In this episode, I sit down with economic strategist Frances Stacey to dive into the current state of the economy and where things might be headed.
Frances shares her thoughts on the Fed’s policies, the yield curve, and whether we’re looking at a possible economic downturn. Together, we explore if liquidity and government spending can keep delaying a recession, or if underlying debt cycles will eventually catch up with us.
I also open up about my own experiences with making economic predictions and the challenges of reading market trends in today’s volatile landscape. Frances provides her educated perspectives on staying prepared, including key diversification strategies and the importance of interpreting technical market data beyond the usual media headlines.
Join us to hear Frances’s insights on managing wealth during uncertain times, and her personal mission to address the growing wealth gap. Don’t miss this deep dive into the economic realities shaping our future and how you can be better prepared to navigate them.
TRANSCRIPTS
Speaker 1 (00:00):
So the election’s been over. We know that there’s made change in the presidency. Is this going to affect the economy? Is it going to get better or is it possible it could get worse? That’s I’m here to discuss today with Francis Stacey. So tune in.
(00:27)
Hello, my fellow Ripples. This is Chris Miles, your cashflow expert and anti financianal advisor. This show is for you. You work so hard for your money and you’re now ready for your money. Start working harder for you today. You want that freedom and cashflow now, not 30 or 40 years from now, but you want it today so you can live that life that you love with those that you love. But most importantly guys, we know it’s not just about getting rich, even though we love that too, and we want that time freedom and money freedom as well. But we want to live a rich life because as we were blessed financially, as we were able to grow and expand our resources, we now can be a blessing in the lives of those around us and create that ripple effect. Guys, thank you for allowing me to do that with you today.
(01:05)
So appreciate it. If this has also benefited you in any way, shape or form, please go to Apple Podcasts and leave us a quick review. Just say, Hey, we love you five stars, you’re awesome. If you don’t love us, then don’t waste your time. It’s cool, but love to get that review from you guys, so please do so and support us on this show because this ripple effect could not happen without those of you. Also, a special shout out to many of our own, really, not just our own VIP clients, but I want to do special shout out to my own team. They are the reason why this show even exists. I mean, granted, I’m the one doing this show, but I would not be doing video for one if it weren’t for having a team. I don’t know how to do jack squat. So the fact that they’re able to get this out and be able to share this with you guys and create shorts and clips and just create so much content for you guys, huge shout out to my team because even though you don’t see them, you see the effect and the ripple effect they’re creating too.
(01:56)
So thank you so much, team. All right guys. So I’m bringing on Francis Stacy today. I’ll tell you, when I first got introduced to Francis, it was actually we’re on a panel together discussing the economy and things like that. And I’ll tell you, she just resonated with me so much. Not to mention, she was the first one to comment and she pretty much I think created a gag on the rest of the group. Nobody wanted to comment after Frances because one thing that’s amazing is that she actually predicted the last great recession, and so that got her really popular on social media and outlets. But she’s great in the way that she sees the economy and what’s coming up. We’re not saying she’s no radus, but she has amazing insights and I think she’ll be very valuable for you guys to hear from because I wonder, just like you do, what’s next? Because everybody’s talking about the picture being extra rosy. Is that really the case? Is it really going to be this bright future or there’s something we’re not seeing yet? That’s what we’re going to discuss today. So Francis, welcome to the show.
Speaker 2 (02:54):
Oh, thank you. Thank you so much for having me. And that panel was a complete blast, and it was so funny because it was a total commercial real estate panel and I completely geeked out about the Fed, and so I’m glad it was well received.
Speaker 1 (03:06):
Oh yeah. I mean all you have to do is bring up feds. I know Big Mike and I is mean. We often will talk in person all the time about that kind of stuff. And so it was for me, I could have said nothing and I would’ve been totally happy just being a part of that panel was really fun.
Speaker 2 (03:21):
Yeah, super. Yes, a ton of fun. Just to give you a quick kind of background about me. Yes, you’re right. I predicted and traded the global financial crisis totally on accident at the time, didn’t realize what I was tapping into. I was getting into trading, this is obviously many years ago, and I was just looking at those great depression technical charts and just beginner’s luck, I was able to filter out the noise from some of the other things happening at the time. And so I saw a very distilled picture after that. I knew that I wasn’t going to have beginner’s luck twice and that I needed to learn the system and learn the business cycle. So I sort of locked myself in a closet for a decade and studied the business cycle throughout history and going back with the mechanisms of banking and debt and credit.
(04:08)
I currently am the chairwoman for the Committee on Global Digital Finance. It’s a UN committee, and so we’re definitely talking about how you would integrate digital finance. We’re working with El Salvador, which obviously has Bitcoin as a legal tender, and it’s just very interesting because mechanically from a liquidity perspective, Bitcoin is very different than the US dollar, and those are their two legal tenders. And then I’m a wealth strategist, and I mean, sorry, wealth manager and economic strategist for a firm, Scarlet Oak Financial Services. I can’t give investment advice on the podcast as you know, but anybody’s welcome to contact me, francis@scarletoakfs.com, and I’m happy to have a conversation about your individual situation. So with that disclaimer, let’s dig in.
Speaker 1 (04:59):
Awesome. Yeah, you got to live with a securities licenses. They don’t let you say anything, do they?
Speaker 2 (05:03):
No, I can’t say anything. Yeah,
Speaker 1 (05:06):
See, that’s what you just got to follow my example and just drop it like I did in 2005. It was so liberating. It was amazing.
Speaker 2 (05:12):
I know. Well, that’s an off camera story, but I am really happy when people contact me and talk to me about their individual situations. It is really fun. Of course, I’m great at solving other people’s problems, and then I have my advisors for my own situation.
Speaker 1 (05:28):
And you said something I didn’t catch earlier, but you mentioned that you were a trader, which I was as well, especially in the mid to late two thousands. And I used a lot of that technical analysis to kind of do my own predictions, but I don’t know if you had the same experience I did, and maybe I’m just an idiot, but I had made several predictions based on the technical analysis I was seeing, and a lot of it did not happen. For example, I actually did a blog and I was writing on this, I was calling it Y 2K 15. I saw similar patterns to Y 2K, and so I said after 2015 going to 2016, we should have another correction in the market. And it went flat. And then of course when Trump got elected, it shot up that year. So it actually, it was down until Trump got elected, then it went rallying back up, and I was like, well, there I was wrong. And then of course the end of 2019, I said, you know what? It looks like 2020 everything I’m seeing, even the real estate space, everything looks like it’s about to come to an end. And then of course with Covid and everything else, they started pumping out money like no other. And the thing rallied again. And same thing in 2021. I was like, okay, we’ve delayed the party. Here’s the hangover. And it didn’t happen. So I’ve been wrong a lot, and if anybody’s followed my podcast now going into almost our 11th season at this point,
Speaker 2 (06:38):
Oh wow.
Speaker 1 (06:39):
They’re probably like, okay, Chris, we hear it all the time. So Francis, what’s been your take? I mean, you’ve been watching this stuff. Did you see things similar to me? Are we just kicking the can down the road and how far does this go?
Speaker 2 (06:52):
Yeah, so like I said, beginners luck, global financial crisis started trading and literally in February of oh seven, and as you know, the market high was in October of oh seven. So yeah, I saw the same thing you did. I mean, I actually made kind of a call on Fox Business at the time, didn’t have the securities license, and so I had a little bit more liberty as to what I can say, but I totally was predicting a sell off. I’m like, look, we’re at the 10 year mark and I’m seeing all these cycles converge and stuff like that, and Trump did pass tax reform and fiscal is one of the fiscal revenue. And also how it’s allocated is one of the things that’s a determining factor of both GDP and also how liquidity moves around in the cycle. So I have definitely been wrong, and then of course evolving into my securities license status, I’ve definitely, I tend to ride the fence a little bit more now and just give the either or on it. But here’s the thing. So yes, so what you’re saying is so correct. Every time we think we have a major cycle, we have technical signals, we just put more liquidity in the system and then we do kick the can down the road.
(08:00)
The fed started tightening and obviously we remember in 18 Christmas Eve the market sold off pretty dramatically. They stopped with raising rates, but they still continued the balance sheet tightening through 19. And I was like, this is crazy. I was like, okay. So that was surprising to me because the policy wasn’t in alignment, it was contradictory. And then of course, September of 19, you had this sudden shortage in the overnight markets when people started putting those quarterly tax payments through and completely reversed course injected like half a billion dollars into the system. And that was just before covid and then like you totally calling for a sell off with securities license in hand, but calling for reducing risk before covid. And of course we got covid and yeah, the market corrected so far so fast, but then when the Fed came in and they did unprecedented things, backstopping the credit markets in such an unprecedented way, obviously there again, so now where are we? You’re saying is it all rosy? Well, the a hundred trillion question I think I’ve had to switch to trillions now is do the mechanics of the debt cycle and the business cycle historically matter or have they been altered? And my favorite analogy for this is you have the internal combustion engine, obviously the car, and then you have Elon Musk’s innovation with the Tesla driving a Tesla and driving an internal combustion engine, very different.
Speaker 3 (09:38):
However,
Speaker 2 (09:39):
They both still have axles and wheels.
(09:42)
So are we in the scenario where we’re just electric car it from the mechanics of the debt cycle and these mechanics don’t matter anymore. The quintessential things around inverted yield curves and quintessential predictors of recessions just don’t matter anymore. Or are we in, yep, still got an axle in wheels, don’t care. Who’s the president? Don’t care. We need liquidity to drive the system. Call me nostalgic. I’m kind of in the axle and wheels camp, but it remains to be seen. And what that looks like is this the yield curve, just to kind of review that is obviously looking at the government debt and looking at the short-term maturity versus the long-term maturity across the curve. And when the yield curve is normal, the yield would be higher on the long end of the curve for longer term debt because you’d be getting paid more yields to lock up the debt for your money in the debt for a longer time.
Speaker 1 (10:37):
It’s like getting a higher yield on a five year CD versus a six month cd. Right?
Speaker 2 (10:40):
Exactly. But the Fed generally affects mostly short-term interest rates. And so when they start raising interest rates, which they did at a record rate, by the way, they start pushing up those short-term interest rates and relative to the long end of the curve, it starts to invert. And that’s not normal. So what happens there is people say, oh, in inverted yield curve, recession, recession, recession, okay. So that’s true, but if you go look at the charts and Fred, which is a Fed source, has the best charts on this, if you look at these charts historically, the recession starts when the curve starts normalizing and re steepening. So we’ve had that occur very recently. It started to re steepen because the Fed has changed its stance and the yield curve has been affected by that. That’s when the recession starts because the Fed lowers rates in correlation.
(11:34)
Perfect, because the Fed lowers rates in correlation with unemployment, usually it’s responding to the labor market. I do think that the 50 basis point cut that was correlating to some softness in the market. And so now what’s interesting is that for the first time that I can recall ever when he lowered the interest rates, 50 basis points, yields went higher. So usually it’s fight the fed. So the bond market kind of bucked that, and it’s because I don’t know that inflation is completely finished and that’s what the bond market is pricing in because commodities prices were still going up, and so the bond market is fighting the Fed. So that’s going to be an interesting catalyst. And now that Trump is in, you’ll notice today that equities are moving higher because equities tend to do well in an inflationary environment. Obviously different sectors do different things, but the bonds are selling off because they’re anticipating that his trajectory that he’s laid out for lowering rates is going to have to change in order to not have a big reacceleration in inflation.
(12:47)
So back to the yield curve, res steepening and inverting, okay, so those mechanics are in play. Now, if you look at charts historically, it’s the length of time that the yield curve was inverted correlates to the drawdown when it normalizes. So we were inverted for over 700 days, which we haven’t been since 1929. So we know what the drawdown looked like in 1929. And again, do we have the same mechanics? Do we have moderate monetary theory? It doesn’t matter how much money we print, as long as we can service the debt or do we have the axle and wheel scenario? So what happens now? So it’s un inverting and usually there’s a domino effect to this playing out. And so the domino effect in preceding recessions in the nineties, you had Kuwait and the oil situation. So that was the catalyst to tick that first domino. In 2000, you had the tech bubble burst. That was the catalyst to tick that first domino in the global financial crisis. You had the housing bubble burst attendant with several other things that occurred, and that ticked the first domino. So now what we have is we have the Fed and globally they’re reintroducing liquidity into the system ahead of that domino. So it’s a new way of thinking. They’re not reacting to the domino. They’re trying to preempt the domino.
(14:09)
So here we go with how does that work? I was thinking that potentially if we had had a contested election, which I was thinking was a decent probability, because I thought neither side is going to go quietly. We had a contentious election season, I was thinking that could be a catalyst to increase volatility itself. Obviously we have geopolitical things, so we just haven’t had that catalyst. So if those mechanics are not broken, as soon as we get that catalyst, what are potential things on the table for that catalyst? Anytime you have to tighten as a reaction to inflation increasing, which is what’s happening in the markets today, they’re trying to price that in.
Speaker 1 (14:49):
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Speaker 2 (15:21):
You can take the future liquidity out of the system. You can’t take the debt that came with the liquidity. So what happens is the liquidity drops below a threshold where you can’t service the debt. You have a reaction in the credit markets, you have defaults, you have fear that clicks that domino. Where are we vulnerable credit wise? Okay, these people that are losing jobs, 60% of Americans living paycheck to paycheck with a record amount of interest rates paying on these credit cards and record amount of money being put onto credit cards and things like that, putting groceries and things like that on credit cards always. And whenever you’ve used your credit card, that puts liquidity into the system, but the minute you can’t service that debt and what percentage of those people stop servicing that debt when unemployment does go up, now that’s one. You have maturity walls both with treasuries, you have a maturity wall and CRE that’s being renegotiated. Those loans are being extended probably because the banks don’t want those buildings, I think they call them jingle keys when they just send the keys back and stop paying the loans. So you have these sort of catalysts in the system, and then the question remains, number one, can trump kick that can way down the road? And can Trump and Elon actually change those mechanics with the Fed and preempt the recession?
Speaker 1 (16:44):
Right? That’s assuming the Fed wants to listen to ’em. They’re supposed to be independent even though they’re not fed and they’re really just bankers, right?
Speaker 2 (16:51):
Yeah, yeah. No, it’s a private for-profit bank actually, and it’s as federal as Federal Reserve, but they have been given the authority by Congress to enact their dual mandate, which is price stability and full employment. Now in some seasons, there are four economic seasons. We have four seasons in general with weather,
(17:15)
And in some seasons the dual mandate is contradictory, and some seasons it’s not contradictory. So it just kind of depends. But that’s the thing is, and going forward as an investor, as an allocator, and also as somebody who advises, we look at what is the season and what season are we in now and what season are we going into? We look at the backtested data on how sectors perform in those various seasons, and we look forward with new data as to especially post covid and where were the anomalies. And we just try to think with that to the best of our ability, and we don’t try to time the markets or time the election or trade around the election, we just try to go with those steady as she goes kind of things because we’re dealing with people’s retirement.
Speaker 1 (18:04):
Right. Well, and then there’s a comment I think I had made when we were on the panel, and I even did a podcast episode just about it, which came out a few weeks ago talking about what’s going to happen to the election, will it matter? And I basically said, no, it doesn’t, at least not from the presidential standpoint, more from your local representatives like Senate and your house representatives, which obviously that made some news even though it wasn’t as big news. But that made some news too, where they supposedly are all now the same party. Although the history has shown too that even when they have a majority in the Congress and in the presidency, they don’t always get crap done. There’s usually some issues still,
Speaker 2 (18:41):
Right. So no, that’s totally true, and the thing that’s interesting is that if you do look at historically, I mean markets go up almost under every presidency because again, the economy is always expanding. Obviously the debt is expanding, and that’s the liquidity that comes into the system, whether it’s public or private debt that expands the system. So election, election, assuming first of all, so we have the White House going Republican, we have the Senate Republican, they’re still deciding on the house. It’s looking reddish, I think. Not to hype another podcast on your podcast, but I really liked Elon Musk’s interview that he did on the All In podcast
(19:23)
Because they really challenged him mechanically about making these drastic fiscal changes and what percentage he was going to do with that. And basically he talked about changing the operating system. So they said on that podcast that with federal, state, local, all of the government spending, they were thinking that it was correlating to about 40% of gdp. D obviously government spending is one of the components of gdp. And they’re like, look, if you just drastically reduce that, he’s thrown out there a 2 trillion number. If you just drastically reduce that, then obviously that’s going to pull a lot of growth and a lot of liquidity out of the system. And I can say that I do think that the high fiscal spending has been one of the things to counterbalance the record rise in interest rates at a record rate to stave off the recession. And so it’s going to be just very, very interesting about how mechanically draconian they, they’re about the fiscal spending. And his idea around that was like, Hey, let’s just change the operating system. He had a totally technological concept of this, which I find so fascinating. He just said, let’s change this operating system from having to do all of these government programs for these suffering people and let’s try to convert them into the private sector.
(20:39)
Easier said than done, of course, but Elon has done some pretty impossible things, so I’m kind of excited. Just may we live in interesting times. I’m just kind of excited to see what he really comes up with that mechanically. And I thought some of his stories about the regulations that he’s just experienced in his own company about trying to get stuff done, it’s insane. The regulations are insane. They’re so business prohibitive, and so just reducing those regulations and reducing that friction, but you have to do it in a way where you don’t have a corporate takeover of the government and the lobbying, and then you kind of put RFK in there for a little bit of balance on that point, obviously litigated with all the health related agencies, and man, it’s going to be interesting to watch what actually occurs with this administration.
Speaker 1 (21:30):
Yeah, I totally agree. And that’s kind of what I was wondering too, is that they could do some things, like you said, to push the envelope a little bit more, right? They can kind of push and push this and delay it a little bit more. Because like you said, I think the big thing you mentioned too repeatedly I kept hearing you say, was liquidity, right?
(21:47)
I watched the M two money supply, which they’re still printing money, they’re still pumping money in the system, therefore banks still have liquidity, they still have money they give. It’s like any one of us, if we had a credit card and then also the bank came to us like, oh, by the way, we’re just raise your limit for the heck of it. Oh, you know what? We just did it again. You’re like, oh, even though I’m going broke, I can last a little bit longer. And that’s kind of what the government’s been doing right now where we’re seeing this happen real time, and as long as we’re liquid things work great. But I mean even the GDP is when you look at the stock market in comparison, it’s two standard deviations above the GDP the last time that was Y 2K, right when we saw that crash. So I find it fascinating that we’re just, all the signs are saying it’s like red or even at least yellow for caution. But like you said, if somebody gets innovative in some way, shape, or form, that could still delay that down the road.
Speaker 2 (22:41):
Totally. So this is what I’m watching just for fun. So I agree with you entirely, and the whole essence of modern monetary theory is as long as you’re liquid and you can service that debt, as long as you can make your minimum payments on your credit card, you look like you’ve got perfect credit. And as long as they’re willing to give you more and more and more credit, more and more and more credit, obviously
Speaker 1 (23:06):
If you’re employed.
Speaker 2 (23:07):
Yeah, if you’re employed, exactly. So that’s so interesting. So what I think is a real challenge is that the United States, if you take away the US dollar, the status of the world’s reserve currency, the United States is starting to resemble sort of a third world balance sheet
(23:26)
Now. So now you have the bricks system, the economic system that is gaining prominence. They just had, I think their 16th annual conference. They’re gaining prominence. They’re trying to gain critical mass. I think I spoke to someone in the UN today who said that that Mexico’s on the fence about that. Now if they gain critical mass, there’s also, I’ve heard different things that, and none of this is super verified, but I’ve heard things saying that they could have, they’re buying a lot of physical gold. Obviously foreign central banks are buying a lot of physical gold, and they could offer a currency that’s quote unquote 40% ish backed by gold. The other 60% is this basket of currencies. They’re gaining critical mass with global GDP, and would that tip us away from using the US dollar as the world’s reserve currency mechanically? What does that look like if that were to occur? And if you listen to Ray Dalio or study Ray Dalio, he thinks that we are on the trajectory of this. If that were to occur, we don’t have demand in our debt markets. So it’s like if you’re comparing it to the personal situation as you just did, it’s like losing your job. It’s like your credit card debt is fine until you lose your job,
Speaker 3 (24:40):
And
Speaker 2 (24:40):
Then the house of cards completely falls. So I’m just so interested, and obviously the dollar went up today on Trump’s win.
(24:49)
And again, like you said, depending on where the house, if we get a complete red wave and we get the house, they’re going to be able to have more latitude to do more moving pieces around, assuming that the establishment Republicans don’t stop them, and depending on whether or not they need 60 votes in the Senate, et cetera, but they’re going to have more latitude to convert this system. And so obviously they’re aware that the US dollar is losing prominence. That’s not, and Powell himself has said, Hey, our fiscal situation really isn’t sustainable, so we just have to see how this plays out. And with clients, we just look at the various personal risks that they have, try to diversify it. We have these various liquidity buckets so they don’t get stuck in an illiquid position should things massively shift systemically. But that’s the biggest threat facing America is loss of the US dollar is the world’s reserve currency because that would really change the demand in our debt. And what is the demand in our debt? It is liquidity.
Speaker 1 (25:50):
You got to have that liquidity
Speaker 2 (25:52):
Once
Speaker 1 (25:52):
We lose that. And that’s why every time it almost seems like there’s some sort of banking failure that happens that sparks a recession, isn’t it? It’s like something unwinds that it was too much of a party, something went just overboard. It created a little bubble, and we kind of witnessed an everything bubble in the last four years. So it’s kind interesting to witness private
Speaker 2 (26:12):
Credit another shoe that could drop
(26:15)
When the Silicon Valley Bank thing occurred, that looked like a potential catalyst for that domino effect. It did. But again, the Fed came in and came in with another facility. What was interesting about that, because they had all of those unrealized losses on their balance sheets because basically they had those bonds and that was supposed to be old, faithful and safety. That was supposed to be a really safe place to park your money, the treasuries and mortgage backed securities, but they were getting paid only 3%. And then they obviously banks don’t pay out like money market funds do to depositors, but essentially it was setting up a negative income type scenario. And then when the Fed came in and gave them loans at par, but they gave them loans at the current interest rate, which was much higher,
Speaker 3 (27:03):
They
Speaker 2 (27:03):
Didn’t give them a break on the interest rate. And we still sailed through
Speaker 3 (27:06):
Because
Speaker 2 (27:07):
I was watching to see if that would work. And so like you said, there’s a lot of kicking the can down the road. The debate is out there for axles and wheels. I look forward in my capacity in the UN committee to really talk about governments about fiscal liquidity, the mechanics in the digital currencies versus the mechanics in the fiat currencies. And can you change the debt cycle? Because the thing is, if you change the debt cycle, let’s take an extreme viewpoint, some people are like, Hey, why do we borrow from ourselves at our own cost? Right? Why do countries do that? Well, the reason is is because if all of this government spending wasn’t debt, it would just go like this forever because debt has an elastic component. When it matures and comes off the books, it’s pulled out of the system.
Speaker 3 (28:00):
So
Speaker 2 (28:00):
The money supply, instead of just going up in a straight line now there’s an ebb and a flow to it, and that’s what the Fed tries to manage. If you don’t have the ebb and a flow mechanically available, it just goes like this. And that’s discriminatory to every future generation because everything just gets more expensive endlessly. So that’s obviously not workable.
Speaker 1 (28:23):
Right. So what do you see as, I mean, like you said, you’re asking your clients to diversify. What are you asking? I mean, and stay liquid, of course. So what are some places you’re seeing as safe havens potentially for people right now?
Speaker 2 (28:37):
Well quintessentially when, well, right now we have to watch and see what occurs with growth. Growth is going to be correlated with fiscal spending because obviously there’s a catalyst there. And then we have to see what happens with a reacceleration in inflation. So do we have stagflation and there are things that work in a stagflationary environment, or do we come in and slash the, it’s basically you have either growth is going up and inflation’s going down, or growth is going up and inflation’s going up based on a rate of change, acceleration, deceleration, or you have growth is going down and inflation’s going up, or you have growth in inflation, both decelerating at the same time, and you have various sectors that perform in those environments. Again, not giving investment advice or picking stocks or something like that. And feel free any of your listeners can reach out to me for this data.
(29:27)
But yeah, we would pick sectors based on that. But haven trades in both the stagflationary environments and obviously in a deflationary environment, you look at things like gold. I think gold has the external catalyst and gold selling off today. I think gold has the, because again, I think that was a volatility play and the volatility in the election went down, but I do think that it is interesting. There is just a lot of global demand for that. I’m not recommending that. I don’t know your personal situation, but looking at things like that, looking at various things with the fixed income ratio versus the equity ratio, looking at the various aggressions and risks, and now we know that the 60 40 portfolio has vulnerabilities that we didn’t think it had. And that’s the thing that’s happening today. Equities are flying, there’s more volatility in the bond markets. So it’s just all about someone’s personal situation juxtaposed to those economic seasons. And then I really wish I could sit here and stock pick with you all day long, just depends
Speaker 1 (30:27):
On when they watch it anyways. It could be different tomorrow, so
Speaker 2 (30:30):
It could be different tomorrow. So yeah, it’s always at this time, and obviously this is the day after the election, so yeah, so definitely happy to have that conversation with anybody who wants to, but it’s just generally speaking from the global macro perspective, I’m so interested to see Trump did talk, there was some leaking and rumors around is he going to assign an executive order that where he has some kind of say in what the Fed is doing. And I don’t know. I don’t know whether or not he’s looking at that or not looking at that, but maybe we live in interesting times. It’s going to be fascinating to watch. And based on his first term in office, I’m glad that hopefully the Hitler rhetoric is going to go away just because he didn’t do any of that really in the first term. So hopefully we can kind of calm down as a country. I’m looking forward to the prospect of that
Speaker 1 (31:27):
For sure. I agree.
Speaker 2 (31:28):
Before
Speaker 1 (31:29):
I ask you about two last questions here, one question is of course, if they want to follow you, what’s the best way to do it?
Speaker 2 (31:37):
So LinkedIn, Francis Newton, Stacy on LinkedIn, and I post most of my television and interviews including this one on LinkedIn. And then I do have a Twitter. I’m not very good at X or Twitter. That is a goal for 2025, so give me a couple months to get going on my Twitter game. But yeah, and then I will definitely be posting interviews on Twitter. Unfortunately, not all social media platforms are approved by my compliance, but definitely Twitter and LinkedIn and because then if I appear on 10 different networks and so then they can catch those interviews on LinkedIn is probably the best place.
Speaker 1 (32:15):
Wonderful. Well, final two questions here. The one is, I know a lot of times the government numbers come out, you hear about unemployment rates and we were talking about Office of Air where there’s several clients we’ve had reach out to us saying, Hey, I’ve just lost my job yet unemployment still looks amazingly beyond full employment. Also, the court, the consumer price index has been altered over the years with all kinds of IES really since Carter. So we’ve seen all these alterations. How do you know what to trust when you hear those or when you see those reports coming out? Do you take ’em with a grain of salt? Do you just say, okay, I’m not even going to listen to this. What do you do
Speaker 2 (32:52):
As a true technical analyst? I just watch the markets. I just watch what the markets are pricing, what they’re getting correct, what they’re mispricing. That’s what I watch because that at the end of the day, the Fed can come out and cut rates and if the bond yields go up, you’re not going to want to buy bonds on that rate cutting news. So I just watch what investors are. The markets are very efficient, and there have been some rumors that they’ve leaked jobs numbers and certain people found out and certain people knew you can’t run and hide from technical analysis. It’s just empirical data. There’s no opinion, there’s no narrative. And some of those, the technical analysis is interesting. Looking at the s and p 500, you had a double top, you had a new high, and then you really had a breakout. And so just looking at the probabilities that surround those things, right now I’m looking for the s and p to surpass 59 37 to keep its upward momentum going without, it could get very exuberant around the Trump trade and then have a little bit of a pullback.
(33:52)
And then if the market starts selling, I’m looking at 56, 25 as massive support to kind of keep that upward trend in place. And those are the numbers I’m watching. I do listen to some of the narratives, but I really just look at the vol markets. I look at the open interest in the options market. I look at the zero days expiration trading, what’s happening, and I have a few data providers that I follow that try to interpret those internal mechanics, but I’m just looking at what is happening in real time. It’s kind of like flying an airplane. I think it’s going to be sunny. No, you have to react to whatever is going on in real time. You can predict it to some degree, and then you have to be able to react to whatever’s happening in real time. And that’s how I look at the markets.
Speaker 1 (34:35):
I love it. That’s great. Takes me back. Rather than being a fundamental analyst, you’re like, I’m technical. All technical. Those fundamentalists stink, right?
Speaker 2 (34:43):
Yeah. I love Abigail Doolittle on Bloomberg. She’s one of my favorite interviews because she’s such an old school chart woman. I think her name on Twitter or X is the Chartres. And I love talking charts with her, and I do her options in site segment occasionally, just because I do think charts fundamental analysis, yes, that is empirical data to CEOs are never going to be like the sky is falling.
Speaker 3 (35:10):
But
Speaker 2 (35:10):
The interesting thing is fundamental analysis. So bottom up stock picking versus top down, it just depends on what economic season you’re in, right? Like yeah, tech stocks for life. Okay, well tech stocks in the face usually of fed tightening. Usually the rise in the cost of capital usually would affect the tech sector. What’s interesting about what’s happened since Covid is that tech, because of all the cash on their balance sheets, have kind of become the safety play and the haven play, which is just fascinating.
Speaker 1 (35:37):
That’s backwards isn.
Speaker 2 (35:38):
So again, it’s like, yeah, internal combustion engine, and you’ve got this, and my friend just bought a Porsche and her Porsche is like a 2020 Porsche, and she’s like, the 2020 fours have the Tesla panel in the Porsche.
Speaker 3 (35:51):
So
Speaker 2 (35:51):
Some of these mechanics are changing, but let’s see what the credit and the debt cycle and the business cycle has been around since the Medicis and since the invention of debt and banking. And so let’s just see if the old axle and wheels, and if Elon Musk makes flying taxis, then the axle and wheels are gone. Whatcha going to do,
Speaker 1 (36:09):
Then they’re obsolete.
Speaker 2 (36:11):
And if anybody’s going to do it, it’s him. I mean, I totally admire Elon Musk, so how could you not? Right,
Speaker 1 (36:16):
Exactly. Well, let me ask you this question. This is kind of the question I always ask on the show, the Money Ripples podcast, and we talk about that ripple effect like it did at the beginning, right?
Speaker 3 (36:25):
Yeah.
Speaker 1 (36:26):
Francis, what do you feel is really your ripple effect that you’re here to do on this planet or even just on a smaller scale?
Speaker 2 (36:32):
Oh my gosh, I love this question. I joke sometimes that it feels like a little bit of a mental illness to lock myself in a closet for over a decade and study the business and credit cycles. But the reason that it is my passion is that it affects absolutely everyone, hairdressers, waiters now, Uber drivers, executives, bankers. It just affects absolutely everyone how the system works. And the wealth gap is sort of the pernicious thing that, and Ray Dalio has the most amazing data on this statistical analysis on this, but the wealth gap is the thing that takes a country from a place of prosperity into a place of total discordance. And if you go through history, you have the fall of Rome. Before the fall of Rome, you had this huge exacerbation in the wealth gap. 90% of the wealth ended up in 3% of the population preceded the French Revolution, the same thing.
(37:28)
And that is the trajectory that we are on in this country. As you have this administration coming and trying to play with these mechanics and really innovate and Elon’s like going to Mars, we don’t know how sustainable this whole thing is. So the reason I think I’m on this planet and I really am, whatever spiritual beliefs people have or whatever religious beliefs they have, of course I respect anybody’s, but I do believe that people were put on this planet to do something special. And when you meet people that have tapped into that and had the courage to follow that, which it is not easy, I think I was put on this planet, I think to change the business cycle so that it just doesn’t end up in a wealth gap tragedy eventually over a hundred years. And so my work is around changing the algorithms around changing liquidity ratios and things like that.
(38:25)
And with my committee appointment, I have a phenomenal opportunity within the UN infrastructure to reach out to leaders all over the world, 193 countries and have meaningful discussions about their liquidity issues and around whether or not they need the IMF or austerity is their only option because obviously that hurts people. And we have a K shaped economy where people at the top of the K, even if they lose their job, are probably doing okay. Ray Dalio has delineated this between the upper 40% and the lower 60%, the upper 40% owning assets is probably the point of delineation. And he wrote something in October of 2017 before Covid and Covid has only widened this gap as we know. And he just was talking about how that upper part of the K Americans are living in a first world country. You can look at their growth rates, their lifespans, their propensities for drug addiction, their propensities for disease, access to healthcare, access to clean water, clean food, access to education, and they live in a first world country. If you take the bottom of the K. And that’s what I think was resounding in this election. They’re living in a third world country, whether they’re in a place that doesn’t have clean water, obviously the quintessential example is Flint, Michigan. And that does over the iterations of the business cycle per Ray Dalio’s research. Cause eventually it causes these extreme populisms on both the right and the left and leads to some proverbial civil war. And I just feel like
(40:01)
We’re at a very, we’re not where Reagan was in the business cycle.
Speaker 3 (40:06):
And
Speaker 2 (40:06):
I just think mechanically, my prayer is for Elon Musk really look like that pilot, look at the present time mechanics and not just try to mimic a Reagan era tax cut or whatever. And just really look at these mechanics and how people are totally suffering. Everything follows liquidity. Like you said, the M two money supply, the s and p 500 normally is correlated. I’ve done some segments on Bloomberg about that with this liquidity because you have to have liquidity before you have any of the other things that occur as a result of adding that liquidity. And that’s the thing that the upper part of the K, they win in all four seasons of the business cycle
Speaker 3 (40:46):
Because
Speaker 2 (40:46):
They have talented asset managers that don’t just have the buy and hold strategy. And we try to mimic that for any level of wealth. So we try to mimic that for people so that they are not victims of being retail investors with retail options only the bottom level of the, they don’t even have assets to invest. They don’t even have, they’re living that they have that paycheck to paycheck scenario. So changing the system in that way is my ultimate dream. I love it. It’s kind of a big one. It’s kind of a big one. Yeah,
Speaker 1 (41:21):
It’s a big one. But it’s fascinating too. And no, I think it’s wonderful. There’s definitely a ripple effect there, and I can tell you’re definitely making an impact, which I love.
Speaker 2 (41:31):
Thank you. And I do these podcasts and I do tons and tons of television, and I’ve managed to stay in a lot of different networks with a lot of different viewpoints. And listeners. I predominantly do CBS, Bloomberg, Fox, Fox Business, and I’ve done a lot of Yahoo Finance and Cheddar News Nation. I’ve been on NEWSMAX a few times. But the thing is, is that I always just want listeners to walk away with a slightly elevated understanding of anything that I said so that they can see a headline slightly differently. They can listen to a politician slightly differently,
Speaker 3 (42:06):
And
Speaker 2 (42:06):
In that way engage in a slightly different, and it’s just moving the needle just a tiny, tiny bit. And I just like to educate people about the mechanics of the system because that’s where, especially in a democracy where you have voters picking these people. It’s so funny, when I watched this election, I’m like, everyone I talked to on either side was honing in on one issue that they understood. They hone in on one issue, they understand. And I’m like, okay, but if the country goes bankrupt, is that worse than if that one issue isn’t addressed for that limited populace? And it is, but they don’t understand that issue. So I just want to increase that understanding in any way I possibly can so that we can all make more informed choices personally, but also in our leaders,
Speaker 1 (42:53):
You’re teaching people to read between the headlines, right?
Speaker 2 (42:56):
Yes. That’s what I want to do. That’s what I want to do. Absolutely.
Speaker 1 (42:59):
Well, you definitely did that today, Francis. I really appreciate your time today. So awesome. So much good wealth and knowledge that’s there.
Speaker 2 (43:07):
Thank you so very much. It’s been such a pleasure to be with you. And yeah, let’s do it again sometime.
Speaker 1 (43:13):
Totally agree. Well, if you guys agree too, be sure to any comment on this video and say, Hey, let’s bring Francis back on for another encore session. But definitely guys, be sure to follow her. We’ll put all that in the show notes for LinkedIn and our Twitter pages that you can follow her on. And guys, this is the big thing. It’s not just about what you’re seeing on social media and what’s seeing on the headlines, it’s about what’s the reality, what’s really happening right now. And that’s what we’re trying to do. We’re trying to create that education for you so that you can make better decisions, not just with your money, but with your life. So go and make it a wonderful and prosperous week. We’ll see you later.