When Both Lifeboats Start Taking Water (What Happens Next)
Summary
Inflation Outlook: The guest projects a potential double-hump inflation with peaks possibly reaching 18–20% driven by supply shocks and policy responses.
Energy Supply Shock: Sustained disruptions tied to Middle East conflict are pushing oil and refined products like diesel, gasoline, and jet fuel sharply higher, elevating broad cost pressures.
Agricultural Commodities: Rising fertilizer (urea) prices and energy costs are constraining farm inputs, with a decisive breakout above a 20-year resistance suggesting a new bullish trend.
Food Inflation: Higher input costs, potential weather disruptions (El Niño), and fertilizer shortages risk materially higher wheat and staple prices, especially impacting developing countries.
Rising Interest Rates: A long-term yield downtrend break signals a different regime, implying structurally higher rates and pressure on bond valuations.
Portfolio Implications: Passive 60/40 portfolios could be severely challenged as both stocks and bonds face concurrent drawdowns in a high-inflation backdrop.
Liquidity & Policy: Ongoing Fed balance sheet expansion and surging federal interest expense act like stealth QE, boosting liquidity but worsening inflation 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. The average investor that's purchased these things is going to have a stock market that's going to collapse dramatically and a bond market that's going to collapse dramatically and they're not going to have that hedge in place that they were expecting to. And they're going to be forced to sell something at some point in the future if they don't have a riskmanage adaptive overlay over the top of it. And and that's going to ripple through the housing market. It's going to ripple through every section of our economy. And this hindsight bias that we have and looking back over the past 10 years of how the government's been able to bail everything out, we're mentally projecting in the future is going to be a completely different reality than what most people are imagining. Hello everyone and welcome to this episode of Finance. I'm your host Chris Martinson back with Paul Ker of Kiker Wealth Management. How you doing today, Paul? >> I'm doing good. Happy Wednesday to you, Chris. Good to see you again. >> We have a lot to discuss today, Paul. And we're going to begin with inflation. Inflation inbound. We've talked about this before. It too bears repeating. It's this important. Remember, we had this bad period of inflation, the worst our country had experienced, 73 to 76, and then oh no, a double hump which went from 78 to 82. So that double hump inflation it it not doesn't just sort of rhyme. It's almost a full repetition. Again, this was an energy crisis some and then some printing decision money printing decisions. We're going to look at that data. We have both of those elements back in play here today. But the question would be somebody posed to me. Look, if the double hump inflation of the late 70s to early 80s peaked out at about 14% on a year-over-year basis, where do you think we're going this time? This is different in the sense Paul that this is a supply shock. It's larger than anything else. We don't have any historical analoges where we can sort of say was kind of like that. It it's just both in in terms of its suddenness and its magnitude just without precedent. Okay. My best Paul I will not be surprised to see over the next two to three years that we go up to high double digit inflation. I'm talking 18 to 20%. that would not shock me if we track along with this. Um, and nobody's ready for that. >> No, I mean the the the destruction that that's going to cause across the board, it appears that a lot of the corporations were much wiser than the US government um uh treasury secretaries in the past because what we have seen, they seem to have turned their debt out for much longer, 20 and 30 years and took advantage of those lower rates. So maybe a lot of the corporations will kind of be okay in that situation. But the problem is they've sold a lot of those bonds to investors that that may necessarily need that capital. Investors that have expected, okay, if stocks go down, bonds are going to go up. So if I need some liquidity to keep from being forced to sell my passive investments at the worst time, I'll sell those bonds. If we get that type of inflation, the average investor that's purchased these things is going to have a stock market that's going to collapse dramatically and a bond market that's going to collapse dramatically and they're not going to have that hedge in place that they were expecting to and they're going to be forced to sell something at some point in the future if they don't have a riskmanage adaptive overlay over the top of it. It's just inevitable if we get there and and that's going to ripple through the housing market. It's going to ripple through every section of our economy. And this hindsight bias that we have and looking back over the past 10 years of how the government's been able to bail everything out, we're mentally projecting in the future is going to be a completely different um reality than what most people are imagining. >> Yeah, I I've got some some data on that too we can discuss. But if we imagine, okay, if we do repeat this double hump inflation, obviously that's everybody needs to begin preparing for that right now because what do we know about inflation when it comes? If you're on a fixed income, your cola adjustments never are as fast as the actual inflation you're experiencing, right? So, you got to look ahead to that and do the best you can, I think, to create some buffer in that or >> um understand that that you may have to really go further in terms of scrimping, excuse me, and saving to to get through that period of time as well. uh what investments do well and do poorly. I think passive investors are going to experience this as a very rough ride because if you're passively in a standard 60/40 portfolio, well, the 40 part is going to get mauled by by this. Absolutely mauled. Remember in the 70s they called US Treasury bonds certificates of confiscation. Meaning if you held them, you were just losing money because you might have held a bond that was yielding 5% and all of a sudden there's a equivalent bond on the market yielding 14%. you're you have a huge draw down uh in your capital on that if you choose to redeem it. So >> yes, a huge draw down and uh and and that's going to be painful and the investing environment completely changes, right? I mean and the interesting thing about passive, it's robotic, right? It doesn't care about price. It doesn't care about inflation expectations. It doesn't care about anything outside of the fact of I've got money in and I'm putting it to work. it's not going to make any type of adaptation. So the strength of that passive is if things are irrational, you're going to do exactly what the general market's going to do because because it's irrational and it has no u management or adaptation for that. If it's irrational, right? Because if we get that type of environment, markets are going to sell off and they're going to go below where they should be. then you're going to stay in that environment uh for as long as uh you know with no adaptation and and you've just got to hope and that and and hopefully you have prepared ahead to make sure you've got liquidity so that you're not forced to sell at the worst time. >> Absolutely. So if we think about this, how how would we possibly get to that crazy 18 20% inflation reading? Well, one is we just keep this war up for a while. Charlie Ble just posted this this morning. Since the start of the Iran war, jet fuel plus 70%, sulfur plus 60%. Brent crude plus 52%, heating oil plus 52%. WTI, that's West Texas Intermediate US crude oil plus 48%, URA, an important nitrogenous fertilizer for corn production and other crops 48%. Diesel plus 45, gasoline plus 40, European natural gas up 36%, fertilizers generally 23% and so on with um some softs down there. Um palm oil wheat starting to to poke their little heads up. And so that's how you get to those high double digit inflation because Paul all that stuff that the the oil that's in there that feeds into everything. It's just not possible to have 50. And listen, if this goes on long enough, these numbers are going to turn into triple-digit numbers. There's going to be 100% increases, 200% increases. Those will feed into high double-digit inflation no matter what we do. So, this has to end soon. And I guess our hope is Iran's going to fold first, and they're hoping we're going to fold first. But this this is now this is getting pretty dodgy. And I'm just amazed that the market's not taken any of this into consideration, any of that risk off the sidelines. Yes, we've had a technical move up. There was squeezes, short covering, all of that stuff. But I mean, if you just look at the general equity environment out there, they're ignoring they're ignoring what's taking place in the Middle East. It's all, you know, the fact that we've broken out to all-time highs after consolidating for a period. That is important, but it's important if we're in the same type of environment without exterior risks that have increased. Risks have increased dramatically. And it's easy to s how this can unfold worst case scenario. And you're having to embrace a lot of speculation and hope to assume that this is going to be over without any continued damage at this point. And my question is is right, if Iran wants to cause as much damage as possible, then they want to drag this out as long as possible, right? And you know, my question is is if China's in the background, you know, we've heard that they're providing some support at least in in uh intelligence gathering that they're sharing with Iran. So, are they protecting their strategic petroleum reserves because they're in the background saying, "Hey, you know, let's deliver an economic blow to the US." And if Iran has some hidden support back there that's encouraging them to to to not negotiate, this really could get out of hand pretty quickly. And I'm I'm just thinking out loud, not saying that's the case. >> Well, China just announced yesterday that they're going to resume exporting certain petroleum products. I believe diesel was on the list, gasoline was on the list, and um maybe Napa, but I can't remember. But diesel and gasoline were on the list. Oh, it was jet fuel. That was the third one. That means they have an abundance of those products right now. And so I have to start to wonder, Paul, if it isn't true that some of those Iranian tankers have come out and they've been going to China anyway, right? Because you don't that when China says they're going to resume exports of those products, it means they have more of those than they currently need. That's not a deficit. That's a surplus situation, right? Um, so the question is, if their reserves aren't going down, where's that oil coming from? I'm beginning to suspect there's more of a leak in the in the straight than we've been told. >> Right. Maybe all of the ships that are coming out are going straight over there. We're just not being told that. >> Yep. Or Russia has found a way to to begin to sneak stuff over to China. So, speaking of Yuria, the the food inflation, this is going to be a really big thing. Obviously, you know, from the outside in concept, the weaker countries are going to get hit hardest. You know, this is just this is absolutely a truth at this point in time. And the URA prices again, which is a nitrogen fertilizer. Now, we're looking at the world nitrogen index here and Middle East Arab Gulf area compared to New Orleans. New Orleans is up 75%ish, but these other ones are closing in on 100% increases since the start of the war. That's an extraordinarily large problem for these countries um that are Myanmar, Burma, Bangladesh, India, you know, it's it's this is coming and it's going to really spike world food prices. And of course, remember the Arab Spring 2011? Yeah, there was this Tunisian fruit vendor set himself on fire. That was the spark, but actually the dry tinder was how much bread prices had gone up. And this was again in consequence of of rapidly rising food prices in early 2011. So high food costs tend to lead to social unrest uh particularly in the developing countries. It's a it's a pattern. >> Yeah. And with with that input cost and farmers choosing not to put that fertilizer down even in a normal environment you get lower yields. God forbid we have a drought that comes on top of that in different parts of the world. that's just going to further supercharge uh the the food price increases and that's going to cause a lot of damage to a lot of the world. Well, allegedly it's going to be another not just a strong but maybe a record breakingish kind of an El Nino year this year and that just messes up rainfall patterns all over the place. Uh which tends to mess up your growing patterns all over the place. So if that happens um yeah we could see vastly higher food prices. a headline this morning on Bloomberg. They're like, "Wheat prices highest since 2023." And I'm like, I don't think they've really budged that much. So, I took a look at this, Paul. Sure enough, yep, there's wheat tucked it up right there. You have to go back to Well, I guess that's 2024, by the way. I count that count things. But can we talk about that 2022 moment again? That's where wheat was right there. More than double from here. So, uh, obviously it could really run hard and still have a hard time getting to those 2022 levels. Again, this is all in the context of the uh, Russia's war with Ukraine and the world just became worried that this was going to disrupt certain energy market things and it did to some extent. But this is hardly this is such a muted response. I I I struggle to understand how it's been this muted. That doesn't make sense with the with the risks that are on the horizon. There doesn't seem to be any anticipation of of that coming to reality. The assumption is Trump's going to taco assuming that he can, betting that he can, and that this is going to be over because we've got the midterms coming up and how damaging that would be. >> Yeah. I mean, that's that's the common theme I hear across the board of every investor, every analyst that's especially modern portfolio theory is just this full belief that there's no way Trump's going to allow this to unfold the way it looks like it potentially can, you know, and I keep asking the question, well, do you think he has that much control? Nobody can answer that question clearly. It's like, no, there's no way. He's got something that that he'll pull off. Well, the problem is if this continues, you can't print money into an inflationary environment. That's just adding gasoline to the fire. That's going to make the situation far worse. So, this is a a pretty tedious situation that we find ourselves in, which is kind of interesting because um Tavy Costa writing here that agricultural commodities are now breaking out decisively from a nearly 20-year resistance, just as expected. When energy moves, food prices tend to follow. This is deeply concerning for society yet it aligns with a broader macro trend. People will point to isolated narratives like droughts but that misses the bigger picture. This is a second order effect of the energy issue and then he's got a substack about all of this. And here's the chart he put along with that. You can clearly see this resistance line here goes back 20 years. And oh this is the first time that agricultural commodities have sort of poked their little head above that trend line. Yeah, they could poke their head back down again, but I can't see it at this point. Seems pretty clear to me that >> No, >> this is a beginning of a new trend of some kind. >> Well, and those those trend breaches that have been in place for so long, those are ridiculously important, you know, and and all of the 28 years that I've been doing this and studying trend lines and breaks and resistance and all that, nobody can really explain exactly why that is, right? But but it occurs. And that makes me think if I can find it here real quick. Going back to looking at interest rates when we broke that major downtrend. Let me see if I can >> Oh yeah, >> find that real quick because it shows a good example of what is most likely to follow through when you have those trend breaks because it's a regime change and it's not something that changed overnight. I mean, there were a lot of investors out there. They've kind of given up on it to begin with. There's still hope, but what this is is the 30-year Treasury yield. Of course that spiked here what 1981 at around 15% on this chart but that was a clear trend that was in place and every time interest rates hit that trend line poof they went lower. Then we finally reach the bottom side of this trend line and we break out and what has occurred since then? We've continued to rise. Right? So maybe maybe you pull back some if we have an economic recession. But it's clear with the weight of the evidence this is a completely different environment. it looks like we're cycling higher even without all of these these pressures that that we're discussing that are just going to exacerbate that move over time. So, this is just puts in perspective that we very well could see a major trend change with those uh agricultural commodities breaching that trend line that's been in place for so long. >> Mhm. Well, so there there's two reasons that prices rise. One is when you have a supply shock, right? So you we have less oil, less natural gas, so there's less fertilizer, so there's a lower crop yield. That that less supply will will of course turn into higher prices. The second reason, of course, is money printing. Um, and if you uh can we talk about this cuz this this is a bit on my mind. This is part of the inflation story. So the Federal Reserve has clearly started to change its behavior. You can see the this is its Federal Reserve balance sheet. So when the Fed's balance sheet goes up and expands, what it's doing is it's going out and buying some sort of a debt product with money. It's printed out of thin air, right? So it buys treasuries, formerly mortgage back securities, little Bear Sterns funds, some corporates, whatever they felt they had to do. And so that doesn't look like much, but we're looking at this over a 20-year period. Let's dial in. This is what it looks like here. uh in the first four months of 2026, it has printed now $172 billion annualizes out to a half a trillion dollars per year. And the Fed is printing, Paul, with stocks at all-time ridiculous highs with inflation way above its target and rising. And it's printing anyway. >> Yeah. >> Reckless, irresponsible. >> Unbelievable. The the only way I know to explain it, Chris, is you know, money in our country has become a god. And and what I mean by that is we think, you know, our leaders believe that if we just print enough money and give it to people, that's going to solve all their problems, right? Not changing your behavior, not looking at your life and how you can institute discipline that you can set those real expectations. It's, oh no, we've got a problem, so let's give you some money to fix it. Let's not solve the core underlying problem that got us here. Let's just print money, you know. So, there are people during times throughout history and especially faith, those of us that have faith as our core tenant. If something goes wrong, you get on your knees and you ask God for guidance to give you the strength to walk through it and trust that the Lord uses whatever calamity is cast upon you for your ultimate good and his glory down the road. Right? been in our country, the only thing that they know to do is print money. And my biggest concern is they're caught up in the the emotional weakness that we have as humans and hindsight bias that, hey, well, we printed all this money in 2008 and we didn't have a dollar collapse or an inflationary holocaust. So, yeah, it's a little bit harder this time, but it solved it in all of these periods. So, let's just print a whole bunch more money and solve it at this moment in time. That's my biggest concern is that seems to be the only thing that they know to do is just throw money at the problem and let's cause these asset prices to go up. Theoretically, they'll continue to go up and we're not going to have any negative consequences associated with that and tell us that it's temporary. That's my biggest concern. It doesn't make sense to be printing all of this money into this environment right here. Well, every time they have printed, of course, they they did a tiny baby version of this in ' 87 with the stock market crash again in '94 with the corporate bond market hiccup again in 1998 with the long-term capital management issue again with the dot crisis again. Oh, you know, uh, with the great financial crisis and then of course super steroids. Well, it actually didn't even stop. Let me back up. I mean, this this this annoyed me to no end. This is the great financial crisis. So, yeah. So they basically go from 880 billion to 2.4 trillion. They tripled the size of the Fed balance sheet. It took a 100red years to get to this point and then they just tripled it in like a couple months and then things floated along and then they look they did it again here in 2011 12 and then they floated a little bit and then the market started to not go up into the right. So wow they really printed up through 20145. Um they never really stopped intervening in the markets. This is where they had to jump in with both feet and they never got out of the pool. They tried for a little while. Then we had here the 2019 repo crisis which caused them to also start printing but then co >> Mhm. >> And then co the COVID crisis is over. They still kept printing. It's just >> it's just who they are and what they do. And what I want to point out is that at each one of these printings, Paul, the cut line for family income where you're basically no longer can keep your nose above the water just keeps moving up and up and up through the income stratas, right? And it's not uncommon to hear people now, Paul, earning $200,000 in a city saying, "I'm barely making it." Why? Because of this. >> And it's out there enough to people like Michael Green. He put together, gosh, I can't remember the name of the article now. my life is a lie. >> Yeah. >> That that that and he was ex, you know, just battered because of his uh because of his uh work, but the core of his work is true. He basically established for a large part of America, $140,000 is the point which you have enough money left over to be able to save and below that you don't. I mean, I've had a lot of conversations with young couples and and conversations with, you know, kids of family of of clients and, you know, and I find that to be reality over large parts of the country. And then you've got your other cities to where I mean, that's poverty level, right? They can't even live in some of these cities because of the cost of living in California, New York, and other Chicago, and places like that. >> No. And and they don't care. That's that's what bothers me, Paul. It's not even I'm not sure if they are hostile, but but they're indifferent, for sure. which is bad. Uh but they're just indifferent to how many more people, you know, can no longer afford to live in the country that they're printing. And why do they print? Like why why is the Fed why is the Fed printing like it's an emergency right now? Well, if there is an emergency, they're not being honest about it and telling us what it is. I think you and I can explore this in terms of the private credit hiccups that are happening or some other things. But it's clear this is this is the Fed's like, "Oh, there's some sort of crisis out there." But the only crisis I can ever find in these moments, Paul, is there's some big bank that's about to lose some money. And that would be tragic, >> you know, >> and I want them to take their losses. I want them to have to lick their wounds. I want some of them to go out of business because they shouldn't be operating the way they've been operating. And then we'll carry on with better, healthier companies. But the Fed's job is to bail out the big banks whenever it looks like they're going to take a loss. That's what this is. This is this is them bailing somebody out. I just don't know who it is. It's not the American public, that's for sure. >> But from behind the scenes, it looks like it could be very private equity, right? With what's taking place and what we're hearing about what's take what is occurring within private equity and it's behind a a dark curtain. It's not it's not clear where we can go in and see what's taking place, but there's credible analysts that are sharing all kinds of things that are taking place. That's the only thing that makes sense to me is they're trying to protect those that are the most connected that are donating the most to the politicians and they're they're protecting their income source it seems at this point and their relationships by printing this money at the expense of the average American. I mean this this >> this is I'm 172 billion is a shocking number. >> It's a shocking number. is shocking. And and you know, and this is just a reminder, I get a little desensitized to it when I'm showing somebody in their retirement plan what the difference between 3 and 1/2 and 5 and 1/2 and 7 12% inflation. And one of the things I go through is I go through and say, "Hey, cumulatively over your retirement, this income level, I can't remember the numbers, you're going to need $3 million uh to sustain yourself." And from your investment portfolio, it's going to be three. That's it. you know, income. Well, counting social security and all, I messed those numbers up. But the point is, I move them to five and a half and that number jumps dramatically. And you move to seven and a half and people are like, "Oh my gosh, that's how bad inflation is." And I said, "Yes, if every American knew how bad the outcome of higher inflation is and the damage that that puts and the pressure it puts on them in retirement, not counting while they're trying to save and earn enough to set aside for retirement, they would revolt against the government and we would not have any printing take place." But they don't show those numbers, right? They keep you short-term focused and say, "Hey, your balance sheet went up. Your house went up." Okay, that's great. They don't point out the fact that, yeah, your taxes and insurance are going to go up following along behind that, too. And your repairs are going to go up and and it just keeps people on this treadmill. The baby boomers have escaped from it at this point. But my concern is it's coming at them with a vengeance with with the foundation we're laying right now. And the large majority are not prepared for it. Even those that that I've met that are in retirement, when I run this analysis on them, the large majority are not prepared for it. Nobody has told them or taken the time or even considered the risk out there to say, "Hey, you might not be able to change everything now to be prepared for this, but this is what's coming." So, and these are the things that you can do to try to head that off, and this is the line where you're going to have to make dramatic changes to protect yourself from it. And I just don't see how it doesn't come at this point unless unless we absolutely have another deflationary great depression collapse that everything falls upon itself like the a Jingga Tower uh to keep that from taking place because all of our actions especially with the government leaders imprinting and fiscal irresponsibility is driving us in that direction. Well, there's there's no chance in my mind that they are going to allow deflation to happen because that could really implode the whole system. They would vastly prefer an inflationary explosion than a deflationary implosion because you can't contain this once it starts happening. The whole system could be at fault. That's the great financial crisis. They they already stared down the barrel of that gun and said, "No thanks." So, inflation problem. You know, when you're in in an inflationary environment, what do you do as an investor? Well, you have to either accept the fact that you're going to have a steady erosion in your living standards or you have to take a lot of risk on to try and stay ahead of that. So, they're forcing people to either eat losses or take risks that are just outlandishly large, you know, and that that's not a good choice to force people into. I just want people to be aware that's the choice the Federal Reserve is saying. I'm going to either make you eat canned dog food or you're going to have to risk it all on a on a hope for snake eyes at the table, you know, or something. It's just it's really it's it's not a good situation. More people should be upset about it to be honest. I think >> they just don't know. They don't understand quite frankly because there's really not anybody that that's around today to I mean there are there are people that are around but the most of the people that are alive and retired today heard about the inflation in the 1970s and yeah they had high mortgage rates but they had the asset price inflation throughout their life to where where that's kind of a memory in the past that was somebody else. You know, if we had somebody that was 80 years old in 1960 or you know, 75 years old 1968 and lived through the that inflation and their retirement that wasn't prepared for it, then that may be something that somebody would listen to. But we just don't have those individuals around right now because of how our life cycles go, right? >> Yeah. By the way, I don't have the data, but we'll just bookmark it that there is a lot of cracks showing up in the housing market, which makes sense, right? they they hit all-time record highs >> uh in terms of affordability or unaffordability. So, the Fed's response to whatever is going on is to print. The government's response is to borrow and spend. And so, this orange line is just federal debt. It's total public debt. Interesting. When I go I went to the Fred site at at uh which is the Federal Reserve site at St. Louis. And I love the site. Gives me lots of good data and charts. I hadn't seen this before because I was like, "Wait a minute. It last updated March 3rd. Like they they issue the debt numbers daily at the Treasury. Um so like they said and they said next release date not available. Like whoa whoa whoa. Why did the Federal Reserve stop recording the actual debt numbers? Cuz they were easy to find. I went I went Paul to the um to the US Treasury site and pulled it down. Okay. It's currently at 38.96 trillion, very close to 39 trillion. They're here at 38.5 and they stopped counting. I don't know why, but the last two times I've seen the Fed stop counting something, it was because they didn't want to. M3 comes to mind. They stopped counting how much money is in circulation across how many dollars are in circulation across the world. Uh and and they uh yeah, I always get a little suspicious when they this this didn't make sense to me. Just >> no. Anyway, 39 trillion we'll call it. We'll round up. >> Yeah, it's a little bizarre, right? >> Yeah. >> Yeah. >> That's bizarre. And I don't like that. I don't like this push to do away with quarterly earnings reports and quarterly reports from the government. >> That that just doesn't make sense. Give people more information. You've got access to technology now where you can compile that data quicker. Give us more information. The only reason that you start hiding information is because you have something to hide, right? so that your propaganda and narrative will last a little bit longer and give you more time to to build your next story when the data comes out. I don't I don't I don't like that. I don't understand in in today's environment when we when we can compile this data so much faster that you're going to hide the data. Doesn't make sense. >> Well, you know, we'll talk about super expensive stocks in a minute. Um, but you know, whenever the Fed prints like this, you know, obviously asset prices, financial asset prices tend to go up, right? Because that's that's the stimulus response. But there's kind of a stealth QE going on. We've mentioned it before. I just want to bring it up one more time, which is that right now the cumulative interest expense for 2026 on the federal debt that's out there is up 7% higher than 2025. It's on track to I don't know where it's going to end up, 1.24 24 trillion and and it could go higher from from there. It might pick up speed. We don't know. But it's kind of like QE, Paul, because this is money. That's 1.24 trillion of cash that goes out into the system. And so that's imagine, I mean, just comparing this to say 2020 when it was half that, less than half that. Uh that's a lot of money. So that's out there working its magic. You know, has to go somewhere, right? So it's kind of I think it plays it definitely adds to overall liquidity. It's a it's like it it expands the money supply in essence. >> It expands the money supply which increases the likelihood of inflation which further exacerbates you know the backdrop that we have right I mean we're consistently seeing layoffs at least the argument is AI and that's less jobs less earning for people with with the cost of living going up. That's that's not good from an overall standpoint. At some point, that trickles into those corporate profits. It does, which trickles into a dramatically different market environment. So, to close this section out, more inflation's on the way. It's baked in the cake just because of the supply shocks that are happening. How would we get that double hump inflation? Well, it's going to be a combination of supply shocks that is going to be from energy as a first order, but second order effects like less wheat, less corn, less food, things like that. And then also we have federal reserve printing and federal government deficit spending on top of that. That's just inflation squared as far as I can tell, Paul. So that's kind of my thesis for why I say it's possible that inflation peaks out in a year or two or three. It it something unthinkable to most people today, which would be 18 to 20%. >> That is unthinkable to the large majority of people unfortunately. >> That's unthinkable to me. Paul, we're going to leave it there for today. And so for anybody who wants to talk with Paul and his amazing team, please just go to peakfinancialinvesting.com, fill out a simple form, and somebody from Paul's office will be back in touch with you within 48 business hours and you can start the first of three phone calls, an introductory call, a planning call, and then finally a recommendations call if goes that far. And if all that checks out and you want to work together, then um that's the process to become uh part of uh Paul's family universe of people that he he helps and treats just like family. So with that, Paul, thanks so much for your time today. >> It's my honor. Good to see you, Chris. >> Bye everyone. Until next week. Signing off for now.
When Both Lifeboats Start Taking Water (What Happens Next)
Summary
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. The average investor that's purchased these things is going to have a stock market that's going to collapse dramatically and a bond market that's going to collapse dramatically and they're not going to have that hedge in place that they were expecting to. And they're going to be forced to sell something at some point in the future if they don't have a riskmanage adaptive overlay over the top of it. And and that's going to ripple through the housing market. It's going to ripple through every section of our economy. And this hindsight bias that we have and looking back over the past 10 years of how the government's been able to bail everything out, we're mentally projecting in the future is going to be a completely different reality than what most people are imagining. Hello everyone and welcome to this episode of Finance. I'm your host Chris Martinson back with Paul Ker of Kiker Wealth Management. How you doing today, Paul? >> I'm doing good. Happy Wednesday to you, Chris. Good to see you again. >> We have a lot to discuss today, Paul. And we're going to begin with inflation. Inflation inbound. We've talked about this before. It too bears repeating. It's this important. Remember, we had this bad period of inflation, the worst our country had experienced, 73 to 76, and then oh no, a double hump which went from 78 to 82. So that double hump inflation it it not doesn't just sort of rhyme. It's almost a full repetition. Again, this was an energy crisis some and then some printing decision money printing decisions. We're going to look at that data. We have both of those elements back in play here today. But the question would be somebody posed to me. Look, if the double hump inflation of the late 70s to early 80s peaked out at about 14% on a year-over-year basis, where do you think we're going this time? This is different in the sense Paul that this is a supply shock. It's larger than anything else. We don't have any historical analoges where we can sort of say was kind of like that. It it's just both in in terms of its suddenness and its magnitude just without precedent. Okay. My best Paul I will not be surprised to see over the next two to three years that we go up to high double digit inflation. I'm talking 18 to 20%. that would not shock me if we track along with this. Um, and nobody's ready for that. >> No, I mean the the the destruction that that's going to cause across the board, it appears that a lot of the corporations were much wiser than the US government um uh treasury secretaries in the past because what we have seen, they seem to have turned their debt out for much longer, 20 and 30 years and took advantage of those lower rates. So maybe a lot of the corporations will kind of be okay in that situation. But the problem is they've sold a lot of those bonds to investors that that may necessarily need that capital. Investors that have expected, okay, if stocks go down, bonds are going to go up. So if I need some liquidity to keep from being forced to sell my passive investments at the worst time, I'll sell those bonds. If we get that type of inflation, the average investor that's purchased these things is going to have a stock market that's going to collapse dramatically and a bond market that's going to collapse dramatically and they're not going to have that hedge in place that they were expecting to and they're going to be forced to sell something at some point in the future if they don't have a riskmanage adaptive overlay over the top of it. It's just inevitable if we get there and and that's going to ripple through the housing market. It's going to ripple through every section of our economy. And this hindsight bias that we have and looking back over the past 10 years of how the government's been able to bail everything out, we're mentally projecting in the future is going to be a completely different um reality than what most people are imagining. >> Yeah, I I've got some some data on that too we can discuss. But if we imagine, okay, if we do repeat this double hump inflation, obviously that's everybody needs to begin preparing for that right now because what do we know about inflation when it comes? If you're on a fixed income, your cola adjustments never are as fast as the actual inflation you're experiencing, right? So, you got to look ahead to that and do the best you can, I think, to create some buffer in that or >> um understand that that you may have to really go further in terms of scrimping, excuse me, and saving to to get through that period of time as well. uh what investments do well and do poorly. I think passive investors are going to experience this as a very rough ride because if you're passively in a standard 60/40 portfolio, well, the 40 part is going to get mauled by by this. Absolutely mauled. Remember in the 70s they called US Treasury bonds certificates of confiscation. Meaning if you held them, you were just losing money because you might have held a bond that was yielding 5% and all of a sudden there's a equivalent bond on the market yielding 14%. you're you have a huge draw down uh in your capital on that if you choose to redeem it. So >> yes, a huge draw down and uh and and that's going to be painful and the investing environment completely changes, right? I mean and the interesting thing about passive, it's robotic, right? It doesn't care about price. It doesn't care about inflation expectations. It doesn't care about anything outside of the fact of I've got money in and I'm putting it to work. it's not going to make any type of adaptation. So the strength of that passive is if things are irrational, you're going to do exactly what the general market's going to do because because it's irrational and it has no u management or adaptation for that. If it's irrational, right? Because if we get that type of environment, markets are going to sell off and they're going to go below where they should be. then you're going to stay in that environment uh for as long as uh you know with no adaptation and and you've just got to hope and that and and hopefully you have prepared ahead to make sure you've got liquidity so that you're not forced to sell at the worst time. >> Absolutely. So if we think about this, how how would we possibly get to that crazy 18 20% inflation reading? Well, one is we just keep this war up for a while. Charlie Ble just posted this this morning. Since the start of the Iran war, jet fuel plus 70%, sulfur plus 60%. Brent crude plus 52%, heating oil plus 52%. WTI, that's West Texas Intermediate US crude oil plus 48%, URA, an important nitrogenous fertilizer for corn production and other crops 48%. Diesel plus 45, gasoline plus 40, European natural gas up 36%, fertilizers generally 23% and so on with um some softs down there. Um palm oil wheat starting to to poke their little heads up. And so that's how you get to those high double digit inflation because Paul all that stuff that the the oil that's in there that feeds into everything. It's just not possible to have 50. And listen, if this goes on long enough, these numbers are going to turn into triple-digit numbers. There's going to be 100% increases, 200% increases. Those will feed into high double-digit inflation no matter what we do. So, this has to end soon. And I guess our hope is Iran's going to fold first, and they're hoping we're going to fold first. But this this is now this is getting pretty dodgy. And I'm just amazed that the market's not taken any of this into consideration, any of that risk off the sidelines. Yes, we've had a technical move up. There was squeezes, short covering, all of that stuff. But I mean, if you just look at the general equity environment out there, they're ignoring they're ignoring what's taking place in the Middle East. It's all, you know, the fact that we've broken out to all-time highs after consolidating for a period. That is important, but it's important if we're in the same type of environment without exterior risks that have increased. Risks have increased dramatically. And it's easy to s how this can unfold worst case scenario. And you're having to embrace a lot of speculation and hope to assume that this is going to be over without any continued damage at this point. And my question is is right, if Iran wants to cause as much damage as possible, then they want to drag this out as long as possible, right? And you know, my question is is if China's in the background, you know, we've heard that they're providing some support at least in in uh intelligence gathering that they're sharing with Iran. So, are they protecting their strategic petroleum reserves because they're in the background saying, "Hey, you know, let's deliver an economic blow to the US." And if Iran has some hidden support back there that's encouraging them to to to not negotiate, this really could get out of hand pretty quickly. And I'm I'm just thinking out loud, not saying that's the case. >> Well, China just announced yesterday that they're going to resume exporting certain petroleum products. I believe diesel was on the list, gasoline was on the list, and um maybe Napa, but I can't remember. But diesel and gasoline were on the list. Oh, it was jet fuel. That was the third one. That means they have an abundance of those products right now. And so I have to start to wonder, Paul, if it isn't true that some of those Iranian tankers have come out and they've been going to China anyway, right? Because you don't that when China says they're going to resume exports of those products, it means they have more of those than they currently need. That's not a deficit. That's a surplus situation, right? Um, so the question is, if their reserves aren't going down, where's that oil coming from? I'm beginning to suspect there's more of a leak in the in the straight than we've been told. >> Right. Maybe all of the ships that are coming out are going straight over there. We're just not being told that. >> Yep. Or Russia has found a way to to begin to sneak stuff over to China. So, speaking of Yuria, the the food inflation, this is going to be a really big thing. Obviously, you know, from the outside in concept, the weaker countries are going to get hit hardest. You know, this is just this is absolutely a truth at this point in time. And the URA prices again, which is a nitrogen fertilizer. Now, we're looking at the world nitrogen index here and Middle East Arab Gulf area compared to New Orleans. New Orleans is up 75%ish, but these other ones are closing in on 100% increases since the start of the war. That's an extraordinarily large problem for these countries um that are Myanmar, Burma, Bangladesh, India, you know, it's it's this is coming and it's going to really spike world food prices. And of course, remember the Arab Spring 2011? Yeah, there was this Tunisian fruit vendor set himself on fire. That was the spark, but actually the dry tinder was how much bread prices had gone up. And this was again in consequence of of rapidly rising food prices in early 2011. So high food costs tend to lead to social unrest uh particularly in the developing countries. It's a it's a pattern. >> Yeah. And with with that input cost and farmers choosing not to put that fertilizer down even in a normal environment you get lower yields. God forbid we have a drought that comes on top of that in different parts of the world. that's just going to further supercharge uh the the food price increases and that's going to cause a lot of damage to a lot of the world. Well, allegedly it's going to be another not just a strong but maybe a record breakingish kind of an El Nino year this year and that just messes up rainfall patterns all over the place. Uh which tends to mess up your growing patterns all over the place. So if that happens um yeah we could see vastly higher food prices. a headline this morning on Bloomberg. They're like, "Wheat prices highest since 2023." And I'm like, I don't think they've really budged that much. So, I took a look at this, Paul. Sure enough, yep, there's wheat tucked it up right there. You have to go back to Well, I guess that's 2024, by the way. I count that count things. But can we talk about that 2022 moment again? That's where wheat was right there. More than double from here. So, uh, obviously it could really run hard and still have a hard time getting to those 2022 levels. Again, this is all in the context of the uh, Russia's war with Ukraine and the world just became worried that this was going to disrupt certain energy market things and it did to some extent. But this is hardly this is such a muted response. I I I struggle to understand how it's been this muted. That doesn't make sense with the with the risks that are on the horizon. There doesn't seem to be any anticipation of of that coming to reality. The assumption is Trump's going to taco assuming that he can, betting that he can, and that this is going to be over because we've got the midterms coming up and how damaging that would be. >> Yeah. I mean, that's that's the common theme I hear across the board of every investor, every analyst that's especially modern portfolio theory is just this full belief that there's no way Trump's going to allow this to unfold the way it looks like it potentially can, you know, and I keep asking the question, well, do you think he has that much control? Nobody can answer that question clearly. It's like, no, there's no way. He's got something that that he'll pull off. Well, the problem is if this continues, you can't print money into an inflationary environment. That's just adding gasoline to the fire. That's going to make the situation far worse. So, this is a a pretty tedious situation that we find ourselves in, which is kind of interesting because um Tavy Costa writing here that agricultural commodities are now breaking out decisively from a nearly 20-year resistance, just as expected. When energy moves, food prices tend to follow. This is deeply concerning for society yet it aligns with a broader macro trend. People will point to isolated narratives like droughts but that misses the bigger picture. This is a second order effect of the energy issue and then he's got a substack about all of this. And here's the chart he put along with that. You can clearly see this resistance line here goes back 20 years. And oh this is the first time that agricultural commodities have sort of poked their little head above that trend line. Yeah, they could poke their head back down again, but I can't see it at this point. Seems pretty clear to me that >> No, >> this is a beginning of a new trend of some kind. >> Well, and those those trend breaches that have been in place for so long, those are ridiculously important, you know, and and all of the 28 years that I've been doing this and studying trend lines and breaks and resistance and all that, nobody can really explain exactly why that is, right? But but it occurs. And that makes me think if I can find it here real quick. Going back to looking at interest rates when we broke that major downtrend. Let me see if I can >> Oh yeah, >> find that real quick because it shows a good example of what is most likely to follow through when you have those trend breaks because it's a regime change and it's not something that changed overnight. I mean, there were a lot of investors out there. They've kind of given up on it to begin with. There's still hope, but what this is is the 30-year Treasury yield. Of course that spiked here what 1981 at around 15% on this chart but that was a clear trend that was in place and every time interest rates hit that trend line poof they went lower. Then we finally reach the bottom side of this trend line and we break out and what has occurred since then? We've continued to rise. Right? So maybe maybe you pull back some if we have an economic recession. But it's clear with the weight of the evidence this is a completely different environment. it looks like we're cycling higher even without all of these these pressures that that we're discussing that are just going to exacerbate that move over time. So, this is just puts in perspective that we very well could see a major trend change with those uh agricultural commodities breaching that trend line that's been in place for so long. >> Mhm. Well, so there there's two reasons that prices rise. One is when you have a supply shock, right? So you we have less oil, less natural gas, so there's less fertilizer, so there's a lower crop yield. That that less supply will will of course turn into higher prices. The second reason, of course, is money printing. Um, and if you uh can we talk about this cuz this this is a bit on my mind. This is part of the inflation story. So the Federal Reserve has clearly started to change its behavior. You can see the this is its Federal Reserve balance sheet. So when the Fed's balance sheet goes up and expands, what it's doing is it's going out and buying some sort of a debt product with money. It's printed out of thin air, right? So it buys treasuries, formerly mortgage back securities, little Bear Sterns funds, some corporates, whatever they felt they had to do. And so that doesn't look like much, but we're looking at this over a 20-year period. Let's dial in. This is what it looks like here. uh in the first four months of 2026, it has printed now $172 billion annualizes out to a half a trillion dollars per year. And the Fed is printing, Paul, with stocks at all-time ridiculous highs with inflation way above its target and rising. And it's printing anyway. >> Yeah. >> Reckless, irresponsible. >> Unbelievable. The the only way I know to explain it, Chris, is you know, money in our country has become a god. And and what I mean by that is we think, you know, our leaders believe that if we just print enough money and give it to people, that's going to solve all their problems, right? Not changing your behavior, not looking at your life and how you can institute discipline that you can set those real expectations. It's, oh no, we've got a problem, so let's give you some money to fix it. Let's not solve the core underlying problem that got us here. Let's just print money, you know. So, there are people during times throughout history and especially faith, those of us that have faith as our core tenant. If something goes wrong, you get on your knees and you ask God for guidance to give you the strength to walk through it and trust that the Lord uses whatever calamity is cast upon you for your ultimate good and his glory down the road. Right? been in our country, the only thing that they know to do is print money. And my biggest concern is they're caught up in the the emotional weakness that we have as humans and hindsight bias that, hey, well, we printed all this money in 2008 and we didn't have a dollar collapse or an inflationary holocaust. So, yeah, it's a little bit harder this time, but it solved it in all of these periods. So, let's just print a whole bunch more money and solve it at this moment in time. That's my biggest concern is that seems to be the only thing that they know to do is just throw money at the problem and let's cause these asset prices to go up. Theoretically, they'll continue to go up and we're not going to have any negative consequences associated with that and tell us that it's temporary. That's my biggest concern. It doesn't make sense to be printing all of this money into this environment right here. Well, every time they have printed, of course, they they did a tiny baby version of this in ' 87 with the stock market crash again in '94 with the corporate bond market hiccup again in 1998 with the long-term capital management issue again with the dot crisis again. Oh, you know, uh, with the great financial crisis and then of course super steroids. Well, it actually didn't even stop. Let me back up. I mean, this this this annoyed me to no end. This is the great financial crisis. So, yeah. So they basically go from 880 billion to 2.4 trillion. They tripled the size of the Fed balance sheet. It took a 100red years to get to this point and then they just tripled it in like a couple months and then things floated along and then they look they did it again here in 2011 12 and then they floated a little bit and then the market started to not go up into the right. So wow they really printed up through 20145. Um they never really stopped intervening in the markets. This is where they had to jump in with both feet and they never got out of the pool. They tried for a little while. Then we had here the 2019 repo crisis which caused them to also start printing but then co >> Mhm. >> And then co the COVID crisis is over. They still kept printing. It's just >> it's just who they are and what they do. And what I want to point out is that at each one of these printings, Paul, the cut line for family income where you're basically no longer can keep your nose above the water just keeps moving up and up and up through the income stratas, right? And it's not uncommon to hear people now, Paul, earning $200,000 in a city saying, "I'm barely making it." Why? Because of this. >> And it's out there enough to people like Michael Green. He put together, gosh, I can't remember the name of the article now. my life is a lie. >> Yeah. >> That that that and he was ex, you know, just battered because of his uh because of his uh work, but the core of his work is true. He basically established for a large part of America, $140,000 is the point which you have enough money left over to be able to save and below that you don't. I mean, I've had a lot of conversations with young couples and and conversations with, you know, kids of family of of clients and, you know, and I find that to be reality over large parts of the country. And then you've got your other cities to where I mean, that's poverty level, right? They can't even live in some of these cities because of the cost of living in California, New York, and other Chicago, and places like that. >> No. And and they don't care. That's that's what bothers me, Paul. It's not even I'm not sure if they are hostile, but but they're indifferent, for sure. which is bad. Uh but they're just indifferent to how many more people, you know, can no longer afford to live in the country that they're printing. And why do they print? Like why why is the Fed why is the Fed printing like it's an emergency right now? Well, if there is an emergency, they're not being honest about it and telling us what it is. I think you and I can explore this in terms of the private credit hiccups that are happening or some other things. But it's clear this is this is the Fed's like, "Oh, there's some sort of crisis out there." But the only crisis I can ever find in these moments, Paul, is there's some big bank that's about to lose some money. And that would be tragic, >> you know, >> and I want them to take their losses. I want them to have to lick their wounds. I want some of them to go out of business because they shouldn't be operating the way they've been operating. And then we'll carry on with better, healthier companies. But the Fed's job is to bail out the big banks whenever it looks like they're going to take a loss. That's what this is. This is this is them bailing somebody out. I just don't know who it is. It's not the American public, that's for sure. >> But from behind the scenes, it looks like it could be very private equity, right? With what's taking place and what we're hearing about what's take what is occurring within private equity and it's behind a a dark curtain. It's not it's not clear where we can go in and see what's taking place, but there's credible analysts that are sharing all kinds of things that are taking place. That's the only thing that makes sense to me is they're trying to protect those that are the most connected that are donating the most to the politicians and they're they're protecting their income source it seems at this point and their relationships by printing this money at the expense of the average American. I mean this this >> this is I'm 172 billion is a shocking number. >> It's a shocking number. is shocking. And and you know, and this is just a reminder, I get a little desensitized to it when I'm showing somebody in their retirement plan what the difference between 3 and 1/2 and 5 and 1/2 and 7 12% inflation. And one of the things I go through is I go through and say, "Hey, cumulatively over your retirement, this income level, I can't remember the numbers, you're going to need $3 million uh to sustain yourself." And from your investment portfolio, it's going to be three. That's it. you know, income. Well, counting social security and all, I messed those numbers up. But the point is, I move them to five and a half and that number jumps dramatically. And you move to seven and a half and people are like, "Oh my gosh, that's how bad inflation is." And I said, "Yes, if every American knew how bad the outcome of higher inflation is and the damage that that puts and the pressure it puts on them in retirement, not counting while they're trying to save and earn enough to set aside for retirement, they would revolt against the government and we would not have any printing take place." But they don't show those numbers, right? They keep you short-term focused and say, "Hey, your balance sheet went up. Your house went up." Okay, that's great. They don't point out the fact that, yeah, your taxes and insurance are going to go up following along behind that, too. And your repairs are going to go up and and it just keeps people on this treadmill. The baby boomers have escaped from it at this point. But my concern is it's coming at them with a vengeance with with the foundation we're laying right now. And the large majority are not prepared for it. Even those that that I've met that are in retirement, when I run this analysis on them, the large majority are not prepared for it. Nobody has told them or taken the time or even considered the risk out there to say, "Hey, you might not be able to change everything now to be prepared for this, but this is what's coming." So, and these are the things that you can do to try to head that off, and this is the line where you're going to have to make dramatic changes to protect yourself from it. And I just don't see how it doesn't come at this point unless unless we absolutely have another deflationary great depression collapse that everything falls upon itself like the a Jingga Tower uh to keep that from taking place because all of our actions especially with the government leaders imprinting and fiscal irresponsibility is driving us in that direction. Well, there's there's no chance in my mind that they are going to allow deflation to happen because that could really implode the whole system. They would vastly prefer an inflationary explosion than a deflationary implosion because you can't contain this once it starts happening. The whole system could be at fault. That's the great financial crisis. They they already stared down the barrel of that gun and said, "No thanks." So, inflation problem. You know, when you're in in an inflationary environment, what do you do as an investor? Well, you have to either accept the fact that you're going to have a steady erosion in your living standards or you have to take a lot of risk on to try and stay ahead of that. So, they're forcing people to either eat losses or take risks that are just outlandishly large, you know, and that that's not a good choice to force people into. I just want people to be aware that's the choice the Federal Reserve is saying. I'm going to either make you eat canned dog food or you're going to have to risk it all on a on a hope for snake eyes at the table, you know, or something. It's just it's really it's it's not a good situation. More people should be upset about it to be honest. I think >> they just don't know. They don't understand quite frankly because there's really not anybody that that's around today to I mean there are there are people that are around but the most of the people that are alive and retired today heard about the inflation in the 1970s and yeah they had high mortgage rates but they had the asset price inflation throughout their life to where where that's kind of a memory in the past that was somebody else. You know, if we had somebody that was 80 years old in 1960 or you know, 75 years old 1968 and lived through the that inflation and their retirement that wasn't prepared for it, then that may be something that somebody would listen to. But we just don't have those individuals around right now because of how our life cycles go, right? >> Yeah. By the way, I don't have the data, but we'll just bookmark it that there is a lot of cracks showing up in the housing market, which makes sense, right? they they hit all-time record highs >> uh in terms of affordability or unaffordability. So, the Fed's response to whatever is going on is to print. The government's response is to borrow and spend. And so, this orange line is just federal debt. It's total public debt. Interesting. When I go I went to the Fred site at at uh which is the Federal Reserve site at St. Louis. And I love the site. Gives me lots of good data and charts. I hadn't seen this before because I was like, "Wait a minute. It last updated March 3rd. Like they they issue the debt numbers daily at the Treasury. Um so like they said and they said next release date not available. Like whoa whoa whoa. Why did the Federal Reserve stop recording the actual debt numbers? Cuz they were easy to find. I went I went Paul to the um to the US Treasury site and pulled it down. Okay. It's currently at 38.96 trillion, very close to 39 trillion. They're here at 38.5 and they stopped counting. I don't know why, but the last two times I've seen the Fed stop counting something, it was because they didn't want to. M3 comes to mind. They stopped counting how much money is in circulation across how many dollars are in circulation across the world. Uh and and they uh yeah, I always get a little suspicious when they this this didn't make sense to me. Just >> no. Anyway, 39 trillion we'll call it. We'll round up. >> Yeah, it's a little bizarre, right? >> Yeah. >> Yeah. >> That's bizarre. And I don't like that. I don't like this push to do away with quarterly earnings reports and quarterly reports from the government. >> That that just doesn't make sense. Give people more information. You've got access to technology now where you can compile that data quicker. Give us more information. The only reason that you start hiding information is because you have something to hide, right? so that your propaganda and narrative will last a little bit longer and give you more time to to build your next story when the data comes out. I don't I don't I don't like that. I don't understand in in today's environment when we when we can compile this data so much faster that you're going to hide the data. Doesn't make sense. >> Well, you know, we'll talk about super expensive stocks in a minute. Um, but you know, whenever the Fed prints like this, you know, obviously asset prices, financial asset prices tend to go up, right? Because that's that's the stimulus response. But there's kind of a stealth QE going on. We've mentioned it before. I just want to bring it up one more time, which is that right now the cumulative interest expense for 2026 on the federal debt that's out there is up 7% higher than 2025. It's on track to I don't know where it's going to end up, 1.24 24 trillion and and it could go higher from from there. It might pick up speed. We don't know. But it's kind of like QE, Paul, because this is money. That's 1.24 trillion of cash that goes out into the system. And so that's imagine, I mean, just comparing this to say 2020 when it was half that, less than half that. Uh that's a lot of money. So that's out there working its magic. You know, has to go somewhere, right? So it's kind of I think it plays it definitely adds to overall liquidity. It's a it's like it it expands the money supply in essence. >> It expands the money supply which increases the likelihood of inflation which further exacerbates you know the backdrop that we have right I mean we're consistently seeing layoffs at least the argument is AI and that's less jobs less earning for people with with the cost of living going up. That's that's not good from an overall standpoint. At some point, that trickles into those corporate profits. It does, which trickles into a dramatically different market environment. So, to close this section out, more inflation's on the way. It's baked in the cake just because of the supply shocks that are happening. How would we get that double hump inflation? Well, it's going to be a combination of supply shocks that is going to be from energy as a first order, but second order effects like less wheat, less corn, less food, things like that. And then also we have federal reserve printing and federal government deficit spending on top of that. That's just inflation squared as far as I can tell, Paul. So that's kind of my thesis for why I say it's possible that inflation peaks out in a year or two or three. It it something unthinkable to most people today, which would be 18 to 20%. >> That is unthinkable to the large majority of people unfortunately. >> That's unthinkable to me. Paul, we're going to leave it there for today. And so for anybody who wants to talk with Paul and his amazing team, please just go to peakfinancialinvesting.com, fill out a simple form, and somebody from Paul's office will be back in touch with you within 48 business hours and you can start the first of three phone calls, an introductory call, a planning call, and then finally a recommendations call if goes that far. And if all that checks out and you want to work together, then um that's the process to become uh part of uh Paul's family universe of people that he he helps and treats just like family. So with that, Paul, thanks so much for your time today. >> It's my honor. Good to see you, Chris. >> Bye everyone. Until next week. Signing off for now.