We’re in the Thick of It
Gold was already trading at all-time highs against all major fiat currencies, save for the dollar, going into the FED meeting. All Jerome Powell had to say was that the rate hikes had done their part…
Markets were eager to see Chairman Powell acknowledging what we’re seeing in the real world; people are panicked over growth and the lack thereof and expecting a 2008-style monstrous recession, which keeps on not coming.
Look at the anxiety levels:
Courtesy: Zerohedge.com, Bloomberg
A CDS, which is what this chart shows, is a Credit Default Swap.
When a seller wants to insure his risk against a credit event, the buyer will assume that risk and get compensated for it.
When you think of the United States government, when you really understand the might and sheer size of that entity and realize that investors are now willing to pay the highest premiums to buyers of the CDS in history, you begin to really grasp the panic levels on the world’s biggest stage… the stage being debt, issued and serviced by countries.
To be in such a mental state as to believe that it’s worth hedging against the Treasury Department going into trouble or a ratings downgrade, you need to have an end-of-the-world mentality.
What is it that’s causing the mood to be this apocalyptic?
I’ll show you what a few of the fund managers I am invested with, as well as others in my sphere, are saying, but I also want to challenge some of these dreary outlooks.
- My next-door neighbor: He sells steel. Buys in China and sells in Israel to big contractors. He says business is dead.
He calls me literally 2-3 times a week about how we’ve never seen a recession like the one we are headed into and sends me articles about this, from here to Timbuktu.
- Fund manager that buys all-cash single-family homes and rents them: He isn’t seeing a recession yet. He says the real estate market is finally behaving more normally, where there aren’t 100 offers on every deal and certainly not many that are above listing price.
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In his world, many American families have just got no other choice but to proceed with the new mortgage rates, because renting is also expensive and burning a hole in their pocket.
- Fund manager that deals with major multifamily complexes: Says that the market is frozen, since buyers think a tsunami of defaults is coming, but from the sellers’ perspective, many of them are figuring out how to weather this storm, so this gridlock could persist.
His biggest takeaway is that having cash is crucial.
- My two cents: After listening to 17 quarterly earnings calls, which included a combined 150 questions posed by CEOs and CFOs, I can say that there is no company in the world, worth its salt, that is taking giant strides to cut losses, reduce spending, fire dead weight and underperforming staff in order to reach profitability.
I am very excited about the FED raising rates to 5.00%.
I hated this fake and artificial world of zero credit, because it birthed and nurtured success in the wrong places.
In 2023 and 2024, and hopefully in 2025, 2026 and for the rest of my life, PROFITS will matter again and not promises…
Now, I’ll go back to watching gold soar to new all-time highs, if you don’t mind.
Huge gold announcement coming tomorrow, FYI.
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