"The Great Reset" is a show about the future of finance. Money is power, and there is a historic fight to control the mechanisms of power. What people, groups, and nations will control the financial systems of the future? And what will be their medium of exchange?
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"The Great Reset" is a show about the future of finance. Money is power, and there is a historic fight to control the mechanisms of power. What people, groups, and nations will control the financial systems of the future? And what will be their medium of exchange?
_
Catch up on Previous Episodes of the Great Reset Here:
https://badlandsmedia.tv/greatreset
_
• Secure your financial future! GOLD AND SILVER
https://badlandsgold.com
_
https://BadlandsMedia.TV
_
Check out our Badlands Marketplace made up of America-First businesses: https://marketplace.badlandsmedia.tv/home
_
Interested in promoting your business? Email Matt Byram at
ads.badlandsmedia@proton.me
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The Great Reset is
Sean Morgan:
https://SeanMorganReport.com
https://twitter.com/seanmreport
https://truthsocial.com/@seanmorganreport
_
Follow Badlands Media at:
Substack: https://badlands.substack.com/
Twitter: https://twitter.com/BadlandsMedia_
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Truth social:
#SeanMorgan
Welcome to the great resets. I'm your host, sean Morgan, from the Sean Morgan report dot com, and I'm here with John person, the co-founder of J person asset management and investment fund. He has a is a 40-year trading professional, so, john, thanks for joining me again, and you sent me the fed beige book before the show. What were some of the themes that you noticed, as these 12 different regional people in the Fed were analyzing the economy?
Speaker 2:sure thanks, john. The Federal Reserve comes out that the beige book is something that's everyone may hear about, but in this particular week it didn't get a lot of traction. Too much headline news out there again with the war in Israel and again Congress not having a speaker. The in the United States we have 12 different districts of financial well, districts of the Federal Reserve and banks Chicago, new York, san Francisco, kansas City. Different districts report what their business economic conditions are like and then two weeks later that report is what they kind of assess what to do with setting interest rate policies.
Speaker 2:And the common theme was that the Federal Reserve and a lot of different districts saw that higher energy prices were a taxing effect on on consumers.
Speaker 2:In the month of September, wages while going up, there was seemed to be a common theme that the availability of workers have been increasing versus a tightening of labor. So that would lead to perhaps a theme down the road that there might be more wiggle room for the unemployment to rise. So if companies say I can get more people and now I can lower wages because it's a little bit more competitive than that, that would also translate into possibly signs that inflation is is abating and that's the, the key theme of what everyone wants to know what's the cost of doing business, where interest rates going and and if interest rates keep going up for longer, as chairman Powell has been saying, it makes it tough to know where to put your money. So that report, the beige book, is the essence of this, the foundation of what the Federal Reserve members get together and vote on and I guess the big question that everyone's wondering is what's the Fed gonna do moving forward.
Speaker 1:Are they gonna keep on raising rates or are they gonna stop raising rates? And and people are afraid, aren't they? They're afraid there's gonna be another banking crisis. We've kind of already had one with Silicon Valley Bank and so forth. What are you hearing? What about the investment community? Are they worried that the Fed will keep on raising?
Speaker 2:yeah, there's a lot of um. You know, the Silicon Valley Bank and a few other regional banks got a little cocky on how they invested and took and took depositors money, invested that to to make what's called float interest on return on someone else's money while not giving them a rate of return or interest. And they were in what's called derivative swaps, which is a different of interest rate differentials between us and european set instruments. So when interest rates went up they got caught with, you know, people saying, hey, I want my money back because I want money in CDs or I want to buy a T-bill, and that was kind of that little run on the market. That might be interesting conversation for another show. As probably, I think was, either two or three of the largest holders of accounts on deposits that bank were Chinese owned companies. So that's where the our government kind of bailed out Silicon Valley Bank in that in that case.
Speaker 2:But what I'm seeing in the market right now as far and I'm not hearing because I don't know I don't really believe a lot of what I hear on the news. So I go direct to the sources. In other words, I go and read my own reports from the Federal Reserve, I look at the Bureau Labor Statistics, I go through and look at the data on on the Bureau Labor Statistics and I and I kind of do my own analysis and make my own conclusions. It's also important to listen to what these Federal Reserve members are saying, and Austin Ghoulsby, who's the head of the chairman of the Federal Reserve of Chicago. He's been more in in tune with wanting interest rates to at least pause right now and see where things go, and I think right now we have a a credit crisis looming still, and that credit crisis is in the sense that money is dried up there. We still have a lot of competing forces that are not going to buy our debt, and right now we've had a complete break down in demand for US Treasury goods. So China would normally be in there, we would see other foreign nationals in there, japan would buy our bonds, and so we need to raise money right now, and we already have a deficit that I'm sure your listeners know is unbelievable. How are we getting out of this? You either increase your taxes and pay down your debt, or you have to have increase in economic growth. So there's a little problem here. My two cents is that the Federal Reserve has been on a tightening path to quash inflation and I think right now there's a bigger problem and the Fed's like gonna probably back down.
Speaker 2:No, j-pal speaks today at a economic conference. It's not an official meeting and if he ever even hints that things are moving in the right direction and they're near closer where they wanna be, it signals to me, based on what we've seen with energy prices, other consumable goods, the way that data suggests that the Federal Reserve, I wanna say, is probably done on raising interest rates for a while. I don't think there's a probably. I think it's a 14% probability from the Chicago futures on the VIX that there's gonna be a rate hike in November. So they're gonna pause. They're not gonna raise rates in November. The question is, will they raise another quarter point in December?
Speaker 2:The odds are that suggests the trajectory of where rents are, energy going and this housing number, existing housing sales, is at a standstill. The recessionary force that's in the real estate market right now, with realtors not making money, no transaction financial, nobody's refinancing houses, I think they're in a pause. They just can't say it yet. So they're gonna hint at it. And I think the bigger picture is also with the war in now the Middle East heating up, we need to sell bonds and we need to raise cash. We're gonna have to finance this, and so I think right now, the Federal Reserve could also do something like slow down their pace of quantitative tightening and reduce their the asset balance sheets that the Fed's been trying to sell down. I think they'll stop and maybe that'll be something that will add a little bit of liquidity. At least give us a Santa Claus rally and some support in this market environment that we have right now.
Speaker 1:Well, you were saying that you don't think inflation is our biggest problem. What are our biggest problems? Is it the stagnation, the lack of growth, the debts combined with the debts, and the fact that when you don't have growth, you can't pay the debts?
Speaker 2:The probably the biggest problem is the deficit, and what industry are we going to create to help GDP and commerce? I was thinking about this before I came on your show. And China they had a big real estate boom and that has caused a lot of problems. They had a lot of building over the last decade and a half In the United States. We had a huge housing boom and a lot of construction was going on and all of a sudden that imploded in 2008. So what is another industry that can the internet boom, artificial intelligence okay, but what's another industry that really creates commerce? And, to be honest with you and, it's sad to say, war, and where are we now? We got a lot of war going on all of a sudden.
Speaker 1:I was going to suggest infrastructure, since we've got these antiquated rail systems and everything.
Speaker 2:Possibly that too. But you notice there's a private fund, is the one that's created the Brightline Trade System here in Florida that has a train that goes from Miami up to Orlando. That's not the US government creating that. So yeah, we could do some infrastructure spending here, but there's probably nothing that else stimulates the economy than work time and you get. You know, you're building missiles, you're building munitions, you have all types of industry, chemical metal manufacturing all getting behind a potential war time. Now, if you write checks to Ukraine only and you let them use the money to buy whatever they're gonna buy, that's a different story. But if you're moving in and sending in equipment and restocking, that's another thing that I mean. It's a portion of what can create business in America.
Speaker 1:Yeah, that's a sad state if that's the only thing we have to don't just saying factual, that's what it is.
Speaker 1:Right and I wanted to ask you, going back to the idea that the wages went up a little bit but people can't afford housing, apparently. I want to share first before I forget, I'll share that there are three reasons to get your free gold IRA kit from BadlandsGoldcom. First, you can safeguard your savings tax and penalty free. You can learn how to protect and grow your retirement and they'll send you the kit free, no shipping and handling. So go to BadlandsGoldcom right now, get that free gold IRA kit. So yeah, I was looking at some headlines here and it looks like the the housing market is so unaffordable. The buyers need to make nearly $115,000 a year to afford the average home and that's $40,000 more than the average earnings. So that disparity between the cost of housing and the level of wages. I was wondering if you could comment on that.
Speaker 2:Yeah, absolutely. There's no one that wants that's motivated to sell an existing home right now because most likely they purchased that home prior or during the pandemic, possibly when yields or 30 year fixed was trading three, three and a half. Maybe even they got lucky at a 2.8, 30 year fixed. 30 year fixed mortgage hit 8%, so it's 5% more. Do the math. You need to put down a lot more Now.
Speaker 2:Another thing is real estate prices went up so you have yields up, expensive, what it takes to buy that house up, and the house price went up. The house price didn't go down. Now if the house price has fallen 30% and your cost of buying that house has gone up double, then maybe you could justify the expense of buying that house because the house value has gone down. But until the house value goes down and that's the shortage it's kind of like a self-fulfilled prophecy. No one wants to sell the house because where are they moving to? And that's what's created the big boom in new home construction relative to existing home sales.
Speaker 2:And this is a problem created more likely and a lot of people are targeting it to the rate increase.
Speaker 2:It went too fast to help bring down inflation and that's why I think right now and just on a side note, the Federal Reserve has been also making a comment that because of real rate rises the rise in real interest rates, meaning you can go down to the bank right now, put money in a two-year note, you can put money into a six-month T-bill and get almost historic equity rate returns and other better returns than you would get than investing in the stock market. So with that kind of thing locking up cash and yields going up it makes it unaffordable for people to buy a house and no one's motivated to sell their house. Where are they going to move to? That's been part of the issue in the market right now. Unfortunately, either we have to have rates come down a bit or we have to have prices come down. But something's got to shake out in order for people to afford a new house or an existing home, or they have to pay up and make more money, and that's going to be I think you can use the word stagflation.
Speaker 1:Yeah, something that worries me is that the housing market has kind of changed its nature.
Speaker 1:Maybe 10 years ago we didn't have Airbnb and people weren't able to make as much money off of a second home. So we've got a lot of these older people who have a second or a third home and they're maybe speculating and thinking, hey, I can qualify for a second or a third home because I have all this equity and because I'm close to retirement age or past retirement age, and so they're maybe speculating a little bit. And then we've got the different demographic of people who, as the headline said, their wages are lower than what they can't qualify even for an average home. So they have to either cop up a lot of money to buy a home that's not very nice or they could just rent. And so what we've got here it seems to me it's an unhealthy trend of a lot of younger people who can't afford a home and are just renting and they're not building any equity and that's not good for the real economy. Is it to have a bunch of renters?
Speaker 2:Well, another factor is and that's true what you said it's not good for the economy to have more renters than you have buyers Generally speaking, the American dream. But the cost of money is kind of an interesting thing. If it costs you $3,500 in a mortgage but it costs you $4,000 to rent, all right. But that mortgage that you pay, you still have to pay for all the maybe your security or your water, your utilities, home maintenance, new appliances, breakdown things of that nature. The cost of having that house might exceed the cost of the rental. So kids today, or millennials or the ones that are, they want a house. But some of them feel that, hey, renting could be even cheaper than buying and they're happy until they're not right.
Speaker 2:Another fundamental fact about the real estate market, because there's a lot of different variables here. You have people that want to flee California and go to I mean, I don't want to be the deliverer of bad news, but I'm sure everyone's seen this but people leave California for either too much taxes or they're tired of whatever, and they move to a different state that's friendlier to their needs. Maybe it's Nevada, las Vegas, maybe it's Texas, florida. New Yorkers flee out of New York. They come down to Florida. What's interesting in that particular last example of New Yorkers coming to Florida?
Speaker 2:A lot of people did not sell their units in New York. A lot of people kept their maybe their apartments or their condos in Manhattan or they kept their houses there. What they did in the pandemic is they came down here because Florida was open. What people did is they bought arms, adjustable rate mortgages because it was cheaper. They bought second properties down here because A the properties were fairly cheap, yields were cheap and they got into adjustable rate mortgages. So you had a bust in New York and a boom in Florida kind of situation that may unravel soon because now those adjustable rate mortgages are starting to wear and tear on people.
Speaker 1:So they might be forced to sell the properties in New York, cause a total bust there, right.
Speaker 2:Yeah, and or they're going to sell a property there and stay here and then pay off the property and cash this interest rate rate hike has caused. And I think that's that this is a great topic to discuss, because this is probably the essence. When the Fed Chairman, j Powell, and all Fed bankers come out and say we don't know the extent of the ramifications of our us raising rates, this this great in this short of period of time in a historic rate hike campaign, we don't know what the effects are going to be. What they're also referring to is this phenomenon right here, that we're talking about this topic right here. We don't know how this is really going to play out, and so if they start to see signs that they've tightened too much and there's other problems, like a new war that's taken out, something's going to have to give.
Speaker 2:Are we going to see a financial crisis crash? Well, when something goes up, it generally comes down, and I would have to say that Right now we probably are going to see, with yields going up so fast in the treasury market and prices going down, it's an inverted relationship. My take is the Federal Reserve is going to do something, probably to ease and say that they have adequate information that inflation is on a trajectory path going lower. That would probably stave off a financial meltdown in maybe more equities and also perhaps less negative in the real estate market. That would be one solution. Is that going to happen?
Speaker 1:Everyone's talking about the possibility of a recession. Are we already in one? Is there one happening, going to happen soon? What's the severity of it? We talked about a couple of headlines before the show. The indicators are not so good the housing indicators, the leading indicators. What's your take on this? Do you think we're heading into a recession? How severe might it be? Or could the Fed pivot? We see another rally.
Speaker 2:Fine news is one that I think everyone needs to take a back seat and look at it and believe half of what you hear, or maybe one-tenth of what you hear when you have a UAW strike that workers want an exorbitant amount of wage increases and are striking but they're not working. They're striking. That's causing a mini-recession in itself for those particular people that aren't working. We've also had a lot of other areas of the economy healthcare they were striking as well. They want more money. When asked, are we in a recession? Now we're causing a little bit of recession for some factory workers in the auto space. We absolutely are in.
Speaker 2:If you ask a realtor, how's your income this year? Have you been selling a lot of existing homes? I bet they're going to say it's been tough. We have a recession in, maybe, the real estate. If you ask someone in the new construction Toll Brothers, polty Home, lenard House, business, texas, booming certain areas, new constructions booming Virginia, outside of DC, a lot of new construction. It's not close to where people work but they have to commute. The point is that we have probably a revolving recession in different industries. We don't have a full stop of a recession. Government workers are still working. School teachers. Obviously school teachers are working. They're teaching kids that well, we won't get into that, but school teachers are working. We have government working, government workers. The employment number right now at 3.8%. People are working, but certain industries aren't making enough to cover what they need. In certain industries, like I've just mentioned, there is a mini recession going on.
Speaker 1:What about your investment fund? What sectors do you guys look at right now as an opportunity, as a bright spot, or what are investing instruments Are you looking at? How does your fund work? What are the basic strategies?
Speaker 2:Okay, I run a private fund. In my fund currently I employ a lot of ETFs, sector ETFs and options. Two areas that I would say have a very low, multiple or attractive price structure was in precious metals and especially the gold miners. I think the last time you had me on your show you asked me about where should people be, should they be in what space? For me, as we get into this October time period, with this market little mini meltdown, and especially as we've just had this big atrocity against what happened in Israel, the uncertainty of this outcome, of what's going to happen in the Middle East, has caused gold prices to be back in favor.
Speaker 2:The flight to safety. The trade is back on gold. In fact, I think gold has had a better reaction out of the war environment than it did in the inflation outlook. What worries me a little bit is the flight to safety, or quality is to gold, not to US Treasuries. Yet Usually people will flock to Treasury bonds saying, oh, the United States, they're always going to pay their debt. We have a stigma against the Treasury debt. It's called Congress not working, don't have a speaker, we're kicking the can. We don't have a budget, we owe too much money already, so gold right now is a really strong favorite in this environment, do you think-?
Speaker 1:Sorry because you mentioned the Silicon Valley depositors were Chinese owned companies. Then you mentioned Chinese are not buying our T-bills anymore. Could this be political economic warfare here, our biggest debt buyer choosing not to buy our debt anymore at this convenient time?
Speaker 2:It could be, but I think China had. They had their own problems with their own economic conditions and their lockdown for COVID in their own country, so they shut down the country for the most part a lot longer than the United States did. And that's why everyone last year was saying, hey, as soon as China opens up and they eliminate the COVID lockdowns, their economy is going to flourish and it hasn't picked up as dramatically. And it's funny you asked that because Tuesday night we had GDP out of China, we had their employment numbers and they weren't that strong. So I don't know if they have the. They're not into the printing presses, maybe as much. But the Chinese entities that were affiliated with the holding their deposits in Silicon Valley Bank, they're more in the technology field. So the better question would be does China, are they in our US companies and buying up maybe our farmland? Are they buying up or investing in our technology companies that might be tied into Silicon Valley Bank's situation? More so, is China not capable of buying our debt?
Speaker 1:in my humble opinion, I was just wondering if China and Japan were just making rational economic decisions by not buying our debts, or were there other decisions?
Speaker 2:with Japanese government bonds have gone up. I think they had an uptick to about 0.85 from a negative remember they were negative yield. So Japan, right now, instead of having to convert money and sell again, buy a dollar deposit money here. Buy US treasuries. Japan's always been a buyer of our treasuries, but now they have a little bit better yield than people might want to just keep some money at home. So that's probably affecting the demand level for the US Treasury Again.
Speaker 2:Remember Fitch downgraded US treasuries because we might not be able to pay our debt on time because of what's going on in Congress. So we've got that stigma. So, yeah, maybe there's a little bit of that stigma, but I think the overall economy in China is not as strong. We can see that with some of the stocks they have. And then finally, sean, what's another thing that we've never had in my 40 years of trading experience is a competing factor called cryptocurrency. Now here's a funny thing when you tell a little kid, don't touch that, you can't eat that, what is the kid going to do? Going to go out and touch it. He's going to go out and eat it. If the US government and foreign government say you shouldn't own cryptocurrency, what do you think people are going to do? Like, really, you're going to tell me what not to do, and so I'm not saying that that's the reason for Bitcoin coming back up. But you have Larry Fink at BlackRock. They're holding out. There was an incident that happened the other day. It was a rumor that they were, and it caused a big spike in Bitcoin price structure. But they are involved and people around the world are involved and invest in it, and it is a real product and the genie's out of the bottle. It's not going anywhere.
Speaker 2:So in the world of diversification, 40 years ago you had two choices buy gold, buy US treasuries in wartime or in times of uncertainty. Now there's a stock exchange on every corner of every city and every major country. There's other places to compete. You've got mergers and acquisitions. Look at Louis Vuitton I mean, what do they own? Look at AirMace these are high-end, trendy consumer products companies and they're doing pretty much gangbusters. They're well off their highs. But you have China, baidu, I mean. The list goes on and on. South America there's all different kinds of commerce. And look at Mexico. The list goes on and on about competing products.
Speaker 2:So, when it boils down to where do we invest and what do I trade? I'm more of a sector trader and in this environment we're on super steroids and meaning in the old days a wealth manager couldn't get his client into Microsoft on Tuesday and get him out three weeks from now. He would be accused of churning. And that's part of the holding a time frame for most investors because they're looking long term In this environment. I don't know because of artificial intelligence and the way the world's turning so fast. If you make a profit in the market in a specific sector, you better take it Now.
Speaker 2:I do see a lot of value at this time of the year, right now, in consumer discretionary products. Right now, as we get into the holidays I don't care how bad things are in war. People have a job right now, they have money and I guarantee you most people, while they may curtail holiday spending, there's going to be presents under the Christmas tree Come next year, late January, early February I don't know how people are paying their American Express bills and that might be where we get a bigger sell off in the market. And that's my two cents.
Speaker 1:That makes sense to me that if employment's reasonably well and wages are going reasonably OK, then people of course are going to buy Christmas presents. But if their savings is low and their credit cards are high and interest rate on those credit cards are high, long term there are going to be consequences for that. John, I want to learn more about your fund. That's going to have to wait till the next time we do an interview, other sectors you're looking at and some of your strategies, some of the options that you're doing, and maybe not just investing in things that are going up, but maybe investing in things that might be going down. We'll talk about that next time. Thanks for coming on the show, john, really appreciate it. And everyone, make sure you go to madlensgoldcom, get that free IRA kit and it's delivered to your home, free shipping and handling. God bless everyone. We'll see you in the next great reset Peace. Thank you so much, bless.