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Speaker 1: Now here's a highlight from Coast to Coast AM on

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Speaker 1: iHeart Radio and welcome back to Coast to Coast, Miss

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Speaker 1: Shedlock with US registered investment advisor. Of course, he specializes

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Speaker 1: in helping individuals seeking strong performance with low volatility, and

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Speaker 1: here he is on Coast to Coast. He's one of

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Speaker 1: our regular news guests, and it's good to have you

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Speaker 1: for a couple hours, Miss Hey. A pleasure to be

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Speaker 1: back on. George. Has it really been that long since

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Speaker 1: the last recession? My? Oh, my, December two thousand and seven.

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Speaker 1: Here we are, he's nineteen long. We come a long way. Sure.

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Speaker 1: Have things seem robust right now, aren't they? They? Do?

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Speaker 1: You know? The question on the back of my hand, though,

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Speaker 1: is you know how long can this recovery? Laugh? Not?

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Speaker 1: Everything seems robust. Jobs sort of seeing robust. But the

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Speaker 1: last five reports we've had two bad ones, two good ones,

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Speaker 1: and maybe one in the medal there, so we're starting

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Speaker 1: to see some increased volatility. Home sales has not been good.

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Speaker 1: The auto reports have been confusing to me George too,

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Speaker 1: because I look at my gosh, how were they selling

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Speaker 1: all these cars? Finally a report came up out last

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Speaker 1: week that explains it. Inventories are stacking up on dealers.

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Speaker 1: And if you know how car sales work, a car

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Speaker 1: sale is reported or the deal or excuse me, the

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Speaker 1: car manufacturers report a sale when they ship that car

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Speaker 1: to the dealer, even if it's still sitting there on

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Speaker 1: the lot. They're stacking up more on the way. Inventories

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Speaker 1: have been rising. Manufacturing inventories origin all time high, just

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Speaker 1: as the global economy is slowing. So there's a lot

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Speaker 1: of cross currency here, George, Ye, there sure is. And

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Speaker 1: of course, you know, when the automobile industry gets sick,

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Speaker 1: the country really gets a call too. It does. And

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Speaker 1: I think one of the things, George, that has kept

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Speaker 1: the auto industry going longer than I actually thought that

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Speaker 1: it would is um boomers that you know, are are retiring.

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Speaker 1: The stock market portfolio looks really good, they say, let's

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Speaker 1: go out and buy that one last car. So and

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Speaker 1: that's been going on for a while. So people are retiring,

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Speaker 1: Boomers are getting older. Those of that are in good

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Speaker 1: shape have money. Those that are in bad shape just

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Speaker 1: weren't going to buy that new car in the first place. Bish,

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Speaker 1: I have a palm reader on yesterday and he's pretty good.

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Speaker 1: And he talked about the economy and he protects twenty

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Speaker 1: twenty is going to be a booming economic year for us. Wow,

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Speaker 1: how about I don't think so, you know, unless we

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Speaker 1: have a huge recession right now that somehow turns around

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Speaker 1: at the end of next year. The I look at UMU.

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Speaker 1: The New York Fed has a recession model and it

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Speaker 1: says the odd recession or about thirty three percent. I

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Speaker 1: went back and looked at that, and it's funny. This

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Speaker 1: model depends on a yield curve in version. They look

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Speaker 1: at the interest rate on the three year bond and

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Speaker 1: it's actually higher than on the ten year yield. Doesn't

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Speaker 1: make much sense normally, but this is the kind of

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Speaker 1: thing that happens at recessions. Now it's not thirty three

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Speaker 1: percent that we're in one right now. It's just thirty

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Speaker 1: three percent that we're in one sometime in the next year. Oh.

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Speaker 1: I was discussing this with a friend just yesterday. He goes,

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Speaker 1: thirty percent is not all that high, and I said, well,

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Speaker 1: here's look at it this way. Every time in the

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Speaker 1: last nine recessions, every time we've hit thirty three percent,

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Speaker 1: we've gone on to have one so, and that's what

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Speaker 1: I'm expecting this time too, Georgia. So the so called

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Speaker 1: middle class, what's happening to the mission? They getting eroded away?

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Speaker 1: Oh my gosh, George, I looked at some stats. I've

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Speaker 1: got some really tremendous charts on this. I've just not

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Speaker 1: posted them on my website yet, um misstalk dot com.

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Speaker 1: But uh, the bottom fifty percent? What what percentage of

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Speaker 1: the wealth of the country do you think the bottom

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Speaker 1: fifty percent has? You know, I don't want to put

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Speaker 1: you on the spot, so I'll give you the answer.

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Speaker 1: One percent. Let me guess one percent. Good guess yours.

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Speaker 1: The top one percent has almost a third, thirty one

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Speaker 1: percent actually, and the top ten percent has seventy percent.

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Speaker 1: So uh, the the right around that middle point, if

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Speaker 1: you're just underneath it, you likely don't have anything. So uh, that's,

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Speaker 1: you know, kind of where we're heading. And people want

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Speaker 1: to do all kinds of things about it, but they

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Speaker 1: do it without looking at why this is happening and

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Speaker 1: where the problem really is. What about the generation? Why, folks,

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Speaker 1: what's going to happen with those youngsters as they get

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Speaker 1: a little more the millennials? Why the UM they're loaded down, George,

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Speaker 1: with tons of student debt. They they're angry. Uh, there

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Speaker 1: was a pull out. There, there was a survey. You know,

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Speaker 1: who do you who do you think is responsible? They

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Speaker 1: blame the boomers, and you know what, George, I don't

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Speaker 1: blame them for blaming the boomers. The Uh, the Fed

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Speaker 1: bailed out the boomers bailed out the banks. The young

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Speaker 1: kids are still saddled with with student loans. Uh. Real

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Speaker 1: wages have not kept up with home prices. They can't

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Speaker 1: afford a home even if they wanted one. Their own

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Speaker 1: prices have just skyrocketed since about two thousand and eleven.

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Speaker 1: Wages are going up about two or three percent a year.

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Speaker 1: It's you know, when home prices are rising six and

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Speaker 1: you're gaining and you're getting three. Home prices are outstripping

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Speaker 1: you three four in some markets, five six seven percent

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Speaker 1: a year. You can't afford. How is it? So their

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Speaker 1: lifestyle is a lot different. Some of them are living

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Speaker 1: at home because they have to because their job doesn't

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Speaker 1: support a house. And some of them are living at

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Speaker 1: home because they need to take care of their aging

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Speaker 1: boomer parents. Yeah, that's true too. Now two thousand and seven,

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Speaker 1: two thousand and eight when we had that disaster, the

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Speaker 1: FED came in and bailed out everything. Can it do

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Speaker 1: that again if we have another situation like that. That's

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Speaker 1: people keep asking me, you know, what are they gonna do? Well,

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Speaker 1: we need to see it first. The Europe is in

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Speaker 1: a lot worse shape than we are here. They have

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Speaker 1: negative entrant rates over there are already the interest trade

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Speaker 1: on the German ten year bond negative zero point three

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Speaker 1: to six percent. They give you back less than what

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Speaker 1: you had. Yeah, that's crazy. Think about this. It's uh.

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Speaker 1: Negative bonds yields imply that you would rather have ninety

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Speaker 1: cents ten years from now than a dollar today. George,

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Speaker 1: that's logically impossible. It is crazy. That's exactly the word

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Speaker 1: that I wrote down. You know, get this word in crazy, uh,

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Speaker 1: the and it it can only happen when central banks

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Speaker 1: are manipulating interest rates that much. Close to half the

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Speaker 1: world's bonds, government bonds are trading with negative yield. Now.

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Speaker 1: It didn't happen in the US, and arguably it's one

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Speaker 1: of the things we I wouldn't say that we did right,

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Speaker 1: but we did better than Europe. These nigga interest rates

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Speaker 1: punished the savers more so than zero percent interest rates.

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Speaker 1: The European banks are in horrendous shape. Deutsche Bank is

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Speaker 1: about ready to go under. The Italian banking system surely

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Speaker 1: is insolvent. Look at what the FED did. In contrast,

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Speaker 1: they're paying interest on access reserves. They patted the balance sheet,

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Speaker 1: they created trillions of dollars of excess reserves. They were

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Speaker 1: giving banks free money. The ECB, with negative interest rates

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Speaker 1: were charging banks. They got insolvent banks, and they're charging

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Speaker 1: them interest to hold funds that the ECB forced them

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Speaker 1: to hold through their quantitative easing strategy. Over there, George,

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Speaker 1: I don't agree with the bailout here in the US.

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Speaker 1: I'm quite certain you don't either, but not to that extent.

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Speaker 1: What they did in Europe was even worse. Bish, I

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Speaker 1: did something I never thought I would ever do. I

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Speaker 1: needed a sponge, and I went online and I bought it. Oh,

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Speaker 1: and I got to tell you, most of the time,

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Speaker 1: normally I would have gone to the grocery store in

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Speaker 1: the household section and picked up a sponge and come

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Speaker 1: home that night with it. And I don't know why

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Speaker 1: I did this. I mean, I've ordered stuff online before,

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Speaker 1: but not a sponge. What's what's happening here? Well, it's

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Speaker 1: it's what's happening is it's easy, it's convenient. Do you

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Speaker 1: really want to drive to the store. Just look back

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Speaker 1: three years ago and I don't need the sponge today.

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Speaker 1: I could use it a couple of days from now. No,

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Speaker 1: but I think three years ago, when you know, they

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Speaker 1: would have charged you, you know, three dollars or something

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Speaker 1: to have that thing delivered. And now you say, you know,

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Speaker 1: I really don't want to pay three bucks or the

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Speaker 1: other thing you might have done instead of ordering one

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Speaker 1: sponge is say, well, let me get this out bucket list,

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Speaker 1: and I'm gonna add you know, anything else I need

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Speaker 1: over the next week and just get all at once

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Speaker 1: and pay one shipping charge exactly. Now it's just free.

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Speaker 1: I routinely think, you know, I'll say, oh I need this,

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Speaker 1: I did it just the other day. We need a

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Speaker 1: dog food, you know, and we want to run out

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Speaker 1: to the store and get it. What happened is, you know,

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Speaker 1: we went on vacation. We went to Door County. We

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Speaker 1: had someone take care of our dog. We gave him

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Speaker 1: our dog food. They brought the dog back, but not

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Speaker 1: the dog foods. We need a dog food. Didn't have

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Speaker 1: to run out to the store. You get these things

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Speaker 1: in by five o'clock and you've you've got your dog food.

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Speaker 1: You know, the next afternoon, guarantee. It's it's really quite amazing.

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Speaker 1: It's convenient. You don't have to even think anymore. So

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Speaker 1: as soon as you need an item, you don't wait

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Speaker 1: and say, well, I'm gonna get all these things at once,

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Speaker 1: you just go get it. You got a sponge, perfect example.

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Speaker 1: I mean, what's happening to bricks and mortar? You know,

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Speaker 1: more and more big stores are closing, Malls are changing.

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Speaker 1: I mean the face of a mall now in your

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Speaker 1: suburban area is dramatically changing. Yeah, and millennials don't even

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Speaker 1: like malls except as a place to just to go, yeah,

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Speaker 1: and not really buy anything. If the it's it's it's

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Speaker 1: more of a social mechanism than you know, anything else.

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Speaker 1: It's kind of like how you know, we used to

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Speaker 1: go Our generation used to go to the n W

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Speaker 1: root beer stand. Let's say, you know, and have a

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Speaker 1: root bear and and you know, hope to catch some

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Speaker 1: friends there and and talk. You know, they do it

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Speaker 1: at the mall, but they don't buy anything. So the

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Speaker 1: malls are in trouble. Now you can look at this

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Speaker 1: two different ways. I think it's a good thing. It's

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Speaker 1: especially for those unfixed income you know who who uh

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Speaker 1: get minuscule bumps and Social Security or those retiring it

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Speaker 1: don't really have a lot of assets, and we just

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Speaker 1: discussed fifty percent of the people don't. So, uh. The

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Speaker 1: Amazon is the god send. They don't have to drive,

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Speaker 1: they don't need a car. They can just order these

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Speaker 1: things online. Well, now they're gonna bring it to you

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Speaker 1: with a drone. They're gonna bring it to you with

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Speaker 1: a drone. Right, pizzas by drone. I didn't think I

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Speaker 1: would see this in the wake this fast, you know.

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Speaker 1: I figured there would be a lot of fears about

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Speaker 1: you know, bomb delivery or something with drones. Nope, the

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Speaker 1: lots of tests going on in the US, Australia, UK

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Speaker 1: for various deliveries. Not you're not gonna see this, say

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Speaker 1: in Chicago on a you know, the twentieth floor of

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Speaker 1: an apartment building that just doesn't work. But no, geographically

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Speaker 1: speaking for much of the nation, you know, it certainly

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Speaker 1: does work. Unbelievable, isn't it. It really is. This is

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Speaker 1: all part of productivity. Enhancement and productivity is a good thing.

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Speaker 1: So when you hear economists at the FAT and you know,

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Speaker 1: talking about this, and you know they're desperate to see inflation, George,

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Speaker 1: the amazing thing is here, there's plenty of inflation. It's

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Speaker 1: just not where they're counting it. They don't count home prices,

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Speaker 1: is amazingly enough, as part of inflation. They call that

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Speaker 1: an asset. So they strike that home prices skyrocketing, not

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Speaker 1: even in their inflation model. If they just simply added

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Speaker 1: home prices to their inflation model, they would find plenty

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Speaker 1: of inflation. The stock market, negative interest rate, yielding bonds,

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Speaker 1: all of these things are our sign of an economy

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Speaker 1: that is overly flush with cash. Oh. Absolutely, they don't

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Speaker 1: know how to get away from it. Listen to more

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Speaker 1: Coast to Coast AM every weeknight at one am Eastern,

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Speaker 1: and go to Coast acostam dot com for more