The Consensus Trades Are About to Unravel (Uncut) 01-25-2025

The Consensus Trades Are About to Unravel – Ep 1005

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Well, welcome everybody. As promised, I’m doing a podcast on Friday to wrap up the first trading week of the second term of the Donald Trump presidency. I guess otherwise known as the Donald Trump Show.

And the markets, the stock markets anyway, finished an up week on a down note. Not that big a decline, but the markets were all down today. Although we did see record highs made this week.

And in fact, the S&P 500 made another all-time record high today before closing negative. I got the numbers. The Dow was up 2.3% on the week.

So it was actually the best gainer. S&P up 2%. NASDAQ one and three quarters.

The big tech stocks leading the way. You got a big boost from the tech world with that $500 billion joint venture announcement. You know, a lot of people talk about the $500 billion spend.

And maybe in the long run, this is going to be a good investment. We’ll see. I mean, maybe AI has, you know, all the promise and will live up to the hype.

I mean, maybe it’s even under hype. But what I do know is that in the short run, there is a big expense to the world investing $500 billion. And of course, that’s not all the investment.

There’s more. But if we’re going to invest this money, it’s got to come from someplace. And that means that other investments that might have been made, that may have had a shorter payoff, payback, they’re not going to get made.

You know, everybody wants to talk about, you know, how, you know, if we invest money, it stimulates the economy. You know, if we build a bridge, it’s going to stimulate the economy. The building of the bridge doesn’t stimulate the economy.

In the short run, it actually sedates the economy because resources to build that bridge need to be diverted from something else. We need to pay for it. Now, it helps the economy over the long run if the bridge makes us more productive.

Let’s say it reduces the time it takes to get goods from point A to point B or to get people from point A to point B. And because we made that investment, it pays off in the long run. But doing the work to make the investment, right, we got to cover that burden in the short run. And then the payoff comes down the road.

Well, it’s going to happen on a bigger scale with AI. If we’ve got to build out all this AI infrastructure, data centers, all the computers, whatever, the money to do that in the short run, even if it has huge returns in the long run, in the short run, it’s got to come at the expense of something else that’s not going to get financed because the resources were diverted. We don’t have an infinite supply of resources.

Now, maybe AI is going to solve that problem. I don’t know. But right now, our resources are limited.

The capital is limited. And, you know, we’re wasting a lot of that scarce capital on crypto, on meme coins. I mean, think of all the money that is being blown.

I’ll get into that a little bit later. But that’s money that’s not available to make productive investments. So we’re squandering that.

We’re wasting a lot of energy creating nothing. But now we need a lot more energy to create something with respect to AI. But I’ll get into that.

But anyway, that’s what was powering the NASDAQ. But I think the big story on the week was the U.S. dollar, gold. Nobody’s really talking about that.

The dollar index was down for the second week in a row. And this week was a big drop, about 2% drop in the dollar index. Now, it’s still pretty high in the scheme of where it was before Trump was elected.

We’re about 107.5. But we got above 110 last week. So we’re about 2.5% below the high. The euro is back at like 105 after being, I think, slightly below 102 when it hit the low.

But we’ll see what happens next week. I think if we get another drop next week in the dollar, I’ll be pretty confident that we’ve seen the highs. And this whole move up in the dollar was a gigantic head fake just to get all the traders positioned the other way before they get the rug pulled out from under them.

And that’s what I’ve been expecting. Also, gold. You know, gold today, after hitting record highs just about every day this week in terms of the euro or the pound or the Canadian or Aussie dollars and a lot of other currencies, gold was going up.

And it came to within $10 today, maybe even $7 or $8 of an all-time record high. We got up to just about 2,790-ish. And that’s about the record high, maybe 2,791, 2,792.

So we almost got there. And, in fact, gold closed today at 2,771 or for the week. That’s about $20, less than 1% below its all-time record high, up 2.3% on the week.

So about the same percentage as the Dow. But, again, record highs in other currencies. Silver was up 1.4% on the week, not as much as gold.

And it’s still below $31. I think it closed around $30.60. That’s the buy. I mean, you can certainly keep buying gold.

It’s going to go higher, I think. But if you don’t want to buy at the all-time highs, which is basically where we are in gold, now the chances are these aren’t going to be the all-time highs for long. And so most people who buy gold are going to be buying near the record highs because gold is going to keep rising.

But, again, it’s not gold that’s rising. It’s fiat currencies that are falling. And they’ve got a long way to fall.

So, therefore, the price of gold in terms of those currencies has a long way to rise. But silver is what everybody should be buying right now, I think. I mean, it’s a steal below $31.

I mean, I think $30 is the support. I mean, it can get a little bit below that. And we’ve done that, you know, $29 and change.

But, I mean, this is, I think, about as good as it’s going to get in the silver market. People should be buying it. You know, remember, Shift Gold sells silver, too.

And they’ll be open all weekend. You can go to shiftgold.com and load up your shopping cart with a bunch of silver or talk to the reps there. But, you know, the market is going to explode, I think.

I mean, I think we’re getting ready for it. Nobody’s talking about it. Nobody’s paying attention to it.

But the fundamentals are great. Certainly, the gold stock investors are not paying attention to it, even though the gold stocks had a good week. Finally, the GDX was up 4.4% on the week.

And the GDXJ was up 4.75%. So, a solid week. But if you consider where they are, this morning, these stocks needed to rally 18% to get back to their highs from October. October, that’s like three months ago.

And even with today’s rally, there’s still 17%, 16.5%, 17% rise from here to get back to where they were when gold was the same price as it is right now. I mean, gold is in a huge bull market, obviously. We’re hitting record highs in every currency.

We’re about to hit a record high. I’m pretty sure that we’ll hit a new all-time record high next week, if not on Monday, Sunday night. So, record highs in gold.

That is a bull market. Bull markets keep making record highs. The gold stocks are all in bear markets.

They all dropped more than 20% from their highs, and they haven’t recovered. So, they’re still in bear markets. So, you have gold at all-time highs in a huge bull market, yet you have the gold mining stocks that should be the primary beneficiaries of the gold bull market, and they’re all in bear markets.

What does that tell you? Investors have got everything wrong. They’re buying what they should be selling, and they’re selling what they should be buying. They don’t understand this gold rally.

And, in fact, because the dollar has gone up over the last three months, even with the recent decline, that means these mining companies are even more profitable because the increase in the price of gold is bigger because the gold companies operate in Canada. They operate in Australia. Their operating profits have really gone up because their costs are in Canadian dollars, but their revenue is in U.S. dollars.

So, they’re more profitable, and the prices are lower. So, this is, I think, going to end up being the biggest bull market that we’ve ever seen in gold, probably bigger than what we saw in the 70s, which is a tough act to follow if you recall the 1970s when gold went from $35 an ounce to $800. So, I’m talking about something that potentially is going to be bigger than that.

But the biggest bull market in history, accompanied by the most skepticism, the most bearishness, there is no greed. Gold’s at a new high, and gold stock investors are scared to buy the stocks. Every time gold goes up, they think it just means it’s about to get killed.

And so, that, I think, is a very good sign for the longevity of this market, but it also just shows you how few investors really understand what’s going on here. I was looking at some of these statistics just on the U.S. market and where it is. So, the S&P, or U.S. stocks, represent 67% of the total world stock market.

Think about that. We’re one country, we’ve got 4% of the population, and our stock market is 67% of the value of all the stock markets. Now, that might be justified if we were that productive, but we’re not.

I mean, we’re productive, but not on that scale. So, world GDP, we’re only 26%. Now, I say only, that’s still a lot.

We’re 26% of world GDP, but our stocks are 67% of global stock market cap. That is a bubble. That doesn’t make sense.

Now, if you drill down into the GDP numbers, if you look at manufacturing, which I think is the most important part of GDP, because a lot of the services are a bunch of fluff and government and stuff like that, we’re 16% of the world’s manufacturing. Now, that’s still a lot. We’re 4% of the people, and we manufacture 16% of the stuff, but that doesn’t mean our stock market should be 67% of the global stock market.

But even though we produce 16% of the world’s stuff, we only export 8% of the world’s exports. That’s not that much. Now, we’re down to 8% of global exports is America.

We’re 13% of global imports. That’s the problem. We import 60% more than we export.

That’s unsustainable. That’s the bubble. That’s, again, I’ll get into Trump and his speeches, but that’s what he doesn’t understand.

He thinks that the world is taking advantage of us. No, we’re taking advantage of the world. They’re letting us get away with this.

We’re importing 60% more than we export, and the way we pay for it is with debt. The United States, even though we’re 26% of world GDP, we’re 37% of world sovereign debt, and that’s just if you count U.S. Treasuries. If you count state and local debt, because most countries, they don’t have all these states and cities borrowing as much as we do, but if you throw in the state and local debt, we’re 40% of the world’s government debt.

We’re only 4% of the population. We owe 40% of the debt. That is an enormous liability that the United States has without the capacity, even close, to repay that, and so how are we financing all this debt? Again, it’s the rest of the world that is making all of this, all this debt possible.

It’s not American savings. It’s global savings. It’s not American manufacturing.

It’s global manufacturing that is making up the gap. Yes, we do manufacture a lot in total, but not enough, not enough to cover our standard of living, our consumption. Our economy is being propped up, but I specifically wanted to focus on the stock market.

That is not going to maintain that 67%. Either the U.S. stock market has to go way down or the rest of the world’s stock markets have to go way up, and I think it’s going to be a combination of two, but what’s really going to happen is an alignment of exchange rates. The dollar is going to tank, and when the dollar tanks, that all by itself readjusts the stock market percentages because when the dollar goes down, then the value of our stock market goes down relative to the rest of the world, assuming all their stocks stay the same, but the currencies that they’re priced in go up, and that’s where I think we’re headed.

I mean, the world has got completely fooled on what the implications are of a Trump presidency. They don’t understand the structural nature of our economic problems and that nothing Trump is going to do is going to even begin to scratch the surface of solving them. We still have a dollar crisis coming.

We still have a sovereign debt crisis coming. All that is going to happen. That is going to realign these valuations, and so people should be buying the foreign stocks, buying emerging markets.

The type of stocks that I’ve been buying for years in anticipation of the events that are going to happen, it’s taken longer for this thing to play out, and in the process, the imbalances have gotten bigger and bigger. I just think that creates an even bigger opportunity for the people that come to the party late, actually, to get an even better seat and to make an even bigger return and a faster return on their investment. Anyway, we’ve got a quick commercial break, so stick around.

I’m going to talk about some of the speeches that Donald Trump’s been making. At least he can make them. He’s probably made more talk to the press more in one week than Biden did in four years.

But anyway, I’m going to talk about that on the other side of this break, so stick around. In business and life, our assets are the sum of what we earn and what we create. Should something happen to you tomorrow, don’t you want to make sure those assets are safe and secure for your legacy and your family’s future? It’s time to protect them with life insurance from SelectQuote.

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All right, before I get to the president, and there are two particular talks. He did a little speech and a Q&A over at the World Economic Forum in Davos, Switzerland. They have that event every year.

And so he addressed all of the Wall Street bigwigs who go out to Switzerland to ski and congratulate one another and pontificate once a year in Davos. I’ve never actually been to that conference. It’s just one of those, I guess they don’t invite me.

I’m not worthy of that. I’m too much of an outsider. But in any event, so he spoke there, and he also did an interview with Sean Hannity.

So I’m gonna talk about some of the things that were said. But before I get to that, I wanna talk about some economic statistics that came out or events. The most significant in Japan, and nobody’s really talking about it.

Again, this is one of these warnings that I’ve been talking about that really goes unnoticed by the mainstream. So Japan raised interest rates last night by 25 basis points. Now that may seem, so what? What’s the big deal? 25 basis points, that’s nothing.

Well, they doubled rates because they were at 25 basis points and now they’re 50. So rates doubled in Japan overnight. But that 25 basis point hike was the biggest hike in 18 years in Japan, 18 years.

So things are changing down there and it ain’t gonna be a pleasant, what’s about to happen in Japan. Now rates have gone up, but they still have a long way to go because they also announced their inflation last night in Japan. And we got the number for December and the year over year.

In fact, I only have the year over year numbers and consumer prices as measured by the Japanese CPI, which I’m sure is flawed, like ours. Maybe it’s not quite as bad, but I’m sure it’s just, it’s not legit. But according to their CPI, prices rose 3.6% last year, 3.6. Interest rates are 50 basis points.

A 10 year Japanese government bond, the JGB, yields 1.21, I think. Inflation is triple that yield. So you have massive negative interest rates.

That’s not going to stay that way. Rates are going much higher. And the most ridiculous part about it is when the Bank of Japan raised interest rates, they still talked about making progress to achieving their 2% inflation goal.

They’re almost at 4%. What do you mean making progress? They way past that benchmark. They’re looking in the rear view mirror at 2%.

They may never see inflation that low again in Japan, 2%. I mean, they made it a number one policy. The reason the Japanese government has so much debt is because the Bank of Japan was committed to having 2% inflation when it was one.

They should have left well enough alone. There’s nothing wrong with 1%. It’s better than 2%.

Zero is better than one, and negative one is better than zero. But of course, these Keynesian economists were able to hide behind this nonsense that the problems that Japan had were that we didn’t have enough inflation. That wasn’t the problem.

That’s false logic, right? The Japanese economy is weak and inflation is low. Aha! It must be the low inflation that has caused the economy to be weak. No, they got it backwards.

And in fact, if inflation was higher, the economy would be even weaker. The low inflation was something good in an otherwise bad economy. It wasn’t the problem.

It was one of the bright spots. But instead, they decided that we would have a stronger economy if only prices were rising faster. I mean, what an asinine economic strategy.

Well, now they got to really pay the piper because now in order to get inflation up, they had to run up all this debt. And now what happens is now rates have to go up and they can’t afford it. I mean, they can afford it more than we can, but not without major disruptions to the Japanese economy because they’re going to have to have big increases in taxes, which the Japanese could afford.

They’re going to have to have big cuts in government spending. What I think the Japanese are going to be doing is unloading over a trillion dollars worth of U.S. Treasury, right? When you can’t afford to pay your bills, you got to sell your assets. And what’s one of the most liquid, easily sellable assets that the Bank of Japan has that they can sell to pay down some of that debt that’s going to be a lot more expensive to service? It’s U.S. Treasuries.

Japan is our biggest creditor, right? They passed China now because China hasn’t been buying a lot of Treasuries. So Japan is our biggest creditor. We owe Japan more than anything, and Japan’s broke, right, with all this debt.

They’re going to be selling U.S. Treasuries. But rising interest rates are going to be a big problem for the Treasury markets. Remember, the yen carry trade has been funding all sorts of investments around the world in risk assets, including U.S. Treasuries, which are a risk asset for the Japanese, right? There’s a lot of risk buying U.S. Treasuries.

What if the yen goes up, right? There’s a big loss there if you’re in Japan and you’re buying U.S. Treasuries. But they got 3.6% inflation, and they’re talking like they’re still trying to get two. They don’t even want to concede the fact that they’re way beyond it, right? They got too much of a good thing, right, as if it was actually a good thing.

We’re going to have a four handle on Japanese inflation early, I think, in 2025. And by the end of the year, it’ll be at least a five handle, if not more. So how are you going to have 5% inflation and 1%, 1.2% 10-year yields? There’s no way.

Nobody is going to want to own these bonds. Most of these bonds are owned by the Japanese. But when they start to see this kind of inflation, they’re not going to want to hold on to these Japanese government bonds.

So rates are going a lot higher in Japan than people think. And that’s going to put a lot of upward pressure on rates around the world, especially in the United States at a time where the U.S. is probably going into recession. And I’m going to get into some of the economic data that we got today.

We got the PMI numbers for January. And even though the manufacturing number was slightly better than expected, it got to 50.1. It’s the first time it’s peaked its head above 50 in a long time, because 50 is kind of the line between expansion and contraction. And we’ve been in a huge manufacturing recession, which I think is going to continue.

So I don’t think it’s a big deal that we’re above 50. I don’t think we’ll stay there for long. But look what happened to the service sector.

It tanked. Last month, the PMI for the service sector, which is, you know, 70 plus percent of GDP, right? That’s our bubble economy. The PMI for the service sector was at 58.5. They revised that down to 56.8. The consensus for January was 56.7, and it came in at 52.8. That’s a crash.

That is a massive contraction in the service sector, which is most of the GDP. So that is a warning sign. Everybody is all excited about the Trump presidency, but the economic data is suggesting that we’re headed south.

Recession, I think, higher inflation, weaker economy, it’s going to be stagflation. And, you know, when Donald Trump did the interview with Hannity, right? One of the things he told Hannity, and they did the interview, you know, in the Oval Office right in front of the Resolute Desk. And he told Hannity that, you know, had he been reelected, we wouldn’t have had any inflation, which, again, if you listen to this podcast, you know, is not true.

The big increase in the monthly CPI started at the tail end of Trump’s last year. And then the worst year of inflation under Biden was the first year he was president, 2021. So a lot of that was a result of the policies that preceded his presidency.

Inflation works with a lag. It takes some time for the money that’s printed to work its way into the pricing structure. So most of the inflation that we had in 2021 was created while Trump was president.

So to say that had he only been reelected, there’d be no inflation is nonsense. We would have had a lot of inflation. Now, maybe we would have had less in 2023 or 2024.

We don’t know. We don’t know what policies he would have had. Maybe he wouldn’t have had as much increases in spending, but maybe there would have been more tax cuts.

I don’t know what would have happened. But I do know that Trump handed the inflation baton to Biden. There was a big inflation problem brewing while he was president.

So he got lucky to get out of Dodge and now he gets to come back and claim that all that mess was Biden’s fault and he had nothing to do with it. And somehow he starts with a clean slate. But there’s a lot of inflation that’s coming.

So Trump’s gonna have a difficult time. He’ll try to blame a lot of this inflation. I suppose on Biden, but I don’t know how long that’s gonna work.

But anyway, let me get to, I made a bunch of notes here of what Trump was talking about when he spoke to Adavos. In fact, I actually don’t even have the notes. As I was watching this, I kept posting on X. I’m almost at 1.1 million X followers.

It’s taken a while. I got to 1 million not too long ago and it’s taken a while to get the extra 100,000. But now it’d be nice to get 1.1 up there.

But I still got a ways to go. Michael Saylor just hit 4 million followers. So it gives you an idea of the popularity of crypto versus sound economic logic.

He’s got four times as many followers as I do. I remember when I had more followers than he did. So he’s on a faster trajectory, just like Bitcoin.

And I’ll get to that. I’m gonna talk about Bitcoin a little later, but let me get into this. Although actually, let me take one quick break.

I’m looking at the clock. We got one more commercial. We’ll play that and we’ll come back and I’ll get into a lot.

There was a lot of interesting things that Trump talked about Adavos. So I’m gonna talk about that right on the other side of this. FitBot is the upgrade your routine needs.

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Get 25% off your subscription or try the app free for seven days at fitbot.me slash gold. That’s FitBot, F-I-T-B-O-T dot M-E slash gold. You know, there was another thing I remember from the Hannity interview, I meant to mention this, that Trump said that actually helped push the dollar lower.

And again, I think the currency traders are handicapping this wrong, but that’s, you know, the narrative that’s moving the markets. But Trump basically backed off a bit on tariff talk and said that he’d rather not have tariffs. He’d rather not impose them.

Now, I’ve been saying all along that Trump wasn’t going to have all these tariffs because, you know, they would be paid for by Americans. They would hurt the GDP. They would either exacerbate the recession that we’re going to be in or they may tip us into it, right? They would offset the tax cuts that he’s working on because they’re not paid for by Mexico or Canada or China.

They’re paid for by Americans. And so he was talking about it like we could, you know, get a freebie. The external revenue service, that was all a bunch of nonsense.

And I think maybe he knows that and that’s why he doesn’t want to impose them. Now, there are people that are saying, oh, well, you know, it’s just a negotiation tactic. This is like, what’s he going to negotiate? Like, you know, our problems are not because we have bad trade deals.

Remember, Trump is saying we’re getting ripped off by Mexico and Canada. Why? We got the USMCA, the greatest trade deal ever negotiated. Do you remember when that was passed? He said that NAFTA was the worst trade deal ever.

And then when he renegotiated it, he said, this is the greatest. He said it was a huge monumental win. Like he just bragged on and on and on about how fantastic this deal was.

And now he’s claiming we’re getting ripped off. Well, how we got this fantastic deal? How are we getting ripped off, right? I thought, you know, this was supposedly a big win. It’s all a bunch of nonsense, right? There really wasn’t much of a difference anyway.

I said that between the USMCA and NAFTA. The biggest difference was the name. You know, but once Trump branded it, you know, with his name, it was great.

When it was somebody else’s, it was lousy. Just like, you know, when he was president, it was the greatest economy in the history of the world. And when Biden was president, it was the worst.

Even though, you know, they were pretty much the same. I mean, yeah, maybe it was a little bit worse. Under Biden, but you know, it wasn’t the night and day difference that Donald Trump claims.

So this is not a negotiation tactic. You know what would be a better negotiation tactic? If the tariffs are so great, put on the tariffs and then use reducing them as a bargaining chip, right? Put the tariffs on right now and say, okay, these are the tariffs, now let’s negotiate. That would put us in an even stronger position, I think, than just bluffing that we’re going to put the tariffs on because people call the bluff.

Oh, it’s just a negotiation tactic. I mean, how do you have a negotiation tactic, right? If the people you’re negotiating with know you’re bluffing, know that the tariffs are just, you know, a gimmick to negotiate, then they don’t give you any leverage. Just impose the tariffs.

And if Trump was right, if it’s a freebie, if Americans get it for nothing, if we really could put the cost of our government on the Canadians or the Mexicans or the Chinese, then why not do it? And, you know, why stop at 20%? Why not 40%? Why not 100%? Make the world pay for everything. Just get rid of the income tax and have the Chinese pay for everything, right? Have the Europeans pay for everything, right? If that’s the case, because it’s not the case. It sounded great to campaign, we’re going to raise taxes on foreigners who can’t vote, right? But when it comes down to it, he doesn’t really want to do it.

And I said that, I said he would be backing away from it. And so the fact that he is, I guess that’s one of the reasons that the dollar is coming down. Although tariffs were never good for the dollar.

It’s just that the markets thought they were. Also wanted to mention this statistic came out this week. Bankruptcies are at a 14 year high.

Now, how is that consistent with all this talk of a strong economy? We have a great economy, yet bankruptcies are at a 14 year high. Does that make any sense? You would assume that if the economy was really good, fewer companies would be going bankrupt. When companies are going bankrupt, it usually means that times are tough.

So most bankruptcies in 14 years contradicts that narrative, as does credit card numbers. So the percentage of people who are making their minimum payment on their credit card, and that’s like you pay 2% of the balance, right? So, you owe $10,000 and you pay 200 bucks, right? The percentage of people doing that jumped to 10 and a half about, that’s the highest it’s been in 12 years. Now, it could be higher for longer because the survey didn’t start until 12 years ago.

So in the 12 year history where they’ve been keeping track of this, this is the highest percentage of people who are making the minimum payment. Now, if the economy was strong, why would you make the minimum payment? Especially with interest rates at record highs, credit card interest rates are 24%. So if you are being charged 24% interest, I mean, that’s kind of like a loan shark kind of thing, 24%, right? You’d want to pay off that credit card debt as fast as you can to avoid that 24% interest.

But the fact that a record number of people are making the smallest payment possible tells you that that’s the most they can afford. And they’re stuck paying 24% on a huge balance because they don’t have any money to pay it down. This would not be going on in a good economy.

In a good economy, people would have more money and would be able to pay down the debt to avoid a 24% interest. And what do you think is going to happen next? It’s going to be the defaults. Right now, people are making 2% payments.

Pretty soon, they’re not going to make any payment at all. I mean, first of all, what’s the point? Why pay 2%? You’re barely treading water. You know, when you make a 2% payment, your balance doesn’t really go down.

You owe $10,000 and you pay 2%. When you get your next bill, the interest is probably the $200 you paid. So you’re never going to get out of that hole.

You’re just throwing your money away, right? So you might as well just stop making the payment. So that’s going to happen. You’re going to see a big surge in delinquencies in credit cards.

Again, all of this is consistent with what I’ve been saying and what the voters have been saying. That is, we have a weak economy. We don’t have a strong economy.

And unfortunately, it is going to get weaker. Anyway, so let me get to what Trump was talking about. So one of the things he said right off the bat that I posted, he talked about the high interest rates that we have and how it’s a problem.

And he said that we have sky-high interest rates. Sky-high. He actually said sky-high twice.

Now, interest rates have got a four handle on them, right? The Fed funds rate is in the fours. Long-term treasury debt is in the fours. How is that sky-high? I mean, the president ought to know what sky-high is.

I mean, he’s a real estate developer. I mean, he builds skyscrapers. I mean, calling 4% interest rates sky-high, that’s like claiming a duplex is a skyscraper.

I mean, we’re nowhere near the sky. If you look at where interest rates averaged, let’s say since the Second World War and up to 2008 financial crisis, we’re lower than normal. We’ve got low interest rates.

They’re not even close to being high, let alone sky-high, but Trump wants lower interest rates. In fact, he claimed that he’s going to contact Powell and he’s going to tell him the lower rates or he’s going to argue or try to persuade him to cut rates because he thinks they’re too high, right? He’s just going to demand lower rates. You know, he said the same thing about oil prices, right? He says oil prices are too high and he’s demanding that OPEC lower oil prices.

Well, first of all, how are they going to do that, right? And, you know, Trump wants America to produce more oil. Well, if OPEC tries to increase production, because that’d be the only way they can lower oil prices, would be to ramp up production. And if they do that and they drive the price down, what’s that going to do to domestic production in the United States? It’s going to drop because we’re the higher cost producer.

We may have more oil than they do, but they get it out of the ground for a much lower cost than we do. They’re the low cost producer. And so if you want to crush the US oil industry, that’s how you do it.

You get the Saudis to flood the market, but he wants us to drill more, but the Saudis to also pump more, that’s not going to happen, right? But he’s like demanding, I demand lower oil prices. And then he also wants the Fed to lower rates. But if the Saudis, the Saudis are investing all this money in the US, and he’s all excited about that.

Well, where are they getting that money from selling oil? If the oil price goes down, how are they going to invest this money? They’re also one of the biggest holders of our bonds. If oil prices really went down, they’d have to sell more treasuries. You know, one of the things that Trump is trying to demand, he wants the Europeans to buy more of our oil, our natural gas, which would be great for them because it’s a lot better than buying our treasuries.

But what would happen to US oil prices if the Europeans started buying more of our oil? You know, he lifted the export ban. It means higher oil prices here. So he’s talking out of both sides of his mouth because if foreigners buy more of our oil, that’s less oil available for Americans.

And it’s not all going to just come out of the ground. You know, we’re already producing, we’re already drill baby drill. I mentioned the oil companies are cutting back on their CapEx because $78 oil ain’t high enough.

Remember, inflation has driven up the cost of drilling. Prices have gone up. Costs have gone up.

Oil hasn’t kept pace, right? Again, Trump blamed when he was on Hannity. Again, he blamed the inflation on rising oil prices. That’s not why we have inflation.

A, inflation causes prices to rise, not the other way around. But the oil price is not the problem. It’s the price of everything else.

Everything but oil is what’s gone way up. Oil is still cheap. And in terms of real money, in terms of gold, it’s never been this cheap unless you want, you know, throw out COVID because that was an aberration when they, you know, you had to pay to get rid of your oil.

But in terms of real money, oil is cheap. When oil is cheap, it’s got one way to go and that’s up. So people are going to be very surprised.

Trump’s going to get the opposite of what he wants. He wants lower oil prices. He’s going to get higher oil prices.

He wants lower interest rates. He’s going to get higher interest rates. Now, he also mentioned the Bitcoin.

People got real excited because he mentioned crypto in his speech. But he didn’t mention Bitcoin, mentioned crypto. It’s not big, you know, didn’t sing about Bitcoin.

In fact, yesterday, he signed, Trump signed a executive order to establish a working group on crypto. And that got a lot of people excited. Although the odds of Trump starting a strategic Bitcoin reserve in the first 100 days on the betting markets collapsed.

They were about 50% before the announcement. They dropped down, you know, I think they went down to 12%, 13%. Then they bounced back to about 20% now.

So obviously, he’s not going to create a strategic reserve right away because he created a committee to study the potential of a strategic reserve. And he didn’t say strategic Bitcoin reserve. He said strategic stockpile of crypto assets, which can include all sorts of crypto, including his own meme coins, right? You know, again, Michael Saylor is out there saying, oh, Bitcoin is this most valuable property, digital property, because it’s the only property that has a fixed supply.

Well, all these meme coins have a fixed supply. I mean, you just, you set it up, you create it. Anyone with a Solano address can launch a meme coin and limit the supply.

And there you go. You’ve got the same characteristics of Bitcoin, right? That the problem is there’s an unlimited supply, an infinite supply of digital assets of limited supply. So how is that scarce? It’s nothing but pure abundance.

But Trump is not saying anything about Bitcoin. In fact, in that executive order, I think there were over 1300 words. I had a computer count them.

And not one of those words was Bitcoin. And I’ll tell you what, you know, I mean, Trump, Trump understands Bitcoin, I think. I mean, I think he played the crypto community like a violin, like a Stradivarius.

During the campaign, he got all their money, he got all their votes, but he doesn’t believe in this crap. You know, and I think, you know, when he launched these tokens, I mean, he’s really just making fun of it. You know, people said, oh, you know, some of the crypto guys were upset that he was making a mockery of the industry.

The industry makes a mockery of itself. Trump just shined a spotlight on the absurdity of it all with these meme coins. But I think what Trump is doing with this commission, right, this working group, this is what politicians do when they don’t wanna do anything.

Think about, you know, reparations, right? You had all these African-American groups all around, you know, they want reparations. Now, of course, the idea is absurd, and so it’s not gonna happen. But the politicians didn’t wanna tell these voters, even the Democrat politicians, that they can’t have the reparations.

So what did they do? They set up committees, right, to study reparations, so they can pretend they’re doing something, even though there’s nothing to study, because the very concept is absurd. So you don’t have to waste any money studying it, right? But that’s what Trump is doing. He sets up a committee to study the potential of a Bitcoin reserve, which is a complete waste of money, and it’s not gonna happen.

But that’s all they need, to keep the hype alive, to keep the potential, to prop up the market. They just need to have this committee that’s constantly studying, maybe having a reserve, so that they can use that to keep the market propped up, because people are gonna wanna buy it, because they wanna front run this reserve, which is gonna run the price to the moon. But, you know, this is politics.

It’s not gonna happen. It would be big negative for the country, right? Because what would happen if the government had to spend money buying nothing, buying Bitcoin? Who would that help? The people who sell their Bitcoin to the government. Everybody else would be hurt.

What would the people do who get Bitcoin and sell it to the government? Well, they go out and buy stuff. They’d spend it. So you have a big increase in spending, but they didn’t produce anything.

They just handed their worthless Bitcoin to the government. And so the money supply expands. More money is put into the pockets of the Bitcoin sellers, who now go and spend it.

It’s all inflationary. You’re driving up prices. Plus, you’re diverting more resources that we need into creating things that we don’t need, you know, like these meme coins or whatever it is, at the expense of legitimate investment.

So there’s nothing but negatives from this Bitcoin reserve. And I don’t think Trump is gonna do it, but he does, you know, want to string along his donors, his supporters. He just doesn’t want to totally, you know, rug pull them.

So he set up this commission. And who knows how long they’re gonna be studying it. Although some of the things they’re studying are rules and regulations and stuff like that.

But I think they slipped that reserve language in there just to appease them. It ain’t gonna happen. And again, I think one of the things Trump’s gonna hide behind is that Congress isn’t gonna approve it.

See, people think that he’s gonna do it by executive order. He can’t. He can’t appropriate money to buy Bitcoin on his own volition, right? Those spending decisions have to be made by Congress.

The Strategic Petroleum Reserve was an act of Congress. The president signed it. But both houses of Congress passed it.

They’d have to do the same thing for a Bitcoin reserve. And so Trump can say, well, you know, yeah, I’m waiting for Congress to pass it. And there’s nobody that supports it.

You got Loomis, the senator who introduced it, and that’s it. There’s not a single co-sponsor of that ridiculous bill. Yet they want to pretend that it’s got a prayer of being passed.

It doesn’t have a snowball’s chance in hell of being passed. And that’s a good thing. But, you know, again, they just want to keep hope alive.

Another thing that Trump said during the Davos speech, he said that during his first term the U.S. had by far, right, this is an exact quote, by far the most productive economy in our history. So he didn’t just say we had the most productive. It was by a long shot.

And it wasn’t even close to being the most productive economy we’ve ever had. I mean, the most productive, the greatest increase in living standards was in the real golden age, or I mentioned the Gilded Age, right, the Industrial Revolution, 1870 through 1910, before we had the Federal Reserve, when we were on a gold standard. Yeah, we ran on tariffs, but we weren’t strong because we ran on tariffs.

We were strong because the economy was so small that we could afford to pay for it with tariffs. We’re not even close to that. You know, the trade deficits went up every year Trump was president.

If we were so productive that they would have gone down, right, the operative word in productive is produce. So we should have produced more if we were by far the most productive, not relied more on the productivity of the rest of the world, right, which was supposedly not as productive as we were, yet they had the surpluses that we needed to survive. Anyway, Trump also, again, talked about that the trade relationship between the U.S. and China is unfair and that they’re ripping us off.

Well, he’s right. It is unfair, but he’s got the who’s ripping who off backwards. It’s unfair to the Chinese.

They’re getting ripped off. We’re getting their stuff. They’re getting our paper.

We get goods that make our lives better. They get inflation that makes their stuff more expensive. You know, we are on a ride on a global gravy train.

That is the reality. Now, long term, this is damaging the economy. You know, we have structural problems in this country.

They’re not going to be fixed by tax cuts. They’re actually going to be exacerbated. The tax cuts that Trump is talking about will increase consumption because we’re going to remove taxes on Social Security, remove taxes on tips, remove taxes on overtime.

Where’s that money going to go? Is it going to go into investment? No, it’s going to be spent on consumption, on imports. It’s going to run up the trade deficit. It’s all inflationary.

We need less of that. We need more savings and more investment. We need less consumption.

And the type of tax cuts that we’re going to get are not going to cause that to happen. It’s going to exacerbate the problems. And we’re not going to get the tariffs.

So we’re not going to be taxing consumption to offset some of the tax cuts on income. So it’s just bigger deficits and more inflation. And, you know, the world is going to have to step up and, you know, absorb an even bigger burden.

Now, I don’t think they are going to do it. That is the irony of what’s going to happen. Trump’s going to get his wish.

In the long run, it’s a good thing. But in the short run, it’s going to be very problematic when the dollar tanks and we can’t afford the imports and we don’t have the ability to manufacture ourselves. I mean, that’s the whole, you know, people talk about we need protectionism.

These trade, you know, the tariffs will protect us. That’s if we have the capacity, which we don’t. You know, if we’re importing 80, 90 percent of a particular product and we just impose tariffs on that product, what are we going to do? There is no domestic way to make up the supply.

We don’t have the infrastructure. We don’t have the factories. We don’t have the supply chains.

We don’t have the workforce. We can’t do it. So either we do without it or we pay more.

And we end up with a combination. Some people do without it and other people pay more. It’s going to happen eventually anyway.

But I think, you know, what we’re doing is going to accelerate a trend that is already way overdue and could easily blow up on Trump’s watch. Now, one of the crazy things that Trump said is he wants the rest of the world to increase their military spending and spend 5 percent of their GDP on the military. Now, remember, a lot of the rest of the world is in debt too.

I mean, Europe has got a lot of debt and Trump wants Europe to spend more on defense. They’ve got to spend less. Everybody’s got to spend less, including us.

You know, for Trump to say that the world needs to spend 5 percent of its GDP on defense, America doesn’t even do that. We spend 3.5 percent, which is still too much. Now, I believe that national defense should be pretty much the only thing the federal government does.

It should be 80 percent of the budget. It’s not, you know, what is it, 13 percent or something like that because the government spends money on all kinds of things that we shouldn’t do. That’s why we can’t get by on tariffs now.

That’s why we need all these income taxes. But we need to cut defense. Obviously, Trump doesn’t want to cut defense.

If he wants the rest of the world to really ramp up their own defense spending, he’s probably going to ramp up ours, right? 5 percent is a number that he thinks should be spent, and we’re nowhere close to 5 percent. Look, I would like to see Trump trying to encourage the world to spend less money on warfare, not more money, especially when we have so much government debt that needs to be repaid. You know, how, where are the governments going to get the money to increase their military spending? They’re obviously going to borrow it or print it, right? So we’re going to have more inflation.

Let me see. You know, when Trump said that he was going to demand interest rates go down, I think, too, that was another factor weighing on the dollar this week, which, you know, he’s going to demand that Powell lower interest rates. I don’t know what Powell’s going to do.

Now, Powell should be raising interest rates, and I think he’s not going to do that. You know, Trump would go ballistic if he hiked rates. And he’s probably not going to cut rates at the next meeting.

But at the meeting after that, I think the probability, the odds are maybe 70 percent. So I think we’re going to get a cut, let’s say, in March. Even though we should be getting a hike.

But remember, Powell’s term is up in a year and Donald Trump can replace him with somebody that he’s confident is going to cut rates because that’s what Trump really wants, unfortunately. He wants to blow a bigger bubble because solving the problems is not, you know, anything that he would consider because, again, solving the problems means things get worse before they get better. There’s no other way.

There’s no way to go from where we are to where we need to be. We can’t restructure the economy, which unless we restructure because the problems are structural, unless we fix that, they just get bigger. But you can’t fix it without a recession.

That’s the tradeoff, right? No pain, no gain. But it is, you know, constructive pain. You know, it’s the type of pain that they went through in Argentina.

But again, they were willing to do it because, you know, I mean, they were used to bad times. So what the hell, right? They were fed up. Yes, we’ll take the bitter-tasting medicine.

We’re so sick. Give it to us. We’ll swallow it.

We’ll gag it down, whatever. But Americans don’t want that, and Trump didn’t promise that. Trump said, you know, America’s new golden age begins now.

Everything is going to boom. Everyone’s going to be immediately better off. The only way that Trump can fulfill that promise is just to make the bubble bigger.

So the only prosperity he can deliver with that formula is false prosperity. The question is, can we do it, right? Is there still enough room left to blow an even bigger bubble so that we can continue this false prosperity, which, again, doesn’t lift all boats, right? We had the false prosperity under Biden, and look at what happened beneath the surface. That’s why Trump was elected.

So even if we have more false prosperity, it’s going to be concentrated in fewer and fewer people as more and more people experience the negative consequences of that. You know, apart from Trump’s talk, I was listening to an interview with Jamie Dimon. He was one of the people they talked to over at Davos.

And, you know, he came out in support of tariffs. Now, I know Jamie Dimon doesn’t really like tariffs, so he had to figure out a way to support it. And he said, well, you know, it’s a national security thing, and so it’s okay, even if it means a little bit higher inflation, deal with it, which is easy for him to say because he’s rich enough that inflation doesn’t bother him.

In fact, it helps him because it helps the financial markets. But the tariffs aren’t about national security, right? I mean, our national security isn’t in jeopardy because of the consumer goods that we’re importing for the rest of the world. Now, the problem is that we’re running up the debt.

It’s the debt that’s a security issue. The trade deficit, the budget deficit, but the tariffs aren’t going to solve that, right? But I think when you get a guy like Jamie Dimon, nobody wants to criticize Trump, right? All these business leaders are sucking up to Trump, right? Because he’s, you know, they don’t want to get on his bad side. I said that in the last episode.

And, you know, Jamie Dimon is one of the big critics of Bitcoin. And they asked him, they wanted to ask him about Bitcoin. He says, no, I refuse to answer any questions about Bitcoin.

So now he won’t even talk about Bitcoin. Why? Well, because he doesn’t want to criticize it now that the president is behind it. So he’s afraid to speak up and he just wants to keep quiet about it.

But, you know, you got a lot of Wall Street people who are talking Bitcoin because they’re talking their book. They’re making a fortune off of Bitcoin and the people that are dumb enough to buy it. So that’s why they keep on hyping it up because they’re generating all these fees.

And think about all these companies that are selling convertible debt, that are selling stock like MicroStrategy. The companies are charging a lot of money, right? Every time MicroStrategy does these at the market stock buys, Wall Street is making a fortune in commissions. And when they underwrite these convertible nodes, Wall Street is making a fortune.

And now that you got more companies that are following this Pied Piper of idiocy down the primrose path, it’s just more money in Wall Street’s pocket. So they don’t care, right? They’re just trying to make a buck. And if they have to encourage a bigger bubble in order to line their own pockets, that’s what they’re doing.

And the only reason that they could do it now is because of the prospect of the government getting involved and using taxpayer money against their will, which is the ultimate irony of Bitcoin because it was supposed to be independent of government and now it’s completely dependent. The entire Bitcoin story now, the only way it keeps going up is if the U.S. government buys it. And if the U.S. government doesn’t buy it, the whole house of cards comes crashing down.

Anyway, that’s it for today’s podcast. Again, if you liked it, don’t forget to give me the thumbs up, leave a comment on it. Again, Shift Sovereign, make sure you sign up to read our newsletters.

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We have even better content available on Shift Sovereign Premium. So either way, you can take the free one or you could do a free trial on the paid. I think it was at nine bucks a month or something like that.

I think there’s a lot of value for a small amount of money. And again, over the weekend, I think we’re gonna get a big move up next week in gold and silver, big move down in the dollar, potentially looking at that chart. Big move in these stocks.

So I think you wanna fill up your shopping cart, especially with silver and contact the representatives at Europe Pacific Asset Management. If you have an account with us, add to it, take some more chips off the table with respect to the U.S. market at its highs and move more into the other markets. You know, the pessimism is extreme in Europe, in China, just as the optimism is extreme in the U.S. You wanna fade that.

You wanna sell what everybody’s buying, buy what they’re selling. It’s Bernard Baruch. You’re buying straw hats in winter and selling them in summer.

So this is the contrarian trade that is long overdue to pay off. So I think people should be doing that. If you don’t have an account with Europe Pacific Asset Management, contact us, go to europac.com, talk to the representatives and get yourself set up and take advantage of the sale while it’s on.

Bye for now. ♪