How the Fed Transfers Wealth From the Many to the Few

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Nothing in this program should be considered investment advice. It is for educational purposes only. Please hit pause and read this disclaimer in full. I'm actually hearing for the first time in a while that some of the the baby boomers are starting to actually wake up and really realize kind of how blessed they've been in the situation, the economic environment they've been in. [Music] Hello everyone. Welcome to this episode of FinanceU. I am your host Chris Martinson and uh today we're going to be talking about inflation, crazy markets and gold and what it's possibly telling us. Also just how stretched these markets are. And we're doing all of this uh looks like recording this on September 24th, 2025. So you'll be seeing this on the 25th and it's been so crazy. So Paul Ker of Kiker Wealth Management, welcome back, Paul. >> Good to see you this morning, Chris. >> Likewise. So, last time we recorded a little bit later in the day because we're waiting for the Fed announcement and they cut rates. Um, and of course it's reading the tea leaves of the oracle because they say things and did they use this word and they it's all junk. Um, you know, we saw that they were cutting rates into the m of all-time highs and all kinds of things, right? Mhm. >> Um, and so I have to con I think we should start here then because a whole week has passed and now we get to listen to Jerome Powell say stuff like this. >> Core PCE prices rose 2.9% last month, also higher than a year ago. Goods prices after falling last year are driving the pickup inflation. incoming data and surveys suggest that those price increases largely reflect higher tariffs rather than broader price pressures. Whoa. Last week he said tariffs weren't doing it. Now he says tariffs are driving the price pressures. Jerome, I have another suggestion. It's your easy money policies and all the money printing that actually drive prices higher. They were like, "Oh, it must be the tariffs." Like, no, no, it's M2 expanded 7.9% last year, big guy. Uh, so they throw all this money in and then they throw smoke up and gaslight us. I don't know. That's how I see it. Paul, what do you see? >> No, I agree with it completely. I mean, this he's trying to deflect blame on somebody else before, you know, while he can and while the media is going to support him behind I don't know if it was in that same press conference, but let's see here. Let me see if I can find the note uh that he made. In that same press conference, did he make the comment, "We do look at overall financial conditions and we ask ourselves whether our policies are affecting financial conditions in a way that is what we're trying to achieve." And then he goes on to say, "But you're right." I guess answering the question, by many measures, for example, equity prices are fairly highly valued. You think? I mean, it's just ridiculous. >> Highly or just highly valued? >> Yeah, fairly highly valued. So yeah, just a >> record or recorder. We'll show some of those in a minute if it's >> record high valued. >> Oh my gosh. Just narrative and lack of truth. That's all they want us to hear. >> Yep. I I'm convinced, Paul, that there's one thing and one thing only that Drone Powell actually cares about, and it's making sure that we have the largest and most ridiculous and unfair wealth gap ever in history. On September 20th, Sen Henrik writing, "New numbers just dropped. 52 trillion of net worth for the top 1% that's 1.3 million households and a combined 4 trillion of net worth for the bottom 50% which is 66 million households. Obviously as we can see here this has been getting worse. This is the great financial crisis and this has been printing printing printing printing a super printathon and then they had they they were scared of this little hiccup because this brought us into October of 2023 and they got scared and they they freaked out and they did that again. That's what the Fed cares about. That's what Jerome Powell's legacy is. That's what they do. They print money so that the top 1% can just get wealthier and wealthier and wealthier, and they don't care at all about the bottom 50%. Let me just put it out there. >> No, I agree with you 100%. I mean, just judge them by the fruit of their actions. That's what we have to do. Forget what they say. Judge them by the fruit of their actions. And that right there is evidence of the fruit uh that they know what they're doing. You cannot tell me that they don't know what they're doing. And and you know, sometimes I wonder if they enjoy the misery they're bringing to the average individual, but let's give them the benefit of the doubt. Let's just say they don't necessarily enjoy it, but they're intellectually elite and they surround themselves by their buddies that are so excited about their net worths going up and they're so detached from the average individual that they don't ever get around the peasants from their point of view. >> Well, let me let me just go back to this real quick. I I know I'm a little dark, but I couldn't help it. >> No, I'm with you. So So this this right here, this is why young people are going to vote for Mami in New York City and other people like him, socialists, right? Because they say, "Listen, maybe I don't have better answers, but I can tell you I'm I'm going to do something different than this. This leaves no economic oxygen for the next generation to come along. It concentrates it in the 1%'s hands." And this is something that the Federal Reserve never had a mandate. The the 1913 Federal Reserve Act never said the Fed has the right and the obligation to make sure that one class of people is favored over another. They were supposed to be here for the general prosperity of this country. The reason we're so awesome as a country is because we have a middle class. This is the Federal Reserve destroying the middle class. It's it's hinged on this really weird idea that the 1% are actually all that and a bag of sliced bread. They're the ones who actually create all the prosperity. No, it's not. We our prosperity comes from having a broad and stable middle class. And by the way, this I'll I'll chase back to Plutarch 2500 years ago. Smart guy said the oldest and most fatal ailment of all republics is a gap between the rich and the poor. >> Somebody is driving a gap between the rich and the poor or the super welloff and the less welloff depending on how you look at this. But that creates an unstable society and I think we're seeing that right. You see a fractured society. People are starting to get angry. They don't understand why things aren't working. And I I it breaks my heart, Paul. I see all these young people on on Twitter, on TikTok, you know, posting just how hard it is. Can't leave the parents basement, one paycheck away from a disaster, just mysteriously rising prices for everything. Insurance, property, taxes, you name it. We covered that last week. That's none of that's by accident. So that that's I guess that's you feel the I got a little energy in my voice. It's because what I really don't like is this guy gets on there and tries to pretend like it's just this mysterious disconnected thing. Oh, PCE prices are up a little from last year and he shrugs. No shrug. It's policy. >> Yeah. >> Own it. Jerome, say we're really proud of the fact that we have fictitiously and fraudulently printed up $20 trillion and we've handed it mainly to one out of a hundred people. >> And they're continuing to do more of the same. everything that they're doing is just continuing to do more of the same for whatever reason. You know, justify it however they can. Well, we've got the midterm elections coming up. So, we need to do there's always going to be >> Yeah, there's always going to be a justification for doing what they're doing. >> Um, you know, and the road to hell's paved with good intentions if I if I'm quoting that correctly. >> But it's just frustrating. And but but I do I do believe that there are a few people >> there's subsets of the society that are starting to understand this. They don't know what to do about it yet. >> They're starting to feel some fear from it. And and I'm actually hearing for the first time in a while that some of the the baby boomers are starting to actually wake up and really realize kind of how blessed they've been in the situation, the economic environment they've been in. You know, as as we've been articulating though, I mean, it's all fun and games on the way up, gets a little rough on the way down, right? So, the boomers too are have to understand that that we are just one rug pull away from these markets really cratering potentially. >> Yes. >> And I say that just as a matter of historical record because right now, congrats. Yay to us. Uh they they finally got the Schiller PE ratio over 40 last week. So only twice in history has it ever been above 40. >> And that's a great tweet by the great martyrs because he's right. We are a part of history and and this is going to be discussed in the history books for quite some time. >> Yep. >> Of what not to do. >> Right. So for those listening, a price earnings ratio. This is across the broad market and it and it's asking the question, what's the price we're paying for stocks today compared to their earnings? And the answer is you would have to wait 40 years for companies that you're investing in and through your passive index, you buy the S&P, you buy whatever, um, you would have to wait 40 years for them just to earn the money that you put into their stock price to for them to earn that back. Now, they're not going to give that to you, right? If they paid 100% dividends on on all earnings, it would take 40 years. That's not happening, right? But >> No. >> No. >> Yeah. You are part of history, writes the great Marty. Yeah, you are. That's that's where that that's >> enjoy it as best you can. Now, uh I've got a chart to show. It'll be hard to see in the way that I've got it laid out, but I'll talk everybody through it. This is this is this is just to put it in perspective, okay? If it's not different this time. So, what I'm going to share here is the S&P 500. The black line right here is the S&P 500 going back to 1924. The red dotted line is the price earnings ratio of 20. Now, historically, that is considered overvalued. So, the best way I want to explain this is let's just pick something that everybody can understand. >> Mhm. >> So, this blue line is considered fair value. So, let's assume that that fair line uh the fair value line price range ratio of 15 is a house that you could build for 500,000. Okay? So, that's just so so let's just take that in consideration because most people can understand this. I can build a home for 500,000 or I can go pay 1.2 million for it. Now, if you have enough money and now these aren't exact ratios, but let's just say that's the case. You know, up here the S&P 500, you know, what are we 6600 or so? I've got my contacts on and I can't see that really good. So, just say 6,500. Now, just get to back to fair value. you're talking about 4500 on the S&P to get back uh excuse me overvalued uh 4500 on the S&P to get back to fair value. You're talking about 3,200. That's a 50% decline just to get back to fair value. Okay? And if we were to get back to undervalued like we did in the 70s and stayed there for a while like we did during the Great Depression, that's 2100 on the S&P. Now, how many people actually believe that that can happen? But it has happened in the past, right? We were overvalued in the 1960s. You had the nifty50 that got us up there. Now, we didn't get as overvalued as we are right now, but you had this massive decline in the face of inflation. Market gets undervalued. So, that that just puts into perspective. So, the question is at what point do things change? Now, I know it's not a good analogy cuz you you you can't for the housing. But the reality is, if you've got enough money and you can waste it, sure, go pay 1.2 million for a house that you can buy build for 500,000. On the other hand, if we get undervalued, why would you build a house for 500,000 if you could buy it for 250? So, this is a very dangerous market environment where we have peak euphoria. And the question is, you can see this cycles throughout time. you know, bad things happen. People aren't as excited. They're not as excited over equities. You know, you get up here and then you go through these booms and and you get through for whatever reason and then it resets itself and it takes some time. The difference is is we had a chance in 2000 to let this normalize. We had a chance in 2008 to let this normalize. But what they did was, hey, low interest rates to try to fuel housing to make up for the internet bubble popping. Well, that worked for a while and then that came apart and now they've just printed printed printed to the point that we have the everything bubble. I mean, there's only a few places that you can you can hide if you just want to park something on the shelf, energy, emerging markets, commodities. But you're really going to have to walk the path less traveled to be able to to maintain that path and understand with conviction why you're doing it. Because this is just ridiculous how how overvalued the markets are and how much euphoria is out there in fear of missing out for the average individual that just can't imagine a different type of environment because of our mental weaknesses of hindsight bias. >> Well, and and to be fair, um the Fed has been rescuing and printing and rescuing and printing because they had a theory. So, let me take their their side of the argument. Um, often the other side goes like this. Well, Chris, you know, if the Fed hadn't sort of bailed out all of Wall Street in 2009, uh, think how bad things would have been, which I always hate that argument, Paul, because it's sort of like a proven negative. You know, you can't, right? I'm like, how bad could it have been? We would have lost Goldman in City. Okay, I would have shrugged. Nothing bad would have happened to me, right? We'd have been fine. >> We'd have skated on, maybe got got some better banks. I don't know. Um but they they take that as an argument. And so so then the Fed made this argument. They said, "Look, we prove that we could rescue the economy by inflating asset prices." So they've gotten themselves sort of wrapped around this idea that the way you get past trouble is you inflate asset prices. And what they failed to observe was that when you do that, you are preferentially rewarding one set of people and a very tiny crew at that. And you're preferentially doing that by stealing from all the rest of the bottom, right? That wealth didn't just magically create. What happened was that's real purchasing power. It's an accounting identity. Where did it come from? You don't manufacture purchasing power out of thin air. You have to take it from somewhere. Well, they printed it up, stole it from all of our bank accounts. We know that is, you know, $7 a pound ground beef. We know that is $500 a month, you know, insurance bills for our 16-year-olds. We know that is, you know, $4 a dozen eggs. Whatever the story is, that's where it came from. But that was the Fed. They they they had this crazy idea and I just wish we had some sort of political check and balance. They said, "Hey, we're going to run this massive social experiment because we think it's the right thing to do." And I'm like, "Did I vote for that? Did you? If we don't like how it turned out, do we vote these people out of office? Like, what do we do? Can we audit your books at least?" You can't do any of that. And this was, to be clear, this looks like um a a monetary or a wealth experiment. This is a sociological experiment conducted by people who know not what they do >> and could care seem to could care less about the consequences >> and could care less >> because the red line is 50% of the population, right? That everything that they have to pay for in the interim period. They don't have a massive amount of discretionary income continues to go up, which is eating in their discretionary income. And the things that they're marketed to that that are the American dream continue to get more expensive and more expensive and more expensive. I mean, I was talking to somebody the other day, you know, just doing a little bit of counseling, just try to help them, a little bit of volunteer work and and I'm going through their budget and they finally finally year ago, I said, "Look, the first thing you need to do is give an emergency fund. They have to buy cheaper cars because cars are so expensive with higher miles." And you know, corporate America doesn't make things to last anymore, right? They they I swear they build in creative destruction for extra profits. car gets about 130,000 miles, they bought it at 80, finally got the thing paid off, got five, $6,000 saved up, transmission goes out. Like, there's just not enough margin for error for the average individual to be even even be able to save enough money or 50% of the population for the average for those to be able to save enough to be able to get in a position to put a down payment on a home. And because they're carrying higher credit card balances and it it's just this environment where all of these policies continue to make it worse and worse and worse and worse. And if they really want what's best for the average individual, stop all of this intervention. Let some deflation occur. Yes, your major firms that have that have levered themselves to the hilt are going to collapse, but then there's going to be those that will build up around them and and offer better products, better service at better prices. and and equalize, you know, that that wealth gap that's there. But they're not going to do it. They're just not if they can help it. >> If I extend this to say an industry like um oh, universities. So, universities do a really too expensive job and they've layered themselves up with administration expenses and reasons, but they're doing a objectively a poor job some of them educating their students and they push all the risk to the students. here you take a quarter million in loans out and uh objectively I would like to see those universities fail and brand new ones spring up because I don't think the reformable at leings are are fine but I mean the people like they've got a culture but that same culture of of ineffectiveness or even counterproductivity could could infest anything GM it could be a a building company doesn't matter the point is is that you need that what Joseph Shumpeter called that creative destruction every so often you have to let the bad stuff die away. It's called the natural cycle. Can you imagine if nothing ever died, right? >> Right. >> Yeah. It's just not how nature works. It's not how God intended, I don't think. So, so, but that's what the Fed has been doing, just for stalling, forestalling, printing, rescuing stick saves, you know, of the markets. And, and on that front, Paul, um, so I I showed this thing from Sven Henrik years ago because I' I've seen manipulation in the markets for a long time, right? I know that honest price discovery is not happening. And I could show you hundreds of examples in commodities markets and here and there. But >> um he used to he wasn't unpolite about it. There's some people who are pretty saucy and say, you know, oh, you're just bitter because you're wrong. And I'm like, no, no, there's I'm I can show you this is not how markets behave. This is how markets. Anyway, but he was a little dismissive for a while. I would like to just point out that I would like to welcome Sven officially to my side of the story >> where he said >> just the other day he said Powell better save this today. That's uh that's the Dow Jones Industrial Average. You better save this today or it's risking a gravestone dogee. Um so we got a rising wedge here which is a bad sign. the these often resolve terribly to the downside and there's this gravestone dogee would be if I know this will be hard for some people to see but it's a it's a big point up that sort of failed back and that often is a kind of a a candle you'll see in this candlestick chart at the end of a big rising wedge. I mean that that's like from a technical standpoint he's he sees uh this thing look technically looks a little weak potentially and uh so he said pal better save this today and I call it a stick save um because those are the ball you know it's like it's everything's sort of selling off and then it just goes the other direction in a single one minute candle just like like no you know like Gandalf was standing there thou shalt not pass but I I I think that you know I didn't know what to title this one today. Um, but I'm having a harder and harder time sort of believing in these markets, right? And I don't want to have to believe in anything, right? I would rather be able to see a good investment, calculate why it's a good risk, understand what the forces are that are moving the prices hither and yan. And none of this stuff really makes sense at this point to me. You know, it's very hard to make sense generally speaking. Well, I mean, that's what happens when you have the the euphoria. We look back through history. Gosh, I wish I could had swapped out my and put my bubble picture back there. But you look back through history in the tulips, it's always clear in hindsight. But when that euphoria takes over and like Sven Hendrick stated a while ago, you know, why does the market keep going up? Because people people keep buying because it's going up. And they keep buying convincing themselves that it's going to ever, you know, continue to go higher. And there are few that are playing the game by the rules that are forced upon us and recognizing, hey, you have to have some exposure at this point. And you pray that your tools are going to give you the ability to step out before you get that big vacuum down. >> Mhm. >> But, you know, once emotions take over and fundamentals are no longer u important, not not only are they not important, but they can cause you to underperform in the in the short period if you're if you're not adapting to the environment that's there. you know, that can last longer than than than anybody can be patient. And I think it was um Jesse Livermore that stated the market, maybe it wasn't Jesse Livermore, it was somebody back in the 20s said the market can stay irrational longer than you can stay solvent if you're betting against it. And this has crushed most of your short sellers out there. there. It's just, you know, you look at the VIX, uh, there's crazy opportunities when it reverts to the mean, but it's it's like stepping in front of a freight train that's running at you because it's hard to stay in that because you're just losing so much capital in the short run. But, I mean, but but back in Jesse Liverour's time, right, those were real humans on the floor shouting and yelling at each other with fistfuls of paper and scribbled stuff and pencil. Today 90 plus% of the trading as I understand it is just done by machines. I don't know that they have emotions. You say oh Chris humans programmed them. No humans who were very mathematically oriented gave them tolerances parameters signals and things and so they just trade off of that right. Um >> I'm not sure except you know sort of at the individual investor level we're all subject to our emotions but I'm not sure if the markets are driven by them anymore. I think we're responding to them emotionally, but the markets look algorithmic at this point to me more than anything. >> Well, that's a really good perspective, Chris. I mean, it it is. I'm seeing the emotions from what the average retail individual is having to face. You know, if you're educated, then then you're you're you know, you've been terrified. You know, I've talked to many people. It's like, look, they've sat on the sidelines for seven, eight, nine, 10 years because it doesn't make sense to them. and they haven't developed the tools to be able to play the game by the rules that are forced upon them. And then you've got the average individual out there that's seeing their cost of living going up. They're not educated of how expensive the market is. All they're listening to is the, you know, um u the financial porn media that's just telling them, hey, you know, this is going to last forever. The Fed's going to bail us out. They've got Trump saying, don't be a panicking. you know, they put their trust in these individuals to be able to keep this game going and they don't really understand how risky the the foundation of this market is and they're just feeling left out. They're they're watching other people around them that seem to be living these lifestyles that are higher than theirs and they're they're being sucked into this this upward move without any realization of the risk that's under the surface. And the bad thing is they're going to be hurt really bad if it's not completely different this time. And you're going to have to break all of the historical textbooks and and lessons of the past. I mean, if it is different this time, then every lesson that we've learned in the past is null and void at this point. And I I you know, computers are still built by humans. They may be emotional, but they're making adaptations to chase this market ever quicker and ever quicker and ever quicker. and and you know it's a complex system. Cycles still exist and at some point this game's going to be over. We just don't know when it is. >> Well, on that front, um, as you know, I'm a I'm a huge holder of uh gold, irresponsible amounts, not advice. Um, and I have been for a long time. So, in fact, the amount of gold I hold hasn't really moved up in ounces all that much. Um, I just bought it a long time ago. And so, uh, the reason I did that, Paul, so I buy gold and silver as two separate words. A lot of people say gold and silver or precious metals. It's a bucket. They're totally separate identities for me. Silver is an industrial metal. It's not really a monetary metal. Hasn't been anywhere for a long time. But it has incredible industrial uses. So, I think you have to look at that from an industrial supply and demand standpoint, plus investment. Those those are the two big categories. Gold is a monetary metal. Full stop. That's what we use it for. few milligrams goes into this and that, but it's a monetary metal. So, I was buying gold because I didn't think that the monetary system was stable or I knew they were going to print all that. I was not ready for what's happening right now. Look at this. >> Yeah. >> Right. >> Mhm. >> So, this is on a weekly basis. Um, and so, uh, look at this. So, it's pulled back a tiny bit today, but we cracked the 3,800 mark last night. Um, you know, after this wedge right here >> broke out of that. That's a bull flag, actually, as far as I can tell. A flat top, rising on the bottom. Um, but >> yes, >> I'm starting to get a little nervous now. >> Like for at first when this first started to take off, I had a little like I I try and retain my like I don't want to get too giddy about any investment. Now, I'm starting to get worried. what this is telling us right here. I think it's saying something and I don't think it's good news for >> no >> the world monetary system. >> You know, it's interesting that you say that because you and I have not had a conversation about that at all. I've been really struggling for for individuals that have to allocate to metals right now. >> Mhm. >> Because because it's overbought. It's been running for quite some time. Even in a in a bull market, you're going to have periods of consolidation and pullback. So, we're wanting to average in. But at this point, it's like, do you do you skip another month because we should have a pullback? But at the same time, is gold telling us that something is about to break. And and that's my concern is that gold's telling us that that that there there's big money that's seeing something under the surface that's going to break sooner rather than later. And they're more worried about counterparty risk, right? Because the good thing about gold is you don't have counterparty risk. debts. We We have a debt based system. So many companies, so many individuals, margin debt, you look at it across the board, you know, the people do not have a fear of debt anymore. Leverage is the thing I'm starting to hear in all of the articles that are coming out, you know, some of your main Wall Street analysts that are saying, "Hey, um, you know, this is a releveraging cycle. Forget fundamentals. You know, the Trump administration is going to do whatever within the banking system. Banks are going to be forced to lend." Bent's pulling, you know, uh, uh, the reverse repo facility down so that they're forced to lend because they don't want to. So, this is going to be a releveraging cycle. And and that's a dangerous thing where we are right now at these valuations because because again if it's not different this time yeah it might be a releveraging cycle but is debt tell is gold telling us that people are are are worried also about the inflation but also if it's not different this time that they don't want the counterparty risk where if you invest into a utility that has debt that could collapse on the other side of that and bankruptcy. So I've been very nervous over the price of gold. I like what it's done to those that have of us that have owned it, but I'm concerned about what it tells us. >> Yeah, indeed. And um we talked about this last time, but let's just reinforce the point, which is that um our government is busy spending like drunken sailors. And we're on track for a $2 trillion deficit this year. And as we talked about last time, um this leads to fiscal ruin at some point. And and that and that we took in 1x and spent 2x last month in August. and we'll see what how September finally finishes out when we're all done. But when you're taking in 1x and spending 2x, obviously you are on your way to what we would call fiscal ruin. Um and and that's where the government is and nobody's really talking about it. Remember on the campaign trail, we got all this talk about it. Nobody's talking about it anymore. You know, we're just all caught up in the latest drama or whatever's happening and um and but but this is still marches on and it's going to create higher inflation. And that's the one thing I was hoping to communicate to everybody listening is you have to be ready for higher inflation. And you just saw Jerome Powell at the opening of this episode say, "Oh yeah, it's a little higher than we thought." And he's trying to blame tariffs, but inflation is now entrenched. And as you and I talked from a thesis standpoint, there's a darn good chance what we're going to see this time is a double hump inflation just like in the 70s. Maybe for almost the same reasons. Two big drivers, lack of fiscal restraint. Bingo. got that on the books. And the second would be rising energy costs. We already see electricity bills exploding higher. I think we have a good thesis for why natural gas prices are going to go higher. And we're starting to see oil move again uh today and yesterday. So, who knows? Is that geopolitical or is that something else? But it'll happen. And at that point, Paul, I don't see how the Fed there's nothing they can really do. They could raise rates, lower rates. that has nothing to do with what's coming. It's going to be out of their hands at that point. And um I just worry they're going to have to really viciously raise rates to try and stop what's coming. >> Mhm. Yeah. Or they're just going to let it let the destruction take place. I I mean, I don't know how they'll do it. At this point, they seem to want to have inflation run hotter than what it has been, but um or or what they've stated has been. I mean, what >> did you see? >> Did you see that news last What? I think it was last week that that 50% of spending is driven by that 1% of households. >> Oh, I did see that data. >> Did you see Did you see that, too? I forgot. I didn't bring it in, but I remember reading that. I was like, "Okay, that comports with the 1% has tons of money to spend, right?" But think now, Paul, so when the Fed raises rates to try and tame inflation, the 1% don't care if their interest rates go from four to 5%. He's going to crush the 99% with higher rates to try and stem inflation. But if half the spending is by the top 1%, they're pretty in interest rate insensitive, I would say, as a crew. Would you agree? >> Yeah. No, I would agree with that. They're interest rate insensitive. And if interest rates go higher, quite frankly, they're lenders, they're savers, they've got your assets. Some, you know, some of them are leveraged, but but they're doing it in a wise manner. So higher interest rates just means more cash flow for them, >> right? So if you're sitting on a lot of cash that's in the bank, then I mean we we we tend to uh we saw that when interest rates started rising what was it late uh in 2022. One thing that was amazing to me is you know Royal Caribbean Cruise Line comes into the portfolio and I'm like well it clears our hurdles. This looks pretty attractive. Um, but you know, I I told the investment committee, I said, I said, I'm I'm willing to bet a couple hundred bucks that this will get kicked out with a loss. What I didn't realize was all of that extra, you know, CDs and treasuries and cash that the baby boomers were sitting on, they were used to living on that lower income level. This is my assumption, okay? Because, you know, maybe you build the thesis behind what happens. But everybody started cruising again. Like cruises just got booked to the hilt with that extra cash flow that was coming in. And I had a lot of clients who were saying, "Yeah, we've done a couple of things now that we're earning a little bit more on our safe money funds that, you know, I had them parked somewhere else." So, it benefits them, you know, kind of both extremes, higher interest rates or or the Fed printing money so that asset prices go up. >> But it but both extremes crush the middle class and and lower. That's why the middle class has been eviscerated. if if you you know if you don't have that discretionary income or you don't have all those assets to benefit from higher interest rates and extra earnings or higher asset prices with the inflationary side of it. You're just crushed in the middle there. And the only thing that actually is going to help that is if we have a deflationary kind of collapse on itself to where the status quo is broken. The average individual, you know, kind of like the Great Depression, you know, the the the top lost everything. I can't remember the data, but you know, we had some extreme wealth disparity at the top of the Great Depression, but by the time you got into the 1950s, what was it? 90% of the the wealth in the country was held by 50% of the population. And and by a lot of measures, looking back, you had an individual that could be a mechanic and have his, you know, wife at home and three kids and live a middle class lifestyle. That's not where we are right now. The financialization of everything has benefited the intellectual class >> indeed. But as we talked about last time, people I'll call them US citizens, not consumers, um really caught on. And that's a really dramatic shift in in perspective there where uh near just over 70% of US citizens now believe that inflationadjusted income will fail to keep up with inflation. Um, so, so they're expecting real income erosion going forward, which I think is fair because as you and I talked about, insurance, property taxes, all these things are rising way faster than the official rate of inflation. And I I did interview uh Ed Bowski of the Chapwood Index, you know, uh, and if people aren't familiar with that, I I like what he does. So he said, "I don't like this Boskin Commission that jerryrigged the CPI." And this was under Clinton, I think. And they did things like hydonic, substitution, waiting, all these statistical tricks. He said, "You know what I'm going to do? I'm just going to take 200 items in 50 cities. I'm just going to track those." Pretty fair. But he tracks something, Paul, that they don't track in the CPI at all. They use what's called um owner's imputed rent which is supposed to be this catch-all bucket for household inflation or housing home inflation. He actually tracks uh real estate taxes and insurance costs. So he found that over the last 5 years there's been closer to double digit somewhere between 10 and 15% inflation depending on which city you're in which tracks a little bit better I think with people's real experience. It hasn't been three or four percent it's been 10 to 15%. So that to me explains this because the lived experience of people is no, my prices are not modulating. They're not going back. I don't care what Trump says. You know, prices are now going down. They're not. The >> speed at which they're going up is is moderated a bit, but they're still going up. And that's what Jerome Powell just said. So I'm worried we're going to get that double hump inflation. It's going to come because people expect it. And sometimes they say inflation expectations are not well anchored. So people are expecting it. What do you do when you expect inflation? You spend it today so you don't have to spend more of it tomorrow. Um, yeah, I think that's the setup here that I'm seeing. >> Yeah. Well, and it seems that there's probably going to be a lag with a lot of the the tax inflation pressures and the insurance inflation pressures because you've got renewals that come out over time. And of course, we're getting into the to this year like my taxes went up substantially over what they did last year. and unless something changes in real estate, they'll probably go up again next year. So, there's that lag that's going to continue to pressure individuals. And those are things, you know, I like the fact that he adds that in there because what are you going to do? You going to carry the risk and quit covering insurance on your home in certain parts of the country. That's a massive risk to carry, but especially with your your real estate property taxes going up. Don't pay it and see what happens. Right? They're going to foreclose on the property. It's going to be s sold on the courthouse steps. So these are inflationary pressures that individuals just cannot work their way around. >> So oil's moving up again. Um natural gas too. So natural gas is is a little over three. It's at 317. It's been hanging under two for a long time. And uh crude oil here, you know, closing in on, you know, 70 bucks uh is going to happen, I think, at the end of this move for Brent. And we'll get close to that on WTI over here. But this this is this is actual something's happening here that I don't quite understand yet. So, we'll have to look at that. But this is the beginning of that double hump thesis. Like, uh-oh, what if energy prices start to move for? Could be geopolitical reasons. We had the OPEC crisis of 73. It could be because uh-oh, there isn't as much as we thought. And that dawning awareness comes in. or it could be because we forgot to invest because oil prices were too low and then the economy actually takes off and so you need more but have less whatever sets of reasons. Uh this is what we're seeing now >> and and we're we're still continuing to see there's been a lot of leadership change. I think last week we talked about just major asset classes. There's been a lot of leadership change between domestic and international commodities, but commodities in general as an asset class from a money flow perspective have this persistent strength that they've not had for quite some time. And if that continues, think about gold. Gold went sideways for a long period of time. Then it started getting this persistent strength and now we're getting that persistent strength has moved into, you know, not near vertical, but but moves that have surprised a lot of us to the top side of of how it's been moving. >> Mhm. That appears to be the foundation for the same thing moving in the commodity sector. And then you got what Bank of America came out over the weekend. Did you see that headline? I I need to pull it up here if we need to find it specifically, but they they said, "Forget the 6040 portfolio, which is 60%, you know, stocks and 40% bonds and consider the 60% stocks, 20% bonds, and 20% gold." I was actually shocked when they came out with that change. >> I did not see that. Yeah, let me see if I can find it here. If you've got something to show and pull because um I I want to talk about um maybe why oil isn't moving up because of economic strength. I don't know if you saw this. This caught me. The Cass freight index uh just fallen off a cliff over here. And on top of that, Craig Fuller of At Freight Alley, he says here, quote, "Trucking has been in my family since the 1960s. We've lived through multiple cycles. Trucking deregulation, oil crisis, stagflation, the SNL collapse, Gulf War, September 11th, and the financial crisis. So, they have a lot of experience here. I've spoken to dozens of trucking veterans with 40 plus years of experience. Almost all agree this is the worst freight market in their lifetime. >> Wow. Wow. >> I mean, his family, I mean, I love how he puts that. They've been through it all. the oil crisis, stag, inflation, SNL, G, all of it. This is the worst they've seen. So, that comports with all those other recession indicators. I think we had eight at last count. Now, we have nine. Um, so >> they're all still flashing recession. I I don't, you know, >> I think that explains why we're seeing the government throw money out the door because that's an easy one. But you don't have to be a genius Scott Bent, you know, ex Soros guy to understand that if things look a little weak, you can paper it over by having the government spend more. >> Well, nobody talks about it anymore, but Dow Theory and Richard Russell did a great job. I, you know, I miss him being gone. I read everything that he >> I met him once. >> Did you really? Oh, I'm I'm a little jealous because he was a legend in his research and just incredible what he did for people. >> This is actually a good story. Hold your thought because this is a great story. So I'm actually this is 2009 and I'm out in Malibu for no good reason and I'm there with Adam Taggert and we're visiting with uh Mike Maloney when he had his his gold and silver.com was actually housed in California. So we're there and we're just talking with him and this is right after I remember the year 2009 because it was this huge like at the time a punishing correction in silver and it was a great time to talk to him because like who's buying who's selling and it was great. While we're standing there talking with Mike Maloney, I get this text and it's from Richard Russell's daughter who says, "Hey, I got your number. He would like to meet you someday." So, I'm like, "Where are you?" It turned out they were about two hours south, right? And and I just turned it around to Mike Maloney. I said, "You want to go want to go meet Richard Russell?" He's like, "So, we jumped in um he had a Tesla, one of those early ones, the the Roadsters, right? So, we jumped in his Roadster. We booked it down there and we get there and his uh his daughter greets us at the door and she said, "Look, he's he's really old. Um I if I you know I I'm sorry you drove all this way. If you'd called me, I could have set expectations. If you're lucky, you're going to get 15 minutes." Okay. And uh so get led into the house and then we get taken down this elevator and we come into this den and there's pictures of him with all these different presidents and he was a World War II fighter pilot and there was all these pictures. It was just this museum memorabilia like this guy lived the life, you know, >> and he's got a cane. He's all and he and he and he called because he he had my crash course book and he's like, "I just read this. This is the most sensible thing." two and a half hours later. Um, we ended up >> two and a half hours. >> Yeah. Because he wanted to talk about the book and the theories and all that stuff. And then he wanted to talk about his memorabilia because I'm a curious guy. So I was just like, you know, I can't help myself when I'm with a living legend. So that that's my Richard Russell story. >> That's that's a pretty incredible story. I mean, what he did and and how many investors he impacted through his work was absolutely incredible. Just brilliant man. Yeah. >> So that that's that's a gift of a lifetime to get a chance to see him. >> So you know Dow theory and I probably need to pull up the definition here because it's been so long since I've talked about it. Um is that basically your transports have to your industrials have to confirm in the movement. So he broke the market down between your basically your retail and your transports and the argument is they have to confirm at the same time. So, so if retails, you know, the retail side, discretionary side is going up, but transports are going down, that's not a confirmation of the trend. So, when you look at transports that are that are terrible across the board, they've been in a negative trend for quite some time, they're not setting new highs, while the rest of the index is setting new highs. That's a warning that you need to pay attention to that there's deterioration under the surface. And a terrible explanation is basically that the transports have to be shipping these goods. Right now it's shifted and there's other iterations of DAO theory today that people have come to that made sense. But if you're not shipping goods right I mean we still have to ship goods and and um then then there's weakness in the underlying economy which we're seeing and it's recessionary indicators there. So the theory is that shipping precedes buying, right? If if if there's a lot of buying and the buying is still strong, but the the retailers aren't restocking, they aren't ordering from the factories, like that's you'll get that divergence. Are are how's the divergence looking today? I mean, because th this this looks pretty ugly, this cast rate freight index, >> you know, I've got uh some basic Dow theory chart in here somewhere that I look at from time to time. It'll take me a second to remember exactly where it is. Well, I I just think this is amazing that this family's been in in the business since the 60s. He's talked to these other people with 40 plus years of experience trucking veterans and says this is the worst freight market in their lifetime. What I I can't even account for that. What it could be that, you know, China just stopped shipping us stuff and so there's really nothing to move. Is it that people aren't buying anymore? That ought to be showing up in the retailers before too long. I would think that it would. >> This is a pretty good indicator. I normally compare the trucking with the rail. So, I'd want to see what the um the intermoal would have been for the rail shipments. >> Here, here's a chart. It took me a second to get it. I was like, where in the world is that? Cuz I looked at it the other day because I referenced it about once every six months. >> So, oh dear. I can't can't really make it longer, but this is the breakdown of the industrials in the red line >> and the transportations in the green. Right. So, so here you had confirmation. So you had situations and of course they started both breaking down about the same time. But look at the divergence we have here. You got uh the industrials continuing to rise and the transportation uh side of of DAO is working its way down. So something's got to break. Either industri transportation is going to have to change and work its way up or the industrials are going to work their way down. You know that's a pretty substantial divergence there. That is and I wonder what's dragging I mean obviously we have the AI story we got our chips now they've snuck some things into the Dow Jones industrials that aren't very industrial at all um >> you know more like information knowledge companies and uh so maybe maybe the divergence isn't as meaningful as it used to be but if it is I just don't understand how how how we everything has to correct at some point maybe even gold because as you mentioned gold's way overbought on the monthly uh also the weekly very overbought meaning the RSI is is way above 70 and and that should consolidate or normally take some digestion at those moments and and that's uh or even retrace a bit at those times we've we've got these are not just slightly expensive how did markets how did drone Powell put it >> fairly highly elevated as if they're fairly priced good you see what you did there >> fairly highly elevated let me show you my new new little favorite chart here and let's put this in perspective instead of narrative. Um, now one thing I will say to finish up with the with the Dow theory there there are a lot of individuals who come out with arguments that you can't pay attention to that anymore. Okay, >> but it's still worth referencing and you know and they've changed it because of the fact that you've got you know the economy has changed somewhat. >> So this is current market valuation. It's my one of my new favorite tools that I' I've found. But this just shows undervalued on the left, fairly valued, fairly valued and and I saw this headline. It's like currently strongly overvalued. And I'm like, "Okay, where it is." So, put it in perspective. >> We're redlinining. So, think of this like the RPM on the cars for you guys that, >> you know, would you buy a car from somebody that if you could look at the history and they drove it around all the time, uh, you know, with this this extreme of the RPMs on the engine? I probably wouldn't. So, but if you go down here a little bit further, this this puts together your basic valuation models. Buffett indicator set a new, you know, set a new high. Look over here. This is this is undervalued. This is expensive. We're way up here at strongly overvalued. >> Look at all those dark lines on the far right of that thing. >> Yeah, look at this. You can see this. I need my mouse to be bigger, but this will update again on September 27th. Price to earnings ratio, the cape ratio, price to sales. I mean, price to sales is the highest that it's ever been. >> You've got your interest rate model that shows we're overvalued. S&P mean reversion that just talks about your, you know, markets um tend to revert to the mean. You know, earnings yield gap. Uh, that's okay. >> Mhm. >> A recession risk, if you go back and look at the yield curve, that's high. The SAM rule is low. That's what the Fed pays attention to, if I remember correctly. >> Yep. >> And state coincidence. But then you get down here at margin debt. It's not at extremes yet, but but we're certainly on on the the far right hand side of a normal bell curve distribution. So that just puts in perspective the environment that we're in. And >> I'm surprised margin debt is is not too extreme, you know, cranking out at a trillion dollars. >> Um, >> it is and it's real high, but they've got a good breakdown in here. I spent, you know, uh, yesterday probably an hour just reading it and looking at their perspective, but gross margin debt is higher, but as a percentage of equity exposure is not necessarily extreme. So, that could get worse. Uh, but I mean that just puts in, you know, the com culmination of all of those puts you in a situation here where it shows you how expensive the market is. Now, for you listeners, I was telling Chris, I got to figure out how to to utilize this because these scatter plots are probably one of the hardest things to use, and I can't freeze it and go show you the right hand side. But right here, you've got the actual 10-year correlation, correlated return. So, we had talked about this before, John Husman came up with a scatter plot. Over here is your aggregated market value index model. So taking all of those together, we can click right here and say, okay, at this point in the year 2000 when the market was uh overvalued. On the left hand side, it shows you the subsequent 10-year returns of the S&P. So if I can find it over here, I can get close. What that tells us is the 10-year return for the S&P 500 was negative - 22%. it was the actual return following that starting point on the right hand side of valuation. So if we go back through history and we look at this okay so this can kind of highlight the areas that we're in somewhere in here we get back into the 60s. Okay, so investors had to learn that lesson. The hard part in the past in the 1960s when the market was, you know, one standard deviation overvalued, the actual 10ear subsequent return for the S&P 500 was a 13% loss. And this is not inflation adjusted from this standpoint. Now, we don't have the subsequent 10-year returns over here, but you know, just look from a historical standpoint. We're at a valuation level that can obviously get more expensive in the short run, but when you go back through history and look at the actual 10-year returns from these starting points, it's highly unlikely that you're going to get these returns that you've come become accustomed to over the past several years. So, just markers to help us gauge where we are. And these are here to help us to be sober and take a long-term picture of where we are at this moment in time. So that's where I keep telling uh you know I'll say it I've said it before I'll say it again right now if I'm looking 3 to 5 years out and even 24 months out depending upon how the narrative can push these emotions in the short run. Return of your capital in my opinion is more important than return on your capital at this point in the cycle. Well, I agree and and this cycle also might be a little different. So, I I think the Fed was sort of politically nudged into cutting rates. Um and and now they're saying we're actually seeing um headlines like uh this Paul just coming up that the Fed's unity is already fraying, right? And what unity was that? I mean, now they're talking about people are starting to worry about inflation and um you know, disagreements. That's because they say here, even as central bankers commit to staying data dependent, shifting their thinking alongside new information, several policy makers see threats facing the labor market as more imposing than persistent inflation. But some of them see inflation. So there's a big little split going on there currently. But what's interesting to me, Paul, is when we go here, this is the Fed decision day back here, and we saw this little pop in the 10-year price. So, this would have been yields going down, but now we've seen just nothing but sort of erosion as we've come through here. So, interest rates are now higher on the 10-year. If we use this cross mark here, you can see anything below that is a higher yield, a lower price because bonds are a seessaw. So, so I think we're seeing once again, you know, the Fed says, "Oh, we're cutting rates." And that's supposed to drag everything down, but the bond markets are saying, "Not so fast, Bucky." And they're going the wrong way. So, >> I mean, no danger territory yet, but it's just it's just saying I don't see a lot of confidence in the bond market for what the Fed and federal government are up to right now. >> Right. Right. I mean, and and that's the concern. The bond market seems to have for the most part priced for a weaker economic environment. The stock market's, you know, pricing for a a Goldilocks economic environment and something's going to give. If if if we get a reaceleration of inflation and then the bond market revolts, what's the Fed going to do? Are they going to step in? There's people out there now saying that they're going to step in and do yield curve control. Well, how'd that work for Japan, right? How'd that work for Japan? So, >> well, it's blowing up on him right now. >> It is. >> Hey, did you did you hear did you hear about um so the speech of the new FOMC member Moran? Um he spoke in New York apparently in a in a a speech titled non-monetary forces and appropriate monetary policy. Now, I don't have I don't have the source because I made notes for myself for the week and and I'll share that and kind of talk through, but I thought it was kind of interesting. >> I hadn't seen it yet. So, what did you what did you see? What'd you hear? >> Okay, so this is the summary that I put together. So, this was the speech. Non-monetary f forces and appropriate monetary policy at the economics club of New York. The new FOMC member Moran implied the Fed needs to see things Trump's way. Okay. So, he goes on to argue the neutral Fed fund rate sits around 2 and a half% due to nonmonetary forces and their impact on inflation. Okay. >> What's a non-monetary force? >> Well, he kind of gets into it here. I've got him bulleted because I was wondering what in the world that was. So, he concludes that sounds low, but I think it's important to take seriously, not literally. I don't necessarily understand what that means. >> Yeah. While I sus suspect exists ex existing I'm tongue twisted guys forgive me existing backward-looking estimates are too high because they insufficiently account for recent changes to the fiscal and border policies. He lists the non-monetary forces as lower rents driven by reversal in net US population flows. He estimates 2 million people will have left the US by the end of 2025. So rental demand will drop and supply increase. You can tell I didn't edit that. Tariffs, he expects exporters will cut prices. Um, and will tariff revenue uh uh tariff revenue are around 380 billion a year. He's expecting increased investment due to Trump's tax policies and multi-rillion dollar pledges of foreign direct investment alongside new trade deals. Well, isn't multi-trillion dollar pledges uh inflationary if they start spending that quickly? And then he says the impact of deregulation and lower energy process. So those are apparently your nonmonetary forces that are justification that they need to bend the need of Trump and and slam rates down to 2 and a.5% apparently. >> Okay. So lower rents is is deflationary and I can understand the argument um >> a little bit. I mean, generally speaking, the people who are going to be out leaving the country, they're probably occupying the lower rent units. Uh, so >> all things being equal, that that tends to drag rents down a little bit, but it's probably not going to do a lot for rents at the top of the structure. Um, >> right. >> Two, I don't know about the tariffs yet. So, we just heard Powell saying they're starting to bleed through. I'm seeing more and more signs they're starting to bleed through. I understand if I'm wrong, I'm going to say, "Oh, these things haven't bled through." Mysteriously, we get 380 billion as a government. Companies don't pay it, so earnings aren't hit and consumers don't pay it. Must be the exporters are going to have to eat it, right? Um maybe that's not how I hear it's actually working, though. I get the narrative, but I've heard otherwise. So, we'll see about that. I'm going to dispute his lower energy prices. I thought you would like that, >> right? I mean, that's not even like remotely non-disputable. Um, let me see if I can pull this up, >> right? And utility prices have been increasing dramatically. That's going to be a a major issue continuing going forward with all of this investment in these data centers and their unbelievable power consumption. At any rate, what I would have shown was that chart of electricity prices which are just absolutely skying and getting away from everybody. And we all know why that is. It's a combination of failure to invest in our energy grid and then slapping in a whole lot of data centers too fast. Um creating extra demand for electricity. Fine. But otherwise, like you can't credibly say lower energy prices because now you have to say, okay, well, I think oil is going down in price. Now, I'm going to dispute the Fed's ability to do forecasts because they that's not they are distinctly bad at that across every dimension, even ones they should know something about. Energy is not their forte. Um, I don't have anybody out there really claiming that we're going to see much much lower oil prices going forward because already at these prices, we're seeing destruction of supply out of the the Perian Basin and other Shell basins. So, it's a tough argument to make. >> It is. Unless we invade Venezuela and take it from there. Um, [Laughter] >> you know, because because of narco terrorists, right? What's that? Three boats we've blown up now. >> Is it three? I knew it was two. I puckered on the first one. I was like, what? I mean, look, I am not for the drug trade at all. I wish that we were dealing with them, but but that's something new that I don't know if we has the US ever military ever taken out a a boat like that under those circumstances before in the past. >> Well, no, no, no due process. We, you know, trust us, bro. There were people and drugs in that boat. But even with that, I mean, interdict it. You know, there's no way that boat was going to make it to the US. It could have made it to its next way stop, which would have been somewhere in, I don't know, Central America, maybe. Um, >> because Paul, you I mean that had four giant engines on it, unless the whole thing was made of gas. Uh, you know, those engines don't they're fast, but boy are they they suck the the fuel down. >> And And how do we know given the trust that we all have these days? How do we know they weren't um narco fishermen, right? Like I I don't I don't know what we're looking at here at this point, but I don't think I I don't think we really care about the drugs in that in this case as a country. I mean we do but we don't really if we really did I have other questions for um that goes back a long way about our government's relationship to the drug trade say in Afghanistan other places like that. So at any rate but I think we are there because China's making huge inroads into Venezuela investing and getting their hands on what we might consider in our hemisphere our oil. And so >> if Venezuela didn't have oil you wouldn't hear anything about this. That's my I agree with you. >> My geopolitics lesson for today. >> I agree with you. I agree with you from that standpoint. I found I found a a chart of electricity prices if you want to show. >> Oh, good. Good. >> Coacy letter put this out. The AI revolution is so massive that electricity prices are moving in a literal straight line higher. Energy is the new limiting factor to grow AI. >> There it is. That chart. That's the one. >> Yeah. Is that the one you were looking for? >> Yeah. >> So, look at that. That's insane. >> Yep. slowly and then that that wasn't even slowly. That was just all at once. >> Yeah, it's a 38% increase. I don't know what he's what he's Miran's talking about lower energy prices. Not not in my electric bill. >> I don't see that at all. I mean, and and that's the thing that concerns me. Is it is it dishonesty or is it is it um uh narrative? I mean, well, dishonesty and narrative can be the same thing, but is it just is it just somebody's convincing him that that's the way it is and that they're just not paying attention to the actual data? I don't understand. >> Uh, to me, it sounds like having spent some time in corporate America. That was the speech he had to give to curry favor with the Trump administration officials who are going to nominate him for the chairmanship if he can make it that far in the process. That's the it's sort of the call in response, you know, that you have to do. Oh yes, the tariffs are non-inflationary, paid by nobody. Uh and uh and energy prices are going to be cheaper. I think those are the the main shibiliths of of the Trump administration. You have to say those things, you know. >> Yeah. Yeah. Well, it's dishonest. It's narrative and I'm you know, I'm Look, it's the society we're in. I get it. But the truth, the truth is so important. You know, it's just like what Jordan Peterson says, you know, tell the truth or at least don't lie, right? At least don't lie. >> And and the truth is just not loved in our society today. I think it is by your followers and those that are that are looking for it. More people are waking up and want to know the truth. But we've got to get to the point where the data is out there. It's not manipulated. It's not these birth death models for for uh labor and unemployment and all this. It's just the data. We have the tools now to track the data in real time. Um, you know, with all the technology and AI's ability to pull things out. I know they can be manipulated, but we have the tools that are there to utilize them in the right way. And and then I mean, I I didn't go to sleep till 3:00 in the morning, I guess, last week when I saw the the proposal by the Trump administration to stop quarterly earnings reports. They want to go to semiannual now. >> Yeah. >> Did you hear that? >> Yeah. >> I mean, I was just like, so what is this, you know? Let's let's let's forget the data and let's just go with narrative. How well did that work for all the people that are regretting the the data that they they pulled into with the, you know, event we just went through? I don't know if I can say this without getting you in trouble, but the event we went through a couple of years ago, right? You know, go get your go get your jab and everything's going to be okay. And now we're starting to see the data on the other side of it. And I hear a lot of people that regret that they bought into that narrative. Just show us the facts and the data and quit treating us like we're stupid and let us make our own decisions. That's what makes a market that is a free market. >> Yep. Yep. >> So, >> well, I think that's the the great setup that's happening right now. There's there's a group of people who don't they want to live by lies, right? Um, I don't know if you saw, but but um, and this is way off topic for markets, but we saw a bunch of people on TikTok, women, pregnant women performatively eating Tylenol to show that they were set against, you know, what Trump said about Tylenol. But it wasn't Trump. It's Harvard Medical School. It's Tus. Yeah. It's like the J&J maybe this is sort of market related so neither for or against but J&J the parent company spun out Tylenol two years ago as a whole separate entity because they have some experience doing this when you have a troubled product right when you're you know you have asbestous or you know they I think they J&J also spun out their talcum powder division right they're a big company they make a lot of things all a sudden they're like we might be getting sued for this and they spin it out as a separate company so they took Tylenol and pushed it out and it's a separate company um not called Tylenol. It's a company with a name. Tylenol is the product. But they pushed Tylenol out into a separate thing two years ago because they were already facing vast amounts of lawsuits. So they're trying to limit liability already by doing that. And why would they do that? Because they know something. Um that's why they're doing that. And so for these women to say, I'm going to do this because I don't like that person. I don't even know what I don't even know what territory we're in anymore, Paul. I don't understand this. Remember, remember it used to be if you're a pregnant woman, we'd be like, "Don't stand near, you know, Wi-Fi routers. Don't eat tuna fish. Don't go out when it's might be moldy." Like, I mean, just anything cuz you would have the precautionary principle and you say, "Don't do that. Just don't do that." When I saw that, I just I was so sad because I was like, look, you know, you're you're you're being spiteful and you're you're risking a major impact on your own life, right, with that child because there's more care that typically takes place with with autistic children and and the child of that, you know, the the future life of that that child that you're carrying in your womb out of spite, you know, no fear that the truth could actually be reported. you know, we don't have all the data right now, but that that's enough to say, hey, warning, be careful, and I just don't understand this society that we're in right now and that that thought process. >> Well, and I could fit this whole idea of let's not report earnings except semiannually. All right. So, you know what? There's an argument to be made that this ultrash short-term focus on earnings tends to drive certain behaviors. And so maybe it would be better if we had a slightly less slavish observation of, you know, earnings on on such a frequent basis. I could sort of get that. Um, but I would want to make sure that we got back to things where I could trust that the earnings we have I So I used to read annual reports. They used to be this thick. Now, if you want to just and again, not investment advice, not picking on anybody, but if you want to understand JP Morgan's earnings, 190 pages or 260 pages, depending on which if you want to do the annual report of say Nvidia, it's a phone book. Why? Dude, they got some shenanigans going on in there that's really hard to unravel. We got these subsidiaries and we're doing these passroughs and of course then we're fronting these people some stuff. So we got these account receivables that actually flow through subsidiaries of subsidiaries that somehow loop back but don't not entirely. It's really crazy. So the people have gotten very creative in these uh accounting methods, you know, and so anyway, if I could trust that we had like easy to understand accounting, >> right? Right. >> Maybe I could I could see, you know, dialing back the the slavish attention to monthly earnings or quarterly earnings. I can see that. >> You know, look, I know I'm being idealistic, but that's what we need to get back to is to where we have the facts, we have the data, it's put out there, and instead of being told what to think, put it out there for the people who want to take the time to actually discern the truth, love the truth, find the truth, and then make good decisions off of the the facts and the truth that is there, regardless of what that outcome will be. >> Well, very well said. And for anybody who would like to have a truthful review of your portfolio, and some of you may not, but if you do, you should really go to uh peakfinancialinvesting.com, fill out the simple form, and then somebody from Paul's team will be in touch with you within 48 business hours and begin to set up the process for having that truthful review because the truth matters. And Paul, that's what I love that you do for people. You give them the honest assessment and you're willing to cover honest scenarios like what if inflation like a lot of people I know have come to me and said that their portfolio their wealth manager insists that inflation is 2% because that's what the Fed's going to say it is. That's not I don't think that's an honest look at it because it hasn't been that way for 5 years. So how long before we say can we just abandon that target? But um you know you take people through scenarios that go all the way up to like what other people would consider punishing or or non ridiculous uh they ridiculous amounts of inflation which I think are well within the realm of possibility. If we get that double hump we will be seeing 14% inflation if we track what happened in the 1970s. Almost nobody is prepared for that let alone people who are under what I would call a passive portfolio management structure at this point. >> Oh yeah. And it's and it's fascinating, Chris, because I' I've really been trying to connect with with uh some of my acquaintances that are on the modern portfolio theory side. >> Yeah. >> And that, you know, they make fun of me for recommending that ancient relic, you know, a while ago. I've talked about that before, but I mean, you should see the look on their face when I tell them we're running retirement um analysis stress tests at 5 1.5% and 7 and 12% inflation. You know, they're like they're like, "That's malpractice." I don't I don't see any way that it really constitutes malpractice ball. In fact, I think it constitutes best practice. So, >> I think so, too. Personally, we argued for about 45 minutes over that and then finally they changed the subject because because I I I just laid out scenario after scenario after scenario why it was important. >> You just wore them down. Good for you. >> Yeah. All right. Until next time, everybody. Thanks for listening. I'm Chris Martinson of FinanceU here with Paul Ker of Kiker Wealth Management. We'll see you next week. [Music]