Stephanie Pomboy: Unemployment Rate To Spike In 2026?

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and we should be live. Welcome to Thalam Money. I'm Tha Money founder and your host, Adam Tagert. I'm welcoming you here for another macro monthly update uh on a Wednesday with the macro maven herself, Stephanie Palmboy. Hi, Steph. How are you? >> I'm great. How are you? >> I am good. Good to see you. I hope the past month has been good to you. I hope you had a good Thanksgiving. I hope you're looking forward to the Christmas holidays. >> Yeah, thank you. Merry Christmas. I am looking forward to it. It's 80 degrees here though, so it doesn't it's hard to feel really Christmy, but uh Willamina has her Christmas nutcracker out. I had to set that aside, so she didn't decide now is the time to play. [laughter] >> That's great. Um it's much more winterlike conditions here in Reno. And actually, I I'll just apologize in advance if folks can hear the wind howling outside the window here. Um, we uh we moved here about two months ago or so and there have been a couple bouts of like a 100 mph plus wind gusts and and we missed the past couple ones. We were away for the weekend or whatever when they were happening. Uh, well, we finally found out last night what everybody was talking about. [laughter] Uh, crazy. I' I've been up since like 3:30 um with with dogs that were in the bed who weren't understanding what was going on out there and it still is kind of ripping. So, let me know if it gets in the way of all your hair. >> Crazy. That's uh that's some severe weather. You probably um I'm sure Ashley feels like Dorothy and Toto with your dogs there. [laughter] >> A little bit. A little bit. Um although I I think unlike Dorothy, I think she was considering throwing them out into the uh the tornado last night. [laughter] >> But I did wake up. I'll see if I can load it while we're talking here. I did wake up to a just a gorgeous uh rainbow like like a full rainbow going across the horizon. So, if I can pull it up here so folks can enjoy, I will. >> Yeah. >> But we've got we've got a lot to talk about here, Steph. Um and why don't we start with the most important topic, which is your conference, the super terrific day is coming up uh faster than I think uh you know be here before everybody knows it. Can you just give interested folks direction on where they should go to sign up for that if they're interested? >> Yeah, absolutely. Well, I can um post a link on my Twitter. Actually, I have posted it a few times on my Twitter feed, but I'll do that again after we log off here. Um >> sorry, I'm just putting your Twitter handle right up there on the screen pomboy so folks know where to go. >> Thank you. Alternatively, if people are trying to find it, they can just um go to my website and just hit the info at macromavens contact and we'll send you the link. Um I need to get it posted on the website. I haven't done that yet, but if you just email us, we'll we'll get you that link. But I the exciting thing is that you have decided to grace us with your presence. I'm super happy about that. uh it's going to make it even uh even more of a spectacular conference. We did this for the first time last year and had such a great such great feedback from people. I mean it was not like any conference I've ever been to because there was such a sense of camaraderie between the speakers and the audience. It was kind of like a big family in a way having a conversation about you know the big investment themes of the year. Um, and people were just really excited to come back and do that again and you're just such a natural fit with that audience. So, I'm I'm very excited and we've got some great speakers lined up and whatnot, but you can learn all about that by looking at the link on my Twitter feed or emailing and I'll send out the agenda. Um, but it's going to be great and it's right after the President's Day weekend in midFebruary here in South Florida, sunny South Florida, St. Pete. It's it's going to be great. So, uh, plan accordingly. [laughter] >> All right. Well, look, it was a huge honor to be asked. It's a real privilege to go there. Um, so folks are thinking about going and decide to go, I look forward to meeting you all there. And and that's really one of the things that I I don't do too many live events um during the years um just because this gig keeps me so busy. But um I really appreciate it when I do and you get to actually interact, you know, face to face in real time. You know, it's really helpful for me to talk to people that that watch this channel and they can I get some of my best ideas from those conversations. But as an attendee of these things as well, uh it's really great when you get the opportunity to not just sit in the audience and and hear somebody on the stage, but to actually get to interact with them, you know, off the stage. you really and and your conference from what I understand is kind of that on steroids where you know you're you're all kind of mingling together. It's not necessarily faculty and audience, right? >> Yeah, absolutely. I mean, we try to make it as interactive as possible. And so, you know, it's it's like I said, it's not your typical conference. People don't get up and have slide presentations. I mean, maybe a couple people will do that, but the norm is a fireside chat between, you know, Grant and someone or myself and someone and then we'll take questions from the audience and really try to make it as interactive as possible. And then we do a live super terrific happy hour where all the speakers are on the stage and we just sit there and take questions from the audience and and uh all of that. So, um it's it's really a great experience and you'll see a lot of people familiar, you know, like we've got um Tom Hanik, the Kansas City Fed guy, coming uh Tom Mlelen of the Mlelen Oscillator, also uh been interviewed by you. Uh Mike Green, who everyone should be familiar with with all his work on, you know, the impact that passive investing is having in terms of concentration in the markets and the implications of that. um just it the list goes on. I don't want to reveal all of the exciting uh speakers, but that's a a tease right there. And of course, you're going to be there to help us MC this whole show and and uh really engage the audience with the speakers. It's It's going to be tremendous. I'm I'm really excited and I think you will add an extra element of uh real insight and and power to this to this. You're you're being too kind. Uh not only it will be tremendous, I'm sure it's going to be super terrific. And [laughter] those three those three gentlemen you just mentioned, um they're all guys who I really have enjoyed interviewing, getting to know over the years, and I have not met them in person, so I'm very excited for that. >> Yeah, it'll be fun. >> All right, folks. I promise we'll get to the meat of this uh macro discussion in just a second. Uh two two quick things. One, uh I did manage to upload it. just to show you guys this is what I woke up to this morning. This this beautiful full rainbow. >> Um but uh uh we're also gonna end a little bit early today. We're we're gonna we're going to go for the next 50 minutes, but I've got to end about a minute or two before the hour because uh great independent journalist Matt Taibbe uh is coming on and I've gota I've got to scoot over to record that one and that interview is going to go out tomorrow. So hopefully that's exciting to folks. All right. Um, >> that's gonna be fantastic. >> It It should It really should be just great. Um, I I saw Matt in person a few months ago and uh, you know, we we talked about recording something special for Thoughtful Money. So, that's that, like I said, I'm like a kid waiting for Christmas here. Okay, Steph, so much to talk about. I'm going to throw some things up here. Uh, we'll, you know, talk about those. We'll talk about anything else that's burning brightly on your radar and then I'll try to take as many um questions from the live audience as well as we go through here. Um there's a chart you put up which I I'll put up in just a minute if I can. Um but uh you had put out on X recently that you think people are kind of missing a big development in the AI space which is uh how there's um you know there's just a unbelievable amount of funding that this space needs. I think the last I saw was like a trillion and a half. uh and there is an increasing competition uh to borrow that money from both the private and the public markets and there's there's actually kind of several important questions that that competition raises but but you know I think your point was a fair one which is I don't hear a lot of discussion about that competition so tell me why is that burning brightly on your radar right now? >> Yeah, it's amazing. So, we knew and I've talked about with you at length about all the corporate debt that needs to roll over the next several years. And we're looking at, you know, over a trillion dollars in in these are corporate bonds that need to um be rolled over um each year for the next three years. I think in fact it's it adds up to almost four trillion over the next three years in in corporate debt that needs to be refinanced. Um, and that's, you know, existing debt. That's not new borrowing to fund AI capex, which is what we're seeing now just take off. And it's being done by a lot of companies that have cash on their balance sheet that are, you know, Google, Meta, these kind of big companies that are undertaking these huge investments in AI. And um and so estimates I've seen, I think so far this year, the latest numbers are that they've there's been like $150 billion worth of borrowing. Um but they estimate that going to a trillion by 2028, which is just, you know, a couple years out. Um so this area is really going to place uh increasing demand uh on capital markets. you know, we'll see at the margin more money flowing to AI capex um and presumably at the expense of other borrowing. Um so we've got obviously the public sector has an enormous amount of debt that has to roll over the next year. Um I mean we've got 7 trillion in T bills outstanding. So you know that each year pretty much we've got to roll at least $7 trillion unless we start to shift the composition of issuance and right now um Treasury Secretary Bessant uh shows zero inclination to do that. So we're looking at 7 trillion minimum from the public sector in terms of demand for capital. Then you've got this, you know, extra trillion in in existing corporate debt that needs to roll. And then you're layering on another, you know, could be a trillion in terms of funding AI capex. Um, and then you've got state and local borrowers and obviously you have consumers who need to borrow. We've got margin debt that's hitting all-time record highs. you know, the demands for capital are just intensifying. Um, and so I think there's uh a question as to, you know, who's going to left get left out by the wayside, >> right? >> And I'm thinking, you know, it remains to be seen obviously and a lot will depend on what the fundamentals look like in terms of the healthy economy moving forward. Um but when you think about my pet topic which has been the uh the misperception about the strength of corporate balance sheets and the idea that you know there's plenty of cash on hand because people look at the total and they don't look at the fact that all the cash is held by the top 10 companies and everyone else there's basically nothing and you know the bottom 50% are can't rub two nickels together. Um, so the question is if you've got a very topheavy sort of corporate sector, um, and yet you've got, you know, junk spreads that are pushed to the mat, um, if you're an investor and you're given an opportunity to extend more credit to some junk rated borrower or to lend money to Google, you know, um, it seems to me like for the amount of extra yield you're getting for taking that massive risk by going down the credit curve, you might decide, hey, you know, maybe maybe I want to actually shift um and take advantage of this opportunity because these companies weren't really big borrowers, you know, so now um there's there's potential crowding out there of sort of marginal credits. Um or you could see perhaps a barbell where people continue to lend at higher rates to the real junk companies and then they're lending to these higher quality borrowers and that tripleB segment of the investment grade universe which is more than half of the investment grade universe now gets completely left by the wayside. in which case, you know, that would be really an existential threat for those companies again because they all have this massive amount of debt that needs to roll over the next several years. So, it's just, you know, I'm just throwing that out there as a topic to think about because there's a lot of acknowledgment about this um capital demands from AI, but not as yet any connecting the dots to what the implications are for everybody else who needs to borrow as well. um to say nothing of the federal government and you know the the competition for capital there because presumably if you can lend to the government at four and you can lend to you know Google or Meta or these other companies and pick up a little more yield you know that that might actually be more compelling to some investors. >> All right so let's let's pull a few of those threads here. Um so increasing competition for uh uh debt buyers out there, right? AI complex is raising all this debt. The government has to raise the 7 trillion that you talked about or roll over the 7 trillion. And we've got the debt maturity wall which you and I have been talking about forever, right? >> Yes. [laughter] Um, so you know, you can argue that the AI debt is productive debt, that we're going to get some sort of future return on that spending, right? I mean, >> you could debate about that, but yes, >> it's debatable, but you can you can make the argument, right? You can't make that argument with the debt maturity wall or with the uh the Treasury rollovers, right? Yeah. >> That's debt that was taken on in the past. Whatever economic benefit we were going to get from it, we got from it. Now, this is just living with the legacy of this, right? So, you know, a fair amount of this competition is is going to be taking money that's going to go to things that don't have a a return on them, right? >> Um, so you raise a really good question here, which is like, all right, to the extent that there just aren't infinite debt buyers out there, you know, what is this race crowding out? like what other things that we could be investing in as a society are not getting fed here. You know, the the smaller but more innovative companies uh on the public side, you know, rebuilding key infrastructure uh you know, things that we could get long-term benefits from. Like how how what's the probability you think we'll look back at this scramble right now and say, you know, we we've shoved a lot of capital into stuff that just really didn't do anything for us? >> Yeah. Well, I mean, I think even around AI, uh, there are a lot of people who liken this, I think, correctly, to the dot bubble, um, which is to say that the internet was a, you know,.com was a thing. It didn't go away. There were just a lot of companies that came into existence then that don't exist today. So you you know you you started with an idea that was valid and then you had a a tremendous amount of money let's say that went into irresponsible malinvesting and that ultimately got flushed out and I think you know you can draw the parallel to AI today where yes obviously artificial intelligence is going to be with us it's you know something that will be durable into the future but that's not to say that there won't be a tremendous um amount of let's say creative destruction as we flesh out the um the wheat from the chaff as it were in that space. Um but you know in the interim it's this question about the push and pull between I believe you know this happening against the backdrop of a public sector trying to finance the largest deficits in our lifetime and doing so with T bills that require constant rolling over. So, you know, if we got seven trillion that we've got to do, that creates a different backdrop from what we've seen in prior episodes where you have these kind of malinvestment bubbles, these credit bubbles, um, where at least you didn't have massive competition for capital coming from the public sector at the same time, right? So this is unique and and you know if you have again it comes back to what is your outlook for the economy because if you think that we're actually going to head into a slowdown god forbid a recession that public sector borrowing requirement is only going to increase further. So you know the deficits will expand from a u you know counteryclical standpoint. So that's just going to be another moving part in this drama. Um but so I'm just speculating. You know, my comment about the tripleB swath of investment grade um is, you know, something I think is a potential implication, but one which, you know, time will tell and it will depend greatly on the outlook for the economy and and where we're headed and, you know, whether the one big beautiful bill does in fact uh create this kind of liftoff in the first part of next year or not. So, a lot of things that are kind of up in the air um and will bear watching. >> Okay. Um All right. I I want to pull on this thread a little bit more. Um Steph, if you if you are not backended, I now have a little bit of flexibility. Uh I just got uh an email um from Matt's assistant saying that he missed his train and that we're going to have to reschedule to early next week. So, I don't I don't have this u backended concern anymore. Um, and and hopefully that'll let us get to a little bit more uh live Q&A from the audience, too. Um, all right. So, another thing about all this debt that's flooding, you know, into the system out there now that that uh presumably needs a buyer is this concept of debt saturation, right? Where it's just like we just might not be able to absorb all this, right? And you you might have have parties that just can't, right? they they've bought so much debt they've kind of hit their limit and like all right we just don't have any more room on the balance sheet to take on any more debt. Um or you know you may get companies that that have enough and say you know I just maybe I could take on some more but I just don't want to. And we're seeing that a little bit even just today. Um the hits keep coming for Oracle, but um one of the ones, one of the headlines today was that Blue, which was in discussions with Oracle to fund, I don't know 10 billion or something worth of of uh Oracle products um for their buildout said, "Hey, you know what? We've changed our mind. Uh we we don't want you dead." Right? So, what I'm curious is is with all of this supply and maybe some limits on demand, might we expect to see bond yields stay high or creep higher because people are like, look, if you want me to take this thing, you're going to have to really >> pay me deal. Yeah. >> Yeah. Absolutely. And I think that that clearly is um the relief valve for all of this, you know, um the basic law of supply and demand. and we're we're pumping in a tremendous amount of supply. Um so the price should go down and conversely yields should go up. Um and I think that's especially true for the public sector and we're seeing that play out already. Um you know there was a interesting chart this is kind of on a tangent. uh the BIS just did a paper I guess they must have published last week looking at the treasury basis trade and uh it's silent but extending expanding role in treasury market dynamics and basically what they are underscoring is a point that I've made for ages now and that is that in uh in the absence of foreign central bank buying sort of hedge funds have silently taken the place uh in terms of pulling a lot of the uh doing a lot of the heavy lifting on our on our deficit financing that through this basis trade. Um they had a chart that puts hedge fund positions in the treasury market over 4 trillion right now. um of which I think they had 2.5 trillion was tied up in these basis trade or other relative value trades. So my point is that we are increasingly reliant on sort of fickle financiers as it were um instead of these longtime central bank buyers who were relatively preunctery. You know they would receive dollars in over the transom and recycle them uh right back into US treasuries. And so they were sort of durable, reliable, uh, a durable and reliable source of financing. And now we're increasingly reliant on hedge funds positioning these highly levered basis trades. Um, which, you know, everyone in the audience is aware that I'm a pretty ded in the wool skeptic, but that doesn't exactly inspire confidence to me, [laughter] you know. So >> I'm sure nothing could go wrong there. Hedge fun. I'm sure they'll hold those positions to maturity and everything will be totally fine. But in the off, you know, in the small chance that they actually do unload, uh, it could create some real havoc. But I think this is a great I mean you're the you're the host but I one thing that is burning brightly on my radar is this whole topic as relates to what the Fed did since we last spoke with resumption of QE under a different name. I mean basically they didn't call it >> Stephanie it's not they're just making sure there are ample reserves in the system. >> Right. Exactly. So, um, but essentially, you know, you and I have had this conversation forever where I said, you know, it's just a matter of time before they end up, uh, restarting QE and and they've done that all, albeit, you know, under some euphemistic guys. But that's clearly where this has to go >> in terms of financing the debt. How how how how much do you interpret what the Fed is doing here as as preliminaries to to panic as as as a as a prequel to panic? Um and I I I don't want to be histrionic here, but um I is this just hey there's a little bit of pressure in the plumbing and we're trying to, you know, provide a little release or do you think this is more serious than PAL is letting on? Well, I think the fact that Powell is doing it is a pretty strong statement about how urgent it has become, >> right? Because I mean, I guess he could just, if it weren't urgent, he could just leave it to his successor at this point. You deal with it, right? >> Exactly. And I mean, he hasn't been trying to ingratiate himself with the administration. He's wanted to sort of present himself as someone who's standing pretty much in opposition or if not in opposition, but as fiercely independent, let's put it that way. Um and so not cowtowing to the wills of the administration, but ultimately, you know, the president may be pushing hard for a rate cut. This expansion of the balance sheet is infinitely more effective for him than a rate cut. You know, so far we've seen five rate cuts, actually now six, where the long end of the yield curve has not come lower. So you've moving the Fed funds rate lower and nothing else is following. So that's they've done that now six times. So clearly that lever is broken and the balance sheet is the tool that remains. And so uh I think that from the administration standpoint, this shift by the Fed is one that they should be very excited about um rather than continuing to push for rate cuts. But I digress. Um, but I think that Powell, you know, he did try to say, uh, we knew this day would come when we'd have to when we'd get to the point of ample reserves and we'd have to, you know, start to manage the reserves, uh, higher, I guess. Um, but he confessed that that arrived a couple months sooner than they had anticipated. That was pretty much all that he did in terms of acknowledging that. But I, you know, again, I'm I'm a a real uh let's say anti- Fedite. [laughter] So I will go far enough to say that I think that this the Fed has enough hubris to imagine that this is just a mechanical tweak and that they can manage this reserve situation and that it is not in fact the uh initial steps of a broader implementation of of some form of yield curve control. I think they have enough hubris to imagine that it's just this little discreet tweak and they've got everything in hand and it's going to be perfect. Um, all evidence to the contrary. [laughter] >> Uh, well, it'll be really interesting especially if we have, you know, more more developments on this uh to to get uh Dr. Hanuk's thoughts on this at your um >> straight from the source. Okay. Um, so you know, Stephanie, I have to come up with the titles for these live streams before you and I have talked. So I'm I'm trying to intimate, you know, topics that we're going to get into. Um, so the one I picked for this, I don't know if you saw it, but >> yeah, the unemployment rate. Yeah. >> Yeah. Is unemployment rate to spike in in 2026. And um, you know, Pal kind of surprised me. I think he surprised a number of people where he said, "Hey, look, you know, we we haven't had all the data sources uh that we usually have because of the government shutdown, but we've kind of come to the conclusion that um that the BLS payroll data is exaggerated to the tune of about 60,000 jobs a month, which if you back that out, uh then job growth would have been negative for, you know, a number of the recent months, right? Um, and it's it's sort of an admission by the Fed that hey, the jobs market's maybe even weaker, you know, than than uh we've been thinking. And Tyler has always taken care to say that the labor market is cooling. He's not saying, "Hey everybody, it's falling off a cliff." Now, the Fed chair is probably never going to say that. Um, but my my my question for you is is in addition to saying that uh we got data recently uh I'm gonna have to pull it up here. Uh I think when you were talking Steph, but um we got data here recently that the unemployment rate uh increased up to 4.6%. Uh shoot, I thought I had this thing easy to pull up here, but I don't. Um but but you you guys have seen me pull this chart up before in the past. um uh where I've I've got here's an older version of it. Um it it it it uh doesn't have the latest 4.6% but it's so small you can hardly tell anyways. But you can see in this data series here, which goes back to 1950, just about every recession uh was preceded by the Fed first hiking interest rates, then plateauing them uh and then starting to cut, you know, uh and then eventually kind of panic cut uh as the new recession hit. And concurrently you would see the unemployment rate which had drifted down from the last recession clearly bottomed and then you know as soon as it starts to pick up it kind of bang shoots up into the next uh recession which is the gray shaded areas on this chart. So you know I've asked you this question in the past but it's like okay so what's the argument for why it should be different this time? Um and you know with with the Fed admitting that hey you know we we actually think that that even the cooling numbers we've seen are probably worse than we thought. Um uh so well sorry that's the question I want to ask you but let me give you one little extra bit of data point. So I think if Scott Bessant were watching this live stream and and he was in here with us he would say oh well I'll tell you what's different this time is you know we've been pushing all these um economyfriendly policies over the past you know 10 months and those things are really going to start firing in earnest as we get into 2026 and uh you know economy is going to have all sorts of tailwinds against it and uh you know it's going to be great and uh you Goldman Sachs even just just this morning um put out a recommendation of like, hey, you should be going out there and buying uh consumer staples and consumer discretionary products. Go buy the the the alcohol companies, go buy the cigarette companies, go buy luxury uh because the consumer is going to be back, baby, in 2026. So, you know, in one sense, we've got this this data that suggests the labor market's worsening. And I think you and I, you know, we could rehash all the arguments we've made, which is why we think things could get even worse next year. On the other half, you've got, you know, the administration and Goldman saying, "Hey, you know what? Like, it's going to start getting better." Where help bridge those two opinions? And maybe you're just going to say they're they're full of it. I don't know. But but has anything changed, I guess, in your outlook around this? Well, I mean, I think one thing that uh Bessant would say too is that all of the investment agreements, the commitments that the administration has cobbled together from, you know, international >> uh companies would boost domestic employment. Um so they're waiting for that to kick in as well. That would just be another thing to add to that argument that they would make. >> Yeah. Oh, sorry. Another thing that they make too is that we've seen the impact of the tariffs. Like it was a one-off price shock. So tariffs aren't going to be an issue in 2026. >> Yeah. Yeah. No, absolutely. And I guess that kind of dubtales into a point I was going to make and that is that, you know, you have to think about what we've seen in the way of employment growth in the context of profit growth because profits is the number one input into employment. you don't hire you don't hire more people if your business sucks or is getting worse, right? You're quite the contrary. You're doing the opposite. So, generally, you know, the nerdy economist chartist in me would overlay employment growth with profit growth and have a hard time distinguishing one line from the other because they just move together. Um, so to hear Wall Street tell it, profit growth is phenomenal and yet employment growth sucks. So something isn't giving you the right reading. And when you look at consumer sentiment surveys and personal income and whatever, it wouldn't appear to be the profit numbers that are giving you the wrong I mean the the employment numbers are giving you the wrong, you know, if anything, the employment number is probably overstated. >> Um, >> yeah. And and I'm sorry to interject, but but is the reason the profit numbers may be giving us the wrong signal is that the profits are all in the hyperscalers. >> Exactly. >> So, you know, yes, the S&P has high profits, but they're in 10 companies and the remaining 490 490, which is where the vast majority of the jobs are, are stuck in wind. >> Precisely. Yeah, that's exactly where I was going to go with that. You're talking about again this halves and have nots in the corporate sector and people look at the averages and draw grand sweeping inferences about the health of the corporate sector. uh when in reality we're really talking about seven or 12 companies and everybody else is in a totally different situation and you need only look at uh corporate bankruptcy filings and I know I'm a broken record on this but every time we talk we have a new update and it's worse than the last one. >> Okay. And I was going there. Okay. Yeah. So so the the beatings continue. >> Yeah. I mean now we're on track. This year will be the largest year for corporate bankruptcy filing filings since 2011 which obviously was the back end of the financial crisis. >> So in terms of you know when you look at a chart of bankruptcy filings and you go along and then you get 2008 and you come down to 2011 then you go along and then you come up to now. The only reason it's the highest since 2011 is that it was coming down to this point in 2011. But when you're trying to look at periods where bankruptcies are accelerating at the pace they are right now, the last time we saw that was going into the global financial crisis. So, you know, in 20078. So, um this is obviously not a backdrop that is reflected anywhere in the in the market averages where the presumption is that every company is doing phenomenally well. um when in reality this is why you're seeing this massive corporate bankruptcy cycle and employment that is far weaker than you would naturally expect it to be relative to the printed numbers on S&P earnings. >> Okay. Um so uh I want to ask you about retail sales in just a second. Um because obviously as retail sales go, we're still a twothirds driven consumer economy. Um if retail spending gets compromised, that obviously, you know, would be highly correlated with or highly likely to generate um additional layoffs. Um I I just want to note, I don't know if she would say the same thing, but but as you were talking, I was just remembering a conversation that I had with >> Anna Wong, who's the chief economist at Bloomberg Economics, >> and uh this was pro probably in the first half of 2025 and the employment rate was starting to creep up and she had one of the highest um uh maybe it was even earlier than that but she she had one of the highest unemployment projections uh on the street uh which eventually proved to be correct but I remember asking her I was like all right you know at what we're not in a recession and these levels aren't recessionary yet but like when's when when's it going to start to bite like when are people really going to start to feel like unemployment is rising unemployment is a And I remember she said once we cross like 4 and a.5% she said I think that's when people are really going to start to to really feel it. Well, you know, now we're at 4.6%. Right. And I I I I've done enough of these interviews to to, you know, know that in a K-shaped economy, the top half can be feeling just great and the bottom half can literally be in their own personal recession. Um, and I think probably a lot of people watching here, you know, based on their previous comments on videos I've done here, you know, a lot of them either know people that are really hurting or themselves feel like they're in a personal recession right now. Um, so anyways, uh, in terms of going into next year, what is retail sales looking like? Is it is it still pretty much, you know, on average being propped up by the the the the top 20% and the K? >> It sure looks like it. And I mean that sort of reinforces what you hear from the companies as well. I mean you do see the Walmarts continuing to gather market share um which is not a good thing >> because wealthy people are kind of down downgrading, right? >> Yes. Some some people in the sort of middle to high end are having to slum at Walmart. Um but you know to the point on on employment uh a couple things. Number one, this has been preaged by the consumer confidence and sentiment numbers for months and months. Uh that the consumer has identified weakness in the labor market that has been universally pooed by Wall Street which basically says ah it's just they're just regurgitating what they hear on CNN or something like that about how awful things are and in reality they're really not that bad. Um, but if you overlay consumer expectations about the labor market or perceptions, current perceptions, it leads the unemployment rate like they they have a much better handle on what's actually happening on the ground, not surprisingly, um, than the statisticians, be they in the government or on Wall Street. The second point I would make is that we've seen for a long time, I mean at least nine months, um this situation where you've had the stock market levitating and the quits rate collapsing. And generally when people when the quits rate, that's people who are just getting up and quitting their job without having another job lined up. When the quitz rate is declining, it's generally associated with either a recession or a market that's crashing. You know, as people start to feel really insecure about their financial future, they're like, "Okay, well, I'm not going to quit. I hate this job, but I'm not going to quit it because, you know, the sky is falling out there." Now you have this environment where the quits rate has absolutely imploded in the face of a stock market that's hitting the moon, you know, and you've never seen anything like that before. So there's clearly it's just to me another example of the underlying stress that that that middle to lower section of the consumer is suffering that's being masked by this bubble in financial assets. um that is the focus of Wall Street and then of course Wall Street's focus on that is reinforced by looking at earnings that are skewed by the top seven [laughter] or 10 companies. So it's like this kind of uh echo chamber of news while the rest of the consumer just continues to get you know more and more into the muck. I mean this this really you know begs the question right how sustainable is all this and of course that's what we spend all our time debating and discussing and you know this does make me think a lot about my hey I'm not sure it's a K-shaped economy anymore it's more like a lowercase Ishaped economy where there are just not enough of the people with the wealth uh to matter in the employment data right they become such a small enough percentage that um yeah, they're doing great. Uh but because so many people are in the bottom half of that that eye now, that's what's driving what's happening with with the employment data. So like the quits rates, right? You know, even if everybody in the in the dot is keeping their job, doesn't matter anymore because there's so many people in that that bottom bar that are unhappy. >> Um so, you know, obviously this makes the system really vulnerable to a stock market correction. Yeah, >> I'm not saying a crash. I'm just saying a cooling off a correction, right? If if if the that dot, you know, that whether you like the K or the dot, um if they start reigning in their spending for any reason, but but an obvious one just could be, oh, you know, my my financial holdings just went down 12%. Um that could that could really have a much more outsized impact on the economy than in past cycles. Correct. to say nothing of a um hit to real estate prices which would be at least as devastating if not even more so I would think. Um, but yeah, absolutely. I mean, it's I view the market as the tail wagging the economic dog here. And it's interesting because, you know, you could get very conspiratorial about this stuff, but >> I don't think it's any secret to anybody around the globe that the US economy is only as good as ever levitating asset prices. So if you're chairman Xi for example, wouldn't it just be convenient to figure out a way to prick that bubble and create some kind of financial meltdown here in the US at which point you know you've pretty much thrown the US economy into a lurch that could reset the entire economic geopolitical playing field. >> Well, let's let's tug on that for a second. And I'm no geopolitical analyst, but can he not not not could he implement that, but I mean that would would that be cutting off his nose to spite his face? Like, okay, I trip up America, my my economic adversary, but then they're not buying from me and I'm trying to get my company out of my country out of this balance sheet recession. Wouldn't that just be kneecapping his own aspirations? I mean, obviously it wouldn't be without consequences for China and he's already in pretty rough shape to begin with. Um, but I'm just saying, you know, it's we have a tremendous vulnerability. Our Achilles heel is the stock market. >> Yeah. >> Because we are so completely dependent on that. And I think, you know, China might not directly target our stock market with some kind of cyber warfare or something like that, but they're essentially doing the same thing by unloading their Treasury holdings and forcing Treasury yields higher or contributing to the the inability to get yields down while the Fed is cutting rates. So that will at some point become a major issue for the stock market given what we just talked about at the beginning which is these increasing demands for capital. Um and you know the market is is reliant on the stock market is reliant on uh continued access to credit and as that cost the the cost of borrowing stays high or even moves higher uh that's going to become a major issue for the stock market. I mean I think it's going to be a real headwind. It's interesting. I wrote a piece called paging Dr. Pavlov in which I sort of posed the rhetorical question of how many times will investors have to hear the Fed rate cut bell ring without getting rewarded before they stop this conditioned response. Salivating every time. You know, it's like we've had six cuts that have accomplished nothing and yet we're still salivating in anticipation of the seventh cut as if that's going to be the one that, you know, finds the dog bowl full of all kinds of deliciousness. It's not going to happen. So, I just wonder the problem is we're trying to decondition 30 years of Fed Pavlovian training that we're going to be there and we're going to rescue you and lower rates are the all our problems. >> I I hate to say it, but I think, you know, like like training a wild animal, right? It's a combination of of carrot and stick or, you know, treats and the rolled up newspaper. And I think you're only going to decondition uh the market, which is used to getting a treat every time the bell rings. It's not going to be the lack of a treat. It's going to be the rolled up newspaper. Like the pain is going to have to get painful enough for them to change. Yeah. >> Yeah. And and you know, you mentioned earlier that that we're at risk of a of a stock market correction andor a housing market correction. And you know, the housing analysts that I interview on this channel say, "Well, that's on." And um this year uh will be the first year of home prices being down on average across the country in in a good long while. Um, and uh, and if you, you know, listen to the Melody Writes of the world, you know, it it could it could really get bad from here. I mean, she is predicting and and I think I I don't think too many others are predicting this dire of a forecast, but she is predicting that this housing correction will be worse than what we saw during the GFC. >> Wow. >> And and I know that Melody doesn't come to that lightly. I mean, she's she's not the histrionic, right? You know, fearmonger. She's very data driven. But but Melody, you know, she worked at um GMAC. Like she she she was in the the heart of the mortgage industry as all the mortgages, you know, were were were going belly up. Um so she really has a good understanding both a of just sort of how the plumbing of the whole housing market works in the financial side, but she she knows firsthand how how bad it was. She was helping GE, you know, try to get out of all their their underwater mortgages and she was dealing with lots of buyers and hearing their personal stories about how their lives got ruined by this. So, I I I don't think that that's a a prediction she makes lightly. Now, what will she be proven correct on it? Who knows? You know, we'll find out. But point being is is the housing market is further along towards a correction than the stock market is right now. Well, I was I was gonna make a a point that admittedly is a subtle point that goes over most people's head, and that is that stock market is down. It's down in real terms. >> Real terms. Yeah. >> Um, so if you've got gold up, I haven't checked today, but it's got to be up at least 55% year to year. >> It's up over 60 for the year. I just looked at the numbers. Gold's up over 60 for the year. Silver's up over 120%. >> And the S&P is up 13 or something like that. >> Yeah. So you're you're down substantially in real terms. Um which again, you know, it's a subtle point. I tried to make it on air recently and uh got laughed literally laughed out of the room. So [laughter] again, >> you know how that there's the the collage of Peter Schiff was right, you know, leading up to the 2008 crisis. I I predict Stephanie someone's going to put together a compilation of Stephanie Palmboy was love [laughter] at the end of >> Oh my god. Well, I I mean, Lord knows I've been making the points long enough that there would be plenty of footage to make. But on the other hand, most of most people view that as, you know, a reason to uh hiss and boo and hurl rotten tomatoes. But again, it's, you know, it's a subtle point that that isn't um viewed with any seriousness in conventional circles. But you know when you are trying to when you're checking out the grocery aisle and you realize that what you used to buy for 50 bucks costs you 120 uh you notice that you know you you are aware of the diminution of your real purchasing power. Um and it's the same with with stocks right now. Um what's interesting too about about the stock market to your point of it being our Achilles heel being our point of vulnerability it is for all the reasons that you you mentioned but increasingly >> the needle just flips back and forth between greed and fear on the greed fear index like it almost doesn't have any intermediate settings anymore. It is either everything is awesome >> or the world's ending. And we we were just in the world is ending and I went and looked and I was like we're not even down a full percent point yet from the all-time high. >> And so it's it's kind of like a shark, right? A shark has to swim or else it drowns. Um this market kind of has to rise or else it's just in in freakout. And to me that really shows that it is now sort of perched on a knife blade. And you know, as long as it can continue walking up that knife blade, I guess we'll be okay. But but the further it goes up, just a little bit of, you know, little breeze one side or the other that it's not expecting, you know, can could potentially upset everything. >> Absolutely. I mean, one bad earnings report from a high-profile company would do it. Um, or, you know, I continue to look at the corporate credit space and and private credit and all of that as a potential catalyst. But you know whatever it is uh the implications will be profound for the economy and then again for the currency because we're starting our starting point is you know two trillion plus budget deficits and that number will double in the event of a a serious of a crisis. >> Yeah. At least. And uh you know where is that money going to come from? So, so to that point, I I I I thought I had sent it to myself, but I didn't. Uh, but I read another headline or article this morning that talked about how to your point about, you know, the massive amounts of private lending now that that the bailouts, the next bailout is going to be both a public and a private >> bailout. Um, and it one of the reasons why it was so confident about private lending need to be bailed out and and I can't remember the exact stack whether it was half of the debt or a third of the debt, but it's both big number in either way, but basically a third or a half of the debt held by the insurance industry is private credit now. >> Yeah, I believe that. I mean, the pension fund exposure to alternative assets is like 40% I think. So that doesn't surprise me with the insurance companies being that exposed to to illquid. >> But the backs stoppers, the guys who were supposed to be playing it safe are loaded up and we just don't know what. Right. >> Yeah. But this is what happens in a world where you have a fixed return mandate and the Fed takes rates to zero and says, "Oh, your return mandate is 8%." Well, you can only get zero. So, you're going to have to take ridiculous amounts of risk if you want to make that 8% return target. Um, and not to mention possibly since you can't get 8% anywhere on the uni on the planet, you know, maybe add a little leverage in there to juice the returns. So, I mean, this is the risks out there are enormous and the market trades like um everything is just perfect. [laughter] >> Okay. And I'm going to mention a couple things here that are happening in real time as we're talking. Um markets are down today. Um you know S&P's coming up on a percent or so. Uh the NASDAQ is down over a percent. Um we have in the recent I don't know you know couple of days a week or so we we we've seen some doubts you know increasingly start to creep in around AI. Um so much so that Louis Gau who I interviewed the video released yesterday he made the he call he said the AI bubble has burst >> and he said it it it's now in the process of you know it's all over but but for the crying at this point in time. Um and he was pointing to stocks like Oracle and Broadcom and a few others and saying okay though that that is the that's the pop and then the rest is is going to cascade out of that. You know I said to him wow that's that's bold bold prediction. I I'm not willing to go there yet because we're, you know, at the time we're a percent away from the all-time high in the market. You know, for for me it's got to be a little bit more more visible than that. But we are seeing some challenges there and and Bitcoin, which has sort of been the the most risk on of risk on assets, has been struggling and it's now uh down again today to 86. Uh but it it it it's had a really tough time, you know, reclaiming its uh what six-digit valuation being above 100,000 a coin. Yeah. >> Um we we'll see what happens there. All I'm saying is is we're seeing, you know, some of the early indicators that we would expect uh to see if if the bloom really starts coming off the AI rose here. Uh concurrently, uh 10-year bond is hanging out at 4.16 right now. So that's gone nowhere to your point. We've had all these rate cuts. Uh you know, we've announced QE again, but it's not bringing that down. Uh and then uh gold is up today again. Uh it is uh about 4360 right now. And silver, talking about gold futures and silver futures. Silver futures are now at an all-time high uh above 66. And Steph, I know you were bullish on gold and silver coming into this year, but I'm going to bet this is going to be even higher than you thought they would have gone this year. >> Oh, yeah. Well, silver for sure. Um, so that's that has been a moonshot. Tremendous. I mean, it c I think at the beginning of the year, wasn't it 25? Some somewhere around 25, I believe. >> Yeah, like I said, it's it's up 120%. So, yeah, it's about right. >> Yeah. Um but uh this is a tremendous move. I do think that >> just just a little bit under 30. >> Okay. Um >> yeah, I I think the uh the case just gets stronger and I you know I had talked about at the beginning of the year that we would have to go to Kiwi. I've been singing from the SIML for a while and that was to >> um and now we're just barely opening the door on that. So I think obviously the the future is bright for precious metals. The other point I would make and it gets back to this whole conversation about capital demands and our bloated uh fiscal situation and that is I there's a fabulous chart that I saw the other day that overlaid the gold price with federal interest expense and it's a perfect parallel. You know they they just you can't tell the lines apart. Um, and unless you expect some relief on the interest expense front, it just looks like gold. It's just clear sailing. Um, I also have done charts way back that overlaid the Fed balance sheet with gold with gold actually leading changes in the Fed balance sheet by over a year. You know, >> sniffing it out. >> Yes. And so gold kind of sniffs out that the QE is coming and moves in advance. Um, and it does look like that's right on quue right now. So, I mean, look for a substantial increase in the Fed's balance sheet, which they're now already beginning. Side note on that, since we were talking about housing as well, you know, they're they're running off the MBS and taking those proceeds and recycling them into T bills. um which would seem to be starving the mortgage market and putting further upward pressure on mortgage rates rather than uh downward pressure which in theory this administration is what what they really want. The reason why they want the Fed to cut rates is to provide relief not just to the federal government but to homeowners and freeze you know unfreeze this housing market. Um so this stands at direct contravention of that goal. Um, but I read something recently that said that Fanny and Freddy, you know, while the Fed is unloading its MBS. Fanny and Freddy have been silently buying up a lot of MBS. So, it may be just a wash in that score. It's going to be interesting to watch how that plays out because they're also trying to >> um privatize. There was talk about, you know, privatiz and Freddy and what happens if and when that actually goes through. I mean, these are all big questions that we don't know answers to and we'll see play out in the new year, but I think it's this um the housing market and you know, Melody's thoughts on that are so crucial um is going to be a major moving part in the drama as we get into 2026 for sure. >> Yeah. And that that actually be that's probably the next session I should do with Melody would be you know the privatization and is it would that be a good or a bad thing because I know Melody >> has a lot of issues with a lot of the lending that's been done by the government agencies um just giving out loans that that have no business being given out right um and I I don't know but I I would assume that maybe privatizing it might lend and over time a little bit more of a of a formal type of scrutiny to that. >> Yeah. >> Um so anyways, we'll see. Um just on the PMs for a moment and folks, if you have questions for Stephanie, uh start asking them in the uh the live chat here and I'll try to pull a few in. [snorts] Um but you've been, you know, a champion of the precious metals for a good long time. Um this year has been a real validating year for you, so congratulations. Um, I I know they have been a pretty large part of your personal portfolio. I think you've largely kind of been, you know, precious metals and T- bills. I think if I've taken decent notes. >> Um, have you made any changes to your personal portfolio or at least to sort of your outlook on a on a appropriate allocation uh given how far the precious metals have moved here? In other words, have they gotten to a point where you've said, "Hey, I'm actually making a change." or are you is this a trend you're still planning to ride? >> Well, I mean, I guess I'm uh reckless because I'm just holding tight. Um and to the extent I've made any changes, it hasn't been to liquidate any of my gold position, but to um shift some marginal cash. I didn't have much, but a little bit into energy names. So, that's the only change I've made has been to be a little bit more exposed to energy. Um, and I'd love to do more, but that would require me to liquidate some of my gold holdings. And I, you know, >> I guess I'm waiting for, you know, I'm going to buy a lottery ticket later, so if I win the billion dollar lottery, then I'll [laughter] >> So, uh, okay. Well, thank you. Thank you for being transparent there. Um, so, uh, I've been doing the same as you, which has been sort of shoveling new cash into energy names. Um, and I think I've been fairly transparent about that. But again, folks, this is not personal financial advice. You shouldn't do what Stephanie's doing or I'm doing just because either one of us is doing it. You should talk to your adviser and do what makes sense for you. Um, but uh I've been talking to a lot of people of late that, you know, are are looking at the energy sector and saying, "Look, it's been beaten down far enough for long enough that uh and there are some signs that it's kind of beginning to come back to life here that there could be a fairly substantial if not even a potentially epic uh you know recovery in that space." Um, and talking again Louie Gav yesterday, uh, he echoed a sentiment that I've heard increasingly echoed on Wall Street, which is that, um, you know, the the traditional 6040 model doesn't work so well in in in what may be a secular era of rising interest rates. And therefore, you may want to, you know, hold a different allocation, maybe still 60 to stocks, but take a good chunk of your bond allocation and move that into other things. And in Louis case, he's like, I've gotten out of bonds. I am in 60% stocks, mostly international. I'm He's basically saying 2020. Uh, personally, he's 251 15, but but 20% energy and 20% precious metals. And he said, you know, because the energy companies, a lot of them are, you know, big companies that pay good dividends. He's like, energy companies are the new stocks. I sorry, the new bonds. He's like that that's what he's looking at for the next decade plus. curious to your reaction on that. >> Yeah. No, I agree. I mean, I guess um in general, I would be long commodities, you know, as the third bucket rather than uh you know, just sticking with that 6040. Uh and I thought Goldman Sachs came out with uh some shift in their allocation as well. >> They did. They kept 20 and they I'm trying to remember what the but I think the other 20 or part of it for sure was gold. I mean, we keep hearing more and more of these big Wall Street names now saying, "You probably should hold some gold." >> Yeah. Well, I look grossly irresponsible with my portfolio structure relative to what they're recommending. But no, I I mean, I think commodities should be a large part. Um, especially in this period now where we're heading to, we've already been through and we're going to accelerate our progress down the road of currency debasement. um clothing paper assets as we talked about. >> Sorry to interrupt it so you can include this in your answer. How much of it is debasement for pro commodities versus global competition for resources and that type of stuff? Is it is it all debasement or is it a blend? >> You mean in terms of why I want to be invested in that? >> Why you're pro commodities? I mean I think uh I mean I I guess I would say it's at least 50% from debasement and uh but I I would say it's probably more than that because one of the reasons why global central banks are shifting from owning treasuries to stockpiling you know uh gold silver rare minerals building SPRs etc is that they see the currency debasement. So whether that's my objective uh sense as to what the risk is or whether it's indirectly what's driving the the fundamental demand for those resources. I think the debasement thing is a huge you know is sort of the overwhelming force behind it. I mean especially if you're talking about an environment where global economic activity is going to be generally softer. you know, you really have to emphasize the debasement as the the key driver. >> Okay. And you think from a price perspective, debasement will overpower any softness and demand? >> I would certainly think so. I mean, we've seen that so far for sure. I mean, I I sit here and I know with the administration's taking a victory lap on oil prices being, you know, below $60 a barrel, but they're not they haven't collapsed by any stretch of the imagination. And we're, you know, we're supposed to look at what 1% growth here in the fourth quarter. And you know, it's just it doesn't seem like a backdrop where the commodity prices are necessarily reflecting the economic reality as much as they are the fiscal realities that we're facing. >> Um, so this user here says, um, if energy goes lower, I'll just buy more. Uh personally I'm in that mindset right now which is I I I I'm totally mentally prepared for oil prices to go you know lower from here for for a potentially decent while. Um and I'm looking at that as a good dollar cost average way to to continue to add to my positions. Um I I don't think it's a guarantee. So you know we we could find something that happens that uh you know all of a sudden pops oil. So, I'm I'm I'm not I'm not telling everybody to take lower prices in the future to the bank. Um but but personally, given [clears throat] where I see this industry could be, it's increasingly smelling to me the way that the precious metal complex and the precious metals mining company smelled to me several years ago. So, that's the type of of recovery I'm hoping to enjoy. Who knows when, six months from now, three years from now. I don't know exactly when it's going to happen. Um so on um on uh silver prices uh and oil prices Steph uh an ounce of silver now buys more than a barrel of oil and that that's only happened actually I put up a chart that that showed this has only happened once before. It actually has happened twice before, but the second time was like a millisecond blip and that's when oil like basically went >> negative, right? >> But but it's barely ever happened, at least in the past, you know, 50 plus years. Um, and so, uh, I guess my question for you on that, Steph, is a couple things could be going on here. Um, they could be fairly priced, but u oil could be really underpriced, right? uh we could expect that ratio to to re-equilibrate. Silver could be really overpriced and it's had an amazing run, right? Um uh you know uh yeah. Yeah. And I guess that even though the ratio is is is now out of whack to where it's been, maybe it's a new ratio and they both go higher from here. I I don't know. But but what what do do you have any strong thoughts one way or the other? >> I don't really I mean I guess my sense would be that they're both going to move higher and that the ratio of the two you know, maybe oil will start to pick back up relative to silver, but that they're both going to be moving higher directionally. So, I, you know, I don't have a particularly strong or insightful comment to make about that ratio. Um, but I I guess one one snide comment would be that, you know, with Ford getting out of EVs, you know, the case for fossil fuels looks brighter and brighter every day. Well, and that's one of the things that gives me confidence about the the oil and gas trade, which is um >> world demand for oil and gas just continues to go up. Yeah. >> And it always, you know, it always has. Even with uh you know the advent of renewables, >> even with all the efficiency technologies that have been rolled out, um we just have more and more of the the rest of the world, forget about the America and the developed world, but the rest of the world that is just coming online, right? Yeah. And um and then we're also finding things like okay, a lot of the kind of green energy stuff that was sold to us isn't going to pay off on the type of timeline that we thought it was. And sure, nuclear energy will probably make a really big uh dent uh at least on the electrical side. And I'm rooting for that. But I still think there's going to be uh overall increasing incremental demand for oil for as far as we know. And you've had, you know, I've interviewed enough guys who really know the natural resources space to say, "Hey, we have underinvested in the capex in this sector for like the past 1015 years." And even if demand were to just flatline, which it's not going to, but even just to flatline, we're going to have some shortage issues coming up here. So, all sorts of reasons just to say, look, the death of fossil fuels has been widely likely wildly. My only concern you know and it's just a near-term concern is that if uh this questions around the AI whether it's a bubble deflating or you know the the all the promise of AI gets called into question will people spank the energy sector as a consequence? I mean, I I you know, I've been burned enough for being uh in the gold trenches for a long time and and suffered through a terrible market for the gold miners for years and years and years and seen a situation where, you know, gold goes down $10 and the miners are down 4% or, you know, they just shred them even though they were wildly underpriced relative to the bullion. And I just am mindful that that kind of scenario could play out in the energy stocks as well where even though they didn't really benefit from the AI trade, they'll get annihilated if the AI bubble burst, you know. >> Yeah. None of the halo and all the blame. Yeah, exactly. That very well could happen. I think that the thing one of the things I think is is somewhat different though is is a lot of these companies is if you're dealing with the bigger ones, >> they're just very generous dividend pay. They have a lots of cash flows and and that that's different from a lot of the the miners there. All right, Steph, thanks for going along here. Um, do you mind doing just a quick kind of lightning round with some of the the user questions here? >> Sure. I got >> couple minutes. >> We'll just do just a few. Um, and people are making so many comments here that I can't Okay. Uh, here's a good one. What would make you sell precious metals? What would make me sell a gun to the head? [laughter] >> Well, I guess what what future developments would you say, okay, this trade has played out? >> Actually, I I'm being facitious. Um, >> well, that's probably a true answer today. >> Well, there will come a time when I will want to sell my precious metals and buy stocks that are wildly uh underpriced. You know, I I am looking forward to a day, and it's ghoulish to say because it will entail a massive correction in the stock market to get there, but I'm very much looking forward to a day when I can invest in American companies at fair to cheap valuations. Um, rather than sitting, you know, like some doomsayer in a corner, you know, uh, cuddled cuddled up with my gold coins. you know, that's I'd much prefer to be invested in great American businesses that are growing. Um, and I do imagine that that day will come, but not until after we have a gut-wrenching reset that probably entails a reset of the of the currency regime as well. >> Oh, well, I'm I'm right there with you. I I can't wait for the day where instead of being tred as a perma bear, right, >> people are calling us perma bulls. >> I can't wait either. Exactly. >> Yeah. Um, kindly ask Stephanie about deflation as Lacy Hunt predicts or hyperinflation. And I'm going to guess that you might you might say one than the other more or less. >> Yeah, precisely. I mean, I I u am fully on board with Lacy's arguments for deflation. I think he's got it nailed. And we actually joked when I saw him at at a conference a little while ago um about how few people understand the law of diminishing marginal returns, you know, and if they did, they would understand why deflation is is the the uh path of least resistance for the US economy just because the more debt we add, the less benefit we get from each marginal, you know, dollar. Um so we just need more and more debt and that's an incredibly deflationary scenario. and then layer on the demographics on top and you've got a real recipe for for deflation. But the solution to the deflation will be to run those printing presses 247. Um, which I think would create the threat of hyperinflation, but I don't think we'll get there because I think we'll be forced to change the monetary regime, the currency regime before we get to that point. >> Okay. And and this is something that maybe I'll earark for you and I to talk at greater depth. um in in a future one of these. But um talking with Melody Wright, the last time I interviewed her, you know, for years and years when I've interviewed these housing people, I have raised the question of, you know, will there be kind of a a deflationary multi-deadal wave as the the boomer generation really starts to die off? Just just being as frank about it as I as I can. um where they're just going to the nursing home or the the cemetery and in most cases, you know, that house is going to get sold, >> right? >> Um and you're going to have this relentless wave of that happening every day to 10,000 boomers, right? And you know, it's been it's and they they've largely said, "Yeah, that's probably going to happen." But it was an academic discussion up until my last conversation with Melody where she said started. I I can already see it in in the data. It is beginning to start now. And um obviously that'll that'll depress housing and that'll have lots of of economic implications, but also too it'll have implications for um boomer portfolios. So some ways you can make the argument that I don't know maybe it'll be stimulative. All these people are inheriting cash and then they'll start spending it more. >> I was going to say that's the counterpoint is that the the heirs to that estate will suddenly have all that money and so you know there's supposed to be this great wealth transfer that's going to be taking place. So, >> right. But but here's a question to that, which is well, who's going to spend at a higher rate? The heirs who get the money or the boomer who was in there last couple years, which is where you tend to spend the vast majority of your money on healthcare and stuff. >> That's what I was going to say. Yeah. To healthare. And Lord knows that's inflating rapidly. So, that's a lot of money that it's sucking sucking out. >> So, this is a conversation I think that that requires more than just 30 seconds to react to. But um I I I do wonder if that that big bolus of of money that is going to get passed along will be as large as is expected because I think it might get attituded in the boomer's later years. >> Might get attracted by a big market correction too. That's a obviously TBD might get attited by following housing. There's a whole bunch of reasons why that thing could get really nibbled away before it actually gets passed along. >> Yep. And we're both in a position to comment on that from personal experience, you know. So anyway, but yeah, >> sorry, last question here, which is um what are the chances of a marketwide sell-off that could cause a liquidation event where even gold and silver get sold off too? I know you get this >> 100%. Right. >> Yeah. Your your your expectation though is that they would bounce back the fastest, right? I mean, I think um it would be foolish to presume that gold and silver would be spared, especially given the enormous amount of leverage that's underlying all of these exposures. I mean, we have to imagine that uh hedge funds, albeit late to the party, have participated in the precious metal move and that when they're forced to unwind exposures across the board at 10 to1 leverage or whatever, you know, numbers they've employed, we'll see a pretty meaningful hit. But again, I do think that will be very temporary. A >> and I I assume you expect sort of like what we saw during the GFC, which is everything gets sold in the downdraft, but then the precious metals recover quickly. And if you were nimble back then, you could have actually traded some of that for really low price stocks, right? >> Yeah. I mean, I'm not clever enough to do that, which is why, you know, I would my father had this uh one axio. He used to always tell me, never lose position in a bull market. Um, and so I I would resist selling in anticipation of that and sooner buy puts or somehow hedge some of my exposure rather than actually liquidating and trying to get clever and figure out when the time to buy is. Um, but you know, I'm not a trader as >> right >> as everyone listening to this can very clearly. [laughter] >> Right. [clears throat] Right. It's it's it's uh macro mavens, not uh not TA mavens. Right. >> Right. Exactly. >> Yeah. All right. Well, look, um in wrapping up here again, Steph, if a couple couple quick things. One, uh because we talked about silver, um I just want to make sure that those of you that haven't already heard uh Andy Sheckchman on this program, uh when silver cracked above 60 bucks an ounce, I asked him if there was uh you know, anything we could do in celebration of that. and he said, "Yeah, I've actually got a great deal on junk silver. I'd be happy to offer the thoughtful money audience exclusively the ability to buy junk silver for me at a dollar below spot while supplies last." So, um, uh, the dollars uh, sorry, supplies are still lasting as last I checked. And so, if you want to take advantage of that, just go to thoughtfulmoney.combygold, fill out the short form there, and then Andy and his team will help you buy as much junk silver as you might want to buy right now. Um, all right, Steph. And then for you um again remind people where they can go just to follow you and your work but also if they want to sign up for the super terrific happy day where where they should go. >> Yeah, I will go ahead and post that link again on Twitter and my handle there is s palmboy. So you can look for that or you could go to macromavens.com and just uh email through the contact page for information and we'll send you the link to where to sign up with the agenda and all of that. So, but again, it's um right after the President's Day weekend. I think that's February 17th and 18th in St. Pete. So, it'll be beautiful and we'll have fabulous folks there, including Mr. Adam Tagert. >> Thank you. Well, I'm very appreciative again to to be invited, but also of the timing. Um the last time I was in February was for Rick Rule's uh great symposium, but he does it in the middle of July. um where it's just, you know, freaking oven there. Yeah, exactly. Um of course, he does it because he says it's the cheapest weekend [laughter] at the hotel because nobody wants to be there because it's so hot. >> He's a true value investor. >> Yeah, exactly. Anyways, I I very much appreciate you doing it at a time of year where those of us in in winter climbs would love to go. Um all right, Steph, look, uh thank you so much for for being on here. Folks, please do me a favor. Please show your appreciation for Steph there in the live chat or in the comment section below if you're watching the replay. Um, please let her know you appreciate these monthly uh times that she comes on and gives us so much of her time uh by hitting the like button and then if you've got time going to macromavens.com and checking her out there. But Steph, can't thank you enough. >> Thank you so much and merry Christmas. >> Thank you. [laughter] Merry Christmas to you and to Willamina. >> You can give her that nutcracker now. >> Oh yeah. Hey [laughter] All right, Steph, thanks so much. And everybody else, >> thanks so much for watching.