WEBVTT - The Mark Moss Show 2-23-24 0:00:00.000 --> 0:00:01.520 If you're just tuning in, you're listening to the Mark 0:00:01.600 --> 0:00:03.600 Mass Show. We always talk about the way the world 0:00:03.640 --> 0:00:05.200 is changing as we look at it through the lens 0:00:05.200 --> 0:00:09.119 of politics, finance, and technology, and today we are going 0:00:09.160 --> 0:00:12.319 to look at where the economic world is moving into. 0:00:12.680 --> 0:00:16.160 This continues to further discussions that we've had showing what 0:00:16.200 --> 0:00:19.800 the natural constraints of the central bankers and politicians are. 0:00:19.920 --> 0:00:23.080 So we know what moves are coming and so we're 0:00:23.120 --> 0:00:25.160 going to break that down. So, like I said, most 0:00:25.239 --> 0:00:28.560 people have been watching the doom, the doom and the gloom, 0:00:28.800 --> 0:00:32.320 the doom scrolling if you will, across YouTube and Twitter 0:00:32.400 --> 0:00:35.880 and Instagram, et cetera, and unfortunately the doom and gloom cells, 0:00:36.080 --> 0:00:39.400 which is why people continue to do it. I have 0:00:39.600 --> 0:00:41.960 found myself in this trap all though for the last 0:00:42.040 --> 0:00:44.400 year so I've been trying to be much more optimistic. 0:00:44.440 --> 0:00:47.160 I always was, but I was still using some doom 0:00:47.240 --> 0:00:49.200 to sort of bring people in. However, I've been trying 0:00:49.200 --> 0:00:53.800 to change that and a lot of people aren't. And 0:00:53.880 --> 0:00:57.120 we're seeing that. The reason why is we kind of 0:00:57.160 --> 0:01:00.400 know this. We see social media post things for engage. 0:01:00.680 --> 0:01:04.480 Rage gets more engagement, rage fear those to get more engagement, 0:01:04.480 --> 0:01:07.120 it starts to divide us. Mainstream media they show us 0:01:07.120 --> 0:01:09.600 all the doom and gloom, and unfortunately, like I said, 0:01:09.680 --> 0:01:14.039 that's what sells. And while most people are so worried 0:01:14.080 --> 0:01:17.240 about their watching every video on, you know, the debt 0:01:17.280 --> 0:01:19.680 of the United States and the bond market's going to 0:01:19.720 --> 0:01:22.320 implode and the yield curve is going to reinvert, and 0:01:22.360 --> 0:01:26.520 it's going to mean recession. Recession, recession, recession. What does 0:01:26.560 --> 0:01:31.279 that mean? Everyone's afraid of a recession. But why well, 0:01:31.440 --> 0:01:35.120 I mean technically, a recession would be that growth is slowing, 0:01:35.319 --> 0:01:37.480 so that means businesses aren't doing as good, You're not 0:01:37.560 --> 0:01:40.200 making as much money, and ultimately your quality of life 0:01:40.240 --> 0:01:43.880 would go down. Okay, that that sounds pretty bad and 0:01:43.920 --> 0:01:47.800 it is. However, we also then the other side of 0:01:47.840 --> 0:01:50.320 a recession. We have what's called the markets. So we 0:01:50.360 --> 0:01:53.559 have the economy and we have the markets. Now, those 0:01:53.560 --> 0:01:55.960 things used to be the same. You see in the 0:01:56.040 --> 0:01:59.080 economy when businesses when when you and I the people 0:01:59.120 --> 0:02:01.680 did good, then the business is good. When the businesses 0:02:02.120 --> 0:02:04.440 did good, then the markets did good because we would 0:02:04.440 --> 0:02:08.079 buy those businesses through publicly traded stocks and equities. And 0:02:08.120 --> 0:02:11.200 when those businesses did good, meaning their revenues went up, 0:02:11.240 --> 0:02:14.359 their profits went up, then their stock would go up, 0:02:14.639 --> 0:02:18.000 and so then we were all in this together. We 0:02:18.040 --> 0:02:20.399 made more money, which means we spent more money, which 0:02:20.440 --> 0:02:22.880 means the business did better. So the economy did better, 0:02:22.880 --> 0:02:27.120 which then meant the markets did better. But that's no 0:02:27.240 --> 0:02:30.560 longer the case. As a matter of fact, I've been 0:02:31.680 --> 0:02:37.679 most economists talk about sort of pre COVID era. I don't. 0:02:37.800 --> 0:02:41.640 I don't. Maybe maybe we can call it BC before COVID. 0:02:42.400 --> 0:02:45.040 And really the world changed in two thousand and eight, 0:02:45.040 --> 0:02:47.480 and specifically the markets and the economy changed. Specifically, the 0:02:47.520 --> 0:02:50.680 way that the governments and central banks work in the 0:02:50.720 --> 0:02:55.200 markets changed. This is something I've talked about quite extensively. Really, 0:02:55.840 --> 0:02:58.960 the way central banks and the governments changed the way 0:02:58.960 --> 0:03:01.000 they interacted the markets happened in two thousand and eight, 0:03:01.800 --> 0:03:04.880 and since then it's only continued to accelerate and get 0:03:04.919 --> 0:03:07.320 bigger and bigger and bigger and bigger. We've seen it. 0:03:07.400 --> 0:03:08.880 You know, I'm not going to go through the whole 0:03:08.880 --> 0:03:11.440 timeline and history of this, but twenty twenty, I mean, 0:03:11.480 --> 0:03:13.760 it was just put into steroids, was put into overdrive. 0:03:14.360 --> 0:03:16.040 And so now we sort of have to when we 0:03:16.120 --> 0:03:18.079 look at economic data financial data, we have to sort 0:03:18.080 --> 0:03:21.200 of look at like pre COVID era, and so we'll 0:03:21.200 --> 0:03:22.679 talk about a little bit of that. We also to 0:03:22.720 --> 0:03:24.400 look at like two thousand and eight era. But what 0:03:24.480 --> 0:03:26.720 I was going to say is in the twenty twenty era, 0:03:26.840 --> 0:03:29.639 what we saw maybe for the first time, or really 0:03:29.840 --> 0:03:32.440 became obvious to everybody for the first time, was that 0:03:32.520 --> 0:03:36.280 the economy in the market split. They were no longer 0:03:36.400 --> 0:03:38.720 equal to each other anymore like they did in the past. 0:03:38.880 --> 0:03:43.760 So what we saw is that literally literally all, you know, 0:03:43.840 --> 0:03:46.960 not all, but a majority of businesses, the economy was 0:03:47.040 --> 0:03:49.600 shut down like a light switch, turn the lights off, 0:03:49.640 --> 0:03:52.000 turned the economy off, not just in the United States, 0:03:52.200 --> 0:03:54.200 but most of the world, pretty much the whole world 0:03:54.280 --> 0:03:57.200 at the same time. So the economy was shut down. 0:03:57.320 --> 0:04:01.440 We saw countless people lose their jobs. We saw countless 0:04:02.040 --> 0:04:05.400 millions of businesses literally shut down. Businesses that have been 0:04:05.440 --> 0:04:09.880 around for multiple decades, multiple generations, were shut down permanently 0:04:09.920 --> 0:04:12.120 for good. A lot of them never made it. You know, 0:04:12.240 --> 0:04:14.800 here in southern California, up in like Hollywood, you have 0:04:14.840 --> 0:04:17.720 all these iconic restaurants that have been around for decades. 0:04:18.080 --> 0:04:22.360 You know, served, served, famous, serve famous, famous athletes from 0:04:22.839 --> 0:04:26.080 way way way back, and they're just gone. Now. Landmarks 0:04:26.160 --> 0:04:28.360 are gone. Right, And so we saw literally the economy 0:04:28.720 --> 0:04:32.760 shut off, but then the markets, meaning the stock markets 0:04:32.760 --> 0:04:35.960 and things like that made crazy all new all time high. 0:04:36.040 --> 0:04:38.200 So how does that work? How can we have a 0:04:38.279 --> 0:04:40.880 recession and yet we have a boom in the markets 0:04:40.880 --> 0:04:42.800 at the same time. Well, that's the world that we 0:04:42.839 --> 0:04:44.960 live in, and so it's important to understand that. So 0:04:45.000 --> 0:04:47.040 when everyone's afraid of a recession, we have to understand 0:04:47.080 --> 0:04:48.920 what are we afraid of? You See, this is a 0:04:49.000 --> 0:04:51.200 question that I get asked a lot mark. What are 0:04:51.200 --> 0:04:54.240 we going to do to protect ourselves from inflation, or 0:04:54.279 --> 0:04:57.960 from a recession, or from central bank digital currencies, or 0:04:58.000 --> 0:05:00.040 from attacks on our privacy things like that, if what 0:05:00.040 --> 0:05:02.279 if the electricity goes out? All these different things. And 0:05:02.320 --> 0:05:06.599 what I always typically, always, typically, typically always reply back 0:05:06.600 --> 0:05:10.400 with is what is the attack vector you're trying to 0:05:10.400 --> 0:05:15.280 protect against? So, for example, if I think that if 0:05:15.320 --> 0:05:18.000 I'm worried about a recession, okay, then what is it 0:05:18.040 --> 0:05:20.719 that I'm afraid of the recession for while I'm afraid 0:05:20.760 --> 0:05:24.920 that my job might get taken out? Okay? Well, if 0:05:24.960 --> 0:05:27.360 you're in a if you're in a job you work 0:05:27.440 --> 0:05:31.279 for a business that's highly dependent on the let's say 0:05:31.560 --> 0:05:33.960 on economy, that would be highly influenced by a recession, 0:05:34.000 --> 0:05:35.880 that could be a problem. But I could have a 0:05:35.920 --> 0:05:40.160 job that's not recession. I guess that that is recession proof. 0:05:40.200 --> 0:05:42.440 So let me give you an example. If I was 0:05:42.480 --> 0:05:47.800 in a business that was only catered to tourists, for example, 0:05:47.839 --> 0:05:50.600 it was all tourism based. Well, in a bad recession, 0:05:50.720 --> 0:05:54.200 tourism might slow down, and so my business might be 0:05:54.279 --> 0:05:56.240 impacted by that. I might lose my job, or if 0:05:56.279 --> 0:05:59.279 I have a business in that sector, I might suffer. However, 0:05:59.839 --> 0:06:01.880 I have a buddy who has a business where he 0:06:01.920 --> 0:06:06.000 does like flood and fire restoration. So if your house 0:06:06.040 --> 0:06:09.520 floods or your house gets a fire, he works for 0:06:09.600 --> 0:06:11.880 the insurance companies and he will go fix your house. 0:06:13.240 --> 0:06:16.599 That business is recession proof. It doesn't matter where the 0:06:16.640 --> 0:06:18.960 recession's at. If you have a fire or flood at 0:06:18.960 --> 0:06:21.159 your house, insurance going to pay for it. And so 0:06:21.360 --> 0:06:22.760 you have to kind of think about what am I 0:06:22.800 --> 0:06:25.840 trying to protect against. Some people think, well, a recession 0:06:25.880 --> 0:06:28.120 is just bad for the market. So like if we 0:06:28.160 --> 0:06:30.840 have a recession, then my retirement accounts are going to 0:06:30.880 --> 0:06:32.920 get cut in half, my value of my home is 0:06:32.960 --> 0:06:35.440 going to get cut in half. And that's where we 0:06:35.440 --> 0:06:38.839 want to talk about today because is that necessarily the case. 0:06:39.680 --> 0:06:41.040 Let's just take a look at some of the data. 0:06:41.080 --> 0:06:46.080 So what we saw this week officially Japan, the Japanese 0:06:46.120 --> 0:06:50.800 economy officially shrinks unexpectedly. In the final quarter of twenty 0:06:50.839 --> 0:06:54.719 twenty three, the gross domestic product or GDP was down 0:06:55.320 --> 0:06:58.880 zero point one percent. Very dramatic. I know, I know, 0:06:59.000 --> 0:07:01.919 very dramatic, but it's down and it's technical, right we 0:07:02.160 --> 0:07:04.800 want it. We ow to understand this. Japan dropped a 0:07:04.920 --> 0:07:08.120 rank in the global standings and went to become the 0:07:08.160 --> 0:07:11.720 fourth largest economy now after the weekend of twenty twenty three, 0:07:12.200 --> 0:07:15.160 and it was weaker than what most economists had projected it. 0:07:15.200 --> 0:07:17.040 So these economist always trying to project where things are 0:07:17.040 --> 0:07:19.800 going because markets are forward looking. And so what we 0:07:19.840 --> 0:07:24.400 see is that the economists had forecasted zero point two growth, 0:07:25.080 --> 0:07:29.160 but then the economy actually contracted, so is much worse 0:07:29.200 --> 0:07:32.400 than what they had thought. Now zero point one doesn't 0:07:32.400 --> 0:07:36.520 sound like a lot, but technically, now the Japanese economy 0:07:36.680 --> 0:07:40.320 is in a recession, and because it's now contracted for 0:07:40.480 --> 0:07:44.200 two consecutive quarters. Now, if you remember, the Biden administration 0:07:44.400 --> 0:07:47.640 changed the definition of that, So technically two quarters and 0:07:48.160 --> 0:07:52.080 to contracting quarters consecutive quarters don't mean a recession in 0:07:52.080 --> 0:07:54.720 the United States anymore. But in this case, they're declaring 0:07:55.120 --> 0:07:58.000 Japan to technically be in a recession. Now, the data 0:07:58.040 --> 0:08:02.520 is preliminary, is small enough I mean, zero point one, 0:08:02.560 --> 0:08:04.640 and small enough to leave room for doubt. So what 0:08:04.640 --> 0:08:06.640 does that mean. I mean this preliminary, It means they're 0:08:06.720 --> 0:08:12.400 still gonna retally the numbers and the margin is so 0:08:12.480 --> 0:08:14.600 small we might be able to just find a little 0:08:14.640 --> 0:08:17.400 bit of extra you know, economic activity over here in 0:08:17.440 --> 0:08:19.880 the corner and bring it in and then when we 0:08:19.960 --> 0:08:23.080 revise the estimates that are going to come in next month, 0:08:23.600 --> 0:08:25.720 I mean, maybe it could paint a different picture. So 0:08:26.480 --> 0:08:28.920 that's where we're at. Okay, So technically, as of today 0:08:29.160 --> 0:08:31.520 we've slipped. It could be revised and will be out. 0:08:31.520 --> 0:08:35.400 But does it really matter whether Japan is in a 0:08:35.520 --> 0:08:38.439 recession right now? Could be debatable? Right, Like I said that, 0:08:38.520 --> 0:08:43.040 the information is still gonna get revised. And what's interesting 0:08:43.080 --> 0:08:46.560 about this is though, even though the GDP contracted for 0:08:46.640 --> 0:08:50.199 a second straight quarter. When we look at other data, 0:08:50.280 --> 0:08:53.080 such as business surveys, it tells us a completely different story. 0:08:53.280 --> 0:08:55.120 And this is why you can't rely on any one indicator. 0:08:55.160 --> 0:08:56.319 You have to look at lots of different things. So 0:08:56.320 --> 0:08:58.080 when we look at some of the business data, some 0:08:58.120 --> 0:09:01.320 of the business surveys, and we look at the labor market, 0:09:01.360 --> 0:09:03.880 it looks like something different. So, for example, if you 0:09:03.880 --> 0:09:06.440 look at Japan's unemployment, and don't worry, it's not all 0:09:06.480 --> 0:09:08.640 about Japan. We're going to talk about EU. We're gonna 0:09:08.640 --> 0:09:12.160 talk about the We're gonna talk about the the EU, 0:09:12.200 --> 0:09:14.240 we're talking about England, and we're gonna talk about the 0:09:14.280 --> 0:09:15.760 United States. We're gonna get through all these but we're 0:09:15.760 --> 0:09:18.200 talking about Japan for a second here. But I gotta 0:09:18.200 --> 0:09:19.959 take a very quick break. If you're just tuning in 0:09:20.000 --> 0:09:22.680 your listening to the Mark Moas Show, we're talking about 0:09:23.200 --> 0:09:26.280 recession and markets and booms and busts and so much more. 0:09:26.280 --> 0:09:27.719 You don't want to miss what's coming up next. Don't 0:09:27.760 --> 0:09:30.120 go away, I'll be right back, all right, Welcome back. 0:09:30.120 --> 0:09:31.520 If you just tune in your listening to the Mark 0:09:31.600 --> 0:09:35.280 Moas Show, we're talking about how the United States and 0:09:35.520 --> 0:09:38.640 other major nations that major economies around the world are 0:09:38.840 --> 0:09:42.520 technically falling into recession, but is it as bad as 0:09:42.520 --> 0:09:44.319 what people think it is? And so we're looking at that, 0:09:44.320 --> 0:09:46.679 we're talking about Japan right now. We'll get to the EU, 0:09:46.800 --> 0:09:49.400 we'll get to Britain, we'll get into the US, but 0:09:49.480 --> 0:09:50.920 right now we're just talking about Japan. And so what 0:09:50.960 --> 0:09:54.559 I was saying is technically we're in a recession, very 0:09:54.640 --> 0:09:58.559 very small zero point one percent of contraction in that. However, 0:09:58.640 --> 0:10:00.240 the data is still going to be revised and be 0:10:00.360 --> 0:10:03.080 released next month, and so it could change. But the 0:10:03.120 --> 0:10:04.840 point that I was making is though even though that 0:10:04.880 --> 0:10:08.080 never came out, some of the other data is contradictory 0:10:08.080 --> 0:10:10.320 of that. And so, for example, business surveys of the 0:10:10.360 --> 0:10:12.400 labor market are telling a different story. We can see 0:10:12.440 --> 0:10:15.840 in the unemployment which fell to an eleven month low 0:10:15.960 --> 0:10:19.439 in December, which is pretty interesting. So typically you think 0:10:19.440 --> 0:10:21.959 of a recession like, oh my gosh, gross slows down, 0:10:22.000 --> 0:10:24.240 I'm probably going to lose my job, But in this case, 0:10:24.320 --> 0:10:27.880 unemployment actually has continues to fall lower and lower and lower, 0:10:28.040 --> 0:10:31.440 which showed that business conditions across all industries and firm 0:10:31.480 --> 0:10:35.959 sizes were the strongest they've been since twenty eighteen. It's 0:10:35.960 --> 0:10:39.640 pretty interesting. So GDP's slowing down, although the job markets 0:10:39.640 --> 0:10:41.960 the strongest it's been since twenty eighteen. Now we're going 0:10:42.040 --> 0:10:44.320 to talk about why that is in a minute. Let's 0:10:44.360 --> 0:10:48.200 just keep going. We can see that many economists expect 0:10:48.280 --> 0:10:51.679 makeup Japan to now end its policy of negative short 0:10:51.760 --> 0:10:54.120 term interest rates. They had wanted them to the Japan 0:10:54.920 --> 0:10:57.920 the boj bankup Japan kept saying they were going to. 0:10:58.720 --> 0:11:01.679 But how can they now? And we'll talk about why 0:11:01.720 --> 0:11:06.920 this is important, But how can with these GDP numbers 0:11:06.960 --> 0:11:11.160 of contracting growth, how could the boj think about ending 0:11:11.640 --> 0:11:14.640 negative vent rates or going to a tightening cycle. And 0:11:14.720 --> 0:11:17.640 the answer is they probably can't. So this leads into 0:11:17.760 --> 0:11:19.800 where we're going. But let me just hit on a 0:11:19.840 --> 0:11:22.200 couple more points here about Japan. Like I said, it 0:11:22.240 --> 0:11:24.960 lost its spot from the third biggest economy to go 0:11:24.960 --> 0:11:29.120 into the fourth and now is in this technical recession. 0:11:30.400 --> 0:11:33.040 And so what comes next and again understanding of some 0:11:33.080 --> 0:11:34.840 of the constraints, we'll talk about that, but let's jump 0:11:34.920 --> 0:11:37.520 over to the European continent for a minute, and what 0:11:37.559 --> 0:11:39.079 we can see over in Europe is sort of the 0:11:39.120 --> 0:11:42.400 same thing the whole Euro Area. For the most part, 0:11:42.440 --> 0:11:46.080 the EU shows that the economy is now losing momentum 0:11:46.360 --> 0:11:49.120 and they're starting to downgrade or slash their outlooks. So 0:11:49.160 --> 0:11:51.720 we saw in the EU, we saw the GDP gross 0:11:51.760 --> 0:11:59.480 domestic product was expanded expanded the zero point eight percent, 0:11:59.760 --> 0:12:04.200 that's the outlook, but they had projected one point two 0:12:04.400 --> 0:12:07.959 percent in a prior prediction. And again when you look 0:12:08.000 --> 0:12:11.280 at public financials, when you look at governments, they try 0:12:11.280 --> 0:12:14.160 to project out what the growth of our revenue profits 0:12:14.200 --> 0:12:18.040 will be. The problem is when businesses, companies and governments 0:12:18.679 --> 0:12:22.520 miss those projections and so downgrading that is pretty bad. 0:12:22.559 --> 0:12:26.000 And going from one point two, which is bad growth 0:12:26.240 --> 0:12:29.040 to zero point eight is like almost no growth, So 0:12:29.040 --> 0:12:31.680 it's a pretty pretty big deal. Now, on the bright side, 0:12:31.760 --> 0:12:34.319 they say that inflation has slowed down to two point 0:12:34.360 --> 0:12:38.640 seven percent this year, which is basically matching the European 0:12:38.720 --> 0:12:41.679 Central Bank's estimate, So that's good. So apparently they're getting 0:12:41.720 --> 0:12:45.200 it under control. What we can see is that this 0:12:45.320 --> 0:12:48.079 is through the EU, but in the UK they are 0:12:48.120 --> 0:12:50.959 also suffering from the same thing. As a matter of fact, 0:12:51.440 --> 0:12:54.000 they're dealing with the recession now as well, we can 0:12:54.040 --> 0:12:57.520 see the UK recession deals a fresh blow to Sunak's 0:12:57.600 --> 0:13:01.439 economic promises. And so what is that means? So again 0:13:01.600 --> 0:13:05.520 we talked about the intersection of politics, finance and technology, 0:13:06.160 --> 0:13:09.959 and finance should not be technical. I'm sorry, finance should 0:13:09.960 --> 0:13:12.559 not be political, but yet it is. And so that's 0:13:12.600 --> 0:13:14.480 what we're talking about here. We can see that GDP 0:13:14.600 --> 0:13:17.240 fell zero point three percent in the fourth quarter of 0:13:17.320 --> 0:13:21.920 last year. Again, they had projected a zero point one 0:13:22.000 --> 0:13:25.719 percent drop, so again it was worse than they had expected. 0:13:26.720 --> 0:13:28.959 Now we can see that this is affecting their Prime 0:13:29.000 --> 0:13:32.640 Minister Rishi Sunac, who so far has failed to meet 0:13:32.720 --> 0:13:35.679 his pledge to grow the economy. And so this is 0:13:35.720 --> 0:13:39.480 the big key. In order for politicians to stay in power, 0:13:39.640 --> 0:13:43.160 one they have to promise more things. So each politician 0:13:43.280 --> 0:13:47.480 is incentivized to offer you more free things. That's why 0:13:47.520 --> 0:13:49.920 Biden is trying to slash student debt. Right. We have 0:13:49.960 --> 0:13:51.560 to continue to give more and more stuff with to 0:13:51.559 --> 0:13:53.880 buy the votes, if you will. And so Prime Minister 0:13:53.960 --> 0:13:56.320 Rishi came in with a whole bunch of promises. I'm 0:13:56.320 --> 0:13:58.280 going to list them here in a second, one of 0:13:58.320 --> 0:14:00.920 which was to grow the economy and in the United States, 0:14:00.960 --> 0:14:02.760 it's also as important. We'll come to the US, but 0:14:03.320 --> 0:14:06.960 no income and president or maybe only one meaning a 0:14:07.000 --> 0:14:10.360 returning president, has won. In a time of recession, the 0:14:10.440 --> 0:14:14.360 economy has to be growing. Rishi Sunik pledged that he 0:14:14.400 --> 0:14:18.040 would grow the economy, but yet grossmc product is falling, 0:14:19.240 --> 0:14:22.560 and it's falling faster than what the economists had predicted. 0:14:24.000 --> 0:14:26.280 It says. While the economy still grews zero point one 0:14:26.320 --> 0:14:29.840 percent across the entire year as a whole, it's the 0:14:29.960 --> 0:14:33.960 slowest annual expansion the UK has seen since two thousand 0:14:34.000 --> 0:14:38.040 and nine. So that's pretty bad now. If you think 0:14:38.040 --> 0:14:40.240 about that. That's two thousand and eight. Two thousande was 0:14:40.240 --> 0:14:43.840 the Great financial Crash, so after the worst crash in history, 0:14:43.880 --> 0:14:46.600 we had a rebound that typically happens. But since then 0:14:46.680 --> 0:14:48.800 we've been in this up trend for the last decade, 0:14:48.840 --> 0:14:52.320 twelve years, fourteen years, and it's the worst that it's 0:14:52.360 --> 0:14:55.920 been since that time. It's pretty bad now. We can 0:14:55.920 --> 0:14:59.480 see that this is a like I said, it was 0:14:59.520 --> 0:15:05.080 anticipate paid, but it's giving the Bank of England the 0:15:05.160 --> 0:15:07.960 same problem that the Bank of Japan is having, which 0:15:08.000 --> 0:15:11.480 is actually the same problem that the US central banks, 0:15:11.480 --> 0:15:15.120 the Federal Reserve is having as well, which is what 0:15:15.960 --> 0:15:19.400 can they do to fight inflation when at the same 0:15:19.440 --> 0:15:24.160 time they're fighting recession. You see, the recession needs stimulation. 0:15:24.400 --> 0:15:27.960 The recession needs easy monetary policy to try to get 0:15:28.000 --> 0:15:31.080 the economy out of the recession. If we can make 0:15:31.160 --> 0:15:33.680 money cheaper, then people will buy more of it, will 0:15:33.720 --> 0:15:36.840 take on more house, car, boat loans, We'll expand our businesses, 0:15:37.000 --> 0:15:39.520 We'll go remodel our house, fix our yard up. We'll 0:15:39.520 --> 0:15:42.680 spend more money, and that stimulation in the market will 0:15:42.800 --> 0:15:44.960 bring us out, hopefully. The goal is to bring us 0:15:44.960 --> 0:15:48.360 out of recession. The problem is is that it restokes inflation, 0:15:48.960 --> 0:15:51.840 and so on one hand they're fighting the inflation, but 0:15:52.040 --> 0:15:56.920 they're overtightening, which is then causing the recession. It's the 0:15:57.000 --> 0:15:58.680 rock and the hard place. We've been talking about this 0:15:58.680 --> 0:16:02.360 for a long time. Now made again, like I said, 0:16:02.400 --> 0:16:06.000 made growing the economy one of five key pledges after 0:16:06.040 --> 0:16:08.560 he took office back in October of twenty twenty two. 0:16:09.040 --> 0:16:13.960 The other ones were cutting the debt, having inflation, reducing 0:16:14.040 --> 0:16:18.680 health services, waiting lists, and stopping boat migration across the 0:16:18.720 --> 0:16:23.359 English Channel. So far, out of all those pledges, those promises. 0:16:23.360 --> 0:16:27.240 Elect me, and I'll get these things done. Out of 0:16:27.280 --> 0:16:28.840 all of those, the only thing he's been able to 0:16:28.880 --> 0:16:30.840 do is been able to slow down price growth. Now 0:16:30.920 --> 0:16:33.560 I say he's been able to do, he's certainly not 0:16:33.600 --> 0:16:37.320 responsible for that. A lot of it is returning to 0:16:37.360 --> 0:16:40.160 the mean. So again, we had this COVID era, this 0:16:40.520 --> 0:16:42.120 massive I call it like a sugar rush, all this 0:16:42.120 --> 0:16:44.240 money dumped in the economy that created all these distortions, 0:16:44.240 --> 0:16:45.920 and a lot of it's coming back to normal. So 0:16:45.960 --> 0:16:47.560 I'm certainly not going to give him credit for that, 0:16:47.800 --> 0:16:51.240 but to his credit, he'll certainly claim it. The one 0:16:51.360 --> 0:16:53.520 thing out of all of those things is inflation has 0:16:53.520 --> 0:16:56.240 started to come back down. But migrants that's not better, 0:16:57.440 --> 0:17:00.560 health services waiting less, that hasn't gotten better. The debt 0:17:00.680 --> 0:17:04.840 certainly hasn't gotten any less. That's laughable. And so none 0:17:04.880 --> 0:17:09.080 of these things have worked. So what do they do well? 0:17:10.320 --> 0:17:12.240 We need to kind of dig in a little bit 0:17:12.280 --> 0:17:14.920 because there's a lot of nuance here. Like I said, one, 0:17:14.960 --> 0:17:16.879 we want to understand what are the constraints. So we 0:17:16.960 --> 0:17:20.520 know that this puts a lot of pressure on the 0:17:20.520 --> 0:17:23.960 central bank. The bank now has to start cutting rates 0:17:24.000 --> 0:17:27.480 faster and deeper than they had wanted to do, because 0:17:27.480 --> 0:17:30.560 again they're trying to keep inflation at bay. And just 0:17:30.640 --> 0:17:33.920 like all central banks Japan wanted to start tightening, they 0:17:33.920 --> 0:17:36.159 can't do that now. The fed's trying to FED in 0:17:36.160 --> 0:17:38.720 the US is trying to delay their pivot, but they're 0:17:38.840 --> 0:17:41.760 being forced into it sooner. In the UK, same thing, 0:17:41.840 --> 0:17:45.359 they're being forced into faster rate cuts at a faster rate, 0:17:45.440 --> 0:17:48.119 psyching highicle than they had wanted to. Now, this is 0:17:48.840 --> 0:17:51.760 the Europe, Europeans the EU, this is the UK, this 0:17:51.840 --> 0:17:55.560 is Japan. And now we'll talk about the United States, 0:17:55.560 --> 0:17:58.199 because retail sales are plunging in January, the worst year 0:17:58.240 --> 0:18:01.119 over your growth since the COVID lockdown. But this is 0:18:01.160 --> 0:18:03.760 only about the economy. What about the markets. I'll cover 0:18:03.800 --> 0:18:04.959 that in a minute when I come back. If you're 0:18:05.000 --> 0:18:06.880 just tuning in, youth in too, the Mark Mass Show, 0:18:07.920 --> 0:18:11.320 talking about recession and markets, don't go away. We'll be 0:18:11.359 --> 0:18:14.479 back with more a minute. Beer back, all right, welcome back. 0:18:14.520 --> 0:18:15.880 If you're just tune in you Lily too, the Mark 0:18:15.920 --> 0:18:18.600 Mass Show. We're talking about the whole world and going 0:18:18.600 --> 0:18:22.040 into a recession right now, and does it matter and 0:18:22.080 --> 0:18:23.840 if so, what should we do about it. So we're 0:18:23.840 --> 0:18:26.440 talking about we talked about Japan going into recession technically 0:18:26.840 --> 0:18:29.359 potentially could be revised out what technically it is, the 0:18:29.400 --> 0:18:32.800 EU and then the UK, and now we'll talk about 0:18:32.800 --> 0:18:36.600 the US. But the story is the same. All governments 0:18:36.960 --> 0:18:41.679 and central banks have been fighting inflation, which inflation was 0:18:41.720 --> 0:18:44.920 caused by printing too much money, creating too much money 0:18:44.920 --> 0:18:48.960 through increasing the monitary base and credit expansion. The problem 0:18:49.040 --> 0:18:51.960 is they created too much inflation by expanding that, and 0:18:52.000 --> 0:18:54.560 they're trying to bring inflation back under control because people 0:18:54.560 --> 0:18:57.919 get restless when you can't afford to feed your family 0:18:57.920 --> 0:18:59.399 and you can't afford the same quality of life that 0:18:59.440 --> 0:19:03.280 you've been living, and you're unhappy. And when people become unhappy, 0:19:03.320 --> 0:19:05.600 then governments don't last very long. So they want to 0:19:05.600 --> 0:19:09.440 bring inflation back down. But at the same time, by 0:19:09.600 --> 0:19:11.560 trying to bring inflation back down, they have to do 0:19:11.560 --> 0:19:14.080 the opposite. They have to contract the money supply them. 0:19:14.240 --> 0:19:16.600 But when they contract the money supply, then the entire 0:19:16.640 --> 0:19:20.480 economy starts to contract. Growth slows down or goes negative 0:19:20.560 --> 0:19:23.760 is exactly what we're seeing. And then if people lose 0:19:23.800 --> 0:19:27.639 their jobs, then they're even more unhappy. So what do 0:19:27.680 --> 0:19:29.600 we do Damn. If we do dan, if we don't write, 0:19:29.680 --> 0:19:31.480 we either continue to print the money that we need 0:19:31.520 --> 0:19:34.680 for all of our endless programs that we want to 0:19:34.680 --> 0:19:38.520 continue to fund and stimulate the economy and face inflation, 0:19:38.800 --> 0:19:41.399 or we try to bring things back under control and 0:19:41.440 --> 0:19:47.240 then we crash the economy. Those are the two choices. Now, 0:19:47.240 --> 0:19:48.879 what we can see in the United States is retail 0:19:48.880 --> 0:19:51.000 sales plunged in January. Like I said, worst year over 0:19:51.080 --> 0:19:54.840 year growth since the COVID lockdown, which is pretty bad. 0:19:55.640 --> 0:19:59.360 We saw that they unexpectedly surged in November and December, 0:20:00.160 --> 0:20:01.800 now driven in a large pot by a jump in 0:20:01.840 --> 0:20:05.520 the food services headline. Retail sales in January expected to 0:20:05.560 --> 0:20:10.000 decline by just zero point two percent, but it was worse, 0:20:10.160 --> 0:20:15.080 and it had been zero point six percent, so again 0:20:15.720 --> 0:20:19.720 worse than expectations. This is the worst monthly decline since 0:20:19.840 --> 0:20:22.840 March of twenty twenty three, and the worst year over 0:20:22.920 --> 0:20:27.320 year rise since May of twenty twenty so that's a 0:20:27.320 --> 0:20:29.480 big problem. We have the same issues going on in 0:20:29.520 --> 0:20:32.840 the United States. The retail cells are plunging. Now we're 0:20:32.840 --> 0:20:35.480 not technically in a recession like we have over in 0:20:35.560 --> 0:20:36.879 Japan and we have in the EU and we have 0:20:36.920 --> 0:20:40.160 in the UK. Technically the US is not, but it's slowing. 0:20:41.000 --> 0:20:43.000 It's slowing now technically to be in a recession, to 0:20:43.000 --> 0:20:45.639 be two negative quarters, we're not at that point yet. 0:20:46.080 --> 0:20:48.200 But it's the trend, it's the direction that we're trying 0:20:48.200 --> 0:20:51.359 to pay attention to. We can see that motor vehicles 0:20:51.680 --> 0:20:54.680 and parts and building materials saw the largest decline month 0:20:54.720 --> 0:20:58.920 over month on a year over year basis. Gas stations 0:20:58.920 --> 0:21:01.960