{"id":1531277,"date":"2025-04-19T18:00:00","date_gmt":"2025-04-19T22:00:00","guid":{"rendered":"https:\/\/bugaluu.com\/news\/?p=1531277"},"modified":"2025-04-19T18:00:00","modified_gmt":"2025-04-19T22:00:00","slug":"it-really-feels-like-were-out-of-time","status":"publish","type":"post","link":"https:\/\/bugaluu.com\/news\/it-really-feels-like-were-out-of-time\/1531277\/","title":{"rendered":"It Really Feels Like We’re Out Of Time"},"content":{"rendered":"

It Really Feels Like We’re Out Of Time<\/span><\/p>\n

\n

Submitted by QTR’s Fringe Finance<\/a><\/em><\/p>\n

I don\u2019t really like talking about trying to time the market with specifics, as most of my readers know. For the better part of the last two years, I\u2019ve been eating crow on my predictions that higher interest rates would grind the economy to a halt.<\/p>\n

While I still think that\u2019s going to be the case \u2014 that positive real rates and slowing economic activity are a mathematical certainty \u2014 I severely underestimated the lag with which those rates make their way through the economy.<\/p>\n

And so, here we are, years after the Fed started raising rates, and for the most part, things appear relatively status quo \u2014 with the exception of some slight volatility over the last week or two due to President Trump\u2019s tariffs.<\/p>\n

Yesterday, I spent an hour of my afternoon listening to Peter Schiff\u2019s November 2006 speech at the Western Regional Mortgage Bankers Conference in Las Vegas, in front of 2,000 mortgage bankers. Schiff predicted,\u00a0with excruciating detail<\/em>, exactly what was wrong in the housing market and how it would collapse.<\/p>\n

If you think the guys from\u00a0The Big Short<\/em>\u00a0were prescient, give this video an hour of your time. Try to pick out one single solitary thing Schiff says that didn\u2019t come to fruition.<\/p>\n<\/p>\n

His financial forecast wasn\u2019t just surgical \u2014 it was delivered straight to the main vein of the very people helping perpetuate the crisis. It\u2019s a stunning, hour-long proclamation that, in and of itself, should have been made into a documentary.<\/p>\n

As I listened to Schiff rattle off exactly how the economy would collapse, one perfect detail at a time, it made me think critically about where we are today for the first time in a long time.<\/p>\n

For those who\u00a0read my analysis<\/a>\u00a0of the market crash after Trump announced his tariffs, you probably gathered two things. First, I thought cooler heads would prevail and the storm would pass \u2014 which seems to have happened with the U.S. rolling back tariffs and active negotiations taking place. And second, either tacitly or through veiled language, I hinted that the market might continue status quo for a while.<\/p>\n

It was great to be proven right on the first, but the second, I\u2019m now not so sure about.<\/p>\n

Listening to Schiff\u2019s speech yesterday was a well-timed reminder that no matter how much modern monetary bullshit and shuffling of Titanic deck chairs we employ, the natural laws of economics and free markets are eventually going to have their way.<\/p>\n

The line in his speech that stood out to me was when Schiff described\u00a0how the Fed lowering interest rates wouldn\u2019t prevent a market crash<\/em>. It hearkened back to multiple pieces I\u2019ve\u00a0written over the last 2 years<\/a>, explaining that this is usually the case: the market doesn\u2019t bottom until\u00a0after<\/em>\u00a0the Fed starts cutting. As an example, I always cite that Lehman Brothers went bankrupt\u00a0after<\/em>\u00a0the Fed had cut rates.<\/p>\n

Put another way, if the Fed is rushing to cut due to a crisis, it\u2019s already too late \u2014 the plane has crashed into the mountain.<\/p>\n

<\/a><\/p>\n

Or as they say in London,\u00a0mind the gap\u00a0<\/em>between rate cuts and a market bottom.<\/p>\n

<\/a><\/p>\n

Now, more than ever, rate cuts are being discussed. President Trump used the ECB\u2019s decision to lower rates this week as leverage to argue that Jerome Powell should follow suit. When he got the impression Powell wouldn\u2019t budge, he started talking about firing him \u2014 until reports later in the week suggested that Treasury Secretary Scott Bessent talked him out of it.<\/p>\n

As resolute as Powell\u00a0says<\/em>\u00a0he is, as the rhetoric about rate cuts gets louder, it\u2019s just human nature that the Fed will be quicker to pull the trigger in the event of continued volatility.<\/p>\n

<\/a><\/p>\n

Powell also made comments last week that the Fed\u2019s dual mandate \u2014 maintaining price stability and maximum employment \u2014 may soon see both objectives slipping the wrong way.<\/p>\n

\u201cWe may find ourselves in the challenging scenario in which our dual-mandate goals are in tension,\u201d he\u00a0said<\/a>. He acknowledged, somewhat underhandedly, that the Fed may have to prioritize one goal over the other, which in my opinion would allow the other to run wild. This aligns with a view I and others have had for a while: that the Fed will have no choice but to run inflation hot to give the appearance that all is fine elsewhere in the economy and to protect financial assets, especially if the\u00a0bond market starts to crack up any further.<\/a><\/p>\n

This shouldn\u2019t surprise my readers. I\u2019ve been saying for years that the Fed is going to get stuck between a deflationary depression rock and a hyperinflationary hard place.<\/p>\n

That point now seems just around the corner. You can say it my way, or you can say it in econ-speak: \u201cdual-mandate goals are in tension\u201d.<\/p>\n

The Trump team has ostensibly made progress with trade deals, saying this week that they\u2019re talking to countries like Japan and clearly\u00a0offering rhetoric that acts as olive branches<\/a>\u00a0to China \u2014 hoping to advance, or even just begin, constructive dialogue.<\/p>\n

But as with the seizure of Russia\u2019s FX reserves during the war in Ukraine, the macroeconomic landscape\u00a0has already shifted<\/a>\u00a0\u2014 and can\u2019t be easily reversed. The shock of seizing Russia\u2019s reserves\u00a0prompted countries globally to consider getting out of the US dollar<\/a>. While recalibrating the global trade picture is a worthwhile goal, there\u2019s no denying that it\u2019s again served as a clarion call to the rest of the world to look beyond the dollar.<\/p>\n

And this isn\u2019t just my opinion \u2014 it\u2019s what the market has shown us over the last two weeks: gold skyrocketing, US financial assets floundering, the dollar falling, and notable volatility in the Treasury market. For those seeking a deeper macro view of where the US stands right now, I suggest watching this\u00a0other\u00a0<\/em>Schiff video, a 40-minute interview from last week\u2014 in my opinion, it explains it perfectly.<\/p>\n<\/p>\n

The question becomes: what kind of economic foundation does the country have to fall back on? Or put differently \u2014 if people want\u00a0out<\/em>\u00a0of the US dollar, what will serve as the bottom for investors selling dollar-denominated assets?<\/p>\n

First, people need to realize this is a decades-long trade now beginning to unwind, as Larry McDonald\u00a0explained<\/a>\u00a0perfectly on a podcast a day or two ago. This kind of dollar-denominated unwind hasn\u2019t happened often, precisely because of the US\u2019s reserve currency status. Economic commentators have noted that this kind of behavior is usually seen in emerging markets \u2014 so why is it happening here? Could it be the beginning of a prolonged global shift away from the dollar and the U.S.?<\/p>\n

And, if so, we have to start looking inward. I\u2019ve been arguing for years that the US is on an unsustainable fiscal trajectory \u2014 $37 trillion in debt, and debt-to-GDP over 120%. That used to be a fringe concern. But now, just a year or two after the Biden administration\u00a0redlined the spending machine with zero care<\/a>\u00a0for the nation\u2019s fiscal trajectory, it\u2019s something the rest of the world is starting to focus on. DOGE\u00a0is making progress<\/a>\u00a0with government cuts with the March deficit tumbling, but will it be enough?<\/p>\n

And the more people dig into the U.S. economic data, the worse things may look. Economists I follow have long argued that the US has exported dollars and lived a higher-than-earned quality of life thanks to the privilege of printing the world\u2019s reserve currency. To me, when I see\u00a0people using<\/a>\u00a0\u201cbuy now, pay later\u201d services for\u00a0fast food<\/em>, I get the message loud and clear: we\u2019ve passed peak decadence \u2014 and we\u2019re on the downhill side of the bell curve. Said another way,\u00a0we\u2019re f*cking broke.<\/em><\/p>\n

<\/a><\/p>\n

While housing may not tank the global economy this time, I do think it\u2019s going to fall significantly. A realtor friend recently forwarded a note from their CEO saying the market is turning into a \u201cbuyer\u2019s market.\u201d This is code for \u201cshit is going to hit the fan soon\u201d.<\/p>\n

Even Zillow is now\u00a0predicting<\/a>\u00a0a housing bear market. Zillow now expects home values to fall by 1.9% in 2025,\u00a0reversing its earlier prediction of a slight gain.<\/em>\u00a0Despite the market\u2019s unpredictability, mortgage rates are projected to settle around 6.5% by year-end, assuming no major disruptions. The forecast also anticipates a rise in existing home sales, driven by more listings and motivated sellers. As inventory increases and borrowing remains costly, buyers are gaining leverage, and sellers are slashing prices at record levels to stay competitive.<\/p>\n

Credit card debt and delinquencies are\u00a0climbing<\/a>\u00a0toward Great Recession highs. Private credit in many industries hasn\u2019t been marked down properly and is being questioned. Regional banks, touted on CNBC as high-yield dividend plays, are tied up in all sorts of illiquid, backward positions. And the auto market?\u00a0Look into the subprime lenders<\/a>\u00a0and tell me this thing isn\u2019t about to blow.<\/p>\n

\ud83d\udd25\u00a050% OFF FOR LIFE:<\/strong>\u00a0Using this coupon entitles you to 50% off an annual subscription to\u00a0Fringe Finance\u00a0<\/em>for life:\u00a0Get 50% off forever<\/a><\/strong><\/p>\n

Wherever you look, the US economy looks shaky \u2014 not euphoric. And that\u2019s the danger: once we\u2019re on shaky ground, sentiment shifts. Investors move to cash and de-leverage at the first sign of trouble. Every full-blown panic in the last hundred years started with a spark. I can\u2019t help but think that trying to recalibrate global trade \u2014 especially while running the largest trade deficits in our history \u2014 could be that spark.<\/p>\n

It feels like we\u2019ve run out of runway. The same axioms Schiff laid out in his speech apply now. Just like one plus one will always equal two, these economic truths will bear out. And while I\u2019ve been wrong on timing, I no longer feel these outcomes are far off in the future.<\/p>\n

To be clear, I don\u2019t think we\u2019re facing another global financial crisis. I think the pain will be contained to the United States, while much of the world sees improving quality of life. Our markets still trade at ~25x earnings, while countries with better fiscal positions \u2014 and who supply us with goods \u2014 trade in the low teens. I expect those valuations to meet in the middle.<\/p>\n

It wouldn\u2019t surprise me if US multiple contraction does most of the heavy lifting in that reversion, either.<\/p>\n

<\/a><\/p>\n

With the Fed in place, I don\u2019t think people\u2019s money is at risk\u00a0in the banking system<\/em>, per se. But I do believe we\u2019re going to see wild distortions that degrade people\u2019s quality of life and realign America\u2019s position in the global order. Such shifts are tricky \u2014 nominal prices can rise, but inflation, shrinkflation, and the outperformance of sound money assets and emerging markets will tell the real story.<\/p>\n

That was my thesis picking my\u00a025 stocks to watch<\/a>\u00a0for the year, and it still is.<\/p>\n

For years, people like me have been dismissed as \u201cperma-bears\u201d or \u201cfearmongers.\u201d We\u2019ve countered that we\u2019re just playing a longer game \u2014 one that exists outside the dopamine loop of financial media. If I\u2019m right now, we could be witnessing the start of a years-long transformation so profound that most economists will be forced to admit they never saw it coming.<\/p>\n

To be frank, for everyone\u2019s sake, I hope I\u2019m wrong. But sadly, I don\u2019t think I am. The 25 stocks I\u2019m watching this year continue to validate my thesis and reassure me that I was right \u2014 but I\u2019ve been wrong before and will be again. This feels like a good time to remind you to read my full disclaimer, located below.<\/p>\n

And now, in the words of Bruce Buffer: \u201cIt\u2019s time\u2026\u201d<\/p>\n

Thanks for reading QTR\u2019s Fringe Finance! This post is public so feel free to share it:\u00a0Share<\/a><\/em><\/p>\n

<\/a><\/p>\n

QTR\u2019s Disclaimer<\/strong><\/em>:<\/strong>\u00a0Please read my full legal disclaimer\u00a0on my About page here<\/a><\/em>.\u00a0This post represents my opinions only.<\/em>\u00a0In addition, please understand I am an idiot and often get things wrong and lose money. I may own or transact in any names mentioned in this piece at any time without warning. Contributor posts and aggregated posts have been hand selected by me, have not been fact checked and are the opinions of their authors. They are either submitted to QTR by their author, reprinted under a\u00a0Creative Commons license<\/a>\u00a0with my best effort to uphold what the license asks, or with the permission of the author.<\/em><\/p>\n

This is not a recommendation to buy or sell any stocks or securities, just my opinions. I often lose money on positions I trade\/invest in. I may add any name mentioned in this article and sell any name mentioned in this piece at any time, without further warning. None of this is a solicitation to buy or sell securities. I may or may not own names I write about and are watching. Sometimes I\u2019m bullish without owning things, sometimes I\u2019m bearish and do own things. Just assume my positions could be exactly the opposite of what you think they are just in case. If I\u2019m long I could quickly be short and vice versa. I won\u2019t update my positions. All positions can change immediately as soon as I publish this, with or without notice and at any point I can be long, short or neutral on any position. You are on your own. Do not make decisions based on my blog. I exist on the fringe. The publisher does not guarantee the accuracy or completeness of the information provided in this page. These are not the opinions of any of my employers, partners, or associates. I did my best to be honest about my disclosures but can\u2019t guarantee I am right; I write these posts after a couple beers sometimes. I edit after my posts are published because I\u2019m impatient and lazy, so if you see a typo, check back in a half hour. Also, I just straight up get shit wrong a lot. I mention it twice because it\u2019s that important.<\/em><\/p>\n<\/div>\n

Tyler Durden<\/a><\/span>
\nSat, 04\/19\/2025 – 14:00<\/span><\/p>\n

\u200bhttps:\/\/www.zerohedge.com\/markets\/it-really-feels-were-out-time<\/a>\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"

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