Market Outlook: The podcast discusses the anticipation of a Fed decision, noting that a 25 basis point cut is unlikely to change the current macro trend significantly.
Investment Strategy: Keith McCullough emphasizes the importance of front-running the Fed using signals from the bond and currency markets, rather than reacting to Fed announcements.
Economic Indicators: The discussion highlights conflicting data on unemployment and inflation, with McCullough suggesting that the U.S. economy may accelerate in real terms alongside inflation in the fourth quarter.
Stagflation Concerns: McCullough explains the concept of "quad 3" or stagflation, where inflation accelerates while real growth, particularly in labor data, slows down.
Asset Allocation: The podcast suggests maintaining positions in gold and stocks, as these assets benefit from the current economic conditions and Fed policies.
Global Relations: The impact of U.S.-China relations on markets is discussed, with McCullough noting that Chinese stocks have performed well due to improved trade negotiations and domestic stimulus.
Future Outlook: McCullough predicts a transition from "quad 3" to "quad 2" in the fourth quarter, which may lead to rising bond yields and a potential slowdown in gold's relative gains.
Transcript
We are mere hours from a Fed decision and the S&P 500 gold are still trading near record highs. What are the market expectations? What should we be bracing for and what is the data going into it? Of course, we can't affect any of that or it can't affect the Fed decision that'll be hitting us here in a few short minutes or in a few hours. But we need to figure out like what's the macro trend. A 25 basis point cut won't change the trend at all. And we need to dissect that. What is happening with the dollar? what's happening in the bond market, unemployment data, inflation, how is that all put together, and how should we as investors sort of react to all of it. How should we position until the end of the year, I've invited Keith Mccau. He's the founder of Hedgei, and I'm really looking forward to this discussion for the next 30 minutes here. Before I switch over to my guest, hit that like and subscribe button. Helps us out tremendously and I'm much much appreciated. Thank you so much for doing that. Now, Keith, it is great to welcome you back on the show. It's good to see you again. >> Yeah, good to see you, Kai. Yeah, Keith, I said it. We're mere three hours away from a Fed decision here, but I don't think it changes whatever the Fed is saying really changes the underlying trends. Uh things we're looking at unemployment, inflation data, actually quite conflicting data when when you look at it from a Fed's perspective. What what is your read uh on on on the situation right now? >> Well, generally speaking, I mean, the bond market's front running the Fed. I mean, people like to to to overhype, you know, the Fed's impact, but uh and you know, say things like don't fight the Fed. I mean, I don't fight the Fed. we front run the Fed and the bond market is our best way to do that. Bond market and currency market really are two primary signals for that. So, you know, ever since we started getting what we call quad 3 uh growth slowing US labor data, you've seen essentially our dollar signal break to lower lows, US dollar index I'm talking about, and my Fed front runner is essentially my two-year Treasury signal. That's uh beyond, you know, where it was at the September of 2024 lows. So, we're really at an interesting point. You know, as you recall last year in September, they they had a panic rate cut of 50 basis points and bond yields actually went up on the cut. So, you know, there's a lot to think about. Like I'm I'm I'm sure like you, I'm not going to change my entire asset allocation and portfolio and retirement account, you know, based on what J Pal thinks or says because of course from a from a future inflation's expectations perspective or growth for that matter, the guy doesn't have a clue. >> Uh ve very true. And uh back in September, I remember him saying that he regretted cutting so late. Do you think we'll get a similar statement in a few short hours here? >> I I mean, he's covering his ass. Let's just start with that. I mean, he's under absolute what I call max political pressure here uh by both pump and bessant to to cut by 50 basis points. The market wants to do 25 or at least that's the pricing of it all. So, if he actually goes to 50, you know, Pal's going to look like he's completely politicized and capitulated. Uh, I don't think it's quite Arthur Burns style like 1970s capitulation to Nixon, but we're getting close where, you know, irrespective of what Pal thinks, you know, in the future, you're going to be pretty close to a point in time, don't forget, where um I call him pump, but whatever Trump replaces Pal with somebody who just tells you that they're going to cut interest rates, you know, 500 or whatever, 200 basis points, 100 basis points, uh, at a clip, uh, whatever they need to say to become the head of the Fed. So there's a lot of dynamics associated with those politics. What typically happens though to the bond markets is that it will eventually go with the rates of change of both growth and inflation because again that's where the economic cycle is going irrespective of of the politics. >> You use the term quad three call or quad three like for people not familiar with the hedgei language. What do you mean by that Keith? Can you elaborate on that? >> Yeah quad 3 essentially means stagflation. It means inflation in this case inflation's reacelerating. Uh that's just an empirical fact whether or not uh people at the Fed or otherwise Fed fanboys want to call it uh inflation falling towards the target. Uh that you know that horse has left the barn. I mean we're up at uh pushing close to 3% headline inflation and our our our now cast actually has it going above 3% in the fourth quarter. We're at like 3.2% for for headline CPI. So it's going the wrong way. That's inflation accelerating while real growth in particular labor data is slowing. Now, we don't think that that's going to continue to happen in every single month. Like we actually think that the economy is going to accelerate on a real basis alongside inflation in the fourth quarter. Um so then you would you really won't have any reason for rate cuts, you know, at that point if you're actually looking at the two legs of the of the of the policy stool that they purport to care on. And of course, they care on a lot more than that, including what the president says and what the S&P 500 do. >> Would you say that the Fed is maybe focusing too much on the unemployment data and maybe the bond market to a degree as well instead of inflation data? Should we be more worried about inflation ticking much higher? >> Yeah, it's like this joke of a stool, right? I mean, you got a three-legged stool, you know, where's the S&P, where's the stock market, where's labor, and where's inflation? And for a long time, everyone's talking about inflation all of the time. And now all they want to do is talk about the slowing labor data while inflation is going back up. I mean it it it obviously, you know, from an objective or an apolitical perspective makes no sense because there's no process in that. If you're saying that you have a dual mandate, then you should be uh at a bare minimum equally weighing, you know, the risks and balances of inflation and and employment growth. Um but that's what it is. I mean, you have a lot of like actually squirrely data that came through even on the labor side. Um there was some fraud in some of the Texas jobless claims numbers. You know, I think that the labor data is as bad as it can get right now. Um, and that's what we call quad three stagflation. So, if the labor data were to improve, and I just mean sequentially from bad to less bad, and inflation continues to where we have it tracking, which is back, like I said, back towards 3.2%. Again, the Fed's not in a spot to um to to be able to ignore that. And if they do, they'll be rent, you know, they'll be who we thought they were, right? It's like Dennis Green. They are who we thought they were. Yeah, they're completely and and and completely and always politicized. >> Like how bad is the unemployment market really looking at it? 4.3%. You know, if you would have shown me that five years ago, I said, "Hey, that's great." You know, excellent employment data, almost full employment here. What Why is everybody so nervous and panicking? Is it just about the trend or are we missing something here? Well, you're I mean 50% of people hate Trump and they're they're politically incentivized to say that the labor market is is crashing and collapsing into a recession. I mean, you watch some of these yo-yo economists like Wolers or whatever, like somebody who's just like blatantly partisan, you know, when they're telling you that we're we're in a recession, labor's in a rec. I mean, of course, it's an absurdity, right? I mean, GDP we have tracking close to 3% on a quarter quarter basis. Retail sales were just reported up 5%. I mean, you have to cut the retail sales number Kai number in the growth rate in half like three times to get towards a recession. So, you know, we don't have a recession. The labor market, your point, if you just look at the level, I'm not a big fan of the levels, but if if the question is, is it a recession in the labor market? Uh, of course, it's not. And I'm not I'm not trying to, you know, say that in the K-shaped economy that America has built under both administrations because they're both um degenerate money printers and of course, you know, you know, fiscal deficit spenders. Um you know, you I'm not saying that a lot of people aren't losing in this type of economy, uh but those of us that are long of asset price inflation, and that's the most obvious inflation you could see, right? I always I always say to people, oh, you don't see inflation reacelerating. You must not have like a trading account. you must not have a retirement account because it's going vertical. Uh that's inflating. So if you're long asset price inflation, you're in a good spot. If you're in the part of America, which unfortunately 50% of Americans are, uh where you have no savings, uh and your cost of living is going back up and the Fed's telling you inflation's under control. Well, you're pissed off and that's where you get a lot of this political um yeah, I'd say even anger associated with it. >> No, absolutely. Like a bit of almost an understatement. I would I would say cuz there's a lot of confusion about the the employment data in particular. We're getting all these massive revisions as well. Um and yet like we almost lost a million jobs and I said it in another in another interview uh yesterday or the day before but the unemployment data is still at 4.3%. Um we lose a million jobs yet the percentage doesn't change. What do you make of that? Like what do you make of the data itself? Well, the MA the MA I mean Bessant was very clever in picking, you know, really picking a fight with the BLS or the Bureau of Labor Statistics. Like it's The data has been for a long time. It constantly gets revised, you know, in completely the opposite direction that that in this case the Biden administration was was speaking towards like the health of the labor market. And that's what the Biden administration, don't forget, you know, boring their brains out to hire, you know, people with taxpayer dollars. you know there was a a third of said hiring over that period u irrespective of the revisions to the downside had to do with government jobs right so it's there there's so much in the labor data that it's hard to call it anything else right I think that what politicians are going to do in particular you know this administration and and the Fed you know folding their tent so to speak to them is lean on the data I mean it's going to be what it's going to be but if you if you look at anything uh in the you in particular in small business, you're seeing, you know, resurgence in small business confidence. You're seeing a lot of positive things that you should see if we're right. And we think the US economy is about to start to reacelerate from here, uh, from October until, you know, let's say at least till the second quarter of next year. And that's where the labor data is going to accelerate in rate of change terms. You're still going to have a relatively low, by all historical measures unemployment rate. for for a lack of alternatives. Like we do have to trust um official data because I'm not going around from house to house and asking questions every day. Okay. Uh it's just not possible. Like I try to read the news and I'm trying to make sense of it, but yet again I'm not a data collector and I I don't run my own data and I don't have thousands of employees to help me collect it. How do we establish trust again? Like how do we figure out what is actually real and what isn't? Uh Keith, what do you do? >> Part of why the data was fake was because they were asking there's this huge lag on respondents uh versus the actual answers. And you know, they were asking people by facts. Like who the hell uses a fax or a rotary phone at this point, right? I mean, um so it's it's like a dinosaur. Um what I do think is that I mean if you we have a a lot of analysts, software engineers, data scientists, etc. And we have a lot more power like with AI right now to find different time series of data, you know, whether they be labor data, inflation data, etc., etc. And you can, you know, there's there's plenty um there's plenty that the machine can do for you to track this data. And I think the bond market's very much in tune with that. So we, again, we had a slowdown in in in the labor data that probably is as bad as it could get in the month of September. and on everything that we track on leading indicators that should reacelerate positively in October. If it doesn't, we'll say so and we'll just go with that. Um because again, we're data dependent. >> Let's talk about the bond market. You use the two-year as a Treasury signal here um as well. And we've had guests on that said, well, the Fed funds rate should be where the two-year is right now, roughly 3.5%. Uh in in terms of yield, like what do you make of that statement? And should the Fed cut almost 100 basis points to get to that level? I probably make about as much of it as if my you know my my fourth grader asks asked me if the cow should jump over the moon. I mean I I don't I don't care. I mean yeah think about the things people in on Wall Street get paid to to say. I mean well I think that it should be right at the target. I mean okay um that's it's just not it's irrelevant. I mean it's not the way the world works when we try to answer these questions. People what they should really do is start to look at the world the way that the world is. the world much like a fractal pattern that explains the contour of an ocean line or the edges of a leaf. Uh and economies you know are live they're living breathing organisms that are constantly in flux. It's a complex system. There are plenty of factors that affect it. If man comes and says look I want to bend and smooth the contour of that ocean line with this super secret equation that's like really not that smart uh about where the Fed funds rate should be relative to this rate and that rate. you're going to screw it up. That's what history tells you. You know, you know, these are we're looking for man-made solutions to some man-made problems to an absolute natural uh order of things that doesn't care. Like, so to me, I just do what bond yields are doing. I do what the currency market's doing. I do what my signals are doing is what I mean by that. And it saves me from having to think about all these things that people get paid. Uh, you know, God, God help us all. But I mean, you know, some people some people are paying for all these new newsletters for these thoughts and ideas on on the way the world could and should be. I I don't waste my time on that. >> Oh, it must be nice to take emotion out of it, eh? Uh it's it's so difficult. Everybody's got opinions, of course, and in this day and age, everybody's very happy to share them regardless of format, right? >> Well, people are very happy to get paid for them, too, right? I mean, uh and if you're willing to pay for somebody's opinion, that doesn't mean that it's going to pay out in your uh in your accounts, right? Right. I mean, like I'm a big P&L guy. Uh because unlike a lot of newsletter people, I I time stamp every position and people can see them every day. So I don't have the luxury of just, you know, opining uh for money. Uh if you want that, you can go on Fox or MSNBC. I guess >> Absolutely. And I haven't been invited yet, so that's probably says a lot. Um but um you've been >> It appears that you and I aren't wearing the right outfits for those shows, right? >> Probably. T-shirts aren't really on vogue there. So, >> I think I think Joe Rogan would like our style a little bit. As as my uh teenage daughter would say, they'd like your sty, you know, you got good sty. >> Your sty slaps, you know. Isn't that something? That was horrible. That was embarrassing almost. Um that was absolutely Oh, ridiculous. No. Um Keith, back on topic. We talked bond market here real quick, but you also touched on the dollar sort of giving away where things are headed. Um the Dixie seem to be breaking down. Uh we're now at 96 something, I forgot, 96.5 or something as we speak here. Um trending lower. Um what do you make of that trend uh in in the in the dollar versus the other currencies now? >> Well, I when I look at markets, I I I I don't believe that people can bend in smooth gravity. As I said, I don't think that policy makers can do that. Obviously, uh I believe in mean reversion, you know, like I believe in in in things like going back to the prior lows, revisiting those lows, making higher all-time highs in gold's case. You know, those two things actually when you look at the Dixie or the dollar index against gold are one and the same thing. If you go back 180 days on the correlation, you can go to 90 days and it's, you know, a little less obvious, but on a trending basis, like three months or more is how we define a trend at hedgei. Um, you know, the inverse correlation between the US dollar index and gold is 95%. So 95% of the time they're doing the opposite, right? So what does that mean? I mean, one, you've already blown through uh the July lows for the dollar index. Again, the dollar started going down after the stock market crashed this year. A lot of people forget that. I mean, we had that call that the market was going to crash and then recover without a recession. It's just totally different way to look at it. That's why I have so many, you know, so many friends out there that love love us for calling that, but not really. But it was a hard one for people to swallow because they're like, "Okay, market crashes, Fed go do doubbish. They got to devalue the dollar because both Republicans and Democrats, that's all they know. It's the only playbook they have." And that's what they did. So, you've seen the dollar started to go down, down, down, down, down. Now, it's, you know, since really February, and now it's violating those lower lows and gold's ripping to all-time highs. So, you know, in a way you like it's it's the perverse relationship that you and I have with asset prices in particular if you're as long as physical and paper gold that I have uh or gold mining stocks for that matter is that I actually need the Federal Reserve to continue to it up, you know, like like like absolutely burn the purchasing power of the American people for me to keep getting paid, you know, these these epic there there's no other You and I have been doing this for a long time. I've been trading gold in 20 for 25 years. I've never realized these notional gains in gold ever and I actually need the government to keep screwing up for that to continue. >> No, 100%. I've been saying it and we track financing data in the mining space as well here at Sore Financial and one one thing we've noticed the second the Fed started raising rates back in March and in May 2022, the wallets just went shut and that was it. The financing window closed and now it's wide open. uh it is wide open and uh the sector is doing phenomenally well. So we're closely tied to the hip. That's why like we look at this Fed meeting and I mentioned to you before hitting the record but I might be overhyping this this announcement here that's going to hit us in a couple of hours. Um am I am I putting too much emphasis on it perhaps in in the grand scheme of things. Keith >> in in this society how could we not you know like we're human and and and we're on a live wire here. So, of course, you're going to talk about the thing that's, you know, what I call these are macro tourist events, right? Every, you know, Tom, Dick, and Harry and their dog and their hairy cat. It, you know, has an opinion on this. Like you said, you just let them talk. They're going to have, they have no models, they have no signals, they have no track record, but they'll tell you that this is a big deal, right? And it is a big deal. Ask pump. It's a super tremendously big deal and he wants a big and tremendously big cut. I mean there there's so many reasons why there's so many eyes on that but that doesn't mean that the market moves have to be dramatic right and and and what you see is actually into all these macro tourist events when it comes here's another perverse reality of the stock market is that which we're long like we're long cues we're not going to be long boring spy Q's are much better uh we're long the Russell 2000 which is even better than that in the last three months um but you know what what happens into all these macro tourist events whether they CPI days, Fed meetings, Nvidia earnings, is that due to the, you know, I don't if you want to get into the weeds on this market structure of the US equity options market, you know, there is a an epic level of hedging, panic put buying the day or the two days before the event. And that, as we like to say, that hedged pot doesn't boil. So what happens is you get the event, it's a nothingness in terms of end of the world like a lot of people are trying to protect against and then the market just rips new highs again because you have to unwind all the hedges. So um that again that's why we're making a lot of money long stocks and gold. Um and it it's been you know quite a thing to watch. I mean I I it's it's one of those things like you're watching it like it's I can't believe it's still happening but it's happening at a faster rate. >> It's like a cold spring. Absolutely. I've been having discussions with a colleague here of mine and uh he made me ultra nervous cuz he's buying puts left, right, and center yesterday going going into this, right? And maybe he actually follows you. So, >> well, I mean, I wasn't buying puts into the event. It's like people, you know, this is like it's an amazing thing like what what you want to know are is who who is buying puts on the S&P 500 in the middle of February, >> right? Okay. You know, who is still long gold in both periods? Quad three stagflation now and a quad four crash. quad fours when you know don't forget that inflation went down for those three months and and people screw that up too. They're like well I hope that the Fed's right and we get towards our target on inflation. If inflation goes down the assets you own are going to disinflate. Okay? Like there there's so much to be taught to people. Um what I love is the participation though. I don't want to hand out participation trophies but I love that more people are participating than ever before. have opinions, have positions because, you know, we want to play against that. >> Yeah. No, AB. Absolutely. Like the question is now like what what is priced in in this market right now? I'm looking at the S&P at 6,600, gold at close to 36 or 3,700 almost. Like what what are we pricing in? It almost feels like a bit of a redundant question here. Um or like rhetorical almost, but what what's possible? It feels like we're way ahead of ourselves. Uh, is is that a realistic assumption or like is there much more to come? >> No, it's not an that's not an inhumane feeling when when the NASDAQ makes nine straight all-time highs. I mean, which hasn't happened in two years. It's not a it's not an inhumane feeling uh when the S&P hasn't had more than a 2% decline in over a 100 trading days. I mean, this is this is what people start to think and feel because it's natural. Right now, the the better question for me, at least in my own mind, is isn't just about my feelings about that because they're pretty obvious. They're in your account, too, if you're long them, which is the other thing. Some people just don't don't like that because they they didn't participate, which is a whole other, you know, kettle of fish. But what I really think it's signaling is that no matter where we have market corrections to, it's signaling the USA is not having a recession. Okay? The US labor data is is is about to bottom. the US economy is about to accelerate and what you could easily have is is bond yields going up. You know, our gains in gold start to correct a little bit and stocks start going up for the the right reasons which is growth is reacelerating. So, you know, that to me it would not be inconsistent with history. Um, you know, that would be that would be a that would be first of all that's what's in our our now cast as we call them for both GDP and inflation. So, we'll have to see. >> Yeah, I'm always worried like are we getting caught off guard? Like I'm looking at the GDXJ or or the GDX which is at all-time highs and if I look at the RSI it's massively overbought. Of course the question is now is the is this time different? A lot of uh investors I spoke to the last few days they're really worried that uh this is already you know the the top and whatever the Fed says might you know cause a massive rugpool here. Um are you worried in that regard as well? If you look at the mining stocks let's let's get a bit more granular. I mean, I I always say like picking bottoms is a very stinky business. Picking tops is even tougher than that. Um, in terms of my own life struggle, I don't want to really entertain those types of things. But, I mean, tops are processes, not points. Like, let's start with that. I mean, if you want to see a topping process in gold or gold miners, then show me a bottoming process in the dollar and the and bond yields. I mean, that's it's it's very straightforward. I mean, what's been surprising to me is that people are, you know, buying protection too early. So, again, I've screwed this up more than anybody listening to this can screw it up and publicly. So, I have eight over 8,000 timestamp positions going back to when I started HedgeI in 2008. So, if you want to look it up, you can see it. But what I do is I learn from these lessons. So, again, it's not enough to just say, "Wow, this can't continue." Especially if you're using like old wall technical things like RSIs. I mean that's not, you know, that's not what my fractal signaling process, you know, uses. I mean, we if I if I if I if it worked, I would use it, right? I mean, instead of building something that works better. So, if if something is signaling higher all-time highs like gold is and bond yields are still still signaling lower lows, then you would have thought that these things could continue, right? And that's until they don't, then I don't wake up in the morning saying anything else. I don't tell the gold price what it should or could do. I do what the signal is saying it it's doing, right? And currently the top end of my range for gold is um is up at 3715. We got close to it yesterday. It's not to say that you can't get close, right? And for those of you that got married, look, you got to the finish line. You got married. Well done. You never thought it could happen. There you go. Uh things happen in your life, right? Gold gets to the top end of your range. I mean, you you thought that, you know, Keith McCulla could never get married. Why? Well, somebody was, you know, I somebody bought into it enough to do that. I mean, anything can happen, right, guy? >> Yeah. What was the overunder on that happening, by the way? >> If you ask my uh hockey buddies, it was it was it was a surprise. All right. >> Fant Oh, that's hilarious. Um, okay. You know, we're running through topics here, but uh let's try zooming out a little bit. We're having the US and China meet in Madrid right now discussing trade deals and just trying to kiss and make up. Although China seems to be playing hard to get. Uh first I I saw German germanmanium exports being halted yet again despite uh discussions where earths are being shipped again and now just uh just today the financial times reported that China put a ban on purchasing AI chips from Nvidia. Uh another clear signal like what do you make of that and how is that impacting markets? I mean, I think the Chinese, if you're Chinese, are behaving the way that you expect somebody in their own self-interest should behave. I think what a lot of Americans in particular screw up because it's it's generally, and it's easier for you and I to say this out loud, um, because I'm Canadian, uh, but, you know, like, you know, it's it's it's a uniquely American problem to think that the rest of the world's just going to bend a knee to whatever you or your new king thinks that you should do, right? I mean, the Chinese, like, are you kidding me? Like you think a bunch of communists running the place are going to like just bend over? I mean, no. They're going to play hard ball and that's what they're doing. But in the end, like if you read a book that just came out like Apple and China, which I think is a phenomenal book that really gives you a much more uh a finer appreciation for the complexity of the relationship, the coexistence that the Chinese and the Americans need to have. Uh at particular the the executive suite level from Apple to to the Chinese Communist Party, just to use the biggest example. I I think that they're going to play hard ball on both sides of the political mics, but they're going to be playing a game of acquiescence, you know, inside. And that's what's happening. I mean, I'm long Chinese stocks uh and they've been freaking awesome, man. You think US stocks have gone up a lot? I mean, Chinese stocks have been a lot better. And I think it's because, you know, you're going to see an appreciate. You're going to see an improve. You couldn't get from a worse place from from in rate of change than where we were six months ago on China USA from a tra from a trade negotiation perspective or a rhetorical perspective or a positioning perspective. Most people that that I know institutional or individual family office investors they're way underweight China or have no position at all. I I was looking at Chinese stocks for for change today actually like BU was up 10% and what else was I looking Alibaba massive moves. Um I I first thought it was maybe because they were expecting a tariff deal or something with the US but it also has to do with Chinese stimulus. Um they're stimulating the do the economy domestically trying to drive more consumption actually one of the demands the US had. What do you make of that stimulus package? How do we put that into economic >> consumption stimulus package the Chinese are going to stimulate? you know that I mean that's what a communist is going to do when they're in an economic slowdown. Uh and and you also have huge uh a huge delta like rate of change improvement on the tick tick tock negotiations. So you get like all this like happier talk, you know, less less negative doom and gloom talk and that continues. I mean the Chinese stock market's up 4.9% in the last month. It was up again last night despite the US having a mini or at least having a small down day yesterday. Um so it's on its own path. I I think the Chinese, like I said at the outset, I mean, they're going to do what the Chinese are going to do what's best for the Chinese. Like, don't wake up in America thinking that other people in this world need to bend a knee to what you and or your president want them to do. >> No. Very, very true. And we're also biased by Western media. So, when we get filtered content over here as well, and uh I have to invite guests over that are based in Hong Kong from time to time just to get an understanding of what's actually happening on the ground. So, just to get an unbiased view. Um but Keith um moving forward and maybe until the end of the year, what should investors do now based on your models? What what's quad 3 telling you? Should we still keep buying gold, silver, platinum, or or should we look at some other asset classes maybe to make up for potential loss of traction? >> I mean, we're uh pleasantly uh long gold, silver, and platinum. Um those things I think the best of their relative gains is likely behind us as we enter October and the fourth quarter because we're going from quad three to quad two. The most important thing that we've been telling clients is that the quad count, Kai, is quad three, two, one. Really easy to remember. Just count it down. Quad three and Q3, quad two and Q4, and then Goldilocks quad one to start 2026. So in that environment, you know, gold, silver, and platinum would quite like going back to quad one. The one quad it doesn't like as much on a relative basis is quad two. Why? Because bond yields start to go up again. So that and the dollar in this case might stop going down. So, so I that's what I'm on the lookout for. Um, unfortunately, I do have to deal with the Fed meeting today on that score because it could change, you know, some of the railway tracks that our signals are on. If not, we just stay the course on the tracks that we've been on, which have been this, like I said, this is, as you know, you know, this is the best run I've had being long gold since 2011. Uh, that was like a long time ago. Like, I had a different color hair. I had a different like number of kids, you know, like I I stayed married the whole time, by the way. She stayed with me the whole time. Uh whether gold was going up or down, but the um but yes, I did get married. No, I'm not married to gold. Um you know, like I like to tell people, you know, they're just tickers. And you you should you should expect, especially if we hit the top end of my range on gold and we publish it every day and you start to see it make lower uh lower highs in the wrist range, that would be the first signal that the route that this epic unprecedented rally in gold really, you should remember that. um the best of it is behind us and if it's not then I'll just say that tomorrow it's not. Looks like today it wasn't. >> No. Fair fair enough. And that's why you put out daily newsletters. Absolutely. Keith, really really enjoyed this conversation. I could chat with you for hours. Really enjoyed this. Uh it was really love the back and forth. Um where can we send our audience if they don't know already? >> It's uh hedgei.com and we also launched hedgiassetmanagement.com. So that's hedgeiam.com. So you can check out our our new ETFs on on that front. >> Fantastic. Awesome. No, really, we'll do. We'll we'll do we'll put all the links down below as well. Keith, tremendously appreciate your time. Thanks so much for joining us and uh everybody else, thanks so much for tuning in to Sor Financially. Much appreciate you watching. How are you positioned coming in and out of this Fed meeting? Did you take some bets off the table or bets some investments, whatever you want to call them, speculations, I'm not sure what you call yourselves these days, but investor, speculator, there is a clear difference according to Rick Rule and to many others of course as well. So, let let us know down below and uh thanks so much for tuning in. If you haven't done so, hit that subscribe and like button and we much much appreciate it. Thank you so much. We'll be back with lots more. Take care out there. [Music]
GOLD: Clueless FED Pushing Stocks & Metals Higher | Keith McCullough
Summary
Transcript
We are mere hours from a Fed decision and the S&P 500 gold are still trading near record highs. What are the market expectations? What should we be bracing for and what is the data going into it? Of course, we can't affect any of that or it can't affect the Fed decision that'll be hitting us here in a few short minutes or in a few hours. But we need to figure out like what's the macro trend. A 25 basis point cut won't change the trend at all. And we need to dissect that. What is happening with the dollar? what's happening in the bond market, unemployment data, inflation, how is that all put together, and how should we as investors sort of react to all of it. How should we position until the end of the year, I've invited Keith Mccau. He's the founder of Hedgei, and I'm really looking forward to this discussion for the next 30 minutes here. Before I switch over to my guest, hit that like and subscribe button. Helps us out tremendously and I'm much much appreciated. Thank you so much for doing that. Now, Keith, it is great to welcome you back on the show. It's good to see you again. >> Yeah, good to see you, Kai. Yeah, Keith, I said it. We're mere three hours away from a Fed decision here, but I don't think it changes whatever the Fed is saying really changes the underlying trends. Uh things we're looking at unemployment, inflation data, actually quite conflicting data when when you look at it from a Fed's perspective. What what is your read uh on on on the situation right now? >> Well, generally speaking, I mean, the bond market's front running the Fed. I mean, people like to to to overhype, you know, the Fed's impact, but uh and you know, say things like don't fight the Fed. I mean, I don't fight the Fed. we front run the Fed and the bond market is our best way to do that. Bond market and currency market really are two primary signals for that. So, you know, ever since we started getting what we call quad 3 uh growth slowing US labor data, you've seen essentially our dollar signal break to lower lows, US dollar index I'm talking about, and my Fed front runner is essentially my two-year Treasury signal. That's uh beyond, you know, where it was at the September of 2024 lows. So, we're really at an interesting point. You know, as you recall last year in September, they they had a panic rate cut of 50 basis points and bond yields actually went up on the cut. So, you know, there's a lot to think about. Like I'm I'm I'm sure like you, I'm not going to change my entire asset allocation and portfolio and retirement account, you know, based on what J Pal thinks or says because of course from a from a future inflation's expectations perspective or growth for that matter, the guy doesn't have a clue. >> Uh ve very true. And uh back in September, I remember him saying that he regretted cutting so late. Do you think we'll get a similar statement in a few short hours here? >> I I mean, he's covering his ass. Let's just start with that. I mean, he's under absolute what I call max political pressure here uh by both pump and bessant to to cut by 50 basis points. The market wants to do 25 or at least that's the pricing of it all. So, if he actually goes to 50, you know, Pal's going to look like he's completely politicized and capitulated. Uh, I don't think it's quite Arthur Burns style like 1970s capitulation to Nixon, but we're getting close where, you know, irrespective of what Pal thinks, you know, in the future, you're going to be pretty close to a point in time, don't forget, where um I call him pump, but whatever Trump replaces Pal with somebody who just tells you that they're going to cut interest rates, you know, 500 or whatever, 200 basis points, 100 basis points, uh, at a clip, uh, whatever they need to say to become the head of the Fed. So there's a lot of dynamics associated with those politics. What typically happens though to the bond markets is that it will eventually go with the rates of change of both growth and inflation because again that's where the economic cycle is going irrespective of of the politics. >> You use the term quad three call or quad three like for people not familiar with the hedgei language. What do you mean by that Keith? Can you elaborate on that? >> Yeah quad 3 essentially means stagflation. It means inflation in this case inflation's reacelerating. Uh that's just an empirical fact whether or not uh people at the Fed or otherwise Fed fanboys want to call it uh inflation falling towards the target. Uh that you know that horse has left the barn. I mean we're up at uh pushing close to 3% headline inflation and our our our now cast actually has it going above 3% in the fourth quarter. We're at like 3.2% for for headline CPI. So it's going the wrong way. That's inflation accelerating while real growth in particular labor data is slowing. Now, we don't think that that's going to continue to happen in every single month. Like we actually think that the economy is going to accelerate on a real basis alongside inflation in the fourth quarter. Um so then you would you really won't have any reason for rate cuts, you know, at that point if you're actually looking at the two legs of the of the of the policy stool that they purport to care on. And of course, they care on a lot more than that, including what the president says and what the S&P 500 do. >> Would you say that the Fed is maybe focusing too much on the unemployment data and maybe the bond market to a degree as well instead of inflation data? Should we be more worried about inflation ticking much higher? >> Yeah, it's like this joke of a stool, right? I mean, you got a three-legged stool, you know, where's the S&P, where's the stock market, where's labor, and where's inflation? And for a long time, everyone's talking about inflation all of the time. And now all they want to do is talk about the slowing labor data while inflation is going back up. I mean it it it obviously, you know, from an objective or an apolitical perspective makes no sense because there's no process in that. If you're saying that you have a dual mandate, then you should be uh at a bare minimum equally weighing, you know, the risks and balances of inflation and and employment growth. Um but that's what it is. I mean, you have a lot of like actually squirrely data that came through even on the labor side. Um there was some fraud in some of the Texas jobless claims numbers. You know, I think that the labor data is as bad as it can get right now. Um, and that's what we call quad three stagflation. So, if the labor data were to improve, and I just mean sequentially from bad to less bad, and inflation continues to where we have it tracking, which is back, like I said, back towards 3.2%. Again, the Fed's not in a spot to um to to be able to ignore that. And if they do, they'll be rent, you know, they'll be who we thought they were, right? It's like Dennis Green. They are who we thought they were. Yeah, they're completely and and and completely and always politicized. >> Like how bad is the unemployment market really looking at it? 4.3%. You know, if you would have shown me that five years ago, I said, "Hey, that's great." You know, excellent employment data, almost full employment here. What Why is everybody so nervous and panicking? Is it just about the trend or are we missing something here? Well, you're I mean 50% of people hate Trump and they're they're politically incentivized to say that the labor market is is crashing and collapsing into a recession. I mean, you watch some of these yo-yo economists like Wolers or whatever, like somebody who's just like blatantly partisan, you know, when they're telling you that we're we're in a recession, labor's in a rec. I mean, of course, it's an absurdity, right? I mean, GDP we have tracking close to 3% on a quarter quarter basis. Retail sales were just reported up 5%. I mean, you have to cut the retail sales number Kai number in the growth rate in half like three times to get towards a recession. So, you know, we don't have a recession. The labor market, your point, if you just look at the level, I'm not a big fan of the levels, but if if the question is, is it a recession in the labor market? Uh, of course, it's not. And I'm not I'm not trying to, you know, say that in the K-shaped economy that America has built under both administrations because they're both um degenerate money printers and of course, you know, you know, fiscal deficit spenders. Um you know, you I'm not saying that a lot of people aren't losing in this type of economy, uh but those of us that are long of asset price inflation, and that's the most obvious inflation you could see, right? I always I always say to people, oh, you don't see inflation reacelerating. You must not have like a trading account. you must not have a retirement account because it's going vertical. Uh that's inflating. So if you're long asset price inflation, you're in a good spot. If you're in the part of America, which unfortunately 50% of Americans are, uh where you have no savings, uh and your cost of living is going back up and the Fed's telling you inflation's under control. Well, you're pissed off and that's where you get a lot of this political um yeah, I'd say even anger associated with it. >> No, absolutely. Like a bit of almost an understatement. I would I would say cuz there's a lot of confusion about the the employment data in particular. We're getting all these massive revisions as well. Um and yet like we almost lost a million jobs and I said it in another in another interview uh yesterday or the day before but the unemployment data is still at 4.3%. Um we lose a million jobs yet the percentage doesn't change. What do you make of that? Like what do you make of the data itself? Well, the MA the MA I mean Bessant was very clever in picking, you know, really picking a fight with the BLS or the Bureau of Labor Statistics. Like it's The data has been for a long time. It constantly gets revised, you know, in completely the opposite direction that that in this case the Biden administration was was speaking towards like the health of the labor market. And that's what the Biden administration, don't forget, you know, boring their brains out to hire, you know, people with taxpayer dollars. you know there was a a third of said hiring over that period u irrespective of the revisions to the downside had to do with government jobs right so it's there there's so much in the labor data that it's hard to call it anything else right I think that what politicians are going to do in particular you know this administration and and the Fed you know folding their tent so to speak to them is lean on the data I mean it's going to be what it's going to be but if you if you look at anything uh in the you in particular in small business, you're seeing, you know, resurgence in small business confidence. You're seeing a lot of positive things that you should see if we're right. And we think the US economy is about to start to reacelerate from here, uh, from October until, you know, let's say at least till the second quarter of next year. And that's where the labor data is going to accelerate in rate of change terms. You're still going to have a relatively low, by all historical measures unemployment rate. for for a lack of alternatives. Like we do have to trust um official data because I'm not going around from house to house and asking questions every day. Okay. Uh it's just not possible. Like I try to read the news and I'm trying to make sense of it, but yet again I'm not a data collector and I I don't run my own data and I don't have thousands of employees to help me collect it. How do we establish trust again? Like how do we figure out what is actually real and what isn't? Uh Keith, what do you do? >> Part of why the data was fake was because they were asking there's this huge lag on respondents uh versus the actual answers. And you know, they were asking people by facts. Like who the hell uses a fax or a rotary phone at this point, right? I mean, um so it's it's like a dinosaur. Um what I do think is that I mean if you we have a a lot of analysts, software engineers, data scientists, etc. And we have a lot more power like with AI right now to find different time series of data, you know, whether they be labor data, inflation data, etc., etc. And you can, you know, there's there's plenty um there's plenty that the machine can do for you to track this data. And I think the bond market's very much in tune with that. So we, again, we had a slowdown in in in the labor data that probably is as bad as it could get in the month of September. and on everything that we track on leading indicators that should reacelerate positively in October. If it doesn't, we'll say so and we'll just go with that. Um because again, we're data dependent. >> Let's talk about the bond market. You use the two-year as a Treasury signal here um as well. And we've had guests on that said, well, the Fed funds rate should be where the two-year is right now, roughly 3.5%. Uh in in terms of yield, like what do you make of that statement? And should the Fed cut almost 100 basis points to get to that level? I probably make about as much of it as if my you know my my fourth grader asks asked me if the cow should jump over the moon. I mean I I don't I don't care. I mean yeah think about the things people in on Wall Street get paid to to say. I mean well I think that it should be right at the target. I mean okay um that's it's just not it's irrelevant. I mean it's not the way the world works when we try to answer these questions. People what they should really do is start to look at the world the way that the world is. the world much like a fractal pattern that explains the contour of an ocean line or the edges of a leaf. Uh and economies you know are live they're living breathing organisms that are constantly in flux. It's a complex system. There are plenty of factors that affect it. If man comes and says look I want to bend and smooth the contour of that ocean line with this super secret equation that's like really not that smart uh about where the Fed funds rate should be relative to this rate and that rate. you're going to screw it up. That's what history tells you. You know, you know, these are we're looking for man-made solutions to some man-made problems to an absolute natural uh order of things that doesn't care. Like, so to me, I just do what bond yields are doing. I do what the currency market's doing. I do what my signals are doing is what I mean by that. And it saves me from having to think about all these things that people get paid. Uh, you know, God, God help us all. But I mean, you know, some people some people are paying for all these new newsletters for these thoughts and ideas on on the way the world could and should be. I I don't waste my time on that. >> Oh, it must be nice to take emotion out of it, eh? Uh it's it's so difficult. Everybody's got opinions, of course, and in this day and age, everybody's very happy to share them regardless of format, right? >> Well, people are very happy to get paid for them, too, right? I mean, uh and if you're willing to pay for somebody's opinion, that doesn't mean that it's going to pay out in your uh in your accounts, right? Right. I mean, like I'm a big P&L guy. Uh because unlike a lot of newsletter people, I I time stamp every position and people can see them every day. So I don't have the luxury of just, you know, opining uh for money. Uh if you want that, you can go on Fox or MSNBC. I guess >> Absolutely. And I haven't been invited yet, so that's probably says a lot. Um but um you've been >> It appears that you and I aren't wearing the right outfits for those shows, right? >> Probably. T-shirts aren't really on vogue there. So, >> I think I think Joe Rogan would like our style a little bit. As as my uh teenage daughter would say, they'd like your sty, you know, you got good sty. >> Your sty slaps, you know. Isn't that something? That was horrible. That was embarrassing almost. Um that was absolutely Oh, ridiculous. No. Um Keith, back on topic. We talked bond market here real quick, but you also touched on the dollar sort of giving away where things are headed. Um the Dixie seem to be breaking down. Uh we're now at 96 something, I forgot, 96.5 or something as we speak here. Um trending lower. Um what do you make of that trend uh in in the in the dollar versus the other currencies now? >> Well, I when I look at markets, I I I I don't believe that people can bend in smooth gravity. As I said, I don't think that policy makers can do that. Obviously, uh I believe in mean reversion, you know, like I believe in in in things like going back to the prior lows, revisiting those lows, making higher all-time highs in gold's case. You know, those two things actually when you look at the Dixie or the dollar index against gold are one and the same thing. If you go back 180 days on the correlation, you can go to 90 days and it's, you know, a little less obvious, but on a trending basis, like three months or more is how we define a trend at hedgei. Um, you know, the inverse correlation between the US dollar index and gold is 95%. So 95% of the time they're doing the opposite, right? So what does that mean? I mean, one, you've already blown through uh the July lows for the dollar index. Again, the dollar started going down after the stock market crashed this year. A lot of people forget that. I mean, we had that call that the market was going to crash and then recover without a recession. It's just totally different way to look at it. That's why I have so many, you know, so many friends out there that love love us for calling that, but not really. But it was a hard one for people to swallow because they're like, "Okay, market crashes, Fed go do doubbish. They got to devalue the dollar because both Republicans and Democrats, that's all they know. It's the only playbook they have." And that's what they did. So, you've seen the dollar started to go down, down, down, down, down. Now, it's, you know, since really February, and now it's violating those lower lows and gold's ripping to all-time highs. So, you know, in a way you like it's it's the perverse relationship that you and I have with asset prices in particular if you're as long as physical and paper gold that I have uh or gold mining stocks for that matter is that I actually need the Federal Reserve to continue to it up, you know, like like like absolutely burn the purchasing power of the American people for me to keep getting paid, you know, these these epic there there's no other You and I have been doing this for a long time. I've been trading gold in 20 for 25 years. I've never realized these notional gains in gold ever and I actually need the government to keep screwing up for that to continue. >> No, 100%. I've been saying it and we track financing data in the mining space as well here at Sore Financial and one one thing we've noticed the second the Fed started raising rates back in March and in May 2022, the wallets just went shut and that was it. The financing window closed and now it's wide open. uh it is wide open and uh the sector is doing phenomenally well. So we're closely tied to the hip. That's why like we look at this Fed meeting and I mentioned to you before hitting the record but I might be overhyping this this announcement here that's going to hit us in a couple of hours. Um am I am I putting too much emphasis on it perhaps in in the grand scheme of things. Keith >> in in this society how could we not you know like we're human and and and we're on a live wire here. So, of course, you're going to talk about the thing that's, you know, what I call these are macro tourist events, right? Every, you know, Tom, Dick, and Harry and their dog and their hairy cat. It, you know, has an opinion on this. Like you said, you just let them talk. They're going to have, they have no models, they have no signals, they have no track record, but they'll tell you that this is a big deal, right? And it is a big deal. Ask pump. It's a super tremendously big deal and he wants a big and tremendously big cut. I mean there there's so many reasons why there's so many eyes on that but that doesn't mean that the market moves have to be dramatic right and and and what you see is actually into all these macro tourist events when it comes here's another perverse reality of the stock market is that which we're long like we're long cues we're not going to be long boring spy Q's are much better uh we're long the Russell 2000 which is even better than that in the last three months um but you know what what happens into all these macro tourist events whether they CPI days, Fed meetings, Nvidia earnings, is that due to the, you know, I don't if you want to get into the weeds on this market structure of the US equity options market, you know, there is a an epic level of hedging, panic put buying the day or the two days before the event. And that, as we like to say, that hedged pot doesn't boil. So what happens is you get the event, it's a nothingness in terms of end of the world like a lot of people are trying to protect against and then the market just rips new highs again because you have to unwind all the hedges. So um that again that's why we're making a lot of money long stocks and gold. Um and it it's been you know quite a thing to watch. I mean I I it's it's one of those things like you're watching it like it's I can't believe it's still happening but it's happening at a faster rate. >> It's like a cold spring. Absolutely. I've been having discussions with a colleague here of mine and uh he made me ultra nervous cuz he's buying puts left, right, and center yesterday going going into this, right? And maybe he actually follows you. So, >> well, I mean, I wasn't buying puts into the event. It's like people, you know, this is like it's an amazing thing like what what you want to know are is who who is buying puts on the S&P 500 in the middle of February, >> right? Okay. You know, who is still long gold in both periods? Quad three stagflation now and a quad four crash. quad fours when you know don't forget that inflation went down for those three months and and people screw that up too. They're like well I hope that the Fed's right and we get towards our target on inflation. If inflation goes down the assets you own are going to disinflate. Okay? Like there there's so much to be taught to people. Um what I love is the participation though. I don't want to hand out participation trophies but I love that more people are participating than ever before. have opinions, have positions because, you know, we want to play against that. >> Yeah. No, AB. Absolutely. Like the question is now like what what is priced in in this market right now? I'm looking at the S&P at 6,600, gold at close to 36 or 3,700 almost. Like what what are we pricing in? It almost feels like a bit of a redundant question here. Um or like rhetorical almost, but what what's possible? It feels like we're way ahead of ourselves. Uh, is is that a realistic assumption or like is there much more to come? >> No, it's not an that's not an inhumane feeling when when the NASDAQ makes nine straight all-time highs. I mean, which hasn't happened in two years. It's not a it's not an inhumane feeling uh when the S&P hasn't had more than a 2% decline in over a 100 trading days. I mean, this is this is what people start to think and feel because it's natural. Right now, the the better question for me, at least in my own mind, is isn't just about my feelings about that because they're pretty obvious. They're in your account, too, if you're long them, which is the other thing. Some people just don't don't like that because they they didn't participate, which is a whole other, you know, kettle of fish. But what I really think it's signaling is that no matter where we have market corrections to, it's signaling the USA is not having a recession. Okay? The US labor data is is is about to bottom. the US economy is about to accelerate and what you could easily have is is bond yields going up. You know, our gains in gold start to correct a little bit and stocks start going up for the the right reasons which is growth is reacelerating. So, you know, that to me it would not be inconsistent with history. Um, you know, that would be that would be a that would be first of all that's what's in our our now cast as we call them for both GDP and inflation. So, we'll have to see. >> Yeah, I'm always worried like are we getting caught off guard? Like I'm looking at the GDXJ or or the GDX which is at all-time highs and if I look at the RSI it's massively overbought. Of course the question is now is the is this time different? A lot of uh investors I spoke to the last few days they're really worried that uh this is already you know the the top and whatever the Fed says might you know cause a massive rugpool here. Um are you worried in that regard as well? If you look at the mining stocks let's let's get a bit more granular. I mean, I I always say like picking bottoms is a very stinky business. Picking tops is even tougher than that. Um, in terms of my own life struggle, I don't want to really entertain those types of things. But, I mean, tops are processes, not points. Like, let's start with that. I mean, if you want to see a topping process in gold or gold miners, then show me a bottoming process in the dollar and the and bond yields. I mean, that's it's it's very straightforward. I mean, what's been surprising to me is that people are, you know, buying protection too early. So, again, I've screwed this up more than anybody listening to this can screw it up and publicly. So, I have eight over 8,000 timestamp positions going back to when I started HedgeI in 2008. So, if you want to look it up, you can see it. But what I do is I learn from these lessons. So, again, it's not enough to just say, "Wow, this can't continue." Especially if you're using like old wall technical things like RSIs. I mean that's not, you know, that's not what my fractal signaling process, you know, uses. I mean, we if I if I if I if it worked, I would use it, right? I mean, instead of building something that works better. So, if if something is signaling higher all-time highs like gold is and bond yields are still still signaling lower lows, then you would have thought that these things could continue, right? And that's until they don't, then I don't wake up in the morning saying anything else. I don't tell the gold price what it should or could do. I do what the signal is saying it it's doing, right? And currently the top end of my range for gold is um is up at 3715. We got close to it yesterday. It's not to say that you can't get close, right? And for those of you that got married, look, you got to the finish line. You got married. Well done. You never thought it could happen. There you go. Uh things happen in your life, right? Gold gets to the top end of your range. I mean, you you thought that, you know, Keith McCulla could never get married. Why? Well, somebody was, you know, I somebody bought into it enough to do that. I mean, anything can happen, right, guy? >> Yeah. What was the overunder on that happening, by the way? >> If you ask my uh hockey buddies, it was it was it was a surprise. All right. >> Fant Oh, that's hilarious. Um, okay. You know, we're running through topics here, but uh let's try zooming out a little bit. We're having the US and China meet in Madrid right now discussing trade deals and just trying to kiss and make up. Although China seems to be playing hard to get. Uh first I I saw German germanmanium exports being halted yet again despite uh discussions where earths are being shipped again and now just uh just today the financial times reported that China put a ban on purchasing AI chips from Nvidia. Uh another clear signal like what do you make of that and how is that impacting markets? I mean, I think the Chinese, if you're Chinese, are behaving the way that you expect somebody in their own self-interest should behave. I think what a lot of Americans in particular screw up because it's it's generally, and it's easier for you and I to say this out loud, um, because I'm Canadian, uh, but, you know, like, you know, it's it's it's a uniquely American problem to think that the rest of the world's just going to bend a knee to whatever you or your new king thinks that you should do, right? I mean, the Chinese, like, are you kidding me? Like you think a bunch of communists running the place are going to like just bend over? I mean, no. They're going to play hard ball and that's what they're doing. But in the end, like if you read a book that just came out like Apple and China, which I think is a phenomenal book that really gives you a much more uh a finer appreciation for the complexity of the relationship, the coexistence that the Chinese and the Americans need to have. Uh at particular the the executive suite level from Apple to to the Chinese Communist Party, just to use the biggest example. I I think that they're going to play hard ball on both sides of the political mics, but they're going to be playing a game of acquiescence, you know, inside. And that's what's happening. I mean, I'm long Chinese stocks uh and they've been freaking awesome, man. You think US stocks have gone up a lot? I mean, Chinese stocks have been a lot better. And I think it's because, you know, you're going to see an appreciate. You're going to see an improve. You couldn't get from a worse place from from in rate of change than where we were six months ago on China USA from a tra from a trade negotiation perspective or a rhetorical perspective or a positioning perspective. Most people that that I know institutional or individual family office investors they're way underweight China or have no position at all. I I was looking at Chinese stocks for for change today actually like BU was up 10% and what else was I looking Alibaba massive moves. Um I I first thought it was maybe because they were expecting a tariff deal or something with the US but it also has to do with Chinese stimulus. Um they're stimulating the do the economy domestically trying to drive more consumption actually one of the demands the US had. What do you make of that stimulus package? How do we put that into economic >> consumption stimulus package the Chinese are going to stimulate? you know that I mean that's what a communist is going to do when they're in an economic slowdown. Uh and and you also have huge uh a huge delta like rate of change improvement on the tick tick tock negotiations. So you get like all this like happier talk, you know, less less negative doom and gloom talk and that continues. I mean the Chinese stock market's up 4.9% in the last month. It was up again last night despite the US having a mini or at least having a small down day yesterday. Um so it's on its own path. I I think the Chinese, like I said at the outset, I mean, they're going to do what the Chinese are going to do what's best for the Chinese. Like, don't wake up in America thinking that other people in this world need to bend a knee to what you and or your president want them to do. >> No. Very, very true. And we're also biased by Western media. So, when we get filtered content over here as well, and uh I have to invite guests over that are based in Hong Kong from time to time just to get an understanding of what's actually happening on the ground. So, just to get an unbiased view. Um but Keith um moving forward and maybe until the end of the year, what should investors do now based on your models? What what's quad 3 telling you? Should we still keep buying gold, silver, platinum, or or should we look at some other asset classes maybe to make up for potential loss of traction? >> I mean, we're uh pleasantly uh long gold, silver, and platinum. Um those things I think the best of their relative gains is likely behind us as we enter October and the fourth quarter because we're going from quad three to quad two. The most important thing that we've been telling clients is that the quad count, Kai, is quad three, two, one. Really easy to remember. Just count it down. Quad three and Q3, quad two and Q4, and then Goldilocks quad one to start 2026. So in that environment, you know, gold, silver, and platinum would quite like going back to quad one. The one quad it doesn't like as much on a relative basis is quad two. Why? Because bond yields start to go up again. So that and the dollar in this case might stop going down. So, so I that's what I'm on the lookout for. Um, unfortunately, I do have to deal with the Fed meeting today on that score because it could change, you know, some of the railway tracks that our signals are on. If not, we just stay the course on the tracks that we've been on, which have been this, like I said, this is, as you know, you know, this is the best run I've had being long gold since 2011. Uh, that was like a long time ago. Like, I had a different color hair. I had a different like number of kids, you know, like I I stayed married the whole time, by the way. She stayed with me the whole time. Uh whether gold was going up or down, but the um but yes, I did get married. No, I'm not married to gold. Um you know, like I like to tell people, you know, they're just tickers. And you you should you should expect, especially if we hit the top end of my range on gold and we publish it every day and you start to see it make lower uh lower highs in the wrist range, that would be the first signal that the route that this epic unprecedented rally in gold really, you should remember that. um the best of it is behind us and if it's not then I'll just say that tomorrow it's not. Looks like today it wasn't. >> No. Fair fair enough. And that's why you put out daily newsletters. Absolutely. Keith, really really enjoyed this conversation. I could chat with you for hours. Really enjoyed this. Uh it was really love the back and forth. Um where can we send our audience if they don't know already? >> It's uh hedgei.com and we also launched hedgiassetmanagement.com. So that's hedgeiam.com. So you can check out our our new ETFs on on that front. >> Fantastic. Awesome. No, really, we'll do. We'll we'll do we'll put all the links down below as well. Keith, tremendously appreciate your time. Thanks so much for joining us and uh everybody else, thanks so much for tuning in to Sor Financially. Much appreciate you watching. How are you positioned coming in and out of this Fed meeting? Did you take some bets off the table or bets some investments, whatever you want to call them, speculations, I'm not sure what you call yourselves these days, but investor, speculator, there is a clear difference according to Rick Rule and to many others of course as well. So, let let us know down below and uh thanks so much for tuning in. If you haven't done so, hit that subscribe and like button and we much much appreciate it. Thank you so much. We'll be back with lots more. Take care out there. [Music]