In this week’s edition of Wealthion’s Weekly Market Recap, Andrew Brill highlights key insights from our expert guests:
• Raoul Pal provided bold cryptocurrency predictions, explained the transformative “Exponential Age” of AI and blockchain, and emphasized strategic investing in disruptive technologies. • Steve Hanke analyzed the U.S. election results, highlighting wealth inequality, inflation, and the political shift driven by economic resentment. • Gordon Johnson uncovered a disconnect between stock market performance and the real economy while outlining a compelling long-term bullish case for uranium. • Brandi Maben and Brett Rentmeester offered actionable year-end financial planning strategies, including leveraging donor-advised funds, 529 plans, and tax-advantaged accounts for optimized wealth management.
Watch now for actionable insights to navigate your financial future!
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Andrew Brill 0:00
Bitcoin is coming very close to 100,000 as the market reacts to reports the Fed might think about skipping December rate cuts. We’re here to give you insights that’ll help you navigate your financial future. I’m your host. Andrew brill, let’s see what our experts had to say this week.
Andrew Brill 0:20
This week on speak up with Anthony Scaramucci. Well, pal stopped by and gave us an outlook on Bitcoin, Solana and Ethereum, and had some bold predictions. He explained the exponential age in the boom, and also wondered if finance is a declining industry, and is it too late to get into crypto. I
Unknown Speaker 0:37
want to
Anthony Scaramucci 0:40
start with Bitcoin, because I think it’s important. I’m talking to you where bitcoin is at 92,000 you’re also talking to a person that did buy Bitcoin at 68,000 November of 2021 wrote it down to 17,000 so you’re talking to a battle torn, scarred human being,
Raoul Pal 1:01
did you add to your trade when it went lower?
Anthony Scaramucci 1:04
I did. No, absolutely no. I absolutely did. No, no, no, then
Raoul Pal 1:07
it works wonders, right? No, no, no, I
Anthony Scaramucci 1:08
added No, no, no. I’ve been, I’ve been a consistent buyer every month of Bitcoin since October of 2020 and even in the down times when I thought I was getting to get creamed, I was nibbling, I can’t say I was buying as much in my overconfident zeal as 68,000 prints. I was less confident at 17,000 isn’t that how human nature works? Well,
Raoul Pal 1:33
always you got to fight yourself in this market. It’s always your own psychology as your most your worst enemy. I’ve learned from being in this cycle for so long that really, if you can when it just feels the worst, that’s when you should be putting as much money in as you can. Obviously it’s also the hardest time, because nobody’s got money, because liquidity is being drawn out of the system. Everyone’s feeling the pinch. So it’s actually hard to scrape pennies from under the sofa, but it is the best strategy of all, because your gains compound so fast when you do it well,
Anthony Scaramucci 2:05
well, I, I, I’m with you on that. I’ve learned that in my old age, I tell younger people, just nibble at things, make an investment every month and don’t look at it. Pay yourself first. But where’s Bitcoin going to be three six months? And then give me your five year outlook? Yeah.
Raoul Pal 2:21
I mean, I try not to give price projections, and I know you always pin them out of me. But the point being is, you know, we’re very public on social media, and it’s just people pin their hopes and dreams on a number you give them. But my general thesis is, we will rally into year end. We will correct at some point. There’s a bunch of hedge funds and raas and others who are into this, who will need to take a bit of profits into year end, I think we’ll get a bit of a shakeout global liquidity slowing down somewhat, and then we should re accelerate into the end of tax season. So my view is, Bitcoin easily gets to 100 this year, and probably, probably is, you know, 150 plus by March, before it corrects again. And then we finish the year after a larger correction with a very strong rally into the end. So that’s, that’s how I think it plays out probabilistically. So
Anthony Scaramucci 3:16
when you say a correction, we’re at 150 it corrects back to 80.
Raoul Pal 3:19
Yeah. Maybe something like that, yeah, maybe less, maybe 30% correction, so back down to 100 kind of make sense to me, and it’ll feel miserable, and people say, has the cycle peaked? And all of that noise, right? And then usually we end the second year after the presidential election cycle, very strong, and then it peaks out sometime there.
Anthony Scaramucci 3:43
Okay, so if I give a range
Raoul Pal 3:45
of targets, I suppose pinpointing a target, worst case is 150 my base case is 250 and in an obscene bull market, because everybody’s buying, driven by a change of regulation, then it could go as high as 450 Okay,
Anthony Scaramucci 4:00
let’s go to Solana. I want to ask you the same questions related to Solana, because I know you’re a bull there. Yeah.
Raoul Pal 4:06
So I think Solana finishes this year closer to 400 than it is to 200 so I think this year, six weeks, maybe 350 I mean, it’s a higher beater asset, so it should do better. So I expect that to happen. I’m I think again, it follow the same kind of price path as Bitcoin, but it should outperform all of the way it’s been in this consolidation versus Bitcoin sideways consolidation. The next leg should be altcoin season, and Solana should be the king of the major alts. So I’m kind of expecting Solana from here to probably get to over 1012 1250 something like that.
Anthony Scaramucci 4:53
All right, last one Ethereum, um,
Raoul Pal 4:56
Ethereum has been a laggard. I think it plays some catch up. I think it out for. Bitcoin going forwards for a bit. Because, you know, if we sit back and look at what the regulatory changes might be, that is the platform upon which most of the institutions will start doing stuff. It’s the Microsoft decision. You know, every bank has Microsoft computers, not Apple computers. So I think that Ethereum actually does better than most people expect going into the end of the year. Again, same price pattern outperforms Bitcoin, Solana outperforms Ethereum. So it’s the risk curve.
Anthony Scaramucci 5:29
Okay, let’s go to the what we’re calling the exponential age, which is the rapid advancement of AI blockchain and other technologies. So, Mr. Paul, you think there’s a boom coming, right? There’s a techno boom coming. It’s
Raoul Pal 5:45
a techno boom and it’s unstoppable. It’s going to be so fast we don’t know how to deal with it. Am
Anthony Scaramucci 5:50
I going to be taller as a result of this? No, is this? Jan, no,
Raoul Pal 5:53
it might be possible. There is hope for you yet. Hope for me yet.
Unknown Speaker 5:57
Okay, yeah,
Raoul Pal 5:59
there is hope for you yet. I
Anthony Scaramucci 6:00
think that’s I think that’s why I have a little bit of jealousy towards you. Is not only you’re good looking, but you’re a tall son of a bitch. Okay, tell us about the exponential age. Go ahead.
Raoul Pal 6:08
So look, it’s this nexus of all of these technologies, all hitting adoption effects at the same time. You can see that in front of your eyes with crypto, that’s what number go up. But AI, we can see that every three months, it’s like a groundbreaking set of new models, whether it’s video, audio, or just the models themselves, or the applications of it. We’re seeing the robots coming. We’ve seen the Optimus robots. We’ve seen the robots coming out of China. We’re seeing Tesla cars. We’re seeing, I mean, it’s just endless. We’re seeing Amazon employing more robots than humans now, and that’s accelerating. Then we’ve got the biotechnology stuff. We’ve got, you know, Google, with their with their Alpha fold, which is the AI based around predicting protein sequences and what that can do for humanity. We’re seeing so much all happening at the same time. EV, I mean, nobody realizes because it becomes politicized. But solar growth, the growth of solar power, is more than all of other energy generation added together and doubled. People don’t realize how fast this technology is moving as well, and how much the prices are coming down. So all of these things mean the price of computers going lower, the price of energy and electricity will go low over time. Nuclear can be thrown into that, and then you’ve got aI which is driving exponential compute, which ends up with infinite human knowledge. All of these things are so disruptive we can’t get our heads around them, and it’s quite difficult to invest in. A lot of it, a lot of it is in VC hands or in these giant tech companies. So you’ve got this fastest growing technology in all history. What are you supposed to buy? Microsoft? Yeah, you might double your money or triple your money, but it’s, it’s not really commensurate with that. So the crypto side of the equation, because the whole new internet is being built on crypto rails. I mean, the AI will have identity, and we will have identity on chain. Many of the things you and I have talked about the larger use of blockchain as a technology, well, that’s front and center. So actually, I actually think we’ve got six years, and this is quite contentious. I think we’ve got six years left to make as much money as we can before we don’t understand how the economy works anymore. We’ve got if an economy is driven by if economic trend, rate of economic growth is driven by population growth plus productivity growth and debt growth. By the time you change this aging population, which is slowing trend. Rate of GDP down. Replace that with infinite robots and infinite AI. We’ve replaced the population component. Same with productivity. By lowering energy costs, we end up with ridiculous growth. I mean, what are financial markets with AGI? So I think we got six years. So actually, we do a lot of this on real vision. So anybody watching this real vision.com. Forward slash, join there’s a whole stuff around the six years. It’s really important. I think we’ve got six years to invest to save our futures or cement our futures. Raul
Anthony Scaramucci 9:10
and Anthony, what advice would you give young people just starting in finance to have a great career like yours? That’s Ryan from California. So go ahead. Sharon,
Raoul Pal 9:20
I give this advice to a lot of friends kids, because they’re like, I want to go into finance. I’m like, finance is a secularly declining industry. You know, if I was comparing notes with a mate of mine who’s just left finance at the same age, I was earning three times as much money as them. The the amount of opportunity in finance keeps going down as guess what AI technology replaces humans in the trading floors and in investment banking across I would not go into finance. If you’re going to go into finance, go into crypto. Crypto is a secular trend going up the fastest of all, as opposed to. Secular trend going down, which is the traditional finance system. So if you want to apply your finance understanding, you want to do investing, you want to think about macro, do it in crypto, and it’ll change your life. The key to anybody’s career is find a secular trend and ride that you you and I wrote the same secular trend. Hedge funds was a huge trend as was finance at the time, and on my side, it was equity derivatives, which was a huge trend, and we rode those. It makes us look geniuses, even though I’m certainly not a genius. You’re smarter. You got to, you went to Harvard or somewhere. I didn’t.
Anthony Scaramucci 10:31
I did. I did go to Harvard. And don’t hold it against me, because, you know, in some ways, it stunts your ability to see things you know. You get you know Ross Perot. You’re old enough to remember Ross Perot, the legendary entrepreneur who also ran for president in 1992 he said something that I’ll never forget. Raul, he said, at Harvard Business School, when I was there, he said, I feel bad for you babies. Why do you feel bad for us? He said, You’re at Harvard. You’re at Harvard. You were successful in the first part of your life. You’re not going to take any risks. You’re not going to do anything stupid or crazy. And left a big impression on me. I left that meeting and said, I’m for stupid and I’m for crazy, and that’s why I’m a bitcoiner like you. But is it too late? Is it too late in crypto?
Raoul Pal 11:20
No, no, it’s a, it’s currently, today, a $3 trillion industry. Think of this scale. It’s a $3 trillion industry. If we just extrapolate the trend rate of growth and the number of wallets and all of that stuff, we get to 100 trillion by 2034, we’re 3% of the way there. We’ve got 97 trillion of wealth to create in this space. We’ve barely started. I know we all use that phrase, you know, we’re so early, but the adoption of this technology is the financial system starts to operate on its rails. So you have instant settlement for equities and bonds and all of that, the transfer payments, even central bank digital currencies, are on these rails. Everything folds into these rails. Our ID, gaming, worlds, all of these things. Well, if it’s if we’re 3% of the journey, it’s all to play for. This is the biggest trend we’ve ever had. Are you
Andrew Brill 12:11
concerned about your financial future or think your investments could be doing better? I’m Andrew brill, one of the hosts here on wealthion, and I’ve been there, not sure my money was in the right places. It’s why I’ve gotten help from a financial advisor. Maybe it’s time you think more about your financial future or get a second opinion about your investments. We’ve made that process easy. Simply go to wealthion.com/free to speak with one of wealthions, registered investment advisors for a free, no obligation, portfolio review, again, That’s wealthion.com/free. I’m now less anxious and confident I can achieve the financial goals I’ve set for me and my family. Renowned Professor of Applied Economics Steve Hanke stopped by wealthion this week. Steve spoke about the disconnect between the election analysis of traditional media and the betting markets, he says there could be a negative impact of President Trump’s proposed tariffs. And he made some predictions for 2025 and put geopolitics in context.
James Connor 13:15
You said Trump would win by a landslide, and he did. And I want to get your thoughts on what exactly you saw that you thought the Republicans would win so decisively. Well,
Steve Hanke 13:27
the main thing I was watching the prediction markets. And the betting markets, they threw up objective information about what the probabilities of an election outcome going one way or another happened to be and and the reason for that is that the people betting have skin in the game. I mean, they’re, they’re not just answering a telephone with some pollster on the other end of the line. You know who, you know, God only knows what they would tell them, but, but at any rate, that’s what I was doing. I was watching the betting markets, and then what happened is that Trump actually was was behind, and the probability of him winning, or certainly winning in these swing states and so forth, didn’t, didn’t look that great. And then about with about a month to go, things started changing in the betting markets, and he really had momentum going into the final stage. He He basically surged for at least three weeks, maybe a month, something like that, so that that was the essence of it now. Now my thinking, though I thought the betting markets were happened to be right, my intuition and analysis told me that I thought the bettors that were betting on Trump were right. And the reason for that is that what we’ve had in the United States and. Also in the UK and Europe, with the European Central Bank and Europe and the Bank of England and the UK, obviously, and the Fed in the United States. What happened when COVID hit? They they exploded the money supplies. And they did that because the government’s increased government spending and and the deficits went up tremendously, and those deficits had to be financed by the issuance of Treasury securities. And the central banks bought most of the say in the US, the Fed bought over 90% of the new debt that was issued. Now, when they do that, that creates money. I mean, they literally create money out of thin air to pay for the treasuries that they buy. And then you were reading about it the balance sheets of the Fed and the Bank of England and the ECB all exploded, and then with with a lag, you get changes in asset prices those, those surged up. Economic activity surged up, and ultimately we got inflation surging up. So, so that that happened. But money, the creation of money, isn’t neutral. It affects different sectors of the economy and different income groups in a different different ways. And what happened in the United States was that that increase in the money supply, it increased asset prices. The S, p5, 100 zoomed, and so did real estate prices, land prices, all asset prices went up. Well, who owns assets? Well, rich people own assets. So, so the rich became very rich as a as a result of this monetary injection into the system and as a result of inflation. Now, if you look at the billionaires in the United States, you in the start of the COVID when they started pumping money in, their total wealth was equal to about 14% of GDP, and now today, in September, I just looked at it, it’s 21.2% so they’re, they’re, they’re, stock of wealth went shooting up, but it went shooting up relative to the size of the economy even so. So it went up in absolute terms, but it went up in relative terms too. This means that the the income distribution was was horribly skewed by this inflation outburst and this monetary explosion that we had. So income equality Forget it. We had a left wing government we have in the United States with Joe Biden. It’s probably the most left wing government we’ve had since World War Two in the United States, and they basically have engineered one of the greatest maldistributions of income in the history of the country. And what does that lead to? It leads to resentment. And this festering resentment, I think, is what really spelled the result on the election. Because what happened? The little guy doesn’t own any assets, so he didn’t, he didn’t take part in this windfall gain dished out by the Fed. All he got was an inflation tax he was still earning income, but the income he was earning wasn’t going up, even as fast as the inflation was going up, and his real income was actually going down, his real income went down, and there, and the fat guys got huge increases. And I think that resentment was festering and behind a lot of this. Now, of course, people on the street aren’t making a kind of calculations I did. They don’t know what the total billionaires wealth is, and they don’t therefore have a number to divide into GDP, to figure out that the proportion of billionaires wealth went from 14% to 21.2% but they kind of intuitively know that inflation was was a tax on them, and they knew a lot of people with wealth were getting rich, even richer. So I think that that’s my kind of take on what was going on. It was kind of kind of. Shall we say, a revolt against the rich and the elites, the elites in the media, in particular, the elites in Washington, DC, the politicians, the lobbyists in Washington. That’s, that’s, that’s a thumbnail sketch of my take on the election, right?
James Connor 20:23
So just to summarize, it was because of the socialist policies that the Democrats were putting forth have resulted in income inequality and also massive inflation. And so because of that, that’s why the Democrats lost by such a landslide, right?
Steve Hanke 20:38
It started. The step is, first you have this fiscal thing, the government spending goes out of control, and it was not financed by tax increases. It was the deficit got big, and that deficit was financed mainly by the Federal Reserve and the money supply. Remember, inflation is always in everywhere. Jimmy a monetary phenomenon. If the if the Fed hadn’t bought those treasuries, there wouldn’t have been any inflation. There wouldn’t have been an uptick, shall we say, in inflation,
James Connor 21:14
you made me, you made mention of the betting pools that you were watching, and this is why you thought the Republicans were going to win. And I think it’s quite interesting, when you look at the various election cycles, how each one is different from another one. And this one is so much different from 2020 and it’s quite often. It’s being referred to now as the podcast election. And Donald Trump, in spite of his age, he’s very innovative. I got to give it to him. I don’t care if you like him or hate him, but the guy is always trying new things. And he did 14 different podcasts on YouTube, which got 124 million views, and that’s just on YouTube. Harris, on the other hand, she only did four or five, and I think she got 4 million views. And I know she was only campaigning for 100 days, but it’s interesting to see, just four or five years ago, these candidates were on CNN and Fox and CBS and ABC, and now they’re not going there the traditional channels. They’re adopting these new media forms. Oh
Steve Hanke 22:19
yeah, this, this is, this is a great point and, and a big development and, and, for example, that’s, that’s one reason that I started doing Twitter about 10 years ago. Roughly, I had no idea what it even was. And my complaint always to my assistants was, you know, I’m turning out this article, that article, that article, and and who reads them, you know. I mean, how do you deliver the message? You know, is there a better way? So one of my students suggested that I do Twitter. I didn’t have any idea what it was, and finally, after about a year, he talked me into doing it. So I said, Fine, I’ll do it. You set it up, you get it going and and we’ll give, give it a shot. So, so that that’s how I evolved into the thing. And then people ask, well, you know, why are you doing podcasts while I’m doing podcasts, because, number one, you have enough time in a podcast to actually say something concrete, whereas, if you’re on the tube, you got 30 seconds or 60 seconds, or something like that, and, And, and many times, the journalist who’s doing the interviewing, they’ll have a narrative. They’ll have a spin they want to do, and so they do their spinning. They spend most of the time spinning and talking, and then they have somebody like me come on to hopefully give them a little credibility. And I got 15 seconds, 30 seconds or something to say, whatever I have to say. And it’s, it’s just a loser’s game for any for serious people, it really is pretty much a losing game. And and there’s another problem with the mainstream media. Now, I said the spin in the narrative, if you watch the news, even even credible news like the BBC or something the spin meisters are on a lot the news content in these major media outlets is pretty minimal. They’re basically producing op eds there. And and even if you go to the New York Times or a paper, paper like the New York Times or Washington Post, and you read a news column, not not an op ed, not an editorial, but a news column, often it’s it’s a spin job, it isn’t really news or now a. Of news and and you get the same thing with all these fact checkers running around, they’re they’re basically spinning things. So, so this is this. This Trump picked up on this. His intuition, obviously was pretty good on this. He’s experienced with it. But as you pointed out, I mean, he was way over the top relative to Harrison podcasting. Harris wouldn’t do anything. Harris wouldn’t do the podcast unless she controlled the podcast. Yeah, so it would be like me coming on with you, Jimmy, and say, Jimmy, I’ll do the interview with you, but I’m going to give you the script, I’m going to give you the questions, and you ask me the questions, and I’ll give you the answers. I’ll give you my answers. Well, that’s not what we do. I don’t even, I don’t have any idea what you’re going to ask me. I mean, you’re running that. You’re running the show. I’m not
James Connor 26:01
yes, and a couple of points I want to make there. First of all, you were talking about CNBC, the business channel. They only get 100,000 views a day, so that’s a dying medium. And with regard to Harris, I don’t know if you saw this, but she did an interview with Oprah Winfrey, and it’s come out here in the last few days that Oprah’s production company called Harpo got paid $2.5 million to do the interview.
Steve Hanke 26:27
Well, yeah, this is turning into kind of a scandal. This is a typical political thing. There’s so much money floating around in the political world this. This is another resentment factor. This is this resentment idea. So if people have a lot of resentment, build up when they see all this money in the lobbyist and so forth, they they’ll tell they’ll tend to vote for an alternative. They’ll tend they want to get the incumbents out. And if you look at the Western democracies, by the way, then the percentage of incumbents that are falling in these elections has increased tremendously, and it’s all because of this resentment. So
James Connor 27:13
we spoke quite a bit about the US, about US politics, and also this whole, this whole movement of elitism or against elitism, and we’re suffering from the same sort of thing here in Canada with the Trudeau Government. Any thoughts on the Canadian government or the Canadian economy?
Steve Hanke 27:28
Oh, I think, you know, Trudeau is in the tank. Basically,
James Connor 27:37
whenever they call the election, we’re going to get another sweep.
Steve Hanke 27:39
I think he, he’s, he’s a little bit Biden esque. He’s, he’s not the sharpest knife in the drawer, and, and, and I don’t think he’s led Canada in the right direction at all. But again, look at the United States. Do I think they’ve been going in the right direction, the answer is no, and
James Connor 28:02
Trump said he’s going to impose a number of tariffs. What do you think that’s going to do to the economy? Well,
Steve Hanke 28:11
it’s going to slow it down, because that’s a tax. It’s like a sales tax. A tariff is like a sales tax on on all those items that are being imported. So, as you know, if you tax something, you bring that demand for whatever it is down people, people don’t want to buy as much of it. So it’ll slow things down. And and trade is something that unfortunately, the politicians, including Trump, of course, and most businessmen, which I mean, let’s face it, Trump, Trump’s a real estate guy. He’s a business guy. So most businessmen think like that, like this. They think trades a zero sum game. And what that means Jimmy is that if, if Jimmy’s selling hanky something and and the exchange takes place, it’s a zero sum game, because one of us is going to gain x and the and the other guy’s gonna lose X. So it’s zero sum trade. Is not a zero sum game. It’s a positive sum game. If, if Jimmy sells hanky something, there’s and we have the terms worked out in the price and the what you’re selling and all the rest of it, you gain. Otherwise you wouldn’t agree to sell a thing and I gain as a buyer, or I wouldn’t agree to fork over the money and pay Jimmy for it. So it’s a positive sum game. All Trades are positive. They’re not zero. And some people, by the way, actually. Think foreign trade is a negative, some game.
James Connor 30:03
So if it’s negative for the economy, why do you think he wants to impose these tariffs? Because
Steve Hanke 30:08
he’s thinking the way I just described it. He he thinks trades actually a negative. Some game, that is bad, that that that on, on balance, they’re they’re more negative number. The negative number is greater than the positive number. It isn’t it isn’t reality, though. The reality is that it’s all positive that the seller has to gain otherwise he wouldn’t sell, and the buyer has to gain otherwise he wouldn’t buy. So it’s this wrong headed thinking and and it will be a dent in the economy. How big a dent will depend on what the nature of the tariffs are and so forth. But it’s, it’s bad, bad news.
James Connor 30:59
Okay, so you’re looking for a slowdown in the economy in 2025 a possible recession. What does this mean for the S P the S P is at 50 906,000 give or take, I think it’s 25%
Steve Hanke 31:10
I think the S P is, is, shall we say, pretty pricey. Right now, there are number of things that aren’t being included. Number one is what the effects of tariffs will be. That’s not included. What the effects of this, these wars and Ukraine in the Middle East, that’s not that’s not priced into the market at all. I mean, you know, they’re shooting long range missiles, not today, and from Ukraine into Russia. That’s not priced into the market whatsoever. And and, and then. And the other thing that the third thing that isn’t priced in is the green transition, going green. It’s it’s going to cost an arm and a leg, not priced in and on and on. How about just the political uncertainty we’re going to have the most important economy in the world that produces the most important currency in the world is the United States, and we have a big regime change coming with a new administration, and no one knows exactly what’s going to happen. I mean, even tariffs, no one, no one knows really what Trump’s going to do. Because on the one hand, he gives a number and he says he’s going to do this, but then a lot of his advisors say, oh, that’s just a bargaining chip because they’re going to use with the Chinese and other people. So it might not really amount to too much. It depends on what kind of deal he cuts with them, but remember, China is not going to sit back and do nothing, and China controls the commodity markets, and this, this relates not only the United States, but all the Western world, and obviously Canada, big time. I mean, if you look at all the critical materials are controlled by China, they and people think, oh, that means they have all the mines and deposits of these things, a rare earth. No, it’s processing these things. It takes very sophisticated chemical processes to process and make, make a rare earth usable for something, and even if you’re even if you’re producing something like lithium, spot, I mean, or, or even hydroxide. You gotta, you gotta send it to China to get it processed.
James Connor 33:49
No, very good points and, and, by
Steve Hanke 33:51
the way, by the way, China has made it very clear they’re there if, if you the Chinese are basically saying, You punch me, fella, I’m going to punch you back. So that’s that’s what the West has a totally stupid idea about this, by the way. And it’s a little bit like the war in Ukraine. NATO goes in there on the side of Ukraine, and we clearly have Western military people in Ukraine, by the way, they’re under the radar, but they’re there one way or another. And we have Western armaments being used openly, these long range missiles now and other things. And in the West it, they complain because the Russians have brought North Korean troops, and they say, oh, you can’t do that. Oh, and you can’t, you can’t get armaments from North Korea and China that. That’s a, that’s a, I. That’s a bad deal. You’re not supposed to do that the West. That’s the way they talk. I mean, it’s like a kindergarten type thing. The Russians are basically saying, you know, Buzz off. Well, we’re in a war, and we’re in a war. Why or why are we in the war? Because the West went over the red line. We told the West that the red line was that Ukraine would not have an entry to NATO. And in 2008 the West said, well, NATO, they could enter NATO and and then, you know, it’s just gone downhill ever since. But you have to put these things into context that that’s my point. You don’t just start from today. Day one. The news will all be about these rockets going into or missiles going into Russia. But, but there’s, there’s a bigger story. Well, how did the whole thing start? CEO
Andrew Brill 36:04
and founder of glj research, Gordon Johnson, was a guest on wealthion. He explained the growing disconnect between the real economy and the stock market. He believes we are headed to a weaker than perceived economy due to indicators like electricity consumption, retail sales and semiconductor exports. Gordon also cautioned the Fed’s actions in Treasury markets and shifting policies are hurting economic stability.
James Connor 36:32
So I want to start with your views on the economy, and also the markets and the economy continues to hum along at two to 3% growth. What’s your take on the US economy?
Gordon Johnson 36:42
Yeah, so I think that the problem exists with a lot of politicians and people in the media equating the stock market to the economy. And the stock market is clearly not the economy. The stock market has done amazing things this year and last year, it’s literally up almost daily. On days it’s down a percent to 2% it’s deemed almost a national economic disaster, a national disaster, etc, whereas the real economy is something different, and there’s a million data points one can look at to track the real economy. But you know, some of the data points we look at if you look at, for instance, electricity consumption in the US, if you look at things like retail sales in the US, if you look at things like semiconductor exports in the US, or commercial and industrial loans outstanding, for instance, retail sales since 2021 I’m sorry, electricity consumption. Let’s start with that year over year, growth in electricity consumption since 2021 is average 1.5% it’s at 1.8% now, and down from highs is recently in 2024 is 7% so when looking at that metric versus GDP growth, the economy doesn’t look as strong if we look at retail sales. Retail sales right now, year over year, growth seasonally adjusted for the month of October, 2.8% better than 2% seen in September. But since 2021 retail sales on a monthly basis, year over year, of average 8% and we’re at 2.8% so significantly below, you know, the average. So looking at just simply looking at retail sales, things do not appear as strong as, you know, the GDP, or, you know, some of the pundits out there would have you to believe if you look at CNI, so commercial and industrial loan growth, year over year, loans and leases in the US, commercial industrial loans and leases right now, right at 0% growth down significantly from that scene in 2023 and 2022 So loan growth not robust. And then if you look at construction spending, year over year, growth and construction spending, it’s on the decline. If you look at semiconductor exports out of the US, that’s a leading indicator for recession. I’m looking at it right now. Let’s see. Yeah, the chart is trending down significantly. Semiconductor export growth. I mean, literally, you’re having literally a collapse in the exports of semiconductors year over year on a monthly basis. So my point is, the real economy is, in our view, nowhere near as strong as the stock market suggests. And when you look at like, you know, for instance, if you look at S, p5, 100, I think over 400 companies have reported earnings this most recent earnings season. So q3, revenue growth for the companies that have reported is trending plus 7.5% last quarter that revenue growth was plus 11.2% Percent earnings growth, the S, p5, 100 companies that have reported for q3 EPS growth, 8.5% last quarter, up 21% go to the NASDAQ for the companies that have reported for q3 revenue growth this quarter, 8% last quarter, 14% EPS growth this quarter, 5% last quarter, 21% so even in the earnings numbers, you’re seeing a significant slowing in growth, and that’s right at a time when I think inflation, I think we’ll get to this is starting to take back off with what I think is a very reckless fed and I want to talk about that as well. Maybe I went on too long, but I’ll stop there.
James Connor 40:36
So just a couple of things I want to ask you about. First of all, with regard to electricity, you’re suggesting lower electricity has to do with the slowing economy,
Gordon Johnson 40:45
right? So when you look at specific economic indicators, that can’t really be, I shouldn’t say can’t be, but they’re unlikely to be manipulated. If you look at electricity growth, and I’m just looking at the chart going back to 2021 again, the average 1.5% year over year. Growth on a monthly basis, we’re looking at 1.8% now, so and it’s trending down. So we’re trending down, back towards the average. Would suggest that overall economic, economic activity is slowing, not increasing, if that makes sense.
James Connor 41:18
And the other point I want to ask you about two. Are semiconductors. You said the sales were significantly lower. Isn’t that? Because the US makes an inferior product, and all of the production has gone to Taiwan.
Gordon Johnson 41:32
That is true historically. But if you look at this, this figure, this, this semiconductor growth, for instance, in August, exports of semiconductors on a year over year basis, in the US, up 31% in July, that number was up 56% so July up 56 August up 32% and then in September, it dropped to just 9.8% so literally, it went like this, and it’s collapsing right now. That’s a leading indicator. Historically, that number has been a leading indicator into recessions, and right now, that number is in full collapse. So I think it’s an important number to look at. If that makes sense, you
James Connor 42:12
wrote recently that the US Treasury market is dysfunctional. What exactly do you mean by that?
Gordon Johnson 42:18
Right? So the Fed and Janet Yellen US Treasury are acting as if their only mandate is to disallow any dysfunction in the US Treasury market, um, and let me talk about what I mean. So I mean, we can go back to, um, you know, 2019, when, um, you know, problems being began to emerge at the short end of the curve. Repo rates spiked in 2019 and the Fed began expanding their balance sheet. You know, then, you know, in early 2020, you know, the Fed exempted US Treasury bonds from SLR for banks. SLR, supplementally, supplementary leverage ratio that was de facto QE for banks. We can fast forward. And these are all times when you started to get, you know, Treasury rates spiking. And they came in and did these things to make Treasury rates come down. You know, you can go back to, you know, late 20 or early 2022, when the US Treasury began working down the TGA account, the Treasury general account balance, which that Treasury general account balance basically serves as de facto QE, because it’s money that once the Fed begins working that down, it finds its way into the real economy again. In 2022 you have the Treasury intervene and begin working on their TGA account again, and then, you know, when you had the banking crisis, you know, they did this btfp facility, which is de facto QE. You know, in 2023 you know, Yellen shocked the market with her QRA announcement, where she shifted from majority long term debt insurance to short term debt issuance, which allowed her to drain the reverse repo account, the RRP. So there’s two people get confused. There’s the overnight RRP, and then there’s the RRP, the overnight RRP, reverse repo account. All that is is excess money printed when they did QE infinity, 2020, to 2021, that was sitting in the coffers waiting to be used. And when Yellen shifted her debt issuance from long term to short term, that effectively incentivized those people who were parking their money in the reverse repo account to put that money, rather into her short term bond issuance, she issued debt. The excess QE money that was sitting in the RRP drained, and that money buying her debt and finding its way into the real economy. You have quantitative easing. You know, again, and you know, you know, in late 20 or early 2024, you know, the Fed cut its pace of q q t, by 30 billion a month. And it’s not q t, it’s just the amount they were letting roll off. And then recently, you know, Yellen announced. Is going to be buying 4 billion in US Treasury bonds per week. There’s just constant intervention by these entities into the treasury market whenever yields start to spike. And it’s them trying to disallow any dysfunction, or rather, I would argue, functioning in the treasury market. Remember one thing I’ll highlight. Remember Liz truss in the UK, right? And she had all these grandiose plans to do all of this spending on climate and, you know, money for corporations and and because they didn’t have the world’s reserve currency, and because their central bank said, we’re not going to fund this, Treasury rates, not Treasury rates, but rates in the UK spiked so much so that, literally, in one weekend, after announcing her plans, she had to step down and they had to revise these plans. My point is, if Janet Yellen and Jerome, Jerome Powell’s Fed did not constantly intervene into the treasury markets and let markets function on their own, we believe that some of this excess slash reckless spending by both the Trump and Biden administration would not be allowed, because the markets would say, No. De facto, the markets would say, if you’re going to issue all of this excess debt, you have to pay us more to hold it, and thus, the plans will be squashed, if that makes sense.
James Connor 46:14
So you mentioned uranium, and this is something. This is a sector I really believe in. I don’t think there’s any other commodity out there that has such strong tailwinds. And as a reminder to our viewers, the US is the largest consumer of uranium. They’re also the largest generator of nuclear energy. 20% of their grid comes from nuclear energy. There was big news recently from the Russians. They said they are no longer exporting enriched uranium, exports to the US, but they’re going to do so to what they call friendly countries, and they named India, Iran and also China. What are your thoughts on this? And where do you think the uranium price goes? Do you have a target?
Gordon Johnson 46:55
We don’t have a target, but it’s just, you know, we see it as a secular bull case. And let me just go through all the Do we have time? Can I go through all the bullish let me give you the bull case, the bear case, and why we think uranium is a 10 year secular bull case. So, all right, first, kazatomprom just revealed that more than half of their supply. So the two main suppliers with low cost of uranium are chemical and kazatomprom right globally. So kazatomprom just revealed that more than half of their supply is committed to China. And the reason why we found that out is because historically, when they’ve committed more than half of their supply to one vendor slash country, they’ve been forced to do a to a shareholder vote. They were forced to a shareholder vote. So we found out for the first time, recently past two months, that because that um, problem, has committed half, more than half the supply to China. That means supply isn’t going to be as readily available as people expect. The US has, essentially, as you just noted, restricted supply from Russia, with Russia acknowledging that, and the UK is considering doing the same. This means that the main suppliers of uranium are Australia and Canada. They’re the really only other alternatives outside of Russia. The problem is Australia has restricted all but two states and territories for mining uranium, despite boasting 33% of known global uranium deposits, meaning that the excess resources are going to be hard to get to in Australia, right? You have pending resource, you know, reserves, some guys like NXT fishing and Denison, but they’ve all been pushed out. Denison has been two years away from production for the past six years. Fishing just said the acquisition by pouting may not happen, meaning they go back to square one, and NXT seems to continuously be pushing out when they’re going to actually have production of their reserve on the supply demands perspective, it’s a pretty easy to model. We know there are around 450 reactors worldwide. We know how much they’re consuming and we know what’s under construction. Um, so when you look at supply demand right now, we know global uranium demand is around 190 million pounds per year, where supply is around 150 million pounds per year. So you just have a deficit right now. And while people are modeling the stuff in development from the guys like NXT fishing and Denison coming to market just as they plan, we know that that stuff is getting pushed out. And then in addition to all that, you have the AI hype, which we believe glj research is BS, but nonetheless, the mag five are investing in more power. They’re talking about investing in SMRs, et cetera. So that’s the bull side. Now the bear side is synthetically removed 48 million pounds of uranium from the market since 2021 so should they start selling? The impact of the spot market would be severe near turn, but that still doesn’t change the fact that you have a roughly 40 million pound per year deficit, and Sprott does not actually own that uranium. It’s owned by their investors, so for them to sell, I think, is a higher hurdle than people think, and admittedly takes roughly 10 as. Mars to equal one old school nuclear reactor. So while a lot of people are excited about the SMRs, they’re not going to drive as much demand as people expect. But you take a step back and you think about that, that dynamic. And also keep in mind people look at the spot price, the overwhelming majority of uranium volumes that transact are in the contract market, not the spot market. So while spot prices fluctuate and at some points are manipulated, it’s not indicative of what’s actually happening. So in our view, uranium appears to be a bull story for at least the next decade. And admittedly, while you know, Cameco is up 10 times over the past five years, keep in mind, we told people to buy it at 11. It’s at 53 today, and there may be some sell the news risk. You know, we think prices are set to go a lot higher. And when you ask, How high can they go? I don’t know the answer to that. You know, previously, you know, in the last bull market, they went to 140 but the reality is, solar and wind just don’t work. They’re intermittent. Peak load forms of electricity, people are extremely have been extremely misinformed. Point being, when the sun goes down, you can’t use solar and no, batteries are not a solution. They’re extremely expensive, and they only work a certain amount of time. And when the wind stops blowing, you can’t use wind power. So unique. There’s intermittent peak load, meaning it’s available intermittently, and it’s available like when the sun’s at 12 o’clock, you’re getting the most out of your solar panel. When people talk about solar being competitive with coal, they’re talking about 12 o’clock in the afternoon, at 3am at night. There is no solar power, right? So you need distributed base load. It’s distributed, meaning it’s available at the same amount all day, and it’s baseload, meaning you can get it all day, right? That’s nuclear, and nuclear is truly renewable energy. It’s clean energy. So if you want real solutions, and not theoretical solutions, again, you know Biden doing this quote, unquote inflation Reduction Act was rich, which was really a massive handout to Elon Musk in the solar industry in China, right? It’s not a real solution. You’re not doing things or actually really helping. So what happens is, it doesn’t benefit people in the United States. A real solution, if you’re going to look for renewable, is nuclear, and the world is now realizing that moving back to nuclear, it’s extremely safe, far less casualties in nuclear than solar, even. So again, you can probably tell from our enthusiasm. We’re very bullish on the nuclear space. So I think that’s one way to play the resurgence in inflation.
Andrew Brill 52:29
And believe it or not, Thanksgiving is around the corner, which means the end of the year is near, and it’s time to start taking action to protect your financial situation. Brandi, Mabin and Brett rent me serve our partner, Ria Winrock, joined us to discuss donor advised funds and how they help with tax write offs and the benefits of donating appreciated stocks. They also pointed out the benefits of education funding with five to nine plans and how to transfer them between family members. And in this episode, Brett and brandy also talked about HSAs and FSAs, along with whole life versus term life insurance. I know that charitable distribution, charitable distributions are on that list. Where does that come in? When you’re talking about this sort of stuff,
Brandy Maben 53:19
right? It comes into play mainly with our high net worth clients or people that have a lot of income in one year. And there’s two areas to this, charitable gifting, and then family gifting. So charitable gifting, we look at certain areas like, well, how much did you give last year in 2023 let’s plan on maybe gifting right now to an account that you and we like to use, donor advised funds. Let’s gift a lump sum to that now to strategize for your 2004 obligations that your CPA could help estimate for us, one of the strategies we use to fund a donor advised fund are gifting appreciated stocks. Let’s say, if you have a huge growth in the s, p5, 100, we can actually sell that stock to a donor advised fund, or even not the fund. If you have a charity of preference, you can give the stock to that charity, and then you get the tax write off for the sale of that stock and not have to take incur any capital gains. Another way we do is just, we try to front load charitable gifts, front load these donor advised funds, so that in those high tax years you’re really strategizing well. And then family gifting. Brett works this. Works with this a lot, especially with our family office sector and our high net worth sector. So he can cover a couple of those areas too.
Brett Rentmeester 54:51
Let me just add, if I could Andrew on the just charitable gifting, echoing what Brandi said. You know, a lot of people don’t realize they can. Gift appreciated stock. So we’ve had situations, of course, where people gift stock that they’ve had for 20 years, and again, you get the full deduction without ever having to pay that embedded tax. But we’ve also gifted Bitcoin. You can gift any highly appreciated asset. So I think it’s, you know, it’s pretty powerful gifting tool that that people should be aware of. And again, as Brandy said, when you start front loading, gifting, if you have a big income year, or you sell a business, then you’re trying to park more away to at least get the charitable deduction. It doesn’t mean you have to give it away to specific charities that year, doing these donor advised funds or even a Family Foundation, which is similar, but for maybe a larger donation, allows you to get a deduction, park the money away, and then over the next, you know, remainder of your lifetime, choose the charities you want to gift it to. So it’s a nice legacy.
Andrew Brill 55:48
Yeah, it’s an interesting point you make, because about seven or eight years ago, when I bought this house and we found a financial advisor and didn’t realize I could give charitable donations without having to take cash out of my pocket. It’s, you take a stock and you say, okay, you know, I’m gonna gift this stock. And the stock, you know, the the gift that you’re giving is that stock price on the day that you transfer those assets. And many, many charitable organizations are, you know, they’re, they’re 501, c3, organizations. And they can take that stock, sell it, and you don’t have to take cash out of your pocket, so it’s not affecting your cash flow at all. Let’s say you have a good year in the market and say, okay, you know, I’m going to give these people a couple shares of Nvidia and call it a day. So that’s a great point, and something I wish I had learned a long time ago, but it’s it’s learned nonetheless. When should someone start planning for this stuff? You know, I know that you talk about best practices and, you know, start, I actually have already started. I had my my meeting with my accountant. We went over a whole bunch of things and said, Okay, here’s what you have to do towards year end. When does someone have to? Should someone start doing that? And how do they go about doing
Brett Rentmeester 57:06
Yeah, I mean, just coming back to the charity, if you’re gifting a stock or Bitcoin or anything else, some of these custodians have deadlines, so I’m saying probably now until first week of December, if you start pushing it past then you may or may not get it done, you know, because you’re transferring an asset. So that’s probably the right guidance,
Andrew Brill 57:26
right? And when you’re talking about planning in general, when, when is, what are best practices for starting that, gathering all your information, stuff like that, you
Brett Rentmeester 57:39
want to address that? Brandy, yeah,
Brandy Maben 57:41
I ideally, I would say it’s an ongoing process. There’s different planning objectives throughout the entire year. So now that we’re two years end, I have a lot of new clients being onboarded right now that we’re gathering a lot of information where this will be their toughest year for end of year planning, but as of January 1, we’re going to be in touch every quarter about any new things that are happening, any business cells, any big bonuses that they’ve had, and we’ll already be prepared for this crunch time and how to strategize on what we want to put into place. So I would say, ideally, all year long. Now,
Andrew Brill 58:23
Brandon, I have a question about gifting to a five to nine. Now, a lot of people look when your kid is little, you’re trying to save for college, save for education. And not only can a parent contribute to a five to nine, but grandparents, aunts, uncles, if they wanted a gift, they could do that as well as a deduction. Couldn’t they? They
Brandy Maben 58:45
can, right? And that is one of the areas like Brett is talking about, that we can use different strategies for these families trying to avoid death tax. And one of these families can take $90,000 per grandkid and front load contributions to a 529 that would count as a five year front load, but $90,000 right away into a 529 can have a substantial amount of growth, if you’re giving that to a child that’s in their 10 and under, or even as A teenager, that can make a huge impact for them. And then with a 529 being able to pass that on generationally at this point, the IRS allows you to move that on to your child or nephew or niece. It can really support families all around if you have the means to do it. So
Andrew Brill 59:39
five to nine. It was funny when I looked at a 529 it’s like, Okay, I’m going to put away enough money for my child to go to college, but now you can put a lot more money in there and just change the name on the five to nine to a family member and continue that education fund.
Brandy Maben 59:58
That’s right, and that means. That no matter how much college tuition skyrockets, your money is growing tax free, as long as spent on educational funds for all of your family. If it works out so
Andrew Brill 1:00:13
there’s and do you have to be a grandparent? Could it be aunts and uncles? But putting into that fund.
Brandy Maben 1:00:22
It can be we even have godparents doing it that have no bloodline relation whatsoever. So anyone can open a 529 for a child and help it be funded. You can also fund your friends 529 for their for their kiddo. It doesn’t have to be blood lineage to fund these in any way.
Andrew Brill 1:00:42
What else are we looking at? Benefits wise, I know there’s HSAs and flexible spending, stuff like that. What else or can we put our money into to save on, you know, taxes and what we might owe the government,
Brandy Maben 1:00:59
right? And these areas go back to planning, where, I would say, annually, whenever people have open enrollment time with their companies, it’s a really good idea to re evaluate these topics. Then you have companies that don’t have any benefits, and there’s still areas to review and make sure you’re maximizing. You brought up HSA and FSA those limits and statutory prior amounts go up every year with the IRS, and they let you put away money depending on the type of account tax deferred, and it doesn’t come up on your income. You can then use them for dependent care health costs. It all depends on how the plan is written. If you have a certain health health savings account, those can be a triple tax savings, because you put it in tax free, you actually grow it tax free, and then you get to pull it out for any health related needs tax free as well. So it’s a major benefit if you have that under your company to maximize that to the fullest. FSA is a little bit different, like I talked about dependent care. A lot of parents don’t know about this, but you get $5,000 a year of your income to put in there, and up till the age of 13 for your child, you can pull it out for free, as long as it’s used for anything dependent care eligible, which could be summer camps or summer sports. It could also be private tuition. There’s a variety of ways you can write that off, and it’s really beneficial to do that up to the point you don’t think you could spend the $5,000
Andrew Brill 1:02:41
so so some of this money can actually go to pay medical bills as well,
Brandy Maben 1:02:47
correct yes, your dentist appointments, your annual checkups, things like that, and even clients that say, you know, we’re really healthy family. I don’t, I don’t think that’s necessary. I can map out the fact that if you do your HSA account every year and get all of these tax savings, it’s much cheaper than long term disability care. Those are very expensive policies to get. Usually, people get them too late in life, and really they’re so unpredictable if you actually get the benefit of those of that insurance or not. So this is the safest and most efficient route to not only use right now for health benefits, but later down the line. I think this
Andrew Brill 1:03:29
is something that people don’t know a ton about, but help educate me a little bit on the HSA. How does that grow? You know, you’re putting money into a fund. How does that grow, and what do you use that money for?
Brandy Maben 1:03:44
So most of the time, these HSAs are through your corporation. So just like your 401, k, if you look into it, at your corporation, they give you certain risk tolerance levels to pick what your investments are. An HSA is a little bit more restrictive, but it’s still the company’s selection. You usually, I would say, 95% of the time, cannot touch those investments because it is their fiduciary responsibility to grow it at a very low risk level. So it won’t grow substantially, like the Bitcoin investments that Brett talks about, but it will be that effective compound of interest over time, in a very safe manner.
Andrew Brill 1:04:27
And what do you use that money for? As opposed to a flexible spending account?
Brandy Maben 1:04:33
So like I said before, it’s an array of options. You can do it for dentists, annual checkups. There’s even some there’s on Amazon. You can go on and you can look up what is HSA approved, and start to spend your money on that type of stuff. So some toothpaste are eligible. Some foot massage. So. Equipments like I’ve seen the craziest things come across my desk that you can use it for. So if it’s a lose it, use it or lose it type strategy, which some of these accounts are, where, well, you put $1,000 in. If you don’t take that out, the government just takes it. That’s how some of these are written, too. And that’s where I advise my clients, go on to Amazon, Click on the eligibility, FSA, eligibility and HSA, and spend that money on things you need or could use as Christmas presents. Who knows
Andrew Brill 1:05:30
what? About insurance policies? Where does that fit into this? Lot of people you know, obviously an insurance policy, regular insurance policy, you have until the age of 70 something, but then there’s whole life. Is that a way to save?
Brandy Maben 1:05:45
It can be it all depends on the situation. So the last firm I was with used insurance very strategically for an investment vehicle, and so if my clients are inclined to do that, we can educate them on that versus other means of savings. But in everyone’s life, I would say life insurance, it is crucial if you have any debt or if you have family members that you care for to be financially stable if anything unfortunate were to happen to you. So it all depends on the client. Again, some people use a term life policy just till their kids are out of college, and then they’re done with life insurance. Some people use index Universal Life and policies similar to a whole life policy, where there’s a cash value on it. And those can be relatable to a Roth IRA, where the cash accumulation in it grows tax free, and you can withdraw from that cash. And I always advise if clients have this policy to wait until retirement age, because that’s when it’s going to be most beneficial. The downside of that is that insurance is very expensive. You’re paying for a company to take the risk on whether you’re going to pass away or not, and so the commissions that insurance agents get off that and the insurance policy gets off that is front loaded, usually. And so the first couple years you’re paying into the policy, you’re not really seeing any cash value. So that’s why waiting on those policies till you’re 65 is really important.
Andrew Brill 1:07:18
Thank you for watching this week’s recap. If you need help planning your financial future, head over to wealthion.com/free for a free no obligation, financial review and please follow us on social media. All the links are right below in the description. If you haven’t done so already, please make sure to like and subscribe to our channel. Don’t forget to turn on notifications so you never miss a video. Thanks again for watching, if you like this content that are looking for more ways to grow your investments, watch this video next until next time, stay informed to be empowered and may your investments flourish.
