Latest / Financial Survival Network / Sticky Inflation, Fed Traps and Gold - Mathew Tuttle #6421

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Sticky Inflation, Fed Traps and Gold - Mathew Tuttle #6421 · Financial Survival Network

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  Speaker 1: You're listening to Cary Lutz's Financial Survival Network, where you
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  Speaker 2: More than ever.
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  Speaker 3: Welcome. You are listening to the Financial Survival Network. I'm
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  Speaker 3: your host, Cary Lutz. Well, we've gotten some economic news out.
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  Speaker 3: Inflation doesn't look like it's slowing down. Let me tell
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  Speaker 3: you a little anecdote. I was in South Carolina. I
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  Speaker 3: needed to buy some deodorant. I went to Walgreens and
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  Speaker 3: the deodorant that a couple of years ago I was
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  Speaker 3: paying $ 2.
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  Speaker 2: 99 a tube for.
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  Speaker 3: It was $ 8.
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  Speaker 1: 95.
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  Speaker 3: I couldn't believe it. You know, every now and then
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  Speaker 3: you go into the store and the price of something
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  Speaker 3: hits you square between the eyes. And that was a
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  Speaker 3: moment for me. Matthew Tuttle is with us now. TuttleCap, T-U-T-T-L-E, Cap.com.
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  Speaker 3: Coming to you from Greenwich, Connecticut. And Matthew, we got
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  Speaker 3: inflation today.
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  Speaker 2: Yeah, what a shock. Inflation is still here.
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  Speaker 4: It's picking up a little bit worse than expected on
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  Speaker 4: the PCE this morning, which is unfortunate because that's the Fed's.
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  Speaker 2: Kind of main thing that they look at. So, but...
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  Speaker 2: On the flip side, we had GDP at 1.5%.
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  Speaker 4: So you've got kind of this weird situation where inflation
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  Speaker 4: is higher, but not ridiculously higher.
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  Speaker 2: Growth is slowing.
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  Speaker 4: And what the heck is the Fed going to do?
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  Speaker 2: Which means Jackson Hole becomes way, way.
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  Speaker 4: More important than Hopefully, we'll get some sort of clue
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  Speaker 4: from Warsh, you know, where they're leaning on the next meeting,
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  Speaker 4: because it's it, you know, this puts the Fed in
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  Speaker 4: a tough spot.
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  Speaker 3: So what about the PCE numbers, the personal consumption expenditures?
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  Speaker 3: You know, that's going up, but is it just keeping
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  Speaker 3: up with inflation barely? Is that what it's doing?
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  Speaker 4: Well, I mean, it continues to grow. I mean, it's
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  Speaker 4: three point seven percent. The Fed has put the goalposts
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  Speaker 4: to two. So we continue to be well ahead of
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  Speaker 4: where they want inflation to be.
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  Speaker 2: Yeah, but.
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  Speaker 4: We're going into this next FOMC meeting not really knowing
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  Speaker 4: what they're going to do. And, you know, normally when
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  Speaker 4: you go into an FOMC meeting, you know, I mean,
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  Speaker 4: you don't know what they're going to say, but you
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  Speaker 4: know what they're going to do. Last meeting, we really
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  Speaker 4: had a lot of uncertainty around what they were going
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  Speaker 4: to do. This meeting, we're going to have a lot
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  Speaker 4: of uncertainty around what they want to do, unless Warsh
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  Speaker 4: helps us out at Jackson Hole, which is possible. But
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  Speaker 4: I think he'll probably play his cards pretty close to
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  Speaker 4: the vest.
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  Speaker 3: Yeah, we don't really have a sense of his style
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  Speaker 3: and his metrics, his analytics yet, do we?
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  Speaker 4: Well, and he's also in a tough spot as well
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  Speaker 4: because Trump brought him in to be his guy. And
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  Speaker 4: we know what Trump wants. Trump wants lower interest rates.
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  Speaker 4: If Trump didn't get lower interest rates... We know how
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  Speaker 4: he's going to react. You know, we know what he
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  Speaker 4: did to Powell. Warsh probably doesn't want that to happen.
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  Speaker 4: And I think that is part of why you saw
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  Speaker 4: him do nothing at the last Fed meeting when you
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  Speaker 4: ended up having three dissenters. And so, yeah, I mean,
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  Speaker 4: we don't know how he thinks. We don't know his metrics.
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  Speaker 4: We do know he probably doesn't want to piss Trump off.
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  Speaker 2: At the end of the day, he may be forced to, though.
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  Speaker 1: Yeah.
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  Speaker 3: Yeah. You don't want to cross Trump. Trump has one
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  Speaker 3: economic prescription for everything, everything that ails, everything. Well, I mean, two. Basically,
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  Speaker 3: it's tariffs and interest rate cuts. And as long as
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  Speaker 3: you go along with the program, then you're the greatest
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  Speaker 3: Fed chairman who ever existed. But if you're not, if
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  Speaker 3: you don't go along with the program, God help you. And,
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  Speaker 3: you know. You got to look at the way Trump
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  Speaker 3: looks at economics, geopolitics, everything else. It's just a real
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  Speaker 3: estate transaction to him. Going into Iran, closing down the
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  Speaker 3: Straits of Hormuz, it's a real estate deal. It's a
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  Speaker 3: hostile takeover where you want to replace the existing management
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  Speaker 3: because they're screwing everything up and they're not effective. And
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  Speaker 3: same thing with the Panama Canal. Venezuela, another real estate deal.
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  Speaker 3: You don't like what's happening in one of your companies.
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  Speaker 3: You just replace the manager, right?
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  Speaker 2: Well, yeah. And we're seeing that in treasuries, too.
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  Speaker 4: I mean, Besson is going out and now trying to
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  Speaker 4: manipulate the treasury market to bring rates down.
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  Speaker 2: Interestingly.
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  Speaker 4: You know, he should know as well as anybody that
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  Speaker 4: eventually market forces win. I mean, you know, he was
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  Speaker 4: part of that billion dollar profit Soros made on the
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  Speaker 4: British pound where they fought the Bank of England and
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  Speaker 4: eventually won.
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  Speaker 2: He's brought rates down a little bit.
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  Speaker 4: But, you know, I just I think the buy I
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  Speaker 4: would not bet against the bond vigilantes if they want
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  Speaker 4: rates higher. You know, he's going to have a tough
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  Speaker 4: time manipulating the marketplace lower.
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  Speaker 3: But the so-called bond vigilantes have been in hibernation mode
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  Speaker 3: for decades already.
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  Speaker 4: Well, they raised their head the last FOMC meeting. So
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  Speaker 4: you had rates stay steady, and they jacked up intermediate
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  Speaker 4: and longer-term interest rates. Because I think there was a
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  Speaker 4: loss of confidence that the Fed is going to be.
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  Speaker 2: Ahead of the curve. And I don't blame them.
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  Speaker 4: I mean, you know, these are pretty much the same
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  Speaker 4: guys who said inflation was transitory in 2022. And these
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  Speaker 4: are the guys who have not been able to bring
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  Speaker 4: it down anywhere near their level.
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  Speaker 3: Yeah. Did you buy that transitory argument? I mean, I
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  Speaker 3: did an article called The Best Things in Life are Transitory.
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  Speaker 2: Yeah, no, I didn't buy that.
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  Speaker 4: I'm not a big fan of the Fed, what they do,
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  Speaker 4: how they do it. You know, I don't know who
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  Speaker 4: died and anointed them the smartest guys in the room.
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  Speaker 4: You know, so I pay much more attention to market forces. And,
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  Speaker 4: you know, when the bond traders are telling me inflation's
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  Speaker 4: not transitory, I'm going to believe that.
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  Speaker 3: And certainly gold was kind of spitting that.
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  Speaker 3: That announcement out and silver as well, but more so gold.
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  Speaker 4: Yeah, we've been pounding the cable for gold and silver.
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  Speaker 2: The past couple of weeks. We think you always want
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  Speaker 2: to own it.
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  Speaker 4: And in our model portfolios, we've got fixed allocations to it.
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  Speaker 4: But the time to really buy gold, if you're going
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  Speaker 4: to be tactical, is when nobody wants it. So we
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  Speaker 4: did add to our exposure a couple of weeks ago.
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  Speaker 2: If anything, I will continue to add. I mean, I'm
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  Speaker 2: not looking to get out of gold here.
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  Speaker 3: Yeah, and silver too, I think. 70 is a crucial mark,
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  Speaker 3: $ 70 an ounce. Just threw out a memo to all
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  Speaker 3: the Insider Advantage members, those of you who are watching.
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  Speaker 3: 70 is a signal, but 75 is the real signal here.
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  Speaker 2: Yeah, makes sense. I wouldn't push back on that.
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  Speaker 3: Yeah. So basically, we're in a wait and see mode
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  Speaker 3: here to see what the man of the hour is
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  Speaker 3: actually going to do. So do you pre-position in cash?
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  Speaker 3: You're buying shares. What are you doing with AI stocks?
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  Speaker 4: Yeah, so to me, the most important thing that you
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  Speaker 4: need to focus on is portfolio construction. So we own
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  Speaker 4: all the AI bottlenecks, you know, space, photonics.
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  Speaker 3: Your dog agrees with you there.
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  Speaker 2: Your dog is a key to dream it.
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  Speaker 3: He's a strategic portfolio allocator, isn't he?
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  Speaker 2: Well, no, he puts everything into Chewy, but.
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  Speaker 3: Well, then he's a socialist. You know, most dogs are socialists.
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  Speaker 3: They get free health care, free food, free housing. And
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  Speaker 3: all they do is like give you unconditional love in return. Right.
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  Speaker 2: Exactly.
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  Speaker 3: It's too bad that Wall Street wouldn't be that way either.
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  Speaker 3: That would be a great business model, but they'd go broke.
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  Speaker 2: Yeah.
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  Speaker 3: So when we're looking ahead here, you're saying construct a
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  Speaker 3: portfolio with with what you mind.
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  Speaker 4: So yeah, own all of the AI names, but watch
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  Speaker 4: your sizing. So, you know, five, 10%, balance it out
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  Speaker 4: with what we call halo stocks, which are heavy asset,
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  Speaker 4: low obsolescence. Those are value names that are either going
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  Speaker 4: to benefit from AI or that AI is not going
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  Speaker 4: to put out of business. And then own some, what
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  Speaker 4: we call Lindy stocks. Those are companies that have been
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  Speaker 4: around 100 years or more.
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  Speaker 2: Combine that all.
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  Speaker 4: Together, mix it with some gold, mix it with some crypto,
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  Speaker 4: use property and casualty stocks instead of bonds. We think
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  Speaker 4: bonds with any type of duration here are uninvestable. And
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  Speaker 4: then you don't really worry if AI is.
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  Speaker 2: In a bubble or not.
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  Speaker 3: OK, so PNC stocks, I've not heard anybody really being
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  Speaker 3: bullish on them. They're kind of boring. Your grandfather's basically,
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  Speaker 3: you know, that kind of those kind of mainline type
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  Speaker 3: banking insurance stocks.
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  Speaker 4: We use them as a bond substitute. So we don't
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  Speaker 4: think you should be investing in bonds. But what you
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  Speaker 4: get in a property casualty insurance company, they're taking your premiums.
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  Speaker 4: And they're managing it in bonds, but instead of like
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  Speaker 4: an ETF or an active bond manager that's benchmarked against
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  Speaker 4: an index, their benchmark is zero. They're managing to make money.
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  Speaker 4: They're managing the duration. They're watching the Fed. And so,
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  Speaker 4: for example, in 2022, bonds got killed. Property and casualty
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  Speaker 4: stocks were up. So that's where we like them. We
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  Speaker 4: like them as a replacement for where you would typically
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  Speaker 4: have vines.
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  Speaker 3: Got it. All right. That's an interesting thing. I hadn't
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  Speaker 3: really thought about it. All right. I like the concept.
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  Speaker 3: I like the fact that they give you a return.
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  Speaker 3: What kind of dividend are they paying? Is this group
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  Speaker 3: paying up?
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  Speaker 4: You know, 2%, give or take. You're not buying them
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  Speaker 4: for the dividend. You're buying them for lack of correlation
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  Speaker 4: with the S & P, lack of correlation with the
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  Speaker 4: AI names, certainly. And again, putting them where you would
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  Speaker 4: typically put bonds in a portfolio. And we're actually, we're
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  Speaker 4: launching a property and casualty ETF next month in September.
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  Speaker 1: Cool.
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  Speaker 3: Wow. So tell us your top three favorite ETFs in
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  Speaker 3: the total capital management family.
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  Speaker 4: Yeah, so... I told you I like the Halo stocks.
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  Speaker 4: That's H-A-L-X is for our Halo names. PCPP is our
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  Speaker 4: version of the permanent portfolio. So it's combining Lindy stocks,
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  Speaker 4: property and casualty, crypto gold and T-bills.
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  Speaker 2: Really like that. That's been crushing it lately. And then.
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  Speaker 4: We've got DRMP, which invests about 50% in the DRAM
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  Speaker 4: ETF memory, and then a bunch of other memory stocks.
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  Speaker 4: And then we write put credit spreads underneath it to
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  Speaker 4: generate a 30% yield. So basically, you've got access to
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  Speaker 4: the memory names, and you've got a 30% or so yield.
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  Speaker 2: So those are my three favorite right now.
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  Speaker 3: All right. Well, that's an interesting concept here. The one
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  Speaker 3: thing I always count on with you is that you're
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  Speaker 3: always going to have a different take on the markets
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  Speaker 3: than the straight line, you know, mainstream CNBC, you know, buy,
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  Speaker 3: allocate treasuries, you know, the typical allocation model, which if
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  Speaker 3: you follow that now in an inflationary period, that could
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  Speaker 3: be disastrous to you.
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  Speaker 2: Yeah.
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  Speaker 3: You know, one thing we're using now, and I think
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  Speaker 3: you've got a kick out of it is the PB PWI.
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  Speaker 3: That is the Palm beach trophy wife index. And we're
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  Speaker 3: tracking private plane landings at what was PBI, but is
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  Speaker 3: now DJT Donald J. Trump airport. And, uh, we've got
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  Speaker 3: the Rolex velocity index and the, uh, Bentley index. So, uh,
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  Speaker 3: And then, of course, there's the marital counterparty risk index,
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  Speaker 3: which one always needs to be aware of when you're
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  Speaker 3: in a high capital, high liquidity area and part of
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  Speaker 3: your life here. So tell us again where we find you, Matthew.
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  Speaker 4: Yeah, so my website is TuttleCap.com. We do a free
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  Speaker 4: daily newsletter.
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  Speaker 2: Sign up will pop up when you get on the site.
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  Speaker 4: Talk a lot about thematic investing, a lot about the
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  Speaker 4: stuff that we just talked about here today.
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  Speaker 3: All right. Appreciate that. I've got a question for Matthew
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  Speaker 3: or myself. Shoot me an email, kl at kerrylutz.com. All
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  Speaker 3: of my work. All of my interviews, my whole life
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  Speaker 3: is at FinancialSurvivalNetwork.com, which is now housed by Substack. Matthew,
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  Speaker 3: appreciate you coming on. We will talk to you again
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  Speaker 3: real soon.
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  Speaker 2: All right. Sounds good. Thank you.
• 15:08
  Speaker 1: Thanks for listening to Cary Lutz's Financial Survival Network, your
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