Ed Dowd: "I've Never Seen Anything Like This"

What I would expect to see sometime in the next, uh, three to six months, is a healthy, uh, 20 to 30% pullback. Scary, then a counter-trend rally. The Fed starts cutting, and then if we're in a bare market, that counter-trend rally will fail, and then we'll go to, uh, lower, lower lows, which I think, yeah, we're, we're almost there. I've never seen anything like this economically. The, the disconnect between, um, you know, the consumer and the stock prices has never been wider.

Welcome to Thoughtful Money. I'm its founder and your host, Adam Tagert. Today's guest entered the year pretty bearish on the prospects for the U.S. economy, the global economy, the financial markets, and the housing market. Well, now that we're five months into the year and embroiled in a new war with Iran, how has his outlook changed, if at all? For insight, we're fortunate to welcome back to the program Edward Dow, founder of macroeconomic consulting and research firm Finance Technologies. Ed, thanks so much for joining us today.

>> Great to be here. Thanks for having me on again.

>> Hey, it's always great, Ed. Um, you're a wonderful interview, also just a good guy. Um, we were just talking before we turned the camera on here. I'm glad you made it through safely, all those heavy rains and floods out there in Hawaii. We're glad you're still with us.

>> Yeah, I'm glad I'm still here. I almost, I almost floated away in my car. I got caught in one of the flash floods, but I now I finally made it home during, during the, the, the worst of it.

>> That sounds kind of scary.

>> Yeah, it was, it was, it was, it was, uh, it was kind of a once in a 200-y year event for Maui. I mean, it rained for a month. There were flash floods twice in a week.

>> Wow. Um, but things are drier now, I hope?

>> Oh, yeah. It's, it's all, we're back. We're on the mend.

>> Okay. All right. Well, very glad to hear that that's the case. Um, all right. Um, maybe going from one disaster potentially to another. Who knows? Depends on your answer. Um, you know, you and I have talked a couple of times earlier this year, and heading into 2026, if I took good notes, you were projecting a mild to moderately severe economic slowdown for the remainder of 2026. Is that still the case? Or if not, how has that outlook changed?

>> No, it's, well, I think when we talked, it was before the oil pro, well, we talked a couple times, but, uh, we put out our report in January of this year. Um, the oil price shock only makes it worse. Um,

>> So, forget the mild part. Now it's moderate or...

>> Yeah, it's moderate to severe. Um, and, uh, it's confusing for people because, prior to the, uh, uh, war, uh, beginning, uh, rates were headed lower. There was a growth, growth scare beginning. Um, private credit was freezing. Payroll numbers were coming in bad. And then the war came, and everybody focused over to war headlines. And then, uh, there was a nice rally, which in a couple podcasts, uh, prior to the bottom, I said we might go to new all-time highs in the market on any kind of relief, and we did. And the market has gone up on a very narrow participation. It's all basically AI and AI adjacent. Semiconductor stocks had a move that we saw similar to the 2000 top, 64% in five trading weeks. Um, just unprecedented moves, very narrow participation.

So, where are we? The S&P 500 is 5 and a half% above the highs we put in in January or February. Uh, the actual, uh, equal weighted S&P index is, uh, down from its high slightly. So, this is very narrow participation. It's all AI. That's the only thing that's working. The real economy has gotten, uh, according to the way we measure it, has gotten worse. Housing prices are finally starting to give up the ghost. We had some bad home price declines in, uh, March, uh, February, and March. I think we're waiting on April numbers. Um, home builders are, uh, uh, stocks are going lower. Financial stocks are going lower. They're not participating in this, in this rally. So, once, uh, once the S&P gives up the ghost, it'll become apparent to everybody. And we think that's sooner rather than later.

There's a scare on the long bond, um, right now. Uh, basically, uh, everyone says it's the end for the long bond and, and long-term rates, but we've seen this before. Uh, the, the rates themselves are going to cause a growth scare, and, uh, we're still very bullish on long the long bond. We like cash as the best, uh, near-term investment dry powder for picking up, uh, uh, bargains on the other side of this, but nothing's changed in our, on our economic outlook. Housing's gotten worse, the consumer's gotten worse, and we're going to see corporate profits get massively squeezed from this oil price shock because they're not going to be able to pass on, uh, the, the cost to the consumer.

So, we're going to see layoffs start to accelerate throughout the year as, uh, companies cut the factors of production because of the margin squeeze. So, we're already seeing layoffs. We'll see those accelerate. Um, China, China retail sales just came in. No surprise there. It was pretty dismal. And, uh, we got the March, uh, China economic data. We're very bearish on China. That continues to go the wrong way. So, everything is globally and economically going south, and people keep pointing to the S&P, which now everyone is now talking about. I mean, it's, it's bubble talk. Everyone's talking about when does it end? Not if it end, but when. And, uh, some people are saying it's '99. We got another year higher stock prices. I don't think so. I think, uh, I think we're going to see the, uh, growth scare come and be evident by the end of Q2, and the Fed, I think the Fed is not going to raise rates. I think the Fed will be cutting sometime towards the end of this year.

>> All right. Um, so one of the problems we now have, Ed, is you pretty much answered every question that I had already written out here for our discussion. So, maybe we're done here. Um, we'll, we'll, we'll peel the onion a little bit deeper here.

Um, you, you said that your outlook hasn't changed at all. I, I'm going to, I'm going to push back and say it sounds like it actually has changed. It's just gotten worse, um, with the, uh, with the Iran war, the higher oil prices, the rise in bond yields.

>> Yeah. And, uh, the, um, the, the, the, the oil price shock is, is, is really put the Fed in a box. They don't have the tools to deal with oil price shocks because it's a, it's cost push inflation, not demand push inflation. So this...

>> And it's real, it's, it's real world based. It's not monetary based. Can't picked up a barrel of oil. Yeah.

>> Correct. And, and demand destruction is coming. I'm just really surprised at how, um, people are not looking forward as investors. I was talking to my, uh, friend who manages, he runs risk management for a $13 billion hedge fund, and, and, uh, he's in agreement with my macroeconomic outlook, but he's just shocked at the fact that the, the new cadre of traders and, and investors have a two-eek outlook, and that's about it. They, they, they don't look out more than two weeks, and they chase what's working. And what's working is literally the last bastion of any kind of growth. But this growth is going to come under problems pretty soon. And it's, it's, uh, it's AI and AI adjacent.

So, the S&P 500 is now 45% AI and AI adjacent. The MAG7's 36%, and semiconductors are about 17, 18% of the S&P 500 index, notoriously cyclical industry, and they're 30% of the NASDAQ. So, what's really driven this last move in the S&P has been a very narrow sector with giant price gains. This the, the SMH and the socks index are up 64% in five weeks. Something crazy like that since the bottom that we put it in April.

>> Um, and I, I've been here before, Adam. I mean, I was, I was there in March of 2000 as a tech analyst, and, uh, what we're hearing now is the word you don't want to hear in a semiconductor cycle, double ordering because, uh, this is what happened during the com boom. Every purchasing manager...

>> Needs, they need these components so they can, like, build their products. So, early on, as, as things become tight, and AI put a massive strain on the, on the supply, on the, on the supply side, but then the oil price shock, uh, has people worry about helium shortages, which go into the manufacturing of semiconductors. So, correct, that accelerated, uh, a lot of, uh, what we call, you know, pull forward demand, getting, getting your supply. So, each purchasing manager individually, they need, let's say they need 1 million units. Well, they go, they, you know, a couple, you know, a couple quarters ago, they started hearing, "Well, we can only give you half of that." So, they, they start double ordering, saying, "I want, I want two million."

>> Yep.

>> And then they get, they get their million, and that, that is the beginning of the end. And then when, when demand, uh, when the demand destruction comes and flips, then they start cancelling orders, and all these semiconductor companies are stuck with inventory.

>> And that, that's where we are. We're, we're, we're closer to the end of this than the beginning of anything.

>> Okay. Um, so I've talked to a number of people in the past week or two who have made similar comments about especially the performance in semiconductor stocks and just say, you know, uh, who was it? It was Cameron Dawson the other day who was quoting Bob Ferrell's, "vertical moves don't correct by going sideways," right?

So, there are people that are thinking that are on the same page as you as saying, "Look, there's, there's going to be some, some, uh, froth for moving event here in the near term on some of the stuff that's just gotten white hot." But they don't necessarily say, "And then we think the market's going to really continue to, to, to roll over and, and potentially close a year lower." I, I get the sense that you expect it's going to correct a year lower. Is that correct?

>> That's correct. And we, uh, we still think that, uh, cash is the best place to be in if you're more of an institutional investor or speculative investor: long duration U.S., uh, bonds and 20, 30 years and 20 years.

And I have a friend who does a lot of cycles an analysis. He's pretty good at cycles work. And we're coming into a cluster, a timing band cluster, of cycle lows in the lawn bond. It's the intermediate term low, the seasonal cycle low, and the three-year low. They're all clustering right now. Uh, and so I, his work is pretty good, and everyone on Twitter today is so bearish the U.S. long bond, it makes, it makes me laugh.

>> Yeah, I mean, it's, if that indeed does happen, it's going to surprise a lot of people right now. Um, we, we'll get to bonds in just a minute here.

Um, so, you know, at the end of the day, what, what drives stock prices for the most part is earnings expectations. And I know you expect demand destruction and earnings expectations to start coming down. You talked about how both the higher oil prices and the higher borrowing costs will pinch corporate profits. That's going to lead to layoffs. I totally get all of that. Um, and I've had those same fears at times over the past several years. And, um, the challenge is, is it, it doesn't really matter to the markets until the market starts seeing earnings estimates start to come down. And they're not yet. And a huge part of those earning estimates, as you said, are being driven by the just tsunami of, of spending that's being done in the AI and AI adjacent space. Um, do you expect some sort of real catalyst or trigger to start turning, you know, start diminishing those earnings expectations, or is this just like any bubble where we don't really know where the top is, but it's just mathematically out there and one day we're going to hit it?

>> Yeah. I mean, look, the valuations last year were silly. They got even more silly. So, we're at, we're at crazy stock market valuations. And, you know, I have people that I consult with from time to time, and they, you know, they'll, they'll, they'll get a inheritance and they'll be like, "I have $4 million. What should I do with it? Should I put it in the stock market?" And I say, "Well, if you do now, mathematically, your return over the next 10 years is zero." So, no.

>> You know, wait. And that's where we are. I mean, you can, you can, you can hope that the AI bubble carries corporate earnings, but the, the, the corporate earnings are mostly due to AI and, and semiconductor earnings. That, that's where all the, the revisions are coming from. Those are probably, and there, and if you look at, look, I was on Wall Street, what they do with, uh, estimate forward estimates is they, they, they grow them continuously. And, you know, second derivative is going to shift here pretty soon, and all, all you need is a second derivative, one company to say there's a little weakness, and the whole thing implodes. And I think that's coming soon.

I think, I think, uh, what you saw with the semiger stock was panic buying, uh, because of, uh, um, perceived shortages, and then the helium shortage, really, you know, that people don't, this is not well known in the public and maybe even in investment circles, but, you know, purchasing managers are well aware of what's going on with helium, and they panicked, and they, they bought, they, they bought more than they did even for AI. So, I think, I think the stock prices themselves are telling you the end is not in semiconductors, at least. Whether that causes a general market problem, uh, remains to be seen. We have no structural evidence that there's a bare market yet, and you don't crash from tops.

So, what I would expect to see sometime in the next, uh, three to six months, is a healthy, uh, 20 to 30% pullback. Scary, then a counter-trend rally. The Fed starts cutting, and then if we're in a bare market, that counter-trend rally will fail, and then we'll go to, uh, lower, lower lows, which I think, yeah, we're, we're almost there. I've never seen anything like this economically. The, the disconnect between, um, you know, the consumer and the stock prices has never been wider. Joe six-pack is struggling mightily. You, you know, you've heard from other people on your show, consumer credit, uh, credit card delinquencies are rising, auto loan delinquencies are rising.

>> All consumer credit is delinquency rising. Yeah.

>> Yeah. And, um, that eventually is going to affect credit, and it's already affecting, uh, there's already a private credit problem. Um, net, net flows in private credit are going the wrong way. For the first time, I think, in a long, long time, there's been more net redemptions than there have been inflows to private credit. So, the credit engine, which was the, the marginal producer of credit the last few years, was private credit, private equity. That's shut off, and banks had already stopped making commercial and industrial loans and, and, and consumer loans in aggregate versus pro, the marginal creator of credit was private credit and private equity. That's done.

>> And, uh, if you want to look at a, uh, barometer for liquidity, keep watching Bitcoin. Bitcoin peaked in October of last year. Bitcoin is trying to rally, but it looks like it may have stalled out. So, watch Bitcoin. Bitcoin will lead the any equity correction.

>> All right. Um, gosh, so much to talk about in here. Um, let me ask you this. Uh, you're, you're doing a great job of pointing out a bunch of negatives. Um, but there are, uh, you know, there, there are parts of the economy that are actually doing quite well.

Uh, I had, uh, uh, oh, um, Craig, uh, I'm blank on his last name. Um, it'll come to me in a second, but he's the CEO of, of FreightWaves, which is the global, um, transport tracking, um, research firm. And he was despondent back in November when I interviewed him. About a month ago, he said, "I, I could not be telling a different story." Uh, Craig Fuller, that's his name. Um, the, the, the industrial economy, the U.S. manufacturing economy is, is really booming now. And I don't see that, I don't see that changing anytime soon. In fact, it just keeps building momentum here.

Um, so, you know, just, just square that circle with me where we've got parts of the economy that actually seem to be getting stronger where you're painting a picture of a, a very kind of dire, um, both economic and financial market future for the second half of this year.

>> Well, it depends where you are in manufacturing. Manufacturing jobs in the last, uh, payroll number were negative. Uh, so there's, there doesn't appear to be a wave of, um, manufacturing jobs being created.

Secondly, I would contend that a lot of the, uh, the recent uptick you've seen in, in, in manufacturing has been, uh, a lot of people pre-ordering before the price shocks really come. It's going to be, it's an inventory build.

>> So it's front running?

>> Front running.

>> Okay. Um, all right. I, I get that. Uh, okay. So...

>> Let's not, you know, housing is 20 to 25, it's, it's 20% of the U.S. economy, 25% of the consumer economy. So, that's, that, that, that is going into, uh, into, into a decline, and that, that's going to impact the consumption.

>> Okay. So, and on housing, housing has been frozen. Housing market's been frozen now for years, right? So, we've got low inventory. Um, so, you know, to a certain extent, there are parts of that industry that are just starving because transactions are low. Um, but price hasn't really come down that much on a national average. Now we've had certainly a number of markets where prices have cratered, you know, parts of Texas, Florida, etc. And I, I think that is, you know, the real estate experts I talked to, that that is a, a contagion that is spreading across more and more markets in this economy. Uh, more inventory is coming on that's starting to let prices adjust downwards. But nationally, we really haven't had, at least until maybe quite recently, um, a national decline in average home prices. I'm guessing from what you're saying, you expect that to turn into a full, proper housing market correction, because I think, I think what we could say is, on average, the housing market has yet to correct. It hasn't...

>> That's not a good, that's not a good thing. I'd rather see it correct fast. The faster it corrects, the better the, the, I'm, look, everyone thinks I'm a gloom and doomer. I, I believe once we get this reset, it's going to be great. Um, I think, I think, I think we're setting ourselves up for a nice economy on the other side of this as we transfer wealth from boomers who don't transact to young people who form families. So that's...

>> Well, time box that, that then, because that's not, that doesn't happen in a quarter or even in a year. It's going to happen over a decade. That'll be two, two years from now when everyone's bearish as all get out. That's when I'm going to be super bullish. A year or two, depending on how quickly asset prices, the faster we adjust, the more bullish I get sooner. The, the, if this turns into a dot, you know, stock market decline of 50% and a slow housing market decline, I'll, I'll, I'll, I'll wait. But I'd love to see it happen quick, quick, you know, rip the band-aid off, and then we come out the other side.

Um, you know, home prices. So, we were tracking, we made, uh, we said, and I'm, you know, we were, we were kind of early to this. We said housing is going to roll over. We said that in L.A. January of 2025, and we saw new tenant rents going lower, and those continue to go lower. All tenant rents are going lower. Home prices are now, home prices are going lower because that, those all lead, tenant rents lead. And what really is the big, the big impact has been the, the closure of the border and a lot of self-deportations from illegal aliens. And, you know, some of the fraud, there were, there were actually the FHA under Biden were giving 100% loans to illegals to buy homes. That's gone.

>> Yeah. I, I was literally just watching a segment on this yesterday, and I, I'm sorry to interrupt, but I just want to note this because I want you to really dive into this if you can.

So, I think one of the things, this was a question I asked a lot of housing people over the previous years once immigration was really beginning to become an issue, which is, were illegal immigrants, you know, artificially pushing housing prices higher? And their general answer was, "Ah, we don't really think so. They're pushing rents higher, and thereby, you know, is rents as a function of housing prices? Yes, they are. But, but these folks tend to rent than buy."

But I think what we're finding out now is that not small a number of, of them were actually able to get, they were being given social security numbers by the, the previous administration. They were able to use those numbers to get an FHA loan, and you only need to put like 3% down to, to get a house there. And, and now I think what they're finding is, is now that people self-deporting or, or, you know, they see ice in their neighborhood so they take off, they're finding these abandoned FHA homes now, um, and realizing that there's actually a fair amount of these.

>> Yeah. You know, our, our thesis was illegals were pushing up rents, which, you know, pushed up, kept...

>> That's what I was. Yeah, that's what I was.

>> Thesis, and we didn't, we didn't want to say that they were buying homes, but then it come, it came out that they were. So, we're like, "Well, that makes our thesis even more..."

>> Yeah. Even worse. Yeah.

>> Yeah. So, um, yeah. So, the home price declines really started in the south near the border. So, the a lot of these red states along the border have been seeing the brunt of it. And now we're starting to see national prices come down, like I said, in, in March, uh, uh, and February. And it's going to spread to the blue cities, especially if we get into a lot of, um, uh, tech layoffs and just general layoffs from the oil price shock. Uh, we were, you know, we were expecting layoffs to happen, but the oil price shock only accelerates this. In my humble opinion, it really does.

>> Yeah. Sorry, let me, let me ask you this. So, we're actually seeing a fair amount of tech layoffs. I'll call it sort of house cleaning, um, or labor shedding, where, you know, the tech industry was famous, especially the big hyperscalers, the Googles, the Metas, etc., Amazons, they were kind of famous for labor hoarding, right? Like, I don't necessarily know what I'm going to do with this guy, but he's kind of smart, and I don't want him going to my competitor and working on something, you know, that that could be against my interests. So, you had a lot of sort of excess talent being held at these companies.

And I think starting about a year ago, they started realizing, "Okay, we can start letting some of these people go." And so you've been seeing this drum beat of, you know, 10,000 people here, 5,000 people here, 12,000 people here being let go by the Microsofts and the metas, etc. That's going on while everything's going great in this hyperscaler world, right? And I think they're also thinking too, "Well, we're going to use AI more in the future and need less of these people around and stuff."

But if, if, if the, if the tech sector experiences the type of correction that you think it's going to, what's going to happen to the volume of those layoffs? Are they just going to, like, are they just going to unleash the floodgates and just start firing tons of people, or what would your...

>> Let's, let's look at the free cash flow of the, the tech companies. The free cash flow is going the wrong way because they're taking on tremendous amounts of debt to find...

>> Because they're spending it all to build data centers. Yeah.

>> Yeah. To build data centers. So, if the profits, if there comes a time where people realize there's no payoff on the other side of this, the funding dries up, uh, and, uh, the, you know, they're, they're reporting earnings, but they're not cash earnings. I mean, it's a lot of circular token buying between each other with no cash exchanging hands.

>> Uh, at some point...

>> Uh, and all it take is one person to start it, start it. They scale back their capbacks. They start laying off people, then everybody will follow. And that's when the real massive wave of layoffs will come because, because, you know, they have all this tremendous amount of investment they've done that's been stranded. So, you're going to cut for factors of production.

And, and to be honest, you know, you, you touched on something. These tech companies, especially, you know, were free cash flow generating machines, and they did, they hoarded a lot of capital, and it was kind of like social, like tech, uh, tech, so, um, socialists, uh, spending, you know, they, they, and Twitter used to be notorious for this. Twitter had so many employees doing nothing. When Elon came in, he fired 80% of them because they were doing nothing. So, he kind of set, set the, you know, the standard, like, "You don't need all these people."

>> Right. Right. And to be honest, I just, and I've been public about this, at the time he did that, I said, "Look, if Twitter's still running in six months, it's going to show the rest of Silicon Valley they need way fewer employees than they have." Um, it's going to reset the standard of what an essential employee is. I think it has done that, but I, I am surprised and have said I'm surprised that it is, it seems to be taking Silicon Valley a lot longer to shed those excess employees than I thought it would.

>> Right. And the other thing going on that people don't understand, and I anecdotally I picked this up from a former Google employee who, who wanted to tap out. He was looking, he was looking to get a package and leave.

>> Yeah. And by the way, they all do. I've, at least the people our age do in Silicon Valley. They all want to tap out.

>> Yeah. They want to tap out. They want a package. And, uh, if you're, and what, what was interesting, he was at Google, and he wasn't involved in the AI part of, of the company.

>> And he said, he said, as, as they rolled through time the last two years, if you weren't part of AI, your budgets were decreasing.

>> Sure. So, so, you know, if you're in a, if you're not part of the AI boom within these tech companies, you're kind of a non-essential employee, and you kind of see the right, you, when your budget decreases and you're a manager, you have to let people go. So, you know, you don't want to be king of a shrinking empire. So, that's what's going on. They're starving other, other parts of their business for DAI.

All right, this is a little tangential, but, um, it's been in the news this week that, uh, there have been, I guess, a number of, of commencement speeches now at colleges where the speaker, and one of them was Eric Schmidt, the former CEO of Google, uh, who got up there and sort of said, "Boy, you guys are lucky. You're launching into one of the greatest transformations in, in, you know, American world history. Um, it's this new AI age, and there's going to be so much opportunity for you." And they pretty much get booed, and they get booed because I think the students are really thinking, "Oh no, AI seems like it's really working against us where it's, we're finding it really hard to get jobs. We don't have a lot of confidence that even if we do get a job, that job will be around for all that long because it'll eventually get replaced by AI."

So, there, there definitely seems to be this sort of cultural backlash against AI or AI adjacent stuff. Uh, you, you've been reading about all the push back on data centers. I live in Reno now, and I think Reno is the first city that basically has, um, just voted to restrict future data center growth here because essentially it's created too much competition for the electrons between the data centers and the actual people that live in the area. Um, so, like I said, this is kind of tangential, but what impact, if any, do you think sort of this potentially growing social backlash against AI might play in the mix here?

>> That's super interesting. And I've already seen the AI, uh, bulls come out and defend, uh, the students booing. This is the same sentiment occurred around the internet, which I was there. It did not. No one was booing anybody talking about the internet during...

>> And I was there with you. I agree. Yep.

>> So that, that did not happen. Um, they get, they got, they got a marketing sales pitch problem, and I pointed this out on, on X. Uh, you know, their sales pitch seems to be, "White collar jobs are going to disappear in 18 months. We need your electricity and your water. Good luck." That, that's not a good pitch.

>> You know, I was thinking about a tweet like that. It must have been your tweet that I was thinking about. Okay.

>> Yeah. But, and that's their pitch. The, these executives actually say this. Now, I, I've been part of the reason I'm, I'm, I, I don't think the AI bubble is going to continue is because there actually is a shortage of, uh, you know, capacity to run these data centers, and there's not enough, um, water to do it. So, they're running into, running into opposition. So, I, I, I'm of the opinion capbacks is going to be scaled back as they realize they can't plug into anything.

And there's somebody on X, um, who, who, who's an analyst who's running around the country looking at all the data centers, and he said, "You'd be surprised at how many of them are not completed yet." So, there seems to be this all this future capbacks announcements, but then the actual going in the ground, getting it, getting it up and running is not as fast as people think, and that's the bottleneck. And that, and that, that's how you end up with like a ton of, uh, you know, inventory of Nvidia chips and everything, you know, that you can't, you can't deploy it, so it's sitting in a warehouse.

>> Right, remember all the dark fiber? Yeah, well, dark compute.

>> Yeah, dark comput. And you don't even, and you don't need to order any more Nvidia chips. I think, I think the constraining factor is, is electrons, water, and social acceptability of this, and there's going to be a lot of fights. Um, so it's all coming to a head.

And, uh, I, you know, and then the other thing about AI is that I, there's all sorts of conflicting, is it going to really replace white collar jobs that quick? I, I personally believe that's hype. I don't believe it's going to happen because you see these weird announcements where, like, you know, uh, Ernston Young and other consulting companies are teaming up with open AI to help implement the solutions in the corporations. So, you need, so it's supposed to get rid of consulting and white collar, but you need them to install it. That, that, that, that's kind of, uh, and then Google said they're hiring engineers, uh, to help their clients, you know, deploy. So, we're hiring people to deploy something. It sounds like it's complicated and maybe not as easy as people think to get up and running.

Secondly, there's all sorts of reports that, uh, people are running through their, their token budgets so fast that they're, they're deciding that it's actually cheaper to keep humans. So, there's all sorts of conflicting, you know, stories. So, it doesn't, it's not as clean as someone might think. So, when I don't know why the anthropic CEO keeps saying white collar jobs are going to be gone in 18 months. I mean, it seems silly to say that if it's not, a, if it's not true, and, b, it's not a good sales pitch.

>> Yeah. Exactly. I, I, I mean, I think at a higher level, your, your, your point is a really good one, which is, if we really want to bring society into this AI future, um, and look, I, I believe AI is going to be transformative, um, but if we want to bring society into it, supporting it and excited to be a part of it in some way, um, we got to give them something positive to step into. And right now, way too many people, myself included, kind of hear it as, "We're going to replace human labor," and, "Yeah, your essentials like your electricity and your water is going to get prohibitively expensive."

>> Yeah, it sounds really dystopian, and not, it's just, you know, is anyone shocked that college students are booing this? They're not dubs. They read, they read what we read, and they're like, "This doesn't sound like very fair. I just, I just spent 20 grand on my education."

>> Yeah. And I don't think it's what they're reading. I, I think it's they're out there sending their resumes to these places and basically interacting with an AI chatbot and not getting a job in the process and just saying, "Jesus, you know what? Like, we're, yeah, I just spent all this money on this degree, and I don't think I've got a door open to me here."

>> You know, a quick aside note for those who are young looking for jobs. You know, when my son graduated from UCLA without a job because it was a tough job market, um, you know, my ex-wife and I helped him with all our contacts, informational interviews. And, you know, he was, he was, he was making a lot of headway, but he found a great job at a fintech company in LA by just going on LinkedIn, messaging someone that was a couple years older than, than him from UCLA, said, "Hey, I'm interested in talking about your company." And he said, "Oh, we're hiring. Just come on in and like have a, a screening interview." Got in, uh, and then eventually got the job, and now he's killing it. So, you know, he did it, he did it himself. He did it the human, you know, he, he didn't talk to an, he didn't apply for a job. He inquired to a human using his alumni network, which is what I did when I was coming out of college. I leaned heavily on the Notre Dame alumni. Gotta go back to like old school networking. That's how it works.

Although I got to tell you, I think that has always worked. And I've, I've talked kind of at length about this topic several times in my weekly, um, rants with, with Lance Roberts. Um, but if you're looking for a job, your lowest odds are going through the front door, which is what you're saying. You know, you, you want to create your own side door or window, and you do that the human way, right? You, you do that with...

>> Absolutely. I was doing that. I never once interacted with HR when I was coming out of college in business school. I did it all networking. Um, I, I tried tricks, uh, like I would, I would, uh, figure out who the, I would, I would send my resume with a cover letter to for anformational interview to people that I was referred to. I would also do blind, uh, um, letters to CEOs of, of banks. I would FedEx them, uh, my resume with a cover letter, spend some money. And, you know, one out of every six, I would, I would end up talking to a CEO of a bank in Boston.

>> Because he was just shocked that someone, you know, could figure out a way to hack the system.

>> Didn't get to him. Yeah. No, very, look, totally shows initiative. Yeah. Exactly. Um, well, you know what, folks? Maybe we should do, uh, actually that might not be a bad thing to do. I could assemble some of the great minds like you, Ed, that I talk, talk to on a regular basis, and we could do an interactive webinar with, with folks who've, you know, maybe got kids that are at the age where they're going into the world and just take their questions on like, "Hey, how, you know, what strategies would you guys recommend?" I'm sure there's amongst that brain trust, I'm sure there's a lot of great, uh, advice folks would have.

>> Absolutely. I would do that because I want to help young people, you know, uh, because applying online is a dead end. It just, it doesn't work.

>> Oh, yeah. I mean, and you probably worked inside big companies like I did at times, and, uh, you know, you, you'd go talk to the HR department about a job, and, and you would, you would just see the just massive stacks of, of resumes they would have that you could, you just knew they weren't going through them all. And, and that was back then, right? Um, you know, it's, it's like I said, the front door, it's your, it's your lowest probability odds. You got to, you got to create your own, like I said, side door, side window to go through. And there are plenty of ways to do that. Takes work. Don't want to lie, but you, you'll definitely have much higher odds.

Um, all right. I got to get back to, to some of the key things here before we run out of time. Real quick though, I want to pull this AI thread just a little bit further with you. Um, you mentioned the K-shaped economy. That's one of the things here I want to talk with you a little bit more. But we have this, um, we've got this reality where the bottom leg of the K, which is the vast majority of people, um, is their, their prospects are getting more and more diminished. At least in my opinion, they're, they're having a, a tougher and tougher road to hoe. That certainly will be the case in the near term if we end up having the kind of economic slowdown that you think we're going to have.

But as I look to the future, and I, I, if I, if I accept what the AI proponents say AI is going to do, and I largely do, you know, again, it might take longer to, to really realize their true vision, but I think largely it's going to happen. And then you combine that with robotics, right? It's just rough. I mean, I look at that and think, "Yeah, there's just a lot less need for human labor." Um, yes, there will always be a need for highly specialized human labor. Um, yes, there will be new fields of people that will work with AI or robot repair or whatever you want to put, but I think in terms of just number of people, it's going to be an awful lot less than the current workforce we have right now. Do you have any real worries long term about what we're going to do should there be a lot of permanently displaced labor?

>> Yeah, you know, I'm not worried about that near-term because I do think the AI hype, just like the internet hype, uh, cycle, and then we'll have a capital destruction, then the benefits of AI, the true benefits of AI will come out of the rubbles and ashes of this over, uh, overap this overinvesting in infrastructure.

>> Yep. You know,

>> And that's the way it always is with these things. Yeah.

>> And, and the real solutions are going to be on the other side. Like, you know, I think, you know, given AI's hallucination rate, there'll be specialized AI companies that, you know, really focus on, you know, uh, data silos, like medical AI companies.

>> That, that, that, you know, that don't need, you know, to do an LLM for the world. I, I think, I think, I think the model is so expensive, we need to, we need to specialize, and that's, I think that's where we're going. I think, uh, I think, you know, it's not going to be you, you know, you get a chatbot and it takes over your job. There's, there's, there's a long time between now and then, and so, and then we don't know yet. Maybe the promise that AI will create more jobs could happen, but they're certainly not telling you that they're, their message seems to be, "You will be jobless soon." I think the truth is somewhere between the two.

>> It, it probably is. And, um, I hope my fears are wrong, and I'm not trying to be alarmist here, but there is a lot of mid to lowkilled work that, um, I'll call smart robotics, can, can do, right? This is everything from, you know, self-driving trucks to, I mean, do we really need baristas in a world where you have humanoid robots? You know, do we need store clerks? Do we, do we need anything where basically somebody's is saying, "May I help you?" and, uh, you know, performing some relatively basic task for you? Um, do we really need a human to do that stuff?

And of course, for the employers, it's like, you know, if the economics look like they're going to be, it's like, "I would, why would I not want to have an automated solution here that doesn't take vacations or get sick or show up late or threaten to sue me for perceived harassment or whatever?" Right? So, I do worry about, you know, it's not every job, but it's, we're talking tens of millions of jobs right there, I think.

>> Well, you know, there's the doom loop. That's the doom loop. So, if you get rid of all the baristas, all the lowkilled people, and then they don't have income, uh, no one's going to buy coffee, you know, there'll be less people being able to afford to buy your, your product. Yeah. So, it's, it, so, so that brings into question the, the UBI. You know, we're going to have a bunch of people sitting around doing nothing.

>> Which I think is a non-solution, right? You give people UBI and they spend it, and then prices adjust, and then the next check they get doesn't buy anything.

>> Right? And, and, you know, look, we know what, uh, welfare, I mean, UBI is basically welfare, and we know what happens when you, uh, give people a lot of free money to do nothing. Uh, it, you know, the humans need to be active and productive and have purpose. If you don't...

>> You destroy ambition. Yeah.

>> You, you end up with these gto ghetto neighborhoods where, you know, that, that's where you go. So, it's going to be interesting. You know, look, I'm optimistic on the other side of this economic reset. I think AI out of the ashes, something will come of it. But I, what I don't like hearing is all this gloom and doom from these AI companies themselves. They need to figure out a new message.

>> Well, I agree. And they need to, they need to get me encourage more encouraged on this, and, and I'm trying to be. I mean, there's, I see real application, obviously. I just...

>> Now, here's, here's, here's another thing that, uh, I'm finding out. I'm not, I'm not a user, I'm a user of AI, but I'm not using it to code or do, you know, I'm not creating my own chatbots.

>> You're not, you're not vibe coding. Yeah.

>> Yeah. So, I have a friend who is vibe coding, uh, because he's at a hedge fund, and he's finding out that it's super interesting because, because he wants to understand, and, uh, you know, uh, he's, he's found that, first of all, um, uh, the, the products that Anthropic came out with, Claude and all these new development tools, they really are putting a tax on the compute. So, you know, you've seen, you've seen prices for, um, the, the prices were declining, and now they're, they're going up again. That's not because it's off the chart demand, because it requires more compute, and prices have gone up because they're running into, because they don't have enough capacity built. There's a pricing issue.

So, but he's found that he was using cloud. Cloud got too expensive, and he switched to codeex which is open AI. Switching costs are zero. And he's also finding that when he wrote all this code, uh, he then asked, uh, you know, it to find some errors, and then, then it found a ton of errors. He said, "Well, you, you, so, like, it's like the amount of labor to go back and make sure it's all good is not, it, it's, it's, it's creating potentially more work than it solves."

>> Yeah.

>> That is a problem. And I, what I'm not smart enough to know is, is...

That's just these just the growing pains, you know, and in two years, is there an elegant solution to that? Right.

Well, and that's that's again why the internet was, you know, hyped, and it wasn't ready for prime time, and then eventually it was. And then we, that's, you know, the real wealth that was created from the internet was the Web 2.0 companies. Google IPOed after the dot-com crash.

Uh, Facebook, um, Apple benefited from the cheap broadband. That's why the smartphone worked. Um, you know, Amazon was the only one that really came out of the dot-com crash and did anything with itself. But all the, all, all the, all the market cap wealth came after, uh, the internet build-out infrastructure. So, you know, I don't, I, I can't even tell you what AI companies to invest in because I think that the, the, the real good ones will be built on the backbone of the crash and and and they'll be, you know, I don't, I don't even know who they are yet.

So, is it safe to say that you are not touching the AI and AI-adjacent stocks now because you think A) they're super richly valued and B) there's some big corrective event ahead, but that you are excited to invest at the other side of the correction in that sector?

Absolutely. And that's that I'm going to be, you know, it's it'll be a year or two or three from now. Look for companies that kind of come out of. And no one after the dot-com crash, no one wanted to touch anything in that space.

And that's that's what a bear market's supposed to do. It's supposed to crush your your your faith in anything.

Yeah. Correct. And, uh, you know, that's what that's when Google IPOed and people thought it was out. You know, I remember when we bought the IPO, I was like, "This, this seems like a great company." And it was, it was expensive when it IPOed, and everybody was so valuation-sensitive because we just had a valuation crash.

Yeah. People, a lot of people missed Google the first couple years because they just thought it was too expensive.

Yeah. And that that that's where I'm going to be looking. I mean, Nvidia is going to do what Cisco did. It's going to retrace, you know, 80, 90%. They all do. All right.

Um, just, I don't know if you know this or not, but you're talking to a guy who worked at Yahoo through this transition. So, I know what it's like to kind of have ridden a 1.0 company down, uh, through all this. And I, I remember, I mean, Yahoo's got the the nefarious distinction of passing on all of these companies that they could have bought, Google being one of them. Um, I mean, it's hard to name a company that Yahoo didn't have the opportunity to buy. And I remember, uh, a quote from the CEO at the time, Terry Semel, uh, would the company was deep, deep in negotiations to buy Facebook. And, um, I can't remember the exact number that he said, but but when when Yahoo broke off the negotiations, Terry said, "You know what? I don't know. I don't know what to value this company at, but I can tell you one thing. It's not worth $2 billion." And that's, I think what they were asking for, you know, and in retrospect, you're like, "Oh my God, you kidding me? You could have bought that for just two billion." And people couldn't see it then. I mean, you know, people didn't realize that, you know, social media was going to be a thing where you could make tremendous amounts of free cash flow. So, I suspect in the rubble of the AI, we're going to, you know, we're going to have to be futurists. When everybody was a futurist now, but they're just a little too enthusiastic. We're going to have to be a futurist a couple years from now and dream and look, look through the valuation, which may look kooky, but in hindsight, it won't be.

So, Ed, let me just ask you this. When you get to that back up the truck moment, you know, there are great bargains to be had now, given the future value, future potential of these companies. Please come back on this program and ring that bell for this audience.

Oh, absolutely. But you know, we got, we got some time between now and then. I mean, well, some rough, some rough sledding between now and then.

Look, I, I bet, this is my third rodeo. I was there for the dot-com. I was there for the housing. And it's all echoing the the participation of the general market. The breadth is so bad. And there's only one game in town. Every hedge fund pod in the world has long these stocks. They're looking out two weeks. That's their time frame. And, uh, it ends when it ends. And it's going to, and it's going to be a glorious swift decline, especially in those stocks. The rest of the stock market might take longer to go down, you know, 40 to 50%, because corporate earnings will will have to roll over, which they, we believe they will. But, um, once this bubble bursts, I think I think it's going to be fast in those stocks. Very fast.

All right. Um, okay. Okay. Well, let me, let me bring this back real quick to bond yields and, um, your inflation expectations. Let's actually flip it. Let's start with your inflation expectations. So, we're seeing an inflationary impulse from the oil price shock.

Um, I'm going to guess, given what you've told me, you think that is real but going to be relatively short-lived.

Yeah. So, it's it's real. So, we, we, we put out a piece for free that's on our website, Finance Technologies, with two scenarios. $125 oil, uh, get you to 5% and and and a fairly, you know, a resolution to the war. It has to happen now. Uh, get you to around four to 5% inflation by May. We just put in 3.8. Uh, we, we were predicting 4.1 for the month of April. Uh, uh, 3.8 was a shock. The Fed Cleveland now is forecasting above four for the month of May. Um, so 5% is in the ballpark, you know, somewhere between 4.1 and 4.8 for for May. So if it comes in at 4.8, let's just call it 5%. That was what we were predicting at $125 oil. Um, if this thing doesn't get results soon, unfortunately, uh, we're going to break out. If we break out of a technically, I'm just looking at technicals on oil, and oil is driving the short-term CPI headline. That's the only variable you care about. Um, that's that that's how we're doing it. Um, if we break out, uh, oil between 120 and 130, backtest it, hold it as support, uh, the the long-term chart pattern, which is a cup and handle, suggests 200 to 250, which we put, which was our second scenario.

Oh my God. That'll take, that'll take inflation to 11% by August.

Whoa. I mean, just that's a big number. Um, what, what could cause oil to do that short of Iran just carpet bombing the other GCC, you know, oil infrastructure?

It's time. So, the longer we linger, the worse it gets. And and once and once we start getting real-world, uh, impacts, you'll, it'll, it'll happen quick. Um, so Trump and team, uh, need to figure out a, if they want, if they want oil to kind of peak out here, they need to do something quick. If they don't, you know, and and and again, it's all technically based. If we break out above 120, 130 and then backtest it and hold, that's the, that's the nightmare scenario. We're not there yet. We're at 109 on oil. Um, so let's hope, let's hope and pray that they figure this out.

And the market, the market clearly doesn't think that's the default scenario yet, right? When you look at it, oil futures, they're not up.

No, not yet. Not yet. So that, so our, our first case scenario looks more, more likely. That's what's going to happen. But even then, that's pretty bad. Um, so in the short term, yields back up. But the yields backing up, if you look at the long-term charts, and and I follow a cycles analyst, we're, we're coming into a cluster of cycle lows. Uh, according to my friend Tim Wood, intermediate-term low, seasonal cycle low, and three-year cycle low. So we're in a timing band. We're the long bond to kind of bottom here, and then it's going to start, you know, its bullish cycle. I know that's hard to believe right now because everyone's calling for, you know, rates going to six, 10%, and it's being, that's not happening because because this spike in yields is going to, is going to, uh, cause the accelerate the demand destruction. And when the demand destruction, the growth scare happens, the Fed will start, uh, cutting, probably second half, you know, probably third or fourth quarter. So I don't think they're going to hike. I think they're going to stay put. We're going to get a growth scare in Q2 and the rates will start coming down. And that's, and that, and when rates start coming down, that's when the real economic destruction begins. If you look historically, that's when it always does.

It always does. Um, and, uh, so when, so we, and we also have like, uh, so we have inflation prediction model. We're going to put out a paper on this free, but then we're going to charge to update the model. We have a model that we've designed that's pretty predictive of core inflation and CPI headline CPI. Um, core is what the Fed's going to focus on. We're seeing core inflation at 1.77% by the first quarter of '27.

Okay. And is that pretty much, I was going to ask you like, I'll give you plenty of chances over the next couple quarters to call audibles on this, but when do you sort of right now expect the long bond will bottom out?

In the next month or two.

Whoa. Next month or two?

Yeah, it could. The low could be now and and it won't go much. It won't, I don't think it's going to go significantly higher, but it's going to be soon.

Okay. Sorry. When you're saying bottom out, then you're talking about prices.

Price. Prices. Yeah.

Okay. Okay. Okay. Because I was like, wait a minute. All right.

Yeah. We're on the timing band for for for prices. When I say cycle low, I'm looking at the the the 30-year Treasury futures. So,

Yeah, but you're looking at the price, not the yield. Okay.

Yeah. The yield, the yields, the yields are going to top soon. Price is going to bottom soon.

Okay.

Yeah. Yeah. So then let me ask my other question. Um, when do you think that this bottoming cycle, the bot, it'll bottom soon. When do you think it'll like, like ride this until when? End of the year? Is this thing going to only take a quarter? Is this going to be a two-year process? What do you think?

Well, you know, look, it depends on how fast it moves. If if if the Fed goes into an emergency rate cut, rate cut cycle, and long bond goes from 5% to three and a half% inside of six months, you know, take, take your profits and run.

I mean, you know, because then the Fed is going to be looking to reinflate this. So if you look at the Great Financial Crisis, the long bond was a tremendous, uh, uh, trade. And the dot-com crisis, the same thing, but it was very, very short-lived because, you know, they tried to reinflate. So, right, it's more tactical than long-term.

Okay. Um, but for folks that are saying, oh my gosh, you know, the 30-year just priced above 5% for the first time since 2007 or whatever it was. Uh, and I'm worried about all these other things. So, prices could be going way high. It's, you know, yields are breaking out to the upside. Sounds like you're thinking of, no, I, I've been here before. I'm not worried. Uh, you know, so my call stands. TLT and, uh, long duration US treasuries will be the best performing asset class by the. That was my call at the beginning of January. You got to give me till December to be right or wrong.

Okay.

But, you know, like they call it an oil price shock for a reason. What I'm, what I, what I, what I find amazing is the mainstream media doesn't seem to be paying attention to it yet. I mean, it's going to be, it's going to be a shock.

So, uh, let me ask you this. So, there, there's the risk of the shock, right? So, the the economy gets shocked by oil prices being this high. Um, concurrently, yields are higher than they've been, right? So, that adds to the problem. Um, so that creates, begins to create its own demand destruction.

Correct.

Um, let's assume, hopefully, let's hope actually that, uh, the Iran war concludes swiftly. Um, does that actually worsen things? Because right at the moment where you're getting demand destruction, you start having like a lot more oil on the scene and, um, you know, all of a sudden oil prices are pl, like, potentially does that uncoring of of what's been pent up there actually hit the market right at the wrong time as demand destruction is already happening and then supply of some of these things?

Well, let's say we have a resolution tomorrow and things start flowing. There's damage that's already been done. So there's demand destruction from that and high yield demand disruption. The economy was already rolling over. Then you have, uh, some of these shortages, uh, alleviated, especially in semiconductors. If there's not a helium scare, all of a sudden you just bought a bunch of semiconductors, you're not going to reorder. So it could, it could uncor.

And like the pricing power of these guys that they're enjoying right now because of the constraints, that gets weakened. Right.

Correct. So, look, there's a lot of moving pieces, but at the end of the day, we were already rolling over before the war. The war actually kind of focused the market on Trump and Trump's tweets.

Uh, but they're not paying attention to what's going on on underneath. And this most, again, this most recent, and I, I'm sure you've had some people on to talk about this. This rally we've seen is so unprecedented. The speed, uh, the, the, the, the V-shaped recovery in narrow, narrow participation and the breadth. We haven't seen indications like this. Like a lot of people are using the words, ever. Like we've never seen this ever.

So, pretty much all the technical guys I interview are saying, in the short term, guys, you got to expect a pretty wicked pullback here.

Yeah. And whether that turns into a bear market remains to be seen.

Although you think it will. I think it will. The tell will be, we'll get a nasty pullback, then a rally. If that rally fails, it's over.

Right? So, we won't know we're in a bear market until,

Top, pullback, counter-trend rally, failure. That's how you know.

And if we go to new highs, then you know it's delayed again.

All right. Well, if this proves to be the top, um, Ed, let's get you back on on the pullback. If it rises again and stalls out, let's get you on for that one because that's going to be the one where you tell everybody, time to batten down the hatches.

Yeah, absolutely. But, uh, I'm more bearish now than I was before the war because prices are higher, leverage and margin is higher. That usually conspires for nasty, nasty deleveraging events.

Okay. Um, all right. So, in wrapping this up here, um, you said you like cash, you like the long bond, you mentioned TLTs and just long-dated US treasuries. What else, if anything, do you like right now?

Well, long-term, gold should be part of everyone's portfolio, 5 to 10%. Gold has been going sideways since its its uh, its blow-off top. And, uh, that's what I've been saying for a couple months, that it's consolidating. We still think gold is $10,000 by 2030. Um, it still has, uh, you know, gold has been used as a source of liquidity as this war started. Turkey sold 120 tons worth of gold.

Right?

So, you know, look, in in a scenario where people need money, and that's what happens in financial, economic turmoil, uh, assets like gold get sold because you sell what you can, not what you want. It's a margin call. It's a margin call. And but I don't think gold has anywhere near to the 50% pullback it did in the Great Financial Crisis. I think if there is a a sell-off in gold, maybe 25% is max, and you'd want to buy that because long, long-term, uh, central banks are buying gold. There's going to be a new currency system at some point again, whatever, whenever that happens, no one knows. Uh, commercial banks are buying gold. Chinese citizens are buying gold. Indian. So gold demand is there. And gold, gold is, uh, as we continue to roll through the sovereign, the slow-rolling sovereign debt crisis, that the demand for gold will only increase over time.

Okay. So, let me just reiterate. Sounds like right now, and of course, this isn't personal financial advice on your, your behalf, but, um, you know, from your personal positioning, sounds like pretty defensive.

Cash. Oh, yeah. Long bond.

Yeah. Look, normally I wouldn't be positioned this way, but I mean, I, you know, Warren Buffett and I have been early and wrong to this call by about two years, but we didn't just expect 20 million illegal immigrants would be, you know, flushing the economy, running, you know, 8% deficits to keep this thing going, but there we are. Um, Warren Buffett's at 40% cash. I mean, that's, you know,

And that's what, that's like $400 billion. I mean, it's almost half.

Yeah, it's $400 billion. He owns something, and it's all in T, three-month T-bills. He owns something like five or four and a half percent of the T-bill market. So, and and and, you know, look, T-bills are the most liquid asset, the pristine collateral. You can, you can click a button and sell them and raise cash immediately.

All right?

And you don't have bank risk. You have, you know, you know, your risk is the, and the US government's not going anywhere.

Right?

I'm sorry. I'm, I'm not a gloom and doomer that way. I, I, and it's one of the things I very much appreciate about you. And I, I do look forward to the day, Ed, where, you know, whatever, whatever process we go through here, when you get to the point where you're really optimistic. Um, I can't wait till because you're like a lot of people, and I include myself in this camp, but a lot of people who I interview who are kind of tired about ringing the warning bell, but because to your point, they just keep finding ways to extend this. And it would be so much better if we just let national, sorry, natural market forces just flush the malinvestment from the system, get true price discovery in there, and then we can start from a sane baseline and pursue things that are, you know, sustainable.

Yeah. Before I go, I want people to understand two things. During '23 and '24, we had illegal immigration and deficit spending to give people money directly that floated the economy. Yeah. And made it look like it was growing when it wasn't. And then we also had the the marginal credit growth in '23 and '24 and '25 was private credit. That's all you need to know.

So, basically two, two big artificial pillars that have now been pretty much dismantled.

Yeah. Correct. So unless there's a new source of of credit creation that I'm not aware of, I, it looks grim. And then the other thing, people keep saying the Fed's doing QE by buying Treasury bills. That's bank reserve management. That's not QE. And and and by the way, they just cut that reserve management from, uh, 40 billion to 10 billion last Wednesday.

Okay.

So, and and and, you know, they were buying a lot of it, uh, going into the beginning of the year, and then we had the stock market weakness into the war. So that, it, it, you know, people like to point to it as the Fed's printing money and and people are using it to buy. That's not what's going on.

Okay. But but basically the way you interpret that with your earlier comment is if there's a cavalry ride to the rescue here, you don't see it.

I don't see it. And the Fed's not going to act until they have to. And and, you know, the new Fed chair, Kevin Walsh, uh, he is anti-balance sheet. Whether he sticks to that remains to be seen. And also another, another thing that probably you've had some of your other guests have talked about. Every time there's a new Fed chair, the market tests them.

Yeah.

And and historically, new Fed chairs, it, it's a minimum of 10% pullback.

Yeah. Yeah. And and that's, I mean, is that, is there any real correlation or causation there, or is it just pure correlation? But yeah, pretty,

Every time there's a new sheriff at the Fed, there's some sort of emergency soon after.

All right. Um, well, look, this has been fantastic. Um, for folks that would like to follow you and your work, where should they go?

Uh, financetechnologies.com. We sell our research reports. Um, it's with a ph instead of an F. I can be found on X at Dad Edward Dwward. And I have a personal website, eddow.com.

Great. And Ed, as usual, when I edit this, I will put up the link. Uh, I'll, I'll put up the, the URLs and your handles there so folks know exactly where to go. Folks, those will be in the description below this video as well.

Um, all right, hang on for just one sec, Ed. First, folks, please join me in thanking Ed for just putting it all all out in the field for us like you did, um, by hitting the like button and then clicking on the subscribe button below, as well as that little bell icon right next to it. As a reminder, we're getting close to like, I think 177,500, uh, subscribers here on YouTube, which is awesome. Um, but we're trying to hit 200,000, uh, by midsummer, if not sooner. So, if you can help us out, please just take a quick second and hit that subscribe button. It really does help. Um, and then last, if you would like to get, you know, none of what Ed said today was personal financial advice, but if you would like to get personalized, uh, advice from a professional financial advisor to, you know, maybe evaluate your portfolio, see how vulnerable you might be to some of the risks that Ed's talked about here, um, as well as to maybe find some, some areas of opportunity for you as well. If you don't already have a good financial advisor doing that for you, consider talking to one of the ones that Thoughtful Money endorses. These are the firms you see with me on this channel every week. Uh, to schedule one of those consultations, just fill out the very short form at thoughtfulmoney.com. Only takes you a couple seconds to fill out the form. These discussions are totally free. There's no commitments involved. It's just a service these offer, these firms offer to help as many investors like you as possible. Ed, last question for you in parting here. Um, I, I, I know you're just a very thoughtful guy about many things, not not just the markets themselves. What parting bits of advice, if any, would you have for what I'll call kind of the the awake viewer? You know, the person that is is paying attention to the same things that you're looking at and make you worried not just about the economy or the markets, but society as well. Any just parting bits of advice, life steps to take? Could be, could be financial, or could be in other parts of your life?

Yeah, look, you know, there's a lot of people who are stressed out and a lot of what we say sounds scary, but I view it as opportunity. And you want to live in the present moment. Keep your head in what's about you. Life, life is going to go on. You know, there's all these scary things, AI, robots, um, you know, disease X, disease Y, and, and, you know, don't let the fear and anxiety creep in and just create your own life. Keep living every day as if it's a gift. And, you know, it's going to be fine. I mean, the, if you look back on history, you know, we've had a pretty good run as a society. There's been a lot tougher times and people made it out the other end, had babies, and life went on. It's not the end of the world.

I, I'm so glad you said that. I, I've made that comment recently and, and I think it might have even been misinterpreted at times. Um, but, uh, you know, there are challenges as I talk an awful lot about folks. You know, I think that that bottom leg of the K, most people are having tougher and tougher times ahead. I do think it is harder in terms of like career prospects and just being able to afford the essentials in life, the American middle-class dream lifestyle. Uh, it is harder for this generation, I think, than say it was for the boomers. Um, for sure. Um, so there's all sorts of challenges out there, but at the same time, have some perspective, right? It, it's like, you know, you could be, you could be 20 years old, you know, yeah, trying to find a job in an increasingly AI environment today, and it really sucks, but you could be 20 years old back in the early 1900s being shipped to the trenches, you know, of Europe to fight in World War I. I mean, just like you said, I mean, just previous generations had a lot of crazy adversity to deal with. And so, just keep it all in perspective. And you've got, you know, certainly more resources and, and just sort of a, a general, uh, higher quality lifestyle in terms of on-demand electricity and hot running water and stuff like that than really any generation alive. And I'm not trying to diminish the challenges you may be facing. I'm just saying don't fall into the depths of despair, which is what I think you're avoiding. You're telling folks to avoid doing it.

Right. Right. And the other thing is, you know, obviously the, this American dream of having a home, a good job, private schools, and all this, you don't need that to be happy. You just get in the game, put, put your best effort forward, and it, it takes care of itself. And people are already, you know, creating a lot of solutions. I mean, we're going to go, if the oil price prices go to $250, we're going to be in the era of carpooling again. And that brings people closer. Multigenerational families are coming back, which actually is, I think it's a good thing. Shipping off your elders to, you know, nursing care homes. I, I don't like that. I think, I think, you know, you're in the Great Depression, and the, the, the, the thought is it was an awful time, but there are stories after story of people who like really helped each other, came together as communities, and figured it out. So, like, there's always a silver lining to everything.

I totally agree. And I won't go into it here, folks, except just to say if you want to learn more about what, what Ed just mentioned there, which is sort of previous generations and, and different societies in today's world who have actually found what I would consider to be a higher degree of happiness, uh, in their lives despite persisting through some pretty horrible conditions. Go read the book Tribe by Sebastian Junger. And, um, I've also interviewed him here on Thoughtful Money. You can, you can find my interview with him then if you want the crib notes for it. But very fascinating discussion, but also just really important and understanding like what really at the end of the day truly matters for humans to be happy. And a lot of it isn't based upon attaining a certain amount of wealth or living in a certain size house or stuff like that.

Absolutely. I, I've read his book and I, I've seen some of his interviews. Fabulous, different way of looking at the world. And I believe one of his great stories is, you know, the, the, the corporate executive sitting in his big house being lonely, drinking his scotch, wondering what the hell's going on.

Yeah. Yeah. Yeah. I mean, uh, well, anyways, folks, we talk about it forever. Go read the book or watch the video. Um, Ed, can't thank you enough, my friend. Look forward to having you back on the channel, um, as soon as events call for your expertise again.

All right, take care, Adam. Thank you.

All right, buddy. And everybody else. Thanks so much for watching.