WEBVTT - Decoding the Fed's Next Move, Inflation Secrets, Skyrocketing Home Prices, China's Semiconductor Standoff, & Latest in Bitcoin 0:00:00.080 --> 0:00:02.480 Hello, Welcome to another episode of the Mark Mass Show, 0:00:02.480 --> 0:00:05.520 where we're always talking about the decentralized revolution, how the 0:00:05.559 --> 0:00:09.120 world is changing through the lens of politics, finance, and technology. 0:00:09.520 --> 0:00:12.440 And that technology that we're talking about is bitcoin, which 0:00:12.480 --> 0:00:16.120 is a decentralized technology. And there was a lot going 0:00:16.200 --> 0:00:18.759 on in the bitcoin world today and I have a 0:00:18.760 --> 0:00:21.600 lot to cover we're going to talk about in this segment. 0:00:21.760 --> 0:00:24.079 We're going to talk about what happened in the bitcoin space, 0:00:24.880 --> 0:00:27.680 something crazy, weren't talk about the economy, what the Fed 0:00:27.880 --> 0:00:31.120 is doing, and even more news coming out of China. 0:00:31.200 --> 0:00:34.520 So lots to talk about in this segment. But jumping 0:00:34.520 --> 0:00:37.000 into bitcoin for a minute, the big news is that 0:00:37.320 --> 0:00:42.360 the price of bitcoin shot up, jumped up on fake news, 0:00:42.400 --> 0:00:44.920 on fake rumors. And what happened is we've been talking 0:00:44.920 --> 0:00:47.040 about on this show for a long time, is that 0:00:47.120 --> 0:00:50.680 there is an ETF coming out that would well hopefully 0:00:50.680 --> 0:00:53.559 there's an ETF coming out for bitcoins. We have ETFs 0:00:53.560 --> 0:00:58.040 for all types of things, and we've been trying to 0:00:58.080 --> 0:01:00.520 get one through for bitcoin for a long time, and 0:01:00.600 --> 0:01:05.000 I believe there's eight ETF applications that are stuck at 0:01:05.000 --> 0:01:08.039 the SEC trying to get through. Now one of the 0:01:08.480 --> 0:01:12.880 larger sort of cryptocurrency bitcoin related news sites, a site 0:01:12.920 --> 0:01:18.160 called coin Telegraph, put out a tweet on Twitter fake news, 0:01:18.560 --> 0:01:24.280 saying that breaking Sec approves a bitcoin spot etf And 0:01:24.319 --> 0:01:27.880 when that happened, within about thirty minutes, we saw the 0:01:27.880 --> 0:01:32.040 price of bitcoin shoot up before coin telegraph could come 0:01:32.080 --> 0:01:36.640 out and say reportedly, and then they went ahead and 0:01:36.680 --> 0:01:40.240 they deleted that tweet altogether. Now, during that time, we 0:01:40.280 --> 0:01:43.200 saw the price job dump about seven to eight percent 0:01:43.520 --> 0:01:48.240 during that time before it was disproven. Now, what's in this? 0:01:48.600 --> 0:01:50.920 There's something in this. There's a couple of things. First 0:01:50.920 --> 0:01:55.120 of all, when that happened, we saw the price shoot up. 0:01:55.200 --> 0:01:57.080 Why did it shoot up so much? I think there's 0:01:57.120 --> 0:02:02.200 two reasons why. So, first of all, the frenzy triggered 0:02:03.240 --> 0:02:06.520 a short squeeze. There were seventy eight million dollars in 0:02:06.560 --> 0:02:09.840 short positions and there was thirty four million in longs, 0:02:10.000 --> 0:02:11.760 and they got liquidated faster than. 0:02:11.680 --> 0:02:14.040 You can say fake news. 0:02:15.000 --> 0:02:17.359 They took off really really fast, and so there were 0:02:17.440 --> 0:02:19.360 so many shorts. As soon as it started moving, they 0:02:19.360 --> 0:02:23.000 started getting liquidated, which caused the price to move up faster, faster, faster, faster, faster. 0:02:23.080 --> 0:02:24.600 Bester fa faster, all right. 0:02:25.080 --> 0:02:26.960 The other thing that I think is interesting in the 0:02:27.040 --> 0:02:30.480 story is isn't just on the price action. It's really 0:02:30.840 --> 0:02:35.639 about what will happen. I guess if I think it's 0:02:35.680 --> 0:02:38.800 more when and the ETF actually does get approved. And 0:02:38.840 --> 0:02:42.000 so even though the news was fake, the reaction from 0:02:42.000 --> 0:02:45.640 the market wasn't. And so what we saw is that 0:02:45.680 --> 0:02:50.120 the market responded positively. We saw that the market moved up. 0:02:50.120 --> 0:02:53.160 We saw the price jump up almost ten percent in 0:02:53.400 --> 0:02:58.280 just a thirty minute time frame. Now could it have 0:02:58.360 --> 0:03:00.520 jumped out more or less, I don't know, but I 0:03:00.560 --> 0:03:02.919 think what it means is that happened within thirty minutes. 0:03:02.960 --> 0:03:05.720 And so I guess the question that most of us 0:03:05.720 --> 0:03:09.040 want to understand is do we think this news is 0:03:09.160 --> 0:03:14.040 already priced in? Do we think that the bitcoin ETF 0:03:14.080 --> 0:03:17.400 getting approved is already priced in? I believe Bloomberg has 0:03:17.400 --> 0:03:20.480 it at like a ninety percent chance of it becoming approved. 0:03:20.880 --> 0:03:24.079 We've seen Gary Ginsler's language around this starting to change, 0:03:24.360 --> 0:03:26.639 and so is it already priced in? And based off 0:03:26.639 --> 0:03:28.440 of this price action, it looks. 0:03:28.200 --> 0:03:29.560 Like maybe it wasn't. 0:03:30.040 --> 0:03:32.320 If this wasn't taken down within thirty minutes, if it 0:03:32.360 --> 0:03:34.200 was allowed to stay up for long or for hours, 0:03:34.200 --> 0:03:37.080 for days, for weeks. What could happen? How much could 0:03:37.080 --> 0:03:40.040 the price move up? Now? It's a little bit priced 0:03:40.040 --> 0:03:42.960 in in my opinion, because it didn't jump up that much. 0:03:43.040 --> 0:03:45.800 I mean, sure, seven, eight, nine, ten percent sounds like 0:03:45.880 --> 0:03:46.280 a lot. 0:03:46.440 --> 0:03:47.320 It would be a lot for this. 0:03:47.320 --> 0:03:49.360 S in P. Five hundred, it's not a lot for bitcoin. 0:03:50.040 --> 0:03:52.640 We've seen bitcoin move way more than that in a 0:03:52.640 --> 0:03:56.240 single day, in a single candle. And so while that 0:03:56.400 --> 0:04:00.800 certainly is positive price action, it's not as big as 0:04:00.840 --> 0:04:02.440 you might think it would be. And so to me, 0:04:02.920 --> 0:04:05.320 I think that most of it has been priced in, 0:04:05.560 --> 0:04:07.400 not one hundred percent of it, but most of it 0:04:07.400 --> 0:04:09.720 has been priced in. Of course, this doesn't account for 0:04:09.800 --> 0:04:12.400 the amount of funds that will flow into bitcoin at 0:04:12.400 --> 0:04:12.920 some point. 0:04:13.440 --> 0:04:13.760 Now. 0:04:14.080 --> 0:04:16.960 One of the biggest ETFs that's trying to get through 0:04:17.040 --> 0:04:21.640 right now is from the largest asset manager in the world, Blackrock. 0:04:22.320 --> 0:04:24.760 I'm no fan of Blackrock. I've been very vocal about that, 0:04:25.120 --> 0:04:29.120 but Blackrock is one of the I believe eight ETFs 0:04:29.160 --> 0:04:31.320 trying to get through. And if anybody's going to get 0:04:31.320 --> 0:04:33.479 an ETF through, it's probably going to be Blackrock. There's 0:04:33.520 --> 0:04:36.440 sort of like a quasi semi arm of the government. 0:04:36.720 --> 0:04:38.760 They work on the Fed's behalf, they work with the 0:04:38.839 --> 0:04:42.080 FDIC bank bailouts, all of those things. So if anybody 0:04:42.080 --> 0:04:43.960 could get one through, it would be them. And it's 0:04:44.000 --> 0:04:46.440 pretty interesting this week to see the CEO of Blackrock, 0:04:46.520 --> 0:04:50.240 Larry Fink, come out and say that he's seeing client 0:04:50.320 --> 0:04:54.320 demand for bitcoin all around the world. He said that 0:04:54.320 --> 0:04:59.040 clients across the globe are talking about the need for crypto. 0:04:59.160 --> 0:05:01.960 He said that I think the rally today is about 0:05:02.000 --> 0:05:05.919 a flight to quality. With all the issues around the 0:05:06.000 --> 0:05:10.240 Israeli war now global terrorism, etc. People want to flight 0:05:10.279 --> 0:05:12.800 to quality, and he thinks that's why people are going 0:05:12.839 --> 0:05:17.880 to bigcoin, which is very interesting. You have arguably the 0:05:17.920 --> 0:05:23.360 most powerful man in the financial world, which makes him 0:05:23.440 --> 0:05:25.960 arguably one of the most powerful men in the entire world, 0:05:27.240 --> 0:05:31.800 who you wouldn't think would want something like bitcoin to 0:05:32.040 --> 0:05:35.320 be approved, and also would always be trying to talk 0:05:35.400 --> 0:05:39.560 down fears of financial problems in the markets, financial markets, 0:05:40.640 --> 0:05:43.640 and here he is talking about bitcoin being used as 0:05:43.680 --> 0:05:45.080 a flight to safety. 0:05:45.720 --> 0:05:47.279 So think about that for a minute. 0:05:47.440 --> 0:05:52.960 Bitcoin went from being a scam to being a Ponzi scheme. 0:05:53.040 --> 0:05:53.880 To being ridiculous. 0:05:53.920 --> 0:05:57.039 Jamie Diamond of JP Morgan said that if anybody even 0:05:57.120 --> 0:05:58.880 used it, he would fire them, and if anybody at 0:05:58.960 --> 0:06:00.920 JP Morgan used it trade that he would fire them. 0:06:01.240 --> 0:06:03.960 To now we have arguably one of the most powerful 0:06:04.080 --> 0:06:07.359 men in the world think saying that they're using it 0:06:07.360 --> 0:06:08.680 as a flight to quality. 0:06:09.279 --> 0:06:10.960 Boy, how far we've come. 0:06:11.080 --> 0:06:13.160 It reminds me of the quote that I think it's 0:06:13.400 --> 0:06:15.599 first they laugh at you, then they fight you, and 0:06:15.640 --> 0:06:17.960 then they finally accept you. And so that's sort of 0:06:17.960 --> 0:06:20.680 where we're at now. I wouldn't say that it's a 0:06:20.720 --> 0:06:24.360 flight to quality necessarily. I think it's something a little 0:06:24.400 --> 0:06:27.240 bit different. So typically we have a flight to quality. 0:06:27.279 --> 0:06:30.040 And you think about treasury. The treasury market like the 0:06:30.360 --> 0:06:34.359 bond market, and bonds are what's considered a risk free asset. 0:06:34.680 --> 0:06:36.839 It's a risk free asset because the government's always going 0:06:36.880 --> 0:06:39.120 to pay. Now, it's not totally risk free. 0:06:39.120 --> 0:06:40.000 It's only risk. 0:06:39.960 --> 0:06:43.120 Free if you hold it to maturation. However, even that's 0:06:43.120 --> 0:06:44.880 not risk free because they're going to pay you back, 0:06:45.120 --> 0:06:46.359 but they're going to pay you back. 0:06:46.160 --> 0:06:48.560 With heavily devalued dollars. 0:06:48.680 --> 0:06:51.320 So you may get one hundred dollars put one hundred 0:06:51.320 --> 0:06:53.000 dollars in you get a hundred dollars back, but the one 0:06:53.000 --> 0:06:55.200 hundred dollars may only buy you twenty or thirty dollars 0:06:55.240 --> 0:06:59.400 worth of stuff. So there is risk there, inflation risk. However, 0:07:00.120 --> 0:07:04.080 what I'm seeing isn't a flight to safety, because it's 0:07:04.240 --> 0:07:07.320 no one's flut rushing into the treasury or bond market. 0:07:07.600 --> 0:07:10.600 What they're doing is they're buying assets instead. So we're 0:07:10.600 --> 0:07:14.320 seeing gold at one of the largest deviations from the 0:07:14.360 --> 0:07:18.240 treasury market that we've seen in recent history. Bitcoins holding up, 0:07:18.280 --> 0:07:21.720 even stocks are holding up, which is against everybody on 0:07:22.760 --> 0:07:25.720 Wall Street. They're telling you that no, once rates go up, 0:07:25.840 --> 0:07:28.480 the stocks have to come down because when the risk 0:07:28.520 --> 0:07:32.480 free rate moves up, stock the evaluations, the pe ratios 0:07:32.560 --> 0:07:36.600 have to come down. Really do they have to, because 0:07:36.600 --> 0:07:41.000 they haven't. Rates have been going up for a year. 0:07:41.840 --> 0:07:46.320 How come the ratios haven't come down? And I think 0:07:46.360 --> 0:07:49.840 the reason why is the same reason why Larry thinks 0:07:49.840 --> 0:07:51.960 that people are rushing to safety. What they're rushing to 0:07:52.000 --> 0:07:55.720 safety in isn't the safety asset of the bond. What 0:07:55.760 --> 0:08:00.040 they're rushing to is anything other than fiat currency. But 0:08:00.080 --> 0:08:03.720 they're rushing to is anything other than government inside paper 0:08:03.720 --> 0:08:08.360 money bond market money. What they're rushing to is real assets. 0:08:08.600 --> 0:08:11.280 That's why gold is going up, That's why real estate 0:08:11.320 --> 0:08:13.920 is holding up, that's why equities are holding up, and 0:08:13.960 --> 0:08:16.600 that's why bitcoin is holding up. Now do I think 0:08:16.640 --> 0:08:19.200 something could change? Of course, something can always change. There 0:08:19.280 --> 0:08:22.640 is so so much danger sitting out in this world 0:08:22.720 --> 0:08:25.720 right now that something could certainly change. But it's sort 0:08:25.720 --> 0:08:28.720 of like this crackup boom right level. Go On Misis, 0:08:28.760 --> 0:08:31.680 the godfather of the Austrian school of economics, called it 0:08:31.720 --> 0:08:34.480 the crackup boom, he said. And then suddenly people realize 0:08:34.480 --> 0:08:40.720 that inflation is both intentional and ongoing, and they will 0:08:40.760 --> 0:08:43.000 no longer want to hold the currency and they'll quickly 0:08:43.000 --> 0:08:45.360 trade it for anything else that they can get their 0:08:45.360 --> 0:08:47.439 hands on. And so you see this happening in other 0:08:47.480 --> 0:08:51.520 countries all around the world, where Venezuela, Lebanon, Turkey, et cetera, 0:08:51.679 --> 0:08:55.160 where the currency is dropping so fast they'll literally take 0:08:55.320 --> 0:08:58.760 anything other than hanging onto the currency. Now, we may 0:08:58.800 --> 0:09:01.000 not be at that point saying the United States is 0:09:01.040 --> 0:09:05.839 at the Lebanon, Turkey, Argentina, Venezuela level yet, but we're 0:09:05.840 --> 0:09:07.920 certainly on that path. And I think this is why 0:09:08.080 --> 0:09:10.920 people aren't rushing to the safety of the treasuries in 0:09:10.960 --> 0:09:15.239 the bonds, but rather holding onto assets such as equities 0:09:15.280 --> 0:09:18.319 which aren't super safe in my opinion, but gold, real 0:09:18.440 --> 0:09:19.360 estate and bitcoin. 0:09:20.920 --> 0:09:23.280 But we'll see. If you're just tuning in listening. 0:09:23.080 --> 0:09:25.200 To the markmas Show, we're talking through some of the 0:09:25.280 --> 0:09:27.640 latest breaking news headlines this week. We just went through 0:09:27.679 --> 0:09:29.960 what happened in the bitcoin crypto markets and with the 0:09:30.000 --> 0:09:31.840 largest asset manager in the world. But I have a 0:09:31.880 --> 0:09:33.800 whole lot more to cover when I come back after 0:09:33.840 --> 0:09:35.520 this very short break. Don't go away, I'll be here 0:09:35.600 --> 0:09:37.199 back all right, Welcome back. If you're just tune in 0:09:37.240 --> 0:09:39.160 your listening to the Mark Maas Show, we're talking through 0:09:39.160 --> 0:09:41.960 some of the latest breaking news headlines this week. Of course, 0:09:41.960 --> 0:09:45.080 always looking through the lens of politics, finance and technologies, 0:09:45.120 --> 0:09:47.680 you can have a better understanding, better context to what's 0:09:47.679 --> 0:09:49.560 going on in the world now. Right before the break, 0:09:49.600 --> 0:09:54.680 I was talking about this Ludwig von Misus's theory called 0:09:54.679 --> 0:09:57.400 the crackup boom and how people don't want to hold 0:09:57.400 --> 0:10:00.400 on to the money anymore, they'd rather buy assets. And 0:10:00.440 --> 0:10:03.920 so we've seen these assets going higher and higher and higher, 0:10:04.559 --> 0:10:08.640 partly because of this inflation where the currency's being destroyed 0:10:08.640 --> 0:10:11.200 and partly because of this rush to own those types 0:10:11.240 --> 0:10:11.800 of assets. 0:10:12.280 --> 0:10:14.400 And I've been very vocal. 0:10:14.480 --> 0:10:16.720 I've been on record many times on my main YouTube channel, 0:10:16.760 --> 0:10:19.000 Mark Moss, which, by the way, if you're not watching 0:10:19.080 --> 0:10:21.960 on YouTube, you should just search Mark Moss on YouTube 0:10:22.559 --> 0:10:24.400 and you can watch and listen to all these shows 0:10:24.440 --> 0:10:26.920 on the podcast just search the Mark Moss Show, or 0:10:26.960 --> 0:10:30.360 you can watch these episodes also on the Market Disruptors 0:10:30.440 --> 0:10:34.760 YouTube channel. But I've been very vocal, even back when 0:10:34.760 --> 0:10:38.080 inflation was at seven eight nine percent, saying that this 0:10:38.520 --> 0:10:40.280 I think this would still even be some of the 0:10:40.360 --> 0:10:42.760 lowest inflation that we'll see for the rest of the decade. 0:10:43.040 --> 0:10:44.800 And so while a lot of people think that inflation 0:10:44.960 --> 0:10:47.880 is over the FED has won, I don't think they're 0:10:47.920 --> 0:10:50.760 even close. And what do I mean by that, I 0:10:50.800 --> 0:10:54.600 mean inflation has come down reportedly from this nine percent 0:10:54.679 --> 0:10:57.560 down to this three percent range, right, Mark, So they 0:10:57.559 --> 0:11:00.000 did win. They got it down, right, well, not really. 0:11:01.160 --> 0:11:03.440 First of all, that number is so heavily. 0:11:03.120 --> 0:11:04.840 Manipulated you can't believe that number. 0:11:05.320 --> 0:11:08.840 Second of all, inflation comes in waves, all right, So yes, 0:11:08.880 --> 0:11:11.240 they got it down temporarily get ready for the next 0:11:11.600 --> 0:11:14.240 move up. Now, we can see this in any number 0:11:14.280 --> 0:11:16.679 of ways. For example, I saw this report come out 0:11:16.720 --> 0:11:19.720 this week that home buyers in the United States now 0:11:19.880 --> 0:11:24.400 home buyers must earn one hundred and fifteen thousand dollars 0:11:25.000 --> 0:11:28.520 to afford the typical US home. The median home price 0:11:28.640 --> 0:11:31.360 in the United States, you now have to earn one 0:11:31.400 --> 0:11:34.000 hundred and fifteen thousand dollars to afford that meeting home. 0:11:35.080 --> 0:11:39.760 The problem is that's about forty thousand more than the 0:11:40.240 --> 0:11:46.160 median US income, So the median income can't afford the 0:11:46.240 --> 0:11:47.160 median house. 0:11:47.679 --> 0:11:49.800 That's a problem. 0:11:50.000 --> 0:11:53.480 The bigger problem is that this has gone up by 0:11:53.679 --> 0:11:56.800 more than fifty percent since the start of the pandemic. 0:11:57.480 --> 0:12:02.120 So now you need fifty percent more income today then 0:12:02.160 --> 0:12:04.480 you needed a few years ago to buy the median 0:12:04.520 --> 0:12:07.480 home price. The problem is your pay didn't go up 0:12:07.480 --> 0:12:11.480 by fifty percent, which is why we're continue to see 0:12:11.559 --> 0:12:13.439 it being harder and harder and harder and harder for 0:12:13.480 --> 0:12:15.280 people to live, which is why in the United States 0:12:15.280 --> 0:12:18.319 we continue to see strikes. 0:12:18.640 --> 0:12:20.280 Right, we have strikes happening all over the place. 0:12:20.280 --> 0:12:23.439 The auto workers in Hollywood, I saw the railways today, 0:12:23.640 --> 0:12:27.480 everywhere we're having strikes because people can't afford to live anymore. 0:12:27.760 --> 0:12:31.280 It's gotten way too expensive. Home prices went up fifty percent, 0:12:31.320 --> 0:12:35.120 but your pay didn't. And so while the FED wants 0:12:35.120 --> 0:12:39.240 to tell you they've got inflation under control, they haven't. Also, 0:12:39.440 --> 0:12:41.880 as I've mentioned many times, even if they did get 0:12:41.880 --> 0:12:45.079 inflation from their nine percent down to three percent, it 0:12:45.559 --> 0:12:49.160 doesn't mean that prices came back down. What it means 0:12:49.200 --> 0:12:51.520 is that prices continue to go up, just at a 0:12:51.559 --> 0:12:55.000 little bit of a slower rate. But that's compounding because 0:12:55.440 --> 0:12:59.880 we're still adding on to the already high rate. And 0:13:00.080 --> 0:13:01.800 like I said, I've been very vocal saying that I 0:13:01.800 --> 0:13:05.000 think inflation is still going higher. And I think the 0:13:05.040 --> 0:13:07.319 market is actually telling us the same thing, not the FED. 0:13:07.400 --> 0:13:09.320 The Fed's patting themselves on the back saying they got 0:13:09.360 --> 0:13:11.760 a job well done, but the market is telling us 0:13:11.760 --> 0:13:16.160 something different. Now, the market is us. The market is 0:13:16.280 --> 0:13:18.480 me and you. The market is the people, the businesses, 0:13:18.559 --> 0:13:22.160 it's Wall Street, it's the bankers, the people we make 0:13:22.240 --> 0:13:25.920 up the market. And the markets are what it's called 0:13:25.960 --> 0:13:30.719 discounting mechanisms. They're really the betting markets. Every day, if 0:13:30.760 --> 0:13:33.600 you put money into the market, whether into the economy, 0:13:33.720 --> 0:13:36.800 or more specifically, into the Wall Street kind of investment market. 0:13:37.360 --> 0:13:38.200 You are betting. 0:13:38.440 --> 0:13:40.520 You're placing your bet as to what you think that 0:13:40.559 --> 0:13:43.760 could happen. So if you go to Las Vegas, for example, 0:13:44.360 --> 0:13:45.440 you're gonna go into the sportsbook. 0:13:45.440 --> 0:13:46.600 You're gonna bet on a football game. 0:13:46.800 --> 0:13:48.599 So you're gonna say, I'm going to put down this 0:13:48.760 --> 0:13:51.200 hundred dollars that I think the Dallas Cowboys are going 0:13:51.200 --> 0:13:54.760 to win this game, and they either do or they don't, 0:13:54.800 --> 0:13:57.160 and I win money I don't. Now I'm sort of 0:13:57.160 --> 0:13:59.240 doing the same thing. If I'm buying Tesla or Apple 0:13:59.320 --> 0:14:02.480 or Facebook or or whatever stock i'm buying, I'm betting 0:14:02.920 --> 0:14:05.440 that the price of that stock will go up, or 0:14:05.480 --> 0:14:07.040 I'm short and I'm betting the price we will down. 0:14:07.760 --> 0:14:10.200 So we're all betting at the same time. The market 0:14:10.320 --> 0:14:15.240 is is billions of pieces of data all aggregating together 0:14:15.640 --> 0:14:17.720 to tell us what people think is going to happen, 0:14:17.720 --> 0:14:19.320 what the future will hold. And so we can see 0:14:19.320 --> 0:14:21.160 this I've talked a lot about if you look at 0:14:21.200 --> 0:14:25.560 the treasury market, the bond market, we have the inversion 0:14:25.600 --> 0:14:29.520 of the yield curve. You've heard about this extensively, so 0:14:30.040 --> 0:14:32.480 what this means the yield curve is supposed to go 0:14:32.560 --> 0:14:35.520 from lower rates in the short term, so three months, 0:14:35.560 --> 0:14:38.680 six months, et cetera should be very should be low rates, 0:14:39.280 --> 0:14:41.760 and the long term, the thirty year bond should be 0:14:41.800 --> 0:14:44.240 a higher rate because I want to get paid a 0:14:44.400 --> 0:14:47.640 higher amount to loan to you for a longer period 0:14:47.680 --> 0:14:50.680 of time. Makes sense, right, So we should have this 0:14:50.760 --> 0:14:53.000 yield curve where the long rates are higher than the 0:14:53.000 --> 0:14:56.120 short term rates. The problem is it's been inverted, meaning 0:14:56.200 --> 0:14:59.200 that the short term rates are higher than long term rates. 0:14:59.240 --> 0:15:03.240 Whenever that happens, spens, it's guaranteed it. It's told us 0:15:03.240 --> 0:15:05.840 that there's a recession coming. I believe it's one hundred 0:15:05.840 --> 0:15:09.080 percent accurate, and it's told us that typically that recession 0:15:09.080 --> 0:15:13.400 comes in about twelve to eighteen months. And now we're 0:15:13.440 --> 0:15:15.920 starting to see that yield curve the inverted. Your career 0:15:16.000 --> 0:15:20.200 is starting to reinvert or what we call resteeping. But 0:15:20.240 --> 0:15:23.880 what's happening is it's happening the wrong way. So typically, 0:15:23.880 --> 0:15:25.920 the way it's supposed to work is that the front end, 0:15:26.000 --> 0:15:28.080 which is higher than it should be, should come down. 0:15:28.600 --> 0:15:31.720 But what we're seeing is the back end that's higher 0:15:32.160 --> 0:15:34.960 I'm sorry, is lower is actually starting to go up. 0:15:35.640 --> 0:15:38.360 So what this means is that the market is actually 0:15:38.760 --> 0:15:42.560 calling the fed's bluff on maintaining a long term inflation 0:15:42.600 --> 0:15:46.880 target of two percent. The market doesn't believe that the 0:15:46.960 --> 0:15:52.800 FED has control over inflation. The market believes. Millions of people, 0:15:52.920 --> 0:15:55.840 billions of people and data points believe that the FED 0:15:55.920 --> 0:15:58.640 has completely lost control of over inflation, just like I'm saying. 0:15:59.480 --> 0:16:01.400 And the reason we can see this in this yield curve. 0:16:01.520 --> 0:16:04.880 If the market believe the Fed's two percent target, then 0:16:04.920 --> 0:16:08.440 they would happily be buying notes on the on the 0:16:08.480 --> 0:16:12.680 back end at four point eight percent. Right, if I 0:16:12.720 --> 0:16:15.000 believe that we'd have two percent inflation, I'll gladly buy 0:16:15.000 --> 0:16:16.880 a note at four point eight percent. That means that 0:16:16.920 --> 0:16:21.359 I'm guaranteed a almost three percent return over ten years. 0:16:22.520 --> 0:16:27.480 The markets, but the markets don't believe that. The markets 0:16:27.600 --> 0:16:30.680 don't believe the fed's narrative. The markets don't believe that 0:16:30.760 --> 0:16:33.720 they're going to continue to see this two percent target. 0:16:34.160 --> 0:16:37.360 They think inflation is going to be higher. That's what 0:16:37.400 --> 0:16:40.360 we're witnessing. We're witnessing the free market signal that it 0:16:40.440 --> 0:16:43.160 no longer believes the Fed's two percent target is realistic. 0:16:43.400 --> 0:16:46.520 They don't believe it's attainable, and all the data supporting 0:16:46.560 --> 0:16:50.280 this is there. It includes the average inflation rate since 0:16:50.360 --> 0:16:54.680 nineteen seventy one being three point nine seven four percent. 0:16:55.720 --> 0:16:58.160 Since nineteen seventy one, the average inflation rate has been 0:16:58.200 --> 0:17:00.560 four percent, not two percent like the Fed wants to 0:17:00.560 --> 0:17:04.760 get to. And again, if the market did believe the Fed, 0:17:05.119 --> 0:17:07.399 then they would be buying the ten year note to 0:17:07.440 --> 0:17:09.640 lock in those real rates of return, not selling it. 0:17:09.800 --> 0:17:11.639 But they're not. They're selling it. 0:17:12.040 --> 0:17:15.560 The selling the rising rates signals the market fields it's 0:17:15.560 --> 0:17:18.920 not being properly compensated for the real inflation risk, which 0:17:18.960 --> 0:17:21.800 is greater than the previous consensus of two percent. So 0:17:21.840 --> 0:17:27.080 the yield curve resteepening, specifically at the long end, is 0:17:27.119 --> 0:17:29.560 telling us the Fed's lost control of the yield curve. 0:17:32.200 --> 0:17:36.879 It's a big deal, amah and the Fed. The Fed 0:17:37.160 --> 0:17:39.720 is trying to regain confidence in the market. They're trying 0:17:39.720 --> 0:17:42.600 to tell us. We've seen several I think seven Fed 0:17:42.680 --> 0:17:44.880 boat board governors came out in the last week trying 0:17:44.920 --> 0:17:47.320 to what we call jab owe the market talk it 0:17:47.520 --> 0:17:51.679 back down, saying we think enough has been done. We 0:17:51.720 --> 0:17:53.760 think the market is taking care of itself. We think 0:17:53.800 --> 0:17:58.320 that we don't need to raise rates anymore. We think 0:17:58.359 --> 0:18:02.720 we've we've saw the inflation problem. Congratulations. Let me pat 0:18:02.760 --> 0:18:05.040 ourselves on the back here real quick. So this is 0:18:05.080 --> 0:18:07.359 what the Fed is trying to tell us, but the 0:18:07.400 --> 0:18:09.719 markets don't believe it. If you're just tuning in, you're 0:18:09.720 --> 0:18:11.800 listening to the Mark mash Show breaking down some of 0:18:11.800 --> 0:18:13.560 the latest breaking news headlines this week so you can 0:18:13.640 --> 0:18:15.520 understand it. I have a lot more to cover when 0:18:15.560 --> 0:18:17.479 we come back. I'm gonna dig deeper into the bonds 0:18:17.560 --> 0:18:19.480 so you can understand exactly what's going on, what you 0:18:19.520 --> 0:18:20.800 need to do, and more. 0:18:20.840 --> 0:18:23.000 Don't go away, I'll be here back all right, Welcome back. 0:18:23.040 --> 0:18:24.480 If you're just tune in your listening to the Mark 0:18:24.560 --> 0:18:26.639 Maas Show, we're talking through some of the latest breaking 0:18:26.640 --> 0:18:28.800 news headlines this week so you can understand what the 0:18:28.840 --> 0:18:30.119 heck is going on out. 0:18:29.960 --> 0:18:30.600 There in the world. 0:18:30.760 --> 0:18:33.680 Of course, always looking at through the lens of politics, finance, 0:18:33.800 --> 0:18:36.360 and technology, you're really looking at the convergence of those 0:18:36.400 --> 0:18:39.439 three things to bring greater context into what's going on 0:18:39.480 --> 0:18:42.879 into the world. Now, we were talking about inflation, we were 0:18:42.800 --> 0:18:45.359 talking about the bonds, and specifically how the bonds are 0:18:45.359 --> 0:18:46.960 calling the Fed's bluff. 0:18:47.400 --> 0:18:48.240 They don't believe. 0:18:48.680 --> 0:18:51.080 The market doesn't believe, as evidence through the yield curve 0:18:51.280 --> 0:18:53.919 that inflation is coming back down to two percent, and 0:18:54.000 --> 0:18:56.440 we're seeing all types of problems. 0:18:56.000 --> 0:18:57.440 In the bond market. 0:18:58.080 --> 0:19:00.679 Nobody wants to buy it, wants to buy it, and 0:19:00.680 --> 0:19:02.760 the reason why is because they know the government is 0:19:02.800 --> 0:19:05.880 going to continue to print money. The amount of money 0:19:05.920 --> 0:19:09.199 printing is I don't even know the word. I'm speechless. 0:19:09.240 --> 0:19:11.320 I've never seen this before. No one's ever seen this before. 0:19:11.359 --> 0:19:14.560 As a matter of fact, there is so much debt. 0:19:14.680 --> 0:19:19.320 The government is spending so much money at an unprecedented 0:19:19.400 --> 0:19:21.879 level that it just boggles the mind. Let me let 0:19:21.920 --> 0:19:24.280 me break it down for you. It took the US 0:19:24.400 --> 0:19:29.600 government just eighteen days to add more than five hundred 0:19:29.720 --> 0:19:33.760 billion dollars in debt after passing the thirty three trillion 0:19:33.760 --> 0:19:37.159 dollar debt run. Now, to put this into sort of 0:19:37.200 --> 0:19:40.280 some context, it took from the founding of the United 0:19:40.320 --> 0:19:44.280 States all the way until nineteen eighty one to get 0:19:44.320 --> 0:19:45.560 to one trillion. 0:19:45.160 --> 0:19:45.879 Dollars of debt. 0:19:47.000 --> 0:19:51.919 Okay, from beginning to nineteen eighty one, and now we 0:19:52.040 --> 0:19:55.159 hit that run rate in less than two months. 0:19:57.320 --> 0:19:58.520 I don't even know what to say about that. 0:19:59.040 --> 0:20:01.840 It took the US until March of nineteen seventy five 0:20:01.880 --> 0:20:04.439 do you get to its first five hundred billion, and 0:20:04.520 --> 0:20:07.040 now it did that in eighteen days. 0:20:08.000 --> 0:20:08.640 It's insane. 0:20:09.960 --> 0:20:12.240 And so now we're starting to witness that the market 0:20:12.320 --> 0:20:14.080 is starting to wake up to the fact that sure, 0:20:15.440 --> 0:20:17.639 sure it's risk free because sure the government's going to 0:20:17.640 --> 0:20:20.480 pay me back, but they're going to be paying me 0:20:20.560 --> 0:20:25.400 back with heavily devalue dollars. I don't want that. And 0:20:25.440 --> 0:20:29.880 not to mention, the demand is still mostly there. There's 0:20:29.920 --> 0:20:33.960