Transcription
Hi everyone, it's Della [music] here from the Della Cambon Show and I have a must-watch conversation you do not want to miss.
Today I am joined by the legendary floor trader Todd Baba Horowitz, 45 plus years in the pits, original SPX market maker, one of the most straight-talking voices in finance. We're diving deep into two massive warnings here. Why Baba sees housing crash 2.0 coming fast with banks potentially needing bailouts again and why he's getting back into [music] buying physical gold right now with a bold call for gold to hit $6,000. [music] I don't know if it's a bold call. We're going to find out right now. So, if you're worried about your home, your savings, or your future, uh you definitely want to stay on for this conversation right now with Todd Baba Horwitz.
Baba, always good to be with you. Happy summer, >> Danny. Great to be with you. It's always a pleasure and I always enjoy our conversations. I'm looking forward to this one.
>> Yeah. Well, okay. Give it to me straight. Bubba, I did you see that note? I think Goldman put out this year. They're they're turning bullish again on gold. They had a pretty bold call. So, that's why I say 6,000 for you isn't so bold. Updates on the >> gold. >> Yeah. So, updates any updates on the gold and silver market on your front here? Well, I think they've obviously been under pretty tremendous pressure, but I I think you saw gold fine 4,000 is a pretty good level to hold. Silver 55 and platinum about 1,600. Uh I expect to see a pretty solid rally. Now, you know, everybody's worried about the potential rate hikes that are coming that will would potentially affect gold, but that's not the case because the gold market already knows. I I believe that the sell-off in gold came partially because they knew rates were going to go higher and partially because they got so overbought and so overextended that anytime you see a chart go parabolically higher, it almost invariably has to come down and you can look at a number of stocks or that's look at what happened to SpaceX. So you can see that happening. I think they found now a nice little base. I look for a solid rally. The truth of the matter is is my original call was about 6,000. It may be a little tougher to get there. I could see us potentially getting back to the highs and listen I can't say we can't get to 6,000 but now my next target that I'd be looking for would be about 4600 then about 5,000 and then the highs and we could certainly go there if we get the action behind it because I do believe that once the Fed announces their rate hike which I believe they will do in probably September I think that will be this the all good signal for gold to start rallying again and start rallying harder. It's held up very nicely here. I think it looks good and I think I I definitely would be a buyer here and continue to accumulate.
>> So, you are still on the side that the Fed will will hike. I know we debated this last time. You haven't >> I'm 100% saying they're going to hike. There's no there is no chance. If they let this go without a hike, then they're making even a bigger mistake. You know, Ben Bernani was the worst. I mean, we go through the Fed chairman. Alan Greenspan was the original bubble builder. He created this monster. Ben Bernani destroyed it by bailing out the banks in '08 and with his quantitative easing garbage program. And you you either have to get back in the line or you have to let the total economy fall apart. And I think they're I think Worsh I like what he said the two times I've heard him speak on his meeting and at the the the banking committee. I think he's got it right. And he wants to hike rates here. You have to clean out the mess that we have created with these lower than rates because think about it. The 10-year notes have gone up about 150 basis points while the Fed funds rate have gone down 100 basis points which is only good for one group of people that is known as the banks. they have made all that profit on that spread versus and the tenure notes are still going higher and I expect to see the tenure notes get upwards north of 6% maybe this year.
>> So okay few points here let's get back into money moving back into gold. Uh what do you make about the argument and I had Peter Bookvar on this. He was saying he thinks the uh AI trade will, you know, will fall apart here, will bust, and that we'll see that money come come back in to gold. He says the Chinese are coming for for the US on the AI front and we're going to see a lot of these companies come down drastically.
>> No surprise that would that listen, you saw Micron, for example, is down 30% from its high.
>> Okay. Palanteer is down 40% from Matai. You know, Nvidia is not down quite that much yet, but a lot of the lesser known names, the little babies that usually charge higher first and then they break first, a lot of big name, a lot of those little names are down 50 and 60%. It would be no surprise that we see a massive meltdown in a lot of these AI stocks. And again, we've got some big earnings coming out over the next couple of weeks that are going to be directly correlated to the AI space. And it's how much are they spending? And you know, we everybody seems to forget the amount of power that it takes to do AI. You know, everybody cried about Bitcoin and how much power that uses. Well, AI uses a hundred times more power and it costs every day, which means the consumer is paying more for their electric bill. They're paying more for their energy. Look what's going on with copper going up because of AI. So all of these things are being forgotten about, but it's going to be a big problem into the inflationary cycle, which is why the Federal Reserve has to hike rates to try to slow this down. You you have two types of inflation. Good inflation when an economy is thriving and there's demand because everybody's got money and bad inflation which is what we've got now which was created by the Federal Reserve where everybody's got nothing. A third of investors have more credit card debt than they have money saved. Okay. We're at the highest rate of foreclosures in homes since 2019.
>> Let's let's Yeah. No, we need to talk about that because uh I've been having so many side conversations about this housing emergency. Uh, I I I really feel we're on the cusp of a of a major, you know, we we're there, Baba.
>> I agree. I listen, you know, when when you have 0% financing, okay, when you're offering, excuse me, I apologize. 0% down.
>> Yeah.
>> Okay. Which is a new thing. And they're now back to in many places no dock loans, stated income. Okay. What is that telling you? It is telling you that the housing builders are have so much inventory that they need to get rid of it and they want to pass the debt on to somebody else even if the debt is no good because they're going to package those loans as they did in 2008 as they've done for years and resell them. Okay? So again, when you have this kind of situation, here's the numbers. 15% of the people are 90 days past on their credit card. Eight percent of the people are defaulting on their homes and 7% are are are defaulting on their car loans. Okay, that doesn't sound like a lot. That's a huge number and it's only getting worse because jobs continue to dry up. I don't care about the ridiculous jobs number that they report. Anybody who understands the true meaning of the Bureau of Labor Statistics, you need to go look at the U6. And the U6 is not even that accurate. It's really employment to employable population, which says that our true rate of unemployment is about 12 or 13% right now because the unemployment numbers don't count people that are no longer looking for jobs. So, we're we're 12 to 13% unemployed. We got more unemployment coming. You've got layoffs like galore. You've got steak houses closing. You've got restaurants closing. Who's going to replace all that money and all that income?
>> And but also look at mortgage rates. Don't mortgage rates have to come down? How are people ever going to be able to afford homes? Bubba,
>> well, that's another thing you mentioned is interesting. Uh, that is the very reason why I bought my new house where I'm at now because they made a deal with me. It was 2 and a half% for the first year, three and a half% for the second year, and I lock in for life at 4 and a half%.
>> So you tell me I can get 5% on a CD. So doesn't it make sense for me to borrow money at two and a half, three and a half, and four and a half%?
>> When did you get that? When did you get that?
>> This was This is a year ago.
>> Okay.
>> So, how does one how does one negotiate that?
>> They offered it. They were They're looking to move inventory. This Now, you drive around Las Vegas, there are signs, no money down, no money down to buy a house. And now, you know that that's never good, right? the no money down scam which started years and years and years ago at Circuit City and the electronic stores, you know, 90 days same as cash. Okay, nobody realizes that eventually that bill comes due and the interest is so high. So now you've got these zero down houses again. You know, you've got these H-1B deals going. This picture is very ugly. The warning signs are so clear. And again, I'm not going to say it's going to melt down tomorrow or next week. I'm just saying that you cannot continue to ignore the massive warning signs that this economy is showing off. Absolutely. The K-shaped. Listen, you're in good shape. You make a good living.
>> It's not affecting you as much as it's affecting everybody else. But you do have two little kids and it is expensive to live. And certainly, but how about the people that are only making $50,000 a year or $60,000 a year. They're paying for over $4 a gallon for gasoline. Their groceries keep going higher. It's kind of hard to live. I mean, if you're if you live in New York City, if you're not making 150,000 a year, you're living in poverty.
>> It's still affecting us. Trust us, Baba. Trust us.
>> But it doesn't affect you as much. You can cut back a little bit. It affects us all.
>> It's not good for anybody. But think about it.
>> In New York City or in California,
>> $150,000 a year is really not enough just to sneak by.
>> Think about the numbers. Think about the housing cost and the income.
>> And it's worse in Canada. It's worse in can by the way just fun fact. So I'm here in Quebec now. You're talking about down payment for a house. It's 20%. 20%. One. You know how much gas is here? I'll convert it for in American terms $10 a gallon. $10 a gallon.
>> I thought New York was sticker shock.
>> And salaries are so much and salaries are so much lower here. I'm like, how are people getting by and your tax like you're choked?
>> And you know what's more amazing, Danny? There's a glut of oil in this country. There's a glut of oil in Canada. There is so much oil that oil has no business being as high as it is. I don't care about the war in Iran. It has nothing to do with WTI oil. And and you can see you've already had a couple of oil companies report earnings, record earnings, and you got more coming out in the next couple weeks. I assure you they will be at record prices because at the end of the day they took every advantage of this stupid war that we're involved in not paying attention to the simple to supply demand curb that there is so much oil in this country that we could never use it anyways.
>> We just keep getting screwed Baba and I'm I'm sick and tired of it just like everyone watching this program.
>> That's that's the pro. Listen, you have a government run a muck, okay? And it's not just Trump. It's not just Biden. It's this goes back. They continue to build the debt. Look at what the debt is. Over $40 trillion of money. If you and I lived like the government lived, we'd be either in bankruptcy court or jail. But yet, the government gets away for it. You know, if according to the Constitution, government is run city, county, state. The federal government was only supposed to be an overseer, not the biggest employer in the world. They have far too much power. The Federal Reserve is far too tied to the government even though they're supposed to be an independent corporation. And we stopped letting the free markets trade and that has been partially the downfall that has created more of the debt because you've destroyed the free market capitalism system.
>> But exactly, Bob. But that's why don't you think they either going to have to really drastically lower the dollar or QE?
>> Well, I don't I I believe now again I'm not the economic genius, but I believe that in capitalism bad business has to go out. Okay, which was why they should have let the banks go out in '08. The ones that were in trouble, they should have bailed out the depositor, not the individual bank to let them continue to steal our money. Okay? So I think you you have to have a lot of failure. That is how capitalism works because somebody else comes in and replaces a business that has failed. If you're not running your business correctly and you're not profitable, then you don't deserve to be in business no matter how big you are. Nobody should be too big to fail when it comes down to money. Because if you're too big to fail, that means me as a taxpayer, you as a taxpayer are financing a business. Just like we're financing the AI boom because of our higher electric bills and our higher copper bills when you build because that's what AI has done. It has raised the price of electricity. And now they're talking about rolling blackouts. So we have to suffer rolling blackouts so that we can support the AI industry that are supposedly worth trillions of dollars. Yet a little poor guy on the street who makes $80,000 a year has got to pay his bigger electric bill to help finance these companies. Does that make sense? Doesn't make sense to me. They should be bearing the brunt of the electric bills. They should be actually be paying the electric for the for the common people.
>> They use more bills.
>> I'm so angry right now. And it's funny you say the little poor guy at $80,000. Right.
>> No, you listen. That's the average right today. Average income 70,000. Average house 510,000. 1985 average income 25,000. Average house 75,000. You tell me how good how did that work out? Not
>> I don't know. But you know what? We were reminiscing the other night. You know, I was gathered with my family, Bubba, and my niece who's a camp counselor now. You know, she's 17 years old making a minimum wage. And she was like, "Minum wage?" I said, "What's minimum wage now, Sarah?" And I think what is it here in Quebec? I don't remember. 16 bucks or 17 bucks an hour, right? And I said, "Wow." I remember when I was working part-time, you know, it was like eight bucks, you know. Then my sister says, who's older says, "Oh, I was $3." Then my dad says, "Oh, yeah, mine was 50 cents."
>> Mine was 60 cents. My first job was 60.
>> He said, "How did he support a family?"
>> You know what's amazing? You did because everything was affordable. Because you didn't have all this intervention. Do you realize that my first mortgage was 14%.
>> Oh my god.
>> Think about that. So it shows you that if you leave the market to work for itself, you know what's amazing? Asset classes know how to price themselves. How do they price themselves? Through supply and demand. Buyer meets seller. They exchange wealth. That's ex. We have got a Federal Reserve that has totally destroyed that system. And again, you have to ask yourself, was was was Wilson in on it or did he get scammed on it? Okay? Because again, this was never in the best interest of the people of the Federal Reserve. It never did a a job that was worth anything. All it has done is make the banks wealthier and make the bankers wealthier, not help the average person on the street.
>> So, this brings me up to, I guess, like just wrapping up here. Something that's been resonating with our audience. We've been doing a lot of coverage on, you know, the reset and what would happen to your dad in a reset. And we've been interviewing people who live through resets, whether in Argentina or or or Mexico. Um, do you think about that, Bubba? Do you do you think that we are headed towards a financial reset?
>> No, I don't I don't think so. I think I think the if we get a reset, that'll mean that America is over. Okay. Uh, I don't think they're going to go for a reset. I think they're going to try to work their way through this. Uh, but hopefully we'll get some better ideas. Hopefully it'll start with again Wars. You know, Jerome Pal I thought was a good choice when he came, but he turned out to be a bozo because he turned into a when he went into the white tower. Okay. Hopefully Wars will continue on his path. We need We need a grown-up in the room that says, "No, you cannot keep spending that money. No, I'm not going to continue to adjust your allowance and adjust the rate so that you can borrow more money. You need to get and and and build a solid budget. You need to work out a plan on how to reduce the overall debt and the spending. I mean, look at all the money we're wasting just in Iran and in Ukraine. Still in Ukraine, four and a half years later, the war that President Trump promised that he would end. I'm a Trump guy. I like Trump, but he promised when he got in office, it would be over. Well, we're four and a half years in to that. We're already what, four months into Iran, and it shows no signs of ending anytime soon. So you're one of the viewers viewers voters that's I would say frustrated with that because that's one of the one of the the the platforms you liked right one of the >> that said right >> I am tired as a voter as a taxpayer as a citizen of throwing my money away that I have to pay taxes on that goes to everywhere that it should goes except for where I'd want it to go. Okay. I'm tired of supporting everybody else in the world. I'm tired of supporting, you know, there is so much criminal and and it was a shame that that Mus didn't work out with the Doge Act because he was finding places where there was a lot of money that's being stolen because listen, there are so many ways to get around the regulations. But obviously, that's a much deeper conversation. But I'm very frustrated with it and not for me. I mean, listen, I'm frustrated for my kids. You know, they're growing up. frustrated for your kids even while you you're young too. Still you're still a little puppy too. So, you know, it's it's it's gonna be harder to live a great lifestyle. You know, I think that people the economy should be in such a way that both parents do not have to work. They can work voluntarily, but in today's world,
>> both parents have to work and still have trouble making ends meet.
>> Yes. Yes. Yes. I feel that. Um well, as always, you know, thank you, Bubba. like depression. Smile a little bit. It's so cool.
>> I am. Trust me.
>> I just your facts, baby. I listen.
>> We're going to go on. We're We're going to get through this. We're going to fight for it. You and I are going to keep putting out that message and maybe someday
>> they'll listen. And that's what we have to get people to listen and people to vote
>> and to wake up.
>> Think about it. You know, like I said, I'm in Canada right now, Bubba, and it's like the level of brainwashing I'm seeing. So, sometimes you need to get out of a place to see things differently, you know.
>> Anyhow,
>> awesome. I love being with you. You're you're great to be a part of.
>> Well, we'll we'll try and change the world together, but in the meantime, we urge everyone to own physical gold, own physical silver. It's going to be the only only thing that could save us, right, Bubba? And you can reach out to uh reach out to my wonderful colleagues at you know, reach out to us at ITM Trading. We're now global. Uh, we could service people outside of the United States. This is fantastic. Uh, so reach out to us. We can help you. It's a free strategy session. We'll fire in the link for you all. And uh, Bubba, thanks for this uh midsummer update. The people love hearing from you. So
>> I love you, baby. Have a great day. Thanks so much. And uh, hello to all the listeners. Thanks everybody for listening. We'll see you soon.