Time To Take Profits in Tech? with Greg Weldon

foreign [Music] to take profits in Tech hi everyone Welcome to the Real Vision Daily Briefing with me today is Greg Weldon CEO of Weldon financials hi Greg it's great to see you what's up Maggie how you doing I'm doing well you look no worse for the where we were just talking as you all know we're a little bit delayed and Greg had some serious car issues but we're happy to report that he's okay and he made it driving back from the gym when you find out your brake fluid fluid is gone and you have no brakes it's a little sketchy yeah it's totally sketchy but and I'm so happy that you're okay and and grateful that you hustled into the seat after that sort of perilous experience so cool and calm Under Pressure which you kind of need to be in the in these markets right so we um we saw stocks ended in the red as the debt negotiations continue to grind along without any resolution the vix was up it's still it's still very well behaved but it was up a little bit today about eight percent what do you at what point do you think investors start to lose their patience and start to then Washington a stronger signal well patience is really such a good word to be used right now today because there's patients being shown and there's patience not being shown but you know when it comes to the debt ceiling issue I mean come on this has to be the single most stupid thing we ever talk about like they're not going to expand the debt ceiling you know what people kind of I think don't fully grasp is when they hear this is really the bigger picture message which is simply the government is broke they're insolvent they can't continue to operate unless they can continually perpetually borrow trillions and trillions and more dollars and as it becomes a 31.4 trillion dollar public debt okay now you each time you want to boost that by a certain percentage the nominal underlying figure is a lot more money so I think that that's the number one big thing that people just kind of don't get and they want to spend all this money and the Republicans don't want to raise taxes and oh my God I mean this is politics at its worse you're going from having like a you know a two-party system that was our strength that has now become our kind of our downfall because it's so divided it will get resolved it's not going to be a problem there's no way they're going to default on their debt they don't want to have to blame each other so to me it's a non-star order the patience Factor comes much more in terms of the FED yeah I I so oh the Fed so we'll we'll Circle back to some of the issues you raised but um what do you what are you looking at for the FED because you know we um I think it was Jim Bianco the other day had a chart we liked it was sort of what the fed's saying and then what the market expectations are and they're pretty far apart and the fed's continuing to sort of sound hawkish is one of the greats in our in our business so always pay attention to Jim Bianco I've been saying the same thing for a long time I mean if you look at the Deferred fed funds forwards for the end of next year at one point they were below three percent I mean the market is anticipating 200 basis points of rate cuts by the end of next year and you know high probability over 80 last I looked that that begins this year now the FED they don't want to see this they don't want to hear this narrative they want to see inflation come down they want to have inflation down for a period of time they have buried this fed has been probably too transparent it goes back to 2018. I talk about this all the time 11 white papers the fed put out on their new policy Paradigm all right over 300 pages I read every single page the FED told us exactly what they were going to do when inflation started to rise they were going to let it rise there was no tolerance bans no point where they begin to take action just because it's reached a certain level it would be above average for an extended period of time and the timeline they were talking about was eight years right and they let that happen right they were way too slow to start tightening they were way too lame at the beginning with just a 25 basis point increase in the first fight I mean come on after it's already too late they missed the boat and now they're making the mistake on the flip side you would think all right but at the same time if you listen to what Powell has said if you go back to 1978 Paul volcker testifying on Capitol Hill the the verbiage the words the syntax is almost exactly the same all right this is the volcker Playbook pal told us in 2018 at Jackson Hole volker's his guy and we can have inflation goes we know how to defeat it the problem is Maggie you know the dead Dynamic is so much different now than it was in the 70s you can't fiscally blow your way out of a recession now all right and the bigger issue is the debt you know black hole in a debt implosion and a debt deflation if you push too hard so Powell has almost become like the Executioner here where he's told us we want the labor market to have Rising unemployment right we now it's kind of when you hear the fed and Channing talk about the banking system they're very complacent about this in the sense of we expect further tightening and credit so they kind of want to bring the guillotine down on the consumer in terms of credit the amount of credit the consumers borrowed about last year is a record amount because they needed to pay the bills right so already now the household survey on credit was just an enormous number huge report you're up three trillion dollars since the pandemic that's 20.5 percentage points in three years that is wholly unsustainable not only that consumers have borrowed at the highest cost of borrowing for consumers in history right so this is not sustainable to the point where all of a sudden after being weighed down and store closed and no one's worried about it delinquencies are on the rise the transformation into delinquent and now the serious delinquent and it's all about credit cards so this is a problem for the FED going forward if they're going to be the execution that's going to bring the guillotine down on the economy kind of like they said they want to do so this narrative in the market of they're going to be cutting rates they're going to be forced to cut rates by next year because of the economy and we're going to price that in the dollar peaked well before the Fed was done or even talked about being done and that came way down you know 20 year over year gang that turned into nothing and that's why Gold's at two thousand dollars do you think the FED wants to turn now with gold to two thousand dollars in the stock market within a few percentage points of new highs absolutely not so when you come to the stock market the question is does the FED want to see pain in the stock market first and I think that that's kind of the way this has to play out and I think the pricing in the in the Futures Market may not be too optimistic but you're not going to get there in a straight line not from here so so tons to unpack there let's let's go from the last thing you said because um we started the the show out talking about whether it's time to take profits in Tech I mean everyone kind of has been expecting this this you know them to break the stock market for the the valuations to go down and instead especially in Tech right that was the future profit going to get killed by higher interest rates and anybody who was shorted it's been it's been terrible for them we've seen and it's been it's granted narrow but it's gone up and up and up and today we have an Apple broadcom deal in the news you know chips have been hot we have ai everywhere we see what's happening with Nvidia and Microsoft are you worried about valuations here can this thing keep running or is it that area and then everything else in the stock market how do you see that yeah I think it could keep running and if you look at a couple stocks I mean Amazon for example and even meta uh I believe the metaverse going forward virtual reality that's still a real story it's kind of gotten overshadowed by AI recently but uh I think in the future that's still a good play longer term you have Amazon which had a 61 retracement of the move from 2008 you know you've had big pain in some of these high-tech that have put in patterns now where I think they're probably value even here but those are the ones that have been beaten down as opposed to in video or Oracle or like say broadcom which have just taken off all right um I think that when you have this much money still kind of sloshing around and when you're you know looking at moving money around this still becomes a top pick until it's not it's almost like musical chairs is Tech going to be the one left with no chair to sit down in when the Music Stops I don't know I'm not worried about it right here but the market to me is pretty neutral even though you want to be exposed to the big cap check that has been the place to be it continues the place to be they're the strongest like internal quantitative readings for bull market trends uh so yes I think that that's still a play but I worry about come August September into early October and what is the situation with credit then and what is the fed's narrative then and where is the market pricing you know forward feds funds then and then maybe you get a reality check for the stock market and everything just kind of gets obliterated much like what I think the FED wouldn't mind seeing frankly right now they want to reduce credit because credit is frothy yeah it does that doesn't come without pain you're making a differentiation and several have um even today I was talking to Jim Rogers earlier you've got this long-term view that the stock market's vulnerable but in the short term it's hard to fight it it sounds like that's what you're saying it's hard to fight that liquidity moving into these Tech names absolutely and it's you know it's very you can see how powerful it is just take a look at Charlotte and video Oracle or broken I mean any of them and I think even the Lesser names they're starting to pull up you even have some of the consumer staples acting well because they've had these huge declines Now consumer staples not in a position to lead the market back out of this so I think that's still a major kind of yellow flag caution flag waving at the racetrack but when you look at where that strength is coming from we have the top five bullish Trends in Consumer Staples in the xly are home builders and the xhp is acting well too so I think you really can pick your choices when you come to home builders we know it's a fundamental story that is continually dominated by lack of Supply you know you have home sales that come down and thus starts to come down permits have come down and you're kind of take you're on the verge of taking out a trend line it goes all the way back to the housing crisis low of 2009 and 10 right when QE started in in March of 2009 so when you look at that Dynamic and then you compare like what the homes are how many homes we're starting and building right now compared to like the late 1980s it's kind of similar except you have 30 million more people in the US now than you did in the 80s so I think that's a long time a problem where the home builders are acting really well too and probably continue to act well even to the degree that they're not really outperforming the market yet but I think that's a place where you can probably hide in what might be coming next uh even with the even in this higher interest rate environment well yeah but I think you know rates are peaked in terms of you know the fed and mortgages so uh you know you've already seen some of the decline you've already seen a little bit of life I mean let's be real I mean the the refund you know index in the NBA you know weekly mortgage activity numbers hasn't been this low in 25 years all right the the purchase index from its peak was down over 40 percent so these markets the mortgage Market got crushed you know the mbb the ETF for the mortgages got crushed so there's been a lot of pain there and I think that that will be one of the things that will kind of lead out the next the next wave the question is how do you get the FED in a position to support that thought and yeah that remains the big question and and in one of your reports so so obviously we're buying iPhones we're using Chad GPT we're definitely vacationing and you going to restaurants and the services have been hot and still buying homes but you sent over some charts and it kind of paints a very dire picture you mentioned all the credit card debt so we clearly been buying it on on credit but you meant it doesn't look like it's a very healthy a picture of the US consumer I mean I think we have a if Brian could dig it out a retail sales year-over-year chart there's a ton of retail charts so if you can find it amid the mall bribe but this you know doesn't that doesn't that suggest that it's going to be really tough for the economy to avoid anything but a pretty large recession yes yes absolutely and I did the piece what's called uh I was asking is Jerome Powell The Reincarnation of uh Charles uh Henry uh Sanson who was the Executioner King Louis XVI to France in 1793 and I'm wondering is the consumer on the chopping block and I kind of think he is and if you look at the retail sales numbers which I'll detail a little bit in a second it's like the guillotine has come down but it hasn't yet broke the spinal cord you know but when you look at these retail sales numbers when you look at the dollars spent first of all you have to remember these numbers are inflated by inflation so the actual numbers if you took the inflation Dynamic that pushes the value of sales up out of the equation these would be so deeply negative it's not even funny and in fact every discretionary sector except uh eating and drinking establishments and online sales every other one clothing Furniture Electronics appliances Garden Supply building materials Vehicles even sporting goods and books and hobbies and all the everyone is negative on a rolling 12-month basis year over year on a monthly you know count right and to the degree that Garden Supply uh and uh Building Material stores Lowe's Home Depot had fared really well during the pandemic course you've got to stay home everyone's fixing up their homes it's a do-it-yourselfers you know Love Fest right well you have a 1.6 trillion dollar year-over-year decline in the monthly sales total for those stores right now there's only one other time it's been that deep 2007 and 2008 before you had a crisis so when you have all of these things that are negative you have deflation in consumer spending in retail sales that is very evident and is actually not as bad as it doesn't look as bad as it really is because of inflation and the way they calculate these numbers yeah which is a whole you know we've done some deep dives into that there's some there's some issue with that a lot of it's backward looking a lot of it lags um so if that's the case certainly the FED is getting we know they're getting the the regional surveys at least which are a little bit more in real time we know that we expect a pinch from the credit crunch which is coming from the Regional Bank crisis do you think this is enough evidence for them to pause why would they why do you think they're sounding so hawkish still isn't that slow down coming and won't that demand take care of inflation well I think the hawkishness is in response to where the market is so I think they have to keep that narrative up when the market is pricing in such a dovish outcome over the next 18 months that's the last thing they want so of course they're going to say why do you think the guy just said the other day I think a Bowman from from Boston said you know we have no interest in cutting rates until second happened next year at the earliest of course this is the narrative and this goes back to Powell and what he said he was going to do and he said when we got to this point we'd have to be restrictive for longer okay because that's a because loosening too soon would be a bigger policy error than waiting too long at this point in time and there's you know there's some sense that you could make you know a case for that thought process for sure but I think the hawkishness is verbal intervention against the Market's pricing because the FED doesn't want to be seen as turning dovish here with the stock market near record highs and golden 2000 and the dollar basically a big technical levels where if you violate those levels of dollar is going to be in big trouble to the downside so I think that all works against what the FED wants the narrative to be and they will maintain that even though I think they're done I don't see them raising rates again I don't see how they possibly can when inflation has come down to 11 letters below the FED funds rate right you talk about where is restricted well the one of the 2018 white papers was all about our star where is a neutral policy rate and they determined for the U.S basically 50 basis points above the rate of inflation in this case the FED uses PC which is even lower than CPI would be neutral by that measures they're neutral if not somewhat restrictive right now so they kind of are where they want to be and you still have two months of Base effect and inflation it probably brings it down a little more but the question is the stickiness of inflation and food is a big problem 40 of the food items in food at home which is 108 components 40 are still in double digit rates every month you know month after month uh so that's a big problem going forward and the FED I has to be concerned about that it is a big problem and it's actually something that I talked to Jim Rogers about today we had him on for a deep dive and he's also but very much giving voice to this the difficulty of this transition but longer term he's also worried about that food inflation General inflation and continues to like Commodities in the face of what he thinks will be persistent inflation let's have a listen to a clip from that and we'll talk on the other side throughout history uh when everybody is printing money or whenever whenever people are stimulating the economy it leads to it has always led to inflation it has again it will lead to more inflation and the best place to be when you have inflation is real assets and real assets or Commodities I mean I own some silver right here I'll buy more if it goes down more and gold and other things as well but you know bonds have are in a bubble and have been in a bubble for a while we've never had such expensive Bonds in the history of the world property in many places Korea New Zealand many places are certainly a bubble parts of China and stocks have been above this if not Bubbles and depends on the country so the cheapest asset that I know is still commodities it was such an interesting conversation with Jim and for some of our members who've already seen it um he was very transparent about how difficult this environment is um knew a lot about what he didn't like but was kind of keeping his powder dry and keeping maximum flexibility um I I noticed that too but uh he um talked about this also three trading ideas so the full interview is available on our website just scan the QR code and join our community and you can see it super interesting great to hear from somebody who sort of lived through so many crisis um and profited from a lot of them too it should be said um what's your what's your feeling about Commodities here I really like them and I think you know the bottom line is you had a 40-year downtrend in inflation and in interest rates okay started with Volker 1982 when he you know took rates to ridiculous levels choked the economy out and thank God we had fiscal stimulus because we don't have that right now in the same you know degree that we did then so that's a problem going forward but as it stands you know you have now turned the corner I mean you're not going to get interest rates lower than zero the whole European you know negative interest rate experiment was a complete failure you know they suck money out of the system and it totally worked in reverse and it sent a bad psychological message to Consumers you know so from that perspective when you start talking about what's the biggest shift all right the biggest shift is QE QE is only as recent as 2009 and if you kind of look at the last gasp in deflation and then now what we had and the pandemic certainly was a catalyst but this would be happening anyway because you have this turn now where you're printing so much money because the nominal underlying amounts are so much to get this same bag for your buck do you need to keep this bubble going because it's a 50-year credit bubble and especially if the fed's going to want to clamp down on credit in a credit bubble I mean wow can we not picture how many ways that could go sideways uh it's it is what the definition of inflation is more money chasing fewer Goods now you have both sides of that equation working against you if you're you know want to fight inflation so I feel that that is one one thing number two you also have a lot of Commodities that are potentially in short supply autonomously Supply demand fundamentals in many Commodities particularly the food commodities which is why again you have to watch food when it comes to inflation there's no base effect when you have 108 components in the food at home index all right so like you have energy it's crude it's gasoline they move together you don't have that in food you also have although the predictions right now have kind of shifted to where expecting a very not very hot summer here in the US you also have a vicious El Nino forming in the Pacific and this could wreak havoc on a lot of crops over the next 18 to 24 months you're you're basically pinning all your hopes on South American crops they're going to follow up a big U.S crop with some of these grains right the problem there is multiple in terms of currencies in terms of oh keepa farms in terms of so many different factors that kind of work against thinking that you know you have this really narrow margin of error so thin in some of these food commodities where any supply side disruption will result in skyrocketing prices for many things so I like the commodity sector we like the some of the soft Tropicals right now Sugar's been a great performer you can trade the ETS for that we actually just re-induced our ETF Playbook to try and help people think more like ctas like with what we are you need to be involved in currencies you need to be involved in bonds you need to be involved in global stock indexes and you need to be involved in Commodities things you've probably never been involved with before to keep Pace with the debasement of the value of paper money that all this printing of money you know initiates so yeah come Commodities longer term very bullish on them because you know what they're going to do and the next time consider this one fact outside of three weeks at the peak of the pandemic in April of 2020. the biggest single week money printing operation ever conducted by the fed and treasury single biggest week in history was in March because of SBB bank so it's like oh my gosh you know every little hiccup man we're gonna print build hundreds of billions of dollars how quick were they with all this narrative about fighting inflation you got a bank in trouble and it's the largest single week ever of money printing yeah that speaks volumes to what's coming next and what the future holds it's more money printing it's more debasement of the value of your paper money and wealth and income and it's higher prices for pretty much everything and that could even include stocks you know I mean the mobile and Argentina makes new highs every year do you think that's a better standard of living for the people in Argentina no not necessarily because they can't keep Pace with the inflation it's a great point and and it touches on two things that um for those who who saw my conversation with Ralph recently talking about liquidity um certainly fits into that um and and just the the new environment we're in more cowbell as he would say um so we answered Ralph's question and green avocados question about inflation I didn't even have to ask you Greg you're just rifling through what what's on people's mind truly index agreeing with you with El Nino there's no way food inflation will ease anytime soon David's asking what sectors are investable for a one to three year Horizon oh man that's a good question I mean want the three year Horizon I take a you know three to six months and then 12 months 12 to 18 months um I still think that there's a lot of places in high tech I still think the home builders if you're looking at you know some of the equities I think there are foreign Equity markets that will do well um I think that frankly some of the high inflation countries in Eastern Europe assuming you know that China and Russia don't completely take over you know the the uh the eastern part of Europe um you know is is investable too just because they have so much downside inflation that could allow them to cut rates a lot more so when you kind of see this rate cutting fever begin Maybe This Year probably not till next year uh some of the markets that have been hard hit and some of the Emerging Markets will do well some of the commodity producing countries would do well some of those currencies are investable too Mexican peso Brazilian real let's not forget you know you're making a move by China we talk about this all the time and spec especially since China introduced the uh in Shanghai a remember be based Dubai grade crude oil Futures Contract did we not see the writing on the wall in terms of the petrol Dollar in terms of the dollar as the means of global trade all right so you got to start thinking about that and how do you protect yourself currencies like the Brazilian real would be in line to uh benefit from something like that so I see a lot of places to invest I'm not a Trader per se because I'm not in and out I want to put positions on I put my stop in I got trailing stops and I want to hold stuff for 18 to 24 months and I have all right but at the same time you know I'm not married to any idea because one thing I've learned is you have to be willing to admit you're wrong and turn on a dime sometimes because it's not about being right or wrong it's about making money and providing return and catching the big moves that happen every year so for me you know answering that question is a day-to-day task and thank God I love my job because I do that every day yeah and it's so true and and you know we reinforce that all the time especially now when editions are so changeable and you have central banks in there and you know all sorts of cross currents that everyone has to deal with you've got to stay vigilant Jim Rogers said the same exact thing uh just as we close out you mentioned I I heard you mention the ETF are you making changes did you introduce a new one what's happening with that well we used to do the ETF Playbook and uh it was really kind of we had a lot of interest I know I'm a Math and Science geek at heart people wouldn't know what to look at me I'm seven feet tall 300 pounds you know walk around have a deep booming voice so people don't really look at me as a geek but I grew up as a master science geek I wrote algorithms back in the 80s they still use and clock before there was quality type of thing and back in 2007 and eight we had a lot of parties interested in some of our core work and then the market blew up we really never kind of pursued it kept in my back pocket but we've reintroduced the product that used to be you know a product that we sold that we're going to start selling again which is the ETF Playbook and this is again like I said trying to put in the mindset of doing some of the things that we just talked about about of being almost a hedge fund or commodity trading advisor mentality to this and using the ETFs to do that while still keeping kind of a core on outperforming the S P by being in the top performing sectors uh we even break it down into individual shares though we don't recommend individual shares but for example like we were talking about with the with consumer staples or the Industrials or with the the information technology sector healthcare too those are some of the sectors that we've been on the both side a little bit recently we also break down what's the most bullish Trends in those equities that make up the S P 500 in those sectors too so it's a pretty broad-based thing it covers I mean we talk about the Commodities we talk about the currencies when we cover all those ETFs but still keep a stock market kind of portfolio approach to it to kind of bridge the gap from people that you know can have enough money to trade you know the futures or something like Commodities by themselves you know don't want to invest with the CTA want to do it themselves and I I really celebrate those people we want to try and help them and expand our business at the same time so it's kind of fantastic I love it and then and you know we that that's our mission as well is to help as many people as possible and I think we all need it now because we've got to we can't just um when the professionals need it now it really is become very difficult yeah you can't Lock and Load and you know just go away for a couple months you've just really got to stay on top of it in this environment so we love it and the opportunities will be fantastic I mean exactly and that's what we're also trying to look for not just the the risk but the opportunities that's important Greg we love having you on because you can talk across so many markets it's fantastic my pleasure always happy to contribute fantastic always great and I'm happy that you were able to make it the rest of the week is a little bit easier cruising for you but I appreciate you being here as always and thanks to all of you for the great questions I'll be back tomorrow with Tommy Thornton so be sure to join us for that and as always in the meantime take care and good luck out there [Music] thank you

Channel: Real Vision Finance

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Keywords: real vision finance, real vision tv, chinese, stocks, bitcoin, equity, equities, nasdaq, consumer sentiment, consumer prices, inflation, chinese tech, chinese tech stocks, china's tech crackdown, fed, federal reserve, the fed, taper, fed tapering, fed hikes, rate hikes, interest rates, bonds, treasuries, investing in bonds, raoul pal, 2023 markets, 2023 recession, 2023 inflation, realvision, ral pal, raoulpal, portfolio management, AMa Raoul Pal, Raoul Pal 2023, raul paul, raoul paul

Id: ZV4hSmY7B2Y

Length: 27min 55sec (1675 seconds)

Published: Tue May 23 2023