When Fed Pivots, Markets to See 'Dramatic' Drop, Here's Why & What's Next For Gold, Bitcoin: Soloway

so there is signs that something is a Miss within the banking system whether it's the bare flag in the K or in these bigger Banks the selling that is going on is not Mom and Pop selling JP Morgan I promise you that they are going all in so this tells me that there is some bigger players that are unloading the big Banks here there is no way that Powell would ever come out and say yeah there's actually some big issues in the banking system right I mean think about the fire that would spread and the market crash that would ensue if he said that having said that what I do is I I listen to the kind of the the rumors out there the rumor mill and I mention this like you just mentioned is that I'm hearing a lot of chatter about the big Banks unloading bad debt right now trying to get ahead of some sort of Crisis [Music] looming on the spot with Michelle mccy is brought to you by Swan Bitcoin hello I'm Michelle mccy thank you for joining us the US Federal Reserve has kept its key interest rate unchanged and signaled that just one cut is now expected before the end of the year fed's chair Jerome Powell said that inflation has eased over the past year but does remain elevated meanwhile us consumer prices were flat in May on a yearly basis CPI increased 3.3% after rising 3.4% in April core CPI which excludes volatile food and energy prices was up 3.4% on a year on a year basis now that is still well above the fed's 2% Target but it is also considerably below the peak of just over 9% seen nearly two years ago now both the S&P 500 and the NASDAQ closed at new all-time highs on Wednesday following the FED meeting let's get some analysis on the FED on inflation the macro economy and what this all means for gold Bitcoin and equities with a Kito fan favorite Gareth Solway Gareth is the chief Market strategist at verified investing.com Gareth always nice to see you welcome back thank you so much it's so great to be here all right so Gareth let's start off with the FED we've got a lot to discuss but let's get the big macro stuff out of the way so in a unanimous vote fed officials decided to keep the Benchmark federal funds rate at 5 and a qu to 5 and a half% range they now expect only one rate cut this year and that's down from the three reduction forec cost back in March let's take a listen to what fed share Powell had to say the economic Outlook is uncertain however and we remain highly attentive to inflation risks we've stated that we do not expect it will be appropriate to reduce the target range for the federal funds rate until we have gained greater confidence that inflation is moving sustainably toward 2% so far this year the they have not given us that greater confidence we know that reducing policy restraint too soon we or too much could result in a reversal of the progress that we've seen on inflation at the same time reducing policy restraint too late or too little could unduly weaken economic activity and employment and considering any adjustments to the target range for the federal funds rate the committee will carefully assess incoming data the evolving Outlook and the balance of risks all right so give us a read General thoughts General overview from what we heard from from pal today is and these are a couple things that I picked up on just in these clips but I listened to it earlier today and there was a lot of uncertainty with Jerome Powell he C he calmly talks about all of this but the words that he uses is uncertainty unsure about economics about the economy and as well as about how many interest rates are going to be needed uh to do cuts so all of these things to me tell me the FED is trying to land This Plane smoothly but they are acutely aware that there are many hurdles that they still have to go through and remember you know even with the CPI data coming in this morning better than expected a lot of that was because gasoline and oil fell about 9% in May and ultimately we've already seen a 6% rise in oil just this month alone and so again you have to look at it and say the FED still has inflation north of 3% and they're now talking about cutting rates but now it's only one cut when does it go to no Cuts maybe next year even less Cuts than they're saying as well all right we'll talk about the uh do plot for 2025 but let's focus on 2024 it did seem as though it was a a perhaps less confident power that we heard from today what is your read then is a September rate cut still on the table or still very much up in the air so so the the what I'm looking at here is now you have to look at the the stock market and the stock market continues to make new all-time highs and I see literally zero chance that the Federal Reserve will cut rates until you see a significant pullback in the stock market when we're talking significant I would say it has to be at least 10% so if we don't get a 10% pullback by year end then you're not seeing the Federal Reserve cut this year and again look at it from this perspective is the higher the stock market goes the more inflation there will be in the system or at least harder it is for the stock market to bring down inflation because of the wealth effect remember everyone's looking at their 401ks at least those that have Investments we know that the lower to Middle income brackets are St Ling I mean that is no change we've known that now for months the higher income they have Investments and every day the stock market making new alltime highs makes them feel richer and they go spend and that creates a demand siiz movement where you're seeing more demand for goods and that pushes inflation basically neutral to higher right and let's keep in mind that when we say 3.3% that is the rate of more inflation year-over-year already on top of as I said we had like 9% in inflation two years ago uh that rate of growth so you certainly still feel this inflation every time you go and buy anything you're saying the FED is looking to the stock market to pull back before it can get inflation under control but unless it signals that it's going to pkee the stock market still keeps on defying what's coming out of the FED higher higher and higher I think that's the amazing thing about it it's like a catch 22 right the FED seems like they don't want to actually put the kibos on the stock market and really force it down but if they don't force it down then you're going to see inflation stay north of 3% and it's going to make it almost impossible for them to cut rates in the future the other side of the coin too is that this Federal Reserve intervention and this has gone on now for decades has literally caused this massive Divergence between the rich and the poor right if you're rich and you have money to invest then if you have a draw down in the economy and people lose jobs the FED lowers interest rates allowing those people to borrow money it pushes the stock market up even more if the economy is strong then they raise interest rates and you talk literally about hundreds of billions of dollars in interest payments that are now being made to these these high income individuals making them richer while the lower income are struggling to afford the inflation at McDonald's to feed their families so again this has been from the very start one of the worst scenarios it all started in my opinion with the Dual mandate once the FED had to be concerned about Employment Plus the banking system that's where honestly this began right uh and a lot of people are seeing the market as an inflation hedge a store of value you don't want to keep your money in cash because you're seeing inflation go up so you put it in the market and that makes it even harder for the FED to then tame inflation and to take what action is needed there let's talk a little bit more specifically about the fed's inflation projections though updated its inflation for cost raising the projection for core pce to 2.8% from 2.6% in March and they maintained their forecasts for economic growth at 2.1% and the unemployment rate at 4% uh which hit this level in May uh markets seem to still think we're going to get the soft Landing if we look at how markets ended the day new all-time highs for the S&P 500 and the NASDAQ can Powell pull off the soft Landing what says Gareth sway I see you know me i' I've always been a doubter been a non-believer in the FED uh historically the FED does not have an accurate you know track record of engineering these soft Landings and really if you look at it it's it's they're in a in a hard place I mean I I don't envy their position even though it's somewhat self-made But ultimately I don't see how we get out of this without some sort of corrective move and by the way if they cause the stock market to come down you're going to see a recession right that's going to cause businesses you know apples the the Googles all of these companies that still are already cutting J jobs they're going to have to cut more as consumers pull back and I think one of the things to keep in mind for people is you have to look at the Tea Leaves right we've seen the latest earnings come out we saw Starbucks Disney I mean Expedia traveling a lot of these areas are starting to see the consumer pull back just a little bit you still have the high-end consumer willing to spend though and they are keeping this this economy on life support at this point and spending enough to keep the marago round going but if anything happens to that stock market you will see the higher end start to pull back as well and then recession follows very quickly so no I don't think the FED Engineers are soft Landing here okay but do you see a cut in 2024 I do I actually do I do think that we're on the verge at some point here in the next few months of some sort of bigger correction you know there's rumors about the banking system going on there whether or not that has teeth we'll get into in a little bit I think but ultimately there are so many kind of issues out there whether it's China Taiwan whether it's the banking system whether it's the economy here whether it's Ukraine Russia there's enough out there to create instability that I do think you'll get a big enough pullback in the market that the FED will step off their seat and actually cut rates but remember historically when the FED Cuts rates that's actually when the market accelerates to the downside not actually starts going up all right well you know Gareth our viewers like to call you Barth at least some of them they're saying you're the Perma bear you're not alone though there is someone that is at least more pessimistic than you are and that is one of the chief economists at the JP Morgan Chase they continue to hold one of the most pessimistic views on Wall Street regarding the stock market analysts said to JP Morgan forecast that the S&P 500 as tracked by the S&P 500 ETF spider spy will end the year at 4,200 points so that implies about a 22% drop from current levels down 22% they raise a lot of the same issues that you just did in that note by JP Morgan Chief marcket strategist and co-head of Global Research Marco kovich he reiterated his bearish view on equities saying investors need to be underweight he sees a high probability a 50% probability of the macro picture deviating from the soft Landing thesis either because there is a near-term break in the US economy or because persistent inflation induces the fed and other major central banks to keep rates high for a prolonged time or to raise them further uh thus raising fears of an eventual hard Landing in 2025 and they also uh site that you know there's just too much optimism there that they're dismissing risks like geopolitics as you just mentioned uh consumer Behavior elections so he is saying a 22% drop from where we are for the S&P 500 where where does that line up with what you have have in mind yeah so it's hard to know exactly you know in terms of technicals when by year end we will be but again I'm actually in you talk about 2025 and going out into 2025 I think it's much more than that I mean we could be looking at 30 35% draw down by mid 2025 and again you named a bunch of the things and I agree 100% that there are so many risks out there and then even just the normal macro the slowdown in the consumer the stretched consumer who has $1.1 trillion do in debt and that's not even including Phantom debt which is like $700 billion doll on the backs of them you throw in auto insurance which has skyrocketed home insurance has skyrocketed the cost of money the mortgage rates and all of these things are just weighing investors down or consumers down and that's not even to mention what it cost to now go out to a family restaurant like Applebees or Chili's so these are things that eventually you will get that straw that breaks the camels back and cause a bigger corrective move and right now you 4 is in the markets AI is the leading thing but I would just point out that in every major bubble before every major collapse there was always the same Euphoria and last thing I'll say to you I was called Barth back in ' 07 2007 I said guys there is something bad going that is going to happen everyone laughed at me and then we had 089 I'm feeling the same way the hairs on the back of my neck Michelle are standing up something is happening here people need to be very careful speaking of hair I think you have a new hair cut that our viewers may not be familiar with uh so I mean look you brought up hair I have to mention it now I think I think we've got rid of we got rid of the man bun finally it's my summer du it's summer du I'm in Florida it's hot out you can't have long hair in Florida when it's this hot out I don't know I I think that can be seen as some kind of Market indicator may maybe that's some kind of Market indicator there but but Gareth yes you were you were correct in 2007 being bearish but we have had this conversation for a while right it seems like it makes sense that the fundamentals are there we've got $35 trillion in debt we've got the you know inflation we've got Reckless spending we've got all of the factors we've talked about geopolitical risks Russia Ukraine Middle East I mean just today we've got Russian warships heading to Cuba right it seems like all of the factors are there and yet the market continues to defy expectations so so why why would it flip now because but people who have been listening to you arguably have missed a lot of upside if they've been you know shorting some of the the broader Market no doubt no doubt they have and in 07 listen in ' 07 I was early I was about eight months early I started warning in early 07 we didn't see the markets top out really until late 07 early 08 and there was upside I missed there and this this is the thing is right as a logical technical Trader I see the things out there but you have to also take into account and this is something I still struggle with is taking into account human motion and the effect of fomo fomo people just wanting to chase even when the factors are not there for instance I look at the PE raos amongst the large trillion dollar companies you know historically does it make sense that you're they're trading between 30 and 40 pees no but ultimately as long as investors are willing to chase gains like this they can keep going higher in the short term until the Music Stops and that will end up happening but no doubt I have been early in this scenario like I was in ' 07 in 08 but it will come in my opinion and it's not going to be pretty and last time we spoke you thought that we would have a recession by fourth quarter of 2024 you still see that a recession as in the technical definition of two quarters of negative GDP so I I don't think I don't know if we'll get two quarters full quarters in the books that might be early the first report in early 2025 but I think all of us and listen I want to be clear on this I would say there's a good 40 to 50% of the population in the US that already feels like they're in a recession but in terms of the data and the analysts and the economists calling it a recession I think that probably takes place in early 2025 right and you know there is a disconnect between what people are feeling what the data is saying how and it's not just feelings it's it's a very real sense when you're at the grocery store and you know paying for a bag of groceries that's arguably gone up 20% over the last two years even though we're told you know three 3.4% year-over-year um the data doesn't really seem to add up let's talk about what we're seeing in terms of quantitative tightening because we did get some insight in what we're expecting from the FED to do with its balance sheet because while we're talking a game about keeping you know uh rates higher the FED did say that it would continue to reduce its balance sheet but at a slower pace so reducing its Holdings of Treasury Securities by up to 25 billion a month that's down from $60 billion a month you know that's that's quite significant Gareth so the the cap for mortgage back Securities remains at $35 billion so slowing down quantitative tightening doesn't that negate some efforts on inflation yes it's it's the beginnings right it's it's the step just before fed the Federal Reserve Cut Rate so they're obviously seeing something right they're seeing something in the data that they're not sharing with us that is making them slow down and this is another pet peeve of mine that every crisis their balance sheet the federal reserve's balance sheet Balloons by 100 to 150% and then during the good times quote unquote they reduce it by 15% and just to give people an idea they ran the balance sheet up during covid to 9 trillion and change and they've gotten it back down to 7.5 trillion prior to that period it was probably four to5 trillion dollar so you look at that and you just see the longer term impacts of what's going on and people like to say the FED is independent their debt doesn't matter it is still debt folks you and I in the US we are responsible for that you might as well add to to the US deficit the debt the debt in the US and add it up there as well but you're right when you're talking about the The Rundown The Slowdown of their their runoff it is a way of them actually cutting rates without taking that step to cut rates right injecting liquidity into the economy into the system which then arguably you know negates the efforts on inflation but back to this you know JP Morgan call right do you see 22% down from where we are now at ending the year down 22% like that dramatic I do and and I want to be clear on this if we go to my chart here we can talk some levels so this is the S&P 500 chart right in front of us here and what we have is a couple trend lines that I monitoring this first trend line takes from the co lows to the Panic March 2020 lows and it goes to recent highs and we just tagged that today now whether or not that's a top we don't know yet we don't know until after the fact when we look back on it if we do go higher there's an incredible trend line here that goes back to the 2009 lows that connects through the 2021 highs and that's just a little bit higher at around 55 to 5600 my guess is the top is very close if not at hand now in terms of a draw down where are we looking well all you have to do is basically connect major recent lows and we can do that and then do a measured move here so what we do is we'll just draw this through these two lows and what we get here and this is probably a good chance for a yearend calculation is we take the current levels we drop a draw a line right back down here and to me that's looking like about an 18% correction on the SNP potentially excuse me potentially by year end now this doesn't take into account if we really slip into a recession that gets bad in 2025 then you could be talking about much much lower levels but I think by year end 18% retesting that major trend line would be very very likely but then Gareth if we start to see this slip in the markets right isn't that the cue for the FED to start cutting rates which could then trigger the same sort of optimism in the markets that we have seen in the past wouldn't that then get the markets to Rally again right at the sign of the first cut so so this is the key is that initially people will get excited about the cuts and then what you see historically and if we look at the data from past scenarios where they've started to cut what actually ends up happening is that the the investing public begins to worry that the Federal Reserve is going too slow and they're starting to panic and this is the wave of emotion from massive greed that we've been seeing to go all the way towards the fear side so when the FED starts cutting rates historically markets actually are that's when we start to see selling because they start to be concerned the FED is not moving fast enough to avoid a major drop like 0809 9 So in theory if you look at the data again it's when they cut rates that the market actually starts to sell off dramatically okay what uh would trigger this you know what all of a sudden changes happens what kind of event sets this narrative into this downward spiral so I think I think the most you know we all think about the Black Swan events the uh the what if China invades Taiwan what if the the war in Russia in Ukraine gets bigger and and develops more countries but in reality it's probably the US economy and with the the the slowdown in consumer spending we've all been told for decades that the consumer is the backbone of the US economy if we start to see selling or or slowdown in that consumer and the consumer stops buying that's where you see the PE ratios that some of these companies are trading at like think about how much impact you now have six companies right Microsoft Apple Nvidia the trillion dollar names they literally make up over 30% of the S&P 500 494 companies are less than 70% of the S&P 500 now and so if you get a Slowdown and you have these Mega caps trading at 30 to 40 forward PE ratios and they go back to even just a general Norm of historic PE ratios let's say 20 you're talking about 40% downside in those stocks which will easily crush the stock market down at least that amount as well so really again there is the most likely scenario is that you get a Slowdown in the US consumer and then that's what takes the markets down all right I want to bring in the other central banks that we heard from earlier this week because we did get cuts from the ECB as well as the Bank of Canada does it seem as though the FED can maintain this position if more and more central banks around the world start to cut so they can for a certain amount of time but there's no doubt that if if we start seeing more and more cuts from these central banks the FED will have to do something in fact they'll be forced into it now the bigger question will be is where is inflation at that point is it coming down enough and the FED May fight that the FED may stay the course as long as they can until you see the stock market forcing their hand to cut these rates to to more normalized levels compared to other countries and just one more little tidbit that I'd just like to throw in there I didn't mention this as a Black Swan risk for the markets but the dollar yen is a major risk for the overall economy and the US here remember that the Japanese Central Bank intervened just about a month ago to push their currency back up against the US dollar we've now started to see the Japanese Yen starting to weaken again and the way that the Japanese Central Bank that basically strengthens their economy or their currency is by selling us bonds remember that the biggest holder of us bonds and so if you start getting a lot of us bonds being dumped on the market and there's a lot of talk that China's already doing this they're dumping US debt to buy gold and we've seen the gold numbers go crazy over there you actually have a scenario where the FED may be unable to really lower real interest rates significantly if it gets to that level so again not something that's likely but it needs to be on on an Investor's radar right we'll get into gold uh China has been on a gold buying spree they did pause the last month but uh it was 18 months of solid purchases before then and most likely will continue we talk about the economy and we have to take in the banking sector obviously commercial real estate and Banks because one of the narratives was that something is going to break you can't have rates at 20year highs for this long without there being a crack so far you know we had that March crisis in 2023 which you did actually flag correctly but so far since then the banking system seems to be weathering things um we did have that come up in today's Pressa and uh pal said that the banking system has been solid and strong let's take a listen in terms of banks the banking system has been you know solid strong well capitalized lending um you know we've seen good performance by the Banks uh we had the turmoil early last year but you know banks have been focusing on on bringing up their liquidity bringing up their capital and having risk risk management plans in place so the banking system you know seems to be seems to be in good shape is it in good shape Gareth I mean you have mentioned that the regional banking ETF has been forming a bare flag patent since the crisis lows of April uh of last year so break that down for us tell us what that suggest so I think the first thing to take away from this is that there is no way that Powell would ever come out and say yeah there's actually some big issues in the banking system right I mean think about the fire that would spread and the market crash that ensue if he said that having said that what I do is I I listen to the kind of the the rumors out there the rumor mill and I mentioned this like you just mentioned is that I'm hearing a lot of chatter about the big Banks unloading bad debt right now trying to get ahead of some sort of Crisis looming and when you talk about mortgage back Securities remember a lot of these Securities were bundled into these these kind of vehicles at interest rates that were so so low for the last x amount of years well now because interest rates are so high the amount of losses in these mortgage back Securities are things that are potentially rivaling what we saw in ' 0809 in addition the commercial real estate market is in tatters and these are all things that banks are holding on their balance sheets now we're not necessarily talking about the jpms the JP Morgans are definitely on the stronger side they probably will be okay but you're right the K is not looking good in fact let's take a look at that K right now for people and just look at this chart setup so in technical analysis there's basically what's called a bare flag here was the crisis last year in May of 2023 the drop and look at how you have not seen a recovery in this and if we do a little parallel this again is the flag pole and the bare flag formation and historically this is a chart pattern if you looked at a hundred of these or a thousand of these about seven out of 10 or 70 700 or 770 out of 100 would break to the downside the other thing to keep in eye on here is I was looking at once I heard these rumors I looked at charts like JP Morgan look at this trend line breakdown that just started on JP Morgan so we are seeing a breakdown in some of these bigger Banks City group has already broken down look at this trend line right here and so there is signs that something is a Miss within the banking system whether it's the bare flag in the K or in these bigger Banks the selling that is going on is not Mom and Pop selling JP Morgan I promise you that they are going all in so this tells me that there is some bigger players that are unloading the big Banks here when you say bigger players who do you have in mind so we're talking institutions like the in the no institutions the hedge funds that are in the no these are the bigger players that are looking for exit liquidity like for instance today on Apple crazy move up on Apple yesterday and today gained something like 300 to 500 billion dollars in two days and then late in the day-to-day it got smoked down Apple dropped about $7 per share in the last hour of the day that was exit liquidity big money dumping it into retail investors that were chasing this to the upside uh we'll get into Apple a little bit further so in terms of this this banking situation you're saying that big institutional players are starting to have concern about the banking sector and they are selling out their positions even in the big Banks like JP Morgan I yeah I think so because listen when when investors start to get word of this they don't say oh well that JPM let me not sell in general it's it's ask questions later so you will see selling in these and listen JP Morgan is going to have exposure they can limit their exposure but it's still going to take a hit it'll it'll hit their bottom line and so I think that's key and if you talk about Marco kovic and his comments about it he's with JP Morgan if he's calling for this like you'd have to say to yourself he might know something he might just not be able to say something about what is going on or what he foresees he has to kind of tow the line there because he's with the bank but I do think that he's seeing something there as well all right let's take it back then to the stock market and obviously the rally has been a very narrow rally we had a few a handful of stocks really propping up the markets we touched on Apple talk us through what we saw there because we did see apple reclaim its title of the world's most valuable company from Microsoft during uh Wednesday's trading session and two of w Street's favorite words artificial intelligence helped it get that way Apple's current market cap is around what $ 3369 trillion um and this whole Apple story began on Monday at uh the worldwide developers conference when Apple unveiled its AI strategy and you know Wall Street loves AI these days so so walk us through what we're seeing in apple yeah so first of all this is this is shows the insanity in the markets right so you have this big conference where Apple unveils their strategy for AI which is basically plugging in chat GPT into their systems and letting chat GPT do its thing by the way every other phone maker is going to do the same thing the stock on that day sold off on this news and then all of a sudden the narrative in the overnight started to change where all these Talking Heads these analysts came out and start saying oh well this is actually really good this is great and before you knew it you got all the retail investors to pile into this thing and shoot it up incredibly in fact I haven't seen the size of this green C here in my recent career on Apple in one single day today it did it again and then finally like I said we saw this exit liquidity created and towards the end of the day Apple got slammed down but look at where it got slammed down to this was incredible we had a pivot high from August of 2022 to this pivot High here in July of 2023 price literally goes up kisses that level and then dumps out so again Insanity in the market as much much as it is insane to me that Nvidia has gone up as much as it has in such a short time this shows the animal spirits and the greed of investors willing to pay any valuation for stocks and not thinking about uhoh what if the consumer stops buying what if we do see a recession and that's what I'm scared about folks that is absolutely on my radar so then what's your call on Apple right now your I would not surprised today yeah I would not be surprised if today put in a top the amount of volume what what you look for as a technician you look for Price reversal after a major move and you look for major volume and you look for a trend line hit the volume yesterday and today was unparalleled I think you have to go back years to find a day when volume was as high as it was today on Apple we hit the level and we saw the late day reversal which is institutional distribution those things most likely signal a top or at least close to a top in apple and I think again the torch was Invidia was the hot play now the AI people could say Hey listen Let's do let's do let's run Apple maybe the one's Google for all I know but they're basically taking the small money and pushing it into the next one into the next one creating ex liquidity and people will be left holding the bag just like with GameStop recently right now uh Gareth the reason makes sense but the sentiment and reason and fundamentals have not been in alignment here you were expecting a top for NVIDIA we haven't seen that in fact what uh we had the stock split recently the 10 for one stock split Nvidia still seems to be unstoppable even or because of the stock split even more so so give give us the breakdown there yeah so you're right Nvidia is in it's an incredible mover here guys um the animal spirits the AI narrative even after hours we saw broadcom report earnings that stocks up almost 15% on AI stuff as well it seems like if you have ai in your title it's just like internet back in the.com Era and I still by the way I I mean it it puts it ages me a little bit but back in 99 literally companies would change their name to add a. at the end and their stock would go up 1,000% on the back of that in a few trading days and so it's the same sort of momentum internet is the was the thing back then AI is the new thing it's great it's amazing in terms of the multiple expansion that we're seeing in the markets but there will be a reckoning day where margins come back to roost like it did for Cisco and let's not forget Cisco has never seen the levels it saw in 19 99 and 2000 since that point uh ever since then because basically the internet became a commodity right and that's what AI chips will do which eventually or prior semiconductor chips were like that but correct me if I'm wrong Gareth there was a time where you were like Nvidia has to reverse at this point right and and look you could say I thought Nvidia was ridiculously priced when it was you know 25 30% lower even more than that I thought so uh and I was dead wrong on that let's be clear on that the the momentum I think I underestimated the momentum and how much money is still left on the or was left on the sidelines of investors I don't know if it's more leverage I don't know if it's everyone piling into just a few names but I think that is something to keep in mind is that there's so because you have such a few amount of stocks running the S&P and the NASDAQ everyone's just piling into this set few names you have suggested that because of this there could be room uh at the time for small stocks to catch up here right how what's the Russell looking like yeah so the Russell is not looking quite as good so it did have a move up after we talked about that in fact a decent little move up here um I still think there's a chance that you could play pickup we did see the Russell performing well with interest rates going down and that's really what the Russell is all about it's 2,000 stocks so it's the best gauge of overall Market kind of strength because it's so many stocks in this player without the trillion dollar names um it also feeds the most off of low interest rates because these are the companies that are smaller they have to borrow money so if interest rates come down and continue to come down the Russell should outperform but my biggest fear is that interest rates are not now going to be able to come down enough for these companies to really outperform enough and if the economy weakens and and the borrowing costs remain relatively High then things in the Russell are not going to do well so I'm a very at this point I'm more skeptical I'm actually worried that the same sort of chart that we saw on the k k is kind of here and what I mean by that is you can kind of see the same sort of pattern here the flag pole and the inside bar action here and if we flip back to the K here you can see that same sort of price action let me get rid of that that same sort of down move and sideways chop so I am a little bit more skeptical now on the Russell I do worry that the time has now passed for the run to and I do worry that it could start to see some downside and look arguably if these cracks in the economy start to manifest that ultimately brings the S&P 500 down about 20% I mean surely the small stocks would get hit far worse right especially yes and especially if rates are not able to go as low as people hope right so I do worry that the days of one2 3% interest rates are long gone I think again three plus is probably the new Norm and that does put a problem issue for a lot of these companies that got used to borrowing money for so so low and now in the future even in a weak economy they may may not be able to do so and it might make it hard for some of them to survive all right so Gareth last time we caught up was on the day that both gold and Bitcoin the day of the week that both gold and Bitcoin hit all-time highs in in mid-march um at the time you expected Bitcoin to pull back and to hit 49 to 50K by the end of May that didn't happen so what went wrong with the thesis there yeah so I think what went wrong is just the the risk on narrative right so as long as the stock market continues to make all-time highs it's going to make it almost impossible for Bitcoin to have any sort of meaningful major pullback because as long as risk is all about people want to take risk Bitcoin is one of the main places to do that right so the one thing I will say is it still hasn't made make made a new all-time high since we last talked we talked when it was around 735 to 739 um and since then we had a draw down back to about I mean in all fairness it got to about 55 56,500 but you're right it didn't get back to the 50,000 level like I was expecting I will say this I still think it's going there um it still may make a new all-time high first but as soon as we see the weakness in the stock market and multiple sell days sell weeks in the stock market I do think Bitcoin comes down you can see I have the chart all all annotated out here we have this trend line here which is parallel we got above the parallel and we're consolidating if you break back into this parallel down here price is likely going to sell off and look at where this trend line is right down around 50,000 so I still think it's going there but it just may take a little bit more time at this point um but again it's all up to the stock market and really by default it's up to the Federal Reserve right if the fed's going to play hard ball with the markets they will sell off if the FED caters to the markets they may not sell off in the near- term so you're saying that the correlation is going to be stronger than ever between Bitcoin and the markets the minute the markets start to have a broader selloff Bitcoin accelerates downwards with it yes absolutely absolutely in fact you see that quite often in fact bitcoin's been selling a little bit even when the markets haven't been selling as much but it seems like anytime there's weakness in the stock market any sort of uptick and fear Bitcoin starts to come in which makes a lot of sense since again it still is a risk asset and the bigger question is is when do we get that bigger correction it may not come for months but at some point that stock market is going to take a 10% tumble and I think all the all the Bitcoin chart needs is a 10% tumble in the stock market and it'll easily see 50,000 do you see 50,000 before another all-time high that's a tough one um we're so close I mean we are literally 6,000 away from an alltime high right now um to be honest I don't know and I'll just be honest with you guys I wish I could give you one way or other I will just say this that again if the stock market tops out then I don't think Bitcoin sees a new high until we see a bigger flush out in the stock market and the stock market starts to recover now of course timing is everything Gareth um and early is uh being early is like being wrong right when it comes to the stock markets we were just at consensus obviously the sentiment there was very very bullish on bitcoin we had some guests saying 100,000 by the end of 2024 125,000 by the end of 2024 where are you with that estimate I I think you will see 100,000 by the end of 20125 on bitcoin so I I am a mid to Long yeah so so I don't think it happens this year I honestly don't I think I think again there's too many obstacles um that are going to be involved to get us to 100,000 but I do think some sometime in mid to late 2025 you will see Bitcoin take on more and more of that safety trade as the US deficit de debt goes higher and higher people are going to naturally gravitate towards things like Bitcoin and like gold and I think both those assets are ultimately over the next 12 18 24 months going to go a lot higher right and that's your perar thesis right because you see the fundamentals you see the issues and that's what ultimately makes you bullish on bitcoin and on gold and I think and I think and I'll just say this too is I think honestly if you don't see like like you can you can say that oh it's not going to happen now but I think there's no one out there that can look at what the state of our economic system is with what the government is doing what the government is is going through uh what personal issues people have with their debts and the inflation there's no way that there's not a reckoning day at some point the question is when is that point yeah well timing is everything but yes yes that Reckoning day is going to approach a lot of our guests say you know when these things happen it's slowly then suddenly right it builds up it builds up and then when it hits it just hits and that's your bullish case for Bitcoin but you're still saying Bitcoin not hitting 100,000 before 2025 yeah I think it'll be 100,000 by 2025 and you're dead right about that where initially the selling starts slowly like if you look at 0809 it was slow lots of bounces and then in early 09 just before it bottomed in those final three months of January February March of 09 it was all out panic and just straight down and that's how markets bottom and I think again when the stock market really collapses it takes Bitcoin down with it but like we saw when covid hit and it was March of 2020 gold dumped very quickly and then recovered very quickly and that's kind of what I'm thinking will happen with Bitcoin as well all right let's talk about gold uh because you have been correct on your gold calls every single time I believe um up what 12.7% year to date at around what 2334 today uh what What's your read how is gold responding to what we heard from the FED what do you expect yeah so gold today had a relatively weak day considering the drop in the dollar it was on the weaker side it only eak out a small gain um I do want to show you something that I think is so so cool so if we take a look at this longer term chart of gold and what we do here so we're going back to the 19 80 high of gold and then if we connect it to the high of 2011 look at where this treend line goes this is one of the coolest things about charting is that if you take this line you literally come right up to this level right so now that I zoom in look we've pierced this level but we're struggling here on gold so you have to respect that trend line again a trend line that goes back 40 plus years to 1980 is a powerful trend line now having said that what that tells me is in the near term I still think there's a little bit more downside in Gold I could see us coming back to about the 2200 area give or take maybe even a little bit lower but I do think eventually on the next leg up we take this area out and I do have an upside Target end of year was 2020 uh 2500 that was my target when we started January I think by 2025 the first half we're probably at 2800 on gold at that point 2800 by the second quarter of 2025 yeah that's correct yeah and what gets us there just momentum building any what what what gets us there yeah so so unfortunately more of the same I think the US to me it doesn't matter what president is in the white house I think once a president is in the White House they tend to just want to make sure everything looks makes them look really good which is generally spending money um we haven't seen any of our politicians have a backbone in stopping the spending generally uh again so so for me it's that that deficit which now interest payments are now north of a trillion dollars loan with higher interest rates for longer those interest payments are only going to go higher because we have to refinance our debt as it comes due and then as you see all of that going if you see the Federal Reserve having to come to the rescue again in a downturn in the economy and basically building their balance sheet higher and lowering rates and making money free again it all has the impact of making gold more valuable in terms of US Dollars and I think you throw in any of the insecurities of of you know Taiwan China you know all these other things that just is extra fuel on the fire of gold and I do think physical assets are going to be a place to be along with Bitcoin yeah certainly no shortage of geopolitical flash points uh these days uh very quickly let's get your thoughts on Silva uh Silva's been flirting with $30 closed a bit low after we heard from the FED but what are your thoughts there it has had a good run up about like what 23% for the year yeah absolutely it's been a great run thus far um I think silver has a pullback uh one area so I'm I'm looking to accumulate myself um I haven't had any silver positions recently since this move to the upside but I have a couple levels one is going to be around the 2850 level I get that level on a technical basis by connecting these lows right here so we're getting close to that first ad level where I'm going to start to accumulate and then the big level is going to be right here folks and if we look at this right and we look at this trend line here we take the high and we stretch this to this High through this high and this is what we call a retrace to the scene of the crime it's back at around $25.50 that would be where I load a majority of my stake in silver should it get there now remember there's always a chance I miss the trade but the greatest thing about being a Trader where you trade crypto stocks and commodities there's always another trade around the corner so I've missed many trades in my life I'll miss many more I just need to catch a few and if it comes back there that's silver for me right and of course you know you are a day trader you're a swing Trader right so I I make you give me these long-term forec costs uh and hold your feet to the fire and I will give you credit because you come up with very specific answers instead of dodging them but for the most part in terms of your own trading activity it's a daily moves kind of activity correct that that's right I mean to to be honest the only way I can hold something long term is when I like for for instance I buy some physical gold and silver and I because it's such a pain in the butt to sell it once you have it as it makes me hold it as a long-term investment but otherwise I can't help it like if something goes up 30 or 40% and I see a chart that's going to pull back it's like well why wouldn't you sell it and then just buy it back cheaper so by by the blood in me I'm I'm a shorter term investor there's there's no doubt but still bullish on gold and Bitcoin long-term picture give us your final thoughts as we wrap up here Gareth what is your point of strongest conviction these days so so the biggest things to me we've seen some of the most incredible runs in some of these Mega caps and the mega caps have led this Market if they start to falter let's say today was a top on Apple let's look at Nvidia let's look at Microsoft if they start to falter this Market is in a lot of trouble the other thing to watch is the bank stocks keep an eye on the bank stocks the K does it start to break lower is there some sort of fire there that we're not being alerted to yet that the banks know about and then ultimately I would continue to look outside of the US for Investments China still looks attractive although very minimally because of the risks of China Taiwan but the valuations in some of those stocks make our stocks look ridiculously expensive I still like Brazil I still like some other uh emerging markets and I think again just look at the physical the physical Metals things that will defy when the US has to print another 10 trillion dollars things like that should do very well over the next 6 12 18 24 months and even longer all right Gareth always a pleasure chatting with you catching up with you thank you so much for your Insight thank you so much Michelle so nice to talk to you thank you we'll see you again soon Gareth Solway thank you and I do want to say a special thanks to our sponsor Swan Bitcoin just a reminder to our viewers that Swan does have an IRA product which allows you to invest directly in Bitcoin with your IRA there's a way to set it up that you're basically buying Bitcoin on autopilot that allows you to take advantage of dollar cost averaging as you accumulate Bitcoin into your IRA and with the prices that's always a good way to do it there's a link in the description of this video with a special offer for kid viewers to help facilitate that process so do check that out and as always thank you for checking out this video if you're watching us on YouTube make sure to subscribe and please leave your comments we'd like to hear from you feel free to praise wide or just opine we do read your comments and we do take them into consideration from me Michelle mcy and the rest of the KidCo team we'll see you again soon on the spot with Michelle mccy is brought to you by Swan Bitcoin Swan Bitcoin Ira your legacy your way real Bitcoin not proxies traditional and wroth IRAs fast easy setup start now at swan. c/ retire

Channel: Kitco NEWS

Views: 174,137

Keywords: gold, silver, finance, news, investing, investing news, finance news, financial news, economy, precious metals, gold price, silver price, gold price today, silver price forecast, gold price forecast, kitco news, Fed, Federal Reserve, Powell, Jerome Powell, Fed Chair, inflation, recession, trading, Apple, Nvidia, Bitcoin, crypto, crypto trading, crypto news, AI, Gareth Soloway, technical trading, technical analysis, Michelle Makori, bitcoin price prediction, stock market, bitcoin price

Id: Bic7Oi-svM0

Length: 50min 39sec (3039 seconds)

Published: Thu Jun 13 2024