'Fed's QT is a Lie': Dohmen on Loose Money & Market Manipulation
Summary
Market Outlook: Fed data blackout and an early end to QT suggest liquidity stress and policy uncertainty into year-end with markets pricing rate cuts.
Deflationary Depression: The guest forecasts a deflationary depression by 2026, driven by AI-induced job losses, rising defaults, and contracting credit.
AI/Nvidia (NVDA): Nvidia posted massive beats and is described as having a strong moat, yet AI circular financing and insider selling raise risk of a trap into a year-end rally.
Bitcoin: He expects Bitcoin to lead broader markets lower, criticizing the “liquid gold” narrative and noting recent weakness versus gold strength.
Gold and Treasuries: Bullish on gold’s strategic role, with a provocative idea to back long-term Treasuries with revalued gold, while warning against tokenized gold like Tether Gold.
Financial Stress: Rising mortgage and credit card defaults, an FHA portfolio hole, and illiquid private credit are highlighted as key risks; liquidity and credit drive market direction.
Leverage Risks: Retail piling into leveraged ETFs is flagged as dangerous due to path-dependent decay, with HFT-driven gaps and forced selling amplifying downside.
US Dollar: Contrary to “weak dollar” claims, he sees the USD as the preferred currency and potentially stronger if US manufacturing reshoring takes hold.
Transcript
The Federal Reserve is officially flying blind now. In an unprecedented move, the Bureau of Labor Statistics has canceled the October jobs report. They say that the data could not be collected due to the government shutdown. And that means that the Fed's head into the final meeting of the year with a black hole where the economy should be. Now, if you look at this, the Fed watch tool shows markets are betting nearly 70% that the Fed will take rates down to 3 and 3/4 range at a 1/3 chance to go even lower. In other words, the market is screaming the Fed is done and rate cuts are now the base case. But while the government turns off the lights, the panic is visible. Fed minutes released just yesterday revealed a lot of dissent within the central bank and also a sudden emergency decision to stop quantitive tightening on December 1st. But as they are turning the liquidity taps back on, the question is why? And it seems like it's because the plumbing is breaking. Now we're looking at a market of illusions. Target shares have collapsed, signaling the death of the consumer. But Nvidia just released massive numbers here beating expectations. But if you look at it, the insiders are selling. And in Washington, reports are surfacing of heated internal clashes at the highest levels over an $ 8.5 trillion debt hole. All right. To understand this chaos, you don't need an economist. You need a historian of market crashes. Our guest today is a legend in this industry. He called the crash of 1987 weeks in advance. He predicted the dotcom bust back in 2000. And he warned his clients ahead of the 2008 financial crisis. And in September, he sat in this chair on this show and told us that the BLS numbers were a lie. And today, those numbers have vanished entirely. He's here now saying that he we're entering a deflationary depression. unlike anything we've ever seen since the 30s. Bert Dolman, of course, founder of the Wellington Letter. Welcome back, Bert. Good to see you. >> Nice to be with you again. I love being with on your show. >> Thanks, Bert. I I appreciate that. And what a day it is to kind of cover. I mean, obviously, we got lots to get into. I want to start with that BLS blackout because you've called them for years the Bureau of Lying Statistics, you know, I guess not even years. It's been decades, Bird. Uh, now they aren't even lying. They they've just gone silent here. Is this is this incompetence? I mean, we we know that the government was shut down, or is this kind of a convenient blackout right before a critical policy decision? >> Well, probably the latter, but I think we're all better off without these bad statistics because they are lies. We always pointed out that they are. And you could even find out what the true numbers were by going to the BLS website. You know, it's amazing on their own website if you but you have to look hard. You can find the real numbers and you want to look at the seasonally nonadjusted numbers. They lie with the seasonal adjustments. They have never divulged to any economist who requested how do you do these seasonal adjustments? They've never said that. And I said they probably do it by calling the White House chief economist and saying what number would you like for jobs this month? You know that is their their analysis. So right now I think this benefit to all all people who because now they're forced to go to the private services like challenger and so on and get the real numbers much more accurate numbers. >> Yeah is very very good. >> I'll tell you one thing. I mean, while everyone seemed to be focusing on on the missing jobs report, the Fed minutes dropped uh kind of a bombshell. On page 15, uh this is a quote. The committee will conclude the reduction of security holdings on December 1st. So, Bert, I mean, to anyone who understands sound money, this looks like a panic signal. Why stop QT now unless something in the bond market plumbing is seizing up? Well, that is another lie in my opinion at least that they have been practicing QT. This is their definition. You know, the politicians and people in Washington, they make up their own definitions of words. You know, we know that from the co vac vax, you know, they said it was a vaccine. I said no ma can never be a vaccine, you know. And we wrote that because I known mRNA for about 20 years and now we know we got mRNA was not a vaccine. It was totally ineffective and in fact it killed a few million people. So uh you know all these things are definitions. So what they call QT we during this time we point that out in every issue of the Wellington bank loans. When bank loans are rising and you have money supply M2 rising, that means that you have lose money. They can't rise if there's tight money. They cannot rise. So they have their own definition. And I think of what it is is that they when they're buying uh bonds and retiring treasury bonds, they they call that tightening. And when they're not buying them, they call that losing. And uh I think that's a total misdef. >> So So are you say so so you're kind of saying that that you know QT is a lie that despite the headlines money supply and bank loans are rising and the system is still being flooded with liquidity. So what's the Fed actually doing? Are they are they just tightening on paper but loosening in reality? >> Yeah, this is loose money. The stock market tells you that the market does not go up when there's tight money. The market is is empowered by the loose money from the Federal Reserve. This is why the market is now at an all-time high on the basis of valuations. The highest valuation or misallocation of capital is right now, you know, and you don't have that when money is tight. You have that when money is excessively loose. That's what we're having right now. >> Uh we got to talk about the elephant in the room then because we just got these numbers out of Nvidia. They guided for $65 billion in Q4 revenue. A massive beat. So, let me ask you directly. I mean, if you're if if you are a bear, how do you argue against the number? Is AI the one thing still holding up the economy? >> Yeah. You know, being a bear or being a bull, it all depends on the time frame. You know, are you talking about the I mean, now it's incredible. People call the long term a couple of weeks. You know, these are the neopights. You know, usually the guys, they're 20 years old, they just start trading and they're day traders. So they think with their laptop they can outperform the high frequenc high frequency trading which can enter 90,000 trades not not shares but trades per second. You cannot do that with your laptop, you know, but they think they can. So, you know, you have to stop the short-term trading. I used to be a great short-term trader. I still have an all-time record for option uh trading results with actual money and but uh you know I I stopped doing it because you now you cannot outrade these high frequency trading and the algo traders. So you have to have a different time frame. So we we always adjust according to what the require the market requires and you know if you're a good chess player you can do play this game very well because you can figure out what they're doing. They're they are playing a game of chess. And when you play chess, you always want to put your put your opponents in a trap, you know. So that's how you win a chess game. So the day of so good and putting all the the fools, the part-time people into these traps, whether it's a bear trap or a bull trap. >> So So Bert, when you when you're when you're saying that DiGo are playing chess, what do you mean? Are these machines kind of front running every move, every headline, every liquidity shift? And and are the human investors basically the pawns now? I mean, who's holding the bag? >> Uh the backholder the backholder always holds the bag and the bag holder is the retail investor. >> Yeah, >> that that has always been true. But now it used to be maybe you by the best estimates maybe 60 70% of the short-term trades were like that. Right now I think we're very close to 100% of the trades are there to fool the majority. They see if the majority of the retail traders are long they knock the market down. This is how we forecasted. For example, at the beginning of November, we had been looking for a good November and December uh in in our September issues and then uh the first issue in November. We said ah we have to cancel that forecast for November. November is going to be a big down the downward correction in the market. All the people and the hot stocks are going to have a big nasty surprise and we're going to have a big correction. We have we we're having the correction now you know many stocks are down 20% 30% and so on you know and Bitcoin is in fact leading it which is another prediction we made we said the the Bitcoin will lead the markets into the abyss over the next year the markets will have a very serious problem next year and it will be led by Bitcoin >> I recall you bringing this up actually back in September too I want to get your Bitcoin prediction because it kind of goes with that money supply you were talking about. Before we do, um, on this AI trade, I I just got to ask you this whole, you know, the circular financing thing, tech giants giving cash to startups just so that those startups can buy chips from them. It's like giving your friend money to buy lemonade from your stand and, you know, calling it revenue. I mean, is is this an Enron, you know, an Enron moment for AI? What are your thoughts on this? You've been through things like this before. >> Yeah. Well, this is the same same thing. Everybody's trying to game the markets, you know, and these tech billionaires, they're very good at that. That's how they got to be billionaires. They're starting with nothing. And uh so right now, this is another signal that this market is ready for a serious uh down move, but it's not going to happen this year. I don't think you know 2026 is probably going to be the year where a lot of people because I see retail investors buying ETFs that are leveraged leverage ETFs. I've been warning in every issue we say don't be leveraged. Don't buy leverage ETFs. But I see people doing it anyway. Oh what the heck? We know how to make money. You know, if a stock goes up 10% and we have a two times of H1, it goes up 20%. Uh-uh. That's not true at all. For example, here's a stock that everyone knew and I think was up 28% um for this year uh until early November, 28%. Um and uh the ETF, the bullish ETF, okay, uh was down 68%. down 68%. So the stock itself that you thought you were investing in, this was in one one stock ETF went up double digits and you lost 68% of your money thinking you would now have a triple or quadruple gain. We now have a new ETF that's come out. It's four times leverage. That means if if the components go down 20% the ETF is done. The value of that ETF is zero. Now people are actually buying this stuff. When you have to watch these podcasts if anyone doesn't believe me then they should watch on YouTube. There are several very good podcasts about 1929 and they have nothing to do with Sorcin's book. I hear that's a good very good book. But these are podcast and it's a very good because you can see the the enthusiasm that preceded that top in 1929 and now the speculation has gone above that above what we saw in 2019. >> So this is good. I mean you know you're you're kind of I mean let's start with that warning that 2026 is the year when the real damage kind of shows up and at the same time retail investors are piling into these leveraged ETFs that they barely understand. So, are we setting up for a scenario where the most inexperienced investors get hit the hardest when this unravels? >> Yes, it always is like that. The most inexperienced have the biggest losses and then it goes up the ladder. You know, if you're a little bit smarter, then you can avoid it. You can hedge your position and or maybe just go into the treasury bills. I would not go into money market funds uh too heavily because they have all kinds of garbage in money market funds. But look at what Wall Street likes to do is put people uh sell people the stuff that they don't want anymore. You know, for example, private credit uh firms, private equity firms, they've been pushed for the last five months. Oh, these are wonderful, wonderful. you you invest directly in these big companies and so on and so on. No, they're terrible. It's all the garbage that Wall Street doesn't want to have in a bare market because in a bare market they are totally totally illquid. You can't sell them. So Wall Street wants to sell them now. So they they put on financial TV and then people, oh private equity, I got to get into private equity. Yeah, you could when they call Bitcoin liquid gold. I mean, who are these people? Do they know what gold is? Liquid gold is Bitcoin. Bitcoin is down what 20% here in the last few weeks. Bitcoin and gold is up, you know. I mean, I don't understand that people actually fall for this kind of stuff. >> So, okay. Well, we got to get into the Bitcoin. There's too many things. Every time you and I talk, Bert, uh, let's start because we got to go back to gold and I keep writing it down because there's too many good bits here. But you keep stressing that 2026 is the year when everything kind of breaks. Let's go a little bit deeper. What exactly is the mechanism that you see kind of unfolding next year? Are we talking about a credit event, maybe a liquidity freeze, a deflation shock, or something structural in the system that finally hits its limits? >> Yeah, you know, there there so many different things that can go wrong. Yeah. And you know uh for example the the world scene is is in shambles. We all know that Russia now you know I mean we're finally getting to the point where we are kicking Russia so many times that Russia is going to finally give up and say okay we got to fight these guys you know no more Mr. Nice guys. So we really and then you see the situation in the Middle East. I mean trying to kill 2 million people just to have Gaza empty. Um there's another reason everybody talks about the the Trump uh resort in Gaza. No, there's a better reason. And that's natural gas that belongs to the Palestinians. It's offshore from Gaza and this is what Israel wants. Okay. So it's just that simple. Uh but um so we have so many cars now we're going to make war against Venezuela. Can anybody tell me why you know? Yes, they have the biggest oil reserves but much of it is basically tar. You know it's way underground. It's tar. We have much better oil. Our reserves in the United States are 400 years worth of oil reserves underground underneath our feet. 400 years. Why do we want to go to Venezuela? I have a war to get their muddy oil, you know. Yeah. Well, they've got they've got emeralds, too, and they've got gold. Maybe that's the reason. I don't know. But it it just does not make sense what is happening on the international front. So, um domestically, we see this the speculative fever in all areas. And when speculation gets this insane, be people buying specs. specs. They're not even allowed to say what they're going to invest the money in. What? How can you invest in a company that doesn't even tell you what they're going to put do with your money? I mean, does this make sense? >> Yeah, but >> I don't know, maybe I'm just old-fashioned. If if the US doesn't need Venezuela's oil, I mean, does that mean that the real's motive is strategic minerals, influence, geography, or is it simply controlling another piece of the global energy chess board before the next crisis hits? I mean, what's the real objective being behind this push? >> Well, I wonder if anybody knows, and I mean, I don't think the president knows, but um there may be some other people behind the scenes that know. Uh the the pretext is of course drugs, but uh you most of the drugs are coming from our neighbor which has a long border with the United States. It's called Mexico. So if we really want to go after drugs, all we have to do is march across the border and we can control that problem much easier than Venezuela, which is a thousand miles away. >> Yeah. Yeah. Well said. Um okay. Well, listen, I let's get back to your we get back to your letter because you kind of had this chapter about the deflationary depression and I mean it's kind of your biggest forecast for 2026. Two years you've warned about inflation, but now you've kind of pivoted sharply. You wrote, quote, "For the first time in decades, we believe there's a serious danger of deflation. Now, we're watching China's bond yields drop below Japan's a historic deflation signal." But you argue that the real US trigger is is is AI itself, right? I mean you you wrote that the Fed can conquer 8% unemployment but they can stop 25 to to 30%. So I mean that is depression level number is 30% of the people losing their jobs here. What happens to the housing market? Who pays for the mortgage? >> You know in fact there's some forecast from Europe. They're looking at a global unemployment of about 50%. So, I don't know if that is too extreme or not, but AI is going to shake up the world. We're seeing it already now with the big layoffs of Google and Amazon, 20,000, 30,000, 15,000 and Microsoft. Microsoft is, you know, reports record sales, record earnings, but then fires 15,000 people. So, what is it? It's AI. AI is making people super. So that's what's going to happen. Now in in past revolutions of technology, we've usually had something come along that took up the slack that people can then go into. With AI, that may not happen because AI really takes special skills to get somebody into the AI field. And um so who knows if the new jobs that will eventually open up will absorb all the people that are getting laid off now. Uh I think if if that happens, it's going to take a number of years before that happens. And in the meantime, you're going to have huge unemployment, huge unemployed. Unemployment creates deflation. Now there's u one way uh you know the the government can you know I've been thinking about this gold for example um is is a good um advantage if you want to be able to continue to sell treasury bonds. Our treasury long-term treasury bonds have not found a lot of biders lately. But wouldn't it be great if the president suddenly would say, "We are going to back all US long-term treasury bonds with gold." Okay. And we calculated that about uh 20,000 tons price, I'm sorry, at a price of $20,000 per ounce of gold would enable us to back all US Treasury bonds with gold. Now, can you imagine what that would do with the markets? I mean, people would say, "Wow, here we have a solution for selling treasury bonds. Everybody's going to want to buy Treasury bonds because nobody has gold back T-bonds, right?" And uh so is that going to happen? I don't know if it's going to happen. I don't have a line to the White House, but that would be something very very interesting because currently most people don't even know that the the official price of gold that the United States holds is valued at a little bit over $42 an ounce. $42. That's ridiculous. Market price 4,000. So um by revaluing this to more re realistic price like you could really do wonders to the markets. >> Yeah. I mean if if I mean if the US actually moved towards gold back treasuries even partially doesn't that acknowledge that the dollar's long-term weakness and in the the Fed's loss of control wouldn't that be the clearest admission yet that the monetary system is kind of running out of road? Well, Jeremy, you know, everybody talks about the weak dollar as the the dollar has not been weak. You know, the it's in the up and down pattern. The dollar is if you had all the currency choice, you could put your money into any currency in the world. Okay? Would you choose the yen? Would you choose the one? Or would you choose uh the peso? Or would you choose the US dollar? I would take the US dollar. Wouldn't you? >> Mhm. Yeah. The clear the cleanest the cleanest shirt in the laundry. >> Yeah. There you go. Yeah. So, I don't I don't see the problem with the US dollar. And especially if we can ever uh initiate this program that Trump wants to do for long-term making the US the manufacturing haven for foreign companies having incentives for foreign companies to put the manufacturing in the US. Then these companies they're going to need US dollars to build factories over here to hire people to do the manufacturing. That creates the demand for dollars. So dollar would rise instead of the decline. >> I got to ask you, I mean, if we're heading towards a depression, the chaos in Washington makes sense. In your latest letter, you reported a, you know, a near physical confrontation between Treasury Secretary Bessant and FHA director PY. Um, you say that the fight is kind of over this $ 8.5 trillion hole in the FHA portfolio. Uh, Bert, is the housing market secretly insolvent? I mean, are the government officials fighting over who takes the blame for the next 2008? >> Well, that is the problem is the the mortgages. People are running out of money, >> you know. I mean, look at credit cards. I I recently heard, I think it was last week, somebody said that some credit card companies are charging 40% interest. I can't believe that. But I know true number is 30%. I never heard that's the first time I heard 40%. But I mean, how can people pay this? If people are going to pay 40%, they must really be in dire straits. So, um, and the mortgages right now are a big problem. People cannot afford housing anymore because, you know, I have a I have several homes and I've got one home. Uh the home insurance went from 15,000 a year to 60,000. Okay. Well, at 60,000 I said you know where you can go. I don't need the insurance. I'm going to share insure myself. And I know a lot of my neighbors in the gated community are doing the same thing. >> Mhm. >> Because when you have a claim, does the insurance company pay you the fair price? No, they don't. That's an interesting one. Hey, just on that front, uh, I got to ask you, I mean, you know, you've hinted that the real breaking point isn't stocks. We've talked about this before. It's that mortgages and credits and, you know, behind the scenes delinquencies are rising and and that FHA exposure you're talking about is exploding and the private credit market is factually wobbling. I mean, what what exactly are you watching in the mortgage and credit system that tells you something serious brewing? Is there anything you look at every day? >> Default rate. >> Okay. the defaults on the mortgages, it's it's rising. I think it's right now at or near an all-time high. So, you want to look at loan defaults in all the different areas, credit card defaults, etc. You know that tells you in 19 well 50 50 years ago when I was two uh 1977 we developed what I call a doman theory of liquidity and credit. If you want to know if the market is going to go up over the long term longer term meaning like the next year or down you only have to look at two things liquidity and credit. Don't forget earnings, forget dividends, forget buybacks, forget all this bologoney they tell you on TV, okay? You only have to look at liquidity and credit. When the liquidity is expanding and when credit is expanding, the markets have to go up. And when both are contracting, the markets have to go down because stocks become a source of cash. >> It's it's really that simple. >> Yeah. Yeah. Bert, who's I mean, who's benefiting, my friend? I mean, you've been tracking insider behavior for decades, and what we're seeing now is is is unprecedented. I mean, insiders are dumping shares at the fastest pace since 2007. CEOs are cashing out at record highs, and there's this this literally launching this whole grift ETF that tracks politician trades. Are are we watching the early stages of what you call the fright economy? You know, where people closest to the system are quietly kind of heading to the exits before the public realizes what's coming. >> Yes. This is we we've been calling this the distribution phase. Distribution is a technical term used by by professionals in the business. And that means the the money goes from the big uh I mean stocks go from the big smart money to the naive retail trader. You know the retail trader is the backholder. Somebody when you think of somebody has to hold all the stocks that are outstanding right somebody has to hold them on the way down. When the when the NASDAQ like in the year 2000 went down 80% you know somebody had to hold it all the way down to 80%. Wall Street obviously doesn't want to be the holder. So they they elect the retail investors to hold those stocks. So they they are the backholders. The retail investors are the backholders all the way down. And at the bottom you you then you you hear the warnings. Oh, it's the end of the world. The banking system is going to close. It's going to be a run on the banks and so on. And this is when the insiders start buying. >> It's it's a game. You know why not? I mean, look, people go to Las Vegas, you know, now you can see save yourself the airfare. >> Yeah. Yeah. I mean, how do you how do you avoid we talked about this before, but how do you avoid holding the bag? I mean, people are sitting at home, they hear this, they feel trapped, they can't move the markets, they don't have the research teams, they're not writing algorithms, right? I mean, they're just trying to protect their retirement or savings. What specifically can a regular investor do right now to avoid being that naive buyer that smart money is un unloading onto? Well, I'm really glad you asked that. All you have to do is subscribe to our B do Wellington letter. Okay, it's available. The URL is here in the background. Domen Capital Research. Actually, the URL is dormant capital.com and you will see the services that we we also have short-term trading services. But the Wellington letter is issued twice a month, usually about 25 pages. We never intended to have it that long each issue, but there's so much to write about. And then you get 50 pages each month and all of that for seven right now $750. We're going to have to raise the price pretty soon because everything has been going up the the rent, etc. So, we're going to have to raise the price. But this is the best value you will ever find. I know a lot of new sellers out there. There are a lot of good ones, but nobody offers everything that we offered. >> It's a whole review. >> We know. We know for a fact that your readers get the full playbook, Bert. But, but give the rest of my audience at least one page from it. I mean, if if there was the warning signs you're talking about, if you had to boil it down to maybe one actionable step that the average investor can take today, what should they do? >> Well, the first thing it's always the most important thing is what you should not do. >> Yeah. You know, most people focus on the profits. No, you should focus on avoiding losses. That's much more important because losses are very hard to re recover. So that's that's the first thing. No leverage. That's so important. You know, in the 1987 crash, I remember we had lunch with vice president from Wall Street. He came to our city. at lunch and he said, "Yeah, I've been traveling all over the country and so on." Uh I said, "What what are you doing?" He said, "For closing houses." I said, "I didn't know you were in real estate." He said, "We're not, but these are people that couldn't meet their marching calls." Can you imagine? People lost their homes because they couldn't meet the marching call. Now, I don't I don't know if the law has changed in the meantime, but I thought that was horrible. >> Yeah. No kidding. Nobody wants to there's a lot of leveraged play out there. It's even in the crypto economy. >> Yeah. You see the thing is as soon as you feel that greed emotion inside of you just forget it. Close out your positions and go play golf. >> You know you don't want to invest with your emotions. And I see it all the time when I talk to people. Oh got one person he called. He had to leverage the bare ETF, you know, so supposedly makes money if the markets go down. Triple leverage. I said, "Hey, do you know how the leverage works against you? Why don't you read some of the articles? They're all online. You know, these articles, it shows you how the math works against you when you have a leveraged investment, you know, works totally against you. you you could be in the right investment and everything you know but the leverage it ups and down ups and downs mathematics works against you now I have a degree in mathematics and chemistry so I know a little bit about it the average person is going to have to read a little bit more or maybe read it three times but it's so important to understand that you know you have to read read my five grandchildren I said if you want to be a leader you have to be a reader So, and I think it's the best advice I can give them. >> Yeah, you know, Bert, I mean, this is an interesting point because everyone thinks that margin calls start with stocks, but the real danger now may be on the bond side. I mean, if Treasury volatility jumps and long duration paper collapses, won't that trigger margin calls in portfolios that people assume are are safe? You know, is is this the first round of force selling coming from places nobody expects? Yeah, but you know it's the professionals who who are on the hook on the with B because they use the derivatives and they they leverage these things like you know 2% margin. 2% margin means that you know if the bonds go down 2% you've lost everything. But they're doing this because they think they can fix this with other derivatives and hedges and so on. And then we get into the situation so complicated. You may remember the book, I think it was a big short about 2008 and there was this one firm, they they fired their derivative guy and he was the only one that knew their exposure to derivatives and then they panicked trying to get him back in and said, "Where's our exposure?" you know, and I don't I forgot if he ever came back as or not, but the the the positions that these people, these companies, big big companies like the Wall Street firms had, the CEO has no idea of the exposure that they have, >> right? And you know, to your point, I mean, markets don't crash during the day anymore. They crash at 3:00 a.m. in the futures market when liquidity is thin and alos control everything. Are you worried that the next margin cascade happens when the public's asleep with the the losses already kind of locked in before they wake up? >> We wrote that about six weeks ago. We said, "How do you know that a stock is um or certain sectors going to go down?" You know, by uh big down gap openings. Remember the word down gap openings. When the stock opens up, it's down 20%. That means that they don't want to give holders a chance to sell because the average investors that oh I can't sell it now I'm holding it at a loss. That's the biggest fallacy of most investors. Oh I can't can't sell it because I have a loss. No the loss is there even if you don't sell it. You know so the first loss is the best loss. That is our motto. You know we all make mistakes but get out when the mistake is small. You don't let a small mistake grow into a big one. That's the important thing. >> Yeah, it's a good lesson for you maybe to learn to teach the audience too. I mean, the public might not realize that brokers don't wait for permission. If collateral drops below threshold, they can pull the trigger. Are you worried that you know the the millions of investors will learn the hard way that their portfolios could be sold out automatically. >> Exactly. They don't have to ask you for permission at all, you know. But but the big thing I'm glad you mentioned that the big down gap openings that is such a big clue in technical analysis. This is done on purpose. This is not market forces. This is manipulation. There is so much manipulation in the market now. I think it's almost totally the short term. It's totally manipulated and manipulation is supposed to be against the law but the SEC seems to like it. though or at least their friends do. So um you know uh you have to see what the reality is where billions of dollars can be made in a day. How can you expect it to be fair? >> So >> you cannot. >> No. Yeah. Are you are you holding cash in this market? I mean are you doing what some others are doing? I mean for the people who are sitting on these leverage ETFs this this high beta tech or or even margin I mean is is the safest move right now simply to step aside until the system resets because some say well we missed the run up right I mean we missed some of those runups but um if you know if someone must hold the losses in this distribution phase you're talking about how do regular investors avoid being becoming one of those naive buyers >> well why buy when the markets are going Yeah. >> Yeah. >> You know, the whole thing is you don't want to always be buying. When they say tell you on TV, buy the dips, forget it. You are the dip. If you do that, you know, don't do it. You know, when the market, you see, this is what technical analysis is all about. It tells you when the bare market is starting, you know, and so we can't tell and we never do tell people buy buy now and sell now and so on. We say these are the negatives. We would sell now. We would buy now. But we can know the emotional setup of thousands of people who subscribe. Some are very antsy, some are very shortterm, some are very long-term, you know. Uh so it's up to them to make their own decision. People hesitate to make decisions. You know I was used to ask people for years said do you know what is in your 401k plan? Nobody I didn't find one person that knew what was in their 401k plan. Then I would have do you know if it's bond market related or stock market? They didn't even know that. So this is how little work the average investor does for his investments. >> Yeah. So, so how do you how do they ever expect to make any money when on the other side there are brilliant people people with long long experience in the markets you know that's that's your opponent you know I mean playing chess you my my brother was a chess champion of our state twice yeah he could play chess blindfold he didn't even have to see the board would just say the move that he made and so so he memorized the whole thing in his mind and he would win the games. It was amazing how he could do that. But a good chess player is what you want. Now there was a time I remember very well and I don't know if there Wall Street is still doing that but the big trend on Wall Street was to hire championship chess players as market analysts. >> Yeah. >> I got to ask you before we wrap up. We always miss you know kind of it goes too fast for us but I'm going to you were talking about Bitcoin. you were talking about gold. Let's start with gold. And one of the things I want to ask you is I mean it's trading around 4,000 right now on the spot side. You issued a big warning this week in your newsletter about tokenized gold products like Tether Gold. You wrote we wouldn't touch Tether product. Um why if it's backed by gold? What's the danger? >> How do you know it's backed by gold? Because they say so. >> Yeah. So that's it. just because it's, you know, it's another Fort Knox. >> That's it. That's it. It's just that simple. >> Yeah. I If I want to sell you the Brooklyn Bridge, wouldn't you like to have evidence that I want it? >> Makes sense. Um, so I mean, you're looking at the Nvidia burning earnings right now and you're not beaming with optimism. I I got to ask you because the Fed has cut the kind of data here and the consumer seems to be cracking. You in this newsletter which was I found really interesting is you you said that there's going to be a possibility or at least warned of a year-end rally and you said that that would be the trap if if if Nvidia, you know, sparked a meltup into December. Is this the final exit ramp or or do we ride this bubble all the way into 2026? Yeah, my yeah, at the beginning of November, I came to the conclusion that we're going to see a negative November where a lot of the high-flying stocks are going to be hit hard and so uh then people get bearish again and that creates lower prices even for for good stocks like Nvidia. uh by talks in Nvidia's over value and so on, but Nvidia has a moat a moat around it. Nobody can can, you know, get into their business. They've got it all. You know, it's not just chips. It's not just software. They've got it all. So, Nvidia is a is the number one stock. You know, people tried to equate it with Cisco. Cisco had a had one item. was a router a year ago and it went up what 2,000% or something but it had a router. How easy is it to duplicate a router, you know, and they found out how easy that was. So anyway, but um I I think and then uh I said we're going to get good stocks to lower prices in November and they're going to able to pick smart money to pick up the stocks again the HFT high frequency trading to pick up stocks for year end rally in December, you know. So they always create their own opportunities just like a chess player. They knock the stocks down. Then they buy the stocks cheap. Then it comes to year end rally which is very predictable because institutional money managers want to hold the right stocks in their year- end portfolio. They don't want to hold the garbage. Okay? So you want to buy the stocks that are good that anybody can show in their portfolio. Look at the beautiful valuable stocks that we bought for your per portfolio. >> Right? >> And that comes January. That's Then of course all that stuff goes out of the window and then the HFD once again does what they want to do for everybody then is on the long side they will short the market. >> Yeah. Interesting. >> That's a game. That's a game. If people think it's fair, they're going to lose. >> You have to realize and people go to Las Vegas all the time to play games, right? The roulette, etc. you know, but here you see yourself there. >> If you were to talk to somebody tonight, I mean, you know, that that kind of everyone needs clarity. I mean, most people can't rotate their entire portfolio overnight, right? I mean, if you if you had to give one final message, one principle that viewers could kind of carry with them onto this increasingly unstable world, what would it be, Bert? Well, like this year there was the April 8th bottom and it was big plunge in the stock market which we call right at the beginning. We we said in January and February we said get out of stocks, get out of stocks. We got a big correction and we had that correction going into but we did not get back into the same stocks. We got back into another sector which I will not mention because paid subscribers deserve some preference. And uh so the the sector that we got into had gains of 130% of one ETF and um so for the year the rest of the market you know you take the gains from February so up 6% 12% and so on. So way outperformed uh everything else you know with much lower risk much lower risk. See that's the important thing is you want to see what's lower risk what's higher risk like you know in 1977 actually I started a company in 778 I made a forecast because the new Federal Reserve chairman said we're going to fight inflation not with um with ex I'm sorry not with tight money but with interest rates and I said Oh, so he's going to raise interest rates but have lose money. That is a prescription for in much higher inflation. We're going to have double digit inflation. We're going to have double digit interest rates and we're going to have stock market going up. And there was a the chief economist of Goldman Sachs was having a seminar in our town and at the end I made the forecast because he was forecasting a peak at a prime rate of 12 and 3/4%. I said well we're forecasting 20% peak in the prime rate and they said ah that's absurd our markets would not never stand for it and I said it will if inflation is high enough and this is going to be high enough. So 1980 we had 20% prime rate and inflation was 15%. And the stock market had soared. You know the the Wall Street wisdom was when interest rates rise you got to sell stocks. No I said interest rates I mean stocks are going to be the inflation hedge for people. Inflation hedge because companies can increase prices if you have loose money. If you have lose money, people can borrow the money to pay the higher prices. That was very that was a unique thought and the Wall Street economist had never thought of that and but it turned out to be true. See, I'm not an economist. That's a big advantage. It took two years I took advantage econ economics just to find out why economists are so wrong and I found out. >> Yeah. Yeah. Well said. All right. Well, I'm going to put everyone over to the Wellington letter. Of course, Bert Joy Domen joining us today. Uh, interesting market, Bert. So many things to get into. We appreciate your time again. Um, you're I encourage the audience to go back and watch our interview from September. I mean, you kind of called a little bit of that top back then and and it's been incredibly accurate. Thank you for your time. I appreciate that. >> It's always a great pleasure to be with you, Jeremy. I wish you all the best and let's do it again soon. I think next year there's going to be so much to talk about. >> Yeah. Isn't that the case? Especially if this thesis holds true, Bert. Uh I appreciate that. Happy Thanksgiving and and happy holidays to you. >> Thank you. Same to you. Okay. Appreciate it. All right. >> All right. Now, the signals are flashing red. From the missing jobs report to the FHA fight to the Fed's sudden panic pivot. Now, thank you for joining us here at Kickode News. We're watching for independent analysis and of course, we're going to be asking some tough questions. Be sure to hit subscribe. I'm Jeremy Saff and for all of us. We'll see you next time. Heat. Heat.
'Fed's QT is a Lie': Dohmen on Loose Money & Market Manipulation
Summary
Transcript
The Federal Reserve is officially flying blind now. In an unprecedented move, the Bureau of Labor Statistics has canceled the October jobs report. They say that the data could not be collected due to the government shutdown. And that means that the Fed's head into the final meeting of the year with a black hole where the economy should be. Now, if you look at this, the Fed watch tool shows markets are betting nearly 70% that the Fed will take rates down to 3 and 3/4 range at a 1/3 chance to go even lower. In other words, the market is screaming the Fed is done and rate cuts are now the base case. But while the government turns off the lights, the panic is visible. Fed minutes released just yesterday revealed a lot of dissent within the central bank and also a sudden emergency decision to stop quantitive tightening on December 1st. But as they are turning the liquidity taps back on, the question is why? And it seems like it's because the plumbing is breaking. Now we're looking at a market of illusions. Target shares have collapsed, signaling the death of the consumer. But Nvidia just released massive numbers here beating expectations. But if you look at it, the insiders are selling. And in Washington, reports are surfacing of heated internal clashes at the highest levels over an $ 8.5 trillion debt hole. All right. To understand this chaos, you don't need an economist. You need a historian of market crashes. Our guest today is a legend in this industry. He called the crash of 1987 weeks in advance. He predicted the dotcom bust back in 2000. And he warned his clients ahead of the 2008 financial crisis. And in September, he sat in this chair on this show and told us that the BLS numbers were a lie. And today, those numbers have vanished entirely. He's here now saying that he we're entering a deflationary depression. unlike anything we've ever seen since the 30s. Bert Dolman, of course, founder of the Wellington Letter. Welcome back, Bert. Good to see you. >> Nice to be with you again. I love being with on your show. >> Thanks, Bert. I I appreciate that. And what a day it is to kind of cover. I mean, obviously, we got lots to get into. I want to start with that BLS blackout because you've called them for years the Bureau of Lying Statistics, you know, I guess not even years. It's been decades, Bird. Uh, now they aren't even lying. They they've just gone silent here. Is this is this incompetence? I mean, we we know that the government was shut down, or is this kind of a convenient blackout right before a critical policy decision? >> Well, probably the latter, but I think we're all better off without these bad statistics because they are lies. We always pointed out that they are. And you could even find out what the true numbers were by going to the BLS website. You know, it's amazing on their own website if you but you have to look hard. You can find the real numbers and you want to look at the seasonally nonadjusted numbers. They lie with the seasonal adjustments. They have never divulged to any economist who requested how do you do these seasonal adjustments? They've never said that. And I said they probably do it by calling the White House chief economist and saying what number would you like for jobs this month? You know that is their their analysis. So right now I think this benefit to all all people who because now they're forced to go to the private services like challenger and so on and get the real numbers much more accurate numbers. >> Yeah is very very good. >> I'll tell you one thing. I mean, while everyone seemed to be focusing on on the missing jobs report, the Fed minutes dropped uh kind of a bombshell. On page 15, uh this is a quote. The committee will conclude the reduction of security holdings on December 1st. So, Bert, I mean, to anyone who understands sound money, this looks like a panic signal. Why stop QT now unless something in the bond market plumbing is seizing up? Well, that is another lie in my opinion at least that they have been practicing QT. This is their definition. You know, the politicians and people in Washington, they make up their own definitions of words. You know, we know that from the co vac vax, you know, they said it was a vaccine. I said no ma can never be a vaccine, you know. And we wrote that because I known mRNA for about 20 years and now we know we got mRNA was not a vaccine. It was totally ineffective and in fact it killed a few million people. So uh you know all these things are definitions. So what they call QT we during this time we point that out in every issue of the Wellington bank loans. When bank loans are rising and you have money supply M2 rising, that means that you have lose money. They can't rise if there's tight money. They cannot rise. So they have their own definition. And I think of what it is is that they when they're buying uh bonds and retiring treasury bonds, they they call that tightening. And when they're not buying them, they call that losing. And uh I think that's a total misdef. >> So So are you say so so you're kind of saying that that you know QT is a lie that despite the headlines money supply and bank loans are rising and the system is still being flooded with liquidity. So what's the Fed actually doing? Are they are they just tightening on paper but loosening in reality? >> Yeah, this is loose money. The stock market tells you that the market does not go up when there's tight money. The market is is empowered by the loose money from the Federal Reserve. This is why the market is now at an all-time high on the basis of valuations. The highest valuation or misallocation of capital is right now, you know, and you don't have that when money is tight. You have that when money is excessively loose. That's what we're having right now. >> Uh we got to talk about the elephant in the room then because we just got these numbers out of Nvidia. They guided for $65 billion in Q4 revenue. A massive beat. So, let me ask you directly. I mean, if you're if if you are a bear, how do you argue against the number? Is AI the one thing still holding up the economy? >> Yeah. You know, being a bear or being a bull, it all depends on the time frame. You know, are you talking about the I mean, now it's incredible. People call the long term a couple of weeks. You know, these are the neopights. You know, usually the guys, they're 20 years old, they just start trading and they're day traders. So they think with their laptop they can outperform the high frequenc high frequency trading which can enter 90,000 trades not not shares but trades per second. You cannot do that with your laptop, you know, but they think they can. So, you know, you have to stop the short-term trading. I used to be a great short-term trader. I still have an all-time record for option uh trading results with actual money and but uh you know I I stopped doing it because you now you cannot outrade these high frequency trading and the algo traders. So you have to have a different time frame. So we we always adjust according to what the require the market requires and you know if you're a good chess player you can do play this game very well because you can figure out what they're doing. They're they are playing a game of chess. And when you play chess, you always want to put your put your opponents in a trap, you know. So that's how you win a chess game. So the day of so good and putting all the the fools, the part-time people into these traps, whether it's a bear trap or a bull trap. >> So So Bert, when you when you're when you're saying that DiGo are playing chess, what do you mean? Are these machines kind of front running every move, every headline, every liquidity shift? And and are the human investors basically the pawns now? I mean, who's holding the bag? >> Uh the backholder the backholder always holds the bag and the bag holder is the retail investor. >> Yeah, >> that that has always been true. But now it used to be maybe you by the best estimates maybe 60 70% of the short-term trades were like that. Right now I think we're very close to 100% of the trades are there to fool the majority. They see if the majority of the retail traders are long they knock the market down. This is how we forecasted. For example, at the beginning of November, we had been looking for a good November and December uh in in our September issues and then uh the first issue in November. We said ah we have to cancel that forecast for November. November is going to be a big down the downward correction in the market. All the people and the hot stocks are going to have a big nasty surprise and we're going to have a big correction. We have we we're having the correction now you know many stocks are down 20% 30% and so on you know and Bitcoin is in fact leading it which is another prediction we made we said the the Bitcoin will lead the markets into the abyss over the next year the markets will have a very serious problem next year and it will be led by Bitcoin >> I recall you bringing this up actually back in September too I want to get your Bitcoin prediction because it kind of goes with that money supply you were talking about. Before we do, um, on this AI trade, I I just got to ask you this whole, you know, the circular financing thing, tech giants giving cash to startups just so that those startups can buy chips from them. It's like giving your friend money to buy lemonade from your stand and, you know, calling it revenue. I mean, is is this an Enron, you know, an Enron moment for AI? What are your thoughts on this? You've been through things like this before. >> Yeah. Well, this is the same same thing. Everybody's trying to game the markets, you know, and these tech billionaires, they're very good at that. That's how they got to be billionaires. They're starting with nothing. And uh so right now, this is another signal that this market is ready for a serious uh down move, but it's not going to happen this year. I don't think you know 2026 is probably going to be the year where a lot of people because I see retail investors buying ETFs that are leveraged leverage ETFs. I've been warning in every issue we say don't be leveraged. Don't buy leverage ETFs. But I see people doing it anyway. Oh what the heck? We know how to make money. You know, if a stock goes up 10% and we have a two times of H1, it goes up 20%. Uh-uh. That's not true at all. For example, here's a stock that everyone knew and I think was up 28% um for this year uh until early November, 28%. Um and uh the ETF, the bullish ETF, okay, uh was down 68%. down 68%. So the stock itself that you thought you were investing in, this was in one one stock ETF went up double digits and you lost 68% of your money thinking you would now have a triple or quadruple gain. We now have a new ETF that's come out. It's four times leverage. That means if if the components go down 20% the ETF is done. The value of that ETF is zero. Now people are actually buying this stuff. When you have to watch these podcasts if anyone doesn't believe me then they should watch on YouTube. There are several very good podcasts about 1929 and they have nothing to do with Sorcin's book. I hear that's a good very good book. But these are podcast and it's a very good because you can see the the enthusiasm that preceded that top in 1929 and now the speculation has gone above that above what we saw in 2019. >> So this is good. I mean you know you're you're kind of I mean let's start with that warning that 2026 is the year when the real damage kind of shows up and at the same time retail investors are piling into these leveraged ETFs that they barely understand. So, are we setting up for a scenario where the most inexperienced investors get hit the hardest when this unravels? >> Yes, it always is like that. The most inexperienced have the biggest losses and then it goes up the ladder. You know, if you're a little bit smarter, then you can avoid it. You can hedge your position and or maybe just go into the treasury bills. I would not go into money market funds uh too heavily because they have all kinds of garbage in money market funds. But look at what Wall Street likes to do is put people uh sell people the stuff that they don't want anymore. You know, for example, private credit uh firms, private equity firms, they've been pushed for the last five months. Oh, these are wonderful, wonderful. you you invest directly in these big companies and so on and so on. No, they're terrible. It's all the garbage that Wall Street doesn't want to have in a bare market because in a bare market they are totally totally illquid. You can't sell them. So Wall Street wants to sell them now. So they they put on financial TV and then people, oh private equity, I got to get into private equity. Yeah, you could when they call Bitcoin liquid gold. I mean, who are these people? Do they know what gold is? Liquid gold is Bitcoin. Bitcoin is down what 20% here in the last few weeks. Bitcoin and gold is up, you know. I mean, I don't understand that people actually fall for this kind of stuff. >> So, okay. Well, we got to get into the Bitcoin. There's too many things. Every time you and I talk, Bert, uh, let's start because we got to go back to gold and I keep writing it down because there's too many good bits here. But you keep stressing that 2026 is the year when everything kind of breaks. Let's go a little bit deeper. What exactly is the mechanism that you see kind of unfolding next year? Are we talking about a credit event, maybe a liquidity freeze, a deflation shock, or something structural in the system that finally hits its limits? >> Yeah, you know, there there so many different things that can go wrong. Yeah. And you know uh for example the the world scene is is in shambles. We all know that Russia now you know I mean we're finally getting to the point where we are kicking Russia so many times that Russia is going to finally give up and say okay we got to fight these guys you know no more Mr. Nice guys. So we really and then you see the situation in the Middle East. I mean trying to kill 2 million people just to have Gaza empty. Um there's another reason everybody talks about the the Trump uh resort in Gaza. No, there's a better reason. And that's natural gas that belongs to the Palestinians. It's offshore from Gaza and this is what Israel wants. Okay. So it's just that simple. Uh but um so we have so many cars now we're going to make war against Venezuela. Can anybody tell me why you know? Yes, they have the biggest oil reserves but much of it is basically tar. You know it's way underground. It's tar. We have much better oil. Our reserves in the United States are 400 years worth of oil reserves underground underneath our feet. 400 years. Why do we want to go to Venezuela? I have a war to get their muddy oil, you know. Yeah. Well, they've got they've got emeralds, too, and they've got gold. Maybe that's the reason. I don't know. But it it just does not make sense what is happening on the international front. So, um domestically, we see this the speculative fever in all areas. And when speculation gets this insane, be people buying specs. specs. They're not even allowed to say what they're going to invest the money in. What? How can you invest in a company that doesn't even tell you what they're going to put do with your money? I mean, does this make sense? >> Yeah, but >> I don't know, maybe I'm just old-fashioned. If if the US doesn't need Venezuela's oil, I mean, does that mean that the real's motive is strategic minerals, influence, geography, or is it simply controlling another piece of the global energy chess board before the next crisis hits? I mean, what's the real objective being behind this push? >> Well, I wonder if anybody knows, and I mean, I don't think the president knows, but um there may be some other people behind the scenes that know. Uh the the pretext is of course drugs, but uh you most of the drugs are coming from our neighbor which has a long border with the United States. It's called Mexico. So if we really want to go after drugs, all we have to do is march across the border and we can control that problem much easier than Venezuela, which is a thousand miles away. >> Yeah. Yeah. Well said. Um okay. Well, listen, I let's get back to your we get back to your letter because you kind of had this chapter about the deflationary depression and I mean it's kind of your biggest forecast for 2026. Two years you've warned about inflation, but now you've kind of pivoted sharply. You wrote, quote, "For the first time in decades, we believe there's a serious danger of deflation. Now, we're watching China's bond yields drop below Japan's a historic deflation signal." But you argue that the real US trigger is is is AI itself, right? I mean you you wrote that the Fed can conquer 8% unemployment but they can stop 25 to to 30%. So I mean that is depression level number is 30% of the people losing their jobs here. What happens to the housing market? Who pays for the mortgage? >> You know in fact there's some forecast from Europe. They're looking at a global unemployment of about 50%. So, I don't know if that is too extreme or not, but AI is going to shake up the world. We're seeing it already now with the big layoffs of Google and Amazon, 20,000, 30,000, 15,000 and Microsoft. Microsoft is, you know, reports record sales, record earnings, but then fires 15,000 people. So, what is it? It's AI. AI is making people super. So that's what's going to happen. Now in in past revolutions of technology, we've usually had something come along that took up the slack that people can then go into. With AI, that may not happen because AI really takes special skills to get somebody into the AI field. And um so who knows if the new jobs that will eventually open up will absorb all the people that are getting laid off now. Uh I think if if that happens, it's going to take a number of years before that happens. And in the meantime, you're going to have huge unemployment, huge unemployed. Unemployment creates deflation. Now there's u one way uh you know the the government can you know I've been thinking about this gold for example um is is a good um advantage if you want to be able to continue to sell treasury bonds. Our treasury long-term treasury bonds have not found a lot of biders lately. But wouldn't it be great if the president suddenly would say, "We are going to back all US long-term treasury bonds with gold." Okay. And we calculated that about uh 20,000 tons price, I'm sorry, at a price of $20,000 per ounce of gold would enable us to back all US Treasury bonds with gold. Now, can you imagine what that would do with the markets? I mean, people would say, "Wow, here we have a solution for selling treasury bonds. Everybody's going to want to buy Treasury bonds because nobody has gold back T-bonds, right?" And uh so is that going to happen? I don't know if it's going to happen. I don't have a line to the White House, but that would be something very very interesting because currently most people don't even know that the the official price of gold that the United States holds is valued at a little bit over $42 an ounce. $42. That's ridiculous. Market price 4,000. So um by revaluing this to more re realistic price like you could really do wonders to the markets. >> Yeah. I mean if if I mean if the US actually moved towards gold back treasuries even partially doesn't that acknowledge that the dollar's long-term weakness and in the the Fed's loss of control wouldn't that be the clearest admission yet that the monetary system is kind of running out of road? Well, Jeremy, you know, everybody talks about the weak dollar as the the dollar has not been weak. You know, the it's in the up and down pattern. The dollar is if you had all the currency choice, you could put your money into any currency in the world. Okay? Would you choose the yen? Would you choose the one? Or would you choose uh the peso? Or would you choose the US dollar? I would take the US dollar. Wouldn't you? >> Mhm. Yeah. The clear the cleanest the cleanest shirt in the laundry. >> Yeah. There you go. Yeah. So, I don't I don't see the problem with the US dollar. And especially if we can ever uh initiate this program that Trump wants to do for long-term making the US the manufacturing haven for foreign companies having incentives for foreign companies to put the manufacturing in the US. Then these companies they're going to need US dollars to build factories over here to hire people to do the manufacturing. That creates the demand for dollars. So dollar would rise instead of the decline. >> I got to ask you, I mean, if we're heading towards a depression, the chaos in Washington makes sense. In your latest letter, you reported a, you know, a near physical confrontation between Treasury Secretary Bessant and FHA director PY. Um, you say that the fight is kind of over this $ 8.5 trillion hole in the FHA portfolio. Uh, Bert, is the housing market secretly insolvent? I mean, are the government officials fighting over who takes the blame for the next 2008? >> Well, that is the problem is the the mortgages. People are running out of money, >> you know. I mean, look at credit cards. I I recently heard, I think it was last week, somebody said that some credit card companies are charging 40% interest. I can't believe that. But I know true number is 30%. I never heard that's the first time I heard 40%. But I mean, how can people pay this? If people are going to pay 40%, they must really be in dire straits. So, um, and the mortgages right now are a big problem. People cannot afford housing anymore because, you know, I have a I have several homes and I've got one home. Uh the home insurance went from 15,000 a year to 60,000. Okay. Well, at 60,000 I said you know where you can go. I don't need the insurance. I'm going to share insure myself. And I know a lot of my neighbors in the gated community are doing the same thing. >> Mhm. >> Because when you have a claim, does the insurance company pay you the fair price? No, they don't. That's an interesting one. Hey, just on that front, uh, I got to ask you, I mean, you know, you've hinted that the real breaking point isn't stocks. We've talked about this before. It's that mortgages and credits and, you know, behind the scenes delinquencies are rising and and that FHA exposure you're talking about is exploding and the private credit market is factually wobbling. I mean, what what exactly are you watching in the mortgage and credit system that tells you something serious brewing? Is there anything you look at every day? >> Default rate. >> Okay. the defaults on the mortgages, it's it's rising. I think it's right now at or near an all-time high. So, you want to look at loan defaults in all the different areas, credit card defaults, etc. You know that tells you in 19 well 50 50 years ago when I was two uh 1977 we developed what I call a doman theory of liquidity and credit. If you want to know if the market is going to go up over the long term longer term meaning like the next year or down you only have to look at two things liquidity and credit. Don't forget earnings, forget dividends, forget buybacks, forget all this bologoney they tell you on TV, okay? You only have to look at liquidity and credit. When the liquidity is expanding and when credit is expanding, the markets have to go up. And when both are contracting, the markets have to go down because stocks become a source of cash. >> It's it's really that simple. >> Yeah. Yeah. Bert, who's I mean, who's benefiting, my friend? I mean, you've been tracking insider behavior for decades, and what we're seeing now is is is unprecedented. I mean, insiders are dumping shares at the fastest pace since 2007. CEOs are cashing out at record highs, and there's this this literally launching this whole grift ETF that tracks politician trades. Are are we watching the early stages of what you call the fright economy? You know, where people closest to the system are quietly kind of heading to the exits before the public realizes what's coming. >> Yes. This is we we've been calling this the distribution phase. Distribution is a technical term used by by professionals in the business. And that means the the money goes from the big uh I mean stocks go from the big smart money to the naive retail trader. You know the retail trader is the backholder. Somebody when you think of somebody has to hold all the stocks that are outstanding right somebody has to hold them on the way down. When the when the NASDAQ like in the year 2000 went down 80% you know somebody had to hold it all the way down to 80%. Wall Street obviously doesn't want to be the holder. So they they elect the retail investors to hold those stocks. So they they are the backholders. The retail investors are the backholders all the way down. And at the bottom you you then you you hear the warnings. Oh, it's the end of the world. The banking system is going to close. It's going to be a run on the banks and so on. And this is when the insiders start buying. >> It's it's a game. You know why not? I mean, look, people go to Las Vegas, you know, now you can see save yourself the airfare. >> Yeah. Yeah. I mean, how do you how do you avoid we talked about this before, but how do you avoid holding the bag? I mean, people are sitting at home, they hear this, they feel trapped, they can't move the markets, they don't have the research teams, they're not writing algorithms, right? I mean, they're just trying to protect their retirement or savings. What specifically can a regular investor do right now to avoid being that naive buyer that smart money is un unloading onto? Well, I'm really glad you asked that. All you have to do is subscribe to our B do Wellington letter. Okay, it's available. The URL is here in the background. Domen Capital Research. Actually, the URL is dormant capital.com and you will see the services that we we also have short-term trading services. But the Wellington letter is issued twice a month, usually about 25 pages. We never intended to have it that long each issue, but there's so much to write about. And then you get 50 pages each month and all of that for seven right now $750. We're going to have to raise the price pretty soon because everything has been going up the the rent, etc. So, we're going to have to raise the price. But this is the best value you will ever find. I know a lot of new sellers out there. There are a lot of good ones, but nobody offers everything that we offered. >> It's a whole review. >> We know. We know for a fact that your readers get the full playbook, Bert. But, but give the rest of my audience at least one page from it. I mean, if if there was the warning signs you're talking about, if you had to boil it down to maybe one actionable step that the average investor can take today, what should they do? >> Well, the first thing it's always the most important thing is what you should not do. >> Yeah. You know, most people focus on the profits. No, you should focus on avoiding losses. That's much more important because losses are very hard to re recover. So that's that's the first thing. No leverage. That's so important. You know, in the 1987 crash, I remember we had lunch with vice president from Wall Street. He came to our city. at lunch and he said, "Yeah, I've been traveling all over the country and so on." Uh I said, "What what are you doing?" He said, "For closing houses." I said, "I didn't know you were in real estate." He said, "We're not, but these are people that couldn't meet their marching calls." Can you imagine? People lost their homes because they couldn't meet the marching call. Now, I don't I don't know if the law has changed in the meantime, but I thought that was horrible. >> Yeah. No kidding. Nobody wants to there's a lot of leveraged play out there. It's even in the crypto economy. >> Yeah. You see the thing is as soon as you feel that greed emotion inside of you just forget it. Close out your positions and go play golf. >> You know you don't want to invest with your emotions. And I see it all the time when I talk to people. Oh got one person he called. He had to leverage the bare ETF, you know, so supposedly makes money if the markets go down. Triple leverage. I said, "Hey, do you know how the leverage works against you? Why don't you read some of the articles? They're all online. You know, these articles, it shows you how the math works against you when you have a leveraged investment, you know, works totally against you. you you could be in the right investment and everything you know but the leverage it ups and down ups and downs mathematics works against you now I have a degree in mathematics and chemistry so I know a little bit about it the average person is going to have to read a little bit more or maybe read it three times but it's so important to understand that you know you have to read read my five grandchildren I said if you want to be a leader you have to be a reader So, and I think it's the best advice I can give them. >> Yeah, you know, Bert, I mean, this is an interesting point because everyone thinks that margin calls start with stocks, but the real danger now may be on the bond side. I mean, if Treasury volatility jumps and long duration paper collapses, won't that trigger margin calls in portfolios that people assume are are safe? You know, is is this the first round of force selling coming from places nobody expects? Yeah, but you know it's the professionals who who are on the hook on the with B because they use the derivatives and they they leverage these things like you know 2% margin. 2% margin means that you know if the bonds go down 2% you've lost everything. But they're doing this because they think they can fix this with other derivatives and hedges and so on. And then we get into the situation so complicated. You may remember the book, I think it was a big short about 2008 and there was this one firm, they they fired their derivative guy and he was the only one that knew their exposure to derivatives and then they panicked trying to get him back in and said, "Where's our exposure?" you know, and I don't I forgot if he ever came back as or not, but the the the positions that these people, these companies, big big companies like the Wall Street firms had, the CEO has no idea of the exposure that they have, >> right? And you know, to your point, I mean, markets don't crash during the day anymore. They crash at 3:00 a.m. in the futures market when liquidity is thin and alos control everything. Are you worried that the next margin cascade happens when the public's asleep with the the losses already kind of locked in before they wake up? >> We wrote that about six weeks ago. We said, "How do you know that a stock is um or certain sectors going to go down?" You know, by uh big down gap openings. Remember the word down gap openings. When the stock opens up, it's down 20%. That means that they don't want to give holders a chance to sell because the average investors that oh I can't sell it now I'm holding it at a loss. That's the biggest fallacy of most investors. Oh I can't can't sell it because I have a loss. No the loss is there even if you don't sell it. You know so the first loss is the best loss. That is our motto. You know we all make mistakes but get out when the mistake is small. You don't let a small mistake grow into a big one. That's the important thing. >> Yeah, it's a good lesson for you maybe to learn to teach the audience too. I mean, the public might not realize that brokers don't wait for permission. If collateral drops below threshold, they can pull the trigger. Are you worried that you know the the millions of investors will learn the hard way that their portfolios could be sold out automatically. >> Exactly. They don't have to ask you for permission at all, you know. But but the big thing I'm glad you mentioned that the big down gap openings that is such a big clue in technical analysis. This is done on purpose. This is not market forces. This is manipulation. There is so much manipulation in the market now. I think it's almost totally the short term. It's totally manipulated and manipulation is supposed to be against the law but the SEC seems to like it. though or at least their friends do. So um you know uh you have to see what the reality is where billions of dollars can be made in a day. How can you expect it to be fair? >> So >> you cannot. >> No. Yeah. Are you are you holding cash in this market? I mean are you doing what some others are doing? I mean for the people who are sitting on these leverage ETFs this this high beta tech or or even margin I mean is is the safest move right now simply to step aside until the system resets because some say well we missed the run up right I mean we missed some of those runups but um if you know if someone must hold the losses in this distribution phase you're talking about how do regular investors avoid being becoming one of those naive buyers >> well why buy when the markets are going Yeah. >> Yeah. >> You know, the whole thing is you don't want to always be buying. When they say tell you on TV, buy the dips, forget it. You are the dip. If you do that, you know, don't do it. You know, when the market, you see, this is what technical analysis is all about. It tells you when the bare market is starting, you know, and so we can't tell and we never do tell people buy buy now and sell now and so on. We say these are the negatives. We would sell now. We would buy now. But we can know the emotional setup of thousands of people who subscribe. Some are very antsy, some are very shortterm, some are very long-term, you know. Uh so it's up to them to make their own decision. People hesitate to make decisions. You know I was used to ask people for years said do you know what is in your 401k plan? Nobody I didn't find one person that knew what was in their 401k plan. Then I would have do you know if it's bond market related or stock market? They didn't even know that. So this is how little work the average investor does for his investments. >> Yeah. So, so how do you how do they ever expect to make any money when on the other side there are brilliant people people with long long experience in the markets you know that's that's your opponent you know I mean playing chess you my my brother was a chess champion of our state twice yeah he could play chess blindfold he didn't even have to see the board would just say the move that he made and so so he memorized the whole thing in his mind and he would win the games. It was amazing how he could do that. But a good chess player is what you want. Now there was a time I remember very well and I don't know if there Wall Street is still doing that but the big trend on Wall Street was to hire championship chess players as market analysts. >> Yeah. >> I got to ask you before we wrap up. We always miss you know kind of it goes too fast for us but I'm going to you were talking about Bitcoin. you were talking about gold. Let's start with gold. And one of the things I want to ask you is I mean it's trading around 4,000 right now on the spot side. You issued a big warning this week in your newsletter about tokenized gold products like Tether Gold. You wrote we wouldn't touch Tether product. Um why if it's backed by gold? What's the danger? >> How do you know it's backed by gold? Because they say so. >> Yeah. So that's it. just because it's, you know, it's another Fort Knox. >> That's it. That's it. It's just that simple. >> Yeah. I If I want to sell you the Brooklyn Bridge, wouldn't you like to have evidence that I want it? >> Makes sense. Um, so I mean, you're looking at the Nvidia burning earnings right now and you're not beaming with optimism. I I got to ask you because the Fed has cut the kind of data here and the consumer seems to be cracking. You in this newsletter which was I found really interesting is you you said that there's going to be a possibility or at least warned of a year-end rally and you said that that would be the trap if if if Nvidia, you know, sparked a meltup into December. Is this the final exit ramp or or do we ride this bubble all the way into 2026? Yeah, my yeah, at the beginning of November, I came to the conclusion that we're going to see a negative November where a lot of the high-flying stocks are going to be hit hard and so uh then people get bearish again and that creates lower prices even for for good stocks like Nvidia. uh by talks in Nvidia's over value and so on, but Nvidia has a moat a moat around it. Nobody can can, you know, get into their business. They've got it all. You know, it's not just chips. It's not just software. They've got it all. So, Nvidia is a is the number one stock. You know, people tried to equate it with Cisco. Cisco had a had one item. was a router a year ago and it went up what 2,000% or something but it had a router. How easy is it to duplicate a router, you know, and they found out how easy that was. So anyway, but um I I think and then uh I said we're going to get good stocks to lower prices in November and they're going to able to pick smart money to pick up the stocks again the HFT high frequency trading to pick up stocks for year end rally in December, you know. So they always create their own opportunities just like a chess player. They knock the stocks down. Then they buy the stocks cheap. Then it comes to year end rally which is very predictable because institutional money managers want to hold the right stocks in their year- end portfolio. They don't want to hold the garbage. Okay? So you want to buy the stocks that are good that anybody can show in their portfolio. Look at the beautiful valuable stocks that we bought for your per portfolio. >> Right? >> And that comes January. That's Then of course all that stuff goes out of the window and then the HFD once again does what they want to do for everybody then is on the long side they will short the market. >> Yeah. Interesting. >> That's a game. That's a game. If people think it's fair, they're going to lose. >> You have to realize and people go to Las Vegas all the time to play games, right? The roulette, etc. you know, but here you see yourself there. >> If you were to talk to somebody tonight, I mean, you know, that that kind of everyone needs clarity. I mean, most people can't rotate their entire portfolio overnight, right? I mean, if you if you had to give one final message, one principle that viewers could kind of carry with them onto this increasingly unstable world, what would it be, Bert? Well, like this year there was the April 8th bottom and it was big plunge in the stock market which we call right at the beginning. We we said in January and February we said get out of stocks, get out of stocks. We got a big correction and we had that correction going into but we did not get back into the same stocks. We got back into another sector which I will not mention because paid subscribers deserve some preference. And uh so the the sector that we got into had gains of 130% of one ETF and um so for the year the rest of the market you know you take the gains from February so up 6% 12% and so on. So way outperformed uh everything else you know with much lower risk much lower risk. See that's the important thing is you want to see what's lower risk what's higher risk like you know in 1977 actually I started a company in 778 I made a forecast because the new Federal Reserve chairman said we're going to fight inflation not with um with ex I'm sorry not with tight money but with interest rates and I said Oh, so he's going to raise interest rates but have lose money. That is a prescription for in much higher inflation. We're going to have double digit inflation. We're going to have double digit interest rates and we're going to have stock market going up. And there was a the chief economist of Goldman Sachs was having a seminar in our town and at the end I made the forecast because he was forecasting a peak at a prime rate of 12 and 3/4%. I said well we're forecasting 20% peak in the prime rate and they said ah that's absurd our markets would not never stand for it and I said it will if inflation is high enough and this is going to be high enough. So 1980 we had 20% prime rate and inflation was 15%. And the stock market had soared. You know the the Wall Street wisdom was when interest rates rise you got to sell stocks. No I said interest rates I mean stocks are going to be the inflation hedge for people. Inflation hedge because companies can increase prices if you have loose money. If you have lose money, people can borrow the money to pay the higher prices. That was very that was a unique thought and the Wall Street economist had never thought of that and but it turned out to be true. See, I'm not an economist. That's a big advantage. It took two years I took advantage econ economics just to find out why economists are so wrong and I found out. >> Yeah. Yeah. Well said. All right. Well, I'm going to put everyone over to the Wellington letter. Of course, Bert Joy Domen joining us today. Uh, interesting market, Bert. So many things to get into. We appreciate your time again. Um, you're I encourage the audience to go back and watch our interview from September. I mean, you kind of called a little bit of that top back then and and it's been incredibly accurate. Thank you for your time. I appreciate that. >> It's always a great pleasure to be with you, Jeremy. I wish you all the best and let's do it again soon. I think next year there's going to be so much to talk about. >> Yeah. Isn't that the case? Especially if this thesis holds true, Bert. Uh I appreciate that. Happy Thanksgiving and and happy holidays to you. >> Thank you. Same to you. Okay. Appreciate it. All right. >> All right. Now, the signals are flashing red. From the missing jobs report to the FHA fight to the Fed's sudden panic pivot. Now, thank you for joining us here at Kickode News. We're watching for independent analysis and of course, we're going to be asking some tough questions. Be sure to hit subscribe. I'm Jeremy Saff and for all of us. We'll see you next time. Heat. Heat.