Transcription
Welcome to Thoughtful Money. I'm its founder and your host, Adam Tagger.
Well, Thoughtful Money's spring online conference was held this past weekend, and I'm delighted to say the event was a real success. That was due primarily to the amazing lineup of speakers who presented and took live audience Q&A throughout the insight-packed 11-hour day. For those of you who didn't attend, I thought you'd enjoy hearing some of the conference highlights.
The day started with Lacy Hunt, former senior economist to the Federal Reserve, explaining how when an oil price shock slams into an economy as vulnerable as ours was right before the war, well, nothing good results.
"One of the most essential uh aspects of an oil shock is that it's a global event. It's not a domestic event. Um oil is is is critical in in every major economy's production function. And so when supplies are withdrawn and prices rise there there have to be uh major recalculations. And with with oil and and related products, it's it's very difficult for simple adjustments to be made because um oil has price inelastic demand. They're not very good substitutes. So if you go into the gasoline station and the price is up and you don't like it and your tank is empty over the short run, you have very little that you can do to avoid the impact. The key factor that that that one has to to take into heavy consideration is that the shock is not the only thing that matters. The initial conditions matter. And so you you have an unsteady or teetering economy and the supply curve shifts inward. Point number six. And the the net result of that is that it's going to raise prices and lower GDP."
Luke Gman then made the case for a pronounced stagflationary recession ahead, expressing his substantial concern for the economic damage the current war in Iran is inflicting on the highly indebted global economy.
"It's going to be a crisis that'll be worse than COVID and '08 combined."
"Well, sorry. Bigger than COVID and what combined?"
"2008 combined."
"2008. Okay. Okay. That's all right. All right. That's not a small statement."
"No. No. This people the the gap in in in perception versus reality of this is as big as anything I've seen in my 30 years in research. Like this is reminds me so much of 4Q7 where what we were hearing on the ground in the seat I was in at the time was so bad that I was calling friends and loved ones saying make sure you have under $100,000 in the bank under the deposit limits at that time because there's going to be a lot of banks failing next year. Uh, and at the same time I was making those calls, the S&P 500 was hitting an all-time high and people were like, 'Oh, everything's fine.' And I think this gap in perception versus reality is even wider."
Ed Dow echoed Luke's recession concerns, though, with a more deflationary bias, noting that the war's high oil prices are already creating a liquidity squeeze across essential supply chains.
"This oil price shock is causing a liquidity problem across supply chains. And uh, you know, if you look at the uh, the chart of the US dollar, it put in a nice low about a month ago. It's putting in a monthly swing low and it's at 100 now. Uh, so as as we roll through time, we expect the US dollar to catch a bid and and be a lot higher by the end of this year. That'll be indicative of a liquidity problem. Uh, a dollar a dollar shortage as credit credit defaults rise and uh, and and and supply chain issues magnify."
Michael Hal came on to explain that now that global liquidity is deteriorating, that is highly correlated with lower asset prices ahead.
"This is a five to six-year cycle. It's a cycle uh as we would argue uh which is about debt. It's a debt refinancing cycle. Uh, and that's an important thought to to hold. And basically, what you've got now is liquidity conditions are starting to deteriorate. They're coming down. They're not falling in absolute terms uh significantly yet. Uh, this is much more a slowing of the growth rate, but nonetheless, we're seeing that inflection and asset markets respond to inflections in growth because they tend to be priced at the margin. So this is why that's important. And the reason for showing the central bank uh chart earlier is that just to say that what we're getting here is that the deterioration is coming fundamentally uh because of the private sector, not because of what central banks are doing. Now, why is the private sector deteriorating? Largely because money is beginning to move into the real economy from financial markets. Now, that's not necessarily only fueling uh real growth. It could be just basically compensating for higher inflation or as we speak now, higher oil prices. But basically, you know, all money that's anywhere must be somewhere. So if it's not in financial markets, it must be in the real economy and vice versa. Uh, and that's broadly how the system works. So what we're facing now is tightening liquidity conditions. Uh, and that's that's basically a fact."
Housing analyst Melody Wright followed it, noting that credit is tightening up across the housing market as concerned lenders are increasingly cautious about making loans.
"Yeah. And they're not tightening up because um they're getting smart. They're tightening up because they are out of liquidity."
"Yeah."
"Which is what typically happens. And also your borrowers are in pretty rough shape. You know, that's why the Fed recorded in I think October the highest mortgage refinance rejection rate uh ever in their series, over 43%. Which is just insane if you think about it."
"Um, and"
"The tightening is already starting, is what you're saying."
"Yeah, it start it's it started really, I think last October and and so, you know, you've got that tightening, but I think people could still access like private markets um, do these uh hard money loans or and and now there's like a it's the personal security loan or, you know, uh buy now pay later. That that's all tightening up too because as these folks get into trouble, these private credit folks, and we're seeing their liquidity be rest constrained by what Chase just did."
"Um, they're not going to be lending out in the market and this is going to hurt residential, but it's really going to hurt commercial because your private credit was probably 20 to 25% of that activity last year. And they kind of had a mini origination boom, refi boom in the commercial real estate last year because of those actors and they're now they're now getting kicked out of the system. And so this debt maturity wall in '26 for commercial, this could be the first time we really have to deal with it."
Technical analyst Michael Oliver then walked us through his momentum charts that warned the stock market is at the precipice of a major multi-year bare market.
"We're go entering a major bare market. And if you go back through history, you see that those major bare markets are at least 50% uh, quite often a lot more. This is the biggest stock market bubble fundamentally and technically by our technicals uh in history. It it it's vastly more of a bubble than the '29 top or than the mid-'73 top that collapsed into '74 or the 2007 top or the 2000.com top. This is a much more aged, more bloated stock market than it's ever been. And momentum says, 'Nope, you're no good if you break these numbers.'"
Stephanie Pomboy and Grant Williams joined afterwards to share their macro outlooks, laying out the possible cascade of asset price write-downs and debt defaults that could result if troubles in Iran and in private credit build from here.
"The overarching question for me is the potential for this surge in oil prices on the back of the action um to precipitate some real risk-off mood in the markets as it sends interest rates higher and we're already seeing the pressure in the private credit space. Does that devolve um as a result of that? So that's sort of, I guess, my top overarching concern right now."
Brent Johnson followed, explaining how stable coins are a true game-changer to the monetary regime, one that will likely make his dollar milkshake theory even more compelling.
"And that is, I think stable coins have the potential to be as transformative to the global monetary system as when the United States cut the linkage to gold, you know, 50 50 years ago or 60 years, whatever the number is now. Um, and and and it's because of not because the dollar is great. I want to make that clear. It's not because the dollar is a great currency. It's because all other fiat currencies are even worse. And there's a large percent of people outside the United States who would much prefer to hold US dollars to holding their local currencies. And stable coins make this infinitely easier to do and it makes them infinitely easier to transport. You have seen in the last couple weeks with all that's going on in the Middle East a rise in stable coin usage and and purchases in in the Middle East as a and it's a, you know, especially in places like Dubai and Oman uh because of what's going on over there. Um, and so I think and, you know, in many ways, before the actions took place in Venezuela, the Venezuelan economy was already very much dollarized. I think 70% of the the economy ran on dollars already and a big part of it was done via US dollar stable coins. It's essentially a way for the United States to infiltrate any part of the world that has an internet connection um and have that infiltration be adopted willingly as opposed to being forced upon them."
Darius Dale offered one of the more optimistic outlooks of the day, noting that the impact of geopolitical events on financial markets are often short-lived.
"Geopolitics in isolation historically has not been in much of a a big, you know, causal factor in trending market risk from the perspective of the momentum and dispersion within and across asset markets. What matters to the momentum and dispersion within and across asset markets are, you know, trends in the six key macro cycles: growth, inflation, monetary policy, fiscal policy, liquidity, and positioning. And so from the perspective of what's happened in the last few weeks that has caused this, you know, risk-off market regime uh condition to emerge over the past few weeks is the fact that the spike in energy and the spike in the US dollar, both of which have broken out to bullish from the set of our volatility adjustable momentum signal. In fact, I can just show you uh quickly walk you through those uh charts in terms of what's happened. We got a bullish BAMS breakout in the vol in the US dollar from the set of our volatility adjust momentum signal. We got a bull a bearish to neutral breakout in the two-year Treasury yield. A b a bearish to neutral to bullish breakout in the 10-year Treasury yield. Uh, we got bond market volatility broke out to bullish. Currency volatility broke out to bullish. Uh, the equity volatility was already bullish. And so you've had so much negativity from the perspective of all these leading indicators of global liquidity suggests that if the war persists, then the probability that we have a trending decline in global liquidity is high."
Highly respected independent journalist Matt Taibi then joined us to share his thoughts on the many ways that today's media is failing us as information consumers.
"The media is broken. I think in the sense that um we're we're at a moment where nobody really knows what facts are true, how to check facts, um, how much to trust certain sources. Uh, and there are a variety of reasons that that we're in this place. I actually started writing about this topic a long time ago. I wrote a book um ages ago called The Great Derangement."
Judy Shelton and Danielle D. Martino Booth followed, sharing their thoughts on a Federal Reserve in transition and what they think of the newly appointed chair, Kevin Worsh.
Judy Mintz no words for her frustration with the way the institution has been poorly stewarding our currency.
"Even that the 2% inflation rate that the Fed doesn't seem able to achieve, but would pat themselves on the back to achieve, is still deliberate debasement of the money unit of the United States. And I think it violates the constitutional authority of Congress to regulate the money. The money was meant to be an invariable measure and the Congress's oversight in regulating the money is in the same sentence of the Constitution that gives Congress the power to define official weights and measures. It's not meant to be something that steadily reduces what it means as as a measure. It's meant to be a monetary standard of integrity."
Right after that, precious metals analyst Andy Sheckchman made his case for why gold and silver are becoming quite oversold here and why he expects a recovery to new all-time highs for both metals lies ahead.
"We see the price get smashed down and then we see things like Chinese customs data showing 790 tons of silver reported in the first two months of 2026. February alone, 470 tons. The the the highest monthly import volume ever recorded. We see big deliveries on COMEX continuing to happen. And and there was an interesting one in in February that I found very very interesting. And, you know, in in February, we saw about 28.5 million ounces that were delivered on COMEX. Now, that doesn't mean that it left, right? 28.5 million ounces or so were delivered in COMEX. But then we saw at the same time, 38 million, almost 39 million ounces leave COMEX in February. 160% of what deliveries alone would explain. You see some other very interesting things and I don't know if you want to call it um coincidence um or not, but as I mentioned, we saw 38 million ounces leave COMEX, right? Someone that means they were loaded out. That means if a mint box of silver eagles, which is 500 ounces, weighs 42 pounds, who in God's green earth is taking possession of between 38 and 39 million ounces, well over 2 million pounds. We were then treated by Rick Roll to a number of his favorite stock picks right now, and how a world increasingly in competition with itself is suddenly creating a surge in appreciation of the essentiality of natural resources and who controls them."
"The circumstance that you're seeing in the Gulf isn't merely geopolitical contest. Uh, a geopolitical contest. Uh, how could you say it makes things difficult? War makes things extremely difficult. Uh, and I think this war is serving maybe a useful purpose in the sense that it is pointing out to us the fragility that we're seeing on the supply side."
"Mhm. Uh, it talks about the fact that we don't have very much surplus capacity."
Income and international investor David Haye came next, sharing a number of specific sectors and companies that he thinks have become quite attractive now that a panicked Wall Street has started to throw the baby out with the bathwater.
"I do think that we've got a situation where there are some very intriguing opportunities that have been created not only by what's happening in the Middle East, but what's happening with AI and we're not about talk about it today much. We can if you want to, but also this private credit uh, you know, hysteria that's developed and and opportunities that's creating. So there's definitely opportunities. There always are. And frankly, I think the more that you've got turmoil, the more opportunities you get. So, the key points I want to cover, and I know we don't have a lot of time today compared to our usual type of uh setting, but it's I do think it makes sense to have an unusually high level of cash on hand right now. And I know it's not exciting to think about earning just 3 or 4%, but sometimes it's better not to lose money. And I say that realizing there are opportunities that I'm going to try to make a strong case for. But I do think that we're in this process where there's money moving out of the US financial markets into offshore markets. And I know that's controversial, as we just talked about, but we'll get into some of the reasons why I think that's the case. And then of course, the idea that AI will eat the world, used to be software, now it's AI, but it has created this kind of throwing the baby out with the bathwater kind of scenario. And whenever that's the case, you've got some opportunities."
Then Lyn Alden, one of the top experts in the world on digital assets, gave her latest assessment and outlook for both Bitcoin and stable coins.
"So far this cycle, we had less of an up move in percentage terms compared to either the prior high or the prior low, depending on where you want to measure it from. Uh, and, you know, we don't know if this correction is over yet, but so far, it's also been a shallower correction uh from prior from its high than prior uh sell-offs have been at the kind of the worst phase. It was about 50% down. Uh, now it's less than that because it's it's bounced off those those kind of recent lows. So it's still too early to say uh what this draw down will be. I mean, I think there's a decent chance the bottom is in, but I wouldn't I wouldn't bet everything on that. Um, but yeah, I do think that we are seeing a longer-term slowdown uh in its volatility. Uh, which you generally would expect. I mean, when it when it bootstraps from zero to over a trillion, it's got to have a lot of upward volatility and to to reach that kind of market cap. Every time you have upward volatility in an asset, you're going to get leverage and euphoria. So, you're going to get periods of downside volatility. So, those unfortunately kind of go together. Uh, but the bigger it gets um and the more it's kind of tied into to institutional capital as well um, you know, in general, we should see um less ability for one entity to move it around. Uh, we should see just higher liquidity, which which kind of takes the edges off generally speaking on on ups and downs. Um, less less overall uncertainty, harder for governments to ban just due to the size of it. Um, you know, more more people advocating for it um in places where there's some degree of freedom of of voting and capital and, you know, things like that. Um, and so I I do this I do generally view this as another pretty garden variety sell-off."
The day then ended with an hour-long Ask Anything with Thoughtful Money's crew of endorsed financial advisors. All in all, the conference was over 11 hours long and delivered a wealth of actionable insights. But don't take my word for it. Here's feedback submitted at the end of the day by the conference attendees themselves.
"Flawless. Thanks, Adam."
"Awesome conference, amazing group of speakers, and a very good use of 11 hours."
"A heartfelt thank you to all the speakers and to you, Adam, for another superb conference."
"What an amazing lineup of speakers."
If you're wishing you'd attended the conference, but for some reason didn't, don't worry. You can purchase the replay video of the entire event, all the presentations, and all the live Q&A sessions by simply going to thoughtfulmoney.com/conference.
And despite inflation having raged over the past two years, we haven't changed the pricing of our conference in a long while. While I'm not certain yet if the price will rise for our upcoming fall conference, I'm giving you the option to buy your ticket for it now at 0% inflation. That is the same price as the one that we just did this past weekend. If you'd like to lock in your ticket now, you can buy it at the early bird price, our lowest, and with no inflation from this past year, by going to thoughtfulmoney.com/fall.
All right, now that the conference is over, I'm hard at work on a number of upcoming interviews I think you're really going to like on high-interest topics like tax-free retirement planning, whether the US will really take Cuba, key learnings from the investment greats like Buffett, Lynch, and Templeton, and a number of others. You're going to find these interviews highly interesting, and I hope highly valuable as well. I'll see you all then, and as usual, thanks so much for watching.