Latest / Financial Survival Network / Consumer Confidence Hasn't Gotten the Memo -- Russell Stone #5955

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Consumer Confidence Hasn't Gotten the Memo -- Russell Stone #5955 · Financial Survival Network

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  People are distracted right now. They're you know, Thanksgiving, Christmas, Halloween,
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  New Year's They're not paying attention to the underlying currents. What's going on
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  in the banking industry, the treasury auctions haven't been going very well. Other
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  areas, you know, the national debt is going up. A couple of
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  banks blew up two weeks ago. So there's a lot of stuff going on.
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  The consumer just isn't paying attention to it. And welcome you are listening
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  to and watching the Financial Survival Network. I'm your host, Carrie Lutz.
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  Well, hey, we're in the last day of November. Today, we
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  got good numbers coming out on the economy on consumer confidence, good numbers at
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  least at first blush. But what is the real story? And the real
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  story, like they say, the devils in the details, Well, the
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  real story is in the revisions. Russell Stone is with us now, Russell,
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  great to have you back. So consumer confidence inched up for people like
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  US fifty five plus, but for the rest of the world it looks like
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  it's heading straight down. Yeah, that would be out great. You know,
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  when I send my notes over, I said consumer confidence hasn't gotten the
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  memo yet. All right. It's kind of like it's the lagging indicator in
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  a lot of ways because people are distracted right now. They're you know,
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  Thanksgiving, Christmas, Halloween, New Year's. They're not paying attention to the
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  underlying currents. What's going on in the banking industry. The treasury auctions haven't
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  been going very well. Other areas, you know, the national debt is
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  going up. A couple of banks blew up two weeks ago. So there's
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  a lot of stuff going on. The consumer just isn't paying attention to it.
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  It is going to catch up. There will be an alignment of the
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  market reality and the consumer confidence. Well, if you look just like auto
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  sales, right, you know, subprime auto bubble repossessions, all of that,
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  it shows that interest rates, higher rates are definitely impacting the auto bubble
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  market. It's no longer a core market. Some bubble marketing, all right,
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  you know, just tell us what your thoughts are on. Right bye.
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  On my way to work, I drive it by a very large auto
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  auctioned parking lot. It's extremely large Southern and you can tell because you know,
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  seven eighth nine those park lots were filled to the brand and then slowly
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  over time that park lot emptied out as the economy got better and those cars
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  were sold off and the repossessed cars were less and less and less. Now
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  that park lot is filling up again, right, And last year the auto
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  industry repossessed one million, seven hundred thousand automobiles. Right, So that's an
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  indicator all by itself, say, with foreclosures on the house, and the
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  foreclosures are way up right, because between inflation and between the rights and interest
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  rates, the consumer can't do everything right. Something's got to go, and
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  when they start balling behind on paying their bills, it's to death spiral eventually,
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  so repossession or foreclosure. Right. So so you got to look beyond
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  the numbers in other words, because you know what they say, statistics lie
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  and liars use statistics right, absolutely absolutely, like the leading economic indicators if
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  you look at them all right, for the US, the leading at Kinneplic
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  indicators are mostly pointed down right right. Give you some example, new orders
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  were down point two two. Weekly average initial claims were down point one eight
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  building permits private housing or it looks like they was actually positive building permits private
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  house and negative point one or interest rate spread on the Fed funds against a
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  tenure that was down point eighty five. Those are all that and about twenty
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  five other indicators are all pointed down, not up. So that's why there
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  is a a conflict between consumer competence and the real numbers. So the real
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  world and the world of statisticians, there's a disconnect. Huh, absolutely absolutely,
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  And you think about it in your own world. You know you're looking
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  at it. Most people looking at four and ks and bank statements, well,
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  those haven't been badly impacted over the last six months because the markets trended
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  up in twenty twenty two, so it kind of blosts over the downturn from
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  twenty twenty one. But at what's going on is the speculation is off the
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  charts. The day trader speculation is off the charts. They have all sorts
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  of investments that are coming to the forefront right now that are pure respected that
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  they have derivative derivative. Right, So they have a derivative that is based
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  on a derivative, right, Yeah, and people are buying them up.
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  Let them right. It doesn't make sense. There's no raptional sense the markets
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  right now. The evaluation of the S and P five hundred is seven times
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  what it should be. Right, that's a powerful statement. It can't keep
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  this up, and it's going to be it's going to be forced back into
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  reality. As the credit bubble continues to contract, the supply of money is
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  being destroyed. And that's what's happening. As the money supply, the end
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  to money supply contracts, they've lost in money right now is lower than it
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  was in nineteen thirty. So all these things are telling us that there's bad
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  news come. Yeah, so bad news is coming. But the government's job
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  is to put that bad news off as long as it possibly can and keep
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  you buying and acting in the so called best interests of the economy. Right
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  yeah. But at some point they can't hide it anymore because pretty soon you'll,
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  as they say, you know, if your neighbor loses his job,
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  it's a recession. It's you to lose your job, it's a depression.
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  Right yeah. Government can't hide one point two trillion dollars in interest pamments.
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  They can't hide thirty four trillion dollars in debt. They can't that the unfunded
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  liabilities are now at two hundred and fourteen trillion dollars and the failed bond auctions
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  are getting into the headlines now as well. All right, the bond vigilantes
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  have made their presence known. Huh yeah, what what do you think will
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  happen when the interest rates go down to the you know, junk bond aread
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  and stay like b rated and C rated bonds, They're going to get abliterated,
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  all right. So there isn't a win win here until the credit bubble
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  comes into alignment with the consumer's expectation for value. Okay, so uh yeah,
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  you know it's their job is to keep the party going. It used
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  to be to take the punch bowl away, which they've already done, but
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  they're trying to make you think that the punch bowl is still there, right,
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  yeah, keep in mind carry it's an election here as well. Almost
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  forgot you could. All right, So what is you what are you telling
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  your clients? What are you as an investor doing here? Well? You
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  know, I expect, you know, in this environment, that we're going
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  to see this year as an unposed and my expectation is December is going to
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  be a very disappointed month economically in the numbers. And with that expectation,
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  you're going to see the political policy. People change directions rapidly because it's an
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  election year, so they're going to start promising us what we want to hear,
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  right, So they're going to start rapidly changing their positions and the focus
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  on what they're talking about. But it's not going to stop. What's going
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  to happen within the markets. The consumer is going to revolt against the government's
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  policies and the corporate greed, right, and they're going to revolt just by
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  They're going to pull back on their spending. They're going to pull back on
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  new cars, houses, vacations, camper boats, planes, trains, and
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  automobiles. They're going to pull back and that will cause enough pain that will
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  force a change in direction. Our country is going to be humbled right before
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  restored, right, and we have to go through the humbling process because of
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  all this debt and all the mismanagement has to be dealt with. Okay,
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  So tell me Russell, what's your take on rising gold and precious metals prices.
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  I would be a buyer of silver first, not gold, but eventually
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  when that ratio from eighty seven right now goes back to fifteen, sell your
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  silver, buy more gold. But right now, I would be a buyer
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  of gold or silver, but preferably silver. Okay, silver, the shiny
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  metal as we call it. And how the question that you ask carry is
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  how high will it go? Well, if you do any research, there's
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  a lot of speculation anywhere from one hundred dollars an ounce on silver. I've
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  seen one thousand dollars announce on silver. That seems like pine in the sky,
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  but it's not not if you understand that it's been suppressed for sixty years
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  and the dollar is in trouble. So if we have a combination of the
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  dollars no longer the world's currency reserve and it's devalued significantly, suddenly those commodities
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  are going to look really, really attracted to a whole bunch of investors and
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  consumers. All Right, So we've seen the oil gyrating quite a bit,
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  but it's getting back up to eighty dollars the barrel. The world seems to
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  be happy with that price. If gold and silver go up, then you
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  think oil is going to follow a suit. No, here's why, because
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  they got that oil to go back up by cutting back on the supply of
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  oil, right, but the demand is going down. So if to track
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  the demand. The demand is going down, and the other way they can
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  compensate for that is to increase or decrease. That's supply right now. Okay,
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  So you know, I read an interesting article a few weeks back that
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  in spite of the current occupants antipathy towards petroleum, oil and all forms of
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  so called fossil fuels, although I've never seen a fossil come out of the
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  out of the pump at the gas station, but hey, be that,
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  Oh wow, have you seen fossils come out? But be that as it
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  may. American production is actually at all time record highs thirteen million barrels per
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  day and with no decline in sight, even with lower ring counts. You
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  know, OPEC's hands are kind of tied, aren't they. Well, we're
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  not using our capabilities not only in oil, but in also gold, silver,
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  and all the other refined metals because there's so much bureaucracy to get these
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  new discoveries to the market. It takes six eight years to get the mineral
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  discoveries to the market. Same with oil. We're not using our oil wealth
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  as a weapon to lower the oil prices, right, We're using it to
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  fulfill our need for oil within our country, but we're not exporting into the
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  world to force the price to silver down in the Key Saudi Arabia, in
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  Russia and China and check mm hm. And we should be and we could,
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  we could be, and we should be doing that. Okay, I'll
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  buy that. So again we look for harder assets. What's your take on
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  real estate? To you know, supply is down, but certainly the markets
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  down. The homebuilders last week just reached a five year high. To me,
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  the homebuilders are like the perfect analogue for interest rates. My problem with
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  the homebuilders what data are you reading and who supplied the data on that information?
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  Right? I do not trust the home builder as information if it came
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  from them, because they have invested interest in keeping the price of houses up.
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  They have a thousand houses under construction that they need to sell and if
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  you look at all the big owned builders in this country, they have a
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  big stake in this to keep the house prices up. I don't trust the
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  data if it comes from that. I look at what's going on and I
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  will see the inventories and in lots of these beacon Why would somebody sell a
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  house with a three percent mortgage to move into a house with a seven or
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  eight percent mortgage doesn't make sense, I know, but I know what you're
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  saying. But people actually do these things, right, Yeah, some people
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  do. I just sold my house carried and it's going to be the worst
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  investment those two young people ever made. Yeah. Oh well, cave on
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  ampter right. Yep, yep, yep. My heart goes out to people
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  that are buying houses now. So to answer your question, Kerry, yeah,
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  I would be saving money so that I can buy in another year when
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  the market is down, all right. I wouldn't be in by in real
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  estate until you can get a good deal on it. It's not now.
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  There's still the prizes are still inflative. Okay, So there's lots of good
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  news ahead and buy things of value. Obviously not all housing markets will be
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  affected equally on this, not but you know it's it's actually the housing market.
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  It's a bunch of sub markets scattered across the country, hundreds of them
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  really, So good time to sell a house though, huh. But fire
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  Just take eight, right, and remember what eight felt like in nine the
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  beginning of nine, and just multiply that by four or five times and then
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  acts us up. Do I really want to be a part of that?
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  The answer is no. Eight oh nine was a real estate bubble. This
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  is a global financial bubble. Look what's going on in China. Look what's
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  going on in very Commony. Look what's going on in Germany and Europe.
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  There is no in the world that anybody can convince me that how we report
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  information in this country, Uh lines up with those economies. It doesn't.
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  Yeah, there's a definite disconnect. Eh, absolutely, absolutely, So three
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  sparts over booksmarts. Yeah. Well, experience is often the best teacher,
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  but often the most brutal teacher as well. Right. You know, if
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  our kids never learned some hard lessons, they wouldn't have a whole lot of
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  character. So life is full of hard lessons. That's how we get our
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  character. Yeah, and stuff happens, right, it does, all right?
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  Hey, tell us where we find you? How do we connect with
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  you? On the web. You can find me at a screen FG dot
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  com from my website Grand Financial Group in self ones or Connecticut. That's where
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  I put my desk and in the other way that you want to contact me.
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  So eight six oh sixty two three five five seven is my phone number.
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  All right, hey, I've got a question for Russell myself. Shoot
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  me an email kl at Terry Lutts dot com. The Russell's u ur L
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  will be in the show notes of this interview on Financial Survival Network dot com.
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  I'd urge you to go and subscribe if you haven't done it already.
• 15:03
  Russell A pleasure is always thanks for stopping by. All right, Merry Christmas.
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  Guide into your audience.