FED RATE CUT! Live Reaction to Jerome Powell, SP500, Gold, Dollar with Lobo Tiggre
Summary
Fed Rate Cut: The Federal Reserve announced a 25 basis point rate cut, which was largely anticipated, but the market reacted with volatility due to mixed signals from the Fed's dot plot and press conference.
Market Reaction: The S&P 500 and gold experienced significant fluctuations, reflecting uncertainty about future monetary policy and economic conditions.
Stagflation Concerns: Jerome Powell acknowledged the conflicting pressures of higher inflation and rising unemployment, hinting at potential stagflation, which complicates the Fed's dual mandate.
Gold Outlook: Despite short-term volatility, the prospect of stagflation and ongoing central bank gold purchases are seen as bullish for gold in the long term.
Global Economic Shifts: The discussion highlighted the impact of geopolitical tensions and trade policies on inflation and market stability, with potential long-term effects on global economic efficiency.
Uranium Market: Independent of broader economic trends, the uranium market is expected to benefit from strong demand and constrained supply, presenting a bullish outlook.
Investment Strategy: Investors are advised to be selective in their commodity investments, focusing on real assets that can benefit from inflationary pressures.
Fed's Dilemma: The Fed faces a challenging environment with no clear path, as it balances between supporting the labor market and controlling inflation, leading to potential market volatility.
Transcript
Hello and welcome to a breaking news special here on Sore Financial. We have just witnessed the Fed cutting 25 basis points. I just watched the press conference and it couldn't be fuller of contradictions. There are contradictions everywhere. The Fed doesn't really know what is going on. The dot plot is all over the place and we we don't really know what to make of it. The market is all over the place as well. Just looking at the S&P chart, it's up, it's down, it's up. the market doesn't know what's going on either. Uh really really interesting. Lots of contradictions as you know. I've invited Lobout Tiger. He's the independent speculator uh on onto the show. He keeps claiming he's not an economist, but yet he's probably the best commentary I can find to discuss what the Fed is doing and what Jerome Powell is saying. He's always fun to chat with. Uh I'll bring him on in a few short seconds. But uh no, you know what? I'll bring him on. I was going to rant for a second because I have some observations that I wanted to share with you, but Lobo, let me bring you on first. It's good to see you. Thank you so much for joining us. >> Happy to be here. You know, I I worked at George Mason University was the center for the study of market processes, which became the Mercada Center. And the PhD students, you know, I wasn't one of them, but they they talked to me about economics and I would say, "I'm not an economist." And they'd say, "Well, you ask questions about economics and you think about it. Therefore, you are an economist." So, >> maybe maybe we can roll with it. Maybe we're all economists a a little bit, you know, like in internally maybe, right? Um look, before we get started in the discussion and your your takeaways and all that, let's take a quick look at the market reactions. I I've cued um some some charts here real quick just to to take a look. Uh S&P 500, it is all over the place. Look at look at this. It looks like a heart rate monitor, doesn't it? >> Yeah, it does. >> Um absolutely insane. That's just a daily chart here. Um same same with gold. Uh a little worse than the S&P 500. Um, one thing that I find really interesting, of course, the Dixie, um, as well. It dropped massively, recovered. Now it seems like it's just hovering along and tinkering along. Uh, really, really interesting market reactions. Um, now, Lobo, what do you make of all of this that we're seeing here? Um, what is your opinion? Uh, what's your first gut reaction to this Fed rate cut? >> Well, the first gut reaction we can see in the charts wasn't the 25 basis point cut. That was largely telegraphed. um there was a lot more expectation and more disscent and so the that the quarter merely a quarter point was so unanimous with one one exception and we all know who that was right um or we think we all know who that was but but I think it's pretty obvious right I mean I that might have shaken the market up more than anything else just that immediate like oh wait you know we thought there was more concern here and you know there was talk about a 50 cut and and that basically wasn't on the table except for the one guy, right? So I I think that made people, you know, sit back and then if that, you know, give them a few minutes to look at the dot plot and it's it's actually quite funny. I just tweeted about it. There's the dots, right? Everybody in the middle and then there's this one dot way down there. We all know who that was, right? >> Here, let me let me bring it up on the screen real quick so everybody can see what we're talking about. >> Yeah, look at that dot down there. >> It's like right there. Yeah, that's my mouse, right? That's what Trump's saying. You know, slash it 100 basis points now 200. Why not? Right. Yeah. >> So, on the one hand, you could laugh that off and say, well, there's one outlier. It's not going to move the whole committee of 12. On the other hand, you know, Pal's term is up now in less than a year, and if you you know, Trump's going to nominate the successor. So markets are forward-looking and they're starting to think about well what you know if this is the impact of one Trump guy what if we get two Trump guys on there uh or this Trump guy becomes the most powerful voice on there. So I can see you know a delayed reaction as people think about this and go hm and then of course there's the press conference. So there's the initial reaction to the press releases the you know the actual statement was was not a big deal. I think it was as expected, but the dot plot did shake things up. And then Powell starts talking and he said a lot and a lot of it I think was not really that important. A lot of people had questions about the Fed independence. And it's not that that's not important, but I don't think that was going to move the markets today. My take is the the moment when I started seeing things reverse and move was when Powell talked about um yes, we're more concerned about the labor side of our dual mandate and yes, we think tariff um inflation from the tariffs is likely to be he didn't say transitory but one off shortterm, right? Um but he said then but we don't know we don't know for sure the tariff policy changes are ongoing and there could be uh longerterm knock-on effects. So that really opened the door for not transitory inflation and the Fed has to pay attention to that at least you know half of its dual mandate is the inflation side. So Powell's saying like everybody's been so confident of these rate cuts because the labor market's weakening and if there's an inflation argument, it's transitory again, right? You know, it's just a one-off from from the tariffs. And Powell opened the door for it not being one off for for inflation actually still being a more serious and ongoing problem. I think that's when people said, "Oh, wait a And I think that's why we saw the DXY reverse because you know there was a big rewrite of what are the odds here and there was a bigger argument to be made for less dovish policy than I think a lot of market participants expected going into this >> very contradictory as you said like the data itself is pointing in two directions higher inflation higher unemployment like how how do you find the balance and he said it himself he was tiptoeing the mind not trying to use the word stackflation again. >> He tried so hard but he said it he said our two uh mandates are in conflict right he wasn't you know and that's that's basically admitting that we have stagflation. >> Yeah pretty much because he says usually inflation is low when uh when when everything's going well or not going well and inflation is high when everything's you know great and it's exactly the opposite. So, >> and and he also said, I mean, he even it was striking admissions in a way. He also said, "Our tools don't work that way." Like, we can't do both. They work one way or the other. We can't we can't do both at once. Uh he didn't use the dreaded sword, but he it was really a quite striking admission for the Fed's um sort of helplessness helplessness in this scenario. And hat tip to our friend Lyn Alden for pointing out that in periods of fiscal dominance that monetary policy becomes if not useless than at least less efficacious. >> Now um lots of direction we can take this now but uh there are a few things like I need I need to mini rant here maybe a little bit because I'm quite annoyed with the questions that were asking. You touched on it like all the political like theater um within that. >> Yeah. Like going to say yeah I'm you know I'm worried about Trump you know. is is really annoying me because I wrote down a few questions I wanted him to answer. Um and and maybe we'll start there cuz he said like when he read from the script like we'll continue to reduce monetary holdings. I I was missing some information on that. Like what does he mean by that? Like we we've talked about this before. Lobo, you were on talked about QT being reduced to 5 billion. >> Are we still at 5 billion? Are we at zero now when he says reducing monetary holdings? Like what does that mean? Nobody's answered that question or asked that question. That's the one I would ask for example, right? Um, do do you have an opinion? Like I couldn't find anything on it. >> Well, in a in a way this could be the Fed's answer to being caught between its two mandates. They see the weakness in the labor markets, so they want to try to cut interest rates a bit to try to help out there and not get too carried away. I do think uh Powell is is well aware that if he just says, "Okay, it's forget about inflation. It's transitory. all we got to worry about is labor market now and they cut too much and inflation really does go much higher and stays higher then you know his dreams of being praised as the next vulker just go out the window his legacy will be the next Arthur Burns and I think he really really doesn't want that you know whatever you know Trump can fire him or whatever else happens he doesn't want to be remembered as an Arthur Burns you know if he gets fired for being a Paul Vulkar I think he can live with that right >> so he's stuck in this place but one way to sort of like pussyfoot around it frankly is to you know cut on the one hand but also continue cutting the balance sheet which is a tightening >> right that that does have a tightening tendency on policy and you know even if one is to be as charitable as possible with POW you know that balance sheet needs to be cut anyway like almost regardless of what else is going on we blew that thing out to what was it 3x over the the GFC levels because of the co 19 problems, the lockdowns and you know everything. So I think the Fed has you anybody rational in that body is aware that they do need to normalize that balance sheet that if they don't and if we uh monetize all of that that really is money printing in a big way. So I I think they try to talk about it as little as possible. you know remember his famous paint drying remark. They would I think they would really prefer this happened in the background but the two ways of looking at it is one is that you know ultimately at the end of the day that balance sheet does need to be cut and then the other way of looking at it is maybe this is a a little bit of a way for the Fed to hedge its bets here. You know they have to they have to cut they have to appear to to respond to you know the big cuts in the labor market uh revisions and all that. the Powell dismissed the revisions as saying, "Oh, yeah, we expected that anyway." >> Like our model was spot on. >> Yeah. Right. You know, well, um anyway, so so I I think it's it's maybe speaking out of both sides of his mouth, which you know, you know, that's kind of his job, isn't it? >> Yeah, it probably is, right? He's got to make uh he's he's got to be a people pleaser, right? He's got to be a market pleaser, I guess, as well. He's got to play both sides of the aisle as well. Um, let me bring up the summary. >> Sorry, let me let me just jump on that remark that you said because I think that's I mean it may just sound like we're we're dissing Powell or calling him names or whatever, but I actually think what you said is literally true, Kai, because he also even re reemphasized this. The mainstream economic perspective is that it's all about confidence, right? And and Powell has said that if people think inflation's going to be 5%, then it'll go to 5% because, you know, they'll they'll frontr run it. try to, you know, they'll bid things up before it gets to 5%. That pushes it in that direction. And, you know, consumer all these different confidence numbers, they at least espouse the belief that what people think or believe is where things go economically. So, if it's his job to guide the great ship of the economy, then by their definitions, it's his job to guide expectations and confidence. So, that's we're not just throwing insults at him. That's >> that's the his self-defined nature of his job. >> Yeah. Allow me a personal comment here about Jerome Powell. He seemed extremely shaky at the beginning of the press conference. The first 15 minutes he seemed to be tripping over his own words and was very shaky in in my opinion. And he he gained some confidence towards the end. Uh but he seemed very I don't almost nervous like I I felt like I heard dry mouth as well. Um which you get when you're nervous. Of course I got the I get that as well when I'm on stage. I can I can attest to that. So I don't that's just me reading maybe into it, but he seemed very nervous. He gained his footing later on, but the first 20 minutes after reading from his statement, he seemed very shaky. Did you catch that as well or is that just me? >> Well, I mean that's that's not hard data, so I'm not sure. >> No, just just something. >> But I will say that his his questions at the end, he did sound I think much more confident. I I don't know about drymouth or whatever, but it did seem that by the end of the press conference, he had hit his stride and, you know, he was knocking off the answers right from the playbook. Page three of the three- ring binder answers this one, right? >> Yeah. >> No, absolutely. Um, let's talk hard data. I've got something prepared here still from the summary of economic projections real quick because the the hard fact the one deciding factor for a rate cut really was the unemployment data uh that they've been getting. Uh, you you touched on it. Well, they expected the exact amount of revisions that they got. Um, yet there >> they'll tell us now they did >> exactly right. But, uh, they're still talking about, and let's make this red here about this part. H, terrible terrible mouse writing here. Um, but four to 4.5%. So, they're expecting higher unemployment rate. And I have a couple questions. A, like why why are they putting so much emphasis on this? And B, like why are they so nervous around four about four to four and a half% here? Why where should they be? Well, if you start from where we were before this exercise or you know 35 arguably slightly lower depending on how you defined it, you know, one whole percent that's that's a lot of people and you know it's a lot of voters. That's a lot of people to not feel confident and so on. And you know here we here I have to sort of um theorize because I can't prove this but my sense is that despite what they say and again as we were just talking about if his job is to manage public opinion and and that you know he's got to tow a certain line but I think they know that the U3 unemployment rate which is the numbers you were just charting there is is not comparable apples to apples to way it used to be. So when people talk about, oh, we have historically low unemployment numbers, well, that's simply not true. You're comparing U3 now to what was more similar to U6 before, and U6 is up around 8%. So I mean, it's it's just not true. And I think they know that. They're economists. They have to know that these are not apples to apples comparisons. So if they know that but can't say it, then it would make sense for them to be a bit more nervous. And another way of looking at it is you get to sort of tripping points or thresholds. And okay, maybe from 4.3 to 4.5 doesn't sound like that big a change, but if 4.4 is the straw that breaks the camel's back, then 4.5 leaves you in a world of hurt. >> No, it's uh let me bring the screen back up here. lower. Just one thing cuz I I was listening to the remarks and I was wondering like they did didn't give me any reason to be confident that the unemployment rate will actually drop in a couple years. Reminds me a bit of the unemployment the inflation rate. Yes, we'll get to 2% in two years time. You know, it's always free beer tomorrow. Uh you'll never get the free beer, right? >> Which oddly enough, you know, that was maybe the most daring question of the lot. We I don't >> I like that one. Yes. Michael who can ask hard questions, but somebody said, "Hey," and it was it was a mainstream reporter. It wasn't I don't know. It wasn't I don't think it was even like a Fox News or something. >> No, it was Bloomberg. It was Mike McKe from Bloomberg. Yeah. Yeah. >> Oh, yeah. Mike McKe. I'd like to talk to him off camera because he's one of those people I think knows a lot more. I mean, he he's clearly smart, but anyway. Yes. So, brilliant question. And Powell, you know, amusingly enough, he didn't just dodge it. He said, "Yeah, it's true." like you know that's but that's just the nature of the business of making projections. Um but the other thing you know so the the other one that got talked about a lot and I think is more important than the four five on the unemployment rate is is the higher projection for inflation going forward. Like I mean that's really striking that okay they're saying you know maybe it's transitory but whether it is or it isn't they're saying inflation's going up but we're cutting anyway to me this is the biggest contradiction of the whole thing and you know you have to wonder I'm I'm not trying to lay out a new conspiracy theory here but you know we have to wonder like why did I forget the name of the lady who suddenly resigned from the Fed and so we have this new uh Trump appointment Like why would that happen? You know, maybe what's happening with Lisa Cook now, maybe somebody told her, "Hey, we've got some dirt on you and you know, if you go quietly, we won't tell anybody." I I don't I don't pretend to know this. I'm just saying the the sudden resignation was very suspicious and and look at the impact it's had already. Um, you know, Lisa Cook may hold on to her position. You know, looks like there's other data now that says that she did say that the second house was a vacation home. So we we'll see. But it's clear that this administration is putting if not entirely unprecedented then no question you know extreme pressure on the Fed. And even Fed members uh you know they're human beings and they can feel that and and you know the carpenter of Nazareth once said you know let he whose slate is clean throw the first stone and everybody put their stones down. Right? There's nobody with an entirely clean slate, you know. So, you got to wonder, you know, what sins do these members of the FOMC have that they don't want to get out there? And, you know, they don't know what the other side knows or has on them. So, I mean, it's a legitimate question to think about how Fed policy might change going forward depend on how ugly the politics gets. >> I just have to think of the life of Brian like everybody enjoys a good stoning, you know. >> That's right. Are there any women here? >> No, no, no. Amazing movies. Phenomenal. Um, now I lost my Now I lost my red thread here. No, there a lot a lot of topics to discuss in terms of inflation. You mentioned um you mentioned of course inflation not going down. Why cut uh the the Fed meeting the market where I had one good follow-up question to you what you just had there. Now I've lost my my my thread here, but why actually let's let's throw up this question here on the screen. So I s stop go and I apologize for for probably mispronouncing it, but will the Fed actually go for two rate cuts this year? They've lied before. Um, of course the last part is a bit uh, you know, subjective here or objective objective subjective. I always confuse the two. Um, what are your thoughts? Like will the Fed cut twice this year? Will we see more cuts? Well, they say they're da dependent. So, if we get more uh degradation in the labor market, which is not an unreasonable expectation, you know, we still have Trump shock just now starting to work its way through the real economy. And I always, you know, I say the word Trump and I get hate in the YouTube comments because I didn't talk about how wonderful our glorious leader Trump is saving America. And I get also people hating me for not beating up on Trump enough because he's crazy, right? But whether you love him or hate him, there's an agenda here. And at least based on the reports we have, you know, people took shots at Trump. There's two assassination attempts, maybe three that we know of, right? So you think he's not playing hard ball? You know, you think he's not going to go as hard as he can to achieve his agenda, whether you agree with it or not. So I think that's that's worth thinking about. Um but the but the economic data itself may continue to be split. The the weakening labor market would give the Fed time or or cover for cutting some more. But if we're right about inflation, then that or even if they're right about the transitory inflation, that means there will be the inflation. And they may dismiss it and say, "Oh, it's transitory or short-term or one-off, whatever words they use that acknowledges that it's going to be there." So, so the expectation is for more stagflation, for more weakness in the labor market and higher inflation. So, you know, that really puts them in a bind and and it and it comes to the question of which which side of the dual mandate do we emphasize? And Pal addressed this today and he says that traditionally their way of doing it is okay, we've got dual mandate, our policies in between, which one is closer? So, like if we're farther from helping the labor side, well, then we'll we'll move towards labor. And if we're farther from helping the inflation side, we'll move in that direction. Um, but when you really don't know or you know, you're you're like the donkey caught between the two barrels of hay and starving to death because you can't make up your mind which way to go, it it's a mess. And whatever they do, there's going to be a cost. like if if they move towards weakening uh loosening labor uh sorry monetary policy to help the labor market that throws the dollar under the bus uh which is what the administration apparently wants. If they do say oh wait a minute this is more inflation than we bargain for or it's looking stickier than we thought then they throw the labor market under the bus. So, so it's a no-win scenario. And actually, you know, the good news here despite today's volatility is that this is really good for gold. I mean, everybody, you know, everybody knows what happened the last time we had stagflation. The more painful this situation gets, Kai, the more people will remember what what happened last time we had high inflation and weak labor markets. What what was the stagflation play? And it was oil and gold. And oil is in a different market right now. We don't have OPEC cutting oil supply. We have OPEC ramping up oil supply. So that leaves gold as the most obvious go-to space here. You know, maybe it doesn't look like it today, but going forward, the louder that stagflation drum beat gets, the better that is for gold. And that's a scary thing for me to say at $3700 gold. But that's the way it looks to me. >> Yeah, it is scary because we got we got one question. Let's stay on the topic of gold for just a second. Um and you you you shared your your insights there already. But Victor asked, "What are the outlooks on gold?" But maybe we can get just a tad more granular. Why do you think it is actually good for gold? Like because I look at the market reaction first. Hey, we get two more rate cuts this year. Great. Gold gold jumps up to 30 3706 3708. In the meantime, it drops like while Powell speaks it drops down to 3645. Like massive massive intday um you know drop almost what is it 80 points here. 70 points 60 points math you know. Um but why why is it good for gold? Maybe let's get just a tad more granular there. >> Sure. Well, first looking at the market girration that's that's almost never a a good or a clear signal. I mean it's important, it's relevant and you think about it, but the but the immediate knee-jerk reaction is almost always wrong. And the thing to remember is that that those knee-jerk reactions at the beginning, that's not you or me or the average gold bug calling up their stock broker and saying, "Hey, you know, sell my gold stocks. I'm I've changed my mind." Or, you know, that, you know, that's not the mom and pop, you know, bullion buyer running down to the local coin shop and buying or selling a few more ounces. This is traders trading with their algorithmically programmed machines set, you know, and they've got triggers. Oh, if this happens, then then sell. If this happens then buy and then afterwards you say well wait a minute that happened but not for the reasons we thought. So reverse course. So it's it's very dangerous to put too much weight on the initial market reactions here. They're not human reactions. They're algo reactions and the algos are often you know programmed wrong. So that would be the first caveat here. uh in terms of the gold market going forward even before we talk about Fed policy and fiscal dominance and all this stuff remember the central bank gold buying that really has been a gamecher it has clearly put a much higher floor under gold it's not done yet you know maybe someday years down the road central banks will stop buying gold maybe they won't uh you know maybe they'll continue moving that way for beyond our investment time horizons but right Now, that's really important because it's not like it was the last time around. So, that's one thing and that makes me less nervous about being a gold bull even above previous all-time highs. The other thing is uh don't forget the fiscal dominance. So, you know, okay, it's it generally speaking lower rates should be good for gold because gold doesn't pay interest, right? um though there is an alternative for that right now but anyway you know there's an app for that um you know so if the if the signal we got today is that the Fed is going to heir on the side of protecting the labor market and cutting rates that's actually bullish for gold never mind what the algos did today that on itself historically has been bullish for gold uh now if um if the inflation side comes back in and comes back, you know, stronger and and the market decides, oh, well, you know, the Fed said they were going to take care of the labor market, but they're actually more interested in inflation. This is not what that we're h what's happening now. But if that did happen, the ironically that would be the knee-jerk would be negative for gold because gold doesn't pay interest and higher, you know, rate increases are supposed to be bad for gold. uh if that happens I think that would create a fantastic buying opportunity because at the end of the day inflation is inflation and anything real anything that governments can't print uh goes up as the printing continues. So, um, basically never say never, but if if if I'm going to look at it theoretically or logically or I'm looking at the charts or I'm looking at the macro situation, all these roads point towards higher gold going forward. That having been said and gold bugs get mad at me or or silver bulls or uranium bulls. Whenever I talk about you know you get a hockey stick chart it's not unreasonable to expect some uh measure of correction and um you know that that's entirely possible Kai it anybody who tells you no it's impossible gold has to go to the moon next uh they're selling something I wouldn't trust them >> absolutely diamond hands you know we're not selling we're hodddling we're diamond hands holder absolutely um I have a couple more questions. Um, you you you touched on it and the tariff uh inflation impact. I I caught it or I pretend I've caught it, but uh Jerome Powell used to say that tariffs are inflationary and not just a one-time head like more more like because not every good is going to be hit on the same day. So inflation is just a constant effect in the system until we're done with it until like it's not a onetime effect is my point. But now he said, "Well, it is a onetime effect." Did he pick up a book in between? But he but he also said maybe not. I mean I I thought what and and I do think this was one of the moments when the market turned today because if he had just said it's a one-time effect and left it at that then everybody would have said, "Oh, so he's not worried about inflation. He is more worried about the labor market. So more cuts are coming. Woohoo. Yay. Glover's gone." Right? Um but that's not what he said. He he brought it up to say, but there's reason to think it may not be so transitory, though he didn't use that word. >> And and I and that's when I saw the market turning today. That's one of the things that I think was not baked in and did surprise people as far as, you know, where he could get the message from or whatever. I mean, just look at the ongoing negotiations with China. >> You know, we we keep being told we have a deal, but then, you know, something changes. is, you know, just lately we've got China um telling its domestic producers to not use any Nvidia chips, basically banning Nvidia chips, which is, you know, a strong hit to Nvidia, which is a big, you know, one of the big pillars of the market rally we have now. And so this is um maybe it's just a negotiating tool. Maybe actually I think it probably is, but it's really interesting because it reminds us, you know, people were saying, "Oh, it's it's all about the rare earths. We got we got to make, you know, China. It turns out, you know, the famous with uh Trump and Zilinsky, you don't have any cards. Well, she does have a lot of cards. The rare earth card turned out to be, if you'll pardon the expression, quite a Trump card. It was really powerful. And it it caused the US side to to fall back and renegotiate. Well, whacking Nvidia really hard, that's another high card, if not a Trump card. That's a powerful card. So if you're sitting here trying to make monetary policy and you're looking at how the whole tariff trade war is unrolling, it's not one and done. You know, Liberation Day was not maximum stress. It turns out it's an ongoing stress. And you know, you have to rethink your outlook in terms of one and done. And then don't forget like even if there is a deal, well a those consequences need to work their way into the real economy. And then b what if there what about the ones where there isn't a deal? And what if they there's a retaliation and all that stuff? We still don't know where that's going to go. But at the end of the day, let's say six months from now, we have all the answers. Yay. All the answers, right? You know, we all the tariffs are settled. Oh, and by the way, for that to really be settled, we probably need the Ukraine war to be over so that the punitive tariffs, never mind the reciprocal, but the punitive tariffs for Russia cooperators or collaborators, all that's gone, right? We have a new stable regime for tariffs. We know what that is now. Well, that that gives you room to say, "Okay, now that's one and done." You know, that's that's behind us. Now, you know, we had these price increases, but they're done. So, the rate of change is back down again. Well, yes and no. What if all of that makes the whole world less efficient? Like we had this massive globalization for decades and what if the new cheriff tariff regime can you know that's already started to undo that? What if it goes further and what are the not just one time but ongoing effects of a less efficient global economy? So I I think there's arguments to be made for it's not just the tariffs now but it's the transformation of the global economy where everybody wants to become more self-sufficient not just Trump and the United States and there is an ongoing cost to be paid for that that inefficiency of duplication of supply chains and production bases in multiple countries makes the entire global economy less efficient that's more expensive And you know as an Austrian economist I want to say that all inflation is you know always and everywhere monetary phenomenon but it works its way into the real economy and it's expressed in and policy responds to higher prices consumer prices in particular. So there's an argument to be made for you know ongoing increases in consumer prices anyway and that's bullish for gold if we want to tie it back to that. I think it's actually bullish for everything. Again, I like to say everything real. And of course, you know, I like JP Morgan's definition of gold is real money. Everything else is credit, right? >> Um, so where do you want to go from there? But I I think there is a case here. You know, the politicians, none of them want to say it, but I think there's a case here for saying that's it's not just the change in the tariffs now. That rate of change can go to zero, but the knock-on effects, you know, have long-term consequences. And I do think they're inflationary. >> Absolutely. I think there's an easy case to be made for that. Uh al although all capitalism is deflationary because you always try to achieve higher benefits, right? I just had Louis Gav on yesterday or the day before and he made an excellent case and explaining what he meant by that and that we're actually in a deflationary boom phase uh right now driven by China, India and Russia which is a really interesting but that's a topic for another debate here. We're trying to stay on the Fed and the ramifications of what Jerome Powell just told us here. And I have one more topic, Lobo, before we get to more questions maybe from the audience as well. And that's more from the HR side. And I don't want to get political. I don't give a I don't give a hoot about that personally, but it's Chris Waller. Uh he's he's the guy who opened the door to jumbo cuts. That's when gold really started taking off. It wasn't just the Jackson Hole press conference where Powell was dovish, but it was also Waller adding, "Yeah, there might be jumbo cuts being discussed here." And all of a sudden, there was extra fuel to the fire. He didn't desent. He he stayed within the within the line. And if you look at the dot plot and we had it up earlier, I can show it again actually here in a second. He he didn't jump off like we all believe that it was Mirin that and I've said it out loud now what we speculated off earlier here that it was Mirin. Let me get it here just real quick. Uh >> just real quick, not Marin Katusa. >> No, Mirin. Steve Mirin. Miran. Mirin. Miran. Not Marin. Not Marin. But here's the dot plot again real quick. And uh this is the descending or let's say descending but the the the outlier. That's the word I was looking for. The outlier then I think it is fair to assume that it wasn't Chris Waller. Um what what do you make of that because he's President Trump's also one of the three candidates Trump mentioned to potentially succeed Powell here? Um wouldn't you think he'd be closer to uh to this level down here? >> I can't know. Like my secret sources in the CIA don't have bugs in the in the Eckles building. So I I can't know of course but if you want me to I don't want to use the word speculate because I use the word speculate as a >> educated guess disciplined practice. It's not just a wild gamble. But if you want me to just flat out guess, I would guess that Powell, and this won't be in the minutes or in the notes, like he got on the horn offline before the meeting and he said, "Look, if we have three descents or if we have descents in different directions. Imagine if we had not just descents of whether it's 50 or 25, but imagine we had descents like don't cut and desents to cut more like different directions, right? you know, this will be really bad for the institution. It will be really bad for you know, even if if you're on Trump's side, it doesn't help if um you know, the market panics. So, in order to avoid uh serious repercussions here, you know, we know that Mirin or whatever his name is, you know, we know he's going to vote that way. So, everybody else should tow the line, guys. even if you don't agree this time, let's all be unanimous this time so that we can keep markets calm. You know, there will be time in the future to cut more. So, that that would be my guess because it it's extraordinary for there to be only the one descent um when we had more last time and the data is even more divided this time. It just makes no sense. Like based on the data, we should have had more descent and more uh experienced Fed watchers than I. We're we're all expecting more descents and and that this was the immediate big surprise when you listen to the financial talking heads the moment um the statement came out that was the number one takeaway like wow we thought there'd be more disscent >> one would think so um he made a couple comments and uh let's see if I wrote that down properly but uh there was a slowdown in consumer spending housing sector I don't think that was the comment I was looking for but he made a couple comments that there were stronger retail failed sales um as as well that sort of balanced things out a little bit. Um I think I don't have the exact quote here. I didn't write it down exactly, but it was right around those lines. >> Didn't say that, you know, and and maybe he thinks that. I don't know. I I have to wonder. Well, retail sales is such a well volatile number and but but subject to interpretation like why you know people bought more ahead of Trump's tariffs. They front ran the tariffs and we had a surge in retail sales. that didn't mean the economy was stronger, right? And now we've got um you know there could be another round of that as the as the new tariff set in like what does that number mean? Does it really mean that the average consumer was happy and spending more? And the other thing that's come out since that number came out and and Powell even mentioned this too today is that apparently and I'm not sure how they they they get these numbers, but apparently something like 50% of that increase was in the top 10% earners. So it's basically it's not Joe Sixpack out there saying, "Hey, I'm I'm feeling great. My job is safe and I can spend more, take on more debt, you know, buy buy now pay later." That's not what's happening. the the top 10% are spending so much that they moved half of that number which means the rest the other 90% move less than half you know right so um I just I think it's it's uh dangerous to to put too much weight on these things and I think maybe even Powell recognized that slightly but at the end of the day I think that the message here dear audience is you saw the Fed caught on this the horns of the dilemma, the stagflation that Powell's whole plan for dealing with was not to let it happen. Well, guess what? They did and they're stuck. And there's no good way out. It's, you know, it's damned if they do, damned if they don't. Um, and it looks like, and at least based on the action today, they're going to heir on the side of throwing the dollar under the bus. And that's good again for anything real, obviously, including monetary metals. It all favors it. Like I might have mentioned it to you before a little bit, but I have a hard time coming up with a bare case for monetary medals like meeting gold in particular. >> It's just scary because it's exactly when you get overconfident that that you know you fall flat on your face. So um I tell you what, I I don't know where the top is, Kai. I'm not smart enough to figure that out. And and we've talked about this before. I have a strategy for my own investments, my portfolio. I call it the upside maximizer where it's sort of like using trailing stops not as stop losses but to lock in big gains >> and so I've got a lot of big gains right now especially in in the gold space right so let's say gold rolls over what's going to happen is my upside maximizer triggers are going to get hit one after the other boom boom boom boom and if I don't get stopped entirely out I will definitely take a lot of money off the table and so what I'm saying with this is uh and if you don't mind my saying so there's a free report on website, you know, upside maximizer. But what I'm saying is like I don't need to know where the top is. I, you know, if gold goes up to 4,000, I stay long, but if gold rolls over and it corrects, my my triggers will get pulled and I will be um taking money off the table so I won't get hurt, >> which makes a lot of sense because nobody's ever gotten poor taking winnings off the table, right? Isn't that the saying? And >> nobody goes broke taking profits. Yep. I love that one. >> That's the one, right? I took some money off the table yesterday cuz uh I didn't know what to expect coming in into this meeting. Usually Powell is quite good at pulling rugs. So I didn't feel like that happening today. Although like the market reaction, what is it? Gold is down 8% as we speak here now. Um it's it's sort of right, but it's it's just volatility. I don't think it's a proper trend yet. And I think you pointed out where where gold might be headed here in the future earlier in the discussion. >> If I was if I was a day trader, I might have f I might was the market still open? No, it just closed. Um I I might have take I might have gone long right before market close on one of those shorttime options, you know, uh >> just just because there's usually even if gold does actually trend downwards um the rest of this week or or next week when you have a big move like this, there's often if not a dead cat bounce or the inverse, you know, the other way. Either way, there's often on the next day, you know, there's some big move and the next day there's people saying, "Hey, wait a minute." So, there's an opportunity for I'm not a short-term trader, but if I was, a move as big as we saw today, I I would have been highly tempted to to make a contrary bet on that. >> Yeah, I I'm with you. And I know a few people that actually bought puts yesterday, just betting on a bit of a reversal, just short-term, but betting on a bit of a reversal, just uh expecting the typical rugpull, right? And we've sort of seen it. Um, Lobo, I'm I'm out of my questions. Maybe we'll uh, you know, ask a couple questions by the audience here. We got a couple in. um sort of along the lines what we've been discussing. Um the question by CK is with about 25% functional unemployment, twothirds of the money supply printed in the last 17 years, he corrected himself in a later um post here, home mortgage delinquencies and credit card delinquencies at 14 years high. Are we looking are are we getting a new system? And he means by that a new metals money backed money uh sorry I'm butchering it. A metals blockchainbacked monetary system. You know what I'm getting at. So the answer the answers are are good, bad and ugly. I guess you know eventually the answer is always going to be yes. Nothing lasts forever. So there will be a reset. Um but to me as an investor, as a speculator, that's only useful if I can say not only when is it going to happen, but like is it going to happen within my usual investment time frame? If the answer is yes, but it's maybe five or ten years down the road, okay, that's not just a vague someday kind of answer, but it's not really useful to me right now. I'm not going to, you know, positions can go completely wrong on me well before I'm proven right five or 10 years from now. And so the answer, you know, to me is, you know, is this going to happen in the next year or two? That is a much tougher tougher call to say. And I'm not sure that it is. It it you know it was unbelievable to me that the powers that be could kick the can down the road after the GFC in 2008 2009. I I truly completely did not believe that they could paper that thing over and dang gum it. They sure did. >> So um you know this has made me very cautious about assuming you know it's it's you know Rick Rule's favorite thing right don't confuse the inevitable with the imminent. I think this question puts its finger on I think inevitabilities at some point in the future. The house of cards cannot go to the moon. At some point it has to come down. Um but I just personally I would not invest on that basis because I have no idea when it's going to happen. And the and the belief that it h that it's imminent has been very dangerous to people's wealth basically in my entire career. Um maybe as a follow-up CK posted um about the stable coin bill. I'm curious if that may is maybe the the starting gun here that sets off the the regime change. >> That is a really interesting move. But you you know you talk about what's going on, you know, the number of unprecedented moves. This is really interesting. Um, but to again give credit where due, I didn't do the math on this, but my fellow Puerto Rican Adrien Day looked at that and you know, even if they're highly successful with this, the amount of money that we're talking about, it's marginal. It's not going to change the trajectory of the United States government's financial situation. It it it may help a little, but it's it's not going to change it's not a game changer. Let's put that way. It's not a game changer. And I'm inclined to agree. And I I think maybe the most important thing about this is that, you know, I liked Bitcoin better when it was this completely anarchctic system and nobody wanted it to be regulated. They wanted it to be another kind of money completely outside of regular finance as an alternative to what happens if the mainstream or the or the establishment infrastructure goes up in flames. the more cryptos get sucked into the to the mainstream infrastructure and get regulated and defined and all that stuff, the more vulnerable they are to problems that they were in many ways designed to be the answer to. And I just think that's really unfortunate. But anyway, so this business now with the mainstreaming of cryptos and bringing in, you know, the ability for the stable coins to participate in treasuries and there's some that are participating in the gold sector. Now, >> I think that's really interesting. Uh, you know, gold is a much smaller market than the United States Treasury market. And yes, there are some Bitcoin maxis out there that just hate gold. They'll never own gold. Doesn't matter how great gold is doing. You know, they'll never own it. But I think most people, they want to make money. And they're not here to be religious about Bitcoin taking over the world in the end, like the one ring of Sauron and Mordor. They want to look and see what's making money. And so if there's an opportunity to make money combining gold and cryptos, whether it's with Tether or something else, right? I mean, that's really interesting. And it brings new buyers to the market or or even just new eyeballs as it were. It it I think it changes the dialogue. It makes it makes gold more appealing or acceptable as a hedge to people who otherwise might, you know, said, "Oh, that's just a boomer thing." Right? No, it it sort of transcend what not transcend but uh it sort of like starts to blur the lines between crypto and hard asset I guess like or digital asset and hard asset is maybe the right term it's and maybe we can mention but it was tether moving into the royalties gold royalty space and buying a lot of gold actually physical gold I think as well somewhere between one ton to two tons a month um for their gold vault in Switzerland which is really interesting development of course so no really appreciate that Lobo. Appreciate those insights. Um, we got a couple more question. One is about Bareric Gold. I'm just going to answer that one real quick because it doesn't really have a bearing on the the macro picture we're discussing, but Bareric announced today at the Denver Gold forum their four mile, I think it was the PA for four mile. Absolutely insane numbers. The market is absolutely excited about those. What is it? 600 to 700,000 ounces a year at an ultra high grade. I think it was 15 grams Lobo. You might have seen it as well. uh 15 grams a ton uh within their backyard at Cortez uh in in Nevada. Uh that's why the market is so excited. So that was one of the questions we had here. Um the rest like what has the market priced in now? Maybe giving giving a bit of a market outlook for the next three months until the year end. Uh the the Fed signals two more cuts. Um what is priced in now? >> Well um let me jump back to Bareric a moment. I think >> okay >> and I I don't I don't give away stock analysis right that's what people pay me for so I don't want to evaluate bareric and put something on that but I think this is really interesting uh on a broader market kind of perspective because there's been a a real increase in political risk in you know great jurisdictions geologically but around the world the number of governments getting more you know hungry for another pound of minor's flesh that just seems to be getting worse and worse and and of course it's understandable you you have gold hitting all-time highs. Of course, the governments are going to get greedier. That's just part for the course. So, it's I think the interesting thing about this is that, you know, Bareric also just sold their last gold mine in Canada. And I remember my reaction to that was like, oh, because Pakistan is so much safer, right? You know, um so it's interesting that at the same time now they come out with this news in in Nevada. So, you know, there there's a balance here of the political risking and I think that is important. I think that's something that the audience should think about. Um I I know that uh you know people get mad at me when I when I say I don't like X Y or Z jurisdiction but you know sorry Mali or Bkina Faso they are more dangerous for your money than Nevada or Ontario. Uh, and yes, you you you'll pay more for a safer jurisdiction, but your risk is really different. Um, as it happens, I just published a political risk map on my website. It's available for free, but I think this is important. And even, you know, one of the world's biggest gold miners, they're clearly trying to keep this balance in mind. So, you know, for people who are just swinging for the bleachers and buying dirt cheap gold stocks or uranium stocks or whatever in dangerous jurisdictions, uh, because they're cheap, uh, understand that they're cheap for a reason and you are taking a lot of risk. Um, and what was your other question? Sorry, Kai triggered me there. >> No, no worries because I know how that feels. That's why I had to bring it up cuz uh it is such a market mover and it's one of the leading like stocks like companies in our space. Uh so that's why I had to bring it up. Um but the the follow-up or the the last question I had for you was really just trying to put a bow around our conversation here and wrap it up was really just what what's your outlook now for the rest of the year? Uh 20 two more rate cuts expected. What what has the market priced in? >> I don't know. Well, what the market is priced in is that's that's coincident or or it's more or less what's been priced in. I'm skeptical that we'll actually have that happen because I do think we're going to see more higher inflation data. So, I I think there's if the Fed actually tries to do its job of balancing between its its dual mandate, I think we might get one or even no more rate cuts this year depending on how quickly and how high the inflation goes up. And even if you're on team transitory again, you know, if inflation goes back, you know, 4%. You know, that that will be pretty scary. And even if you think it's oneoff, right, it would be hard to ignore that and just look through it and cut rates anyway. I mean, can you imagine the inflation? Forget for it. Let's say it goes to 5% by December. Can you imagine cutting anyway in December? That would be really tough. So, I'm not making a prediction there exactly. I'm saying though that the odds to me favor a more difficult path for rate cuts than is currently being priced in by the markets. That aside, I think the broader picture is is where we started. I think all roads lead to higher inflation. I think this is good for all real assets, not just gold and silver. I'm very bullish on copper going forward. Uh, you know, come the reflationary boom, I'm going I expect to be bullish on oil again. Not right now. And we'll see other markets, other things, you know, the iron, maybe even nickel, not so much cobalt, probably not lithium. You know, I I'll look at them as that happens. But I think all pass leads towards inflation. I think the big beautiful bill and and the Trump agenda in the United States is inflationary. I think Europe's remilitarization is inflationary. I think China though it's nominally battling deflation right now the policy responses the stimulation I think ultimately the printing press wins in the end if you try hard enough you'll get the inflation you want right Mario Draghi was gone when he's by the time that Europe got the inflation he wanted but they got it >> um so I think the bottom line here is and I don't know what headline you want to choose but the bottom line I think we are looking at a super cycle ahead that is bullish for commodities as a class, but I think we'll need to be selective. I, you know, it might work to just, you know, buy the commodities index and and ride it out over the next five years. Uh, I'm going to be more selective than that. And we haven't talked about uranium yet. And and that one really is different. the the real quick the data says that in the last four recessions uranium prices went sideways to up in three of them and the one where they went down that was 2008 and uranium had actually peaked in 2007 so it was already on its way down and arguably was not going down because of the recession and I only bring this up because we've spent this whole hour talking about economics monetary policy fiscal policy I think almost none of that matters for uranium the buildout of reactors around the world is huge. The demand case is soaring. Supply remains constrained. The miners have not been able to ramp up. Even the biggest and the best in the business, the two biggest and best in the business have been unable to ramp up as planned. And this is extremely bullish. So, so this is not an economic statement. This is just simple supply and demand. I'm I'm extremely bullish on uranium going forward. >> Perfect. No, Lobo, really appreciate those uh those insights. also the uh the extracurricular curricular insights here as well on on the commodities. Much much appreciated, Lobo. Um everybody else, really appreciate everybody tuning in. It was it was great doing this live again. It's been too long. Lobo, thank you so much for joining us. Where where can we send our audience? Where can they find more of your work? You've been hinting at it earlier already. >> independent speculator.com. There's a free weekly letter. You It's on the website now. We used to send it out via email, so you do need to register, but we don't charge for it. And we will not spam you with a flood of advertisements if you sign up. You just get one notification per week letting you know we've posted that free digest. And if you like the way I think you might consider my paid services. >> Fantastic. Lobo tremendously appreciate your time. It's awesome to do these live with you right after the Fed press conference. Much much appreciate it. And everybody else, thanks so much for tuning in to this live presentation breaking news special here on Soore Financially. I hope you enjoyed it as much as I have. There's always lots to discuss. There was so many topics, so many like nuances that that can be picked up in those press conferences, especially this one. I felt like I overhyped it a little bit the last couple days here on our channel, but uh it was an important warning for us from the precious metals perspective, and I don't think it disappointed. The contradictions are visible for everybody now. What's the Fed doing? Even the Fed doesn't know what they're going to do next. And that's I think that's the crux of the matter, and that's why we'll see volatile markets. Although the VIX is almost dead looking at it, but we've seen it in the S&P 500. You've seen it in the gold price. You've seen it in the Dixie just now. Uh let's see how that plays out over the coming days. I still have some cash on the sidelines. I'm ready to buy when the stock prices dip of some of the stocks I'm watching. So, I hope you have the same. Good luck out there. Stay safe and uh don't forget to hit that like and subscribe button. We much much appreciate it. Take care out there. And we're offline.
FED RATE CUT! Live Reaction to Jerome Powell, SP500, Gold, Dollar with Lobo Tiggre
Summary
Transcript
Hello and welcome to a breaking news special here on Sore Financial. We have just witnessed the Fed cutting 25 basis points. I just watched the press conference and it couldn't be fuller of contradictions. There are contradictions everywhere. The Fed doesn't really know what is going on. The dot plot is all over the place and we we don't really know what to make of it. The market is all over the place as well. Just looking at the S&P chart, it's up, it's down, it's up. the market doesn't know what's going on either. Uh really really interesting. Lots of contradictions as you know. I've invited Lobout Tiger. He's the independent speculator uh on onto the show. He keeps claiming he's not an economist, but yet he's probably the best commentary I can find to discuss what the Fed is doing and what Jerome Powell is saying. He's always fun to chat with. Uh I'll bring him on in a few short seconds. But uh no, you know what? I'll bring him on. I was going to rant for a second because I have some observations that I wanted to share with you, but Lobo, let me bring you on first. It's good to see you. Thank you so much for joining us. >> Happy to be here. You know, I I worked at George Mason University was the center for the study of market processes, which became the Mercada Center. And the PhD students, you know, I wasn't one of them, but they they talked to me about economics and I would say, "I'm not an economist." And they'd say, "Well, you ask questions about economics and you think about it. Therefore, you are an economist." So, >> maybe maybe we can roll with it. Maybe we're all economists a a little bit, you know, like in internally maybe, right? Um look, before we get started in the discussion and your your takeaways and all that, let's take a quick look at the market reactions. I I've cued um some some charts here real quick just to to take a look. Uh S&P 500, it is all over the place. Look at look at this. It looks like a heart rate monitor, doesn't it? >> Yeah, it does. >> Um absolutely insane. That's just a daily chart here. Um same same with gold. Uh a little worse than the S&P 500. Um, one thing that I find really interesting, of course, the Dixie, um, as well. It dropped massively, recovered. Now it seems like it's just hovering along and tinkering along. Uh, really, really interesting market reactions. Um, now, Lobo, what do you make of all of this that we're seeing here? Um, what is your opinion? Uh, what's your first gut reaction to this Fed rate cut? >> Well, the first gut reaction we can see in the charts wasn't the 25 basis point cut. That was largely telegraphed. um there was a lot more expectation and more disscent and so the that the quarter merely a quarter point was so unanimous with one one exception and we all know who that was right um or we think we all know who that was but but I think it's pretty obvious right I mean I that might have shaken the market up more than anything else just that immediate like oh wait you know we thought there was more concern here and you know there was talk about a 50 cut and and that basically wasn't on the table except for the one guy, right? So I I think that made people, you know, sit back and then if that, you know, give them a few minutes to look at the dot plot and it's it's actually quite funny. I just tweeted about it. There's the dots, right? Everybody in the middle and then there's this one dot way down there. We all know who that was, right? >> Here, let me let me bring it up on the screen real quick so everybody can see what we're talking about. >> Yeah, look at that dot down there. >> It's like right there. Yeah, that's my mouse, right? That's what Trump's saying. You know, slash it 100 basis points now 200. Why not? Right. Yeah. >> So, on the one hand, you could laugh that off and say, well, there's one outlier. It's not going to move the whole committee of 12. On the other hand, you know, Pal's term is up now in less than a year, and if you you know, Trump's going to nominate the successor. So markets are forward-looking and they're starting to think about well what you know if this is the impact of one Trump guy what if we get two Trump guys on there uh or this Trump guy becomes the most powerful voice on there. So I can see you know a delayed reaction as people think about this and go hm and then of course there's the press conference. So there's the initial reaction to the press releases the you know the actual statement was was not a big deal. I think it was as expected, but the dot plot did shake things up. And then Powell starts talking and he said a lot and a lot of it I think was not really that important. A lot of people had questions about the Fed independence. And it's not that that's not important, but I don't think that was going to move the markets today. My take is the the moment when I started seeing things reverse and move was when Powell talked about um yes, we're more concerned about the labor side of our dual mandate and yes, we think tariff um inflation from the tariffs is likely to be he didn't say transitory but one off shortterm, right? Um but he said then but we don't know we don't know for sure the tariff policy changes are ongoing and there could be uh longerterm knock-on effects. So that really opened the door for not transitory inflation and the Fed has to pay attention to that at least you know half of its dual mandate is the inflation side. So Powell's saying like everybody's been so confident of these rate cuts because the labor market's weakening and if there's an inflation argument, it's transitory again, right? You know, it's just a one-off from from the tariffs. And Powell opened the door for it not being one off for for inflation actually still being a more serious and ongoing problem. I think that's when people said, "Oh, wait a And I think that's why we saw the DXY reverse because you know there was a big rewrite of what are the odds here and there was a bigger argument to be made for less dovish policy than I think a lot of market participants expected going into this >> very contradictory as you said like the data itself is pointing in two directions higher inflation higher unemployment like how how do you find the balance and he said it himself he was tiptoeing the mind not trying to use the word stackflation again. >> He tried so hard but he said it he said our two uh mandates are in conflict right he wasn't you know and that's that's basically admitting that we have stagflation. >> Yeah pretty much because he says usually inflation is low when uh when when everything's going well or not going well and inflation is high when everything's you know great and it's exactly the opposite. So, >> and and he also said, I mean, he even it was striking admissions in a way. He also said, "Our tools don't work that way." Like, we can't do both. They work one way or the other. We can't we can't do both at once. Uh he didn't use the dreaded sword, but he it was really a quite striking admission for the Fed's um sort of helplessness helplessness in this scenario. And hat tip to our friend Lyn Alden for pointing out that in periods of fiscal dominance that monetary policy becomes if not useless than at least less efficacious. >> Now um lots of direction we can take this now but uh there are a few things like I need I need to mini rant here maybe a little bit because I'm quite annoyed with the questions that were asking. You touched on it like all the political like theater um within that. >> Yeah. Like going to say yeah I'm you know I'm worried about Trump you know. is is really annoying me because I wrote down a few questions I wanted him to answer. Um and and maybe we'll start there cuz he said like when he read from the script like we'll continue to reduce monetary holdings. I I was missing some information on that. Like what does he mean by that? Like we we've talked about this before. Lobo, you were on talked about QT being reduced to 5 billion. >> Are we still at 5 billion? Are we at zero now when he says reducing monetary holdings? Like what does that mean? Nobody's answered that question or asked that question. That's the one I would ask for example, right? Um, do do you have an opinion? Like I couldn't find anything on it. >> Well, in a in a way this could be the Fed's answer to being caught between its two mandates. They see the weakness in the labor markets, so they want to try to cut interest rates a bit to try to help out there and not get too carried away. I do think uh Powell is is well aware that if he just says, "Okay, it's forget about inflation. It's transitory. all we got to worry about is labor market now and they cut too much and inflation really does go much higher and stays higher then you know his dreams of being praised as the next vulker just go out the window his legacy will be the next Arthur Burns and I think he really really doesn't want that you know whatever you know Trump can fire him or whatever else happens he doesn't want to be remembered as an Arthur Burns you know if he gets fired for being a Paul Vulkar I think he can live with that right >> so he's stuck in this place but one way to sort of like pussyfoot around it frankly is to you know cut on the one hand but also continue cutting the balance sheet which is a tightening >> right that that does have a tightening tendency on policy and you know even if one is to be as charitable as possible with POW you know that balance sheet needs to be cut anyway like almost regardless of what else is going on we blew that thing out to what was it 3x over the the GFC levels because of the co 19 problems, the lockdowns and you know everything. So I think the Fed has you anybody rational in that body is aware that they do need to normalize that balance sheet that if they don't and if we uh monetize all of that that really is money printing in a big way. So I I think they try to talk about it as little as possible. you know remember his famous paint drying remark. They would I think they would really prefer this happened in the background but the two ways of looking at it is one is that you know ultimately at the end of the day that balance sheet does need to be cut and then the other way of looking at it is maybe this is a a little bit of a way for the Fed to hedge its bets here. You know they have to they have to cut they have to appear to to respond to you know the big cuts in the labor market uh revisions and all that. the Powell dismissed the revisions as saying, "Oh, yeah, we expected that anyway." >> Like our model was spot on. >> Yeah. Right. You know, well, um anyway, so so I I think it's it's maybe speaking out of both sides of his mouth, which you know, you know, that's kind of his job, isn't it? >> Yeah, it probably is, right? He's got to make uh he's he's got to be a people pleaser, right? He's got to be a market pleaser, I guess, as well. He's got to play both sides of the aisle as well. Um, let me bring up the summary. >> Sorry, let me let me just jump on that remark that you said because I think that's I mean it may just sound like we're we're dissing Powell or calling him names or whatever, but I actually think what you said is literally true, Kai, because he also even re reemphasized this. The mainstream economic perspective is that it's all about confidence, right? And and Powell has said that if people think inflation's going to be 5%, then it'll go to 5% because, you know, they'll they'll frontr run it. try to, you know, they'll bid things up before it gets to 5%. That pushes it in that direction. And, you know, consumer all these different confidence numbers, they at least espouse the belief that what people think or believe is where things go economically. So, if it's his job to guide the great ship of the economy, then by their definitions, it's his job to guide expectations and confidence. So, that's we're not just throwing insults at him. That's >> that's the his self-defined nature of his job. >> Yeah. Allow me a personal comment here about Jerome Powell. He seemed extremely shaky at the beginning of the press conference. The first 15 minutes he seemed to be tripping over his own words and was very shaky in in my opinion. And he he gained some confidence towards the end. Uh but he seemed very I don't almost nervous like I I felt like I heard dry mouth as well. Um which you get when you're nervous. Of course I got the I get that as well when I'm on stage. I can I can attest to that. So I don't that's just me reading maybe into it, but he seemed very nervous. He gained his footing later on, but the first 20 minutes after reading from his statement, he seemed very shaky. Did you catch that as well or is that just me? >> Well, I mean that's that's not hard data, so I'm not sure. >> No, just just something. >> But I will say that his his questions at the end, he did sound I think much more confident. I I don't know about drymouth or whatever, but it did seem that by the end of the press conference, he had hit his stride and, you know, he was knocking off the answers right from the playbook. Page three of the three- ring binder answers this one, right? >> Yeah. >> No, absolutely. Um, let's talk hard data. I've got something prepared here still from the summary of economic projections real quick because the the hard fact the one deciding factor for a rate cut really was the unemployment data uh that they've been getting. Uh, you you touched on it. Well, they expected the exact amount of revisions that they got. Um, yet there >> they'll tell us now they did >> exactly right. But, uh, they're still talking about, and let's make this red here about this part. H, terrible terrible mouse writing here. Um, but four to 4.5%. So, they're expecting higher unemployment rate. And I have a couple questions. A, like why why are they putting so much emphasis on this? And B, like why are they so nervous around four about four to four and a half% here? Why where should they be? Well, if you start from where we were before this exercise or you know 35 arguably slightly lower depending on how you defined it, you know, one whole percent that's that's a lot of people and you know it's a lot of voters. That's a lot of people to not feel confident and so on. And you know here we here I have to sort of um theorize because I can't prove this but my sense is that despite what they say and again as we were just talking about if his job is to manage public opinion and and that you know he's got to tow a certain line but I think they know that the U3 unemployment rate which is the numbers you were just charting there is is not comparable apples to apples to way it used to be. So when people talk about, oh, we have historically low unemployment numbers, well, that's simply not true. You're comparing U3 now to what was more similar to U6 before, and U6 is up around 8%. So I mean, it's it's just not true. And I think they know that. They're economists. They have to know that these are not apples to apples comparisons. So if they know that but can't say it, then it would make sense for them to be a bit more nervous. And another way of looking at it is you get to sort of tripping points or thresholds. And okay, maybe from 4.3 to 4.5 doesn't sound like that big a change, but if 4.4 is the straw that breaks the camel's back, then 4.5 leaves you in a world of hurt. >> No, it's uh let me bring the screen back up here. lower. Just one thing cuz I I was listening to the remarks and I was wondering like they did didn't give me any reason to be confident that the unemployment rate will actually drop in a couple years. Reminds me a bit of the unemployment the inflation rate. Yes, we'll get to 2% in two years time. You know, it's always free beer tomorrow. Uh you'll never get the free beer, right? >> Which oddly enough, you know, that was maybe the most daring question of the lot. We I don't >> I like that one. Yes. Michael who can ask hard questions, but somebody said, "Hey," and it was it was a mainstream reporter. It wasn't I don't know. It wasn't I don't think it was even like a Fox News or something. >> No, it was Bloomberg. It was Mike McKe from Bloomberg. Yeah. Yeah. >> Oh, yeah. Mike McKe. I'd like to talk to him off camera because he's one of those people I think knows a lot more. I mean, he he's clearly smart, but anyway. Yes. So, brilliant question. And Powell, you know, amusingly enough, he didn't just dodge it. He said, "Yeah, it's true." like you know that's but that's just the nature of the business of making projections. Um but the other thing you know so the the other one that got talked about a lot and I think is more important than the four five on the unemployment rate is is the higher projection for inflation going forward. Like I mean that's really striking that okay they're saying you know maybe it's transitory but whether it is or it isn't they're saying inflation's going up but we're cutting anyway to me this is the biggest contradiction of the whole thing and you know you have to wonder I'm I'm not trying to lay out a new conspiracy theory here but you know we have to wonder like why did I forget the name of the lady who suddenly resigned from the Fed and so we have this new uh Trump appointment Like why would that happen? You know, maybe what's happening with Lisa Cook now, maybe somebody told her, "Hey, we've got some dirt on you and you know, if you go quietly, we won't tell anybody." I I don't I don't pretend to know this. I'm just saying the the sudden resignation was very suspicious and and look at the impact it's had already. Um, you know, Lisa Cook may hold on to her position. You know, looks like there's other data now that says that she did say that the second house was a vacation home. So we we'll see. But it's clear that this administration is putting if not entirely unprecedented then no question you know extreme pressure on the Fed. And even Fed members uh you know they're human beings and they can feel that and and you know the carpenter of Nazareth once said you know let he whose slate is clean throw the first stone and everybody put their stones down. Right? There's nobody with an entirely clean slate, you know. So, you got to wonder, you know, what sins do these members of the FOMC have that they don't want to get out there? And, you know, they don't know what the other side knows or has on them. So, I mean, it's a legitimate question to think about how Fed policy might change going forward depend on how ugly the politics gets. >> I just have to think of the life of Brian like everybody enjoys a good stoning, you know. >> That's right. Are there any women here? >> No, no, no. Amazing movies. Phenomenal. Um, now I lost my Now I lost my red thread here. No, there a lot a lot of topics to discuss in terms of inflation. You mentioned um you mentioned of course inflation not going down. Why cut uh the the Fed meeting the market where I had one good follow-up question to you what you just had there. Now I've lost my my my thread here, but why actually let's let's throw up this question here on the screen. So I s stop go and I apologize for for probably mispronouncing it, but will the Fed actually go for two rate cuts this year? They've lied before. Um, of course the last part is a bit uh, you know, subjective here or objective objective subjective. I always confuse the two. Um, what are your thoughts? Like will the Fed cut twice this year? Will we see more cuts? Well, they say they're da dependent. So, if we get more uh degradation in the labor market, which is not an unreasonable expectation, you know, we still have Trump shock just now starting to work its way through the real economy. And I always, you know, I say the word Trump and I get hate in the YouTube comments because I didn't talk about how wonderful our glorious leader Trump is saving America. And I get also people hating me for not beating up on Trump enough because he's crazy, right? But whether you love him or hate him, there's an agenda here. And at least based on the reports we have, you know, people took shots at Trump. There's two assassination attempts, maybe three that we know of, right? So you think he's not playing hard ball? You know, you think he's not going to go as hard as he can to achieve his agenda, whether you agree with it or not. So I think that's that's worth thinking about. Um but the but the economic data itself may continue to be split. The the weakening labor market would give the Fed time or or cover for cutting some more. But if we're right about inflation, then that or even if they're right about the transitory inflation, that means there will be the inflation. And they may dismiss it and say, "Oh, it's transitory or short-term or one-off, whatever words they use that acknowledges that it's going to be there." So, so the expectation is for more stagflation, for more weakness in the labor market and higher inflation. So, you know, that really puts them in a bind and and it and it comes to the question of which which side of the dual mandate do we emphasize? And Pal addressed this today and he says that traditionally their way of doing it is okay, we've got dual mandate, our policies in between, which one is closer? So, like if we're farther from helping the labor side, well, then we'll we'll move towards labor. And if we're farther from helping the inflation side, we'll move in that direction. Um, but when you really don't know or you know, you're you're like the donkey caught between the two barrels of hay and starving to death because you can't make up your mind which way to go, it it's a mess. And whatever they do, there's going to be a cost. like if if they move towards weakening uh loosening labor uh sorry monetary policy to help the labor market that throws the dollar under the bus uh which is what the administration apparently wants. If they do say oh wait a minute this is more inflation than we bargain for or it's looking stickier than we thought then they throw the labor market under the bus. So, so it's a no-win scenario. And actually, you know, the good news here despite today's volatility is that this is really good for gold. I mean, everybody, you know, everybody knows what happened the last time we had stagflation. The more painful this situation gets, Kai, the more people will remember what what happened last time we had high inflation and weak labor markets. What what was the stagflation play? And it was oil and gold. And oil is in a different market right now. We don't have OPEC cutting oil supply. We have OPEC ramping up oil supply. So that leaves gold as the most obvious go-to space here. You know, maybe it doesn't look like it today, but going forward, the louder that stagflation drum beat gets, the better that is for gold. And that's a scary thing for me to say at $3700 gold. But that's the way it looks to me. >> Yeah, it is scary because we got we got one question. Let's stay on the topic of gold for just a second. Um and you you you shared your your insights there already. But Victor asked, "What are the outlooks on gold?" But maybe we can get just a tad more granular. Why do you think it is actually good for gold? Like because I look at the market reaction first. Hey, we get two more rate cuts this year. Great. Gold gold jumps up to 30 3706 3708. In the meantime, it drops like while Powell speaks it drops down to 3645. Like massive massive intday um you know drop almost what is it 80 points here. 70 points 60 points math you know. Um but why why is it good for gold? Maybe let's get just a tad more granular there. >> Sure. Well, first looking at the market girration that's that's almost never a a good or a clear signal. I mean it's important, it's relevant and you think about it, but the but the immediate knee-jerk reaction is almost always wrong. And the thing to remember is that that those knee-jerk reactions at the beginning, that's not you or me or the average gold bug calling up their stock broker and saying, "Hey, you know, sell my gold stocks. I'm I've changed my mind." Or, you know, that, you know, that's not the mom and pop, you know, bullion buyer running down to the local coin shop and buying or selling a few more ounces. This is traders trading with their algorithmically programmed machines set, you know, and they've got triggers. Oh, if this happens, then then sell. If this happens then buy and then afterwards you say well wait a minute that happened but not for the reasons we thought. So reverse course. So it's it's very dangerous to put too much weight on the initial market reactions here. They're not human reactions. They're algo reactions and the algos are often you know programmed wrong. So that would be the first caveat here. uh in terms of the gold market going forward even before we talk about Fed policy and fiscal dominance and all this stuff remember the central bank gold buying that really has been a gamecher it has clearly put a much higher floor under gold it's not done yet you know maybe someday years down the road central banks will stop buying gold maybe they won't uh you know maybe they'll continue moving that way for beyond our investment time horizons but right Now, that's really important because it's not like it was the last time around. So, that's one thing and that makes me less nervous about being a gold bull even above previous all-time highs. The other thing is uh don't forget the fiscal dominance. So, you know, okay, it's it generally speaking lower rates should be good for gold because gold doesn't pay interest, right? um though there is an alternative for that right now but anyway you know there's an app for that um you know so if the if the signal we got today is that the Fed is going to heir on the side of protecting the labor market and cutting rates that's actually bullish for gold never mind what the algos did today that on itself historically has been bullish for gold uh now if um if the inflation side comes back in and comes back, you know, stronger and and the market decides, oh, well, you know, the Fed said they were going to take care of the labor market, but they're actually more interested in inflation. This is not what that we're h what's happening now. But if that did happen, the ironically that would be the knee-jerk would be negative for gold because gold doesn't pay interest and higher, you know, rate increases are supposed to be bad for gold. uh if that happens I think that would create a fantastic buying opportunity because at the end of the day inflation is inflation and anything real anything that governments can't print uh goes up as the printing continues. So, um, basically never say never, but if if if I'm going to look at it theoretically or logically or I'm looking at the charts or I'm looking at the macro situation, all these roads point towards higher gold going forward. That having been said and gold bugs get mad at me or or silver bulls or uranium bulls. Whenever I talk about you know you get a hockey stick chart it's not unreasonable to expect some uh measure of correction and um you know that that's entirely possible Kai it anybody who tells you no it's impossible gold has to go to the moon next uh they're selling something I wouldn't trust them >> absolutely diamond hands you know we're not selling we're hodddling we're diamond hands holder absolutely um I have a couple more questions. Um, you you you touched on it and the tariff uh inflation impact. I I caught it or I pretend I've caught it, but uh Jerome Powell used to say that tariffs are inflationary and not just a one-time head like more more like because not every good is going to be hit on the same day. So inflation is just a constant effect in the system until we're done with it until like it's not a onetime effect is my point. But now he said, "Well, it is a onetime effect." Did he pick up a book in between? But he but he also said maybe not. I mean I I thought what and and I do think this was one of the moments when the market turned today because if he had just said it's a one-time effect and left it at that then everybody would have said, "Oh, so he's not worried about inflation. He is more worried about the labor market. So more cuts are coming. Woohoo. Yay. Glover's gone." Right? Um but that's not what he said. He he brought it up to say, but there's reason to think it may not be so transitory, though he didn't use that word. >> And and I and that's when I saw the market turning today. That's one of the things that I think was not baked in and did surprise people as far as, you know, where he could get the message from or whatever. I mean, just look at the ongoing negotiations with China. >> You know, we we keep being told we have a deal, but then, you know, something changes. is, you know, just lately we've got China um telling its domestic producers to not use any Nvidia chips, basically banning Nvidia chips, which is, you know, a strong hit to Nvidia, which is a big, you know, one of the big pillars of the market rally we have now. And so this is um maybe it's just a negotiating tool. Maybe actually I think it probably is, but it's really interesting because it reminds us, you know, people were saying, "Oh, it's it's all about the rare earths. We got we got to make, you know, China. It turns out, you know, the famous with uh Trump and Zilinsky, you don't have any cards. Well, she does have a lot of cards. The rare earth card turned out to be, if you'll pardon the expression, quite a Trump card. It was really powerful. And it it caused the US side to to fall back and renegotiate. Well, whacking Nvidia really hard, that's another high card, if not a Trump card. That's a powerful card. So if you're sitting here trying to make monetary policy and you're looking at how the whole tariff trade war is unrolling, it's not one and done. You know, Liberation Day was not maximum stress. It turns out it's an ongoing stress. And you know, you have to rethink your outlook in terms of one and done. And then don't forget like even if there is a deal, well a those consequences need to work their way into the real economy. And then b what if there what about the ones where there isn't a deal? And what if they there's a retaliation and all that stuff? We still don't know where that's going to go. But at the end of the day, let's say six months from now, we have all the answers. Yay. All the answers, right? You know, we all the tariffs are settled. Oh, and by the way, for that to really be settled, we probably need the Ukraine war to be over so that the punitive tariffs, never mind the reciprocal, but the punitive tariffs for Russia cooperators or collaborators, all that's gone, right? We have a new stable regime for tariffs. We know what that is now. Well, that that gives you room to say, "Okay, now that's one and done." You know, that's that's behind us. Now, you know, we had these price increases, but they're done. So, the rate of change is back down again. Well, yes and no. What if all of that makes the whole world less efficient? Like we had this massive globalization for decades and what if the new cheriff tariff regime can you know that's already started to undo that? What if it goes further and what are the not just one time but ongoing effects of a less efficient global economy? So I I think there's arguments to be made for it's not just the tariffs now but it's the transformation of the global economy where everybody wants to become more self-sufficient not just Trump and the United States and there is an ongoing cost to be paid for that that inefficiency of duplication of supply chains and production bases in multiple countries makes the entire global economy less efficient that's more expensive And you know as an Austrian economist I want to say that all inflation is you know always and everywhere monetary phenomenon but it works its way into the real economy and it's expressed in and policy responds to higher prices consumer prices in particular. So there's an argument to be made for you know ongoing increases in consumer prices anyway and that's bullish for gold if we want to tie it back to that. I think it's actually bullish for everything. Again, I like to say everything real. And of course, you know, I like JP Morgan's definition of gold is real money. Everything else is credit, right? >> Um, so where do you want to go from there? But I I think there is a case here. You know, the politicians, none of them want to say it, but I think there's a case here for saying that's it's not just the change in the tariffs now. That rate of change can go to zero, but the knock-on effects, you know, have long-term consequences. And I do think they're inflationary. >> Absolutely. I think there's an easy case to be made for that. Uh al although all capitalism is deflationary because you always try to achieve higher benefits, right? I just had Louis Gav on yesterday or the day before and he made an excellent case and explaining what he meant by that and that we're actually in a deflationary boom phase uh right now driven by China, India and Russia which is a really interesting but that's a topic for another debate here. We're trying to stay on the Fed and the ramifications of what Jerome Powell just told us here. And I have one more topic, Lobo, before we get to more questions maybe from the audience as well. And that's more from the HR side. And I don't want to get political. I don't give a I don't give a hoot about that personally, but it's Chris Waller. Uh he's he's the guy who opened the door to jumbo cuts. That's when gold really started taking off. It wasn't just the Jackson Hole press conference where Powell was dovish, but it was also Waller adding, "Yeah, there might be jumbo cuts being discussed here." And all of a sudden, there was extra fuel to the fire. He didn't desent. He he stayed within the within the line. And if you look at the dot plot and we had it up earlier, I can show it again actually here in a second. He he didn't jump off like we all believe that it was Mirin that and I've said it out loud now what we speculated off earlier here that it was Mirin. Let me get it here just real quick. Uh >> just real quick, not Marin Katusa. >> No, Mirin. Steve Mirin. Miran. Mirin. Miran. Not Marin. Not Marin. But here's the dot plot again real quick. And uh this is the descending or let's say descending but the the the outlier. That's the word I was looking for. The outlier then I think it is fair to assume that it wasn't Chris Waller. Um what what do you make of that because he's President Trump's also one of the three candidates Trump mentioned to potentially succeed Powell here? Um wouldn't you think he'd be closer to uh to this level down here? >> I can't know. Like my secret sources in the CIA don't have bugs in the in the Eckles building. So I I can't know of course but if you want me to I don't want to use the word speculate because I use the word speculate as a >> educated guess disciplined practice. It's not just a wild gamble. But if you want me to just flat out guess, I would guess that Powell, and this won't be in the minutes or in the notes, like he got on the horn offline before the meeting and he said, "Look, if we have three descents or if we have descents in different directions. Imagine if we had not just descents of whether it's 50 or 25, but imagine we had descents like don't cut and desents to cut more like different directions, right? you know, this will be really bad for the institution. It will be really bad for you know, even if if you're on Trump's side, it doesn't help if um you know, the market panics. So, in order to avoid uh serious repercussions here, you know, we know that Mirin or whatever his name is, you know, we know he's going to vote that way. So, everybody else should tow the line, guys. even if you don't agree this time, let's all be unanimous this time so that we can keep markets calm. You know, there will be time in the future to cut more. So, that that would be my guess because it it's extraordinary for there to be only the one descent um when we had more last time and the data is even more divided this time. It just makes no sense. Like based on the data, we should have had more descent and more uh experienced Fed watchers than I. We're we're all expecting more descents and and that this was the immediate big surprise when you listen to the financial talking heads the moment um the statement came out that was the number one takeaway like wow we thought there'd be more disscent >> one would think so um he made a couple comments and uh let's see if I wrote that down properly but uh there was a slowdown in consumer spending housing sector I don't think that was the comment I was looking for but he made a couple comments that there were stronger retail failed sales um as as well that sort of balanced things out a little bit. Um I think I don't have the exact quote here. I didn't write it down exactly, but it was right around those lines. >> Didn't say that, you know, and and maybe he thinks that. I don't know. I I have to wonder. Well, retail sales is such a well volatile number and but but subject to interpretation like why you know people bought more ahead of Trump's tariffs. They front ran the tariffs and we had a surge in retail sales. that didn't mean the economy was stronger, right? And now we've got um you know there could be another round of that as the as the new tariff set in like what does that number mean? Does it really mean that the average consumer was happy and spending more? And the other thing that's come out since that number came out and and Powell even mentioned this too today is that apparently and I'm not sure how they they they get these numbers, but apparently something like 50% of that increase was in the top 10% earners. So it's basically it's not Joe Sixpack out there saying, "Hey, I'm I'm feeling great. My job is safe and I can spend more, take on more debt, you know, buy buy now pay later." That's not what's happening. the the top 10% are spending so much that they moved half of that number which means the rest the other 90% move less than half you know right so um I just I think it's it's uh dangerous to to put too much weight on these things and I think maybe even Powell recognized that slightly but at the end of the day I think that the message here dear audience is you saw the Fed caught on this the horns of the dilemma, the stagflation that Powell's whole plan for dealing with was not to let it happen. Well, guess what? They did and they're stuck. And there's no good way out. It's, you know, it's damned if they do, damned if they don't. Um, and it looks like, and at least based on the action today, they're going to heir on the side of throwing the dollar under the bus. And that's good again for anything real, obviously, including monetary metals. It all favors it. Like I might have mentioned it to you before a little bit, but I have a hard time coming up with a bare case for monetary medals like meeting gold in particular. >> It's just scary because it's exactly when you get overconfident that that you know you fall flat on your face. So um I tell you what, I I don't know where the top is, Kai. I'm not smart enough to figure that out. And and we've talked about this before. I have a strategy for my own investments, my portfolio. I call it the upside maximizer where it's sort of like using trailing stops not as stop losses but to lock in big gains >> and so I've got a lot of big gains right now especially in in the gold space right so let's say gold rolls over what's going to happen is my upside maximizer triggers are going to get hit one after the other boom boom boom boom and if I don't get stopped entirely out I will definitely take a lot of money off the table and so what I'm saying with this is uh and if you don't mind my saying so there's a free report on website, you know, upside maximizer. But what I'm saying is like I don't need to know where the top is. I, you know, if gold goes up to 4,000, I stay long, but if gold rolls over and it corrects, my my triggers will get pulled and I will be um taking money off the table so I won't get hurt, >> which makes a lot of sense because nobody's ever gotten poor taking winnings off the table, right? Isn't that the saying? And >> nobody goes broke taking profits. Yep. I love that one. >> That's the one, right? I took some money off the table yesterday cuz uh I didn't know what to expect coming in into this meeting. Usually Powell is quite good at pulling rugs. So I didn't feel like that happening today. Although like the market reaction, what is it? Gold is down 8% as we speak here now. Um it's it's sort of right, but it's it's just volatility. I don't think it's a proper trend yet. And I think you pointed out where where gold might be headed here in the future earlier in the discussion. >> If I was if I was a day trader, I might have f I might was the market still open? No, it just closed. Um I I might have take I might have gone long right before market close on one of those shorttime options, you know, uh >> just just because there's usually even if gold does actually trend downwards um the rest of this week or or next week when you have a big move like this, there's often if not a dead cat bounce or the inverse, you know, the other way. Either way, there's often on the next day, you know, there's some big move and the next day there's people saying, "Hey, wait a minute." So, there's an opportunity for I'm not a short-term trader, but if I was, a move as big as we saw today, I I would have been highly tempted to to make a contrary bet on that. >> Yeah, I I'm with you. And I know a few people that actually bought puts yesterday, just betting on a bit of a reversal, just short-term, but betting on a bit of a reversal, just uh expecting the typical rugpull, right? And we've sort of seen it. Um, Lobo, I'm I'm out of my questions. Maybe we'll uh, you know, ask a couple questions by the audience here. We got a couple in. um sort of along the lines what we've been discussing. Um the question by CK is with about 25% functional unemployment, twothirds of the money supply printed in the last 17 years, he corrected himself in a later um post here, home mortgage delinquencies and credit card delinquencies at 14 years high. Are we looking are are we getting a new system? And he means by that a new metals money backed money uh sorry I'm butchering it. A metals blockchainbacked monetary system. You know what I'm getting at. So the answer the answers are are good, bad and ugly. I guess you know eventually the answer is always going to be yes. Nothing lasts forever. So there will be a reset. Um but to me as an investor, as a speculator, that's only useful if I can say not only when is it going to happen, but like is it going to happen within my usual investment time frame? If the answer is yes, but it's maybe five or ten years down the road, okay, that's not just a vague someday kind of answer, but it's not really useful to me right now. I'm not going to, you know, positions can go completely wrong on me well before I'm proven right five or 10 years from now. And so the answer, you know, to me is, you know, is this going to happen in the next year or two? That is a much tougher tougher call to say. And I'm not sure that it is. It it you know it was unbelievable to me that the powers that be could kick the can down the road after the GFC in 2008 2009. I I truly completely did not believe that they could paper that thing over and dang gum it. They sure did. >> So um you know this has made me very cautious about assuming you know it's it's you know Rick Rule's favorite thing right don't confuse the inevitable with the imminent. I think this question puts its finger on I think inevitabilities at some point in the future. The house of cards cannot go to the moon. At some point it has to come down. Um but I just personally I would not invest on that basis because I have no idea when it's going to happen. And the and the belief that it h that it's imminent has been very dangerous to people's wealth basically in my entire career. Um maybe as a follow-up CK posted um about the stable coin bill. I'm curious if that may is maybe the the starting gun here that sets off the the regime change. >> That is a really interesting move. But you you know you talk about what's going on, you know, the number of unprecedented moves. This is really interesting. Um, but to again give credit where due, I didn't do the math on this, but my fellow Puerto Rican Adrien Day looked at that and you know, even if they're highly successful with this, the amount of money that we're talking about, it's marginal. It's not going to change the trajectory of the United States government's financial situation. It it it may help a little, but it's it's not going to change it's not a game changer. Let's put that way. It's not a game changer. And I'm inclined to agree. And I I think maybe the most important thing about this is that, you know, I liked Bitcoin better when it was this completely anarchctic system and nobody wanted it to be regulated. They wanted it to be another kind of money completely outside of regular finance as an alternative to what happens if the mainstream or the or the establishment infrastructure goes up in flames. the more cryptos get sucked into the to the mainstream infrastructure and get regulated and defined and all that stuff, the more vulnerable they are to problems that they were in many ways designed to be the answer to. And I just think that's really unfortunate. But anyway, so this business now with the mainstreaming of cryptos and bringing in, you know, the ability for the stable coins to participate in treasuries and there's some that are participating in the gold sector. Now, >> I think that's really interesting. Uh, you know, gold is a much smaller market than the United States Treasury market. And yes, there are some Bitcoin maxis out there that just hate gold. They'll never own gold. Doesn't matter how great gold is doing. You know, they'll never own it. But I think most people, they want to make money. And they're not here to be religious about Bitcoin taking over the world in the end, like the one ring of Sauron and Mordor. They want to look and see what's making money. And so if there's an opportunity to make money combining gold and cryptos, whether it's with Tether or something else, right? I mean, that's really interesting. And it brings new buyers to the market or or even just new eyeballs as it were. It it I think it changes the dialogue. It makes it makes gold more appealing or acceptable as a hedge to people who otherwise might, you know, said, "Oh, that's just a boomer thing." Right? No, it it sort of transcend what not transcend but uh it sort of like starts to blur the lines between crypto and hard asset I guess like or digital asset and hard asset is maybe the right term it's and maybe we can mention but it was tether moving into the royalties gold royalty space and buying a lot of gold actually physical gold I think as well somewhere between one ton to two tons a month um for their gold vault in Switzerland which is really interesting development of course so no really appreciate that Lobo. Appreciate those insights. Um, we got a couple more question. One is about Bareric Gold. I'm just going to answer that one real quick because it doesn't really have a bearing on the the macro picture we're discussing, but Bareric announced today at the Denver Gold forum their four mile, I think it was the PA for four mile. Absolutely insane numbers. The market is absolutely excited about those. What is it? 600 to 700,000 ounces a year at an ultra high grade. I think it was 15 grams Lobo. You might have seen it as well. uh 15 grams a ton uh within their backyard at Cortez uh in in Nevada. Uh that's why the market is so excited. So that was one of the questions we had here. Um the rest like what has the market priced in now? Maybe giving giving a bit of a market outlook for the next three months until the year end. Uh the the Fed signals two more cuts. Um what is priced in now? >> Well um let me jump back to Bareric a moment. I think >> okay >> and I I don't I don't give away stock analysis right that's what people pay me for so I don't want to evaluate bareric and put something on that but I think this is really interesting uh on a broader market kind of perspective because there's been a a real increase in political risk in you know great jurisdictions geologically but around the world the number of governments getting more you know hungry for another pound of minor's flesh that just seems to be getting worse and worse and and of course it's understandable you you have gold hitting all-time highs. Of course, the governments are going to get greedier. That's just part for the course. So, it's I think the interesting thing about this is that, you know, Bareric also just sold their last gold mine in Canada. And I remember my reaction to that was like, oh, because Pakistan is so much safer, right? You know, um so it's interesting that at the same time now they come out with this news in in Nevada. So, you know, there there's a balance here of the political risking and I think that is important. I think that's something that the audience should think about. Um I I know that uh you know people get mad at me when I when I say I don't like X Y or Z jurisdiction but you know sorry Mali or Bkina Faso they are more dangerous for your money than Nevada or Ontario. Uh, and yes, you you you'll pay more for a safer jurisdiction, but your risk is really different. Um, as it happens, I just published a political risk map on my website. It's available for free, but I think this is important. And even, you know, one of the world's biggest gold miners, they're clearly trying to keep this balance in mind. So, you know, for people who are just swinging for the bleachers and buying dirt cheap gold stocks or uranium stocks or whatever in dangerous jurisdictions, uh, because they're cheap, uh, understand that they're cheap for a reason and you are taking a lot of risk. Um, and what was your other question? Sorry, Kai triggered me there. >> No, no worries because I know how that feels. That's why I had to bring it up cuz uh it is such a market mover and it's one of the leading like stocks like companies in our space. Uh so that's why I had to bring it up. Um but the the follow-up or the the last question I had for you was really just trying to put a bow around our conversation here and wrap it up was really just what what's your outlook now for the rest of the year? Uh 20 two more rate cuts expected. What what has the market priced in? >> I don't know. Well, what the market is priced in is that's that's coincident or or it's more or less what's been priced in. I'm skeptical that we'll actually have that happen because I do think we're going to see more higher inflation data. So, I I think there's if the Fed actually tries to do its job of balancing between its its dual mandate, I think we might get one or even no more rate cuts this year depending on how quickly and how high the inflation goes up. And even if you're on team transitory again, you know, if inflation goes back, you know, 4%. You know, that that will be pretty scary. And even if you think it's oneoff, right, it would be hard to ignore that and just look through it and cut rates anyway. I mean, can you imagine the inflation? Forget for it. Let's say it goes to 5% by December. Can you imagine cutting anyway in December? That would be really tough. So, I'm not making a prediction there exactly. I'm saying though that the odds to me favor a more difficult path for rate cuts than is currently being priced in by the markets. That aside, I think the broader picture is is where we started. I think all roads lead to higher inflation. I think this is good for all real assets, not just gold and silver. I'm very bullish on copper going forward. Uh, you know, come the reflationary boom, I'm going I expect to be bullish on oil again. Not right now. And we'll see other markets, other things, you know, the iron, maybe even nickel, not so much cobalt, probably not lithium. You know, I I'll look at them as that happens. But I think all pass leads towards inflation. I think the big beautiful bill and and the Trump agenda in the United States is inflationary. I think Europe's remilitarization is inflationary. I think China though it's nominally battling deflation right now the policy responses the stimulation I think ultimately the printing press wins in the end if you try hard enough you'll get the inflation you want right Mario Draghi was gone when he's by the time that Europe got the inflation he wanted but they got it >> um so I think the bottom line here is and I don't know what headline you want to choose but the bottom line I think we are looking at a super cycle ahead that is bullish for commodities as a class, but I think we'll need to be selective. I, you know, it might work to just, you know, buy the commodities index and and ride it out over the next five years. Uh, I'm going to be more selective than that. And we haven't talked about uranium yet. And and that one really is different. the the real quick the data says that in the last four recessions uranium prices went sideways to up in three of them and the one where they went down that was 2008 and uranium had actually peaked in 2007 so it was already on its way down and arguably was not going down because of the recession and I only bring this up because we've spent this whole hour talking about economics monetary policy fiscal policy I think almost none of that matters for uranium the buildout of reactors around the world is huge. The demand case is soaring. Supply remains constrained. The miners have not been able to ramp up. Even the biggest and the best in the business, the two biggest and best in the business have been unable to ramp up as planned. And this is extremely bullish. So, so this is not an economic statement. This is just simple supply and demand. I'm I'm extremely bullish on uranium going forward. >> Perfect. No, Lobo, really appreciate those uh those insights. also the uh the extracurricular curricular insights here as well on on the commodities. Much much appreciated, Lobo. Um everybody else, really appreciate everybody tuning in. It was it was great doing this live again. It's been too long. Lobo, thank you so much for joining us. Where where can we send our audience? Where can they find more of your work? You've been hinting at it earlier already. >> independent speculator.com. There's a free weekly letter. You It's on the website now. We used to send it out via email, so you do need to register, but we don't charge for it. And we will not spam you with a flood of advertisements if you sign up. You just get one notification per week letting you know we've posted that free digest. And if you like the way I think you might consider my paid services. >> Fantastic. Lobo tremendously appreciate your time. It's awesome to do these live with you right after the Fed press conference. Much much appreciate it. And everybody else, thanks so much for tuning in to this live presentation breaking news special here on Soore Financially. I hope you enjoyed it as much as I have. There's always lots to discuss. There was so many topics, so many like nuances that that can be picked up in those press conferences, especially this one. I felt like I overhyped it a little bit the last couple days here on our channel, but uh it was an important warning for us from the precious metals perspective, and I don't think it disappointed. The contradictions are visible for everybody now. What's the Fed doing? Even the Fed doesn't know what they're going to do next. And that's I think that's the crux of the matter, and that's why we'll see volatile markets. Although the VIX is almost dead looking at it, but we've seen it in the S&P 500. You've seen it in the gold price. You've seen it in the Dixie just now. Uh let's see how that plays out over the coming days. I still have some cash on the sidelines. I'm ready to buy when the stock prices dip of some of the stocks I'm watching. So, I hope you have the same. Good luck out there. Stay safe and uh don't forget to hit that like and subscribe button. We much much appreciate it. Take care out there. And we're offline.