every key turning point!
And he is MISSING it again, WAY behind the curve this time, and for just ONE reason, in his mind there are not enough LAYOFFS yet to tilt the scales towards getting to a NEUTRAL POLICY as quickly as feasible. He believes this even though there are ample signs that layoffs are EXACTLY what is coming next.
Worse yet, from the political side, the Fed actually REVISED their Labor market projections to reflect STRENGTHENING job gains over the NEXT TWO YEARS, offering a vision that includes NO MORE RATE CUTS AT ALL!
For sure, several “dots” reflected that exact projection, and Powell went so far as to SAY SO, during his press-conference (I discuss within the podcast).
And, at the end of the day, with the onerous Public and Household Debt, $55 trillion in total, INFLATION is here to stay, as “reflating” is the only way to maintain growth, which is necessary to facilitate the SERVICING of debt, now “priced” at over $1 trillion per year in Public Debt interest expense alone!
The time for academic solutions, the time for eggheads to spend hours discussing the nuances of nothingness…are far behind us.
The Fed has “lost it", and Jay Powell is “flipping off” every hardworking American, and more so, those who CAN'T FIND WORK!
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:01):
Hi, I'm Greg Weldon and welcome to Money Markets and
New Age Investing, season 3,episode 12.
Hopefully we'll get one or twomore episodes in before the end
of our third season.
We turn over in Thanksgivingand today we're talking about
the Fed and Jerome Powell.
Bottom line is you know, theproblem is Jerome Powell right
(00:25):
now, and in terms of where Ibelieve policy should be neutral
, you know and should be neutralas soon as possible.
I'm not saying you go there inone move, but the Fed failed to
signal last week that the ratecut was the beginning of a move,
a more directed, a morepronounced, a more defined move
to get policy to a neutralstance.
(00:47):
And they did not deliver.
In fact, powell said policystill needs to be restrictive.
It's still appropriate for usto have a restrictive policy.
When he cites inflation andtariffs, and guess what?
All that's true it is.
The problem is Jerome Powell isa monetary purist.
(01:11):
I like to use the term egghead.
It's not really meant to bederogatory, it's more of an
academic mindset that is stuckin the classroom, stuck in the
ivory tower, stuck in thetheoretical world, not the
reality of the real world, notskin in the game, not, you know,
(01:33):
this is no blood, no foul thing, is no way this a theoretical
but take no action.
This overthinking, overthinkingto me that's like an egghead,
all right, and this is someonethat's obviously never managed
money, never traded the marketsand so on and so forth.
But you know that's not hispurvey, it isn't.
He's a monetary purist, whichis one of the things I kind of
(01:56):
like about him.
He genuinely seems like a niceguy and there's no doubt.
I mean I think there's no evilintent coming from him.
He's not a bad guy, he's anaked and to him, as a monetary
pierce, there's only two thingsthat matter employment and
inflation.
That's it, because that's thedual mandate, that's what we're
(02:17):
given.
He even used the word exerciseat one point during the press
conference, as if this is whatthey do at the fed is just
exercise after exercise afterexercise.
And while I kind of plug intothat a little bit because what I
do here is what, if, what, if,what, if but I'm scenarioizing
what am I going to do if I seethese things start to develop
and get ahead of them?
(02:37):
To be ahead of the curve, to beahead of the rest of the people
in the markets, to maximize myexpected value my EV for my
customers and my clients.
For Powell, the fact that youhave a consumer cocoon doesn't
matter.
That you have a credit crunchand an epidemic in delinquencies
on credit card debt doesn'tmatter at all.
(03:00):
Deflation in real final demandfor discretionary goods and
retail sales matters not.
The housing crisis matters not.
The deflation in the servicesector 71% of the economy
matters not.
It doesn't matter.
(03:21):
The economy and the consumermatter not.
Nothing else matters exceptemployment and inflation and
balancing those two things.
And this is why the Fed hasmissed every turn, and in
Powell's tenure for sure.
I mean we're talking twice waybehind the curve and now missing
(03:44):
the curve again.
Why?
Because we don't see dramaticlayoffs.
And Powell even then talksabout the fact that people that
lose their jobs are not likelyto find one because the hiring
rate is so low.
So he's flipping the bird, andnot only hardworking Americans.
Anyone earning less than$100,000 a year is choking and
especially flipping off thepeople who can't find work.
(04:07):
And what's amazing about allthis is the Fed, in their SEPs,
their forward projections forthe economy, actually say this
is the worst the labor market isgoing to be and it's going to
get better for the next twoyears.
And Powell even came out andsaid look, you know, 10 people
said you know multiple rate cutsthis year, but nine said not
multiple rate cuts and in factthe majority of them said no
(04:30):
more rate cuts and if theemployment dynamics are going to
get better for the next twoyears, like the Fed projects,
that's it.
It's one and done.
It's an insurance policyaccording to the worst possible
question at the presser whichhad to be a plant?
It had to a plant, it had tosuch a.
You would never ask thisquestion unless you were told to
ask this question.
(04:50):
It's really interesting stuffhere.
We're going to break down allof it.
I'm going to go througheverything powell said.
We're going to go through allthe data and particularly the
budget numbers, because this isabout debt and the fact that you
have to reflate.
If you have just killer debtthat would wipe out the economy
in boom like that, okay, youdon't want boom like that, you'd
(05:12):
rather stretch it, which iswhat we decided the 90s.
And here we are and that's theonly option and the fed will be
faced with this option.
And powell even said look, wegot stagflation here and policy
can't do both Fix the economy ondemand side and keep inflation
in check.
They know, they know, butthey're not willing to kind of
(05:37):
put them on the table, on thechopping block every day, like
people that you and I probablydo I know I do Every single day
Stack them right on the table,and the chopping block is there.
You never know when the whenthe hammer is going to come down
.
So before we get to all that,though because the market end of
(05:58):
this podcast normally we gothrough the market at length at
the end there's nothing to doright here other than to wait
and see the smoke clear, becausethe Fed has just blown out of
the water this whole thoughtprocess, that this beginning of
a new easing cycle All right,I'm not even sure people have
fully gotten with that yet.
I really don't.
I'm not sure.
It's Monday morning here as I'mrecording this.
(06:18):
So we'll see, and it's going tobe a long one.
So we'll see, and it's going tobe a long one.
So stay with me, but the firstthing I want to do is get back
to the markets and do this first, do kind of backwards to the
way we usually do this, and thenwe'll get to the data, and then
we'll get to the Fed, becausethe Fed is like it just blows my
mind what Powell said it reallydoes.
It's important that we note it.
(06:39):
But when we look at the dynamicover the last three seasons of
this podcast I went back justfor fun, actually started over
the weekend, did a littleexamination episode two, season
one, episode two december 12thof 2022.
I mean, we're coming up to threeyears ago, all right, and the
(07:00):
episode was entitled Silver isDirt Cheap, hello McFly.
All right, december 12, 2022,silver was traded at $2,304.
Said silver was dirt cheap.
Today it's $4,285.
It's actually above $4,300right now.
(07:22):
Since I said silver is dirtcheap, it's up 87%.
87% Over $20 per ounce.
I actually said weight yourownership towards gold until the
gold-silver ratio flips, whichit has since then.
But at the time, december 12,2022, I said buy silver, buy
(07:44):
gold, weight it towards gold andbuy the mining shares ETFs.
That was our production.
I mean, and even ask thequestion got gold, like, got
milk, like it's just?
You know it's standard In anyhousehold.
You should have gold.
All right, I'm not saying keepit at home, but that's a whole
other story, because youshouldn't.
(08:07):
Bottom line is gold.
December 12, 2022, episode 2season 1 dirt cheap at 1790 and
I even remember saying like 1790, it's almost 2000, seems high,
like this is the highest priceever for gold.
But throw that thought processout the window because people
will be chasing this markethigher and this is.
And we said buy gold because weunderstood that at the time
(08:28):
central banks buying gold itwasn't speculative, it wasn't
wall street money rotating inwhich you have now.
We said you would get to thispoint.
That was part of our year aheadoutlook for 2025, which you see
, the rotation you're seeing nowand this little bit of
speculative fervor you havegoing on now wasn't the case in
2022 at all.
It was central banks, brics,countries that had to sell
(08:50):
treasuries, take the dollarproceeds, buy gold, import the
gold, which is why the vaultsdried up and lease weights went
up and the whole nine yardsaround the bullion banks in
London and it's kind of exposedthe shorts, the paper shorts,
the bullion banks, the JPMorgan's at home, enormous short
positions that they could neverdeliver upon if people wanted
to deliver this stuff.
Gold was $1,790.
(09:12):
It's now $3,700.
It's up almost $2,000, 107%since I first recommended it on
this podcast.
107% since I first recommendedit on this podcast.
The mining shares a little bitmore late to the party.
We said they would be and wesaid also watch Lake Newmont,
(09:35):
angle Grove, ashanti and Barrick, because those are the big
three and if Wall Street moneywas going to move, wall Street
managers are going to buy thestocks.
They know, the stocks they canvalidate towards their bosses,
whoever iseing them.
You know, here's the stocks weown, instead of some of the more
speculative mining shares,which is the ones we preferred
and we ran through them lastpodcast.
All of them.
(09:55):
Uh, save new gold, which is anewer purchase, triple digit
gains since we bought them.
What's interesting here is theGDX was the choice.
Then, all right, and the GDX onDecember 12, 2022, said buy it
$28.82.
(10:16):
It's now $73.
It's up $43, $44 on a priceless than $30.
It's up 151%.
The SIL again came later interms of its performance.
We liked it all along, ofcourse.
All right, december 12th,trading $28.
(10:39):
Now it's $67.
It's up $38, 136%.
So you know that's kind ofwhere it's.
Last time we took a victory lap.
And then, of course, every timeyou take a victory lap, you
know that you've gotten a littletoo arrogant and the market's
going to smack you square in thenose, and that's exactly what
(11:00):
happened this past week, becauseI really thought the Fed was
going to use this opportunity tomake a shift.
All right, I was looking for thecurveball Powell threw.
I had to duck and still managesomehow to strike out, because
short the dollar didn't work out, so that was one of our bigger
positions coming in.
You also had big corrections ingold and silver that were very
(11:23):
short-lived, which is why theylook really strong here and, at
the end of the day, the onlyposition I have on after last
week, I still want to be shortthe dollar very much, so that is
the biggest trade going forwardoutside the metals and the
metals have responded to thatand the metals are already
higher, and I actually hadrecorded this once.
It was too long, so I'mre-recording it this morning,
(11:44):
worked on it all weekend.
It's a good one.
Get the chart pack too, becauseI put together an entire 44-page
chart pack.
All the data the macro, themarkets, and all the data, the
macro, the markets and all thefeds words, all the pals words,
and the beige book too, are inhere.
You really should see this goodstuff for free.
No problem, just email me, gregweldon at weldon onlinecom.
G-r-e-g-w-e-l-d-o-n at weldononlinecom.
(12:06):
One word um at the bottom line.
Here is where were we?
Um, yeah, I mean it's stillsilver.
I mean so it's funny, becausetaking a victory lap and crash
the car into the wall now stilla phenomenal quarter, you know,
for the money management clientsare thrilled, I mean tickled
pink.
Get back some profits, becausewe had big profits built in
(12:29):
these positions.
I just levered up a little bitinto the Fed meeting, thinking
really Powell would deliver andhe didn't.
That's not why I'm saying thesethings either.
I mean I'm saying it because Ibelieve them.
I have my money where my mouthwas.
I still believe everything I'msaying.
Dollar short is one of thebiggest positions you're going
to see over the next 12 to 18months.
(12:50):
Let's go to the data.
All right, because the data isintriguing, because you know,
look, you know if there were anyother thing you know.
And again you can even say,look, the stock market is part
of the problem for Powell.
I mean, how is he going to, youknow, really kind of validate,
you know, rationalize, going ona new easing campaign when the
stock market is at record highs?
Maybe you need disinflation inequity prices before the Fed
(13:14):
feels comfortable here.
I don't know.
That's a really interestingpoint and I can't say that I
blame them.
I mean it's a nuance here.
They have an argument.
It's just the problem is theargument leaves them exposed to
when things are obvious in theirargument, it's too late.
That's the problem and that'salways been the problem with the
Fed and the market's predictingthree percent interest rates.
(13:36):
The fed is at 3.6, talking fedfunds by the end of next year.
We've seen this over and overagain and until 2022.
The market was always right,the fed was always wrong.
But it's part of the fed's jobto be optimistic, right.
So I understand, but in thiscase I think it's become a tad I
use this word gingerlyirresponsible.
(13:58):
Flipping off the average Joe,jane Doe, mom Pa Kettle if you
remember that I'm an old blackand white movie buff, film buff,
mom Pa Kettle it was likeduring the Depression, they were
the average family out therethat were struggling to find
food.
(14:19):
Let's look.
And when inflation comes back,because it's here, and let's
look at it, and I get it frompal's perspective.
The inflation numbers aredaunting, but that's kind of not
really where the focus shouldbe when you have 55 trillion
dollars in debt betweenhousehold debt and public debt.
That's the problem, that'sdifference.
That's what the Fed is nottaking into account in terms of
being neutral.
I'm not saying be stimulativeyet, I'm saying be neutral here
(14:43):
Because bottom line, you can saythe risks are balanced.
And yes, inflation is a problem.
Cpi, I mean 0.4 for the month.
I mean that's not chump change0.4.
I mean, frankly, I went backand looked at all the months
over the last decade.
If you extract the two-yearperiod, you know 20 to 22,.
The pandemic inflation 0.4 orhigher.
(15:07):
Only 17% of the time, 17 out of95 months, did you get 0.4 or
higher as a monthly CPI.
It's almost 5% annualized.
It's huge, all right.
Not only that, when you break itdown, food 0.6 for the month,
that's 7%.
And I get it.
It's not compounded Well, it'snot annual, it's not a true
annualized.
I don't care.
All right, we're doing makingit simple, most people, so you
(15:29):
know, let's make it easy, I'mthe math geek here 0.6.
All right.
So let's say 7% annualized.
Energy 0.7 for the month, 8 plusannualized.
And I have said this how manytimes over the last three months
Watch energy, because the baseeffect is ending and it is, and
we see it in PPI particularly.
(15:50):
I'm going to go to those statsin a minute.
Shelter 0.4, that's again 5%annualized.
The numbers are high, I meanthey're just high.
And when you look at theyear-over-year rate 2.9.
It's up 60 basis points sinceApril.
It's up 60 basis points sinceApril and 2.9 is the second
highest of the year.
(16:10):
Food 3.2, up from 2.9.
Second highest of the year Food3.2, up from 2.9.
And energy with a 2.9 headline,energy is still minus 6.6 year
over year.
Inflation is here.
And then when you look at PPI,well, at first glance PPI wasn't
that bad.
It was down a tenth for themonth, expected to be up 0.3.
(16:32):
So everyone was celebrating PPIbecause it means forward.
You know CPI is going to comedown and it was 2.6 year over
year for PPI, down from 3.1.
It dropped 50 basis points in amonth.
That's a big decline, all right, but 2.6 is not low.
Don't get fooled by PPI.
It's not low at 2.6.
It was 2.6 in 2022, 2018, 2011,2007, 1999, 1997, all of which
(16:58):
presage periods of economicturbulence.
And here's the rub you have tobreak down PPI because it's
crude, intermediate and finished.
And crude meaning raw basic,not crude oil.
These are the stages ofprocessing, because it's
producer price index, right.
So you have three stages andthe number is broken down into
(17:20):
three stages.
Then you get the headline, theheadline, 2.6, down 0.1 for the
month.
Mostly energy Energy's down 2.5for the month.
Energy materials at thefinished level and still
finished ppi was up 0.4 for themonth.
5 annualized year over year,3.3 up from 2.5.
(17:41):
It rose 70 basis points eventhough the headline rate fell by
50.
Finished ppi rose by 70 basispoints.
Energy is still down 3.2 forthe year.
Year over year Services 4%.
And Powell's sitting heresaying well, you know, the
(18:01):
tariffs are going to be a goodsissue and services are at 4.0.
In the CPI number, servicesfirst of all, they cut the
number of service cpi indexes byabout 30.
It used to be 114 components,now it's 77.
That was mind-blowing and itdid.
(18:22):
I freaked out.
I was looking, I'd missedsomething, I'm missing a page.
I went back, I went through theheadlines into the footnotes.
Oh, my god, they reduced it allright.
So what's interesting here is65% of service CPI indexes are
above 3% year over year.
The headline rate is 3.6.
3.6.
Ppi service is 4.0.
(18:45):
These are inflation numbers, man.
They're huge.
They're double the Fed's target.
40% of service CPI is above 4%and 20% is above 5% or greater
year over year.
Only 28% are below target inservice CPI indexes.
This is inflation big time.
(19:09):
It really is.
Now what's interesting about itis the Fed talks a lot about
inflation expectations andPowell keeps saying including
just now he said they're verywell anchored quote unquote just
in a press conference becausehe was asked about inflation
expectations and he basicallywhat he did was he dismissed the
Michigan survey because it doestend to be more volatile.
(19:29):
A lot of people think there'ssome issues around the politics
or whatever.
The numbers are what they are.
If you understand where theycome from, you understand what
they are and then you can dealwith them for whatever value
they may or may not provide,whatever partial value they may
or may not provide.
It's understanding exactly whatthese numbers, where they're
derived from, what they comefrom, what they represent.
(19:51):
But the problem for Fed is it'sthe New York Fed's own consumer
expectation survey.
That is the problem with sayingthat inflation expectations are
well anchored.
They are not at all theone-year inflation expected rate
right now.
This is a really cool surveyand there's all kinds of
(20:12):
different ways to look at it.
That's why it's such a valuabletool.
The one-year expected rate is3.2.
That's up from 3.1 in July and3.0 in June.
It marks the 57th out of thelast 58 months to be above 3.
(20:34):
The 57th out of the last 58months to be above three.
How are inflation expectationsanchored if they're 50% above
the Fed's target and have beenthere for almost five years
running?
The one-year inflationexpectation in the New York Fed
survey for food is 5.5.
5.5%.
(20:56):
Good questions asked about foodprices at the press conference.
We're going to get to that Now.
The Fed survey again veryinteresting, because they also
have a distribution and thenthey have a whole kind of you
know they have various ways tomeasure this.
One of them is the medianprediction point.
Okay, it's kind of what I mean.
(21:16):
It's kind of the I guess youwould say the middle of where
all the range of estimates are.
It's much higher than theheadline.
3.2 is the one-year expectedrate.
The one-year median predictionpoint is 4.5.
4.5.
From a zero spread above theexpected rate.
(21:37):
Zero was the spread, they werethe same in November.
Now 4.5 is 130 basis pointsabove the expected rate of 3.2.
It's like moving averages too,and it means inflation is going
higher, but it gets worse forthe Fed because the three-year
median prediction point is fourpercent.
(21:59):
Consumers are telling the fed wedon't see inflation.
We see inflation double yourtarget for the next three years,
through 2028, when you get tothe distribution.
And this is where it gets.
Really I love this data thepercentage of consumers that
expect every level of inflationright now, and the low on these
(22:23):
numbers was in October of 24.
You had October to like March,april.
All of the inflation indicatorsbottomed during that period and
they're all moving higher now,including the expectations from
consumers, as reports to the NewYork Fed.
All right, the percentage ofconsumers expecting inflation to
be above 4% over the next year.
One year was 37%, in October.
(22:47):
It's now 44%.
Hello, the number expecting itto be below target has fallen
from 38% to 33%.
44% expect above 4%, 33% expectbelow target.
Think about that.
Think about that.
(23:08):
And one more thing on the NewYork Fed.
Because when you take theexpectations for inflation, the
3.2 headline, let's use theexpected rate, let's play nice,
let's play conservative, andthen we break it down by income
Below $50,000, which is kind ofpoverty almost.
I mean I don't want to say thatword, but it kind of is it's
(23:31):
hard to make all your bills,let's put it that way.
If you have a family, forget it.
You're of is.
Uh, it's hard to make all yourbills, let's put it that way.
If you have a family, forget it.
You're deep underwater everymonth.
50 to 100 000, which includesincludes, like the average and
median income levels, you know,65 to 85 000, depending on which
measure you look at.
And then above 100 000.
All right, let's take a look.
All right, inflation versustheir expectations over the next
year for their income to grow.
(23:53):
Below 50,000, inflation 3.1,income 2.5.
Real income falls deflates 0.6.
Between 50,000 and 100,000,inflation expect 3.4.
The more you make and thehigher your education, the
higher you think inflation isgoing to be.
By the way, 50,000 to 100,000,3.4 inflation against 2.8 income
(24:15):
Real income deflates 0.6 overthe next year.
Do you think people are goingto run out and go to restaurants
and go to bars and go spendmoney on things they don't need
when they expect their realincome is going to deflate over
the next 12 months?
The Fed is kind of losing it.
They're not listening to theirown data.
And then, above 100,000, andthis is key, because this had
(24:37):
been a very resilient.
Source of the last bastion ofstrength in the economy was
those that earn over 100,000,their mood is souring quickly
and, at 3.2 inflation, theyexpect their income to be up 3.2
, which means no real incomechange, even for the wealthiest
(24:58):
people.
And in that context, let's notforget consumer credit.
Okay, because revolving credithas now downed $27 billion over
the last 12 months.
Revolving credit, which meansit includes credit cards and
I've talked about the weeklycommercial bank numbers and
credit card loans contracting.
Okay.
Now, yeah, consumer credit rose$16 billion in the most recent
(25:21):
month, which frankly sounds likea lot, but it isn't compared to
where we've been.
So it's still negative and theyear-over-year rate is still
deeply negative.
And it's only been negative ona rolling 12-month basis in
revolving credit two other timesin US history, and now global
financial crisis 2009, pandemic2020, and now that's it.
(25:42):
That's it.
It's a consumer cocoon, it's acredit crunch, it is virtually
unprecedented and the Fed isjust flipping the bird.
Not only that, here's anothergreat stat.
I love this stat because it'sso telling.
Trust me on this, because Ipinned this out in 2007,.
Big time, and man, was it righton when you are.
(26:07):
Consumer credit is broken downinto the sources of the credit.
Commercial bank consumer loanshave fallen over $100 billion
since the end of the thirdquarter of 2024.
Over $100 billion, that's morethan 10%.
All right Finance companiesdown $17 billion.
So you know, go to the bank,they won't lend you money.
(26:29):
You go to the finance company,they're going to pay more, they
won't lend you money.
Where do you go?
You go to the credit unionmoney.
You go to finance company,they're going to pay more.
Then we'll lend you money.
Where do you go?
You go to credit union.
Credit union loans to consumersup 71 billion over the last,
since the end of third quarterof last year almost a year, 11
months.
It's.
The only source of growth is iscredit unions.
We saw this in first quarter,second quarter, 2008 of 2008.
(26:52):
Same thing, because that's thelast place you can get credit,
that is the easiest place you'regoing to get credit.
And when we see that numberturn down, that's going to be a
bad, bad sign for the consumer,a bad sign for the Fed.
They're not listening to theirown data or any other data and
the bottom line is they stick tothis 2% inflation target.
(27:14):
The last time you were below twopercent on cpi, which
admittedly, they're targetingpce.
I get it, but cpi below twopercent.
The last time was february 2021.
Joe biden's presidency wasn'teven half over 54 consecutive
months above two percent, andthe closest was just recently,
in april, when you were 2.3.
(27:34):
And now you're already 2.9,which, again outside of the
period from 2021 to 2023, 2.9would be the highest cpi in 12
years.
12 years and on the other side,of course, we the labor market,
which we will talk about.
But you also have the elephantin the room, the 800-pound
(27:56):
gorilla in the room, theTyrannosaurus Rex in the room.
Okay, you have 11 months of thisfiscal year in budget numbers.
The budget deficit reported forAugust $345 billion.
$345 billion More than that.
We spent more than twice whatthe revenue was, and there are
(28:20):
five months when either you didthat or you were just within a
couple tens of billions of that.
Three months specifically, youspent more than twice the
revenue the government did andin five months, it was pretty
close to the same.
Okay, right now, revenue forthis fiscal year covers only 70%
(28:41):
of spending.
Last year, it was 73%.
All right Now.
There's a lot of people outthere that want to say well, you
had tariffs and that helped thebudget situation.
It's paying down debt.
True, absolutely true.
$22 billion was the positiveflow net from customs duties.
(29:02):
Total customs duties were $29.5.
You had a $22 billion positiveflow in.
Okay.
Compared to a $344 billionsingle month deficit, $22
billion is a drop in the bucket.
It's an eyeglass squeeze ordrop in the bucket, even though
you had this allegedly huge.
(29:22):
And guess how long it wouldtake to pay down one year of
debt at $22 billion a month?
Yeah, decades.
Okay, that's not the answer,and anyone that tells you that
that's a big deal is ignorant oris lying.
Despite this record and it wasa record 22 billion positive
(29:43):
flow from customs duties the$345 billion deficit in August
was the 10th deepest in UShistory, and all 10 of the 10
deepest deficits in US historyon a month-to-month basis have
come since April of 2020.
It projects to be the thirddeepest fiscal year deficit in
(30:06):
US history In history.
I mean this is just not historyin history.
I mean this is just notsustainable.
We're chronic debt addicts andthis is why you're going to have
to choose to reflate.
You have to or you'll get adebt deflation which is like the
1929 thing, 1930s.
You know they'd rather have the1970s than the 1930s.
(30:27):
That's just the way it is.
Uh, and over the last, sinceAugust of 2008,.
426 months this is howchronically addicted we are to
debt in this country and thefederal government.
426 months goes back to Augustof 2008.
Only 36 months do we have abudget surplus that's 8%, one of
(30:49):
which we just recently hadsurplus that's eight percent,
one of which we just recentlyhad eight percent.
Only eight percent out of 426months.
390 months.
We had deficits 92 percent ofthe time.
And we talk about socialsecurity.
You have to do away with socialsecurity.
You have to.
All right, that doesn't meanpeople that are getting their
benefits or they're going to gettheir benefits in the next 10
(31:10):
and 15, even maybe 20 years, aregoing to lose them.
That's not what this means.
It means that some grandfatherrate or age, rather below age 40
, below age 45, you losewhatever you put in.
It's just a fact.
You already lost it and I did abig study two years ago or
three years ago, when New Yorkstate raised their welfare tax.
The city and the state raisedwelfare taxes and I found that
(31:33):
man, young people would be somuch better off doing their own
retirement.
You don't need the governmentto hold your retirement.
That's ludicrous.
Think about that.
Do you really want to maintainsocial security?
You really want to keep lettingthe government manage your
retirement fund with theirmismanagement, their
irresponsibility?
If this was any business,they'd be shut down and probably
(31:55):
the people thrown in jail forrunning a ponzi scheme.
Come on, man, do it yourself isthe way to go.
Social security has got to go,but it's political suicide
because of all the lies thatpoliticians tell that scared the
elderly that they're going tolose their benefits.
I hate that.
It's despicable.
All right, you'll never solvethis problem unless you face it
(32:16):
with reality.
Here's the reality.
Okay, so far this year, fiscalyear, 11 months Medicare
spending $2.44 trillion onSocial Security and Medicare
Retirement income revenue.
Okay, so you're bringing moneyin to Social Security, right?
1.6 trillion versus 2.5 out.
(32:36):
That's almost a trillion.
Right there, it's 40% of thedeficit.
You get another trillion fromnet interest cost and bam,
there's your deficit.
Social Security and interestand interest payments now
outpaced by far health care,defense, veterans and education.
It's ridiculous, but this iswhat the Fed is facing.
(32:58):
And while I have a few minutesleft because this is a long one,
but I have to go through theFed's comments.
We have to talk about whatJerome Powell just said, because
it's nothing less thanjaw-dropping.
I'm going to skip through theBeige Book.
Get the chart back.
You're going to want to see allthese charts, all the deficit
charts, all the debt.
All these charts are in here.
And you're going to want to seethe long-term monthly budget
(33:20):
numbers.
I mean, that's a really coolchart the Beige Book, talking
about consumers being squeezedby rising costs of insurance,
utilities and other expenses.
From the Beige Book, contactsreport flat to declining
consumer spending because formany households wages are
failing to keep up with risingprices.
Bam, I keep saying it, it's allI'm saying.
From the Beige Book Firms arehesitant to hire workers.
(33:43):
There's an increase in layoffs,reduced headcounts through
attrition and increase in thenumber of people looking for a
job.
That's the Beige Book Problem.
Is the Beige Book on prices Bad?
It's bad from both sides.
I get Powell's dilemma.
I just think he's choosing thewrong way to look at it.
Nearly all districts this isfrom the Beige Book all
(34:04):
districts tariff-related priceincrease.
Contacts report rising pricesfor insurance, utilities and
technology services.
All districts describedhesitancy in raising prices,
citing customer pricesensitivity, a lack of pricing
power and a fear of losingbusiness Margins are going to
(34:26):
take the hit and stocks are atnew highs.
A lot of this doesn't makesense.
And here's the piece deresistance in terms of the beige
book just out two weeks ago,clothing retailers marking up
prices by 10 to 15 percent,citing tariffs as the reason.
From the baseball restaurantcontacts say menu price is
increasing in response toincreases in wholesale food
prices, fuel prices andinsurance rates.
(34:46):
And here is the final kick inthe stones From the Beige Book
Hotel prices rose despitedecreased occupancy rates.
How do you spell stagflation?
You spell it Beige Book Allover it.
But what does the Fed have tosay about this?
(35:07):
All right, it says the questionfrom ABC, elizabeth Schultzz.
Good question, how concerningabout you to slow down in jobs
for households, especiallyyounger americans struggling to
find a job?
Well, that's why we become moreneutral.
As powell's answer more neutral.
There's no such thing as moreneutral.
You're either in the war or outof the war.
There's not degrees ofneutrality.
(35:29):
All All right.
And then he goes on to kind ofmumble.
There's no mumbling andjumbling.
Get the text.
You're going to want to seethis text.
I did it out with highlightsand everything.
It's really cool when you seejust like he's stumbling to try
and get his words off.
He's not really doesn't knowwhat to say.
You know, he's basically saidwe cut rates, which will be well
, which will presumably bebetter for the labor market, but
(35:51):
, yeah, kids coming out ofcollege and younger people
minorities are having a hardtime finding jobs.
The overall job-finding rate isvery, very low.
However, the layoff rate isalso very low.
So you've got a low hiring anda low firing environment.
That's a growing concern forthe last few months, last few
(36:12):
months, and basically what he'ssaying too, by the way, is, if
you lose your job, you're notfinding a new one.
Those laid off, there won't bea lot of hiring going on.
Then you're talking about thedynamic around inflation,
elizabeth Schultz, again.
Well, the inflation reportsshow prices going up in key
(36:36):
categories, including groceries.
What will the Fed do if pricespick up more?
What will the Fed do?
And here's Powell's response.
I'm Jerome Powell now.
So what will we do?
It's kind of how he said it.
I mean he was not stumbling asbad as I am right now.
We'll do what we need to do,but we have two mandates and we
(36:57):
try and balance them All right.
This is quite an unusualsituation.
How do we decide what to do,because our tools can't do two
things at once.
What Hold on?
Stop the presses?
What hold on, stop the presses?
Jerome powell just said wecan't fight the stag and
(37:18):
deflation at the same time.
We have stagflation, and hesaid he used the word.
He used it.
I've been saying it for 18months.
It's coming.
He's here.
Our tools cannot fixstagflation.
We'll have to choose one andyou will choose to reflate.
Hands down.
Bet my reputation on it.
I bet my reputation on it in2006.
I was called a kook for sayingthe Fed would monetize
(37:40):
government debt and print newmoney.
Was Joe Kernan called me a nutjob on Squawk Box Before
millions of people?
Now, I don't know.
You've got maybe tens ofthousands of people watching.
Four millions of people?
Now I don't know you've gotmaybe tens of thousands of
people watching.
So this really kind of allcomes down to do.
We think the Fed is actually inthe right position, and the best
(38:00):
question came from NickTimoreos.
Now, this guy's really good.
Follow him on Twitter.
He's excellent.
Okay, even though he's from theWall Street Journal.
Okay, he's highly respected.
The journal used to be highlyrespected.
But he asked the most pertinentquestion, thank you.
Do economic conditions and thebalancing risk no longer warrant
(38:20):
a restrictive policy settingBam Need to be neutral 100%?
Here's Powell's response.
I don't think we can say that.
No, I don't.
We cannot say that the risksare clearly tilted to inflation,
but I would say they're movingtowards preliminary equality.
What the hell is preliminaryequality?
(38:44):
Again, this is central bankeseFed speak at its finest, at its
worst, and then it goes on.
I would say they're movingtowards preliminary equality.
Well, maybe they're not quiteat equality, but we don't need
to know that.
Yeah, you do, that's your job,okay, and at least pretend you
know it, okay.
(39:06):
And that suggests that weshould be moving.
We should be, not that we are,that we should be moving.
We should be, not that we are,that we should be moving in the
direction of neutral.
So he says we're getting moreneutral, okay, which is
meaningless, but finally kind ofputs it out there we should be
moving in the direction ofneutral, but they're not.
(39:26):
Because they are saying, still,we can't say that we no longer
warrant a restrictive policy.
Aka, it warrants a restrictivepolicy, the risks are moving
towards preliminary equality andthat suggests we should be
moving in the direction ofneutral.
But they're not.
That's the problem.
(39:46):
And then you get the plant.
The last one Long podcast today.
But this is it, of course, fromthe New York Times, of course.
I'm actually just realizingthat now.
I didn't even notice thatbefore Colby Smith.
I got nothing against her,necessarily, except she's a
plant.
Here's her question Should webe viewing today's cut as the
(40:10):
committee taking out someinsurance against the
possibility the land market isat risk of weakening?
That's a planted question.
Why would anyone ask thatquestion, unless you were
directed to ask that questionand, of course, leave it to the
New York Times to be in cahoots.
I mean just no credibilitywhatsoever and this question
just verifies it, if that's whatyou think already.
But Powell kind of exposes amajor problem here with his
(40:35):
answer and he doesn't even knowit.
Yeah, I think, I think you couldsay, in a way, as a risk, this
was a risk management cutbecause if you look at the scp,
which is the economicprojections, the projections for
growth this year actuallyticked up a bit and employment
really didn't move.
That's false.
That's a lie.
That is a lie.
(40:58):
Okay, and here's why Becauseemployment did move Next year
and the year after theiremployment projections to be
(41:18):
dramatically better, much lowerunemployment for next year.
Next year, the majority, thebiggest vote for unemployment
rate next year was 4.7.
Now it's 4.4.
Hello, from 4.7 to 4.4.
The biggest grouping for 2027was between 4.5 and 4.7 to 4.4.
The biggest grouping for 2027was between 4.5 and 4.7.
Now it's between 4.2 and 4.4.
(41:39):
In other words, the Fed issaying this is the worst the
labor market is going to get.
You're going to see a muchlower unemployment rate in the
future, and that would implythat they're not even going to
cut rates again, that this is aninsurance policy.
I mean.
This is why I think thisquestion was the plan.
So Powell could say all this weneed to be restrictive because
(42:00):
inflation is a problem and weexpect the employment thing is
not going to be.
That's what they just said.
And here is the end game.
And here is the end game.
This is one of his lastcomments, okay, when he was
asked about.
You know the dot plot he saysso you have seen that we have 10
participants out of 19 whowrote down two more or more rate
(42:25):
cuts for the remainder of theyear, but nine who wrote down
fewer than and in fact, in agood number of cases, members
wrote down they expected no morecuts.
If you think the employmentmarket is going to strengthen
from here and inflation is toohigh, one and done could be what
(42:48):
this was.
I really beg to differ.
I think you know doesn't wantto telegraph this, because the
stock market's at new highs.
I think there's a lot morenuance going on here.
But at the end of the day, ifyou just take it for face value,
jerome Powell is just flippingoff the average, joe, jane Doe,
mom, pop kettle and the market,because the market's expecting 3
(43:10):
percent fed funds by the end ofnext year.
According to the.
To powell it could be.
You know, the average is 3.6.
It's a 60 point difference andI'll tell you until 2022, this
is always the way, because I getit, the fed needs to be
optimistic.
It's part of the thing.
So yeah, of course, let's saythe employment market is going
to be great, because this way itinstills confidence.
We've already seen.
I mean powell asked aboutinflation expectations.
(43:32):
He basically said if we stickto our two percent guns, people
will believe it.
We can talk down the market.
Really interesting stuff.
The bottom line for me, though,is this does put into question,
at least in the near term, justthe fed's part of this in terms
of the dollar depreciation theme, and maybe that's what they
(43:53):
want to see.
Maybe they want to see a littlestronger dollar where it can
take some of the pressure offinflation, and if it is coming
which of course it is, andthey're not going to be able to
manage it, it doesn't matter.
None of this matters, andthat's why, ultimately, the
dollar down and all the rest ofthe trades that we've been
promoting here will continue towork over the longer term.
In the near term, there's somesuspicion here that you could
see corrections.
I would say the market's goingto see through this because,
(44:15):
like I was going to say, until2022, when everyone was late to
the curve on inflation, exceptfor us, of course, all humility
aside, we were all over thisTransitory.
No, we used to say waiting forGodot, the alternative ending,
because, you remember, the Fedwaited for inflation for years,
since 2015.
Inflation is going to be 2.
Inflation is going to be 2.
It never even got there.
It was always lower, alwayslower.
(44:36):
It was like waiting for Godot,and then I forget what year.
I think it was 2020, early 2021.
I said waiting for Godot, thealternative ending I think it
was even a podcast title whenGodot's gonna show up, meaning
inflation's gonna come and noone expected it to.
(44:57):
But every other time I mean inmy entire career the market is
always more right than the Fed,ultimately in projecting where
interest rates are going.
It's that simple.
Why?
Because the Fed no disrespect,I wouldn't want that job, the
hardest job in the world Got alot of respect for that.
On the other hand, let's call aspade a spade.
Let's call an egghead anegghead.
Let's call a diamond a diamond.
(45:18):
Let's call a heart a heart.
Let's call a club a club.
Let's call an egghead anegghead.
An academic with no skin in thegame, no blood, no foul.
You know it's really aboutexercise, no foul.
You know it's really aboutexercise.
Remember what the feds chairmanpowell said at the end of the
day, this is all a big exerciseto these guys.
(45:39):
The one position I'm stillholding right now is long silver
might add gold in here couldchange very quickly.
I like energy.
Distill is, in particular, verylow supply.
They're building, but it's arace against time.
We'll see.
Heating oil could be a bigstory later in this winter and I
would continue to look at and Ijust did a special which you
(46:00):
can also get if you want toemail me.
On the dollar, okay, I mean thenumber of currencies breaking
out, breaking multi-year,multi-decade trends against the
dollar is.
I mean, it's a plethora ofcurrencies, it's a very long
list of currencies.
I mean emerging markets maincurrencies, I mean it's
currencies all over the world.
Major long-term breakoutsagainst the US dollar.
(46:23):
That is still the big story.
Silver and gold at new highsstill the big story.
As far as the rest of it, rightnow it's a little tricky.
So I think that having a higherdegree of cash even as the
stock market breaks out notnecessarily the worst thing in
the world.
Follow me on Twitter at WeldonLive the podcast, at money
underscore podcast.
We're on Buzzsprout and we'reavailable everywhere.
(46:46):
I'm also on YouTube usersbackslash, gregory underscore
Weldon and for any informationon our services.
We do daily research withrecommendations in all the
markets fixed income, foreignexchange, global stock indexes,
all regulated futures contracts,ETS.
We talk a lot about it.
We do discuss the individualstocks.
Although we can't officiallyrecommend them specifically.
(47:08):
We, you know, give you rankingson the best mining shares and
these kinds of things that havereally played out extremely well
in the three years that we'vebeen doing this, as we discussed
at the beginning.
For any information on any ofthat, including my cta business
as a registered three uhcommodity trading advisor who
manages individually managedaccounts money is in your name.
(47:28):
Nobody touches it, nobody,nobody commingles it, so on and
so forth.
Never see me on American Greed.
Email me, greg Weldon,g-r-e-g-w-e-l-d-o-n at Weldon
Online and thank you so much forlistening.
Hi, I'm Greg Weldon and welcome to Money Markets and
New Age Investing, season 3,episode 12.
Hopefully we'll get one or twomore episodes in before the end
of our third season.
We turn over in Thanksgivingand today we're talking about
the Fed and Jerome Powell.
Bottom line is you know, theproblem is Jerome Powell right
(00:25):
now, and in terms of where Ibelieve policy should be neutral
, you know and should be neutralas soon as possible.
I'm not saying you go there inone move, but the Fed failed to
signal last week that the ratecut was the beginning of a move,
a more directed, a morepronounced, a more defined move
to get policy to a neutralstance.
(00:47):
And they did not deliver.
In fact, powell said policystill needs to be restrictive.
It's still appropriate for usto have a restrictive policy.
When he cites inflation andtariffs, and guess what?
All that's true it is.
The problem is Jerome Powell isa monetary purist.
(01:11):
I like to use the term egghead.
It's not really meant to bederogatory, it's more of an
academic mindset that is stuckin the classroom, stuck in the
ivory tower, stuck in thetheoretical world, not the
reality of the real world, notskin in the game, not, you know,
(01:33):
this is no blood, no foul thing, is no way this a theoretical
but take no action.
This overthinking, overthinkingto me that's like an egghead,
all right, and this is someonethat's obviously never managed
money, never traded the marketsand so on and so forth.
But you know that's not hispurvey, it isn't.
He's a monetary purist, whichis one of the things I kind of
(01:56):
like about him.
He genuinely seems like a niceguy and there's no doubt.
I mean I think there's no evilintent coming from him.
He's not a bad guy, he's anaked and to him, as a monetary
pierce, there's only two thingsthat matter employment and
inflation.
That's it, because that's thedual mandate, that's what we're
(02:17):
given.
He even used the word exerciseat one point during the press
conference, as if this is whatthey do at the fed is just
exercise after exercise afterexercise.
And while I kind of plug intothat a little bit because what I
do here is what, if, what, if,what, if but I'm scenarioizing
what am I going to do if I seethese things start to develop
and get ahead of them?
(02:37):
To be ahead of the curve, to beahead of the rest of the people
in the markets, to maximize myexpected value my EV for my
customers and my clients.
For Powell, the fact that youhave a consumer cocoon doesn't
matter.
That you have a credit crunchand an epidemic in delinquencies
on credit card debt doesn'tmatter at all.
(03:00):
Deflation in real final demandfor discretionary goods and
retail sales matters not.
The housing crisis matters not.
The deflation in the servicesector 71% of the economy
matters not.
It doesn't matter.
(03:21):
The economy and the consumermatter not.
Nothing else matters exceptemployment and inflation and
balancing those two things.
And this is why the Fed hasmissed every turn, and in
Powell's tenure for sure.
I mean we're talking twice waybehind the curve and now missing
(03:44):
the curve again.
Why?
Because we don't see dramaticlayoffs.
And Powell even then talksabout the fact that people that
lose their jobs are not likelyto find one because the hiring
rate is so low.
So he's flipping the bird, andnot only hardworking Americans.
Anyone earning less than$100,000 a year is choking and
especially flipping off thepeople who can't find work.
(04:07):
And what's amazing about allthis is the Fed, in their SEPs,
their forward projections forthe economy, actually say this
is the worst the labor market isgoing to be and it's going to
get better for the next twoyears.
And Powell even came out andsaid look, you know, 10 people
said you know multiple rate cutsthis year, but nine said not
multiple rate cuts and in factthe majority of them said no
(04:30):
more rate cuts and if theemployment dynamics are going to
get better for the next twoyears, like the Fed projects,
that's it.
It's one and done.
It's an insurance policyaccording to the worst possible
question at the presser whichhad to be a plant?
It had to a plant, it had tosuch a.
You would never ask thisquestion unless you were told to
ask this question.
(04:50):
It's really interesting stuffhere.
We're going to break down allof it.
I'm going to go througheverything powell said.
We're going to go through allthe data and particularly the
budget numbers, because this isabout debt and the fact that you
have to reflate.
If you have just killer debtthat would wipe out the economy
in boom like that, okay, youdon't want boom like that, you'd
(05:12):
rather stretch it, which iswhat we decided the 90s.
And here we are and that's theonly option and the fed will be
faced with this option.
And powell even said look, wegot stagflation here and policy
can't do both Fix the economy ondemand side and keep inflation
in check.
They know, they know, butthey're not willing to kind of
(05:37):
put them on the table, on thechopping block every day, like
people that you and I probablydo I know I do Every single day
Stack them right on the table,and the chopping block is there.
You never know when the whenthe hammer is going to come down
.
So before we get to all that,though because the market end of
(05:58):
this podcast normally we gothrough the market at length at
the end there's nothing to doright here other than to wait
and see the smoke clear, becausethe Fed has just blown out of
the water this whole thoughtprocess, that this beginning of
a new easing cycle All right,I'm not even sure people have
fully gotten with that yet.
I really don't.
I'm not sure.
It's Monday morning here as I'mrecording this.
(06:18):
So we'll see, and it's going tobe a long one.
So we'll see, and it's going tobe a long one.
So stay with me, but the firstthing I want to do is get back
to the markets and do this first, do kind of backwards to the
way we usually do this, and thenwe'll get to the data, and then
we'll get to the Fed, becausethe Fed is like it just blows my
mind what Powell said it reallydoes.
It's important that we note it.
(06:39):
But when we look at the dynamicover the last three seasons of
this podcast I went back justfor fun, actually started over
the weekend, did a littleexamination episode two, season
one, episode two december 12thof 2022.
I mean, we're coming up to threeyears ago, all right, and the
(07:00):
episode was entitled Silver isDirt Cheap, hello McFly.
All right, december 12, 2022,silver was traded at $2,304.
Said silver was dirt cheap.
Today it's $4,285.
It's actually above $4,300right now.
(07:22):
Since I said silver is dirtcheap, it's up 87%.
87% Over $20 per ounce.
I actually said weight yourownership towards gold until the
gold-silver ratio flips, whichit has since then.
But at the time, december 12,2022, I said buy silver, buy
(07:44):
gold, weight it towards gold andbuy the mining shares ETFs.
That was our production.
I mean, and even ask thequestion got gold, like, got
milk, like it's just?
You know it's standard In anyhousehold.
You should have gold.
All right, I'm not saying keepit at home, but that's a whole
other story, because youshouldn't.
(08:07):
Bottom line is gold.
December 12, 2022, episode 2season 1 dirt cheap at 1790 and
I even remember saying like 1790, it's almost 2000, seems high,
like this is the highest priceever for gold.
But throw that thought processout the window because people
will be chasing this markethigher and this is.
And we said buy gold because weunderstood that at the time
(08:28):
central banks buying gold itwasn't speculative, it wasn't
wall street money rotating inwhich you have now.
We said you would get to thispoint.
That was part of our year aheadoutlook for 2025, which you see
, the rotation you're seeing nowand this little bit of
speculative fervor you havegoing on now wasn't the case in
2022 at all.
It was central banks, brics,countries that had to sell
(08:50):
treasuries, take the dollarproceeds, buy gold, import the
gold, which is why the vaultsdried up and lease weights went
up and the whole nine yardsaround the bullion banks in
London and it's kind of exposedthe shorts, the paper shorts,
the bullion banks, the JPMorgan's at home, enormous short
positions that they could neverdeliver upon if people wanted
to deliver this stuff.
Gold was $1,790.
(09:12):
It's now $3,700.
It's up almost $2,000, 107%since I first recommended it on
this podcast.
107% since I first recommendedit on this podcast.
The mining shares a little bitmore late to the party.
We said they would be and wesaid also watch Lake Newmont,
(09:35):
angle Grove, ashanti and Barrick, because those are the big
three and if Wall Street moneywas going to move, wall Street
managers are going to buy thestocks.
They know, the stocks they canvalidate towards their bosses,
whoever iseing them.
You know, here's the stocks weown, instead of some of the more
speculative mining shares,which is the ones we preferred
and we ran through them lastpodcast.
All of them.
(09:55):
Uh, save new gold, which is anewer purchase, triple digit
gains since we bought them.
What's interesting here is theGDX was the choice.
Then, all right, and the GDX onDecember 12, 2022, said buy it
$28.82.
(10:16):
It's now $73.
It's up $43, $44 on a priceless than $30.
It's up 151%.
The SIL again came later interms of its performance.
We liked it all along, ofcourse.
All right, december 12th,trading $28.
(10:39):
Now it's $67.
It's up $38, 136%.
So you know that's kind ofwhere it's.
Last time we took a victory lap.
And then, of course, every timeyou take a victory lap, you
know that you've gotten a littletoo arrogant and the market's
going to smack you square in thenose, and that's exactly what
(11:00):
happened this past week, becauseI really thought the Fed was
going to use this opportunity tomake a shift.
All right, I was looking for thecurveball Powell threw.
I had to duck and still managesomehow to strike out, because
short the dollar didn't work out, so that was one of our bigger
positions coming in.
You also had big corrections ingold and silver that were very
(11:23):
short-lived, which is why theylook really strong here and, at
the end of the day, the onlyposition I have on after last
week, I still want to be shortthe dollar very much, so that is
the biggest trade going forwardoutside the metals and the
metals have responded to thatand the metals are already
higher, and I actually hadrecorded this once.
It was too long, so I'mre-recording it this morning,
(11:44):
worked on it all weekend.
It's a good one.
Get the chart pack too, becauseI put together an entire 44-page
chart pack.
All the data the macro, themarkets, and all the data, the
macro, the markets and all thefeds words, all the pals words,
and the beige book too, are inhere.
You really should see this goodstuff for free.
No problem, just email me, gregweldon at weldon onlinecom.
G-r-e-g-w-e-l-d-o-n at weldononlinecom.
(12:06):
One word um at the bottom line.
Here is where were we?
Um, yeah, I mean it's stillsilver.
I mean so it's funny, becausetaking a victory lap and crash
the car into the wall now stilla phenomenal quarter, you know,
for the money management clientsare thrilled, I mean tickled
pink.
Get back some profits, becausewe had big profits built in
(12:29):
these positions.
I just levered up a little bitinto the Fed meeting, thinking
really Powell would deliver andhe didn't.
That's not why I'm saying thesethings either.
I mean I'm saying it because Ibelieve them.
I have my money where my mouthwas.
I still believe everything I'msaying.
Dollar short is one of thebiggest positions you're going
to see over the next 12 to 18months.
(12:50):
Let's go to the data.
All right, because the data isintriguing, because you know,
look, you know if there were anyother thing you know.
And again you can even say,look, the stock market is part
of the problem for Powell.
I mean, how is he going to, youknow, really kind of validate,
you know, rationalize, going ona new easing campaign when the
stock market is at record highs?
Maybe you need disinflation inequity prices before the Fed
(13:14):
feels comfortable here.
I don't know.
That's a really interestingpoint and I can't say that I
blame them.
I mean it's a nuance here.
They have an argument.
It's just the problem is theargument leaves them exposed to
when things are obvious in theirargument, it's too late.
That's the problem and that'salways been the problem with the
Fed and the market's predictingthree percent interest rates.
(13:36):
The fed is at 3.6, talking fedfunds by the end of next year.
We've seen this over and overagain and until 2022.
The market was always right,the fed was always wrong.
But it's part of the fed's jobto be optimistic, right.
So I understand, but in thiscase I think it's become a tad I
use this word gingerlyirresponsible.
(13:58):
Flipping off the average Joe,jane Doe, mom Pa Kettle if you
remember that I'm an old blackand white movie buff, film buff,
mom Pa Kettle it was likeduring the Depression, they were
the average family out therethat were struggling to find
food.
(14:19):
Let's look.
And when inflation comes back,because it's here, and let's
look at it, and I get it frompal's perspective.
The inflation numbers aredaunting, but that's kind of not
really where the focus shouldbe when you have 55 trillion
dollars in debt betweenhousehold debt and public debt.
That's the problem, that'sdifference.
That's what the Fed is nottaking into account in terms of
being neutral.
I'm not saying be stimulativeyet, I'm saying be neutral here
(14:43):
Because bottom line, you can saythe risks are balanced.
And yes, inflation is a problem.
Cpi, I mean 0.4 for the month.
I mean that's not chump change0.4.
I mean, frankly, I went backand looked at all the months
over the last decade.
If you extract the two-yearperiod, you know 20 to 22,.
The pandemic inflation 0.4 orhigher.
(15:07):
Only 17% of the time, 17 out of95 months, did you get 0.4 or
higher as a monthly CPI.
It's almost 5% annualized.
It's huge, all right.
Not only that, when you break itdown, food 0.6 for the month,
that's 7%.
And I get it.
It's not compounded Well, it'snot annual, it's not a true
annualized.
I don't care.
All right, we're doing makingit simple, most people, so you
(15:29):
know, let's make it easy, I'mthe math geek here 0.6.
All right.
So let's say 7% annualized.
Energy 0.7 for the month, 8 plusannualized.
And I have said this how manytimes over the last three months
Watch energy, because the baseeffect is ending and it is, and
we see it in PPI particularly.
(15:50):
I'm going to go to those statsin a minute.
Shelter 0.4, that's again 5%annualized.
The numbers are high, I meanthey're just high.
And when you look at theyear-over-year rate 2.9.
It's up 60 basis points sinceApril.
It's up 60 basis points sinceApril and 2.9 is the second
highest of the year.
(16:10):
Food 3.2, up from 2.9.
Second highest of the year Food3.2, up from 2.9.
And energy with a 2.9 headline,energy is still minus 6.6 year
over year.
Inflation is here.
And then when you look at PPI,well, at first glance PPI wasn't
that bad.
It was down a tenth for themonth, expected to be up 0.3.
(16:32):
So everyone was celebrating PPIbecause it means forward.
You know CPI is going to comedown and it was 2.6 year over
year for PPI, down from 3.1.
It dropped 50 basis points in amonth.
That's a big decline, all right, but 2.6 is not low.
Don't get fooled by PPI.
It's not low at 2.6.
It was 2.6 in 2022, 2018, 2011,2007, 1999, 1997, all of which
(16:58):
presage periods of economicturbulence.
And here's the rub you have tobreak down PPI because it's
crude, intermediate and finished.
And crude meaning raw basic,not crude oil.
These are the stages ofprocessing, because it's
producer price index, right.
So you have three stages andthe number is broken down into
(17:20):
three stages.
Then you get the headline, theheadline, 2.6, down 0.1 for the
month.
Mostly energy Energy's down 2.5for the month.
Energy materials at thefinished level and still
finished ppi was up 0.4 for themonth.
5 annualized year over year,3.3 up from 2.5.
(17:41):
It rose 70 basis points eventhough the headline rate fell by
50.
Finished ppi rose by 70 basispoints.
Energy is still down 3.2 forthe year.
Year over year Services 4%.
And Powell's sitting heresaying well, you know, the
(18:01):
tariffs are going to be a goodsissue and services are at 4.0.
In the CPI number, servicesfirst of all, they cut the
number of service cpi indexes byabout 30.
It used to be 114 components,now it's 77.
That was mind-blowing and itdid.
(18:22):
I freaked out.
I was looking, I'd missedsomething, I'm missing a page.
I went back, I went through theheadlines into the footnotes.
Oh, my god, they reduced it allright.
So what's interesting here is65% of service CPI indexes are
above 3% year over year.
The headline rate is 3.6.
3.6.
Ppi service is 4.0.
(18:45):
These are inflation numbers, man.
They're huge.
They're double the Fed's target.
40% of service CPI is above 4%and 20% is above 5% or greater
year over year.
Only 28% are below target inservice CPI indexes.
This is inflation big time.
(19:09):
It really is.
Now what's interesting about itis the Fed talks a lot about
inflation expectations andPowell keeps saying including
just now he said they're verywell anchored quote unquote just
in a press conference becausehe was asked about inflation
expectations and he basicallywhat he did was he dismissed the
Michigan survey because it doestend to be more volatile.
(19:29):
A lot of people think there'ssome issues around the politics
or whatever.
The numbers are what they are.
If you understand where theycome from, you understand what
they are and then you can dealwith them for whatever value
they may or may not provide,whatever partial value they may
or may not provide.
It's understanding exactly whatthese numbers, where they're
derived from, what they comefrom, what they represent.
(19:51):
But the problem for Fed is it'sthe New York Fed's own consumer
expectation survey.
That is the problem with sayingthat inflation expectations are
well anchored.
They are not at all theone-year inflation expected rate
right now.
This is a really cool surveyand there's all kinds of
(20:12):
different ways to look at it.
That's why it's such a valuabletool.
The one-year expected rate is3.2.
That's up from 3.1 in July and3.0 in June.
It marks the 57th out of thelast 58 months to be above 3.
(20:34):
The 57th out of the last 58months to be above three.
How are inflation expectationsanchored if they're 50% above
the Fed's target and have beenthere for almost five years
running?
The one-year inflationexpectation in the New York Fed
survey for food is 5.5.
5.5%.
(20:56):
Good questions asked about foodprices at the press conference.
We're going to get to that Now.
The Fed survey again veryinteresting, because they also
have a distribution and thenthey have a whole kind of you
know they have various ways tomeasure this.
One of them is the medianprediction point.
Okay, it's kind of what I mean.
(21:16):
It's kind of the I guess youwould say the middle of where
all the range of estimates are.
It's much higher than theheadline.
3.2 is the one-year expectedrate.
The one-year median predictionpoint is 4.5.
4.5.
From a zero spread above theexpected rate.
(21:37):
Zero was the spread, they werethe same in November.
Now 4.5 is 130 basis pointsabove the expected rate of 3.2.
It's like moving averages too,and it means inflation is going
higher, but it gets worse forthe Fed because the three-year
median prediction point is fourpercent.
(21:59):
Consumers are telling the fed wedon't see inflation.
We see inflation double yourtarget for the next three years,
through 2028, when you get tothe distribution.
And this is where it gets.
Really I love this data thepercentage of consumers that
expect every level of inflationright now, and the low on these
(22:23):
numbers was in October of 24.
You had October to like March,april.
All of the inflation indicatorsbottomed during that period and
they're all moving higher now,including the expectations from
consumers, as reports to the NewYork Fed.
All right, the percentage ofconsumers expecting inflation to
be above 4% over the next year.
One year was 37%, in October.
(22:47):
It's now 44%.
Hello, the number expecting itto be below target has fallen
from 38% to 33%.
44% expect above 4%, 33% expectbelow target.
Think about that.
Think about that.
(23:08):
And one more thing on the NewYork Fed.
Because when you take theexpectations for inflation, the
3.2 headline, let's use theexpected rate, let's play nice,
let's play conservative, andthen we break it down by income
Below $50,000, which is kind ofpoverty almost.
I mean I don't want to say thatword, but it kind of is it's
(23:31):
hard to make all your bills,let's put it that way.
If you have a family, forget it.
You're of is.
Uh, it's hard to make all yourbills, let's put it that way.
If you have a family, forget it.
You're deep underwater everymonth.
50 to 100 000, which includesincludes, like the average and
median income levels, you know,65 to 85 000, depending on which
measure you look at.
And then above 100 000.
All right, let's take a look.
All right, inflation versustheir expectations over the next
year for their income to grow.
(23:53):
Below 50,000, inflation 3.1,income 2.5.
Real income falls deflates 0.6.
Between 50,000 and 100,000,inflation expect 3.4.
The more you make and thehigher your education, the
higher you think inflation isgoing to be.
By the way, 50,000 to 100,000,3.4 inflation against 2.8 income
(24:15):
Real income deflates 0.6 overthe next year.
Do you think people are goingto run out and go to restaurants
and go to bars and go spendmoney on things they don't need
when they expect their realincome is going to deflate over
the next 12 months?
The Fed is kind of losing it.
They're not listening to theirown data.
And then, above 100,000, andthis is key, because this had
(24:37):
been a very resilient.
Source of the last bastion ofstrength in the economy was
those that earn over 100,000,their mood is souring quickly
and, at 3.2 inflation, theyexpect their income to be up 3.2
, which means no real incomechange, even for the wealthiest
(24:58):
people.
And in that context, let's notforget consumer credit.
Okay, because revolving credithas now downed $27 billion over
the last 12 months.
Revolving credit, which meansit includes credit cards and
I've talked about the weeklycommercial bank numbers and
credit card loans contracting.
Okay.
Now, yeah, consumer credit rose$16 billion in the most recent
(25:21):
month, which frankly sounds likea lot, but it isn't compared to
where we've been.
So it's still negative and theyear-over-year rate is still
deeply negative.
And it's only been negative ona rolling 12-month basis in
revolving credit two other timesin US history, and now global
financial crisis 2009, pandemic2020, and now that's it.
(25:42):
That's it.
It's a consumer cocoon, it's acredit crunch, it is virtually
unprecedented and the Fed isjust flipping the bird.
Not only that, here's anothergreat stat.
I love this stat because it'sso telling.
Trust me on this, because Ipinned this out in 2007,.
Big time, and man, was it righton when you are.
(26:07):
Consumer credit is broken downinto the sources of the credit.
Commercial bank consumer loanshave fallen over $100 billion
since the end of the thirdquarter of 2024.
Over $100 billion, that's morethan 10%.
All right Finance companiesdown $17 billion.
So you know, go to the bank,they won't lend you money.
(26:29):
You go to the finance company,they're going to pay more, they
won't lend you money.
Where do you go?
You go to the credit unionmoney.
You go to finance company,they're going to pay more.
Then we'll lend you money.
Where do you go?
You go to credit union.
Credit union loans to consumersup 71 billion over the last,
since the end of third quarterof last year almost a year, 11
months.
It's.
The only source of growth is iscredit unions.
We saw this in first quarter,second quarter, 2008 of 2008.
(26:52):
Same thing, because that's thelast place you can get credit,
that is the easiest place you'regoing to get credit.
And when we see that numberturn down, that's going to be a
bad, bad sign for the consumer,a bad sign for the Fed.
They're not listening to theirown data or any other data and
the bottom line is they stick tothis 2% inflation target.
(27:14):
The last time you were below twopercent on cpi, which
admittedly, they're targetingpce.
I get it, but cpi below twopercent.
The last time was february 2021.
Joe biden's presidency wasn'teven half over 54 consecutive
months above two percent, andthe closest was just recently,
in april, when you were 2.3.
(27:34):
And now you're already 2.9,which, again outside of the
period from 2021 to 2023, 2.9would be the highest cpi in 12
years.
12 years and on the other side,of course, we the labor market,
which we will talk about.
But you also have the elephantin the room, the 800-pound
(27:56):
gorilla in the room, theTyrannosaurus Rex in the room.
Okay, you have 11 months of thisfiscal year in budget numbers.
The budget deficit reported forAugust $345 billion.
$345 billion More than that.
We spent more than twice whatthe revenue was, and there are
(28:20):
five months when either you didthat or you were just within a
couple tens of billions of that.
Three months specifically, youspent more than twice the
revenue the government did andin five months, it was pretty
close to the same.
Okay, right now, revenue forthis fiscal year covers only 70%
(28:41):
of spending.
Last year, it was 73%.
All right Now.
There's a lot of people outthere that want to say well, you
had tariffs and that helped thebudget situation.
It's paying down debt.
True, absolutely true.
$22 billion was the positiveflow net from customs duties.
(29:02):
Total customs duties were $29.5.
You had a $22 billion positiveflow in.
Okay.
Compared to a $344 billionsingle month deficit, $22
billion is a drop in the bucket.
It's an eyeglass squeeze ordrop in the bucket, even though
you had this allegedly huge.
(29:22):
And guess how long it wouldtake to pay down one year of
debt at $22 billion a month?
Yeah, decades.
Okay, that's not the answer,and anyone that tells you that
that's a big deal is ignorant oris lying.
Despite this record and it wasa record 22 billion positive
(29:43):
flow from customs duties the$345 billion deficit in August
was the 10th deepest in UShistory, and all 10 of the 10
deepest deficits in US historyon a month-to-month basis have
come since April of 2020.
It projects to be the thirddeepest fiscal year deficit in
(30:06):
US history In history.
I mean this is just not historyin history.
I mean this is just notsustainable.
We're chronic debt addicts andthis is why you're going to have
to choose to reflate.
You have to or you'll get adebt deflation which is like the
1929 thing, 1930s.
You know they'd rather have the1970s than the 1930s.
(30:27):
That's just the way it is.
Uh, and over the last, sinceAugust of 2008,.
426 months this is howchronically addicted we are to
debt in this country and thefederal government.
426 months goes back to Augustof 2008.
Only 36 months do we have abudget surplus that's 8%, one of
(30:49):
which we just recently hadsurplus that's eight percent,
one of which we just recentlyhad eight percent.
Only eight percent out of 426months.
390 months.
We had deficits 92 percent ofthe time.
And we talk about socialsecurity.
You have to do away with socialsecurity.
You have to.
All right, that doesn't meanpeople that are getting their
benefits or they're going to gettheir benefits in the next 10
(31:10):
and 15, even maybe 20 years, aregoing to lose them.
That's not what this means.
It means that some grandfatherrate or age, rather below age 40
, below age 45, you losewhatever you put in.
It's just a fact.
You already lost it and I did abig study two years ago or
three years ago, when New Yorkstate raised their welfare tax.
The city and the state raisedwelfare taxes and I found that
(31:33):
man, young people would be somuch better off doing their own
retirement.
You don't need the governmentto hold your retirement.
That's ludicrous.
Think about that.
Do you really want to maintainsocial security?
You really want to keep lettingthe government manage your
retirement fund with theirmismanagement, their
irresponsibility?
If this was any business,they'd be shut down and probably
(31:55):
the people thrown in jail forrunning a ponzi scheme.
Come on, man, do it yourself isthe way to go.
Social security has got to go,but it's political suicide
because of all the lies thatpoliticians tell that scared the
elderly that they're going tolose their benefits.
I hate that.
It's despicable.
All right, you'll never solvethis problem unless you face it
(32:16):
with reality.
Here's the reality.
Okay, so far this year, fiscalyear, 11 months Medicare
spending $2.44 trillion onSocial Security and Medicare
Retirement income revenue.
Okay, so you're bringing moneyin to Social Security, right?
1.6 trillion versus 2.5 out.
(32:36):
That's almost a trillion.
Right there, it's 40% of thedeficit.
You get another trillion fromnet interest cost and bam,
there's your deficit.
Social Security and interestand interest payments now
outpaced by far health care,defense, veterans and education.
It's ridiculous, but this iswhat the Fed is facing.
(32:58):
And while I have a few minutesleft because this is a long one,
but I have to go through theFed's comments.
We have to talk about whatJerome Powell just said, because
it's nothing less thanjaw-dropping.
I'm going to skip through theBeige Book.
Get the chart back.
You're going to want to see allthese charts, all the deficit
charts, all the debt.
All these charts are in here.
And you're going to want to seethe long-term monthly budget
(33:20):
numbers.
I mean, that's a really coolchart the Beige Book, talking
about consumers being squeezedby rising costs of insurance,
utilities and other expenses.
From the Beige Book, contactsreport flat to declining
consumer spending because formany households wages are
failing to keep up with risingprices.
Bam, I keep saying it, it's allI'm saying.
From the Beige Book Firms arehesitant to hire workers.
(33:43):
There's an increase in layoffs,reduced headcounts through
attrition and increase in thenumber of people looking for a
job.
That's the Beige Book Problem.
Is the Beige Book on prices Bad?
It's bad from both sides.
I get Powell's dilemma.
I just think he's choosing thewrong way to look at it.
Nearly all districts this isfrom the Beige Book all
(34:04):
districts tariff-related priceincrease.
Contacts report rising pricesfor insurance, utilities and
technology services.
All districts describedhesitancy in raising prices,
citing customer pricesensitivity, a lack of pricing
power and a fear of losingbusiness Margins are going to
(34:26):
take the hit and stocks are atnew highs.
A lot of this doesn't makesense.
And here's the piece deresistance in terms of the beige
book just out two weeks ago,clothing retailers marking up
prices by 10 to 15 percent,citing tariffs as the reason.
From the baseball restaurantcontacts say menu price is
increasing in response toincreases in wholesale food
prices, fuel prices andinsurance rates.
(34:46):
And here is the final kick inthe stones From the Beige Book
Hotel prices rose despitedecreased occupancy rates.
How do you spell stagflation?
You spell it Beige Book Allover it.
But what does the Fed have tosay about this?
(35:07):
All right, it says the questionfrom ABC, elizabeth Schultzz.
Good question, how concerningabout you to slow down in jobs
for households, especiallyyounger americans struggling to
find a job?
Well, that's why we become moreneutral.
As powell's answer more neutral.
There's no such thing as moreneutral.
You're either in the war or outof the war.
There's not degrees ofneutrality.
(35:29):
All All right.
And then he goes on to kind ofmumble.
There's no mumbling andjumbling.
Get the text.
You're going to want to seethis text.
I did it out with highlightsand everything.
It's really cool when you seejust like he's stumbling to try
and get his words off.
He's not really doesn't knowwhat to say.
You know, he's basically saidwe cut rates, which will be well
, which will presumably bebetter for the labor market, but
(35:51):
, yeah, kids coming out ofcollege and younger people
minorities are having a hardtime finding jobs.
The overall job-finding rate isvery, very low.
However, the layoff rate isalso very low.
So you've got a low hiring anda low firing environment.
That's a growing concern forthe last few months, last few
(36:12):
months, and basically what he'ssaying too, by the way, is, if
you lose your job, you're notfinding a new one.
Those laid off, there won't bea lot of hiring going on.
Then you're talking about thedynamic around inflation,
elizabeth Schultz, again.
Well, the inflation reportsshow prices going up in key
(36:36):
categories, including groceries.
What will the Fed do if pricespick up more?
What will the Fed do?
And here's Powell's response.
I'm Jerome Powell now.
So what will we do?
It's kind of how he said it.
I mean he was not stumbling asbad as I am right now.
We'll do what we need to do,but we have two mandates and we
(36:57):
try and balance them All right.
This is quite an unusualsituation.
How do we decide what to do,because our tools can't do two
things at once.
What Hold on?
Stop the presses?
What hold on, stop the presses?
Jerome powell just said wecan't fight the stag and
(37:18):
deflation at the same time.
We have stagflation, and hesaid he used the word.
He used it.
I've been saying it for 18months.
It's coming.
He's here.
Our tools cannot fixstagflation.
We'll have to choose one andyou will choose to reflate.
Hands down.
Bet my reputation on it.
I bet my reputation on it in2006.
I was called a kook for sayingthe Fed would monetize
(37:40):
government debt and print newmoney.
Was Joe Kernan called me a nutjob on Squawk Box Before
millions of people?
Now, I don't know.
You've got maybe tens ofthousands of people watching.
Four millions of people?
Now I don't know you've gotmaybe tens of thousands of
people watching.
So this really kind of allcomes down to do.
We think the Fed is actually inthe right position, and the best
(38:00):
question came from NickTimoreos.
Now, this guy's really good.
Follow him on Twitter.
He's excellent.
Okay, even though he's from theWall Street Journal.
Okay, he's highly respected.
The journal used to be highlyrespected.
But he asked the most pertinentquestion, thank you.
Do economic conditions and thebalancing risk no longer warrant
(38:20):
a restrictive policy settingBam Need to be neutral 100%?
Here's Powell's response.
I don't think we can say that.
No, I don't.
We cannot say that the risksare clearly tilted to inflation,
but I would say they're movingtowards preliminary equality.
What the hell is preliminaryequality?
(38:44):
Again, this is central bankeseFed speak at its finest, at its
worst, and then it goes on.
I would say they're movingtowards preliminary equality.
Well, maybe they're not quiteat equality, but we don't need
to know that.
Yeah, you do, that's your job,okay, and at least pretend you
know it, okay.
(39:06):
And that suggests that weshould be moving.
We should be, not that we are,that we should be moving.
We should be, not that we are,that we should be moving in the
direction of neutral.
So he says we're getting moreneutral, okay, which is
meaningless, but finally kind ofputs it out there we should be
moving in the direction ofneutral, but they're not.
(39:26):
Because they are saying, still,we can't say that we no longer
warrant a restrictive policy.
Aka, it warrants a restrictivepolicy, the risks are moving
towards preliminary equality andthat suggests we should be
moving in the direction ofneutral.
But they're not.
That's the problem.
(39:46):
And then you get the plant.
The last one Long podcast today.
But this is it, of course, fromthe New York Times, of course.
I'm actually just realizingthat now.
I didn't even notice thatbefore Colby Smith.
I got nothing against her,necessarily, except she's a
plant.
Here's her question Should webe viewing today's cut as the
(40:10):
committee taking out someinsurance against the
possibility the land market isat risk of weakening?
That's a planted question.
Why would anyone ask thatquestion, unless you were
directed to ask that questionand, of course, leave it to the
New York Times to be in cahoots.
I mean just no credibilitywhatsoever and this question
just verifies it, if that's whatyou think already.
But Powell kind of exposes amajor problem here with his
(40:35):
answer and he doesn't even knowit.
Yeah, I think, I think you couldsay, in a way, as a risk, this
was a risk management cutbecause if you look at the scp,
which is the economicprojections, the projections for
growth this year actuallyticked up a bit and employment
really didn't move.
That's false.
That's a lie.
That is a lie.
(40:58):
Okay, and here's why Becauseemployment did move Next year
and the year after theiremployment projections to be
(41:18):
dramatically better, much lowerunemployment for next year.
Next year, the majority, thebiggest vote for unemployment
rate next year was 4.7.
Now it's 4.4.
Hello, from 4.7 to 4.4.
The biggest grouping for 2027was between 4.5 and 4.7 to 4.4.
The biggest grouping for 2027was between 4.5 and 4.7.
Now it's between 4.2 and 4.4.
(41:39):
In other words, the Fed issaying this is the worst the
labor market is going to get.
You're going to see a muchlower unemployment rate in the
future, and that would implythat they're not even going to
cut rates again, that this is aninsurance policy.
I mean.
This is why I think thisquestion was the plan.
So Powell could say all this weneed to be restrictive because
(42:00):
inflation is a problem and weexpect the employment thing is
not going to be.
That's what they just said.
And here is the end game.
And here is the end game.
This is one of his lastcomments, okay, when he was
asked about.
You know the dot plot he saysso you have seen that we have 10
participants out of 19 whowrote down two more or more rate
(42:25):
cuts for the remainder of theyear, but nine who wrote down
fewer than and in fact, in agood number of cases, members
wrote down they expected no morecuts.
If you think the employmentmarket is going to strengthen
from here and inflation is toohigh, one and done could be what
(42:48):
this was.
I really beg to differ.
I think you know doesn't wantto telegraph this, because the
stock market's at new highs.
I think there's a lot morenuance going on here.
But at the end of the day, ifyou just take it for face value,
jerome Powell is just flippingoff the average, joe, jane Doe,
mom, pop kettle and the market,because the market's expecting 3
(43:10):
percent fed funds by the end ofnext year.
According to the.
To powell it could be.
You know, the average is 3.6.
It's a 60 point difference andI'll tell you until 2022, this
is always the way, because I getit, the fed needs to be
optimistic.
It's part of the thing.
So yeah, of course, let's saythe employment market is going
to be great, because this way itinstills confidence.
We've already seen.
I mean powell asked aboutinflation expectations.
(43:32):
He basically said if we stickto our two percent guns, people
will believe it.
We can talk down the market.
Really interesting stuff.
The bottom line for me, though,is this does put into question,
at least in the near term, justthe fed's part of this in terms
of the dollar depreciation theme, and maybe that's what they
(43:53):
want to see.
Maybe they want to see a littlestronger dollar where it can
take some of the pressure offinflation, and if it is coming
which of course it is, andthey're not going to be able to
manage it, it doesn't matter.
None of this matters, andthat's why, ultimately, the
dollar down and all the rest ofthe trades that we've been
promoting here will continue towork over the longer term.
In the near term, there's somesuspicion here that you could
see corrections.
I would say the market's goingto see through this because,
(44:15):
like I was going to say, until2022, when everyone was late to
the curve on inflation, exceptfor us, of course, all humility
aside, we were all over thisTransitory.
No, we used to say waiting forGodot, the alternative ending,
because, you remember, the Fedwaited for inflation for years,
since 2015.
Inflation is going to be 2.
Inflation is going to be 2.
It never even got there.
It was always lower, alwayslower.
(44:36):
It was like waiting for Godot,and then I forget what year.
I think it was 2020, early 2021.
I said waiting for Godot, thealternative ending I think it
was even a podcast title whenGodot's gonna show up, meaning
inflation's gonna come and noone expected it to.
(44:57):
But every other time I mean inmy entire career the market is
always more right than the Fed,ultimately in projecting where
interest rates are going.
It's that simple.
Why?
Because the Fed no disrespect,I wouldn't want that job, the
hardest job in the world Got alot of respect for that.
On the other hand, let's call aspade a spade.
Let's call an egghead anegghead.
Let's call a diamond a diamond.
(45:18):
Let's call a heart a heart.
Let's call a club a club.
Let's call an egghead anegghead.
An academic with no skin in thegame, no blood, no foul.
You know it's really aboutexercise, no foul.
You know it's really aboutexercise.
Remember what the feds chairmanpowell said at the end of the
day, this is all a big exerciseto these guys.
(45:39):
The one position I'm stillholding right now is long silver
might add gold in here couldchange very quickly.
I like energy.
Distill is, in particular, verylow supply.
They're building, but it's arace against time.
We'll see.
Heating oil could be a bigstory later in this winter and I
would continue to look at and Ijust did a special which you
(46:00):
can also get if you want toemail me.
On the dollar, okay, I mean thenumber of currencies breaking
out, breaking multi-year,multi-decade trends against the
dollar is.
I mean, it's a plethora ofcurrencies, it's a very long
list of currencies.
I mean emerging markets maincurrencies, I mean it's
currencies all over the world.
Major long-term breakoutsagainst the US dollar.
(46:23):
That is still the big story.
Silver and gold at new highsstill the big story.
As far as the rest of it, rightnow it's a little tricky.
So I think that having a higherdegree of cash even as the
stock market breaks out notnecessarily the worst thing in
the world.
Follow me on Twitter at WeldonLive the podcast, at money
underscore podcast.
We're on Buzzsprout and we'reavailable everywhere.
(46:46):
I'm also on YouTube usersbackslash, gregory underscore
Weldon and for any informationon our services.
We do daily research withrecommendations in all the
markets fixed income, foreignexchange, global stock indexes,
all regulated futures contracts,ETS.
We talk a lot about it.
We do discuss the individualstocks.
Although we can't officiallyrecommend them specifically.
(47:08):
We, you know, give you rankingson the best mining shares and
these kinds of things that havereally played out extremely well
in the three years that we'vebeen doing this, as we discussed
at the beginning.
For any information on any ofthat, including my cta business
as a registered three uhcommodity trading advisor who
manages individually managedaccounts money is in your name.
(47:28):
Nobody touches it, nobody,nobody commingles it, so on and
so forth.
Never see me on American Greed.
Email me, greg Weldon,g-r-e-g-w-e-l-d-o-n at Weldon
Online and thank you so much forlistening.
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