Latest / Financial Survival Network / Soft Dollar for 2024 and Lower Rates with Eric Hadik #5979

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Soft Dollar for 2024 and Lower Rates with Eric Hadik #5979 · Financial Survival Network

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Yeah, I guess see. The only thing is if the fit you know
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waives a magic club like Paul Volker did in the early eighties, that that
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eventually brought it to a screeching halt. But I agree that that you know,
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FED policy isn't going to do a whole lot and in that same vein
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as what I was just talking about with the first phases of dollar index versus
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goal dollar versus other currencies. You're listening to Carrie. Let'sa's financial survival Network
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Network now more than ever. And welcome you are listening to the Financial Survival
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Network. I'm your host, Carrie Lutz. Well, twenty twenty three was
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quite a year. Here we are in twenty twenty four. Wanted to get
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Eric Haddock back and get your views Eric on where we're heading for twenty twenty
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four. Hey, you find Eric over at inside track Trading. That's I
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nside Tracktrading dot com. Got a question for Eric or myself. Shoot me
1:27
an email Klatcarrie Lutz dot com. Eric, Hey, it's January ninth.
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I'm glad we're getting you on here early in the year. So I remember
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you mentioning that the strong dollar made you realize that, among other things,
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that we were going to get a Democrat in the White House. Now we've
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had a weaker dollar, although it's not as weak as where we started out
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once upon a time. Any prognostications about the election, well, what I
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discussed with that too is more of a not where we are now, but
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where it moves during the administration. So you need a little crystal ball where
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that's concerned. But the discussion we had even I think I even had it
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with you back in in twenty sixteen when it was showing to me a Republican
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even before they knew who the candidate was. And the pattern has been over
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the last forty to fifty years that during Republican administrations the dollar tends to trade
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lower, and during democratic administrations it trends higher. And that's obviously that's kind
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of from start to finish that within there you're going to have your swings.
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So any particular six month or even one year. Part of that might not
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or might contradict the overall trend, But I would say that from a dollar
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perspective, I have been saying all along that I thought the dollar would head
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lower from the beginning of twenty twenty three into about the end of twenty twenty
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five, maybe even carrying over into twenty twenty six. So from just a
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purely dollar outlook, that's what I've been looking for, and I think we
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kind of have the first big leg of that down and we're probably in for
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some consolidation in the dollar. But as far as administrations and whatnot, a
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lot of that would also hinge on how much of that move comes between now
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and the end of twenty twenty four. It may just you may get most
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of the down and move then and then it stabilizes. So long answer to
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a short question as far as is political prognostication, No, that's not really
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giving me anything convincing to hang my hat on. But I do think the
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dollar is going to be a big factor in a lot of economic issues,
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in potentially another future batt of inflation, and in a lot of other factors
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within our economy. Because I think it has completed a fourteen year bull market
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from two thousand and eight into late twenty twenty two, and that's based on
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the Dollar Index, and I think that that Dollar index is going to work
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its way back at top dout around one thirteen. I think by the time
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we're over, it's going to be back down to between eighty eight and ninety
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so. And I think that some of that has to do with geopolitical monitor
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competition, everything from from China to the Bricks Nations, and the ongoing battle
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against the global hegemony of the dollar and looking for alternatives to it. And
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I think we're entering that time frame where many of the efforts that have been
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put forth the last ten to fifteen years are going to start to reach fruition.
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And you know, that doesn't mean a collapse in the dollar or anything
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like that, but you take ten percent of its reserve authority away from it,
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and that has big ramifications for the US and US debt and who's interested
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in buying it and who's not, and a lot of other factors that stem
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from that. Yeah. Well, the one thing I've felt like the dollar
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was on its way out men many times in the past, and somehow it's
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stuck. It out. And you know, it's been over one hundred years
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now since the advent of the Federal Reserve, and here we are. It's
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it's still sticking it out. But I guess in the long run, all
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fiat currencies returned to their intrinsic value, right well, And that's part of
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it too, And that's why I even specified dollar index when I was talking
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about fourteen year bull market, because back in twenty thirteen, twenty fourteen,
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twenty fifteen, I was doing a series of articles on this forty year cycle
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that I've documented going back hundreds of years, even predating the US in Europe.
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But it times these battles between heart currency and other forms. Often it's
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a paper fiat current. See. You know, you even go back to
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what is it the I think it was the sixteen nineties, fifty sixteen nineties
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in the Plymouth Bay Colony and their experiment and then you had experiment with the
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continentals right after the declaration of independence. And in this forty year cycle had
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timed these these battles between fiat currency hard currency, and it was showing me
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that twenty sixteen would start it actually culminate one forty year cycle from twenty sixteen
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to twenty twenty one, and then a new forty year cycle would begin twenty
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twenty one. And both of those the end of the one cycle in the
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beginning of the next were both telling me to look for dollar weakness against things
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like gold. Well, when I just mentioned the dollar index that rallied from
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two thousand and eight and didn't hit its peak until twenty twenty two. But
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if you look at the dollar versus gold, the dollar topped out in the
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end of twenty fifteen versus gold, and it has not even come back close
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to those levels that goal gained from early twenty sixteen all the wayend of late
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twenty twenty. Now it's had several retests of its highs, and it's getting
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more and more prone to a future breakout to the upside in gold, and
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that to me is also part of what you will see. The dollar index
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itself now starts to take a first dive, and that's kind of the diversions
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you see in a lot of markets that the dollar to most observers looked like
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it was still holding up from twenty sixteen to the present or to the end
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of twenty twenty two, But in reality, when you look at it on
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other basis and versus other currency, it was weakening, weakening, and that's
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kind of the first stage of a transition. And then when it becomes clear
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to the masses is when you have much bigger moves, when panic buying or
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selling enters in and you start to get accelerated moves. And I think that's
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what we could be in for in the coming years. Well, in fairness
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to the dollar, basically every currency became weaker versus gold over the past decade,
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right, Well, yeah, and that's that's what even the dollar index
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strength kind of tells you, is the Dollar index was gaining in the last
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half of the last decade twenty sixteen to twenty twenty one. On balance,
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it was gaining. It actually had some pretty significant moves in both directions,
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but on the whole it gained even as gold gained too. Which, yes,
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that tells you that the dollar index was the helpiest course in the glue
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factory, so to speak. But yes, it doesn't mean it's strong other
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than when you're comparing it for other kiak currency. Yeah. We we always
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say it's the best looking house in Baltimore. Okay, I'm not familiar enough
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with Baltimore in real estate. I know they had a real resurrection around the
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waterfront and what not alas decade or so, but I don't so much about
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it. So hasn't gone too good since then. But but you know what
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I'm saying, it's it's basically here. Yeah. Yeah, So let's talk
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about individual markets first. Like you made reference to inflation, and of course
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inflation run in Inflation runs in cycles as well. You and I lived through
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the list inflationary cycle sixties, seventies and eighties. It's not like the FED
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weighs a magic wand and it goes away. So what about the inflationary cycle
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that we're in now? What can we look forward to there? Yeah,
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I guess see. The only thing is if the FED, you know,
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waves a magic club like Paul Volker did in the early eighties, that that
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eventually brought it to a screeching halt. But I agree that that, you
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know, FED policy isn't going to do a whole lot. And in that
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same vein as what I was just talking about with the first phases of dollar
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index versus goal dollar versus other currencies, I also think there's a factor there
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of inflation and dollar weakness, And by that I mean that you had this
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first run up inflate of inflation from you know, late twenty twenty to late
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twenty twenty two, although there's been continual residual effects of it. I think
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they kind of identify many of the inflation indexes as peaking out in third quarter
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of twenty twenty two. But I think that you know, historically you've seen
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too that a week er dollar can certainly prod inflation, you know, just
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by critical thinking there if everything you're buying you're now buying with a weaker currency
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by comparison, just like we're talking about the comparison of gold the dollar,
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well commodities, it's the dollar weekends. As I expect, anything you're purchasing
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with that dollar is going to be more expensive relatively speaking, And so I
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think it's one of those things where we probably will see another round of inflation
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down the road a bit. I think we're into this reaction phase now.
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One of the things that I gauge my perception of inflation because I'm more concerned
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with commodity inflation commodity prices, and so I watch things like the Golden and
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SACS commodity index as a little bit of a gauge, and that really peeked
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out in the early part of twenty twenty two has been heading lower ever since.
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That is heavily weighted in oil and energy, but even apart from that,
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commodities have been coming off. And it's something where I'm from that index
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and from mid to longer term cycles. I'm looking at a bounce in it
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right now during the first quarter, but I think it could see another drop
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into who I'm kind of looking around the July August time frame, and that
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would be when I would expect it to bottom out. So after that would
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be when I would expect the next phase of inflation to start. And it
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doesn't mean that it comes roaring back within a few months. You know,
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it's going to need to kind of base out and start to slowly build momentum.
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So it's probably more looking out in that twenty twenty five, maybe even
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twenty twenty six timeframe, when I think we'd it would be more apparent that
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a second wave of inflation is well entrenched. Uh huh, Okay, Well,
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that's interesting and the kind of goes along with my thinking because these things
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go in waves as well, right, absolutely so, so you get a
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really bad wave and then it eases off, becuse whatever. But the only
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way the FED could really stop it is to just stop the economy, right,
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I mean to diminish the economy so much that it can't function well enough
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to produce inflation. Right. Yeah, And you know that's not going to
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happen in the next In the current year and an election year with either party,
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you know that it doesn't want to be viewed as being political, and
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so they're going to be kind of walking a tightrope and trying to be just
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very balanced and as neutral as they can while still trying to influence the markets
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the way they're hoping, right right. Okay, so let's talk about markets.
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So you would think a loss of purchasing power gold is going to do
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well in that environment. I think that, yes, that gold has more
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upside down the road. Gold has just very consistently been one of these markets
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where it kind of whips sideways in a trading range for months on end,
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and then within a few weeks or maybe two months, it makes an entire
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move and then it plateaus again and trade sideways. So it's one of those
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things where you want to certainly be patient and saving your ammunition, but you
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also want to be ready to move when it gives those first signals. A
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couple of perfect examples were in twenty twenty three, and this is where the
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cycles and charts were just so instrumental. I did several reports in late twenty
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twenty two saying where there was a consistent seven year cycle that was bottoming,
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and gold late twenty twenty two is seven years from the late twenty fifteen low,
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which was seven years from the late two thousand and eight low, which
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was twenty seven years from the late two thousand and one low, and for
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me, it looked like gold was ready to enter a three to four year
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bull market. But again it's that's in the way I just described that you'll
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get some initial advances and you'll get a lot of sideways trading. And so
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I have a couple of indicators that really helped me pinpoint when accelerated moves following
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turning points are most likely. And so in early March gold signaled one of
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those and generated a couple of bicygnals in early March, and every publication I
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put out for the next two months, I just kept saying everything shows gold
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should accelerate up into the first week of May and then then top out until
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late twenty twenty three. Well, gold serbs right up into May fourth,
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I think silver beat on May fourth or fifth, and then they just sat
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for the next They declined on a slower basis into early October, and as
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we were coming into the latter part of the year, this same combination of
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indicators was saying to look for a search in November and probably peaking out in
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the first week of December. And I even had a very specific upside target
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in gold that was linked to that at twenty one to fifty two, and
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sure enough, these indicators kind of confirmed it. In mid November, gold
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and silver accelerated to the upside. Gold peaked on December fourth, I believe
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it was at twenty one to fifty two, and that just ushered in another
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one of these trading ranges. So it's again it's looking for those opportunities.
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I mean, if you're just buying and holding, then fine that you also
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want to kind of buy what it's bolt back to give yourself the best potential
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for gains. But from a training perspective, it's important to just kind of
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be patient with gold, wait for those indicators to set up, and they
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often do it once or twice a year and then indicate when that one to
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two month surge is most likely. And so that's what I'm looking at in
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gold over the coming months and years. But I'm also along with that,
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looking at the ultimate breakout to the upside. And I discussed this back earlier
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this year of the whole pattern structure that gold was setting up, and so
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far it has continued to fill what I described back then, but on a
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continuous basis, continuous contract basis. Gold peaked around twenty seventy back in late
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twenty twenty and then around twenty seventy back in early twenty twenty two and has
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just gone back up and for three weeks in a row. The nearby contract
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closed right around twenty seventy before a pullback. Hearing gold, it is getting
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closer and closer to an upside breakout. So I think that when you get
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the next signal from these indicators, you're probably going to get an even bigger
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move because you'll get that momentum of a breakout to the upside. So you
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think it's this year, I do think it will be this year, and
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these indicators I'm watching are giving kind of some subtle hints of when I think
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that could be, but they really need to line up a bit more,
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get a bit more specific before I start to put too much weight on that
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timing. Okay, so let's talk about because when you talk about inflations,
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particularly in commodities, you got to look at energy because it's so huge.
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It's so hugely important to every economy in the world. So what is in
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store for energy prices. One of the things that I discussed throughout twenty twenty
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three was a combination of monthly, quarterly, and multi year cycles all that
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were telling me to look for a peak in your crude. In products,
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natural gas is completely different, and those cycles were telling me to look for
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a final peak in mid September of twenty twenty three. That was a consistent
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even five year cycle in crude. The previous peak like that was in a
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fourth quarter of twenty eighteen, and monthly cycles were aligning with that, even
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a lot of multi week cycles. So I thought, and still think that
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your September peak in the energy markets is a very significant one that could hold
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for quite some time. And when I mentioned that, I'm looking at the
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Golden SAX commodity index rallying right now, but then probably seeing another sell off
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into third quarter of this year. Since that's so heavily weighted in energy,
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it wouldn't be surprising to see crude and products have another sell off and set
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a more significant bottom at that time. Right now, I did have mid
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December as being what I thought would be a multi month bottom. But unless
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crude can turn a monthly and a weekly trend indicator that I use or kind
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of clarification of the trends and cycles, unless it turns that positive, I
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would expect it to go back down to the December lows and probably below them
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leading into mid year. At that point is when I think you'll see a
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significant bottom and energy crisis. And so that fits with a lot of the
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other markets that I'm looking at to where we see this final deflationary for lack
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of a better term, or less inflationary might be more accurate in the current
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environment. Yeah, you see a less inflationary wave down into a third quarter
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of this year, and then you start to enter another multi year cycle of
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things steadily inflating after that. Okay, all right, So in cryptocurrencies we
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got to talk about that because bitcoin's kind of been on fire lately. It
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broke forty seven thousand today as we were speaking earlier, and you know,
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it's been on a tear. A lot of it's due to these spot ETFs
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that are supposedly going to be approved, but we don't really know. What
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do you think about bitcoin? I still contend that it set a major bottom
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back in late twenty twenty two, and throughout the second half of last year.
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My kind of ultimate upside target or the current wave was to see bitcoin
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yet above forty five thousand, and there were a couple of targets that published
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that were at between in the forty six to forty seven thousand levels. So
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we're right there, and it certainly fits with what you're saying that I believe
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it's tomorrow, January tenth, that the first one, is it like arcshareses
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or something something like that, is the first one that they're expecting some indication
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as to whether an ETF will be approved or not. And if you've had
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this rally, particularly since early October, a lot of it has been,
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like you said, linked to that expectation. Well, then you start to
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go to the old adage of buy the rumor sell the fact type of thing.
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It wouldn't be surprised. It wouldn't surprise me at all to see bitcoin
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top out, even if it is good news, you know, even if
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they do approve etfor or start to move that whole process in a more forward
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direction, it wouldn't surprise me at all to see a top and a sell
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off. I'm kind of looking at the mid November lows in bitcoin ethereum as
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being your key support and or downside target for the next correction. And that's
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the other thing I been kind of looking is that, you know, Bitcoin
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is the one still rallying to new highs, whereas some of the others are
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are diverging over the last month. And that could also be one of those
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indications that cryptos have have kind of run their course for this sphase, this
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trend, this part of the trend, and that it's time for more of
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a consolidation or corrective phase. I do think that later on in the year
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we'll have another time when there's a lot of upside potential, and you do
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have the dollar factor in there too, that if you do start to see
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the dollar decline that I expect over the next couple of years that your investors
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and your speculators start to pour into alternative dollar alternatives, and so certainly the
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will or should benefit from that, just as they did during some of the
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previous selloffs in the dollar. Okay, interesting there, Interesting what other markets
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we got to pay attention to? Interest rates? Obviously an important one there.
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Yeah, that was actually what I was just about to say when we're
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discussing that. That also the outlook I have for bonds, notes, and
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inversely interest rates fits very closely with the cycles I was talking about with inflation,
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with crude, with many of these other markets. And the thing is,
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what is more convincing to me is when a lot of these cycles have
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a pretty high level of non correlation, and so like in the case of
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interest rates, in the case of bonds, they've had this consistent four year
28:07
cycle that I documented back into nineteen nineties and even before then, and it
28:17
perfectly timed, and I had this published for a year before the fact.
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Why I thought middle of twenty twenty would be a major multi year, potentially
28:29
multi decade high end bonds so low in interst rates and that July twenty twenty
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cycle top in bonds was four years from a multi year top in July of
28:42
twenty sixteen, which was four years from a top in July twenty twelve,
28:48
and all of those told me to look for a secondary top future top in
28:55
third quarter, ideally July of twenty twenty four. And so as I was
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writing throughout twenty twenty explain why I thought bonds would have a two to three
29:06
year decline, likely stretching that into twenty twenty three, and then you would
29:11
get a pretty decent bounce into this next cycle high, which should be a
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secondary a lower cycle high in July of twenty twenty four. And so that
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would mean that interest rates come down in that period between the fourth quarter of
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twenty twenty three and beginning of the third quarter of twenty twenty four. So
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that's been my outlook for four years now as far as at general roadmap or
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bonds, And now you get some of these other markets indicating things that are
29:48
typically closely correlated, and by that I mean if you do get another round
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of commodity deflation inflation leading into during the second quarter of this year, well
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that's something that would certainly favor bonds heading back up, interest rates pulling down
30:11
a bit along with some of the other markets that I'm looking at. So
30:17
from an intermarket correlation, which I always advise my readers to be very careful
30:22
when you're trying to trade off of innermarket correlations, but there are certainly some
30:27
general conclusions that can often be made from those associations. It fits that bonds
30:37
would see a rebound into that timeframe and that they would see their next significant
30:45
peak in a third quarter of twenty twenty four, just as commodities are bottoming
30:53
out. So that's kind of consistent with the scenario mapping out here for the
31:02
next couple quarters in the overall economy. Okay, so what other markets should
31:11
we be paying attention to here? That really is a lot of the primary
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ones that I'm watching, kind of on a site note of Bettles and had
31:22
Platinum showing me some bullish signs and cycles from November into about May this year,
31:33
November of last year until they have this year. I think that that
31:37
could have a decent run up in there. I'm trying to think what other
31:45
markets. Natural gas has pretty much completed it's plunge from what were multi year
31:53
cycle highs in twenty twenty two. I think that's got a prolonged basing period,
32:00
looking for a bit of a rally here in January, but nothing overly
32:09
significant anytime soon. And I don't know if there's any other markets or market
32:17
complexes that really jump out at me right now. I do see wheat in
32:25
the grain markets showing signs at bottoming that could have some decent upside potential in
32:31
the coming months, But that's about it on my radar as far as major
32:37
things right now. Okay, yeah, I was going to ask you about
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food, and you don't really track real estate per se, but based on
32:47
interest rates and other markets, Carada Hazard and a guest there. Well,
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the one thing actually I did want to touch on one longer term cycle that
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I was discussing it back in the early two thousands. In fact, even
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have a secondary URL website full seventeen year cycle dot com because there was just
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so much research and an also analysis that I was doing market analysis that was
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tied into this seventeen year cycle, and it's a very unique cycle. It
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actually has a very documented and valid fundamental purpose in that that there's research on
33:45
the magnetic interconnectivity and relationship between the Sun and Earth that oscillates on a seventeen
33:57
year cycle. I only came across that research after all, my market research
34:02
was already showing me this seventeen year cycle, and then come to find that
34:09
there was some rationale behind why that might be the case. But what I
34:16
explained back then, and it's I had several big reports from two thousand and
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six and two thousand and seven that are still archived on our website, But
34:29
it was showing me that two thousand and seven should time a multi year top
34:32
in the stock market, and you should see a thirty five to fifty percent
34:38
one to three year plunge from from that peak. And this seventeen year cycle
34:45
has time kind of a unique pair of events over the last century, and
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that pair of events is stop selling off significantly and Middle East conflict, Middle
35:00
East wars flaring up, and the early stage of that cycle were in nineteen
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thirty nine, then nineteen fifty six, which was a Suez crisis, the
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nineteen seventy three Yan Kapoor War, and also a fifty percent drop in the
35:19
stock market, and seventy three seventy four, then nineteen ninety Raq and Kuwait
35:25
and a it's about a twenty percent drop in stocks two thousand and seven wasn't
35:32
quite as significant where the Middle East aspect was, but certainly we had our
35:37
forty fifty percent dropping in the stock market, and twenty twenty four twenty twenty
35:44
five is the next phase of that cycle. And the reason I mentioned that
35:51
part is because there's also been kind of an interesting correlation of that to interest
36:00
rates and real estate. When I was discussing this last year, when I
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thought that October would time a probably a six to twelve month, maybe even
36:10
one to two year bottom in bonds, but I went revisited this seventeen year
36:16
cycle that I was already discussing in my stock market outlook for the next couple
36:22
of years, but showing how it was seventeen years prior to our our bottom
36:29
and bonds, our recent bottom in bonds, seventeen years prior when the housing
36:35
affordability index at its lowest level, and you soon after had a real estate
36:44
crash, and that also coincided with the last time. It was the third
36:51
quarter of two thousand and six when the plund was target rate peaked at five
36:55
and a quarter percent, completing a three year surgeon in at the same time
37:00
a major real estate peak was taking hold. The other thing I just read
37:06
about third quarter of two thousand and six perfectly applied to third quarter of twenty
37:12
twenty three as well. FIT funds starting rate peaked at just above five and
37:16
a quarter percent, completing a three year surgeon interest rate. At the same
37:21
time, real estate levels appear to be peaking. And if you go back
37:27
to not only to that two thousand and six time, you go seventeen years
37:31
earlier in nineteen eighty nine, fit funds peaked in third quarter of eighty nine
37:37
just blow ten percent at the time, and it was completing a three year
37:43
served in interest rates, and real estates suffered after that out lines well.
37:49
And so you have this seventeen year cycle impacting a lot of different things,
37:53
and so far with the way bonds have reacted to that potential for a major
38:00
bottom in October twenty twenty three, it appears at that seventeen year cycle is
38:05
coming back right on alive, alive, and will huh, yes, yes,
38:09
and it will be interesting to see, you know. Some of the
38:16
general knowledge of real estate is, oh, there's such a housing shortage,
38:22
and no one wanting to sell and trade their three percent mortgages for a new
38:28
seven percent mortgage, that prices just have to keep going up. Well,
38:34
anytime the general knowledge is that something has to happen. I start looking for
38:40
what most people didn't recognize and what may come out of left field. And
38:46
I don't know exactly what that is, but to me, it's telling me
38:52
to watch for a peak in real estate and interest rates responding either leading or
39:00
lagging. That that turnaround. Interesting. Interesting. Well, the tree does
39:07
not grow to the sky, right, we know that exactly, And it's
39:12
always when you think it can never go down again, that reality has a
39:16
way of biting you in the butt, right exactly. Yeah, So so
39:22
right there, you should be careful. So if you were thinking of downsizing
39:29
whatever, would this be a time you would be thinking of selling your home?
39:34
I well, obviously not right now, but if it's something, if
39:39
we saw a decent correction in prices and saw interest rates come down, that
39:45
would certainly provide a prime opportunity. But at the current moment, it's you
39:52
know, we're still very close to the peak. So I'm not rushing out
39:58
to be buying any state. Okay, but you're not selling either, right,
40:04
No? No, okay, So I just wanted to get that well,
40:08
Eric, been a lengthy conversation, really covered a lot of markets.
40:13
I think we get the gist of what you're saying and as always, appreciate
40:19
you coming on. They make sure you go check out Eric's site inside track
40:23
Trading. That's i NSID track Trading dot com. A question for Eric myself
40:31
kl at Carrie LUTs dot com is the place to send it, and you'll
40:37
find in the show notes of this interview Eric's site. Just click through.
40:42
While you're there, sign up for your free newsletter. Eric. Always a
40:45
pleasure, and I'm looking forward to seeing how these predictions jibe with the reality
40:51
of the markets in the year ahead. Yeah, it could be a very
40:53
interesting year or two. Thanks for having me back, Jerry, Thanks for
40:57
listening to Carrie Letz's Financial Service Network, your solution to today's trying times.
41:04
For the latest, go to Financial Survivalnetwork dot com. Financial Survival Network now
41:09
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