Stephanie Pomboy: Market Confusion — Are Things Getting Better…Or Worse??

Summary

• Market Outlook: Mixed signals with a seasonally noisy jobs beat versus weak retail sales and elevated bankruptcies, pointing to ongoing macro uncertainty.
• Consumer Stress: Rising delinquencies across student loans and credit cards, alongside wage-garnishment policy pauses, suggest mounting pressure on households despite low initial claims.
• Commodities & Gold: Bullish stance on gold supported by a weak dollar, prospective QE/YCC-style measures, and broad currency debasement; ETF flows imply no speculative bubble.
• Energy Prices: Firming oil and higher gasoline, plus refinery capacity pressures (e.g., exits/shutdowns), risk squeezing consumers and stoking headline inflation.
• Japan Risk: A weak yen despite rising JGB yields raises odds of currency intervention and potential yen carry-trade stress, with possible Treasury sales spilling into U.S. rates.
• Policy Path: With Kevin Warsh likely to err on accommodation, a Fed–Treasury accord or de facto yield curve control could emerge to manage deficits while the administration tolerates a weaker dollar.
• AI Dynamics: Rapid advances in agentic AI hint at future productivity gains, but near-term job displacement and higher transfer-payment needs pose fiscal and social challenges.

Transcript

And we should be live. Welcome to Thoughtful Money. I'm Thoughtful Money founder and your host, Adam Tagert, welcoming you here for another Wednesday monthly live stream with live stream with the macro maven herself, Stephanie Pomboy. Hi, Steph. How you doing? >> I'm great. How are you? >> I'm doing well. Um, as I was telling you right before we went on live here, um, I am in San Francisco right now. I was, uh, it was actually really fun and we'll talk about this hopefully a little bit later. Um, I was invited here to sort of host a private dinner event that Vanek, you know, the >> Oh, yeah. the large uh, you know, uh, fund uh, family of funds. Uh, they were putting on a private event here in San Francisco. And, um, anyways, they put me up in the Fairmont Hotel, which folks, if you ever watched the movie The Rock with Sean Connory and Nicholas Cage, uh, you're probably familiar with the hotel. So, that's where I'm speaking to you uh, from here. I also used to live in this area a zillion years ago. I was uh walking my daughter around yesterday, Stephanie. And it hit me. It's been 30 years. >> Oh my god. >> Since I was a junior investment banking analyst working here in San Francisco, but it's kind of been fun to be back in the old haunts. >> Yeah. No, I'm sure it's fun to visit and then you get to retreat back to your wonderful new home. So, [laughter] I will be a taste of it. >> Yeah, I'll be retreating later today. Although um we're getting some much needed snow in the Sierras right now, which would be great for the skiing, but it's probably not going to be super fun for the drive back home. But we'll >> Yeah, but you have um some sunny, warm weather to look forward to in the notsodistant future. So >> be great. >> That that's actually the much more important event that we should be talking about here, which is that you're in Grant Williams's >> uh super happy terrific funday or super terrific fun, [laughter] >> but but you're you're hosting you're holding that in in just a week from today. I know. It's just amazing how quickly it it came up. You know, when you plan these things, they feel like they're so far off in the distant future. And then, of course, you know, they arrive quickly. And the funniest thing, though, is that you wonder like, will there be anything left to talk about by the time the conference rolls around because, you know, it seems like every day so many things happen that you you think, well, we're going to run out of stuff to talk about. And quite the contrary, it >> quite the contrary. Yeah. Exactly. How do you cram all that into the time that you've >> lost? I I know that there's been a ton of demand in it. Are are there spots left if anybody's watching and saying, "Hey, I'd love to still jump in." >> Yeah, there are there are a few spots left. Um the super VIP experience has been sold out, but there's that's weight listed. So, you know, if you're interested in that, by all means, sign up because you never know, people, you know, life happens. Um, but there are uh tickets available still for the the main conference. Um, so uh you know I can post that link again. Actually it's pinned on my Twitter feed at S Pomboy on Twitter. Um, so you can register there and we'd love to get you down there and everyone in the Northeast and and pretty much everywhere in the country can come thaw out for a little while. [laughter] So, um, I'm super excited for it. It'll be the first time Olive been there. And, um, uh, I mean, it's such a great faculty, and I'm doing this from memory. I know I'm not going to catch everybody, but you've got, uh, Tom Hanig, uh, you know, former FOMC member. Um, you're gonna have Mike Green, you're gonna have Pippa Mal Mal Malmrren, >> correct? >> Have Tom Mlelen, uh, the TA specialist. >> Yep. >> Obviously Grant. Um, somehow you guys are are slumbing it by letting me come. >> Oh, stop. [laughter] Oh my god. >> Folks, I haven't mentioned you might want to mention, but I do want to know that there is a uh let folks know there is a mystery guest. And turns out I actually know who it is. >> Yeah. [laughter] >> But it's a good mystery guest. >> Yeah. People who are familiar with either, you know, Grant and me and the interviews you've done as well will certainly be familiar with this person. So, [snorts] it's a mystery. Um, but it won't be surprising. I should [laughter] say >> I think almost everybody I mentioned there >> you've >> I have met I have I've interviewed before but I've never met in person. Um so I'm excited in person. Yeah. >> Wow. Fantastic. Yeah. Well, it'll be a fun time. So that Yeah, it starts uh next Tuesday which is the 17th and then it continues on the morning of the 18th and tickets for those two slots are available. It's the Wednesday afternoon super VIP experience that is now weight list only. Um but there are I I believe there are still a handful of tickets left. Um but not many. So if you're thinking about it, move fast. >> All right. And I I've got your um espo Twitter handle here. So want to actually go there and uh and find the link. That's where they can go. >> Um all right. Well, look um lots and lots to talk about. Um, and I'm just going to mention that the the event last night with Van E was around digital assets, which is something we don't talk all that much about, Steph. Um, so help remind me if by the end of this conversation, we have a little bit of time to to give one or two of my takeaways from there because it's been sitting on my mind since the event. Um, but let's start. So, as you know, Steph, I've got to I've got to name these things uh before we do it. And and when I originally created this event in StreamYard for you to put on your calendar, I think I called it um has a selling vortex started because when I did that, the markets were, you know, they were they were dropping, you know, over several days. Uh gold and silver were correcting. Bitcoin was getting into the low 60s. Um there was a theory Michael Bur had kind of put out there that that Bitcoin was going to kind of drag everything down with it. Now, the markets stabilized since then. Um, and oh, it actually looks like that's still the name of this thing on StreamYard, but hopefully on YouTube everybody got the new title. The new title is market confusion. Are things getting better or worse? [laughter] >> Um, you know, like I said, you know, the markets were selling off a few days ago or a week or so ago. Now, now they've kind of stabilized. They've come up a bit. Gold's back at 5100 or so. Silver's hopefully sort of seems to have found a floor. And then we get this jobs report today which everybody was expecting basically a horrific jobs report and it surprised to the upside on almost every metric. Now I don't want to sugarcoat the fact that there were um like an annual revision that was down like almost 900,000 jobs. Um so obviously that's a big deal but uh uh jobs for January way higher than everybody expected. Of course, that'll probably get adjusted down in in in future uh reports. The unemployment rate surprisingly dropped uh again back down to 4.3. Um there's just a lot in there and I saw your tweet that said, "Hey, like this is actually pretty good across the board." So, um in your mind right now, are things getting better or worse? Like where are we? It's a confusing time. >> Yeah. Well, I think just to wrap up the the employment report, um I think that the the expectations for a weak report were I would argue mislaid to some extent. And I hate to get into the nerdy economic uh statistical minefield on this, but January is a very volatile month in terms of economic data because you're coming off of the holiday inflated December. So the economy sheds over two million workers every January, >> right? >> So they adjust they use this thing called the seasonal adjustment to take into account the fact that you go from a huge increase in employment in December. So that you know when you go to the shopping mall there are plenty of people working in the stores. They bring in you know seasonal workers and then they can the mall on January 1. So the the uh uh whatever number crunchers adjust for this through what they call the seasonal adjustment factor. Anyway, so historically this is why you might recall uh GDP, employment, etc. all tend to surprise on the upside in January because the seasonal assume such a huge decline that it lowers the bar to such a low level that it's very easy to clear and so you end up with these upside data surprises. So going into this number where everyone was poo pooing how weak it was going to be blah blah blah I was thinking well the danger is actually that it surprises on the upside because of this seasonal downshift. Um so this year the first thing I did when I saw that print was go to look at what they did with the seasonal adjustment factor and whether they actually made it lower the bar even more than they normally do. And that's why the number looked so much you know outsized uh surprised and they didn't in fact quite the contrary they actually raised it a bit from what they normally do in January. This is all deep in the weeds. But the one thing uh that stuck out to me was that the birth death adjustment and which is a separate adjustment. Uh bear with me folks because it actually is important and it's why we have the 900,000 revision is because of this birth death adjustment they do each month and that is basically an effort to imputee how many new businesses are being formed or businesses are going out you know filing for bankruptcy or closing or whatever. So you get net new business creation that isn't captured yet in the payroll numbers. So they try to guesstimate let's say how many jobs might have been created in the month that haven't yet been uh registered. That birth death adjustment again in January assumes a lot of businesses shutter in January. They decide at year end they're not going to continue. So you come into January normally that subtracts 120,000. That's a an adjustment of roughly 120,000 to the downside. This year that adjustment was minus60,000. So it was half as large. So that's a contributor to the upside surprise as well. So anyway, this is all I know it sounds sort of wonky and irrelevant, but it's all my long-winded way of saying we still can't grasp on this number and say this is indicative that things are clearly turning and the employment market is clearly reacelerating because it's a seasonal time of year when these numbers tend to be very volatile. So, I'd be disincined to take this one number and say, okay, the economy is now, you know, off to the races. Plus, we saw a whole host of other employment signals leading up to this report. Schultz, Challenger, you know, that all suggest that the opposite picture, you know, that things are actually worse. we had, you know, the the lowest number of January job uh hiring plans since I think uh COVID and the great recession before that. Um and you had the the jolts job openings I think was the lowest January since 2009. So you are seeing uh some counterpoint to this payroll number. >> Yeah. Although >> ju just just to toss a counter in there, the jobs opening uh sorry, the um initial claims numbers >> are still really low, right? So it's it's it's yes, it's a no hire economy, but it still seems to be kind of a no fire economy. I I mean we see the job cuts, the daily job cuts reports and and the layoff stuff, but it it doesn't seem that the economy is shedding a ton of jobs right now the way that you looks like you do when you're heading into a a big economic slowdown. >> Yeah, I think on the claims that too is subject to some seasonal noise and then we've had all these storms that can also impact that. So again, you know, we'll have to do you have to look at a four-week moving average and kind of be, you know, diligent about watching that over the next few weeks. Um the Challenger layoff number was, you know, pretty substantial. And then um yeah, and then when you look at bankruptcy filings, you know, Bloomberg has a tally uh of bankruptcy filings and right now uh I think we're running it was the largest number since COVID. Again, we saw a huge increase in bankruptcy filings in the last month or so. And if you go and look at the February filings, I counted 10 filings so far. These are large business bankruptcies. I think the they define that as having over a 100red million in assets. So, we've got 10 bankruptcy filings here thus far in February. And uh I'm looking at the calendar, it's February 11th. So basically we've had a bankruptcy each day so far in February which is you know substantial. That's much higher than the kind of pace you would normally expect to see. So uh all by again by way of saying it's not clear that everything is as fabulous as you know the data is very mixed. You get some very strong data. There's a lot of weakness on the other side. There's still a lot of credit stress out there in the system. Um and where the rubber will meet the road is on consumer spending. And uh you know that retail sales number yesterday, wow. Um as good as the employment report was today, the retail sales number was really um equally uh impressive on the bad side in terms of uh you know punk retail spending. And I would highlight that that's especially surprising because we see a huge increase in credit card borrowing for the month um that retail sales were so weak. So uh that's not a good sign when consumers are ramping up credit card borrowing but their discretionary spending is slowing. That sort of is indicative of some level of consumer distress. So we will see um you know only time will tell over the next few weeks how this all fleshes out. But uh you know I think it's way too early to draw really strong conclusions about where we're headed. >> Okay. >> Classic economist on the one hand on the other hand useless answer but unfortunately that's where we are right now or that's where I am. >> Right. But that's sort of why I've titled this um you know market confusion is are are things getting better or worse? Like it's it's there's a lot of dust in the air right now and it's kind of hard to tell. Um I I actually hadn't because I've been traveling I hadn't seen the um retail sales data and I was going to ask you about that because as I sort of say a lot in these discussions uh I know one of the things you look at a lot is credit spreads right that's going to be your indicator of hey is the market starting to get worried about something serious right and they have been still pretty darn compressed. >> Um on the economy side you know I think it's really all about where jobs go and where retail spending goes right so you know either are the is the top half of the K still keeping retail spending, you know, in an okay area even if there's a lot of people on the bottom half of the K that are that are, you know, struggling. Um uh and also jobs like you know does do jobs go in a direction where people are either materially increasing their ability to spend because they've got positive real wage growth and they feel good about tomorrow or does the unemployment rate get to a point or the jobs market get to a point where enough of the bottom half of the K even enough of the total K just says hey I got to start raining in my spending. Um, and to your point, um, there's there's still kind of we're in this middle ground where there's some positive here, there's some negative here, and you know, we're hearing from the administration and I think from some parts of industry, hey, like the economy is going to going to do better this year. It's going to grow because of everything that and the one big beautiful bill and all the other stuff we've talked about in the past. Um, and so [clears throat] I was wondering, you know, in this jobs report, are is, you know, could could part of the the strength of the jobs report be from that? But I think what I hear from you is is too early to tell. And we're not necessarily seeing corrodative evidence on the retail sales side, at least from the >> Yeah. In fact, uh again, you know, the drivers of growth in employment in this report. Um while, uh very encouragingly, we're all private sector. You know, the government sector obviously was a huge detractor, which is great. We'd much prefer to see jobs created in the private sector than the public sector. Um but it's continues to be driven by healthcare and education. Um things like transportation, warehousing, retail, all very weak. Um and then you get into uh you know the the other components of that uh just really it's it's primarily being driven still by the healthcare and education and I guess to some extent you could call that kind of quasi government in a way. Um so you know until the employment picture really broadens out. Um but then it's hard to see like with AI you would think if anything uh you're going to see more concentration in terms of the job creation uh and things like warehousing for example which is already being largely automated uh just continue to decline. Um so again you know we'll have to see I'm not an expert on AI by any stretch of the imagination. and I can find hardly get into this monthly conversation that we have without some kind of technological issue. So, [laughter] but uh you know it seems pretty clear um that the the benefits in terms of productivity have yet to really be uh harvested on that in many cases. I mean there are places where people are able to use AI to help uh improve their own productivity but in terms of a broad uh transformation of different sectors of the economy you know there's certainly great promise and there are signs you know you can see where this will be incredibly uh productivity enhancing um but I don't think we're at a place yet where we can yet see that reflected in the employment numbers um but when it does, you know, that's a whole other can of worms uh for the people who are going to be displaced. And I was looking at this chart the other day because, you know, I go back and look at these big secular themes and we've had an environment where obviously you've had ever levitating financial assets, stock market in particular, um that's been driven on the back of both surf monetary and fiscal stimulus, but also rising profit margins. Um, and if you go back and look at the relationship between profits as a percent of GDP and labor comp as a percent of GDP, they're like this. You know, profits >> some game basically. Yeah. >> Right. Exactly. Main Street's Wall Street's gain is Main Street's pain or vice versa. You know, Main Street's pain is Wall Street's game. So, and you remember the days of chainsaw out when he would come out and announce another layoff, stock would go flying. So, and you still have kind of tinges of that now. Um, so I think that, you know, that's that's going to be another hurdle. So, anyway, related to that, I was looking at transfer payments as a share of disposable income, which mirrors that trend in terms of as as labor comp has gone down and profits have gone up, transfer payments as a share of income have continued to move higher. So, this is what I wrestle with is AI can be transformational and productivity enhancing and everything, but there's going to be a period there where it's going to be incredibly deficit busting because we're going to have to come up with supports for the people who end up being disenfranchised by this revolutionary technology. I assume >> this is why I was saying let's let's put a pin in the um in the discussion to make sure we get to kind of um digital assets but AI. Um because this was basically my whole dinner conversation last night. >> Yeah. So we we'll we'll get there in just a moment. Um so uh I pulled up this chart which just came out from the New York Fed which you've probably seen Stephanie. Um >> yeah, >> this is this is just for student loans. There's another chart here I could have pulled which is um delinquency by loan type um which looks pretty much the same. So um you know I think student loans are the worst um but all loan types are beginning to increase in their delinquencies. But um so you know as you and I talked a lot uh before we we got to see the charts at this stage Steph was that hey with all the moratoria and everything that the um the pandemic uh brought to to debt payers um once those things go back into repayment you know we're likely going to see pretty big spike in in delinquencies and then later defaults. Well, that seems to be act, you know, absolutely coming true right now. And what's the reason why I pulled up the student loan one here is I think this is the domino that kind of >> kind of knocks down all the rest uh consumer credit wise because you've got to pay your student loans back and it was also the last form of debt to go into repayment again. And now we're seeing that people are like, "Okay, well, I've got to pay the student loan if I can. And to do that, I might actually skimp on paying back my auto loan or my credit card, etc. And and we're definitely starting to see that. >> Um, what's interesting about this is this is broken down by age cohort. So, look at, you know, a age cohort of basically every stripe here is uh not paying their student loans. And it looks to me that the the one that is is the in the worst shape >> right are the oldest who who theoretically should have the most capital to be paying back your student loans. Although I guess if you've still got a bunch of student loans by the time you're over 50 it means you're probably not very good at paying them down. [laughter] But I mean to me this this sends a real warning signal again with with with all the other forms of u >> of debt that are out there. um that hey you know we talk about that lower leg of the the K-shaped economy like okay now they're actually really starting to struggle because when I look at delinquencies in my head I just think okay pre-defaults right this is just a step towards default so >> do you how worried are you about the sort of coming wave of consumer debt defaults as people just start drowning under this and tapping out hey sorry I can't do it can't get >> you and I have been tapping our fingers on the table waiting for the moment when this snowball was gonna hit. Um, and you know, last year they were supposed to start uh student loan wage garnishment for people who were seriously delinquent in the fall of last year. And, you know, I was searching, scouring the Department of Education website to find out if they actually were starting to do that. And then finally we got some uh sense toward the end of last year that they were actually going to start garnishing wages and then in January just a couple weeks ago they came out and said no actually we're going to temporarily pause the wage garnishment. So basically I think this is kind of the framework we have to operate in is that uh no sins will be permitted between now and October. So basically, um, they're going to run it hot as you and I have talked about previously, and if it means relaxing the student loan, uh, repayment plans and coming up working with struggling borrowers or whatever, stringing it along, at least till after October, um, that's going to be the game plan. So I think in terms of developing a framework for how to look at the markets and the economy right now um that I think overrides any sort of great macro thesis you might have. It's just going to be you know we're not going to care whether in the CPI is slightly above the Fed's target uh between now and October. we still want to cut rates and especi suggests that the labor market actually isn't that weak. So, you know, neither side of the Fed's mandate is really screaming that we need a rate cut, but we're going to do it anyway. And I think that's the way you have to kind of posture yourself, at least between now and October. And from what I hear, listening to all the cabinet officials who are interviewed daily, um, and the president himself, um, that seems like a reasonable framework to operate in until October what happens after that. You know, we can figure out when we get there, but I suspect that that shoe that you're talking about, um, every effort will be made to prevent it from dropping between now and October. Um, plus you get this impact of the one big beautiful bill with the chain and withholding and then the tax refunds and that will help for sure to alleviate some of that stress. >> I mean, we've got what a billion and a half in tax refunds about to go out. >> Yeah. Yeah. I was just looking at the numbers last night. It's way >> it'sund the tax foundation estimates 129 billion in tax refunds. Um, and it's we're way too early in the season to really have any uh strong numbers, but I just looked at, you know, January basically there are never any tax refunds of any significance. February, you start to see some. Right now, we're running around two billion ahead of last February. So last February, I think 10 months, 10 days in, we were at six billion. Today we're at 8 billion. So still, we're so early in the season, it's hard to tell. But in theory 129 130 billion uh in refunds and that's real money. Um so that could help. Um, but I think the real issue for consumers, and I come back to these stronger sentiment and confidence readings that we've gotten recently is the inflation story because that's why they've been so beaten down is that, you know, the cost of living skyrocketed. And while the Fed and the administration and everyone else is taking a victory lap that inflation has come down a lot, that just means that the price that everyone was paying is going up at a slower pace. you know, the bacon that doubled or tripled is now only going up, you know, 2% additionally each year, you know, but prices aren't coming down except in, you know, very discreet little areas. Um, and what I worry about now is that, um, you know, maybe I'm drinking my own Kool-Aid too much on this commodity super cycle thing, but gasoline prices this week tick back up nationwide over $3 a barrel. So, $3 gallon. So, you know, we had a brief dip down and now we're right back in with oil prices back almost at $66 a gallon. I think I think today, sorry, barrel. God, I'm getting um uh you know, that trend could continue. And then obviously the other commodities are are firming as well. And then you've got the impact of the weaker dollar, which the administration seems to be um very much in favor of. And you saw that in the import price data that happened yesterday. um you're starting to see some firming in import prices. So, I think that the concern on the consumer front and the spending front and all is really going to be driven by what they're seeing at the gas tank and at the grocery store in terms of prices. Um and the extent to which that spending crowds out all of the other stuff. um even with this firmer, you know, the the benefits of the the tax cuts because again, you know, like we were talking about with the student loans, debt service isn't coming down either. You know, interest rates really have been another, uh sort of thorn in the side of the administration. So, >> um so let's get your opinion on this. I'm thinking out loud here. Um do you expect the next eight months or that's between now and the election um to sort of be an era of let's call it executive easing where like the exe you know the administration is going to do absolutely everything it can just to try to you know uh make everybody feel good enough so that when they go in the voting box in November they they pull the lever the way the administration wants and And hey, whatever unnatural acts we have to commit to make that happen, we'll figure out how to deal with the repercussions after November. >> Yeah. I mean, I think the greatest I think uh clearly that's the agenda. Um you know, the run hot policy and we'll worry about, you know, whether we create a resurgence of inflation or whatever at that time. But [clears throat] it's a risk they're willing to take right now. They're running hot. I mean, look at today's report. If you believe the employment report, you know, wage growth was much stronger. So maybe their attitude is if we can get wage growth just to outpace inflation, it doesn't matter if inflation picks up, you know, if we can just the wage side going >> which it has, right? For the past year or so, sorry, we have had positive real wage growth. >> Yeah. So well and again that's you know uh assumes that you believe that the measure of inflation is accurate which we can have a raging debate about but you know by that calculation yes um so I think that's that's the attitude um my concern about the run it hot policy is less about Main Street than Wall Street because there's a point at which you know if Wall Street gets the sense that there the inflation pressures are actually resurgent then you've got a real problem on your hands in terms of the interest rate side and if wars actually intend to shrink the balance sheet while cutting interest rates. You know, this is going to be a very interesting experiment. You know, you could see the curve steepening dramatically in that environment where the long end of the yield curve gets punished for the sins of the Fed, you know, for uh overt stimulus at a time that they shouldn't be cutting rates. So you could see the bond vigilantes come out and really um push long rates higher like we saw at the tail end of the Biden administration when Powell came in and started cutting rates and inflation was already above their target and the yield curve added back every single basis point that the Fed cut um and then some. So I think that's the number one risk for the market. So obviously I'm watching the tenure very closely and I'm also watching uh to broaden the lens Japan is sort of the uh analog basically leading us it's the leading indicator of where we're headed essentially um because they tried this experiment and I think it's just a matter of time before they throw in the towel on that one. All right. So, so many heads I want to pull on this and and what I want to make sure I don't forget to ask you is your thoughts on Morsch because that that's been new news since you were last on this channel. So, I'd love to get any thoughts you have on him and >> whether it was true or not. You know, that was sort of the excuse used for why the precious metals, you know, had their their correction there. So, I also want to get your thoughts on precious metals at this stage, too. Um, but on Japan, since you brought it up, um, I had a the last interview I did in this channel was with Luke Groman. Um, and he, like a number of the analysts I'm I've been talking to over the past week, very focused on what's going on in Japan. And he puts out a chart that he says, this is probably the most important chart in macro right now. And uh it's basically I think the delta between um US 10ear yields and and Japanese 10ear yields and they they kind of they've been very correlated and then in the past I don't know six months or so they they've got the kind of the alligator jaw differential and um I think what what Luke is sort of saying is is hey uh that's not going to sustain and it's you know it's either going to come up by Japanese yields coming up or US yields coming down. Maybe a combination of the two. But he's saying that Japan is now at a stage where the yields, the bond yields at which the economy there starts really breaking under rising yields. He's like, I think that's a lot lower than the market is appreciating right now. Um, and so if those jaws start closing and the and the Japanese rates start coming up, um, it could create some, you know, a lot of troubles in in the Japanese economy. and he said that that might just force Japan into becoming a seller of treasuries uh in that situation and so therefore their problem becomes our problem. Um do you feel similarly? >> Yeah, I've been writing about this actually. So I guess Luke and I are we're were we're two notes singing for the same himnel. But what I've been looking at actually is the relationship between uh the spread between the 10 and 30-year Japanese bond which you know you see the pressures on the 30-year that's been rising and rising as that spread widens. um and the yen and the the basically Japan is in a world of hurt because they have rising interest rates but in contrast to the normal relationship their currency is weakening in the face of higher interest rates. That's not the way it typically works. And Japan gets hit particularly hard because they rely on imports very heavily and especially of the things you know food uh energy etc like these commodities that we're now in a cold war for um really are critical to Japan and they're all priced in dollars right now. So as the yen uh gets weaker and weaker, the price goes up and and that means their inflation picks up which means that they have to tighten policy war if anything to quash the inflation. So rates have to go higher but you're getting no benefit to the currency. So, I this is why I've been saying for a while um that I think it's not long before they have to come in and do outright currency intervention, which they the last time they did this was in July of 2024 and when the yen was basically trading around the same point it is now. Um they're going to have to do that and they're also going to have to give up on the uh idea that they can not use yield curve control indefinitely. like they need QE Infinity just as much as we need QE Infinity if not more. Um, and I think that's the point that we're coming to. I mean, the stress and I don't know um, you know, where Luke sees that threshold of pain and how he identifies that, but I would agree, you know, is probably far lower than people believe. But there are a lot of implications with this. Number one, obviously, if they're going to intervene to support the yen, they do so by selling dollars, which are held in treasuries. So, they're just exacerbating our our own deficit financing situation, which already sucks. And you and I have talked about that like technical term, folks. Sorry. Um, but it also threatens to unravel this whole yen carry trade. And we've been talking about this forever. Um but that you know one of the reasons why we had that first shot across the bow on the carry trade as Japanese rates unbelievably started to increase and the Bank of Japan undertook what no one ever imagined possible a tightening cycle like in our entire investment careers we've never had the Bank of Japan in a tightening cycle. Um and yet you know there was a brief sort of shake in the in the global markets but it really didn't turn out to be anything more material than that. Um and I think the reason why was that this the yen weakening provided more you know was able to provide the juice for this yen carry trade that the interest rate portion of it wasn't providing anymore. So it basically um offset um but if they intervene to support the currency then Katie bar the door I would think for that. >> All right. Well obviously that's something that we'll be tracking closely folks and we get anywhere near that stage. We'll certainly be talking about it here. Um >> so Kevin Warses was the uh topic you wanted to get into. >> Yeah I think so. I'm just I'm looking at all the the comments here. Uh there's so much that that we is going on that that we could talk about and folks sorry we're not going to get a chance to get to everything. I'm looking at folks comparing what they're paying uh for uh a price per gallon of gas where they live and people are all over the country. Got somebody here in where it was Oklahoma or something that said they were paying a buck 50. Um some folks in Texas paying you know $2.40. So folks, just for for comparison on the drive here to San Francisco, um you know, gas was at least when I left Nevada about $4.30 there. I'm sure here in San Francisco, it's much closer to five, if not over five. And it's projected to get Stephanie way worse this summer in California because, you know, it's makes >> boneheaded decision after boneheaded decision. [laughter] Chevron, which has been in the state for 140 years, has now left. Um, and several other refineries here are shutting down. So, I mean, they're saying that gas could get to like seven, eight dollars a gallon >> in the summer. Yeah. And it's it's bananas. So, we we'll, if that indeed happens, folks, I'm sure we'll do a deeper dive into that. Um, yeah, some other great questions here, but um, uh, let's get to your thoughts on Mr. Worsh. So, uh, Kevin Worsh has been selected by the president as his his next guy to be the head of the Fed. Um curious to get your general reactions to that and and do you pretty much expect that you know the first FOMC meeting once worse is chairing it you know the cuts will resume. >> Um well I I guess it depends on what the data look like at that point. I'm actually going to suggest that they will remain semi data dependent. I think he came in and the inflation numbers uh that hit just before he takes the head of the first FOMC meeting uh were hot and he cut rates anyway. um you know he'd look like he was just cowtowing to the president and I think you know I would assume that as long as he's basically committed to airing on the side of accommodation the need to cut rates at the first meeting isn't really as critical. Um the other thing I would point out is that I have gone in and looked at the base effects for the CPI going forward for the next few months and you know he >> well that's the thing like we're comparing when you get to March through May March, April and May we had very low CPI prints last year. >> Okay. So those will conspire to make it the inflation numbers probably hotter, >> right? [clears throat] Okay. >> Much to beat that. >> So if the May print for example, I forget I think it was up 0.1 last year in May. So let's say it's up 2. So you get a hotter year on year. That report will come out in the middle of June. And I think it comes out just days or a week before that FOMC meeting. That will be his first FOMC meeting. There'll be a whole bunch of other data that will come out as well. We'll have payrolls, all this other stuff. So, that may not be the one deciding factor, but I would caution that, you know, the idea that he's going to come in on day one and immediately cut rates may not work out that way, but I would I totally believe and expect that he is going to heir on the side of accommodation and that that's obviously the tacid agreement um that he has made. you know, I have always viewed him as a hawk in general and someone who was sort of a voice of reason from the Federal Reserve. Um, but the fact that he has been spent basically the last several years campaigning for this position, um, makes you wonder a little bit whether he just likes the limelight or whether he actually and maybe I've never met him. I know nothing, you know. So, I'm just guessing maybe he's one of these people who's just a genuine patriot and feels like I can get in there and actually make a meaningful positive change in the way the Federal Reserve conducts monetary policy because I will be the first to say that like George Castanza, every impulse they have ever had has been the opposite of what they should have done. So, if you've got someone in there who's levelheaded and dispassionate about it and can say, "Look, you know, we have completely disenfranchised Main Street and our entire policy has been focused on making sure everything was stable and nice for Wall Street because we don't want to upset, you know, all of Wall Street and the banks and the financial sector. um you know, if his plan is to try to figure out a way to refocus and rep prioritize uh the Fed's goals toward helping Main Street and not destroying purchasing power indefinitely as they have done since they started. Um then I'm all for it. I just, you know, I'm not sure right now. It's just unclear to me whether this guy really is that kind of a patriot who has some great scheme on how he can revamp it because what I've read is that you know he wants to wind down the balance sheet which is what made me think this guy is really you know a hawk who sees the problem. >> Yeah. >> Um but then on the other hand he suddenly wants to cut interest rates a lot which you know seems a little bit across purposes there. Um admittedly I think everyone in the administration's orbit in the economic circles there from Bessant to uh Peter Navaro and all of these guys and Worsh all have this idea that may prove correct that higher growth doesn't necessarily be get more inflation. So that we have an environment where yeah the employment number could be stronger today but that doesn't mean that it's going to spark some kind of inflationary resurgence and so we can afford to cut rates. Um time will tell you know I think part >> this is sort of the reflation trade right which is growth without inflation. >> Yeah. And I think that they they see that in part being built on the back of this AI productivity boom, which I think they rightly believe is going to fundamentally change the way the economy works and the relationship between growth and inflation. I happen to believe that's true. I just don't think it's true today. Mhm. >> So that's, you know, it may be true three years, five years, 10 years from now. But I think between now and October, that's probably fairly unrealistic and a whole lot of stuff can go wrong between now and October if they run policy too hot. >> So, um, I just want to pull up this user comment here who says he'll do what he's told, right? Um, and >> this, by the way, is exactly what I can't wait to ask Tom Hanick because I don't know if they ever were in the room together, but they over overlapped at the Fed. I think that uh Worsh was actually working for Bernani when you know this when Tom >> was was making his famous uh uh what do you call it descents. >> Yes. when Tom Hanuk was saying this was in 2011 I guess when they decided well maybe we should continue Kiwi you know reup restart Kiwi and and Tom was like no that would be got all kinds of un untored consequences um and I think Worsh and he maybe separately but happened to be singing from the same himnil um and so I can't wait to get his thoughts at the conference about you know whether he's still that guy or it you know whether he has any insight on that but anyway >> that would be so fascinating and and we are having a dinner with him before everything starts Steph I think we should definitely make that a topic of discussion at dinner >> well I don't want to I don't want to get too far into it because I want the conversation to be very natural when I have it >> bring it up in the room have it before my tongue then >> wait I'm just repeating what I said last night over I'll zip my lip at dinner um so Uh, you know, it's interesting because I I have talked to people who who have met Kevin uh worsh. >> Uhhuh. >> Um I've asked Judy Shelton about him, but even last night um Axel Murk was at this dinner and uh you know Kevin was was uh a member of the Hoover Institution there at Stanford and Axel lives in PaloAlto. So they've actually their paths have crossed several times and I will say over the years um you know Kevin's name has come up a number of times in my interviews over the past years and the people who have known him have thought very highly of him. He he really did seem like the guy that the the the rational economic thinker would want to have in the Fed for many of the reasons that you mentioned. um he seemed like the kind of guy, especially given, you know, his public stances, um that would kind of do what was what he thought right, to kind of rein in the excesses of the Fed and to try to minimize the Fed's ability to distort the economy and create asset bubbles and things like that. So, in many ways, it is sort of a surprising choice by Trump. >> Yeah. because um you know especially after Powell where Trump put somebody in there who at least on the surface seems to have gone rogue on Trump right um and Trump loves to beat up on Powell and all that type of stuff. So to put another like really independently mind first just a very independently minded guy but a guy who's been very public about saying hey I think the Fed should have a lighter touch versus you know the heavy touch that it has right now is surprising. Now, I will say listening to to Bessant throughout the the search for the Fed head, Bessant has made surprisingly critical comments about uh how the Fed's the Fed's mission creep >> and made comments I think you and I would applaud like, hey, I think this thing got its finger in way too many pots and you know, all that type of stuff. So, I know that they are looking to kind of reform the Fed >> with this new choice, right? to bring in somebody who will will bring some restraint to the Fed. Um, so I'm not shocked from that perspective, but just from like a Donald Trump, you know, everyone's like, well, Trump just wants a toad in there that he can just call and say do it this way. Worse does not seem to fit that bill at all. And maybe that's why, you know, the markets reacted on the day of his announcement. But I don't know, have you sort of squared that in your head yet about the of course the narrative the the blatant assumption is Trump wants a pathy but it doesn't work just doesn't seem like he fits that bill. >> Yeah. No. Um I totally agree with your visceral reaction that you would have thought he would have picked I figured he would pick Kevin Hasset. >> Yeah. guy who says, "Yeah, boss." You know, or put Steve keep just promote Steven >> Mor because he came in on day one and said, "Let we need to cut. We Andy's been dissenting. We need to cut." Um so there's that. But um so I I was surprised with the choice. Um but then when you sit back, you think um one person that Trump is incredibly pleased with in his cabinet is Scott Bessant. And Scott Bessant and Stan Ducken Miller obviously worked together for many years uh at Soros. and Stan Ducken Miller and Kevin Worsh, you know, work together, you know, in his firm at Dain. Uh, so there's a familial relationship there. And I'm sure if Scott Besson said to the president, look, >> Wars is a really upstanding, great guy. He can he's the man for the job. That that carried a lot of weight with President Trump. Um although I agree that it sounds to me like when you listen to Trump describe the circumstances around his choosing Powell that he was kind of talked into it by people. Um and so if he was talked into it by Vessent then trust and believe if he's dissatisfied with this choice that'll get hung around Bessant's neck immediately. Um, but I do think it's it's noteworthy that there is a relationship between Bessant and Worsh and Ducken Miller. >> And I would say that in my view, the one thing that's kind of interesting about the Bessant Draen Miller Wars connection is their at least Bessant and Draen Miller's um mutual love for gold. Yeah. >> So, it makes you wonder whether gold doesn't play a role somewhere in their grand plan as to what they're going to do or in a plan B should plan A suddenly go ary in some manner of a way. Um, it just, you know, this is me maybe being conspiratorial or making connections that I shouldn't be making, but I I think to me that that's noteworthy that they have this kind of mutual appreciation. I wouldn't say they're, you know, gold bugs or anything like that, but they definitely see gold as an important asset right now. Bethin has for a long time. I think Den Miller as well. I haven't really heard Worsh talk very much about it, but I have to assume that he's probably, you know, somewhere in that realm. So, um, let me ask you this, and this is a great segue into the gold, uh, topic. Um, but it's it's so I I think Bessant is super smart. Um, so whether you like him or not like him, I I think it's hard to argue that he's not a really smart guy. And and and I think from a Treasury Secretary standpoint, to me, he seems to be doing a great job with all the different things that he's he's uh responsible for there. Um, and uh I guess where I'm going with this is, you know, Trump and sorry, uh, Abessant and Wars together to me, they seem like guys that I would have picked and and That's from a partisan standpoint. They're just guys who really understand the system well. They're smart. They know how to get things done. You know, from what I know of Fed people, like I said earlier, the folks that I have a high regard for who have high regard for War, like he seems like the best guy that that we could have picked from the people who I trust. Um, so in one sense, you can say, oh, they're kind of building a dream team. You know, how great to have sort of two really strong players at both the Fed and the Treasury. Um, but then there's that disconnect between like, well, everybody think Trump's wants a yes man, right? So, it seems like one of two things is is going to be proven true. Um, maybe not, but that either um uh worsh has been kind of snowing Trump like, hey, I'm just going to be a yes man boss, right? And then might get in and and will prove to either be a yes man or to go rogue. Um, or this assumption that just Trump wants a a Fed head who's just going to do nothing but cut and and cowtow to Trump. Maybe that's a faulty assumption. It is by far the dominant narrative and I get it and I've been assuming it, but maybe there's a different plan here, right? I don't know. But it just seems like again I just really have a hard time. Yes, Trump trusts Bessant, but but Trump's met with worse tr if Trump really wants an obsequious guy in there, he's going to want the guy to come to the White House, bend the knee, [clears throat] say, "Yeah, I'll do it." So, I I don't know. You I feel like one of two things is is going to be wrong. Like, we're either going to have um we're just going to basically just disprove his his reputation and become a laugh dog, or maybe the plan is different than what we're all assuming. >> Yeah. Well, I mean, I guess some of it will depend on uh mortgage rates and the path of mortgage rates uh because that seems to be when they talk about the need for lower interest rates and the objective of sort of prioritizing Main Street, I think it really is mortgage rates more than anything else. I I I don't know that they're focused on the corporate credit market and trying to, you know, bail out the private credit guys or anything like that. I think the the rationale for cutting interest rates is really to um kind of unfreeze the housing market, >> not get voted out of not not lose Congress in the >> Right. Exactly. and help improve the housing affordability or unaffordability situation. Um, so I guess if they feel like to your thesis, if they feel like, you know, this $200 billion in purchases from Fanny and Freddy is doing its job in terms of helping to drag mortgage rates lower, um, while rising wage growth is also improving affordability. I mean, I think they're they're tackling it from all angles here. um that maybe the emphasis on Fed funds cuts is less urgent. Um, and you know that would be a pleasing conclusion for me if they actually had come to that because why they would believe that slashing the Fed funds rate is going to bring the mortgage rate down when the last six cuts have not [clears throat] >> would kind of make me scratch my head, you know, as to how smart these guys are. you know, like you you tried it six times or you didn't, but the the Federal Reserve did and um you got a whole lot of nothing. So, I think that's why they're probably pursuing it from these other angles, too. So, to your point, yeah, it's quite possible. And I was just trying to figure out, you know, the the market isn't is no longer anticipating some massive amount of rate cut. They're not anticipating a huge rate cutting cycle. Um, so they can they can afford I guess to have someone who comes in and you know maybe he cuts in July as the markets now expect after the employment report they push it from June to July um 25 and then maybe they do another cut in the fall you know data depending um but we're no longer talking about an environment where he comes in on day one slashes 100 basis points and then every meeting after that is slashing another 25 >> right >> it seems like That idea has been completely taken off the table. >> Yeah. Although why does the president and look >> why does don't ask me why he does anything. [laughter] >> Yeah, I know. But like Trump is still like, you know, rate should be like one and a half or whatever, right? You should be one% right. So I don't know why why still say that when you're putting a guy in who does not look like he's gonna cut that crazily, but I don't know. We'll see. Time will tell. All right. So you you mentioned gold and and and we don't necessarily have time to get into kind of the the big potential of what could happen with gold. And in there you I'm assuming you're guessing some sort of revaluation or you know some sort of monetary tying of of gold to the of the dollar in some way. Maybe with Judy Shelton's uh 100 or 50-year gold back bond idea or whatever for the the 250th anniversary for the country. But let's let's put that for the next conversation. But but in the remaining time we have and Steph if we can go a few minutes over great. If not you just let me know. Um but um gold has done a lot since you were last on this program [laughter] and a lot of people were begging me when it was starting to fall to say hey can you get Stephanie on you know out of cycle to give us an update. Um we have you here now. So um what are your thoughts? you know, uh just just a blip uh you know, shaking out the weekends before we go to even higher prices soon. Has this, you know, put a pause on the the precious metals and they're going to hang out here for a good long while? Or as some still fear, you know, is this just a brief recovery before the bottom really falls out and we get a correction, you know, basically giving up all the gains the way that we saw in 2011 or 1980? Well, I guess just stepping back um in the big picture scheme of things, it's very clear and the administration really hasn't made a secret of it that they're just fine with a weaker dollar. In fact, they don't really want the dollar to strengthen. >> Yeah. >> So, from that standpoint, uh the wind is at your back in gold. you know, if you if you believe and I don't think there's any reason to question because actions speak louder than words and their actions clearly suggest they're they're fine with the weaker dollar. Um, that's not going away at least for the next three years. So, I think that's number one. Um clearly I have my own thesis about the ability for us to finance these deficits um absent uh foreign creditors which are are now absent. Um, and my view, as all of your listeners are well aware, is that they're going to have to go back to Kiwi at some point, or they'll call it yield, they may not even call it yield curve control, call it something innocuous, but essentially that's what it'll be. Um, and there was some stories on Bloomberg, I guess, on Monday about Worsh talking about some Fed Treasury accord that he had sort of conceptualized. And essentially it's not anything new or novel. It's what Yelen and Powell were doing all throughout the last four years where basically you know she shifted the issuance to the front end of the yield curve and the Fed stopped up all the issuance at the front end of the yield curve. So um I don't think that's a new or novel thing but the fact that Worsh has some ownership of that kind of thesis suggests to me that we will get into a form of yield curve control. And again, that speaks to an expansion of the Fed's balance sheet, which is money printing in simple terms. And therefore, again, yet another tailwind uh for gold. And then you just expand the lens globally. And like we talked about with Japan before, um the US is by no means alone in going down this path. All the major developed world economies are going to have to do it because they all have the same they're in the same situation where they have massive obligations to an aging population that they just cannot support um at these interest rates. So that's all going to have to be you know we'll see QE like we did following the financial crisis from all the major central banks. So basically every major currency will be debaced versus gold. You know people who are looking at the dollar versus the yen or the dollar versus the euro or pound or whatever will be missing the fact that they're all losing value at varying rates. So that continues to be my thesis. I you know as intoxicating as it was to watch gold rise a hundred $200 every single day you knew that was unsustain. Nothing goes up like that. Um, you've never seen a chart where it just keeps going up like that. You always have these pullbacks. And so, while it was going up, I kept looking at the chart with the moving averages. And, you know, to me, I saw, well, 4,600, that's where the 50-day moving averages. So, we could go to 5,500 and then the next move go to 4,600. And we got pretty damn close. And now we're starting to march up again. So, you know, it takes some intestinal fortitude, but at the end of the day, when people talk about a bubble in gold and that's why the the sell-off happened, I just have to laugh. Um, Fact Set posted a chart on its Twitter feed the other day that looked at inflows into ETFs and it had, you know, equities, bonds, commodities, whatever. and you could barely make out the commodity. It was this tiny little sliver of the bar, you know, and it's still as much as people talk about, oh, gold's a bubble, commodities are blah blah blah blah blah. No one says that about the stock market or very few people do who are taken seriously or credit or anything else. And this is we're still just barely into this um whole secular bull market. And then the final thing I would say about it on the speculation front, uh, clearly we rung out some, you know, weak hands. Um although I would suggest they're probably uh hedge fund related, not retail investors because I look at the total ETF shares outstanding for gold >> and they really hadn't when gold was rising from 5,000 to 5500 they inched up but they didn't they didn't mirror the parabolic rise in gold and they're still only back to where they were in 2022. So, gold's hitting all-time record highs and the ETF holdings are only back to where they were three years ago. No. >> Um, that doesn't speak to me of a massive speculative late stage. Yeah. Bubble. Yeah. Um, [clears throat] sorry. So, super fascinating. Okay. So, just a couple couple things. One, um, for folks that want a a real deep dive on the opportunity in commodities large, if you haven't watched it yet, watch the video that I released. Um I think it was this past weekend, so what four or five days ago with Tommy Costa. Um we go into this in in great depth and if you're feeling potentially optimistic about commodities futures, you're really going to feel optimistic after you after you watch that video with Tommy. Um [clears throat] let me just ask a devil's advocate question. Um staff, so I totally understand the logic pit you laid out why you think gold should have, you know, some some good tailwinds against it for the next couple years. Um, let's just contrast that with with post 2011. So, you know, gold went vertical back then. It then cratered and it pretty much was dead money for a decade where we were doing Q1, Q2, Q3. I mean, we were doing a lot of the things that you're saying we're going to do. And gold to Grant Grant Williams's point back then, no one cared, right? Um, so why should we have more confidence this time that that people will care about gold for those reasons? It's interesting because back then the [clears throat] QE was a policy response to a financial crisis >> and that gold kind of sniffed out the financial crisis coming rallied in anticipation and and got hit in the actual crisis as with got thrown out with the bathwater with everything else and then came back on the policy response. This time we haven't had the crisis. Stock market valuations are at all-time record highs. Credit spreads are near all-time record lows. >> Um, so the question is gold's moving so much and it it's it's sending a signal about something now. Maybe the crisis is unfolding on the balance sheets of private equity firms and we just don't have visibility into it. Um, but I think that the I guess if I had to come up with some really stark differences, it's that in 2011, 12, 13, whatever, the stock market had been destroyed and was starting, you were now starting to rebuild and you were finally reflating assets in general. And so there there was that attitude that I think most people investment managers have, which is why do I want to sit around with my money parked in something that generates no return when I can buy stocks cheap and I can buy credit cheap, you know, and so and I've got monetary stimulus. They're throwing money at me to do this. So basically they took they took the money for nothing bait that the Fed was offering and ran with it and at a time when it made actual sense from or more sense let's say from a valuation standpoint today you know if the Fed tried to started expanding its balance sheet which I expect it will um it's a it's a harder decision you know based on valuation >> stocks are cheap right now. Yeah, >> exactly. So, I think you have to look at it relative to these other financial assets. And that was that's to me the most stark difference. The other huge difference, of course, is the amount of debt we've amassed in the intervening dec, you know, 15 years. I mean, it's mind-blowing how much greater. You know, it's quaint and charming to think back to Hank Pollson on practically his hands and knees begging Congress for $790 billion to bail out the financial system. 700. I mean, it wasn't even a trillion dollars he was talking about. These numbers are laughable today. Like, that wouldn't that wouldn't accomplish anything in the environment we're in right now. I'm doing this from memory, but the was the uh national debt back then under 10 trillion in >> I would guess it was let's leave >> and if so then it's pretty much quadrupled in the past whatever that is right 18 years. >> Yeah. So in 2011 yeah it was 10 and now it's 33. >> So >> is it 33 now? Oh, okay. >> Well, but that's this is you know there's the marketable and non-marketable that so we have 38 trillion >> that's the number my head yeah >> right but then you have a lot of that is unmarketable because it's held within government funds so you know isn't true but anyway so basically the debt has has let's say roughly quadrupled certainly more than tripled um but it's also true when you look at the corporate sector their debt has more than doubled in that intervening stretch. So the risk of a financial crisis there is obviously much greater as well. Um all at the same time also quite different from that post GFC episode where our foreign creditors are no longer helping us back then, right? >> They were sapping up a ton of that issuance that we had to uh make to fund the the bailout. So that's another crucial difference. >> Okay. Um so two last questions on gold and then I'll I'll start to try to wrap this up. Um >> my my bladder is given out. [laughter] >> But uh so so most important question on this then. So uh I take it you have not changed your your general portfolio allocation then. you're still pretty much long and strong gold the way that you were before or have you made >> you you'll remember you and I had a little text exchange when uh gold was soaring and approx you know closing in on 5500 I think it was before it rolled over about >> hedge did the prudent thing that I had been recommending publicly right >> well what I did you know I I thought about um I did a little bit of hedging of gold miners specifically through an ETF that shorts um which I closed closed down immediately after, you know, it looked to me like the the bottom was in. Um, but what I kept on was a uh volatility long exposure, which, you know, just volatility in general, I think, across all markets is something you want to own. You know, I I think we're going to see that kind of bumpy action for a while. I mean, we're we're entering a period where the data, like today's perfect example, >> you're going to have hot and strong data reported at the same time and you're going to have the administration saying we're shrinking the balance sheet and we're cutting interest rates and you know, we're doing this. So, I I think prepare for a lot of chop. Um, and so I think having some I view being long volatility as a way to conveniently hedge my gold position. >> Okay. And I'm just curious, uh, do you still have that? >> Yes. >> Yeah. To keep that and I may even add to it over time, but um, right now I just, you know, I threw on a little bit in sort of, uh, a frenzied effort to get put on some kind of hedge and I guess glad I did. you know, it wasn't substantial enough to make a meaningful difference, but intellectually it gives me some gratification. >> Good. Good for you. And just to pat ourselves on the back a bit. So, um, like you, Stephanie, I was getting pretty vocal with folks on this channel that, hey, look folks, vertical moves in in any asset don't last forever and they usually they almost never go sideways. And so I had been increasingly recommending that people think about having some sort of hedge which was just hey just take some profits or as I was advising or as I was doing in my personal uh portfolio putting on hedges you did as well. Um so now we're a little bit more vindicated for that because I got to tell you when when when >> the the bit is in the teeth a lot of people don't want to hear you know the voice of caution. They just want us to hear that it's going to go up even more tomorrow. Um, but folks, this is why we sometimes just tell you the news we know you probably don't want to hear, but we're doing it for your your um your best interest. Um, last thing on gold, then then we'll wrap up. Um, so [snorts] in the interview that I just did with Luke Gman, um, we actually had a really interesting conversation about I wasn't expecting it to be a gold focused interview, but it it quickly turned into one. Um, and one of the things that I sort of uncovered in Luke's thinking was that, you know, for decades, uh, the, uh, the government had really not wanted the gold price to rise. And you can make arguments about intentional suppression or things like that, but it was it was the mirror that was held up to the weakening of the dollar by government policy. And so, it sort of was, you know, clandestine government policy to try to keep a lid on the gold price. Luke now thinks that that script may have flipped and that the government may actually want a higher gold price in the long run and it doesn't to a certain extent have something to do with a with a long game of eventually revaluing gold by the government and there's you know some potential benefits the government could get out of that and it is something that you know Bessant has >> right >> in the past um so it's not necessarily a crazy idea out there we can get into the details of it in greater depth in a discussion, Steph, but what do you think about that? Is that is that something that's actively on your radar that like, hey, the government may now actually want a higher gold price? >> Well, that's sort of what I was implying when I drew the relationship between Vesset, Draen Miller, and more together. Um, is that they they see a role for gold. Um, and revaluing it is obviously the easiest thing to do. In fact, I think as part of that uh stable the genius act, the stable coin fund uh was to be funded by revaluing a portion of the gold was one of the proposals. So these ideas are out there and circulating not just in the administration but by people within Congress too. Um but going back to you know basset wars um I do think that there is there is a lot of conversation about gold as a possible uh mechanism for helping deal with this untenable deficit financing situation that we have. Um, and time will reveal what exactly their ideas are, but it seems clear to me that's sort of another reason why you you wanna kind of hang on to gold. I I don't think you want to get jerked around too much uh by these swings uh because it seems pretty clear that there's even if the administration didn't have a plan, gold would seem to be the obvious solution to the global debt issue that we're confronting in the developed world. Um, but the fact that we have an administration with cabinet members that are familiar intimately with the metal and its important properties and its potential role um to helping fix these problems is just a further reason to own it in my view. >> So I don't have I can't elucidate any specific ideas around it. I mean, I think that the revaluation thing is an obvious way, and I don't know that they would, you know, go and revalue the entire uh gold reserve, but maybe they would do it in bits and pieces or do like Judy Shelton suggested, have some kind of gold linked bond um and see how that flies. You know, this is kind of variations a little bit that gold link bond on the idea I suggested of tax-free treasuries. Like we're we're trying to come up with a domestic audience for our paper. >> Yeah. >> In a world where the rest of the world just doesn't have the appetite or the ability really. >> Guess I like Japan. >> Yeah. >> Yeah. Um All right. Well, look, I'm just ask you to speculate here real quick, but given given that we've got Bessant and we've got Worsh, do you believe behind the scenes that we're also getting the brain power like of the Ducken Millers? [laughter] I don't I don't know. I you know Stan doesn't strike me as someone who's really a political animal. He never has. Um so >> do you think of Scott and Kevin column and say hey look we're trying to wrestle through a solution to this problem like is there an additional benefit like an option value of getting the brain power of the people that these guys have worked with over their careers captains of investment? >> I guess they they probably talked. It's probably Yeah. I I don't know if I want to speculate too much about how deep those conversations are because [laughter] I don't know I don't know how close contact Scott and Stan had post Soros. >> I mean, I'm sure they've stayed in touch. I just don't know if they, you know, are texting buddies or anything like that. I I don't think they are. But, you know, my sense is that they're probably still, you know, in touch, but not on some kind of speed dial type of situation. I don't >> And this is also I was just wondering if there's like an additional reason for optimism that you kind of not just get the players, but you get access to some of the giants that they know too and their thinking. But who knows? We'll find out, I guess, in in over the scope of history. >> Yeah. >> So, we'll we'll talk about this then. I'll punt this thing on digital assets to to next time. I just want to note why I wanted to talk about it. Um, two two reasons. One, um, so this was a private event uh, that was at a swanky restaurant here in downtown San Francisco. So it was probably two dozen people all in all, 30 people maybe. Um, and uh, it was the the digital asset specialists at Vanek and then a bunch of private investors and capital managers who are really interested in digital assets. And I will tell you, gosh, amongst that crowd, >> no doubt that this is where the entire world is going. >> Everything is going to be blockchainized, tokenized, you know, whatever. Like, no question at all in their minds that, you know, the the trillions of of payments markets and the financial markets and stocks and all that stuff, it's all going to be blockchainized. It's just a basically an issue of market players getting comfortable enough to just make the jump. And of course, there'll be new business models that emerge from all this and stuff like that. But but just from a technology standpoint, it's one of those things where it's just like in their minds, it is so clearly superior for the tasks that so much of of what's being done in the financial markets right now um that it is it is definitely going to happen. it's just a matter of how quickly and and kind of how. Um, so that was really interesting to kind of spend time with that crowd because I'm I'm not super knowledgeable about digital assets and it was it was fun in some ways to see the world through their eyes. I ended up sitting down at dinner with with a young woman um uh who funnily enough had just gotten married and her father-in-law was a guy that I worked with for a number of years at Yahoo just totally randomly. But she is is starting her own company and it's an agentic company. So like it's a oneperson company and her vision is is you know I'm just training all these agents and I've got this vision for how I want the company to operate and my vision is is you know once I've kind of trained all the agents and built it up the company will be capable of doing all these things and it won't need anybody but me at the top you know basically just kind of directing the agents on what to do. Um and again this is a a space that I I have a you know small high level knowledge about sort of how things [snorts] generally work but I don't have a lot of detailed knowledge. So I learned a ton in the conversation but it it um it was really eye opening about how swiftly we are moving to this agentic economy um or or at least seems like the potential we we have. And uh, of course, it just opens up all sorts of questions about what the hell is this going to do to jobs? >> And uh, just I guess because we're at this moment in the universe, about 10 minutes before we hopped on, Steph, I got this um, email [snorts] from a very successful private investor who I've known for a number of years. And uh, he said, "You got to read this." And it's a a post written by a guy in the AI space. and he just he basically said like the AI agentic tools are getting incredibly good incredibly fast and he said you know I've been in the space I get all the you know understand all the criticisms that folks have had about AI and hype and stuff like that but he's like I'm actually working with the technology and he said something's happened over the past like two three months where the agents are just getting so much smarter and and so much better so much faster where he's like they're now really acting like real people where now I just tell it what I want done. I give it like just basic parameters. I want you to build me something that does this. You figure out the design. You figure out the user experience flow. You test it. And then he walks away and he comes back four hours later and he can see that this thing has built what he wanted. then actually done a bunch of beta testing on it, found some bugs, debugged it, got it to a state where the agent was happy that it's doing essentially what it's supposed to be doing and says, "Okay, I think it's ready for your review now." And he's like, "And I look at it and I don't have any changes to make." >> Wow. >> And that's right now, right? What's it going to be like in six months or six from now? Right. So, um, again, I'm talking about something that I'm still kind of clinging to my fingernails on, just generally understanding. But that guy's takeaway was, "Oh my god, like this is moving so much faster that that society is ready for that there is going to be likely just just catastrophic scale jobs displacement here um before we figure out what to do with all these displaced humans. So again, we don't have time here to get into all that. I want to let you go, but um I'm just still kind of processing all that in real time as we're talking here." And the deficit numbers are going up and up and up in my head as you do. >> Yeah. I mean, obviously, what are the economic impacts of that, but just socially, like what are we going to do with those people? >> That's what Yeah. >> Yep. >> No, it's a that's a major issue for sure. Um Well, I mean, we need people in the trades, so I don't know how many of those people can be retrained to go into the trades, but >> Great. Yeah. And I mean, look, I'm a big fan of the trades in general, but even there, like, I can see um yeah, next decade, we need all these data centers and factories and robot plants built. I mean, just yes, we will need a ton of welders and electricians and stuff like that for a while. >> Yeah. >> But then once the Optimus robots and all the robots from China and everything get as good as this agentic AI, >> Yeah. I guess that's >> we're not going to need people to do most of that stuff, right? So anyways, sort of a depressing, >> right, a very dystopian view of the world. Unfortunately, I'm going to live in my lite land of bliss. [laughter] >> Of course, at the end the end of dinner to that point, I was like, and look, we didn't even really get to the point about how these are all going to kill us anyways, right? [laughter] >> Young bright shiny woman was like, well, I'm pretty optimistic about this stuff. And so, we we started drilling into it. As we kept drilling into the what if, she was like, okay, I'm beginning to become less optimistic. >> Right. Right. So anyway, um hopefully we can we can dig into that next time more if you want to, Steph, but it was important enough for me to throw out there. >> Yeah. No, >> all right. Well, as we wrap up here, Steph, again, um let folks know where they can go follow you to follow you and your work in general, perhaps subscribe to your service, but also again remind them if they want to join your conference next week where they >> Yeah. Well, you can um find about Geez, I can't even speak. I've now lost all my words. I mean, you can find out about both myself and the conference um at S Pomboy on my Twitter and I've pinned the link to register if there's still time to do that. And I think we still have a few tickets left. Um and in terms of subscribing to Macroavens, you just go to macromavens.com. Bada bing, there it is. And you can read and learn all about it. Thank you, Adam. [laughter] >> Thank you. And um so let me um let me just give a couple quick things and then then we'll close up here. Um real quick folks um definitely go to Stephanie's uh Twitter there and uh and sign up for her event if there's any way you can make it. Um but just a reminder that there is another event coming up um a month after that uh here at Thoughtful Money. That'll be our spring uh online conference. And I won't give the whole song and dance uh in here because we're pressed for time. But to learn all about it, just go to thoughtfulmoney.comconference. It's it's really the best faculty we've ever had. Um, of course, at the top of the list is Stephanie herself. Um, but there's a lot of great uh players there, which you can go see on on the website here, but you can um buy a ticket now. You get uh the lowest early bird price that we're charging. I want everybody to get that before the price goes up. And if you're a premium subscriber to our Substack, uh you will get an additional $50 off of that low early bird price. and uh given what's going on with gold, if you want to um uh you know get some help in buying precious metals in general, but if you want to take advantage of the offer that is still running that Andy Sheckchman has made available to this audience of being able to buy junk silver uh for just 99 cents over spot, um you can still get that offer by going here to thoughtfulmoney.com/bygold. You fill out the short form there and Andy's firm will help you take advantage of that offer. or if you've got other questions about buying, storing, selling gold and silver, his team will will take full care of you there. Um, [snorts] and then lastly, if you want to get some help just with your financial portfolio um, and figuring out how to how to navigate this year that's likely going to be more volatile, as Stephanie's been saying, feel free to talk for free to one of the adviserss here at thoughtfulmoney.com. Steph, it is always such a joy. I cannot wait to see you in person in just a couple of days. you, like I said, the team that you've assembled is is phenomenal and I'm just so honored that you guys have asked me to be a part of it. I can't wait. >> We're thrilled to have you. It's going to be a blast and um yeah, it's going to be a really fun group of people and you're such a tremendous asset for um you know, basically distilling everything that everybody says [laughter] for for the audience. It's going to be great. We're >> No, you're so kind. It is going to be great. And and if we can, you know, for those that can't make it, um, and folks, there's no substitute to being there in person, but maybe we can we take one or two of the key nuggets, uh, from it and, uh, and and talk it through next time when you're on this channel. >> We'll do. Absolutely. Well, I'll see you in St. Pete. >> I'll see you in St. Pete. And literally, just [laughter] can't wait. I can't wait to get to the warmth. >> Well, I'll keep doing my Sundance for you. >> All right. Well, Steph, it's been so wonderful. Thanks so much. And everybody else, thanks so much for watching. Eggs.