It’s Time to Believe Your Lying Eyes — The Real Economy Is Showing It

Summary

• Market Outlook: Speakers highlighted collapsing consumer sentiment, weakening employment trends, and persistent inflation pressures alongside a widening federal deficit.
• AI: Extensive discussion of an AI capex-driven bubble, with revenue models lagging and systemic support (credit/government) propping up demand for AI infrastructure.
• Key Companies: NVIDIA (NVDA) as the AI bellwether facing rising competitive threat from Alphabet/Google (GOOGL) via TPUs offering major cost and efficiency advantages.
• Semiconductors: Focus on sustainability of AI hardware economics as TPUs potentially undercut GPUs on cost, performance per watt, and training speed, pressuring margins and payback periods.
• Commercial Real Estate: Office values and CRE stress, particularly in Chicago, are translating into sharp homeowner property tax hikes, signaling deeper municipal and Real Estate sector fragility.
• Industrials & Trucking: Freight and trucking volumes are down significantly year-over-year, while manufacturing activity and employment indices indicate contraction.
• US Treasuries: With a compressed equity risk premium versus real yields, Treasuries were discussed as a defensive allocation amid elevated equity valuations and rising macro risks.

Transcript

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 would rather be a little bit early than 6 months too late, especially as how fast these market liquidations unfold when reality cannot be masked over any longer. Hello everyone. I am Chris Martinson with [music] FinanceU and today is well it's the day before Thanksgiving. Paul and I are recording this on Wednesday. So welcome if you're watching this during Thanksgiving day of uh it's much better than the football game of course. Paul, welcome back to the show. Good to see you. How you doing? >> Thank you. Thank you. I'm doing good. Happy Thanksgiving to you uh and all the listeners out there. And may God bless your family and relationship time greatly. >> Indeed. Indeed. So, um I would love to have uh you know just a very cheerful sort of Thanksgiving sort of well there's lots to give thanks for. So I have plenty to give thanks for in my life. Um but not least of which is uh the relationship with you and your firm and and helping people get to prudence. Um and >> yes, >> I mean that's my mission, Paul. I just want to help people uh dodge the imprudence that's just about us right now. And so I want to talk about some of that today. >> Yes. And I am incredibly grateful for the relationship and all the wonderful people that I'm meeting through the Pete community and the podcast. It's it's just it's amazing just how wonderful the people are, how much they care about our country. Uh how critical of of thinkers they are. Uh it it's just been it's been such a huge blessing. I thank the Lord for it every day. Well, that does give me lots of hope because if you just sort of observe the world around you, it looks kind of hopeless. But then you meet these great people and you're like, "Oh, no, no, no. This is this is what we could be, right? It doesn't have to be this way. You know, we could easily do things better if we could just rally up the good people and get them organized in some fashion here." So, >> yes, >> I have lots of hope about that. >> I do too. I do too. There is a remnant of individuals who care about truth, prudence, and wisdom. and and by God's grace, you know, those that we have the opportunity to serve, if our strategy works the way that it should, it'll put them in a position to to to take advantage and step up in a little bit more leadership for themselves and their their families in the days and years ahead. >> Now, preserving wealth is is going to be hard. Um, when bubbles burst, it it's very hard in some cases. You know, let me be clear about this. I don't think it's possible to preserve your absolute wealth. Your relative wealth you can clearly do a very very good job at. And of course that can provide an absolute advantage later. But this idea that if I can just I don't know that there's any way for anybody to sidestep what's coming. And so we'll talk about some of that today particularly when it comes to things like property taxes. You know there's certain things you just can't avoid. And so I think we're going to be dealing with that for quite a while here. And of course, it's no fun when your neighbors lose their jobs or lose their hope or or become, you know, uh, poorer in any way, shape, or form. Or if that happens to you, none of that's fun. >> None of that's >> I I wish we weren't here, Paul, but here we are. >> Right. Right. and and and unfortunately, you know, we have to be hopeful about where we are because the the you know, as the Bible tells us in Proverbs twice, the prudent foresee danger and hide themselves while the simple pass on and are judged for it. Mhm. >> So, as long as we're prudent, we're seeking wisdom, we're seeking truth, and we have the courage to follow that truth wherever it will take us, then we may not come through it unscathed, but but we can come through it with resources and and a few bumps and bruises to where where we can continue to press on the days ahead. So, I'm I'm very hopeful. I'm hopeful that we have the ability to have these conversations. We still have freedom of speech. Yes, there can be some blowback on it, but that gives us a chance to to work through the risks that we're facing and develop wise and prudent plans to to navigate the days ahead. >> Well, in some cases, Paul, I think that's as hard or as simple as believing your lying eyes, right? You know, there's data >> and you just have to look at it and tune out what you're being told about it by the marketing machine of Wall Street, which is CNBC and all those people, right? >> And just for yourself decide, what am I actually looking at here? You and I, we've we've covered the AI bubble. Obviously, they're spending a trillion, a trillion, eight, whatever the numbers are now. And with no clear revenue models now, we'll we'll get into that a little bit, but I do want to talk about how the real economy, Paul, is actually cratering here. And we'll do a little more in the AI bubble watch. I got some there. Anything else you want to talk about, but it kind of begins. So, when I say the real economy, I mean, Paul, the economy used to be right 70% consumers, right? 30% business investment and activity, right? But in government, so it used to be about the consumers. Of course, it makes sense. That's what the economy is, right? We we buy food at the grocery store. We own or rent houses. We buy and lease cars stuff, right? Well, that's what I mean by the real economy, Paul, is the thing that impacts the most people. And on that front, there's some things we can look at. This is the US consumer sentiment. And so the University of Michigan uh captures this and they have some kind of a poll um a survey and they ask people a lot of dimensions like how you feeling about things and you feel comfortable on your job and how do you feel about inflation and you know all this and that. How comfortable are you? And so it turns out that it just turned in the second lowest reading in history. It tagged a 51. The only time lower than that was actually at the depths of the COVID crisis here um coming into 2022. That was the only time it was worse. we had that big rebound because of course they pumped lots and lots of liquidity into the markets to make everything look good again. Um but here we are and where else has it been this low at the depths of the great financial crisis and at the depths of the great inflationary crisis back in 1980. Um those are the only sort of relevant moments here. So this is important to me because how people feel sometimes it's a self-fulfilling prophecy meaning if people aren't comfortable they tend to pull back their spending their plans. maybe we won't take that trip this year. I'm gonna maybe we can make do in the house we're in. Those are the decisions that get made when people are feeling like this. So, this is an important economic reading to me. >> That's very important. It's very important. And I'm actually seeing, you know, just this most recent correction that we've had in the overall markets. I've seen a a a heightened level of concern and like which is actually surprising. I'm usually pretty good at keeping my finger on the pulse of how my clients are feeling emotionally. And I had a couple of calls out of the blue that just, you know, just kind of caught me off guard. And I was telling one, I'm like, "Hey, we worked together for a long time. You've been through, you know, we've sidestep 2022, that big decline, and you know, they actually had a little bit more volatility back in April during the the tariff tantrum." And I said, "So what what's the trigger right now? What's the difference?" And she's like, "Everything has been, you know, just hitting us. our property taxes going up, our insurance costs going up, our you know, everything across the board is going up and I've just been hyper concerned and and and then all of a sudden a little bit of volatility concern concerned them. You know, once we talked through it, they were okay. Not not the big picture concerns. They're concerned about a lot of things, but at least how their portfolio was in that position. So, you know, there's an unbelievable amount of emotions out there because I think everybody recognizes that we're not in a a a sustainable circumstance, but they just don't know what to do, right? And now that's my job to to to handle our job to handle from a portfolio standpoint. You don't do something just for the sake of doing it. You doing it you do it when you cross decision points. [snorts] But but there's there's just this pervasive fear that's building out there because of things that they were worried about are continuing to come to fruition. >> Well, yeah. And as we've talked about it, it's also um it kind of depends where you are in socioeconomically, right? So the top 10% seem well, they're half of consumer spending now, right? So the top 10%'s kind of doing okay. They're a little bit of Marie Antuinette, let them eat cake coming off of that that cohort of people. Uh, I've noticed like particularly senators, congressmen saying some really toned-e stuff that's frankly gotten right under the skin of a lot of people. Right up to Trump saying, "Well, we don't have enough qualified people to do the stuff we need to do." Right. Which is patently false. Right. >> Right. >> Right. >> We don't have enough people who are willing to work at a substandard wage for their skill set. That's what he really meant to say. Like, oh yeah, we got to bring these people in and compress our wages here. that didn't resonate well. But I think this could result in a political shock because that gap between what we're being told, greatest economy ever, that's what we're sort of being told at the top versus people's lived experience of it, which includes this, right? This is the the sentiment is no, no, this is the second worst reading ever, okay, in this history. And by the way, this actually goes back to I think 1973. Um, but it's not on this chart. They discontinued the series, so it's kind of and then picked it up again. So, it's a little bit of a broken series on this one. But here's where the political revolution part comes in, Paul. When you break this down further and dive in a little bit and you ask a how is consumer sentiment among young people, which is where political activity and revolutions sort of get their their oomph, right? 18 to 30 40 year old people near an all-time low ever ever ever going back to 1977. Um, worse than during the pandemic. the Great Recession, even stagflation. This is terrible. >> That's terrible. I did not realize it was that bad. That's that's horrific, actually. >> It is. Young people are not okay. Cheddarflow writing here. This is actually insane. It is. This th this this is where Mamami gets elected. This is where Nick Fuentes, you know, people are like, "What what is this weird thing with this angry young man?" It's right in this chart. >> Here it is. >> It is. And the sad part is is they've not been taught through the education system honest history and the reality of history of of what the mandamis represent and and Marxism and all of that stuff. So they're looking for any alternative because it's not working for them. And quite frankly the baby boomer generation and I know the baby boomers are taking a lot of heat, okay? It's not all but it is just that generation has experienced such an economic tailwind that they don't really understand. They're trying to speak to speak the discipline and and and um character into the lives of those 18 to 34 that worked for them. But even if they have that discipline at this point, yeah, they're going to be better off than their peers, but they're still don't have the opportunities that that the the generation that they're looking to for wisdom because they they can't understand it. One thing that I have learned over the years is unless you've walked in a path that somebody else has, you can't truly understand what they're going through. And and I always get this messed up. You can empathize, I believe, but you can't sympathize. Let's see. If you've walked it, you can sympathize it, but if you're if you're observing from the outside, you can try to empathize. Guys, forgive me if I got that backwards, but um but you understand what I'm trying to say. And that that's kind of the problem is and I've experienced that a lot with my father-in-law is a great man and my daughter in her home purchasing uh process and he's like you'll never go wrong in buying real estate. I've never had a bad experience. And then I'll kind of explain it through the data and we look at it and he's like that makes sense. But we always revert back to our personal experience. And um it it's just about very challenging environment because I think that group doesn't have anybody who understands what they're facing and is certainly not trying to solve the problem because it would impact that generation that's watching their asset balances go up dramatically, right? Whether it's unsustainable or not, my concern is is when this cycle is over, those that are unprepared and don't have a riskmanagement overlay to their assets are going to experience the same um uh frustration that the younger generation is before this cycle's over. >> Well, it you know, not to make this generation against generation, but but the deal was we're all in this together. And so one generation works and saves and then another one comes along and in many ways our social security system is a Ponzi scheme because current workers are paying in to a system to pay the people who were in the system before. There's no trust fund in there, right? Just so everybody's real clear about that. There's no cash sitting in a bank account, right? Earning interest. There's none of that. Uh there are some IUs from the Treasury in the Social Security trust fund, which is one pocket owing the other pocket. Paul, if I write myself a check for a million dollars, slip it out of my right pocket into my left pocket, how much richer am I, [laughter] you know, if that worked, right? >> Great. It just It's crazy. Um, all right. So, so when we come back, Paul, I want to finish this up. We're going to talk about layoffs, but we're going to take a quick [music] break and, uh, everybody will be right back. Markets [music] are facing heightened uncertainty and thoughtful portfolio management has never been more important. If your current strategy [music] relies solely on passive investing or diversification without active oversight, it may be time to consider a different approach. At Peak Financial Investing, [music] we connect you with experienced wealth managers who actively manage portfolios using disciplined, [music] research-driven strategies designed to adapt to evolving market conditions. [music] Our focus is on helping clients navigate volatility with clarity and confidence. While no investment strategy [music] can guarantee results or eliminate risk, we believe that preparation and active management can make a meaningful [music] difference over time. Visit peakfinancialinvesting.com to schedule a complimentary consultation [music] and explore whether our approach aligns with your goals. I'm Dr. Chris Martinson and I am proud to [music] support Peak Financial Investing. This is not a guarantee of future performance, but a [music] call to take your financial planning seriously. Again, that's peak financial.com. [music] Investing, of course, involves risk, including the potential loss of principle. [music] Past performance is not indicative of future results. Please consult with a qualified adviser before making investment decisions. [music] All right, welcome back everybody. Paul, I want to carry on and go to this part now. Um because we're talking about how the economy is is I said cratering. Is that too strong a term? This is ADP. They do a weekly change in employment. They've built it to really track what the BLS is going to tell us. Obviously, the BLS took October off, so we don't really have any October numbers to work with. This is the best we've got. But this zero line here says that we're adding more jobs and below the zero line says we're shedding jobs. We did briefly peak up here about, you know, in September, but they're clearly showing an erosion here. There's weekly change in employment is going down, not up. Um, and by the way, this is a four-week moving average in monthly terms. So, this gives this pretty noisy thing, but this smooths it out a bit. Um, so this just says weakness. I've been hearing this a lot just anecdotally. Uh I have people actually asking me um in the trades, you know, do I have work here at the farm? And that hasn't happened to me in a few years. >> And I'm seeing it here locally, too. In the trades, they're things are slowing down now. They haven't come to a a dead stop, but but individuals in the trades are starting to worry a little bit and the premiums on their price that have been generated since CO are starting to squeeze a little bit. So things are starting to get a little bit more affordable, but they're not to the point where where it's pulling people off the sidelines to deploy capital substantially yet. >> So employment's weak a little bit. Of course, we've talked about this before. Obviously, commercial mortgage back securities, um, we're still wondering who the bag holders are, but we answered that last time a little bit because we found out the insurance companies, Paul, are 35% allocated into private equity, which presumably is going to be involved in some of these strategies over here and things like that. So, that's not good. Um, that's why your insurance bills have been going up. uh your insurance people who should be insurance specialists suddenly are dabbling in exotic financial products that oh surprise um risk and return go together >> and the risk is starting to rear its head in this story and the returns are drying up. >> Yes. And that and that's a very important chart from a long-term standpoint because that shows a a massive deterioration under the surface where all of the AI euphoria and capital spend may be papering that over here in the interim period, but it's certainly not making it better. You know, if it was really if it was really making it better, it would be trickling those would be trickling down substantially. So that that's something under the surface that is still going to deliver some pain at some point in the future. seeds that are sown and we haven't seen the fruit of those negative fruit yet, but it's coming. >> Yeah. Well, to the point of of that woman you were talking to who said it's everything, but our insurance is going up, our real estate taxes are going up. This is now a big topic of conversation that's really blown up nationally because it just got announced that for 2025. Nationally, the average property tax went up 7% in 2025. >> Right. And this is what it looks like for somebody. Um the green old dill here writing on Twitter said, "My property taxes, uh paying them today, I'm bitter again, another 7% over last year." Look at that property tax bill. Practically renting my paidoff home from the county. And if I don't pay my taxes, they evict me and take everything. He's paying uh what's that? 1,100 bucks a month. 1,200 bucks a month. >> Yeah. 16,44. That's incredible. >> Yeah. That's actually $1,367 a month. >> $1,367 a month. >> That is more than than twice my my first mortgage payment I ever had in life. >> Mhm. >> Yeah. >> Like that's lit. For some people that is a mortgage payment, 1,300 a month. >> Oh, absolutely. I mean that is absolutely a mortgage payment coming out for a lot of people. I mean that would be a mortgage payment for somebody if they could find an affordable home as a starter home coming out >> and then On top of that, that's >> Let's get to that Chicago thing real quick, but I because we have to talk about that, but I want to set it up by saying, "Hey, the city managers like in Chicago, they said to people, oh, because of COVID, you have to stay home." And they did all this crazy stuff where they let Walmart stay open, but they closed down mom and pop. At any rate, through those decisions which were highly unconstitutional and and and just unscientific and frankly just made up out of whole cloth, right, they ended up driving away a lot of people to away from the city centers and so people worked from home and they suddenly people lost the thread on well why should I go drive and commute and go through all that rigomearroll which I hate, right? Um so guess what? Commercial real estate is tanking. So because Chicago city managers did a horrible job managing CO, they tanked their commercial real estate, >> which leads us to this thing you're about to tell us about. >> Yes. And I will say I wish I wish you guys could have seen the surprise that Chris had last week. We did we shared this after um after we got finished. So Brian Westberry, chief economist for First Trust, and I really like him a lot. And the hits keep coming. Chicago hit by record property tax uh hike as office values fall. Chicago homeowners are getting hit with a record property tax hike after the city's downtown office buildings and other commercial real estate values fell again. The median residential bill climbed by 16.7% >> to 4,45 16.7 to 4457 according to a report from Maria Papus the Cook County Treasurer. Residential assessments for 2024 rose 16.4% contributing to an 11.6% jump in total homeowner tax bills with the biggest surge for residents in the city's south and west sides. Whoa. >> Unbelievable. >> Whoa. So, I mean, just to sum this up, the city managers do a terrible job. They they end up helping to contribute to tanking their commercial real estate. And instead of going, "Wow, you know what, Paul, we really messed up. You know what? We'll find a way to cut 15 20% from our budget," they're like, "Ah, we'll just stick the bill to these guys." They they screw up and they stick homeowners with the bill. That's not uh how this is supposed to work. If you fail in business, you you have to find a way to trim your budgets, right? You may even have to fire people. It's unpleasant. I understand that. >> But I feel like our public servants have entirely lost the thread. They screw up and they're like, "That's okay. We just stick the poor plebs who own the homes with the bill over here." And that's happening all over the place. And we're going to have to address that as a nation at some point. >> We are. And you know, but the problem is is they're so embedded. And I know it's not necessarily nepotism because they may not be hiring family, but what's the term where they're protecting their own, right? I mean, there's people that are on the payroll within that city that just need to be gone at this point. And I know that's sad, but it's easier for them. And this is the problem when when your leaders are detached from the citizenry. That's one of the reasons why I left corporate back in in 2000 with January 1st, 2004 to be exact, because I didn't want some bean counter in the back office, you know, 300 miles away making decisions for the clients that I have to face face to face on a daily basis. It's easier for them to to pass all of these mistakes off to the taxpayers that they're detached from than it is to actually cut off the uh cut, you know, to fire the people that they sit by from day to day, which is exactly what they should do because of their bad leadership. I mean, it's just absolutely incredible that the government is becoming a burden to the people with with absolutely no regard to to the pressure that they're putting on those individuals. Would you believe that over the last 20 years actually the number of students in public schools has fallen? Right. We're having a little bit of a baby bust, right? Relatively speaking. Um it's just I think it's down like a million and a half students um in in the past uh 15 years or so. Would you also believe that over that same time we're up a million and a half teachers and non-teers? [laughter] That doesn't surprise me at all. >> You called it. It's not really nepotism, but it's taking care of your own. Of course, it's always easier to hire people and give them nice salaries and good packages and pensions and it feels good. But they're basically playing with OPM, other people's money, right? And and this I this is going to this is going to I feel like we're getting to a break point around this, right? Florida's now talking about eliminating property taxes. Obviously, you would have to find other sources of revenue, maybe a sales tax. We'll see what the details are. But, but this idea, Paul, that you have to rent your home from people who have zero fiscal restraint, zero understanding of matching outcomes to expenditures. That's that's going to break here at some point. I mean, I can feel it bubbling up um here in my own community even. >> It is. And you know, and the worst part about it is those that are impacted the most are the retirees. those that are on a fixed income budget. You know, I saw a stat uh well, I actually had the stat 20% of the population owns 80% of the equities. Okay, so let's say this the stock market's been irrationally good over this period of time. That's great for the 20% of the population, but what about the other 79% of the population that maybe the only thing that they have is a pension that does not have uh inflation adjustment with it. So, if they're uh if they're 80 and they retired at 65, they've got the same income coming in from that pension that they did 15 years ago, but the cost of everything is substantially higher. The social security increase was what, 2.8 2.9% this year, which is nowhere near what these property tax increases been in a large majority of areas. So, you know, the misery that you're casting upon the individuals that are in retirement, we're supposed to care for the elderly. I'm not I'm not saying we should just shed money across the board for them. But we're supposed to care for the elderly, the widows, and the orphans. and and th this is, you know, this is just an increasing burden because if they have long-term care insurance to try to protect themselves from having to fall back to state Medicaid, those premiums have continued to go up and the governments are allowing that to happen because of the fact that these insurance companies underpriced uh for the for the need that it's their job as an actuarial to price that. I don't agree that you buy a contract and those premiums go up each year. I don't agree that you get into retirement and and and monetary policy has caused your food costs to go up, your insurance costs to go up, your your property taxes to go up because of foolish management. It it's it's it's evil is what it is. And >> well, it is. It is. And and um I mean, listen, my advice to people in Chicago is leave, right? I I just don't think it's fixable. I think it's going to have to crash and burn before they they'll even consider what you and I are talking about, right? Making rational cuts, maybe even slightly irrational cuts to city services, payrolls, pensions, all of that stuff, right? But maybe I can I can get a shocked face from you cuz after you you showed me that Chicago thing last week, I went digging for a little data. Even I was shocked. Are you ready for this? Between 2014 and 2024, the inflation rate of property taxes is 33%. Goodness gracious. >> The total take is up 103%. Right. Unbelievable. That's insane. For what? What services are better? Do they have a larger police force? Is their water pure? Is there is there response time for uh are the roads better? I mean that's what we're the government's supposed to do for us. That's incredible. >> Yeah. I mean these are in thousands. So that's the that's 861 million to 1.7 billion in the city. CPSTF total 3.3 billion up to 6.8 billion. Question over that time frame did people's incomes double if you were on a fixed income? The answer is no. [laughter] >> It went up 2.3% a year or whatever the stupid number is. Right. Right. Right. >> I mean that's that's really astonishing. So that's out of control. That that just that's out of control. And the question is well do they just keep doing that? Because now this is a system now Paul when when like you can just feel it like they just expect that they're going to get 7 8% more per year. And by the way rule of 72 7% more per year means every 10 years it's going to double right. >> So they've just gotten themselves caught on a 7% you know per year sort of an increase. So this 16% they came up with that's just to keep them on the overall 7% take cuz corporate's down so or commercial's down so residential's got to go up because this is what they've gotten used to. >> That's that's just horrible. That's unsustainable. That's unsustainable. I mean you let's assume the AI actually does eliminate that many jobs. Okay. And you got Trump that's that's willing at this point the HB1 visas, you know, let's let's Let's let's bring in this talent from outside because in the reality is it keeps wages low. It keeps wages low. So in what world at this point are we going to see and corporations are not sharing a larger share of their profits. More of it's going to the CEOs and the sea suite and the top most connected individuals. It's not like they're really conscientious and spreading that across their employee base. They give them just enough to keep them from jumping ship and going somewhere else. And from what I'm hearing in the conversations I'm having around the country, those higherp paying jobs are much harder to replace right now. Well, what are these corporations going to do? Well, the moment that they know that these employees aren't going to be jumping other places because they don't have the ability to jump, then their payraises are going to be less and less because they're going to protect their profits more. I mean, we're we're we're in a system right now that is absolutely unsustainable. We don't know exactly when it's going to break, but we can inevitably see the ultimate outcome. >> Yeah. And and on that very point, speaking about what are corporations going to do, right? Because the most corporations have two major input costs, right? You've got your your producer prices, you know, your inputs, your raws, and then you got labor. And those are your two biggies. Well, if you're one of the AI companies, you also have debt service as a large and growing component of of your overall cost structure. But on that point, Charlie Bleello writes here, "Hey, producer prices in the US rose 4.6% year-over-year over the last 5 years and now we're up 25% in total. 2% inflation is a myth. The Fed should be hiking rates, not cutting 4.6% a year." So again, you know, for everybody trying to plan on this, if your insurance is going up, all of my insurance has went up double digits this year, by the way. Um, house, auto, and and and um and uh health. So double digits there. Uh property taxes going up by 7%. This is all squeezing in at about 5%. Can we just admit it? We're in a high inflation environment and the Fed is doing everything it can to cut rates so the stock market can just continue to go up and to the right because the Fed has said, Paul, very clearly, we want to reward those who already have assets. And we're going to do that at the expense of everybody who hasn't managed to grab that brass ring yet. And that's why you get this chart because people have figured it out. Hey, I got locked out of the system. It's been rigged against me. And the keepers of the system >> are telling us explicitly, we're going to keep rigging that system in this way for the people who've who who have the assets. And if you don't have the assets, tough, you know, you'll loan nothing. We hope you're happy. >> Yeah, we hope you're happy cuz we have the few remaining assets that are left, right? I mean, they're So, it's it's just unsustainable and something's going to break. And here's the hard part, Chris. You know, I still am am of the belief that at some point, and look, there's been factors that we can't see. You know, you anticipate, you think Trump's going to reign in some of this fiscal spending, and then he doesn't. You know, he continues that and increases it some. So, this is all about kicking this can down the road a little bit longer, a little bit longer. But the longer this can kicks down the road, the worse position that the average individual is getting in, the more pressure it's putting on the middle class to accumulate debt or or to become complacent and just just embrace this debt because of the the debasement trade. But it it either breaks into severe deflation, which which I think that's the first impulse, and I may be wrong on that. They may just turn on the printing presses to keep that from from occurring. But if the, you know, the deflation and then the hyperinflation potentially on the other side with a currency crisis or we just go straight off into sustained inflation where it's going to be 5, 6, 7, 8% a year from this point forward. Either way, you have to be adaptable and what has worked to benefit you over the past 15 years since the 2009 bottom is not going to be the same strategy that produces as good a results to protect your purchasing power going forward. And but we're seeing more people heard into the passive the passive um investment thesis because that's just what they're being marketed to consistently with unbelievable amounts of dollars. >> Yeah. You you they're forcing everybody to play the game, right? It's just how it's going to be. So looking across everything here, yeah, bonds are pretty flat at the moment, but stocks stocks are up. Stocks are up. Stocks are up. Stocks are up. You want to this this Paul? I don't want to be cranky all the time, but David Saxs is is the cryptos are for Trump, right? >> Yes. >> And he said this the other day. He said, according to today's Wall Street Journal, and I read the article, AI related investment, which you and I both know as capex, it probably is going to get burned on a p of dollars at some point. AI related investment accounts for half of GDP growth. A reversal would risk recession. We can't afford to go backwards. [laughter] You're laughing. Please decode for people. Why you laughing? I I'm laughing too, but why are you laughing? >> I'm just laugh I'm just laughing at the fact. So So I can't remember exactly David Sach's background off top of my head right now. So he comes from the technology space and that industry, right? >> Yeah, he's Silicon Valley guy. >> Yeah, Silicon [snorts] Valley guy. Yeah. Recession for him and his buddies is going to hit their asset prices. And you know, we we can't afford to do this because those people that I know may actually be impacted severely and our balance sheets may not be going up greatly. But it's just justification for continued foolish behavior. That's what I'm laughing about and it's just absolute justification for continued foolish behavior. >> And I'm going to talk about that AI stuff um in just a second, but just to round out, you know, I said the economy is kind of in the dumps. Um, we talked about this last time, I believe. Freight wave CEO saying that um, again, year-over-year trucking volumes is down 17%. When you just look at the industrial sector, down 30% year-over-year, which is great financial crisis levels of concern. So, so something's not happening. This great manufacturing renaissance is supposed to occur. We're not seeing it right in the trucking. So, it's saying, okay, industrial trucking is down and >> let me see. >> Yeah. So look at this. Manufacturing is still basically contracting here for 23 of the last 25 months. Um manufacturing employment. So maybe we don't need PE. Maybe the manufacturing is doing okay, but we just don't need people because AI and robotics. I don't know. But the manufacturing employment index fell to 46 in October. So that's an employment recession. Again, if you believe in our economy as configured, people have jobs, they earn money, they spend the money. And we're missing that middle part. We are, >> you know, >> we are and and I have a a client and friend in a particular transportation industry because I haven't gotten permission to say exactly what, so I'll keep it keep it as vague as I can, but they're seeing a massive slowdown in in in their shipping industry, the worst that they've seen since 2008. Like it's happened just quickly over the past 60 days. So which which was eye openening to them because it their their particular sector of the industry has been relatively strong. Other sectors are but specifically in the retail area which just tells you people aren't quite spending as much right now because of tax increases and insurance and food costs. I mean that's a common topic everywhere I go now is just how expensive food has become. >> Mhm. Yeah. Yeah, they they they like to say I've heard Trump say over and over again, food prices have come down. And sometimes they cite eggs. And I think that one category did hit a peak and come back a bit. I think orange juice has come back a bit. But overall, what they really should be saying is food prices aren't rising as quickly as they were in the past. They have not come down. They're just not rising as quickly as before. >> Yeah. They're short-term in their thought and they're gaslighting people without the without realizing they're gaslighting people. I believe because they're just looking at these shorter term numbers and not looking at the bigger picture, >> right? But I do think David Saxs is right. I if if it turns out AI the bubble when that bubble burst that's a when not an if to me when it does uh that's going to be really devastating because it's it's basically as you and I have discussed there there isn't the S&P 500. There's the big seven and 493 kind of struggling companies under that. So we'll get to that but but a measure of of the struggling Paul is that um this is only through October 31st. So, we still have November, December, two more months to add to this. But this is corporate bankruptcies are now on track to get to the worst level or second worst since 2010. Um, worst since 2010. So, is it super crisis? No. But it's it's this this is, you know, this is relative strength down here in the 400s. 500s is, you know, I'm sort of trucking along, but we're going to get 67 800 in here probably. Um, pretty easy. We'll be at 655 now. get 7800 or more if if things don't break quite right. So again, this just sort of rounds out my my theory here that when we're looking at employment, we're looking at inflation, we're looking at Oh, speaking of which, before I finish out inflation, let's finish this out. We finally got our our our fiscal fiscal year for the United States government runs from October 1st through September. Um so that's their fiscal year. So, so at any rate, um, October 2025, which is fiscal year 2026, off with a bang. 284 billion deficit just for October. Um, if you annualize that out, it'd be something stupid. Um, but it won't, you know, January is a big income month and April obviously and things like that. So, they're the quarterly months. But that's that's bad. That's that's pretty bad. >> That's bad. So why are we doing that if tariffs are working great and and and the economy is that great? Why do we have to be spending that much money at this pace for a deficit if the economy is really that strong? >> And if you look at um individual income plus um let's just look at individual income right in corporate. So that's 217 plus 15 I'll call that 230 232 billion right net interest 91 billion. So 91 into 23. That's that's that's a huge number. Um that's like we're spending 30 Well, Zero Hedge said we're spending 24 cents of of every dollar collected in taxes is going out in US debt. But for October, it was much worse. Um that's by closing in on almost nearly 30%. Around 30% by just off the top of my head. So, but this is bad, right? This idea that we're spending 24 like you pay taxes and 24 cents of that just goes right out the door because of all the deficit spending from before and the deficit spending is continuing. So, for the consumers out there feeling kind of in the dumps, if they know about this, this Paul, I'm looking at this. This is out of control spending. There's nothing being done to reel this in right now. that there's some kind of emergency that I don't know about that the federal government is is um observing and reacting to. Is it aliens? What is it? Is it aliens? [laughter] And and whose infrastructure has gotten better? Whose services have gotten better? Has your customer service gotten better when you pick up the phone and call Social Security or or or Medicare or Medicaid or anybody? No, it hasn't. So, we're not seeing uh we're not seeing a huge benefit. Now, I will say Georgia is pretty good about repairing the roads. We do have a good infrastructure here, but that's that's from your state level system. And of course, there are some government federal funds that are coming through, but services in general haven't gotten better. And I want to remind people all debt is is pulling future uh uh future spending power into the present. So the further you go, the more you go into debt, the further out in the future that you're you're spending that at some point you're going to run into a wall. So if the economy is that good, why are we not reducing that and reducing our government debt to make ourselves more resilient for in the future? I mean that you're telling me one thing, but the numbers are are showing something completely different. We're on we haven't altered that unsustainable path. Um we're going to take a quick break and when we do I want to talk about this idea that really everything's propped up by tech spending right now. So this is just a chart here looking at um this is from Tavicosta Krescott Capital talking about um capex at the tech sector in the S&P 500 versus 400 midcap stocks. We'll call that the real economy. Well actually that's what he calls it too. So 400 large cap companies their um you know total capital expense expenditure to depreciation expense is nothing to write home about not terrible not great but look at this large cap tech sector everything's being propped up right now with this massive amount of um S&P you know the large cap tech so it's all tech spending >> but that's not the real economy so when we come back Paul I want to talk about again AI has to show that it can deliver revenues at some point. And there was a huge announcement this week showing that the way Nvidia has been going about it is um maybe [music] under severe threat. We'll be right back after this. Hey folks, [music] Chris Martinson here. Look, we've all been there, watching our hard-earned dollars get chewed up by this endless inflation [music] machine while the folks in Washington and the big banks continue to play games [music] with our money like it's monopoly cash or something. It's not right. I know it and you know it. 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Um, remember quick reminder, a bubble like that that chart behind Paul's head there. A bubble exists when asset prices rise beyond what incomes or revenues in this case can sustain. So if I build a $10 million factory, but it can only earn, you know, $100,000 a year, it's never going to pay for itself over time, right? So, so shouldn't have done that. But a bubble exists when when we just throw lots of capital into a story. And that happens when two things happen. Again, there you have some story. Oh, tulips, railroads, housing, AI, right? You have a story and you have ample credit. And so, this is where I fault the Federal Reserve and the banking system. They've just been throwing monster credit um at at these at these companies. And we talked about this, Paul, it's they're doing the circular financing. Nobody nobody really knows what's happening. No, nobody knows. But we do know there's a trillion trillion8 in spend that's coming. But when we look at the debt that they're taking on, big tech's definitely binging on debt. No question. But that's only 100 billion only 100 billion. But where's the rest of that money coming from? Um you know we I think we have to account for that somehow some way. And so we've heard Paul that that um companies are buying chips from Nvidia and then taking loans out against those chips because it's a capital asset. Um >> and so there's straight debt, there's loans, there's private capital flowing in. I'm convinced there's government money flowing into this whole thing at this point in time. All because well think how terrible it would be if the economy went in recession because the story blew up. >> Right. Right. Well, and it's going to hit a wall at some point in the future. There's no doubt about that. And and I heard I heard I love listening to the analyst takes the very thoughtful analysts as far as how this unfolds in the future. So, one of the takes that I thought was fascinating is they talked about small language models. So, if you're a phone company from a customer service standpoint, you can have your own small uh small language model. Let's say it's just for answering phones when it first comes in and you want to train it on that. You don't need all the PhD data out there. And that's also going to be proprietary because if you're, you know, company A, you don't want to give this small language model if you're getting great customer service on calling in from the artificial intelligence to your competitor. So one thing he was talking about with economy of scale is like if you know if I'm using WhatsApp there's pressure for you to use WhatsApp. I don't use WhatsApp but as an example because there's network effects that take place through there and there and this analyst put forth the thesis or the argument very clear and good argument that you're not going to see that network effect take place within the artificial intelligence industry which is going to further limit their profits down the road. And at this point, you know, we still don't see a major imp. I mean, don't get me wrong, it's a fascinating search engine. It's it's much easier to get through to find information than what it is all the ads and the algorithms that are pushing things to the top of your traditional search. But but I'm just not seeing anyone truly argue. They're arguing a lot of hope. It's a great story, >> but they're not laying out the mathematics for a path of which this will happen. It's this pie in the sky that we're reaching for and spending all this capital for, but um but we're not seeing it come to fruition at this point. Maybe it does in the future, but we're just not seeing it yet. And and and I think we're starting to see some cracks in the AI theme. >> Let's talk about some of the cracks. So So Nvidia is kind of the beating heart of of the overall AI story. Everybody understands this. Nvidia, formerly the company. I bought Nvidia things back in the day because I like to play video games at one point in my life and they made a great little gaming GPU, right? Little graphics processing unit, right? And then those suddenly turned out to be useful for AI. And so Nvidia is now a $5 trillion company worth more than every company in Japan apparently this one company. But just this week, we saw a huge crack show up in that to your point where Google showed up with a different kind of a chip. So just Dario has been tracking the Nvidia stuff. And by the way, anybody if you really want to dive in like how Nvidia's their earnings reports are labyrinths with >> yes >> crazy accounts receivables and special offbalance sheet vehicles and it's just it's a little suspicious but anyway um and just Dario's done a great job tracking that and somebody down here on the All-In podcast David Friedberg said Nvidia's greatest threat is from Huawei in China. Um, and just Dereo said wrong. Nvidia's greatest threat right now are Google TPUs, not GPUs. I'll talk about what those are in a sec. US companies already lost the Chinese market and that uh since long now focused on efficiency to minimize infrastructure size costs to develop AI. That's never coming back. So, China's lost. If the US doesn't shift to TPUs or costefficient solutions quickly to make their I offer affordable from a business perspective, the risk Chinese open source models become the market standard for AI products. Development's very high and if that happens, US can kiss goodbye to any chance of maintaining any AI leadership objectively speaking because Paul the cost for these things. So a TPU, a GPU little wonky. I didn't know what a TPU was to save my life. So, I asked Rock about it and it said TPUs um uh tensor processing units. They say, "Okay, what are they?" Um first, they're often 30 to 50% cheaper than equivalent Nvidia GPUs with no additional software licensing fees. They provide 2 to 3x better performance per watt, so way more efficient. At hypers scale, TPUs can offer AI compute at roughly 20% of the cost of high-end Nvidia GPUs, implying a 4 to 6x cost advantage per unit of compute. And TPUs can complete various tasks like this B thing training 2.8 times faster in 12 hours versus 31 hours on comparable GPUs. Whoa. Whoa. Those are big numbers. This isn't the 3% improvement. 30 to 50% cheaper. 2 to 3x faster performance, 4 to 6x cost advantage, and 2.8 times faster. That's the threat. >> So faster, cheaper, more energy efficient. And I mean, and and why would the market not capitalize upon that? I mean, that's the thing about a situation where Nvidia is when somebody's making that much profit, there's incentive for others to come in there and lower that price. That's one of the reasons why we see technology is deflationary over time because the cost of storage is what I'm just going to pick a number just just to put an illustration. 1/100th of what it was 25 years ago. I mean that's the trajectory that we're going to be on. That's that's dramatic. Maybe that's one of the reasons why Nvidia has been struggling in its price here recently. >> Sort of. But I mean this this it again if we lived in a world Paul where people could actually believe their lion eyes that's an immediate deal killer right there. >> Absolutely. Absolutely. >> I mean that that just whatever whatever NVIDI is up to you just got to cut it by some whole whole number right >> you know. >> Wow. >> Obviously but you can feel there's market forces at work to try and keep everything elevated and the Fed really you know the the Fed so this really made me annoyed. So last week, Thursday, the market actually has a pretty robust sell-off on volume. >> Mhm. >> Early in the morning on Friday, they trot out a Fed official, Williams, to say, you know, I'm a little bit more open to a cut than I thought. And boom, everything went off, right? And you have to read these stupid Yahoo Finance headlines, which are like investors are, you know, come on, that's not the game right now. >> No, >> they're they're doing everything they can to keep these markets elevated. And I have to ask, why? Um, are they apparently a 5% selloff is enough to get the Fed to come out and start flapping its gums about jawbone everything back up into the right. But again, Paul, what what why do we just not have markets anymore? And so everything has is just a stage managed narrative machine. I don't get it. I mean, the Fed shouldn't be out there jawboning every time there's a slight wiggle in the markets. They should just be every six weeks they should come out of their cave, give us a little bit of guidance what they're thinking and go back into their cave. >> They should be and actually and they should just operate monetary policy out there without jawbone in the markets and rates should be higher. And and that reminded me I tried to find it real quick but I couldn't find it. So I'll have to go off of memory from this standpoint. So Monday and Tuesday following that that announcement, we had some of the strongest two-day buying that we've seen in in many years, several quarters. Like it's just all of a sudden it's just Pavlov's dog. The bell rings and the fear of missing out kicks in that the Fed's going to save the day. So, you know, we're starting to get this more I'm been wrong on timing. I thought this would be very similar to the 2000 market peak where where the market stays in there and you start getting this increased volatility with some higher highs and these bigger swings before this thing tops and rolls over. And who knows whether it's going to roll over in 2026 or not. U it it looks like that's a high probability. We're at the end of the year where you've got pension fund rebalancing, you've got hedge funds, the chase is on for the potential Santa Claus rally that tends to occur, you know, towards the end of the year. And um but but the narrative is starting to crack across the board. And and the fact that they're having to come out and do that. I mean, it's just it it it if you just stand back and look, it's clear that they're trying to do everything that they can to kick this can down the road a little bit longer. And you know, that you know, justify it, right? Well, the midterm elections are coming up. We don't need we don't need our economy and our markets to be working on political forces. They need to be working for the average citizen that's out there. But they've dropped the ball on the average citizen a long time ago. So >> Oh, yeah. Yeah. >> Yeah. Well, I I think this is um this will neatly sort of summarize where we're at. So, Paul, if you could imagine if if the White House was going to put out a an executive order explaining why we have to put more force behind AI, what would be a great code name for that? What What would you What would you name that project? >> [laughter] [snorts] >> You must have the name for it. Oh my goodness. The Genesis mission. [laughter] I was not about to take a guess cuz I figured you were about to pull up something. I've not heard of that yet. >> The Genesis mission. >> Genesis. Remind me what happens in Genesis in the Bible. Paul. Well, that seems like an important moment in history. >> Um. >> Oh, yeah. Yeah. the creation and then the fall of man. [clears throat] >> Yes. I mean, are are they are they winking at us here? Is this a little little foreshadowing? >> It may be. Wow. Known or unknown? >> Genesis. Genesis. So, so, but it does it ties in. So, Paul, I've been very concerned because some of these tech bros and the WF people like Harreri and every they talk about we're gonna transcend. We're gonna become like gods. And I really feel like that's an urgent sort of a mission that's driving this whole AI thing. Nobody can make sense of why suddenly, you know, we're slamming data centers in and consuming power like pigs and nobody cares about climate change anymore and nobody even cares about, you know, electricity costs for the average person. It's that important. So you could feel there's a muscular urgency under this which is about it's got something really important. So obviously somebody somewhere in the government is going to say and they've already have said this. It's a matter of national security that we don't just get our clock clean by China on this AI thing. But then they rebrand it into this Genesis things. It's like dude this is this is the moment of creation. This is where God shows up. >> Yes. Yes. >> And creates something from nothing. And so anyway interesting some you know they sat around Paul and they're like what's a good name for what we're really trying to do here. They didn't just come up with Genesis because they were on the that part of the word list like they were like naming hurricanes, you know. Well, the next DEO is going to be called oh, Genesis. Well, that's ironic. I don't think that's how it went down. [laughter] >> And they may have some tag tagline like this is better than the tree of good and evil. Knowledge of good and evil in the Garden of Eden. >> Yeah. But for those of you who who like your um uh predictive programming out of Hollywood, I would remind everybody that of course that is a Terminator science fiction film. [laughter] >> Wow, nice tie there, Chris. That was a very nice tie. >> I got that from Nick. He reminded me. It's It's true. I think what they did was they they had they had named you the system that became Skynet Genesis and it it went off the rails. So, I don't know. Hopefully we're not, you know, foreshadowing that. Um, but it does speak to why I think people can be bullish about AI because the government is of course very um involved in it at this point. And they say here, quote, "This order launches the Genesis mission as a dedicated, coordinated national effort to unleash a new age of AI accelerated innovation and discovery that can solve the most challenging problems of this century. The Genesis mission will build an integrated AI platform to harness federal scientific data sets, the world's largest collection of such data sets developed over decades of federal investments to train scientific foundation models and create AI agents to test new hypotheses, automate research workflows, accelerate scientific breakthroughs. Okay, so they're going to basically unleash AI within and across national data sets, I guess. Um, but more money, more spend. Um, there'll be bigger deficits. That That's I hope it pays off. >> I hope so, too. I hope so, too. But it's not going to pay off as quickly or at the pace that that everyone's hoping it is at this point. I don't think I could be wrong. >> Yeah. >> But we would we would be seeing some more uh fruit being produced right now and not as much hype if that was the case. >> Yeah. The revenues to capex are just they're just not adding up. Every month is just same story. um capex is a hundred times higher than revenue roughly um in every model I've looked at so far. So that's a big closing 100 to one gap is going to take some time. Um in in sort of towards the end in closing Paul um maybe you saw this we should talk about this um the equity risk premium is in fairly rare territory at the moment. Um what does that mean? >> That's a good question. So that would be the K uh earnings yield versus the real yield. >> Oh, equity risk premium. So that's got to be the earnings yield. The real yield just basically says that the market's priced for perfection at this point. I mean, you look at where the year 2000 is. You're not getting any bit of dividends in relation to the risk that you're carrying and the price to earnings ratio. So, >> um I haven't I haven't analyzed that specific chart from time to time, but I look at a different risk premium yield, but that's the real yield. That's low. That tells you you're not being compensated for the risk that you're carrying in these equity stocks in relation to treasuries. I would assume that's the backdrop there. >> Yep. Real yield. So, uh look, it got close to zero in 1929. It did get all the way below zero here in 2000. We're we're yet we're getting down there. Um, so yeah. So, so you're not being compensated to be in the stock market because of because of your earnings yield compared to the real yield. Real yield being defined as what you can get in treasuries minus um inflation, right? So that's not a very big number. [laughter] >> No, that's not a very big >> You're just dramatically reducing your margin for error. I mean I mean that's that's that's driving you've been warned that there's black ice on the road and you're still driving 20 miles an hour over the speed limit everywhere you're going. I mean that's that's essentially where that is right now. >> Yep. Yep. Wow. So I mean just everywhere I turn around I'm just like wow this is crazy. But they're they're working extra hard to keep it all elevated and bubbling along. And I guess it makes sense, but >> they are >> doesn't help the average person out. >> It doesn't help the average person out. And and the risks continue to compound and compound and compound. So, and and I like this uh this is not really good to show because it doesn't show the numbers. I'll kind of talk everybody through it here, but I do want to share this because it does take it into perspective. So, let's talk about the risk from the downside standpoint just from a mathematics. And we've showed this before, but what I'm sharing on my screen here, the black line is the S&P 500 going all the way back to somewhere around January 1st, 1926. Okay? So, there's a lot on this chart, but if you look at that red dotted line that follows behind, >> that's a S&P price to earnings ratio of 20. So, that's that's considered an overvalued market. Now, the first thing I want to point out is we've really been overvalued in this market since the year 2000. Most new investors don't know anything difference between overvaluation and overvaluation doesn't tell you when the market's uh going to peak but it tells you the risk associated when this cycle is over. So you know one thing massive money print uh interest rates slam to zero massive money printing after the year 2000 and yeah it's kept this bubble going a little bit longer. The blue line is an S&P 500 price earnings ratio of 15. So, so that's a considered a fairly valued market. Okay. So, that that's ideally kind of where where you would want to stay. You're fairly valued. And then a price range ratio of 10 is an undervalued market. Okay. So, we went from, you know, fairly valued to overvalued from, you know, coming out of the Great Depression after that World War II was behind us and and the rebuilding and people forget the mistakes of the past or the pain. So, in the 60s, you stayed up there. But in 1974 with that decline, you got down to an undervalued market and the inflation inflation caused earnings to go up. That's the reason why you see price to earnings ratio actually go up. >> Mhm. >> But look where we are. Just to put it in perspective, just to get back to an overvalued market. Okay, that puts the S&P at 4450. So we're at 6821 right now. To get back to a fairly valued market is 3337. So that's a 50% decline to get back to a fairly valued market. >> Just fair. Yeah. >> Just just fair, right? That's a reasonable price that you're paying for these companies. To get back to an undervalued market, assuming the earnings stay up. Okay. In the year 2000, earnings actually went down. >> Mhm. >> You're talking about 2225. I mean, that's a 5,000 or 4,500, you know, off the top of my head, 4,600 point price drop in the S&P, which puts you at a 70% decline. Now, now most people don't want to pay attention to these things because they they think, oh, you I can time I need to run for the hills right now. Well, well, that's not worked over this period of time. You have to have other indicators that will tell you when to to reduce that risk and start reducing that dramatically. But the point is, you know, earnings are not keeping pace with this gap that's Yeah, they're rising a little bit, but not at the pace that the S&P 500 has been moving. So, what I want to point out to people is if it doesn't work out perfect, that there's substantial downside risk in in the S&P 500 index. I mean, we don't even have to get back to undervalued at this point for investors to experience a 50% decline. And the question is, what's a 50% decline going to do to you in retirement when you enter that distribution phase in a passive investing process? It's going to dramatically it's going to dramatically alter your perception of retirement. It's going to alter what you think that you're going to be able to leave for your family and your heirs. It's going to crush a dramatic number of dreams that are out there. So, you know, if you're an investor that's running active, you have a couple of choices. You can sell on the way up or you can sell on the way down when this is over. You can do a combination of those two. Now, I believe that you should have a strategy. And I thought about changing the bubble picture to an investor plan, not your emotions. But, you know, one of the reasons we spend so much time focusing on the planning is just to help people know where they are. Right? If you've reached escape velocity and you can peel some risk off and park it into treasuries right now, John Husman does a great job of explaining riskreward and that that treasuries are a good place to park at this moment because valuations are so high. It's going to take some discipline. It's going to take some patience and yeah, you're going to feel some fear of missing out, but are you more concerned about increasing your your asset balance sheet or building resilience into retirement? And that's what I'm able to do with people is say, "Hey, let's go through here. Let's show in the context of actual history where you're allocated, you know, where you are. Does it make sense to lower that risk some to make yourself more resilient and and to have a little bit less stress going forward over this uh you know over these years ahead? Because where we are in the market right now, my biggest concern is that you have some event the algorithms kick in and you get a 10 to 15% decline with only a couple of day warning from some of the tools like we use. And then the average person that's passive, it's going to scare them, but they're going to go through that cycle of market emotions where it's, well, I'll sell when it bounces. The Fed's going to save the day. And then before you realize what happens, you're down 50 60 70%. And about the time that you bail out because you can't take it anymore and the news is the worst may potentially be the time that the Fed comes in and just unleashes the the the money printing press and then the markets are just in this asset, you know, uh takeoff because of the actual debasement trade taking place in a currency crisis. It's not going to be easy to navigate and you're going to have to be adaptable and and passive, I don't believe, is going to get people through it because because passive is is relying, you know, all the modern portfolio theory um strategies that I have seen come in in the transfers, they're not even following modern portfolio theory because they're all US equities. They don't have any commodity diversification in there. they don't have any emerging markets or international markets or or I'm not talk when I say alternatives I'm not talking about private equity I don't want to beat that uh horse to death because I've been really concerned about private equity for some time but I believe that adaptability is important there's a time to be passive and there's a time to be adaptive like Ecclesiastes says there's a time for everything there's a time for mourning there's a time for celebration there's a time for reflection And for for most people right now, I would say just just reflect upon your situation. Get some analysis done of where you are and and if it makes sense, peel some cards off the table, lower your risk a little bit. You're not going to pick the top. Somebody's going to get lucky and they're going to hit the top, but they're not going to know it until hindsight, you know, until the rearview mirror is well behind them. And I would rather be a little bit early than 6 months too late, especially as how fast these market liquidations unfold when reality cannot be masked over any longer. Very well said, Paul. And for everybody listening, if you want to talk with Paul and his amazing team, about your plan, not your emotions. Well, you can talk about those two, but to invest your plan, uh, please go to peakfinancialinvesting.com, fill out a simple form. somebody from Paul's team. We'll be in touch with you within 48 business hours to begin the first of three calls that you're probably going to have. An initial get to know each other call and then a planning session and then a recommendation session if it if it goes that far. So Paul, thank you so much for your time today. Have a very happy Thanksgiving. The best from Eevee to Holly and all of you and yours and um just hope you have a wonderful time. >> Thank you. Thank you so much. And I want to leave one challenge with the listeners out there. when you get a chance to get around your families for Thanksgiving, set your phones down, >> fellowship, and even if somebody's on the the other side of the table where you are, just enjoy their company and listen and have conversation and just celebrate the fact that you're all able to get in the same room and communicate with each other because because it's just a chance for us to to sit around and and listen to each other because we may have different views that are on the table, but but I think of the large majority of our concerns are the same. Some people just want to deal with them in different manner. So, you know, from Holly and and our family and our whole staff, many blessings to you and Eevee, your family, and all the listeners out there. May God bless everybody's fellowship time [music] greatly and safe travels. Safe travels. May the Lord protect everybody as they travel. >> Thank you for that. With that, everyone, we'll be back [music] next time with another episode of Finance You. Hope you like this. Leave the comments down below. If you want us to discuss any particular topics, hey, just let me know. Uh you can do that by leaving [music] comments underneath this and I do read them. So, let me know. With that, Paul, thanks very much and um we'll see you next week.