finance
Actionable insights on building wealth from the top experts in money & the markets Hosted by Adam Taggart
Jeff Clark points out that despite recent macroeconomic pressures including a 24-year high 10-year yield and a strong US dollar, gold has continued to rise alongside yields since 2022, central banks are accelerating net purchases, and global gold ETF inflows reached a record high in Q3.
Jeff Clark highlights that mining stocks are currently at their cheapest levels in 50 years with record-high projected free cash flow yields, while total mining industry market cap represents a tiny fraction of global cash and bond markets.
Jeff Clark discusses Grand Portage, noting its acceptance into the US Fast Track program for the Herbert Gold Project and pointing out a recent PEA displaying an after-tax NPV of $721 million at $3,200 gold against a much lower market cap.
Chance Finucane of Oxbow Advisors stated that the firm is concerned about 2027 and would not be surprised if the stock market fell 30% or more. Finucane noted that directional data only maps out the first eight months or so of 2027 so far, but it looks concerning and represents a risk that needs to be managed.
Chance Finucane explained that Oxbow Advisors views the valuation of AI beneficiary stocks as too high, with the downside risk for semiconductor stocks specifically estimated at around 50%. Consequently, the firm focuses on reasonably valued, non-AI positions.
Chance Finucane highlighted that memory semiconductors and the Korean stock index have dropped about 40% from their highs, which he cited as a warning sign for holders of AI-related stocks.
Chance Finucane discussed how Oxbow Advisors has been allocating maturing treasury proceeds into two-year and three-year treasuries as yields neared 5%. He emphasized that the firm prefers to stay at three years or less on the yield curve.
Chance Finucane pointed out recent data showing that construction spending growth is heavily concentrated, with data centers seeing over 70% annual growth and power infrastructure seeing 10% growth, while all other sectors register negative year-over-year figures.
Chance Finucane noted that the XLE energy sector ETF is up more than 50% year-to-date, making it the top-performing sector by a wide margin. He affirmed that energy remains Oxbow's favorite sector despite recent trims in peripheral holdings like uranium and coal.
Steven Bavaria, founder of The Income Factory, argues that a long-term income investing strategy is actually advantageous when interest rates rise. He explains that while short-term bond prices may decrease, the rising rates lead to higher reinvestment opportunities and ultimately a more favorable income base over time. Bavaria differentiates between short-term and long-term assets, noting that floating-rate instruments reprice immediately, mitigating interest rate risk.
Steven Bavaria explains the short-term impact of rising interest rates on bond prices, stating that they decrease. However, he emphasizes that for long-term investors, this price drop is temporary as bonds mature and are reinvested at higher rates. Bavaria highlights that approximately 20% of high-yield bonds in his portfolio reprice annually, leading to a higher income stream over time.
Ted Oakley believes the current economic growth is heavily reliant on AI, describing it as a 'one-trick pony.' He cautions that this reliance is precarious and that the build-up around AI will eventually pass. Oakley emphasizes the importance of investing in companies with long-term potential.
Ted Oakley points out that while major indices like the Nasdaq 100 appear strong, most sectors within the S&P 500 are actually down significantly from their highs. He attributes this market divergence to a large amount of money flowing into a single sector, which he believes is unsustainable.
Ted Oakley highlights that energy stocks have been the top performing sector of the year, despite receiving little attention. He suggests investors are overlooking significant opportunities in energy by focusing solely on AI-related companies. Oakley's firm, Oxbow Advisors, has a substantial allocation to energy.
Ted Oakley expresses skepticism about the projected profitability of AI-related companies over the next two to three years, suggesting the probability of these projections not materializing is high. He warns that many of these companies are heavily leveraged with debt, posing a significant risk if their promises fall short.
Ted Oakley suggests that the current moment is highly speculative, particularly concerning the AI sector. He recommends that investors consider taking some profits from their AI holdings and reallocating them to other areas. Oakley's firm, Oxbow Advisors, maintains significant liquidity to capitalize on value opportunities.
Ted Oakley reminds listeners that the Federal Reserve's ability to intervene and support the market is limited. He suggests that while the Fed might offer temporary assistance, such actions could ultimately exacerbate problems. Oakley references historical bear markets in the 70s and 80s as a reminder of market volatility.
Jonathan Wellum suggests that the US-Canada potash dispute, fueled by US tariffs and President Trump's rhetoric, is primarily a negotiating tactic. He believes Belarus cannot realistically replace Canadian potash supply, which is substantial.
Jonathan Wellum finds some of President Trump's comments unhelpful and irritating to Canadians, creating unnecessary friction in trade negotiations. However, he believes the fundamental alignment between the U.S. and Canada presents significant opportunities for future collaboration.
Jonathan Wellum sees potential in a 'United Americas' trading block that leverages the diverse resources and labor of countries in the Western Hemisphere. This could create a powerful trade bloc less dependent on the rest of the world, mitigating national security risks exposed by global supply chain vulnerabilities.
Jonathan Wellum expresses concern over Canadian Prime Minister Mark Carney's attempts to strengthen ties with China, advocating for an arm's-length approach. He also notes Carney's discussions about potentially becoming an associate member of the EU, suggesting it might be a strategic move to gain leverage in negotiations with the U.S.
Jonathan Wellum attributes Canada's low GDP growth to government policies that have made it difficult to invest in natural resource development, citing restrictive legislation and carbon taxes. He contrasts this with the country's abundant resources like potash and uranium, which are primarily exported to the U.S.
Jonathan Wellum describes Canada's healthcare system as being in crisis, despite dedicated professionals. He points to long wait times for services, outdated technology compared to the U.S., and bureaucratic inefficiencies as major issues. He strongly advises Americans against further socializing their medical system.
Jonathan Wellum argues that true free-market capitalism, with minimal necessary regulation, is the path to prosperity, contrasting it with socialism's failure to generate wealth. He uses Margaret Thatcher's quote about socialism running out of other people's money and criticizes 'crony capitalism' where select players benefit unfairly.
Jonathan Wellum expresses concern that large AI companies might form cartels to secure regulatory capture and stifle competition. He advocates for open competition to drive down prices and innovation, arguing that the market should determine success, not preferential treatment for a few dominant players.
Jonathan Wellum believes U.S. policies like deregulation and capital investment incentives are driving economic growth, attracting capital from countries like Canada. However, he identifies the massive U.S. fiscal deficit as a significant long-term overhang that could eventually impact the economy.
Jonathan Wellum recommends a balanced investment approach, hedging against both economic growth and the risks posed by high debt levels and potential currency debasement. He suggests investing in companies that benefit from technological revolutions, commodities, and infrastructure, while remaining cautious about potential market downturns.
Tom McClellan suggests that the market is currently in a 'squishy bottoming period' and is about to enter the typically bullish third year of the presidential cycle. He anticipates a turning point in the next week, after which he expects a significant upward trend.
Tom McClellan explains the presidential cycle theory, noting that the first two years of a presidential term are typically sideways, followed by a strong third year. He observes that the current market is exhibiting an unusually upward version of sideways movement in the early part of the cycle.
Tom McClellan posits that stock market bottoms typically occur before midterm elections, as investors begin to form expectations about the outcomes. He notes that the market tends to bottom in late September or early October, reflecting a sentiment of reduced uncertainty.
Tom McClellan advises investors to monitor specific indicators for signs of a market upturn. He suggests looking for days with a high put-call ratio, a high VIX, and developing breadth divergences, particularly in momentum.
Tom McClellan argues that lower taxation on Americans benefits the economy and stock market by leaving more money in circulation. He contrasts this with higher taxes, which he believes starve the economy of investment capital, despite potential benefits for government revenue.
The Federal Reserve has implemented its first rate hike since 2023, with a unanimous decision from its members. This move comes as inflation remains too high, despite a somewhat decent labor market. Geopolitical factors, including wars in Iran, Russia, and Ukraine, are seen as contributing to higher oil prices and complicating the Fed's efforts.
Fed Chair Kevin Wash delivered a concise 30-minute press conference following the rate hike, addressing key economic factors. He outlined three main points: the economy has strengthened, inflation trends necessitate action, and geopolitics played a role in the decision. Wash indicated that the Fed can indeed influence inflation and is taking steps to do so.
According to a philosophy attributed to the 'green span school of thought,' delivering price stability is considered the best way to support employment. This approach was discussed in the context of the Federal Reserve's actions and its impact on the economy. The market had previously been confused by shifting statements but gained clarity after a recent speech emphasizing the need to bring down inflation.
In his closing remarks, Fed Chair Kevin Wash stated that he does not believe it is necessary to harm the labor market to achieve the Federal Reserve's objectives. This statement was noted as potentially significant but surprisingly did not seem to elicit a strong market reaction.
Host Adam Taggart and guest Lance Roberts discuss the market's reaction to the CPI report and the Federal Reserve's potential interest rate hike. Roberts expresses skepticism about a rate hike next week, citing upcoming PPI revisions, oil price volatility, and already restrictive Fed fund rates relative to core inflation. He believes the Fed should wait for clearer economic signals before adjusting rates.
Lance Roberts presented three key arguments against a Federal Reserve interest rate hike in the upcoming meeting. He highlighted the upcoming revision to the PPI report, the transient nature of oil price spikes impacting inflation, and the current restrictive level of Fed rates in relation to core inflation figures.
Lance Roberts expresses concern about the increasing introduction of gambling-like behaviors into financial markets, likening it to addicting an entire generation to gambling. He believes this trend will lead to a significant future price to be paid, both financially and economically, as the realization of having created a generation of 'speculative drunkards' sets in.
Michael Lebowitz suggests that the 10-year bond yield approaching 5% could be a significant turning point for the economy, stock market, and the Treasury. He notes that while short-term drivers are often narrative-based, fundamentals historically dictate bond yields.
Michael Lebowitz discusses the disconnect between bond market fundamentals and prevailing narratives, noting that while fundamentals typically drive yields, short-term narratives can temporarily influence prices. He cites examples like AMC and GameStop where stock prices diverged from fundamentals.
Michael Lebowitz shares how he is using AI, specifically a tool named Claude, to assist in creating presentations. He describes the AI as acting like an assistant, helping to visually format and organize content, significantly speeding up the process compared to traditional methods.
Economist David Rosenberg stated that he has a completely different view on the economy than others, believing it is not resilient or solid. He predicts a "growth turn-down" from a 3% growth economy to around 2%, with a four-quarter trailing real GDP growth of 1.5%. Rosenberg attributes much of the current economic growth to AI data center construction and the equity wealth effect on spending, particularly at the high end.
David Rosenberg expressed concern that the current economic situation, heavily reliant on AI data center construction and the equity wealth effect, could lead to significant knock-on effects, potentially worse than the dot-com bust. He warned that if AI spending or confidence in AI earnings slows, it could negatively impact both financial markets and the broader economy.
Economist David Rosenberg highlighted the significant impact of the bond market on equity valuations. He stated that rising interest rates necessitate a downward adjustment of discounted cash flows for future earnings. Rosenberg believes that the correlation between real interest rates and fair value P multiples poses a major challenge for the equity market.
David Rosenberg pointed to Caterpillar as a non-tech stock that has become a leading indicator, noting its stock is down more than 25% in recent months. He suggests this decline in Caterpillar's stock could be signaling broader issues in the market and economy, despite the ongoing AI boom.
David Rosenberg drew parallels between the current market conditions and the dot-com bubble of the late 1990s, referring to the situation as a "tech and telecom bubble." He noted that while the technology itself was a game-changer, the market valuation and investor behavior created a bubble. Rosenberg believes the "bubble is not really in the technology" but in the "behavior" and "extreme emotions" of investors.
Adam Taggart suggests that Federal Reserve candidate Kevin Warsh's approach, if appointed, could signal a significant shift towards a less interventionist Fed. Taggart notes that Warsh aims to restore market integrity and believes markets should react to signals, not the other way around.
Long-term Treasury bond yields have risen to levels not seen in two decades, potentially marking a significant shift in the market. The exact point in history for this level is being double-checked, but it is believed to be pre-global financial crisis.
The discussion touches on whether the economy can withstand rising interest rates, with initial predictions of stress at 3-3.5% yields proving inaccurate. The economy has shown a surprising ability to cope with yields exceeding 5% on the 30-year Treasury.
Stephanie Pomboy suggests that a significant change in market dynamics is occurring, comparing the current situation to the period before the 1987 stock market crash. She believes the 'Fed put' that has been in place since Chairman Greenspan may be diminishing.
Adam Taggart expresses concerns about job displacement due to AI, noting that AI makes it easy to envision needing fewer humans because they are expensive and problematic. He cites economist John Maynard Keynes' concept of technological displacement, emphasizing the need to manage the pace of human labor replacement to avoid societal crises.
Adam Taggart argues that government policies over the past few decades have disproportionately benefited asset owners, leading to increased wealth disparity. He explains that those without financial assets only experience rising costs, while asset owners benefit from rising asset prices, widening the gap between the rich and the less rich.
Adam Taggart highlights a significant gap in financial education, stating that neither his Ivy League education nor his MBA from Stanford included practical money management courses. He believes this lack of fundamental financial knowledge, covering topics like credit card debt and mortgages, is a widespread issue, impacting most people's ability to build wealth.
Adam Taggart identifies three core 'muscles' for financial success: earning, saving, and investing, recommending they be developed in that order. He emphasizes that the earning muscle, derived from creating value for which the world pays, is the foundation. Subsequently, controlling costs to maximize savings, and then putting money to work through investing, are crucial steps.
Adam Taggart explains the concept of compounding, noting that human brains tend to think linearly rather than exponentially, making compounding a powerful but often misunderstood force. He illustrates that starting with $5,000 at age 18 and adding $5,000 annually, with an 8% return, could lead to millions by age 50.
Adam Taggart emphasizes that compounding, while beneficial for savings, can work detrimentally with debt, acting in reverse. He criticizes the education system for not teaching this, noting how credit card offers are readily available to young adults, leading them into debt traps where interest accrual makes it difficult to repay principal.
Adam Taggart links financial struggles to a negative relationship with money, including a "hatred of capitalism" and a perceived "ascendency of socialism." He argues that this view, coupled with a vilification of the wealthy and an envy of their quality of life, hinders people from pursuing financial success and drives political momentum towards wealth redistribution.
Adam Taggart delves into behavioral economics, explaining that while money is quantifiable, human decisions around it are often irrational due to our nature. He illustrates this with a capuchin monkey experiment, showing that a sense of injustice, like receiving a cucumber while another monkey gets a grape, triggers anger and resentment, reflecting societal feelings of unfair treatment.
Adam Taggart points to the rise of the gig economy, where independent contractors often lack benefits like healthcare, retirement, paid time off, and job security. He suggests that this precarious situation forces individuals to seek other means of securing their future, frequently leading them to take on debt as a consequence.
Lance Roberts discusses Nvidia's recent earnings report, noting significant year-over-year revenue and operating income growth. He acknowledges concerns about accounts receivable but emphasizes that the overall growth is real and dismisses bearish sentiment as people who missed out on the stock's rise.
Lance Roberts advises caution regarding market exposure, citing a short-term sell signal and declining momentum. He suggests setting stop-loss orders around previous highs or the 50-day moving average, anticipating a potential pullback.
Lance Roberts draws parallels between the current AI boom and the late 1990s internet bubble, noting that while some companies faltered then, today's AI leaders are reporting substantial revenue. He argues against dismissing AI's potential, likening the sentiment to early skepticism about the internet.
Michael Every suggests that the US Treasury's recent 'Operation Twist' maneuver, involving buybacks of longer-duration bonds funded by T-bill issuance, is not merely a financial adjustment. He likens it to a 'special military operation twist,' implying a more complex geopolitical and financial strategy at play.
Michael Every predicts that stablecoins could be aggressively pushed out by 2027, potentially coinciding with new legislation like the Clarity Act. He posits that the widespread adoption of stablecoins, particularly in emerging markets, would necessitate stablecoin issuers buying Treasury bills, thus shifting US debt issuance to the short end of the curve.
Michael Every describes a geopolitical and financial dichotomy where countries must choose between aligning with US markets, tech, finance, and stablecoins, or engaging in business with Iran. He suggests that countries choosing the latter will face repercussions from the US, potentially leading to a significant disruption.
Michael Every argues that the US Treasury's move to shift debt issuance to the short end of the curve is a form of yield curve control, albeit not explicitly stated. He believes this action signals a determination to prevent financial market constraints from dictating military actions, particularly concerning Iran.
Michael Every suggests a connection between fluctuations in the US 10-year Treasury yield and statements from political figures regarding a potential deal with Iran. He posits that the Treasury's actions to manage the yield curve are a strategic move to assert autonomy in foreign policy decisions, especially concerning Iran.
Economist Dr. Art Laffer expressed a highly optimistic view of the US economy, stating it is performing "extraordinarily well" and has good future prospects. He highlighted favorable tax policies, including no taxes on tips and overtime, and permanent reductions in corporate and personal income tax rates as key strengths.
Economist Dr. Art Laffer attributes the recent material decrease in US GDP growth rates to changes in immigration policy. He argues that a shift from 3.5 million annual immigrants to an out-migration of 1 million has resulted in a significant swing in population and labor force growth, thereby impacting GDP.
Dr. Art Laffer stated that Kevin Warsh's appointment as chairman of the Federal Reserve Board will make a "material difference." Laffer believes this change will be significant for the future, particularly over the next quarter-century, and considers it good news for the economy.
Showing the latest 15 of 33 covered episodes.