Latest / Financial Survival Network / Jerome Powell is Wearing Concrete Boots with David Stryzewski #6063

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Jerome Powell is Wearing Concrete Boots with David Stryzewski #6063 · Financial Survival Network

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  There's no question Jerome Powell needs to reconsider this two percent inflation target that he
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  has because, in my opinion, he is very much losing this battle.
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  And and and it's with a lot of areas that the FED cannot control,
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  like the cost of insurance has gone up so much, the cost of oil,
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  and the cost to you know, escort it by navy, you know
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  fleet, you know, as we're going three thousand new nautical miles around Africa
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  because we can't go through the normal channels because of new terrorist attacks, et
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  cetera. So there is a lot of inflationary data coming to right now,
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  and it leaves the FED in a very very very difficult spot, but one
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  that I think that we should ultimately talk about and have some conversations about because
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  the consequences of having that so wrong could be devastating. You are listening to
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  Carrie Let's's Financial Survival Network, where you get valuable information you just can't find
• 0:54
  anywhere else to thrive in today's trying times. You need the Financial surviv Network
• 1:00
  now more than ever. Go to Financial Survivalnetwork dot com and get your free
• 1:06
  newsletter and gift. Financial Survival Network now more than ever, And welcome.
• 1:15
  You are listening to and watching the Financial Survival Network. I'm your host,
• 1:19
  Carrie Lutz got some big numbers out. PPI inflation is up quite five percent.
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  Experts were surprised. I don't know who these experts are, David Strazuski,
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  but obviously it's nobody I know, because all the experts I know,
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  Uh, we're only surprised it wasn't higher. Maybe that's what the experts are
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  really surprised about. Yeah, you know, it's it's always great to be
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  with you carry you know, when we talk about PPI, yeah, I
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  mean inflation in general. If people are not noticing right now that the season
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  is changed and that a lot of this economic data that's coming out is beginning
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  to deteriorate from this goldie locks everything's perfect rosy and we're going to have a
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  soft landing scenario. So we can't recognize the seasons change. I think that
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  we probably need to examine our eyes. So, yeah, with the PPI
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  numbers, you know, that's otherwise said is the wholesale prices that producers or
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  employers pay to create things. And so when we see inflation there, well,
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  then we know that that ultimately comes to the economy for CPI as well,
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  and we'll get a new reading on that here tomorrow. A couple of
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  things to note those that this is the third consecutive monthly read that is higher
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  than the month prior to it. And why is that a really big deal?
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  Well, because this talks about how sticky inflation ultimately is right now and
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  also gives us a forecast for where we're headed. I think it's really big
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  deal to note that if you actually, you know, total up the last
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  three months worth of inflation, that equals one percent at times that by four,
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  that gives us a trajectory for four percent on And this is PPI numbers
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  here. The CPI numbers are between four point four and four point five based
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  on how I calculated that. But that is a much higher inflationary environment than
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  where we set right now. So there's no question Jerome Powell needs to reconsider
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  this two percent inflation target that he has because in my opinion, he is
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  very much losing this battle. And and and it's with a lot of areas
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  that the Fed cannot control, like the cost of insurance has gone up so
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  much, the cost of oil, and and and the cost to you know,
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  escort it by navy, you know fleet, you know, as we're
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  going three thousand new nautical miles around Africa because we can't go through the normal
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  channels because of new terrorist attacks, et cetera. So, uh, there
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  is a lot of inflationary data coming to right now, and it leaves the
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  FED in a very very very difficult spot, but one that I think that
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  we should ultimately talk of out and have some conversations about because the consequences of
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  having that so wrong could be devastating. Hey, you know, inflation is
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  sticky, like like when the mob gives somebody a pair of cement shoes,
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  right exactly. It's not just sticky. Sticky is like flypaper. Now,
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  this is like a monster glue on steroids. Here, this sticky right right,
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  Well and candidly, Carrie, you know, over the last year we
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  actually look at inflation and CPI or sorry PPI, we're not really seeing,
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  you know, significant divergence in the numbers. You know, CPI has been
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  sitting in the threes for over a year. It's not going down. It's
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  been flatlined and just sort of leveled out here, by the way, as
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  we look at oil prices right now in commodity prices. They've gone up significantly,
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  and I believe that they will be, you know, leading the rise
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  in the sinflationary environment, therefore making it more expensive to produce things. You
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  know. Another really really big one that came out here just this last week
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  is that both the ISM and the PMI indicators went negative. And what are
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  those They basically speak to the manufacturing and the servicing sector here in the United
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  States, and when they go below fifty, it's recessionary. And when either
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  of them go below fifty, we tend to have hiccups and challenges in the
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  market. Today, both of them are negative. That's only the second time
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  that this has ever happened in the history. The two previous times were the
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  dot com and then two thousand and eight Great Financial Crisis. So if any
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  of these two precursors are indicative of what the future might look like, or
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  if they rhyme, if you will, then I think that we are headed
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  for some major challenges here. And this is going to disrupt the thesis of
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  so many today that have just bought long and they're all in. I mean,
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  there's literally more bullish sentiment right now in the stock market than I guess
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  going back to two thousand and twenty one when everything was rally into the top
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  here and we hid all time high. So I think that when these two
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  ideas of it's going to be really great and then only smokes, it's actually
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  not catch up, I think that we could find ourselves in a yeah,
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  real surprise moment here that could be you know, devastating, especially if you're
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  nearing or entering retirement, like most of the families are that we work with.
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  Hey, so right, So your feeling is the Fed's gonna cut,
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  but they're not going to cut until they absolutely one hundred percent have to right,
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  absolutely right. So the FED is at a very difficult spot here,
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  and so I think that they're going to be forced to cut rates in order
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  to avoid a banking crisis. And I say that in all humility because these
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  are very serious matters that we're discussing here. But with inflation being too high
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  for the FED to cut rates, they're going to you know, have to
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  be remain higher for longer, just like they told us that they would,
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  even though we were you know, pretty much guaranteed according to statistics, that
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  we were going to get cuts as of last July so that didn't manifest anyway.
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  We're in this higher for longer place right now. So I think that
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  the FED is stuck between preventing a banking crisis and preventing inslation from getting more
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  out of control. Because if they drop rates right now, basically the top
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  twenty percent of Americans as far as financial goes, they've got money in the
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  market, they're doing well, and they're going to you know, be off
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  to the races. We'll see all new all time highs. That's very inflationary.
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  You know. Eighty percent of the economy though, in my opinion,
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  is actually in a recession right now. And you know, I think that
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  we probably need to even consider how are we defining recessions because that would also
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  ultimately determine how FED policy and monetary policy, you know, might be implemented
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  in the economy. And I define it as or I think it should be
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  defined as, when the middle class is doing better or worse for two or
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  three quarters at a time, we can see a trend in a positive or
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  a negative direction and ultimately point back to the why behind it. Right now,
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  the why is so many different things. It's actually difficult to even keep
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  up on it. But getting back to that that banking crisis right now.
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  You know, when we raise interest rates the way that the CETA Reserve is
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  done, this flips the entire credit cycle. This it flips the entire market.
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  You know, the United States, all sectors, all families use credit
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  to function in daily life. And so that our banking industry is incredibly important
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  in what's taken place here is with higher interest rates. I'll just even point
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  to the numbers that came out from realtor dot com and that was in twenty
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  twenty three, we had lower housing sales than the worst point in two thousand
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  and eight. That's a staggering bit of information very few people are actually even
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  sharing talking about right now. But you know, the challenge is, you
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  know, when you go from a three percent mortgage environment to seven point five
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  two I believe it is today, you know, people have to come up
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  with either forty percent more money as income or they got to they're going to
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  be their purchasing power has been reduced by forty percent plus in that example.
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  And so the housing market is is certainly, at least across the United States,
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  in a very tenuous moment. We've obviously had a lot of big institutionals
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  purchasing over the years. But I think that I think that that we're seeing
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  this crisis begin right now in housing, and no one's going to be able
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  to really get loans. These local regional banks are not going to be remittabolizing
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  office space. And if you look at the office space numbers right now,
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  it's it's a staggering number. Just to not name more facts here, but
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  in April, forty three percent of small businesses in the United States we're unable
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  to pay their office lease. Forty three percent. I can't even imagine that
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  over one thousand companies have announced that they are going to be shutting down locations
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  this year. Over one thousand. Is that a really pro growth economy or
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  is this a resassin economy? If we have eyes to sen, ears to
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  hear, we can recognize this is slowing down. It's slowing down dramatically,
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  and I fear that it happens all at one time in this convergence and we
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  will not be prepared for it. Hey, I just saw today and this
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  is in I believe Fort Worth, Texas. A high rise, forty story
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  building went for twelve dollars a foot. Now I'm black thirty Back in nineteen
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  ninety eight, I think I was paying ten dollars a foot in New York
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  City. So if I had just waited, I could have bought that place
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  in Fort Worth exactly. And so there's there's places in our economy that there's
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  going to be deflation because of the interest rate challenges. So those prices have
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  to come down because the sellers want to sell where and the buyers want to
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  buy. They don't have a choice, and so they need something for it.
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  And so there's always a market that's being made. And actually, if
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  I could just parallel that idea to one of the concerns that I have today,
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  and that is with the fact that we're printing one trillion dollars every one
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  hundred days, and if we understand how supply and demand work, or inflation
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  actually works. Inflation is literally a phenomenon that's created by central banks as a
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  result that they're printing and basically giving us the tax of least resistance, So
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  instead of raising our taxes, they print more money. Well, so someone's
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  got to buy that, and so Chi they used to be the biggest net
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  buyer, they're a seller. Saudi Arabia used to be a net buyer.
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  They're no longer doing that. In fact, they've just joins the bricks nations
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  as of January first, and so they're no longer excited about the US dollar
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  and they're trading now outside of the US dollar for oil and gas. If
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  we look at all of these things kind of collectively coming together here, this
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  is a This is a very concerning time for us to be looking at at
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  the world and where we're headed. Because in the world of you know,
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  having to sell new treasuries, if we don't have a new buyer's like as
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  an example, Japan's a lugger buying, well, what happens to the price
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  If there's a buyer, the price will go higher where the yield has to
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  go higher in order for somebody to say, okay, it's worth it now,
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  I'll fix some money, I'll put some money into into there. And
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  instead of being in the stock market and thinking that everything is going to be
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  running so I think that you'll see people flee back into treasuries right now and
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  it'll get bought for a little bit. But I think as we get closer
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  to the end of the summer September to fall October and we've got more expenses
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  coming in, more printing going on, more deterioration, and the numbers that
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  we could find ourselves in a moment where we have a very very significant hiccup
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  the treasury market. And that's when you see real challenges because you know,
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  we're going to over a trillion dollars this year the nation in treasury debt,
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  the US sax bearers on the hooks for that. You know, the Fed,
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  you know, is going to keep these rates higher. In act,
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  they could go higher even yet uh if if if what I just shared place
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  true. So again, when there's more supply than than there are buyers,
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  the price has to go up. And that is a devastating idea for bond
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  holders today, especially those that are nearing an entering retirement and don't have time
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  to recover from these losses. All right, well, uh, definitely interesting
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  times ahead. Uh so what are you supposed to do? Bitcoin? Gold,
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  silver, diamonds, bananas? What do you do? You know?
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  I think everyone's kind of asking some questions right now, and that is what
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  is real money. I personally believe that real money is gold and silver.
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  Uh and uh, you know, it takes just more dollars to purchase real
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  money gold and silver, uh you know then than it did just six months
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  ago twenty percent more. So I think that that gold has led to a
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  new high, and I think that it will break thirty four hundred year probably
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  even within the next thirty days. And and once that does, just watch
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  because silver is going to rally very hard and through the end of the year.
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  I believe that silver is going to outperform gold at least two to one.
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  I think that oil per barrel you're looking at one hundred dollars a barrel
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  by year end, could be higher than that, if I can be honest,
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  especially with new tensions in the Middle East, we're obviously seeing you know,
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  other metals like copper and steel. See, you know, very very
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  significant upswings right now, and so you know, more of a commodities based
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  approach I think is going to be valuable. But let's just be clear about
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  this as well. Running AI and everything associated with evs, it's going to
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  take a lot of electricity. So I think that there's some value and some
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  utilities as well. And so I got a couple of thoughts as it relates
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  to that and how to play that. But you know, metal liners be
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  good as well, given the fact that their pe ratios are are lower.
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  They've been undervalued basically for two decades, and I think that they're about to
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  get repriced and really be seen for the value that they have. We'll see
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  if the Biden administration lets them drill and figure some things out, but you
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  know, and until that occurs, we've got what we got. And in
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  the last part there is that you know, those oil producers, I don't
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  think that they will cut their dividends. And so for those that are looking
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  for income, the dividends from from certain oil producers, I think they're going
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  to be consistent. And uh, they've got plenty of margin in there based
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  on what the costs are to produce relative to what uh you know, we're
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  paying that for the pump here. And that's even if there's a slowdown,
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  We're we're going to see any of those ideas I believe continue to grow and
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  and continue to take off. So yeah, there's some thoughts. So all
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  right, well, hey, I'm a huge utility bull. I was a
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  big bowl before the AI thing hit now because I'm figuring, hey, the
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  evs AND's that's inexorable trend as more and more go, we're going to see
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  demand increase. What's good about EV's is that most of them get charged at
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  night, least if you're in a home charger situation. So it's perfect for
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  the utility companies. They don't really need to increase capacity to service this new
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  fleet of cars. But AI is a whole another story. I think the
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  AI combined with the megabattery pacts really going to be where it's at where you
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  can store up the electricity, get it at night. Beauty is the ability
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  of those things is to buy energy at the lowest possible price, Like in
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  Florida here just for a home seven cents of killowot hour regular tag thir thirteen
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  cents of killo what hour. So stock up all that energy and then basically
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  use it during the day when you need it. Actually they use it twenty
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  four to seven. But my point is that's going to be invaluable. It's
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  going to help pay for those things for sure. Yeah, all right,
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  David. Always great to have you on tell us, where do we find
• 17:18
  you on the web? How do we connect with you? Yeah? So
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  our website is my spg dot com. I've also got to a site out
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  their offerings and great information, and that is fed bubble dot com. Fed
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  bubble dot com bubble. And you know, you've got to name the perpetrator
• 17:37
  who causes pop, so that is the Federal Server. And I think that
• 17:41
  we should be critical of those who have the ability to affect our lives in
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  such significant ways. So there's been big mistakes that have been made and we
• 17:52
  have absolute bubbles that are amongst us right now. So you know, just
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  hopeful that people can certainly you know, survive in these financial times. And
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  so appreciate your time here today and the opportunity to be on your show,
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  as this is a key, key time to be having the right answers and
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  to be understanding what the future is going to be holding. Couldn't agree with
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  you more, Hey, David, Always appreciate you coming on. Got a
• 18:15
  question for David or myself. The email address is kl atcarrieluts dot com.
• 18:21
  You'll find a link to fedbubble dot com in the show notes to this interview
• 18:25
  on Financial Survival Network dot com. We just asked if you visit, please
• 18:29
  sign up for your free newsletter. David. Always a pleasure. We'll talk
• 18:32
  to you again soon. Appreciate you carry Thanks so much talking said. Thanks
• 18:36
  for listening to Carrie Letz's Financial Survival Network, your solution to today's trying times.
• 18:42
  For the latest, go to Financial Survivalnetwork dot com. Financial Survival Network
• 18:48
  now more than ever,