Latest / Financial Survival Network / Global Financial Crisis Coming Soon with David Stryzewski #5790

Transcript

Global Financial Crisis Coming Soon with David Stryzewski #5790 · Financial Survival Network

0:00
You're listening to Carrie Lets's Financial Survival Network, where you get valuable information you
0:05
just can't find anywhere else to thrive in today's trying times. You need the
0:10
Financial Survival Network now more than ever. Go to Financial Survival Network dot com
0:17
and get your free newsletter in gift Financial Survival Network now more than ever,
0:27
And welcome. You aren't listening to watching the Financial Survival Network, I'm your
0:32
host Carrie Let's Well. Consumer sentiment numbers, consumer confidence numbers are out.
0:38
They're low and heading lower. David Skurzwski is with us and now, and
0:44
David, it's great to have you back on the show, and you find
0:48
him at myspg dot com. So what do you make of the numbers?
0:53
Where's the rate hikes? Are they going to be over soon? What about
0:59
the stock more we're heading for a major correction, all these questions, what
1:03
are your thoughts? David, Hey, good morning and great to be with
1:07
you here Carrie. So, yeah, the consumer confidence numbers are are down.
1:11
So in our opinion, what we're watching right now is the deterioration of
1:19
this information. Now, these numbers are always looking in the rearview mirror,
1:23
which is kind of a weird way to be driving the metaphoric car. You
1:26
know, we're always looking a month behind, etc. But this particular consumer
1:30
confidence poll was done on April third, so just a couple of weeks after
1:34
the banking crisis had begun, and so it's reflective of a weaker consumer sentiment
1:42
on what's actually going to be taking place and going on here. So to
1:46
kind of summarize those those next questions, I think if you follow the consumer
1:53
and understand where they're going, you're going to actually understand where economy is headed
1:57
next. As seventy percent of our economy has been sumer driven based upon our
2:00
spending. I'll say one of the things that was really interesting with this particular
2:06
survey is that they were talking about those who are under the age of fifty
2:09
five and are making more than fifty thousand dollars per year, so a little
2:14
bit younger, higher earners tend to be those those greater spenders, and one
2:20
of the things that they noted is that there was a significant deterioration in those
2:24
in the sentiment of those particular individuals, and so that tells me that we're
2:29
we're definitely seeing things change in a very considerable way. Right now. So
2:36
you know, we saw last year the market had its downturn, and we've
2:39
got a mixed you know signals right now. Some people, you know,
2:43
I could, I could speak out of both sides of my mouth. I
2:44
could tell you that we're in the middle of the beginning of a new bowl
2:47
market. And I can also let you know that, you know, my
2:51
personal opinion is that anyone who's objective is going to ultimately be looking at things
2:55
and guess what, We're not out of the woods here. We've got way
3:00
too many things that are uh signaling downturns, that are that are ahead of
3:05
us. Now, what's interesting is understanding, um that you know, we
3:09
haven't hit the last leg of a downturn, which is typically called capitulation.
3:15
And that's where of course everybody is hating the market. They hate real estate
3:21
like we saw in two thousand and eight, nine and ten, and they
3:24
just you know, are running from it. And so I personally don't think
3:29
that we have hit capitulation yet, uh And I don't think that we have
3:31
seen the sentiment numbers you know, really get as low as they're going to
3:37
be, uh likely over the next couple of months here. So, um,
3:40
what one of the things that I think that the average person looking at
3:45
these markets UH is not aware of is that many are expecting a quick downturn,
3:50
just kind of like we saw in two thousand and eight. Um.
3:53
I think it's actually going to be more similar to what we saw on like
3:55
the year two thousand and two thousand and one with the dot com bubble,
4:00
where it's going to be a more of a rolling recession that's going to take
4:04
place and play out over time. And see, the real big key here
4:09
is that we just began a banking crisis. You know, we're we're we're
4:12
a little bit beyond a month into that today. But you know, if
4:16
we look at what Lehman and Bear and UH, you know, Washington Mutual
4:21
all went through in two thousand and eight and nine that took over a year
4:25
to develop, you know, we saw these banks collapse faster than any banks
4:30
have collapsed before, you know, forty eight hours, which ultimately speaks to
4:33
the systemic challenges that are that are throughout the the financial world in our economy
4:42
today. And so I'm personally calling this the Federal Reserve bubble, and I
4:46
believe that we have bubbles in both the stock market, the bond market as
4:50
well as the real estate market, and all three of those things coming together
4:55
at one particular place and time that has not happened historically very of often,
5:00
in fact, if ever. And so we need to be very very very
5:03
cautious right now as we're looking here towards the future. Absolutely, And they
5:09
had two other bubbles or three credit card bubble, and auto loan bubble and
5:15
student loan bubble, so we got six of them going on here, David,
5:20
let's talk about the banking crisis. So we all know that No.
5:25
Eight, No. Nine, the biggest mistake the government made was allowing Lehman
5:30
Brothers to collapse. Right by far in retrospect, nobody would have done it
5:36
that way. It created a collapse, a global collapse by any description,
5:43
even though when you read the books, the history books of the time,
5:46
they won't refer to it as that. They're just call it a financial crisis.
5:50
But it was a collapse globally and started with subprime mortgages. Here they
5:59
made noise is about letting letting it go, letting the banks fend for themselves.
6:06
But then that all change, right, Yeah, all of a sudden
6:11
they stepped up and they bailed them out, not so much the shareholders and
6:16
the deadholders like last time, but the depositors more importantly, as they realize
6:23
the concept of the bail in now is dead, meaning that when the bank
6:28
comes up short on capital, all the depositors chip in and they take a
6:34
hit. This comes from the maritime concept, the general average, where when
6:42
the part ship is in danger of sinking and they've got a jettison cargo to
6:46
stabilize it, all of the interested parties, the fellows, shippers, everybody
6:51
chips in to make the injured party whole. But that doesn't work with the
6:59
banking system, because the banking system replies one on confidence. And like I
7:05
like to say, the root of the word confidence is con right. Yeah,
7:15
the two bank to fail idea, I think is what you're even alluding
7:18
to here. And so, um, you know, the banking crisis that
7:23
we have today is rooted in, of course, the rate of change that
7:28
the Federal Reserve has increased, uh, the interest rates. You know.
7:31
So I've been calling this now for this bond bubble crisis for for several years,
7:38
just understanding that we cannot and we could not maintain zero interests like this
7:44
uh, in the in the lending sector. So in all these banks put
7:46
money into long term treasuries. They've told everything was transitory by the you know,
7:50
the FED, and of course the FED had it dead wrong, and
7:54
uh, you know, we get these major increases, and of course we
7:57
we then find you know that these assets you know, are down thirty percent
8:03
from where they were just even twelve months ago. And our entire economy is
8:07
based upon credit, I mean globally, and so when when we look at
8:11
this from a from a global standpoint and we recognize that, you know,
8:16
fractional reserve lending has allowed banks to leverage up for every one thousand dollars that
8:22
they've been able to take in, they've been able to leverage ten thousand dollars
8:26
in lending. And so when when people begin to take deposits out, uh,
8:31
specifically from these local regionals, which are massive, you know, they
8:35
are the backbone right now of how we metabolize debt inside of corporations. Seventy
8:41
percent in fact, of all corporate lending and real estate lending in corporate uh
8:48
dollars there are from these local regionals, not from the big banks right now.
8:52
And so I think that We've got a very very very significant issue that
8:58
is still on our hands right now. And just like you you were sharing,
9:01
Hey, as we see some of these things wash out, the impacts
9:05
on these things, the ripple effects of these things can be uh, you
9:09
know, worldwide. And now I want to draw one different contrast here.
9:13
There are recessions and then there are also financial crisises. They are separate ideas,
9:18
but the two of them happening at the same time, that is a
9:22
very rare phenomenon. Now that happened in two thousand and eight, which the
9:26
it was a financial crisis that we saw with the the the lending and the
9:33
banks and the fallout that you just knowed there and it led to a recession.
9:35
Well, we could be finding ourselves in a very different side of this.
9:39
And again, as I was saying this rolling recession, I believe that
9:43
we're going to see different times that we're going to see part of our economies
9:48
hit our bottoms. And it's not just going to be all at once.
9:52
You know. These components and banks are very critical again to commercial office space,
9:58
and we have a one point four trillion dollars that needs to be metabolized
10:03
this year as well. As next year. That is the record, by
10:05
the way, for debt that has to be metabolized, and we're having to
10:09
do it at a timeframe when they're paying four or five six percent higher than
10:15
what they were originally financing for just a few years back. And so if
10:18
you weren't able to be more credit worthy, let's just say, when you
10:24
had three and four percent loans, how on earth are they planning on doing
10:28
it with seven, eight, nine, ten to twelve percent loans that are
10:33
that are mandated now in order to reset that debt. And so these are
10:39
the concerns that need to be on people's minds as we look forward to the
10:41
future. I mean, hey, we can talk about sentiment numbers, and
10:45
that's interesting and it's also helpful to tell us where we're going, But we
10:48
need to look at the handwriting on the wall and have a little bit larger
10:50
macro perspective of how these changes are ultimately going to have ripple effects kind of
10:56
flowing out and so it's going to affect real estate, it's going to infect
11:01
corporate earnings, which we're in the middle earning season right now. First republics
11:05
having a horrible time. Is that about one hundred billion dollars leave them.
11:09
And you know, here's one of the challenges as well. We raise interest
11:13
rates like this, Well, the treasury doesn't have FDIC limits like two fifty
11:18
like a bank does, and is paying a lot higher than a basic bank
11:22
is. And so why wouldn't I just put all my cash in the treasury?
11:26
You know, getting near five percent on three month commitments of time or
11:31
you know, you know, four better than four percent no FDIC. If
11:35
I do more than a year, I've got you know, long term capital
11:39
gains instead of ten ninety nine income. I mean, there's a lot of
11:41
advantages that the treasuries have today going direct as opposed to investing in banks.
11:46
And so anyone who's got real money, they understand this idea, and they
11:52
have moved these assets. And so I expect a corporate earnings recession here to
11:56
play out Q two and then Q three this year, which is ultimately going
12:01
to lead to more bad news, more market lows. And again I think
12:05
it's going to happen as things go out over time. We're looking at a
12:09
global financial depression here. Don't just survive the financial survival network. Fury Gold
12:18
Mines is a Canada focused exploration and development company committed to aggressively growing its scalable,
12:24
high grade gold assets, with major drill campaigns planned across its three point
12:28
five million ounced portfolio. Furies led by a management team of proven explorers and
12:33
developers with the track record of success in advancing and financing project development. Fury
12:37
gold Mines is well positioned to create value for investors with low risk development growth
12:41
and the potential for a new major discovery. Fury gold Mines trades on the
12:46
TSX and NYS American under the ticker fu Ry. To learn more, go
12:50
to Fury gold Mines dot com. That's Fury gold Mines dot com. This
12:58
is the financial survival network. The information you need to throw now more than
13:05
so interesting that you say that. So one of the things that we would
13:07
follow would be the ISM indicators. So these are the indicators for manufacturing.
13:13
We can look at them in the United States, which is where I tend
13:16
to focus most of my attention, but I was looking up these indicators actually
13:20
on an international basis. And so when we break below fifty, that is
13:26
like literally a point in time where there's an expectation we're going to have a
13:31
recession within the next twelve months. Well, we've been below fifty in the
13:33
United States since September last year, and so that's that's a big deal.
13:37
But if we look at this in a global standpoint, nearly every nation across
13:43
the globe is either below fifty or slightly above it right now, and so
13:48
no one is looking super healthy, including China. We have just the whole
13:52
globe is slowing down as people are spending less, they're saving more quote unquote
13:58
if they have it to say, let's just be honest about that. And
14:03
we're watching a deterioration here that I think that it's just, you know,
14:07
the math just begins to add up. Wall Street wants to rally really hard.
14:11
So you know, is this going to be a bowl trap? I
14:13
mean, I vote the market goes up forever. Here's the reality. This
14:16
is not the time to fall asleep at the wheel on the information, the
14:20
expectations. We need to understand where we are in cycles, especially if someone
14:26
is nearing to entering retirement. Yeah. I could not agree with you more,
14:28
David, And I think this is a global meltdown, an implosion taking
14:33
place. We're going to reach the panic stop where they're going to cut rates
14:37
and I don't know that the interest rates will come down as a result of
14:41
the FED cutting. Yeah, short term, but what you described is zero
14:46
percent interest rate policy past decade. It's all coming home to roost. In
14:52
Austrian economics, we have a concept that is totally devoid in the Keynesian economics.
14:58
It's called malinvestment. And all that free money went into real estate that
15:05
we didn't necessarily need to see through office buildings. The pandemic kind of brought
15:11
all that home to roost. You know, in China they've got ghost cities,
15:15
dozens of them all over all from malinvestment and central planning. This is
15:20
always the net result of it, isn't it. Yeah, Yeah, absolutely,
15:24
I mean the whole China real estate market that could be potentially the largest
15:28
Ponzi scheme in the world. You know, they only allow their people to
15:33
invest in three different things their currency, real estate, or their stock market,
15:37
which we know is rigged. And they don't you know, report accurately
15:39
based upon Gibbs reporting like we have to hear. And so everyone's putting all
15:45
this money into these these ghost cities that you know, hey, they're paying
15:48
their mortgages on these condos that have never actually been fully built. I saw
15:54
statistic. I hate to quote something without the specific data in front of me,
15:58
but we had over a decade worth of information. It was like,
16:02
you know, two thousand and twelve to twenty twenty two, there had been
16:06
like sixty five percent of all real estate purchased by the average consumer in China
16:11
that had never been completed, sixty five percent. And so you know,
16:15
he's the here's the concern of the Chinese over there. Why am I paying
16:19
on a mortgage for a property that was supposed to be an income property and
16:23
you're supposed to be doing all this great industry there and oh we've moved on
16:26
now to the next one. And so at some point people capitulate and they
16:32
say we're done. We're throwing up our hands. And so I think that's
16:34
the big issue there with Evergrand, which is their largest real estate producer,
16:41
and the reason why it's having such solvency challenges. And you know, the
16:45
back to your point on will the Fed drop rates? You know, here's
16:51
the thing. If the Fed drops rates, is that bullish for the stock
16:55
market? Well it could be, but the reason why they would drop rates
16:59
is only because of massive systemic challenges that are going to mandate that the FED
17:04
has to get to this easy money stuff again. And if we have to
17:08
and we're forced to do that, then things have broken a lot further than
17:12
I think that most people would have expected to see a bull market moment again.
17:18
And so this is where we just don't want to fall asleep at the
17:19
wheel. We need to be able to ride bull markets and tame bear markets.
17:23
That's our little phrase here on investing, riding bulls and taming bears.
17:26
The goal of seventy to eighty percent of the game while missing seventy to eighty
17:30
percent of the pain. You easier said than done. But there are investment
17:33
strategies that help us to play both offense as well as defense, and we
17:38
need to be able to do both of those very very very effectively. Biggest
17:42
concern that I have right now, though, is in the bond market,
17:47
and that is that bonds lose money in five different ways. And so we
17:51
talked earlier about the inverse relationship between interest rates rising value bonds falling, especially
17:56
the longer duration ones. But you know, credit worthiness is another one of
18:02
these things that we look at. You know, hey, what if these
18:04
corporations can't metabolize their debt or they have an earning compression and they go from
18:08
being credit worthy to not credit worthy. Well, you're going to lose a
18:12
ton of money in your bonds. What if these companies are ghost companies at
18:17
this point and they're getting replaced by new technology like chat, GPT, maybe
18:21
their supply chain challenges that are still going on. I personally foresee many Chapter
18:26
eleven bankruptcies going forward. Now, that doesn't mean that they're completely insolvent.
18:30
That means that they need to reassess their debt relative to the commitments that they
18:34
made previously. And so if you do a Chapter eleven, well, guess
18:37
what the value of your bond is going to be going down, if not
18:41
go to zero as those changes begin to adjust, because bonds are debt instruments.
18:48
And then the last one on that is that we look at the fact
18:52
that inflation is higher than what we're actually receiving on those sixed assets today.
18:57
And so this is this is an important concept for us to understand because we
19:02
need to look at our after inflation rates of return. You know, we've
19:06
got two different investors. One that's trying to beat inflation because they need to
19:10
keep their money relevant, and the other that's just trying to avoid a major
19:14
downturn through a recession or a financial crisis in order to remain buoyant that they've
19:19
got the dry powder to rellocate back in when everything goes on sale. And
19:25
so, you know, the point here is that we have to be patient,
19:27
and we have to recognize that bear markets are bear markets are bear markets,
19:32
and they all play out in a very similar way. But this bond
19:36
bubble that we're in, it is systemic, it's worldwide. The challenges could
19:41
be devastating. And again for those who are near and the entering retirement that
19:45
don't have the working years ahead of them to be contributing more in they're just
19:48
going to be riding the tide of whatever the market gives or takes away.
19:52
And so this is where it becomes really important to understand where are those places
19:57
to allocate right now in order to avoid sleepless nights that that big recession downturn
20:03
that we're all fearing, we know is coming, when's the shoe going to
20:06
drop? And then but ultimately we need to be able to outperform and beat
20:11
inflation as well as these these challenges because Hey, most people are going to
20:15
be around for you know, twenty thirty forty years, even within retirement,
20:18
and and so this is the concern on their mind, running out of money
20:22
before they run out of time. I think we'll leave it at that.
20:26
But basically I agree it's just about everything you said, and you can't really
20:33
rely upon the government A to give you this straight information and be to actually
20:40
try to protect you. Not what the system's about. As George Parlin said,
20:45
it's all a big club and you aren't in it, and you're not
20:49
going to be protecting you. The one thing I will say is if we
20:53
get to the point where there's mass defaults on mortgages, there will not be
20:57
another fordclosure crisis, all right. There is no appetite by the public and
21:03
the government to see ten million, twenty million homes were closed upon. There
21:07
will be This will be what we would call a workout depression. All these
21:14
loans will be worked out, they'll be reduced, they'll be liquidated because nobody
21:18
is going to have the money to pay their debts. And in San Francisco
21:23
they said the number of cell phone calls in downtown San Francisco. There's an
21:29
article in zero hedge down thirty one percent of what it was pre pandemic.
21:34
And the only reason why cell phone calls are down is because the number of
21:38
people there is down. That's just one example that David, just tell us
21:42
how we find you again, how we get you on the web. Yeah,
21:45
and the last point on this, I agree with you. I believe
21:48
people and individuals will get bailed out. Corporations, however, will not.
21:52
There's less of a desire to bail out corporations. So that's why understanding the
21:57
office space and the corporate channel is with debt, I think are very,
22:00
very very important because we're at risk of losing a lot of them. Folks
22:04
can find us on my website myspg dot com or Ready to Retire dot com.
22:11
I got a number of websites, different information out there to teach educational
22:15
courses on retirement planning, maximizing so security, minimizing taxes, and you know,
22:22
just really trying to help people to be able to focus on the areas
22:26
that they can change, because there's so many places in this life that we're
22:30
just going to have to figure out, Hey, what comes next, So
22:33
let's focus on the areas that we can Yeah, it's a veritable financial tsunami,
22:38
and the only way to survive a sosunami is to be away from the
22:42
title wave when it hits. Yes, sir, that's what you need to
22:45
be thinking about, David. Appreciate it. Hey, you've got a question
22:48
from David, Shoot me and email kl at Kerreluts dot com and you'll find
22:55
the link to David's site on our show notes on Financial Survival Network dot com.
23:00
While you're there, sign up for your for your newsletter David. Always
23:03
a pleasure. Appreciate your stopping by. Hey, appreciate your carry. Thank
23:06
you for so much for your time. Thanks for listening to Carrie Letz's Financial
23:10
Survival Network, your solution to today's trying times. For the latest, go
23:15
to Financial Survival Network dot com. Financial Survival Network now more than ever,