December 22, 2024 • 30 mins
By deciding to cut their Fed Funds Policy Rate this past week, amid a renewed rise in CPI price indexes is a clear sign that the FOMC is "acquiescing" to higher general rates of inflation.
Subsequently the US Dollar has broken out to the upside in a big way, which in turn is weighing on US Stock Indexes, Gold along with the entire Metals complex, and even Bitcoin.
What's next for the US economy, the Federal Reserve, the Dollar, and US asset prices?
Greg lays out his outlook, in today's episode of Money, Markets & New Age Investing.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:01):
Hi and welcome back to Money Markets and New Age
Investing.
I'm your host, greg Weldon, andwe've got a good one for you.
Today we have the United Statesof America and what's coming
next.
We've had a very volatile weekand month.
As it stands, the FOMC just cuttheir Fed policy rate, the Fed
(00:22):
funds rate, on Wednesday, andwe're going to talk about that
as the Fed now proving to usthat they're acquiescing to
higher general rates ofinflation and into a stagnating
type, stagflation type ofeconomic trend.
Here.
It's kind of a shift from wherewe are now, which was moving to
(00:47):
kind of protect the consumerwho's suffering, to.
We have inflation is still anissue and we don't want the
consumer to suffer more fromthat, so we may not be cutting
rates as quickly as the marketexpected.
That now upsetting the stockmarket, and this is a big deal,
I mean it really is.
I think this is kind of a bigturning point for many of these
markets and this is a big deal,I mean it really is.
I think this is kind of a bigturning point for many of these
(01:08):
markets and we're going to talkabout all of that, starting with
inflation and starting with theCPI data that we just got.
I mean, you're on a two monthupside run in CPI.
You got to 2.7 year over year.
The low was September at 2.4.
The core rate, the low, was 3.2.
It's at 3.3 for the last threemonths.
If you recall, back in thewinter, february, march, into
(01:32):
the spring April, I kind of laidout the map, the roadmap, for
where inflation would go.
It was pretty simple as itrelated to energy base effect,
because it had a big rise in2022, 23,.
And a big decline, you know,this year, late last year, into
this year.
So you could see that the baseeffect because it had a big rise
in 2022, 23, and a big decline,you know, this year, late last
year, into this year.
So you could see that the baseeffect was going to drive energy
down.
It's going to bring inflationdown, you know, towards that 3%
(01:53):
level.
So that would get below four.
But it would prove to be stickyand that's the word that I use,
that's the word other peopleyou know started to use more
frequently more recently.
And it is exactly that it hascome down to a level above the
target, above the recent low, soa higher low and begins to rise
because it's the 40-year trendreversal from lower lows in
(02:17):
inflation, lower lows ininterest rates, based on the
dynamic that we had from 1982,when Reagan came to power and
again we started to pump outdebt.
Now we have so much debt Trumpcan't possibly do the same thing
, so it's really going to be astruggle from here.
But the bigger picture is the40-year trend has changed.
We've printed so much money weknow the only way out is to
(02:38):
reflate and this is the coursewe've chosen.
It's going to be higher highsand higher lows in inflation and
interest rates from here, andwe just got a good dose of that
this week.
All right, let's talk about thebreakdown on the CPI Energy.
Gasoline was down 2.9 for themonth.
All right, I actually thoughtyou might, you know, bottom a
little higher in inflation,because I didn't expect energy
(02:59):
and I did say this look, therisk to the forecast of
bottoming above three would beenergy, and if energy keeps
going month to month to month,you'll hit a new base effect
that's negative, and that'sexactly what's happened.
It's extended the negative baseeffect into right now, 2.9%
down for the month, 8.4 yearover year.
I mean, this is where you haveit Now.
(03:27):
What's interesting aboutgasoline is.
It went from the pandemic lowof 37 cents all right all the
way up to $4.33, all right.
It has since come back down toa three-year low here, which is
185.
That was four weeks ago.
In that context we've jumpedback up a little bit.
The spot price right now is 199, all right.
Now what's interesting is thatlast November we start to look
(03:49):
at last November prices were$218.
So we're 9.1% below Novemberlast year price.
Well, that matches right offagainst the year-over-year
decline in gasoline and CPInumber at 8.4.
But let's look forward, becauseJanuary last year, $218, then
got to $ 231 in February, thengot to 246 in March and by April
of last year gasoline priceswere $2.70.
(04:11):
Now we have a forwards marketthat anticipates the movements
in those months.
Against 231 a year ago, thisyear's February's price 201.
Still deflation, significantdeflation.
Not only that, but you'relooking at March a year ago,
where priced at $2.01.
Still deflation, significantdeflation.
Not only that, but you'relooking at March a year ago
where prices were $2.46.
This year March is priced at$2.02.
That's an even deeper deflationthan in February, april at
(04:35):
$2.70 a year ago.
This year's April forward priceis $2.21.
$0.50 below a year ago price,which is still going to be
pretty sizable deflation.
The high in the move in theinterim in gasoline was 298.
So in essence, you have to getabove 270 and above 298 to
(04:57):
generate any inflation in energy.
And thank God because you havea situation where, if not for
energy price deflation, theheadline inflation rates would
be much higher, maybe eventowards 4% on the headline.
When you're talking about thegasoline market going forward,
well, I can tell you you've hadthis huge price decline which is
(05:19):
a perfect kind of Fibonaccidynamic, and you have a lot of
stuff going on in the forwardprice in June.
The suggest is bottoming andthat's interesting because
gasoline inventories, whilethey're rising and posted a big
increase for the most recentweek this is the season where
they increase because you'repumping it out, building
(05:39):
inventories into the spring peakdemand season, all right into
the spring peak demand season.
When you compare the rise ingasoline prices, it still puts
you 2% below year-ago levels and1.7% below the two-year level
and puts you below the five-yearlow.
The build period leads intoMarch and you are behind
(06:00):
schedule in a significant way.
So this sets it up to maybe youcould get above $3.
The June price at $2.26, I mean,excuse me, at $2.26,.
It's below that right now.
But if you get above $2.26, youtake out the medium-term moving
average, all right.
You would take out thedowntrend line.
You take out the oscillatorswould turn positive, all right.
(06:22):
And the open interest suggeststhis is a short market.
You get a short covering rally,it breaks you out and all of a
sudden you look around, youdon't have much inventories.
I mean you need a demanddecline to offset that.
Now that's possible if you geta recession, but not likely in
my view.
And the swap rates show thatit's the differential between
this spring and next winter.
(06:42):
All right, normally this springis going to be a higher price.
Well, a higher price of $0.24in September has turned into a
higher price of $0.35, and thehigh is $0.36.
It was set last year.
Get my point.
I mean the swap market istelling you that gasoline is
looking tight heading into May.
Unless we accelerate theinventory build and it's already
(07:03):
accelerated I'm not sure youcan accelerate it anymore.
They're pumping out gasolinelike crazy.
Keep an eye on the UGA.
Is the gasoline ETF above 65.50would be a breakout.
More importantly in CPI andinflation, is food prices.
A .4 for the month of November.
That's almost 5% annualized.
Food at home was .5.
That's 6% annualized.
(07:25):
That's versus 2.4% a month ago.
When you're talking aboutprotein meat poultry, fish and
eggs up 1.9% for the month.
That's a double-digitannualized rate.
Beef, with live cattle pricesin a futures market at a record
high, almost at $2 a pound.
Beef prices up 3.1.
(07:45):
Eggs up 8.1.
These are monthly numbers.
Think about the annualizednumbers here.
They are huge, all right.
Non-alcoholic beverages up 1.5for the month.
Double-digit rates of inflationin some of these things in
November,all right.
Now to be fair, not to be, notto be objective, I'm going to
(08:06):
say subjective, but that's thetrading side.
Cereal and bakery down 1.1 forthe month, the largest single
month decrease ever in thehistory of this breakdown that
goes back to 1989.
But at the same time I think tomyself well, chicken, eggs,
beef, these are the things I eat.
I'm a protein guy.
Chicken, eggs, beef, these arethe things I eat.
I'm a protein guy.
(08:27):
I'm a carnivore protein guy,all right.
But I'm also kind of asugarholic.
So it's the epitome of apolarized spectrum on eating
habits Protein and heavy dutyand amino acids and working out
like crazy versus mysugar intake.
Well, I think you can dump thecereal in bakery a lot easier
than you could the protein.
The proteins, the one with thehuge price increases.
(08:51):
Tough to dump it.
You can't.
You can't live without theprotein.
You can live without the sugar,but the bottom line really here
is that service pricesare high.
I mean, you look at CPI, youlook at PCE and it seems like
inflation is tamed to somedegree between and I wouldn't
say that, but some people arebetween 2.7 and 3.3.
Well, that's still three.
And I said a long time agoright here on my podcast and
(09:14):
several times on my podcast,that you're going to reach a
point where the Fed is going toadjust their entire policy
paradigm to make it an inflationrange of 1% to 3%, with 2% as
the midpoint.
They can say they're really notchanging anything, but they are
acquiescing to a higherinflation because they need it
to support growth so you don'tget a debt deflation.
This is kind of the missingpoint for a lot of people when
(09:34):
they talk about inflation.
The way out of the debt is toinflate out.
The problem is that lowers thestandard of living and the
purchasing power ofyour currency.
But let's get to services.
Services accounted for 77.6% ofUS GDP, gross domestic products
77.6% it's called 78%.
(09:57):
The rest of it's only 22%.
Services are overthree-quarters of the economy.
Service price inflation,excluding energy services, the
core services and energyservices, is a small part of it,
really small compared to theCPI, the service price inflation
(10:18):
.
Cpi for services 4.6 year overyear and yeah, that's down from
over 7, but it's 4.6 year overyear and yeah, that's down from
over seven, but it's 4.6.
It's more than double the Fed'starget rate of 2% for inflation
and when you break this downit's kind of mind-boggling.
Rent is 4.9.
Yeah, it's down, but it'sstill 4.9.
All right, when you talk aboutsomething like vehicles, all
(10:42):
right, and we'll get to that ina second, because if not for
vehicle sales, retail saleswould be deflating.
All right over the last twomonths, but at the same time,
while people are buying morecars, vehicle repair and
maintenance up 5.7 year overyear.
Vehicle insurance up 12.7 yearover year I mean, hello, those
are huge numbers and that'ssomething everyone has to pay.
(11:02):
Just like medical care, medicalcare services 3.7.
Doctors in hospitals up big.
I mean, you're talking aboutdental up 3.9,.
Eye care up 3.9,.
Nursing homes up 4.8,.
Elderly invalids at home 9.9,.
And health insuranceup 5.9%.
(11:25):
Don't get sick, inflation willkill you.
That inflation will kill you,but it's everything.
It's even just around the houseGarden and lawn care up 6.3.
Water 5.2.
Trash removed 5.7.
Your commuter parking 3.5.
Tolls 3.8.
You have a pet dog, cat,whatever alligator, like we do
(11:46):
down here in Florida?
Pet services 12.1% Inflationdouble digits 12%.
All right.
Shopping club memberships youthink you're buying something
cheap or you're going to paymore to buy it cheap 6.4% year
over year.
Shopping club memberships wereup 2.7% for the month.
Shopping club memberships aregoing up because food prices are
(12:07):
going up and other things aregoing up, and those two buy them
.
It's going to cost you morejust to be a part of the club.
Okay, how about tuition?
Non-college, rather not like afour-year institution college
3.9.
High school if you want to payfor private school high school
4.8.
Daycare and preschool you got akid, you're getting crushed.
(12:29):
6.2% inflation All right.
Laundry, dry cleaning 5.4.
Bank services 5.5.
Taxes and accountingservices 7.2.
I broke down the service CPIindex.
There are 82 services that arecounted in this index and 82% of
(12:50):
the 82 indexes were above theFed's target of 2%.
Only 18% were below 2%.
More than that when you takethe whole as a whole, above 3%
year over year.
73 percent of services areinflating at more than three
percent.
54 percent more than half aservice price inflation is above
four.
(13:10):
31 percent above five 20.
One out of five serviceindustries or service
occupations services that thecustomer would buy are inflating
on a year-over-year basis at 6%or higher.
One-fifth, 6% or higher 10% areabove
7% year-over-year.
(13:30):
Now when you start to talkabout service CPI, all right,
yeah, again it's down.
But if you take the 4.6 numberand you look at it prior to 2022
, pre-2022 measurements 4.6 isthe highest in 30 years.
The other highs that were notat 4.6 were February of 2002 at
(13:56):
4.1.
What did you have then?
Tech bubble crash, september2006,.
3.9, financial crisis You're at4.6.
You're higher than either oneof those for service prices and
service prices keep in mind 78%of GDP.
Now keep that in mind for a fewminutes when we get to the Fed.
4.6, service price inflation,78% of GDP on services.
(14:17):
But let's go to core CPI at 3.3on a pre-2022 level.
It's also the highest inthree decades.
The only other times 1997 ledto the long-term capital
management and theBrazilian-Russian tie, debt
crisis in 1997-98.
It's above the 2007 level whereoil was 140 and caused the real
(14:40):
estate market to collapse onthe back of a consumer collapse
after that 140 and caused thereal estate market to collapse
on the back of a consumercollapse after that, and it's
100 basis points, above all thehighs from 2009 to 2022.
13 years you haven't seen a 3.3core CPI.
It'shigh.
Now.
What's even more troubling isPPI producer prices, which is
(15:02):
the pipeline.
Producers are paying more.
They're going to pass that costalong to distributors, who pass
it along to the customer.
All right, we're seeing it.
Ppi the pipeline's full Finaldemand for services 3.9.
It's a new all-time high.
All final demand 3%.
Goods final demand is finallypositive.
It's been deflation for awhile Now.
(15:25):
What's interesting is foodsFood at the wholesale level, the
pipeline level.
The PPI level was down 0.8 yearover year in May.
In October it was up 0.3 andnow November up 3.1%.
Unprocessed food 2.9.
Unprocessed energy wasdown two.
You can see how food's leadingthe way here when you look at
food pork, chicken, eggs, corn,strawberries, melons, vegetables
(15:47):
, fresh fruit, tomatoes all atnew highs and in terms of the
outright prices for some ofthese commodities cocoa, coffee,
oj, sugar cattle and butter,all at new highs.
The index for final demand,food is at an all-time high and
up 5% year-over-year above the2022 highs.
The wholesale level for food7.5% year-over-year inflation
(16:09):
and the index itself at a newall-time high.
And food at the consumer level.
Ppi, also a new all-time high,up 7% year-over-year and up 40%
since 2019.
Food costs more.
We all know, but these numbersare still staggering and it
continues and it's acceleratingagain.
So you say but retail sales aregood, the consumer's good?
(16:32):
No, the consumer's not good.
All right, retail sales cameout this week.
The media cheers the number,the market rallies.
I'll tell you right off the batthe year-over-year number 3.2,
is below core inflation,relative to core inflation.
Real retail sales are down,they're deflating and they have
for something like 15 out of thelast 18 months.
(16:53):
All right, and there's moredanger here.
All right, because of thetwo-month increase in retail
sales that the media iscelebrating.
The marketis celebrating.
72% of the growth came fromvehicle sales alone.
Now we also know, just as Isaid, repairing and maintaining
a vehicle costs more, insuringit costs more.
And the delinquency rate onauto loans has hit a new high.
It's at the highest level since2008,.
(17:19):
A new high for this move.
All right, you talk about foodprice deflation for two months.
All right, minus 0.2, minus 0.1.
So you actually are spending alittle bit less here because
food prices did deflate.
It's showing up at the consumerlevel, but we just saw PPI says
that's going to change in a bigway.
So you've had this pass fromgasoline and food for the last
few months and still 72% of thegrowth in retail sales
(17:42):
is vehicles.
The biggest tell for how is thehealth of discretionary
spending and the consumer andthe feel-good factor.
You say there's a hugefeel-good factor here because
Trump won the election.
Well, I mean, you know, maybenot right in a few days before
the election, but frankly, okay.
The tell.
The number to look at for thehealth of the consumer on a
(18:03):
discretionary spending comfortlevel is eating and drinking
establishments.
You go out to eat more, you goout to party more.
If you're feeling good aboutyour income, if you're feeling
good about the economy, ifyou're feeling good about
everything in household,inflation is not
bothering you.
The fact of the matter iseating and drinking
establishment sales fell by 0.4for the month of November, by
(18:26):
0.4 for the month of November.
It's a big-time rarity to get adecline that's not around
December and January, based onthe holiday flip-flop.
You take those two months outof the equation and that's every
year pretty much a seasonalthing.
This decline was $431 millionfor the month, the fifth deepest
in history ever.
The fifth deepest in historygoing back 30 years.
(18:46):
To this number.
I mean, you know history.
Okay, the fifth deepest onemonth.
The others, 2001, 2009, 2018,2020, all of which presaged some
kind ofeconomic downturn.
The year-over-year rate ofeating and drink establishment
sales dropped from 4.2 to 1.9.
It is deeply negative relativeto the core CPI and many of the
(19:08):
sectors are outright negative.
The only other times that'sbeen the case where the
year-over-year rate of change ineating and drink establishment
sales was below core CPI onlytwo times other than now 2009,.
Financial crisis, 2020,pandemic.
That's it.
So what does the Fed do?
Well, they cut rates.
The top end four and a half.
(19:28):
Well, compare the top end to begenerous to the Fed, the top
end Fed funds rate of four and ahalf against our service price
inflation.
We take it back to that 4.6.
It means that policy rate isnegative on a real basis and is
stimulative, not restrictive.
This whole thing aroundrestrictive and is stimulative,
not restrictive.
This whole thing aroundrestrictive, yeah, maybe against
(19:49):
PCE, but not against the pricesthat accompany 78% of the
economy.
All right, I mean, only in Julydid policy finally get to
neutral, when you had a 5% and5.25% Fed funds against that
4.6% rate, which was actuallyhigher then.
So you know again, and if youlook at this, all right, the
(20:13):
service price inflation has beenbelow the Fed funds rate,
except for those two months thisyear, since 2008.
It's been stimulative for 16years.
The closest you came to endingthat stint was in 2018, which
led to easing in 2019, beforeCOVID even hit.
(20:35):
It never got to even neutral.
It stayed stimulative theentire time.
You've been stimulative on areal Fed funds policy level
basis against the service CPIyear-over-year rate since 2008.
I mean, hello, is this not whystock market's new highs, gold's
rallied and bitcoin's higher?
And I mean, come on, I meanrestrictive.
(20:57):
Huh, they're acquiescing tohigher rates of inflation,
straight up.
You know it really is so.
Within that context, though,does leave the consumer
vulnerable.
Delinquencies on all the loans,a new high, like I said, credit
card delinquencies, highestsince 2007.
And now the pace of the rise inmortgage delinquencies we
(21:19):
haven't seensince 2006.
In the Fed's risk assessment,all right, they told us the
highest risk was to higherinflation.
You went from a Septembernumber of 16 members versus two
members.
There's 18 voting and 18 whogive their opinions.
16 said the risk was balancedand two said it was towards
inflation.
(21:39):
Three months later, two saidit's towards it's balanced and
16% is towards higher inflation.
They all project and 16% istowards higher inflation.
They all project 4% or higherFed funds for 2020.
I'm going to say they all.
The median and the bulk of theguesstimates are above 4% for
next year.
I mean, the futures contractfor the end of next year
was 3.75.
(22:00):
When the meeting took place, itjumped to 4.
In September you were 2.82.
And you wonder why?
Stocks were higher and theyrallied even into that little
push in rates, because theystill thought they're going to
get a lot of VIG over the next18 months.
That's not true.
Now, according to what the Fedjust told us, not only that, the
Palisades are going to be morecautious and you had a
(22:22):
dissenting vote who wanted toleave rates unchanged because
they're worriedabout inflation.
From the Cleveland Fedpresident, what's the market
impact and what do we do withthis information, the market
impact is straight up a dollarhigher.
The dollar is breaking out.
The yield differentials areblowing out.
The yield curve is steepening,just like we said it would.
The thing is we thought thedollar would go lower.
I was wrong on that one right.
(22:43):
The degree to which the Fed haskind of slowed here before they
get where they think is neutralis interesting to me, but it
also shows some vigilance oninflation.
It's trying to walk a tightropeacross Niagara Falls.
It really is difficult.
You're almost destined to fall.
You're going to tip one way orthe other too far at
some point.
The dollar has broken out on abig long-term basis.
(23:04):
It got above $107.35 on thedollar index.
It's up to $.50.
This is a major breakout thatleads you to the 2022 high of
114.75.
That level of 114.75 is aperfect 50% retracement of the
entire dollar decline from the1985 Plaza Accord when the
dollar was 165, the index to thelow in 2008 when it was 70.
(23:27):
And now it's all the way backup to 108, headed towards 115.
If it breaks above 115, thenext level would be the high of
121 15 years ago.
If you get up there, the dollaron a year-over-year basis will
be up almost 20%.
It's already up 6% to7% year-over-year.
Why do I say that?
(23:47):
Because you throw tariffs intothe mix and the dollar moving
higher is the worst possiblething for stocks Dollar higher,
stocks lower, dollar lower,stocks higher.
It is the most reliable, thetightest negatively correlated
dynamic ever meaning stockshigher if the dollar goes lower,
stocks lower if the dollar goeshigher, dollar's going higher.
(24:08):
Right now the divergence ishuge.
It's gotten really severe overthe last two weeks and it
suggests an immediate downsiderisk in the stock market of 400
points in the S&P 500, let alonethat the market itself is as
stretched and extendedtechnically on a long-term
momentum basis, mathematicallyand even geometrically, as it
(24:30):
has ever been, and the medium tolonger-term oscillators are now
rolling over.
They're really losing momentumand it lacks leadership.
You don't have China as aleader.
China imports.
You don't have consumerdiscretionary in the US being a
leader, even though consumerdiscretionary indexes up
the XLY.
Over 40% of it is Amazon andTesla.
(24:52):
When you talk about real retailstocks, they're choking.
Their leadership has clearlybeen AI and XLK and Infotech and
chips, but they're widely owned.
Every passive investor ownsthis stuff and owns it big.
Every passive investor ownsthis stuff and owns it big.
All right, but the momentumstarted to slow in the chip
sector, even in the leader, thebenchmark, nvidia.
(25:14):
We wrote a special piece twoweeks ago and then followed it
up last week and then followedit up again this week, and our
piece, immediately ahead of theFed, was watch NVIDIA, watch 131
.
This market is vulnerable and aFed where they actually cut
rates and then talk hawkishlywould really crack this market
wide open.
It's exactly what happened.
You have a head and shoulderspattern in NVIDIA.
(25:34):
It's very clear.
The neckline, the movingaverages are all there.
I mean the medium-termoscillators already turned lower
.
The momentum here in these chipstocks has waned significantly
and many of them are breakingdown.
Amd completely broken down,trend from 2020, broken.
All the moving average is gone.
The oscillator is negative.
Same with Applied Materials,amat Broken down.
(25:55):
The trend line, the two-yearmoving average, the oscillators,
all of it.
Intel is on a weekly close-onlybase at a 12-year low and this
is one of the worst-performingstocks.
That was the former leader.
Hail to the new boss, same asthe old boss.
And then Micron got crackedwide open this week.
A nasty downside day, allright Overall.
(26:17):
The NASDAQ I said earlier thisyear, back in January, february,
that you could have a melt-upsituation.
I didn't think it was going tohappen, but I was wrong.
It did happen, all right, butusing the geometry, using some
of the GAN angles, for example,the angle of ascent is very
important to me.
All right, we had a target of22,500 on the NASDAQ.
If it went into a melt-up, itmissed it by a couple hundred
(26:38):
points.
I mean, it's almost there, butwhat happens when you get there
this week?
Literally it is one of thebiggest outside-downside key
reversal weeks I've ever seenthe magnitude, the severity, the
swiftness and the fact thatit's at a record high right on
an angle of ascent that iscompletely unsustainable
over time.
Let's pick out some levels onthe downside.
(27:00):
If we take the fourth quarter,low to the 2024 high, a 38%
retracement would be $16,800.
You're trading around $21,000.
The high was $22,152.
You could get even lower thanthat.
But bottom line is you'retalking about the two-year
moving average, the secondquarter low, the 38% retracement
(27:21):
, all between $16,800 and$17,400.
That's a downside risk of 17%to 21% in the NASDAQ and it
could go lower.
You have targets down around$15,600 to $16,800.
Now $16,000, excuse me.
So you know.
I don't know that you're goingto get those bigger downside
depending on what the Fed mightdo and depending on what Trump
(27:43):
might do.
But that's the risk here andthe risk-reward is very little
upside and potentiallysignificant downside on the
risk side.
Dollar up means stocks down.
But if you see the NASDAQ getbelow this week's low, this past
week's low of a 21.160, that'son the nearby futures contract,
that would be a major breakdownand a major sell signal.
(28:04):
You would want to have someprotection.
I'm not saying dump everything,but I'm saying protect yourself
.
I call them financialprophylactics.
The cash S&P 500 below 58.32would be a breakdown and you're
looking at 400 points of almostimmediate downside risk.
That's sizable.
That's 8%, 9%.
But what's interesting here?
Dollar up also means gold down.
It's getting whacked.
Could be 21.50, 22.50.
(28:26):
A lot of supportat 24.50.
Bitcoin at risk and we've beenbullish on long Bitcoin.
It's made us a lot of money.
But right now Bitcoin's at risktoo, because Bitcoin has traded
in lockstep with the stockmarket, in lockstep with money
supply, in lockstep withpolicies or whatever extent.
Right now more of those thingsare working against Bitcoin in
the short term and we've ownedit until last week, sold it
(28:47):
before the Fed meeting.
And the industrial commodities.
Look at base metals, look atsteel, look at aluminum, look at
copper.
They're all really onthe ropes.
What does that leave you?
It leaves you with the dollar,which leaves you in cash or
commodities, food commodities, alot of them cocoa, coffee,
sugar, you know big deal.
Natural gas another one in play.
(29:09):
I like gasoline and crude oilat some point here in the near
term.
How about the other side of thedollar?
I don't like the dollar, butthere are certain currencies I
would absolutely sell againstthe dollar.
It's more of those currenciesare bad versus the dollar is
good, and then foreign bondsoffer big
opportunities here.
So to stay on top of thesethings, this is what we do.
I mean all of this from astrategy perspective, really
(29:32):
looking to assist people,because it's about keeping pace
in an environment where it'sincreasingly difficult to keep
pace with the debasement of thepurchasing power of your paper
money, income and wealth.
I help to level the playingfield with 40 years of
experience.
Check me out, happy to send yousome samples of the research or
some of the stuff that has thecharts of these things that I've
just talked about, which arereally eye-opening.
(29:52):
Email me at gregweldonG-R-E-G-W-E-L-D-O-N at gmailcom.
Follow me on Twitter at WeldonLive, and then also the podcast
at money underscore podcast, andI'm also on YouTube under user
Gregory underscore Weldon.
(30:12):
Until next time, thanks forlistening.
Good luck.
Be careful out there.
Hi and welcome back to Money Markets and New Age
Investing.
I'm your host, greg Weldon, andwe've got a good one for you.
Today we have the United Statesof America and what's coming
next.
We've had a very volatile weekand month.
As it stands, the FOMC just cuttheir Fed policy rate, the Fed
(00:22):
funds rate, on Wednesday, andwe're going to talk about that
as the Fed now proving to usthat they're acquiescing to
higher general rates ofinflation and into a stagnating
type, stagflation type ofeconomic trend.
Here.
It's kind of a shift from wherewe are now, which was moving to
(00:47):
kind of protect the consumerwho's suffering, to.
We have inflation is still anissue and we don't want the
consumer to suffer more fromthat, so we may not be cutting
rates as quickly as the marketexpected.
That now upsetting the stockmarket, and this is a big deal,
I mean it really is.
I think this is kind of a bigturning point for many of these
markets and this is a big deal,I mean it really is.
I think this is kind of a bigturning point for many of these
(01:08):
markets and we're going to talkabout all of that, starting with
inflation and starting with theCPI data that we just got.
I mean, you're on a two monthupside run in CPI.
You got to 2.7 year over year.
The low was September at 2.4.
The core rate, the low, was 3.2.
It's at 3.3 for the last threemonths.
If you recall, back in thewinter, february, march, into
(01:32):
the spring April, I kind of laidout the map, the roadmap, for
where inflation would go.
It was pretty simple as itrelated to energy base effect,
because it had a big rise in2022, 23,.
And a big decline, you know,this year, late last year, into
this year.
So you could see that the baseeffect because it had a big rise
in 2022, 23, and a big decline,you know, this year, late last
year, into this year.
So you could see that the baseeffect was going to drive energy
down.
It's going to bring inflationdown, you know, towards that 3%
(01:53):
level.
So that would get below four.
But it would prove to be stickyand that's the word that I use,
that's the word other peopleyou know started to use more
frequently more recently.
And it is exactly that it hascome down to a level above the
target, above the recent low, soa higher low and begins to rise
because it's the 40-year trendreversal from lower lows in
(02:17):
inflation, lower lows ininterest rates, based on the
dynamic that we had from 1982,when Reagan came to power and
again we started to pump outdebt.
Now we have so much debt Trumpcan't possibly do the same thing
, so it's really going to be astruggle from here.
But the bigger picture is the40-year trend has changed.
We've printed so much money weknow the only way out is to
(02:38):
reflate and this is the coursewe've chosen.
It's going to be higher highsand higher lows in inflation and
interest rates from here, andwe just got a good dose of that
this week.
All right, let's talk about thebreakdown on the CPI Energy.
Gasoline was down 2.9 for themonth.
All right, I actually thoughtyou might, you know, bottom a
little higher in inflation,because I didn't expect energy
(02:59):
and I did say this look, therisk to the forecast of
bottoming above three would beenergy, and if energy keeps
going month to month to month,you'll hit a new base effect
that's negative, and that'sexactly what's happened.
It's extended the negative baseeffect into right now, 2.9%
down for the month, 8.4 yearover year.
I mean, this is where you haveit Now.
(03:27):
What's interesting aboutgasoline is.
It went from the pandemic lowof 37 cents all right all the
way up to $4.33, all right.
It has since come back down toa three-year low here, which is
185.
That was four weeks ago.
In that context we've jumpedback up a little bit.
The spot price right now is 199, all right.
Now what's interesting is thatlast November we start to look
(03:49):
at last November prices were$218.
So we're 9.1% below Novemberlast year price.
Well, that matches right offagainst the year-over-year
decline in gasoline and CPInumber at 8.4.
But let's look forward, becauseJanuary last year, $218, then
got to $ 231 in February, thengot to 246 in March and by April
of last year gasoline priceswere $2.70.
(04:11):
Now we have a forwards marketthat anticipates the movements
in those months.
Against 231 a year ago, thisyear's February's price 201.
Still deflation, significantdeflation.
Not only that, but you'relooking at March a year ago,
where priced at $2.01.
Still deflation, significantdeflation.
Not only that, but you'relooking at March a year ago
where prices were $2.46.
This year March is priced at$2.02.
That's an even deeper deflationthan in February, april at
(04:35):
$2.70 a year ago.
This year's April forward priceis $2.21.
$0.50 below a year ago price,which is still going to be
pretty sizable deflation.
The high in the move in theinterim in gasoline was 298.
So in essence, you have to getabove 270 and above 298 to
(04:57):
generate any inflation in energy.
And thank God because you havea situation where, if not for
energy price deflation, theheadline inflation rates would
be much higher, maybe eventowards 4% on the headline.
When you're talking about thegasoline market going forward,
well, I can tell you you've hadthis huge price decline which is
(05:19):
a perfect kind of Fibonaccidynamic, and you have a lot of
stuff going on in the forwardprice in June.
The suggest is bottoming andthat's interesting because
gasoline inventories, whilethey're rising and posted a big
increase for the most recentweek this is the season where
they increase because you'repumping it out, building
(05:39):
inventories into the spring peakdemand season, all right into
the spring peak demand season.
When you compare the rise ingasoline prices, it still puts
you 2% below year-ago levels and1.7% below the two-year level
and puts you below the five-yearlow.
The build period leads intoMarch and you are behind
(06:00):
schedule in a significant way.
So this sets it up to maybe youcould get above $3.
The June price at $2.26, I mean,excuse me, at $2.26,.
It's below that right now.
But if you get above $2.26, youtake out the medium-term moving
average, all right.
You would take out thedowntrend line.
You take out the oscillatorswould turn positive, all right.
(06:22):
And the open interest suggeststhis is a short market.
You get a short covering rally,it breaks you out and all of a
sudden you look around, youdon't have much inventories.
I mean you need a demanddecline to offset that.
Now that's possible if you geta recession, but not likely in
my view.
And the swap rates show thatit's the differential between
this spring and next winter.
(06:42):
All right, normally this springis going to be a higher price.
Well, a higher price of $0.24in September has turned into a
higher price of $0.35, and thehigh is $0.36.
It was set last year.
Get my point.
I mean the swap market istelling you that gasoline is
looking tight heading into May.
Unless we accelerate theinventory build and it's already
(07:03):
accelerated I'm not sure youcan accelerate it anymore.
They're pumping out gasolinelike crazy.
Keep an eye on the UGA.
Is the gasoline ETF above 65.50would be a breakout.
More importantly in CPI andinflation, is food prices.
A .4 for the month of November.
That's almost 5% annualized.
Food at home was .5.
That's 6% annualized.
(07:25):
That's versus 2.4% a month ago.
When you're talking aboutprotein meat poultry, fish and
eggs up 1.9% for the month.
That's a double-digitannualized rate.
Beef, with live cattle pricesin a futures market at a record
high, almost at $2 a pound.
Beef prices up 3.1.
(07:45):
Eggs up 8.1.
These are monthly numbers.
Think about the annualizednumbers here.
They are huge, all right.
Non-alcoholic beverages up 1.5for the month.
Double-digit rates of inflationin some of these things in
November,all right.
Now to be fair, not to be, notto be objective, I'm going to
(08:06):
say subjective, but that's thetrading side.
Cereal and bakery down 1.1 forthe month, the largest single
month decrease ever in thehistory of this breakdown that
goes back to 1989.
But at the same time I think tomyself well, chicken, eggs,
beef, these are the things I eat.
I'm a protein guy.
Chicken, eggs, beef, these arethe things I eat.
I'm a protein guy.
(08:27):
I'm a carnivore protein guy,all right.
But I'm also kind of asugarholic.
So it's the epitome of apolarized spectrum on eating
habits Protein and heavy dutyand amino acids and working out
like crazy versus mysugar intake.
Well, I think you can dump thecereal in bakery a lot easier
than you could the protein.
The proteins, the one with thehuge price increases.
(08:51):
Tough to dump it.
You can't.
You can't live without theprotein.
You can live without the sugar,but the bottom line really here
is that service pricesare high.
I mean, you look at CPI, youlook at PCE and it seems like
inflation is tamed to somedegree between and I wouldn't
say that, but some people arebetween 2.7 and 3.3.
Well, that's still three.
And I said a long time agoright here on my podcast and
(09:14):
several times on my podcast,that you're going to reach a
point where the Fed is going toadjust their entire policy
paradigm to make it an inflationrange of 1% to 3%, with 2% as
the midpoint.
They can say they're really notchanging anything, but they are
acquiescing to a higherinflation because they need it
to support growth so you don'tget a debt deflation.
This is kind of the missingpoint for a lot of people when
(09:34):
they talk about inflation.
The way out of the debt is toinflate out.
The problem is that lowers thestandard of living and the
purchasing power ofyour currency.
But let's get to services.
Services accounted for 77.6% ofUS GDP, gross domestic products
77.6% it's called 78%.
(09:57):
The rest of it's only 22%.
Services are overthree-quarters of the economy.
Service price inflation,excluding energy services, the
core services and energyservices, is a small part of it,
really small compared to theCPI, the service price inflation
(10:18):
.
Cpi for services 4.6 year overyear and yeah, that's down from
over 7, but it's 4.6 year overyear and yeah, that's down from
over seven, but it's 4.6.
It's more than double the Fed'starget rate of 2% for inflation
and when you break this downit's kind of mind-boggling.
Rent is 4.9.
Yeah, it's down, but it'sstill 4.9.
All right, when you talk aboutsomething like vehicles, all
(10:42):
right, and we'll get to that ina second, because if not for
vehicle sales, retail saleswould be deflating.
All right over the last twomonths, but at the same time,
while people are buying morecars, vehicle repair and
maintenance up 5.7 year overyear.
Vehicle insurance up 12.7 yearover year I mean, hello, those
are huge numbers and that'ssomething everyone has to pay.
(11:02):
Just like medical care, medicalcare services 3.7.
Doctors in hospitals up big.
I mean, you're talking aboutdental up 3.9,.
Eye care up 3.9,.
Nursing homes up 4.8,.
Elderly invalids at home 9.9,.
And health insuranceup 5.9%.
(11:25):
Don't get sick, inflation willkill you.
That inflation will kill you,but it's everything.
It's even just around the houseGarden and lawn care up 6.3.
Water 5.2.
Trash removed 5.7.
Your commuter parking 3.5.
Tolls 3.8.
You have a pet dog, cat,whatever alligator, like we do
(11:46):
down here in Florida?
Pet services 12.1% Inflationdouble digits 12%.
All right.
Shopping club memberships youthink you're buying something
cheap or you're going to paymore to buy it cheap 6.4% year
over year.
Shopping club memberships wereup 2.7% for the month.
Shopping club memberships aregoing up because food prices are
(12:07):
going up and other things aregoing up, and those two buy them
.
It's going to cost you morejust to be a part of the club.
Okay, how about tuition?
Non-college, rather not like afour-year institution college
3.9.
High school if you want to payfor private school high school
4.8.
Daycare and preschool you got akid, you're getting crushed.
(12:29):
6.2% inflation All right.
Laundry, dry cleaning 5.4.
Bank services 5.5.
Taxes and accountingservices 7.2.
I broke down the service CPIindex.
There are 82 services that arecounted in this index and 82% of
(12:50):
the 82 indexes were above theFed's target of 2%.
Only 18% were below 2%.
More than that when you takethe whole as a whole, above 3%
year over year.
73 percent of services areinflating at more than three
percent.
54 percent more than half aservice price inflation is above
four.
(13:10):
31 percent above five 20.
One out of five serviceindustries or service
occupations services that thecustomer would buy are inflating
on a year-over-year basis at 6%or higher.
One-fifth, 6% or higher 10% areabove
7% year-over-year.
(13:30):
Now when you start to talkabout service CPI, all right,
yeah, again it's down.
But if you take the 4.6 numberand you look at it prior to 2022
, pre-2022 measurements 4.6 isthe highest in 30 years.
The other highs that were notat 4.6 were February of 2002 at
(13:56):
4.1.
What did you have then?
Tech bubble crash, september2006,.
3.9, financial crisis You're at4.6.
You're higher than either oneof those for service prices and
service prices keep in mind 78%of GDP.
Now keep that in mind for a fewminutes when we get to the Fed.
4.6, service price inflation,78% of GDP on services.
(14:17):
But let's go to core CPI at 3.3on a pre-2022 level.
It's also the highest inthree decades.
The only other times 1997 ledto the long-term capital
management and theBrazilian-Russian tie, debt
crisis in 1997-98.
It's above the 2007 level whereoil was 140 and caused the real
(14:40):
estate market to collapse onthe back of a consumer collapse
after that 140 and caused thereal estate market to collapse
on the back of a consumercollapse after that, and it's
100 basis points, above all thehighs from 2009 to 2022.
13 years you haven't seen a 3.3core CPI.
It'shigh.
Now.
What's even more troubling isPPI producer prices, which is
(15:02):
the pipeline.
Producers are paying more.
They're going to pass that costalong to distributors, who pass
it along to the customer.
All right, we're seeing it.
Ppi the pipeline's full Finaldemand for services 3.9.
It's a new all-time high.
All final demand 3%.
Goods final demand is finallypositive.
It's been deflation for awhile Now.
(15:25):
What's interesting is foodsFood at the wholesale level, the
pipeline level.
The PPI level was down 0.8 yearover year in May.
In October it was up 0.3 andnow November up 3.1%.
Unprocessed food 2.9.
Unprocessed energy wasdown two.
You can see how food's leadingthe way here when you look at
food pork, chicken, eggs, corn,strawberries, melons, vegetables
(15:47):
, fresh fruit, tomatoes all atnew highs and in terms of the
outright prices for some ofthese commodities cocoa, coffee,
oj, sugar cattle and butter,all at new highs.
The index for final demand,food is at an all-time high and
up 5% year-over-year above the2022 highs.
The wholesale level for food7.5% year-over-year inflation
(16:09):
and the index itself at a newall-time high.
And food at the consumer level.
Ppi, also a new all-time high,up 7% year-over-year and up 40%
since 2019.
Food costs more.
We all know, but these numbersare still staggering and it
continues and it's acceleratingagain.
So you say but retail sales aregood, the consumer's good?
(16:32):
No, the consumer's not good.
All right, retail sales cameout this week.
The media cheers the number,the market rallies.
I'll tell you right off the batthe year-over-year number 3.2,
is below core inflation,relative to core inflation.
Real retail sales are down,they're deflating and they have
for something like 15 out of thelast 18 months.
(16:53):
All right, and there's moredanger here.
All right, because of thetwo-month increase in retail
sales that the media iscelebrating.
The marketis celebrating.
72% of the growth came fromvehicle sales alone.
Now we also know, just as Isaid, repairing and maintaining
a vehicle costs more, insuringit costs more.
And the delinquency rate onauto loans has hit a new high.
It's at the highest level since2008,.
(17:19):
A new high for this move.
All right, you talk about foodprice deflation for two months.
All right, minus 0.2, minus 0.1.
So you actually are spending alittle bit less here because
food prices did deflate.
It's showing up at the consumerlevel, but we just saw PPI says
that's going to change in a bigway.
So you've had this pass fromgasoline and food for the last
few months and still 72% of thegrowth in retail sales
(17:42):
is vehicles.
The biggest tell for how is thehealth of discretionary
spending and the consumer andthe feel-good factor.
You say there's a hugefeel-good factor here because
Trump won the election.
Well, I mean, you know, maybenot right in a few days before
the election, but frankly, okay.
The tell.
The number to look at for thehealth of the consumer on a
(18:03):
discretionary spending comfortlevel is eating and drinking
establishments.
You go out to eat more, you goout to party more.
If you're feeling good aboutyour income, if you're feeling
good about the economy, ifyou're feeling good about
everything in household,inflation is not
bothering you.
The fact of the matter iseating and drinking
establishment sales fell by 0.4for the month of November, by
(18:26):
0.4 for the month of November.
It's a big-time rarity to get adecline that's not around
December and January, based onthe holiday flip-flop.
You take those two months outof the equation and that's every
year pretty much a seasonalthing.
This decline was $431 millionfor the month, the fifth deepest
in history ever.
The fifth deepest in historygoing back 30 years.
(18:46):
To this number.
I mean, you know history.
Okay, the fifth deepest onemonth.
The others, 2001, 2009, 2018,2020, all of which presaged some
kind ofeconomic downturn.
The year-over-year rate ofeating and drink establishment
sales dropped from 4.2 to 1.9.
It is deeply negative relativeto the core CPI and many of the
(19:08):
sectors are outright negative.
The only other times that'sbeen the case where the
year-over-year rate of change ineating and drink establishment
sales was below core CPI onlytwo times other than now 2009,.
Financial crisis, 2020,pandemic.
That's it.
So what does the Fed do?
Well, they cut rates.
The top end four and a half.
(19:28):
Well, compare the top end to begenerous to the Fed, the top
end Fed funds rate of four and ahalf against our service price
inflation.
We take it back to that 4.6.
It means that policy rate isnegative on a real basis and is
stimulative, not restrictive.
This whole thing aroundrestrictive and is stimulative,
not restrictive.
This whole thing aroundrestrictive, yeah, maybe against
(19:49):
PCE, but not against the pricesthat accompany 78% of the
economy.
All right, I mean, only in Julydid policy finally get to
neutral, when you had a 5% and5.25% Fed funds against that
4.6% rate, which was actuallyhigher then.
So you know again, and if youlook at this, all right, the
(20:13):
service price inflation has beenbelow the Fed funds rate,
except for those two months thisyear, since 2008.
It's been stimulative for 16years.
The closest you came to endingthat stint was in 2018, which
led to easing in 2019, beforeCOVID even hit.
(20:35):
It never got to even neutral.
It stayed stimulative theentire time.
You've been stimulative on areal Fed funds policy level
basis against the service CPIyear-over-year rate since 2008.
I mean, hello, is this not whystock market's new highs, gold's
rallied and bitcoin's higher?
And I mean, come on, I meanrestrictive.
(20:57):
Huh, they're acquiescing tohigher rates of inflation,
straight up.
You know it really is so.
Within that context, though,does leave the consumer
vulnerable.
Delinquencies on all the loans,a new high, like I said, credit
card delinquencies, highestsince 2007.
And now the pace of the rise inmortgage delinquencies we
(21:19):
haven't seensince 2006.
In the Fed's risk assessment,all right, they told us the
highest risk was to higherinflation.
You went from a Septembernumber of 16 members versus two
members.
There's 18 voting and 18 whogive their opinions.
16 said the risk was balancedand two said it was towards
inflation.
(21:39):
Three months later, two saidit's towards it's balanced and
16% is towards higher inflation.
They all project and 16% istowards higher inflation.
They all project 4% or higherFed funds for 2020.
I'm going to say they all.
The median and the bulk of theguesstimates are above 4% for
next year.
I mean, the futures contractfor the end of next year
was 3.75.
(22:00):
When the meeting took place, itjumped to 4.
In September you were 2.82.
And you wonder why?
Stocks were higher and theyrallied even into that little
push in rates, because theystill thought they're going to
get a lot of VIG over the next18 months.
That's not true.
Now, according to what the Fedjust told us, not only that, the
Palisades are going to be morecautious and you had a
(22:22):
dissenting vote who wanted toleave rates unchanged because
they're worriedabout inflation.
From the Cleveland Fedpresident, what's the market
impact and what do we do withthis information, the market
impact is straight up a dollarhigher.
The dollar is breaking out.
The yield differentials areblowing out.
The yield curve is steepening,just like we said it would.
The thing is we thought thedollar would go lower.
I was wrong on that one right.
(22:43):
The degree to which the Fed haskind of slowed here before they
get where they think is neutralis interesting to me, but it
also shows some vigilance oninflation.
It's trying to walk a tightropeacross Niagara Falls.
It really is difficult.
You're almost destined to fall.
You're going to tip one way orthe other too far at
some point.
The dollar has broken out on abig long-term basis.
(23:04):
It got above $107.35 on thedollar index.
It's up to $.50.
This is a major breakout thatleads you to the 2022 high of
114.75.
That level of 114.75 is aperfect 50% retracement of the
entire dollar decline from the1985 Plaza Accord when the
dollar was 165, the index to thelow in 2008 when it was 70.
(23:27):
And now it's all the way backup to 108, headed towards 115.
If it breaks above 115, thenext level would be the high of
121 15 years ago.
If you get up there, the dollaron a year-over-year basis will
be up almost 20%.
It's already up 6% to7% year-over-year.
Why do I say that?
(23:47):
Because you throw tariffs intothe mix and the dollar moving
higher is the worst possiblething for stocks Dollar higher,
stocks lower, dollar lower,stocks higher.
It is the most reliable, thetightest negatively correlated
dynamic ever meaning stockshigher if the dollar goes lower,
stocks lower if the dollar goeshigher, dollar's going higher.
(24:08):
Right now the divergence ishuge.
It's gotten really severe overthe last two weeks and it
suggests an immediate downsiderisk in the stock market of 400
points in the S&P 500, let alonethat the market itself is as
stretched and extendedtechnically on a long-term
momentum basis, mathematicallyand even geometrically, as it
(24:30):
has ever been, and the medium tolonger-term oscillators are now
rolling over.
They're really losing momentumand it lacks leadership.
You don't have China as aleader.
China imports.
You don't have consumerdiscretionary in the US being a
leader, even though consumerdiscretionary indexes up
the XLY.
Over 40% of it is Amazon andTesla.
(24:52):
When you talk about real retailstocks, they're choking.
Their leadership has clearlybeen AI and XLK and Infotech and
chips, but they're widely owned.
Every passive investor ownsthis stuff and owns it big.
Every passive investor ownsthis stuff and owns it big.
All right, but the momentumstarted to slow in the chip
sector, even in the leader, thebenchmark, nvidia.
(25:14):
We wrote a special piece twoweeks ago and then followed it
up last week and then followedit up again this week, and our
piece, immediately ahead of theFed, was watch NVIDIA, watch 131
.
This market is vulnerable and aFed where they actually cut
rates and then talk hawkishlywould really crack this market
wide open.
It's exactly what happened.
You have a head and shoulderspattern in NVIDIA.
(25:34):
It's very clear.
The neckline, the movingaverages are all there.
I mean the medium-termoscillators already turned lower
.
The momentum here in these chipstocks has waned significantly
and many of them are breakingdown.
Amd completely broken down,trend from 2020, broken.
All the moving average is gone.
The oscillator is negative.
Same with Applied Materials,amat Broken down.
(25:55):
The trend line, the two-yearmoving average, the oscillators,
all of it.
Intel is on a weekly close-onlybase at a 12-year low and this
is one of the worst-performingstocks.
That was the former leader.
Hail to the new boss, same asthe old boss.
And then Micron got crackedwide open this week.
A nasty downside day, allright Overall.
(26:17):
The NASDAQ I said earlier thisyear, back in January, february,
that you could have a melt-upsituation.
I didn't think it was going tohappen, but I was wrong.
It did happen, all right, butusing the geometry, using some
of the GAN angles, for example,the angle of ascent is very
important to me.
All right, we had a target of22,500 on the NASDAQ.
If it went into a melt-up, itmissed it by a couple hundred
(26:38):
points.
I mean, it's almost there, butwhat happens when you get there
this week?
Literally it is one of thebiggest outside-downside key
reversal weeks I've ever seenthe magnitude, the severity, the
swiftness and the fact thatit's at a record high right on
an angle of ascent that iscompletely unsustainable
over time.
Let's pick out some levels onthe downside.
(27:00):
If we take the fourth quarter,low to the 2024 high, a 38%
retracement would be $16,800.
You're trading around $21,000.
The high was $22,152.
You could get even lower thanthat.
But bottom line is you'retalking about the two-year
moving average, the secondquarter low, the 38% retracement
(27:21):
, all between $16,800 and$17,400.
That's a downside risk of 17%to 21% in the NASDAQ and it
could go lower.
You have targets down around$15,600 to $16,800.
Now $16,000, excuse me.
So you know.
I don't know that you're goingto get those bigger downside
depending on what the Fed mightdo and depending on what Trump
(27:43):
might do.
But that's the risk here andthe risk-reward is very little
upside and potentiallysignificant downside on the
risk side.
Dollar up means stocks down.
But if you see the NASDAQ getbelow this week's low, this past
week's low of a 21.160, that'son the nearby futures contract,
that would be a major breakdownand a major sell signal.
(28:04):
You would want to have someprotection.
I'm not saying dump everything,but I'm saying protect yourself
.
I call them financialprophylactics.
The cash S&P 500 below 58.32would be a breakdown and you're
looking at 400 points of almostimmediate downside risk.
That's sizable.
That's 8%, 9%.
But what's interesting here?
Dollar up also means gold down.
It's getting whacked.
Could be 21.50, 22.50.
(28:26):
A lot of supportat 24.50.
Bitcoin at risk and we've beenbullish on long Bitcoin.
It's made us a lot of money.
But right now Bitcoin's at risktoo, because Bitcoin has traded
in lockstep with the stockmarket, in lockstep with money
supply, in lockstep withpolicies or whatever extent.
Right now more of those thingsare working against Bitcoin in
the short term and we've ownedit until last week, sold it
(28:47):
before the Fed meeting.
And the industrial commodities.
Look at base metals, look atsteel, look at aluminum, look at
copper.
They're all really onthe ropes.
What does that leave you?
It leaves you with the dollar,which leaves you in cash or
commodities, food commodities, alot of them cocoa, coffee,
sugar, you know big deal.
Natural gas another one in play.
(29:09):
I like gasoline and crude oilat some point here in the near
term.
How about the other side of thedollar?
I don't like the dollar, butthere are certain currencies I
would absolutely sell againstthe dollar.
It's more of those currenciesare bad versus the dollar is
good, and then foreign bondsoffer big
opportunities here.
So to stay on top of thesethings, this is what we do.
I mean all of this from astrategy perspective, really
(29:32):
looking to assist people,because it's about keeping pace
in an environment where it'sincreasingly difficult to keep
pace with the debasement of thepurchasing power of your paper
money, income and wealth.
I help to level the playingfield with 40 years of
experience.
Check me out, happy to send yousome samples of the research or
some of the stuff that has thecharts of these things that I've
just talked about, which arereally eye-opening.
(29:52):
Email me at gregweldonG-R-E-G-W-E-L-D-O-N at gmailcom.
Follow me on Twitter at WeldonLive, and then also the podcast
at money underscore podcast, andI'm also on YouTube under user
Gregory underscore Weldon.
(30:12):
Until next time, thanks forlistening.
Good luck.
Be careful out there.
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