The Mark Moss Show 2-23-24

going to break that down. So, like I said, most people have been watching the doom, the doom and the gloom, the doom scrolling if you will, across YouTube and Twitter and Instagram, et cetera, and unfortunately the doom and gloom cells, which is why people continue to do it. I have found myself in this trap all though for the last year so I've been trying to be much more optimistic. I always was, but I was still using some doom to sort of bring people in. However, I've been trying

to change that and a lot of people aren't. And we're seeing that. The reason why is we kind of know this. We see social media post things for engage. Rage gets more engagement, rage fear those to get more engagement, it starts to divide us. Mainstream media they show us all the doom and gloom, and unfortunately, like I said,

that's what sells. And while most people are so worried about their watching every video on, you know, the debt of the United States and the bond market's going to implode and the yield curve is going to reinvert, and it's going to mean recession. Recession, recession, recession. What does

that mean? Everyone's afraid of a recession. But why well, I mean technically, a recession would be that growth is slowing, so that means businesses aren't doing as good, You're not making as much money, and ultimately your quality of life would go down. Okay, that that sounds pretty bad and it is. However, we also then the other side of a recession. We have what's called the markets. So we have the economy and we have the markets. Now, those

things used to be the same. You see in the economy when businesses when when you and I the people did good, then the business is good. When the businesses did good, then the markets did good because we would buy those businesses through publicly traded stocks and equities. And when those businesses did good, meaning their revenues went up, their profits went up, then their stock would go up, and so then we were all in this together. We made more money, which means we spent more money, which

means the business did better. So the economy did better, which then meant the markets did better. But that's no longer the case. As a matter of fact, I've been most economists talk about sort of pre COVID era. I don't. I don't. Maybe maybe we can call it BC before COVID. And really the world changed in two thousand and eight, and specifically the markets and the economy changed. Specifically, the way that the governments and central banks work in the

markets changed. This is something I've talked about quite extensively. Really, the way central banks and the governments changed the way they interacted the markets happened in two thousand and eight, and since then it's only continued to accelerate and get bigger and bigger and bigger and bigger. We've seen it. You know, I'm not going to go through the whole timeline and history of this, but twenty twenty, I mean, it was just put into steroids, was put into overdrive.

And so now we sort of have to when we look at economic data financial data, we have to sort of look at like pre COVID era, and so we'll talk about a little bit of that. We also to look at like two thousand and eight era. But what I was going to say is in the twenty twenty era, what we saw maybe for the first time, or really became obvious to everybody for the first time, was that the economy in the market split. They were no longer equal to each other anymore like they did in the past.

So what we saw is that literally literally all, you know, not all, but a majority of businesses, the economy was shut down like a light switch, turn the lights off, turned the economy off, not just in the United States, but most of the world, pretty much the whole world at the same time. So the economy was shut down. We saw countless people lose their jobs. We saw countless

millions of businesses literally shut down. Businesses that have been around for multiple decades, multiple generations, were shut down permanently for good. A lot of them never made it. You know, here in southern California, up in like Hollywood, you have all these iconic restaurants that have been around for decades. You know, served, served, famous, serve famous, famous athletes from way way way back, and they're just gone. Now. Landmarks

are gone. Right, And so we saw literally the economy shut off, but then the markets, meaning the stock markets and things like that made crazy all new all time high. So how does that work? How can we have a recession and yet we have a boom in the markets at the same time. Well, that's the world that we live in, and so it's important to understand that. So when everyone's afraid of a recession, we have to understand what are we afraid of? You See, this is a

question that I get asked a lot mark. What are we going to do to protect ourselves from inflation, or from a recession, or from central bank digital currencies, or from attacks on our privacy things like that, if what if the electricity goes out? All these different things. And what I always typically, always, typically, typically always reply back with is what is the attack vector you're trying to

protect against? So, for example, if I think that if I'm worried about a recession, okay, then what is it that I'm afraid of the recession for while I'm afraid that my job might get taken out? Okay? Well, if you're in a if you're in a job you work for a business that's highly dependent on the let's say on economy, that would be highly influenced by a recession, that could be a problem. But I could have a job that's not recession. I guess that that is recession proof.

So let me give you an example. If I was in a business that was only catered to tourists, for example, it was all tourism based. Well, in a bad recession, tourism might slow down, and so my business might be impacted by that. I might lose my job, or if I have a business in that sector, I might suffer. However, I have a buddy who has a business where he

does like flood and fire restoration. So if your house floods or your house gets a fire, he works for the insurance companies and he will go fix your house. That business is recession proof. It doesn't matter where the recession's at. If you have a fire or flood at your house, insurance going to pay for it. And so you have to kind of think about what am I trying to protect against. Some people think, well, a recession

is just bad for the market. So like if we have a recession, then my retirement accounts are going to get cut in half, my value of my home is going to get cut in half. And that's where we want to talk about today because is that necessarily the case. Let's just take a look at some of the data. So what we saw this week officially Japan, the Japanese economy officially shrinks unexpectedly. In the final quarter of twenty twenty three, the gross domestic product or GDP was down

zero point one percent. Very dramatic. I know, I know, very dramatic, but it's down and it's technical, right we want it. We ow to understand this. Japan dropped a rank in the global standings and went to become the fourth largest economy now after the weekend of twenty twenty three, and it was weaker than what most economists had projected it. So these economist always trying to project where things are

going because markets are forward looking. And so what we see is that the economists had forecasted zero point two growth, but then the economy actually contracted, so is much worse than what they had thought. Now zero point one doesn't sound like a lot, but technically, now the Japanese economy is in a recession, and because it's now contracted for

two consecutive quarters. Now, if you remember, the Biden administration changed the definition of that, So technically two quarters and to contracting quarters consecutive quarters don't mean a recession in the United States anymore. But in this case, they're declaring Japan to technically be in a recession. Now, the data is preliminary, is small enough I mean, zero point one, and small enough to leave room for doubt. So what

does that mean. I mean this preliminary, It means they're still gonna retally the numbers and the margin is so small we might be able to just find a little bit of extra you know, economic activity over here in the corner and bring it in and then when we revise the estimates that are going to come in next month, I mean, maybe it could paint a different picture. So that's where we're at. Okay, So technically, as of today we've slipped. It could be revised and will be out.

But does it really matter whether Japan is in a recession right now? Could be debatable? Right, Like I said that, the information is still gonna get revised. And what's interesting about this is though, even though the GDP contracted for a second straight quarter. When we look at other data, such as business surveys, it tells us a completely different story. And this is why you can't rely on any one indicator.

You have to look at lots of different things. So when we look at some of the business data, some of the business surveys, and we look at the labor market, it looks like something different. So, for example, if you look at Japan's unemployment, and don't worry, it's not all about Japan. We're going to talk about EU. We're gonna talk about the We're gonna talk about the the EU, we're talking about England, and we're gonna talk about the United States. We're gonna get through all these but we're

talking about Japan for a second here. But I gotta take a very quick break. If you're just tuning in your listening to the Mark Moas Show, we're talking about recession and markets and booms and busts and so much more. You don't want to miss what's coming up next. Don't go away, I'll be right back, all right, Welcome back.

If you just tune in your listening to the Mark Moas Show, we're talking about how the United States and other major nations that major economies around the world are technically falling into recession, but is it as bad as what people think it is? And so we're looking at that, we're talking about Japan right now. We'll get to the EU, we'll get to Britain, we'll get into the US, but right now we're just talking about Japan. And so what I was saying is technically we're in a recession, very

very small zero point one percent of contraction in that. However, the data is still going to be revised and be released next month, and so it could change. But the point that I was making is though even though that never came out, some of the other data is contradictory of that. And so, for example, business surveys of the labor market are telling a different story. We can see in the unemployment which fell to an eleven month low

in December, which is pretty interesting. So typically you think of a recession like, oh my gosh, gross slows down, I'm probably going to lose my job, But in this case, unemployment actually has continues to fall lower and lower and lower, which showed that business conditions across all industries and firm sizes were the strongest they've been since twenty eighteen. It's pretty interesting. So GDP's slowing down, although the job markets

the strongest it's been since twenty eighteen. Now we're going to talk about why that is in a minute. Let's just keep going. We can see that many economists expect makeup Japan to now end its policy of negative short term interest rates. They had wanted them to the Japan the boj bankup Japan kept saying they were going to. But how can they now? And we'll talk about why this is important, But how can with these GDP numbers of contracting growth, how could the boj think about ending

negative vent rates or going to a tightening cycle. And the answer is they probably can't. So this leads into where we're going. But let me just hit on a couple more points here about Japan. Like I said, it lost its spot from the third biggest economy to go into the fourth and now is in this technical recession.

And so what comes next and again understanding of some of the constraints, we'll talk about that, but let's jump over to the European continent for a minute, and what we can see over in Europe is sort of the same thing the whole Euro Area. For the most part, the EU shows that the economy is now losing momentum

and they're starting to downgrade or slash their outlooks. So we saw in the EU, we saw the GDP gross domestic product was expanded expanded the zero point eight percent, that's the outlook, but they had projected one point two percent in a prior prediction. And again when you look at public financials, when you look at governments, they try to project out what the growth of our revenue profits

will be. The problem is when businesses, companies and governments miss those projections and so downgrading that is pretty bad. And going from one point two, which is bad growth to zero point eight is like almost no growth, So it's a pretty pretty big deal. Now, on the bright side, they say that inflation has slowed down to two point seven percent this year, which is basically matching the European Central Bank's estimate, So that's good. So apparently they're getting

it under control. What we can see is that this is through the EU, but in the UK they are also suffering from the same thing. As a matter of fact, they're dealing with the recession now as well, we can see the UK recession deals a fresh blow to Sunak's economic promises. And so what is that means? So again we talked about the intersection of politics, finance and technology, and finance should not be technical. I'm sorry, finance should not be political, but yet it is. And so that's

what we're talking about here. We can see that GDP fell zero point three percent in the fourth quarter of last year. Again, they had projected a zero point one percent drop, so again it was worse than they had expected. Now we can see that this is affecting their Prime Minister Rishi Sunac, who so far has failed to meet his pledge to grow the economy. And so this is the big key. In order for politicians to stay in power, one they have to promise more things. So each politician

is incentivized to offer you more free things. That's why Biden is trying to slash student debt. Right. We have to continue to give more and more stuff with to buy the votes, if you will. And so Prime Minister Rishi came in with a whole bunch of promises. I'm going to list them here in a second, one of which was to grow the economy and in the United States, it's also as important. We'll come to the US, but no income and president or maybe only one meaning a

returning president, has won. In a time of recession, the economy has to be growing. Rishi Sunik pledged that he would grow the economy, but yet grossmc product is falling, and it's falling faster than what the economists had predicted. It says. While the economy still grews zero point one percent across the entire year as a whole, it's the slowest annual expansion the UK has seen since two thousand and nine. So that's pretty bad now. If you think

about that. That's two thousand and eight. Two thousande was the Great financial Crash, so after the worst crash in history, we had a rebound that typically happens. But since then we've been in this up trend for the last decade, twelve years, fourteen years, and it's the worst that it's

been since that time. It's pretty bad now. We can see that this is a like I said, it was anticipate paid, but it's giving the Bank of England the same problem that the Bank of Japan is having, which is actually the same problem that the US central banks, the Federal Reserve is having as well, which is what can they do to fight inflation when at the same time they're fighting recession. You see, the recession needs stimulation. The recession needs easy monetary policy to try to get

the economy out of the recession. If we can make money cheaper, then people will buy more of it, will take on more house, car, boat loans, We'll expand our businesses, We'll go remodel our house, fix our yard up. We'll spend more money, and that stimulation in the market will bring us out, hopefully. The goal is to bring us out of recession. The problem is is that it restokes inflation, and so on one hand they're fighting the inflation, but

they're overtightening, which is then causing the recession. It's the rock and the hard place. We've been talking about this for a long time. Now made again, like I said, made growing the economy one of five key pledges after he took office back in October of twenty twenty two. The other ones were cutting the debt, having inflation, reducing health services, waiting lists, and stopping boat migration across the English Channel. So far, out of all those pledges, those promises.

Elect me, and I'll get these things done. Out of all of those, the only thing he's been able to do is been able to slow down price growth. Now I say he's been able to do, he's certainly not responsible for that. A lot of it is returning to the mean. So again, we had this COVID era, this massive I call it like a sugar rush, all this money dumped in the economy that created all these distortions, and a lot of it's coming back to normal. So I'm certainly not going to give him credit for that,

but to his credit, he'll certainly claim it. The one thing out of all of those things is inflation has started to come back down. But migrants that's not better, health services waiting less, that hasn't gotten better. The debt certainly hasn't gotten any less. That's laughable. And so none of these things have worked. So what do they do well? We need to kind of dig in a little bit because there's a lot of nuance here. Like I said, one,

we want to understand what are the constraints. So we know that this puts a lot of pressure on the central bank. The bank now has to start cutting rates faster and deeper than they had wanted to do, because again they're trying to keep inflation at bay. And just like all central banks Japan wanted to start tightening, they can't do that now. The fed's trying to FED in the US is trying to delay their pivot, but they're

being forced into it sooner. In the UK, same thing, they're being forced into faster rate cuts at a faster rate, psyching highicle than they had wanted to. Now, this is the Europe, Europeans the EU, this is the UK, this is Japan. And now we'll talk about the United States, because retail sales are plunging in January, the worst year over your growth since the COVID lockdown. But this is only about the economy. What about the markets. I'll cover

that in a minute when I come back. If you're just tuning in, youth in too, the Mark Mass Show, talking about recession and markets, don't go away. We'll be back with more a minute. Beer back, all right, welcome back. If you're just tune in you Lily too, the Mark Mass Show. We're talking about the whole world and going into a recession right now, and does it matter and

if so, what should we do about it. So we're talking about we talked about Japan going into recession technically potentially could be revised out what technically it is, the EU and then the UK, and now we'll talk about the US. But the story is the same. All governments and central banks have been fighting inflation, which inflation was caused by printing too much money, creating too much money

through increasing the monitary base and credit expansion. The problem is they created too much inflation by expanding that, and they're trying to bring inflation back under control because people get restless when you can't afford to feed your family and you can't afford the same quality of life that you've been living, and you're unhappy. And when people become unhappy, then governments don't last very long. So they want to

bring inflation back down. But at the same time, by trying to bring inflation back down, they have to do the opposite. They have to contract the money supply them. But when they contract the money supply, then the entire economy starts to contract. Growth slows down or goes negative is exactly what we're seeing. And then if people lose their jobs, then they're even more unhappy. So what do

we do Damn. If we do dan, if we don't write, we either continue to print the money that we need for all of our endless programs that we want to continue to fund and stimulate the economy and face inflation, or we try to bring things back under control and then we crash the economy. Those are the two choices. Now, what we can see in the United States is retail sales plunged in January. Like I said, worst year over year growth since the COVID lockdown, which is pretty bad.

We saw that they unexpectedly surged in November and December, now driven in a large pot by a jump in the food services headline. Retail sales in January expected to decline by just zero point two percent, but it was worse, and it had been zero point six percent, so again worse than expectations. This is the worst monthly decline since March of twenty twenty three, and the worst year over year rise since May of twenty twenty so that's a big problem. We have the same issues going on in

the United States. The retail cells are plunging. Now we're not technically in a recession like we have over in Japan and we have in the EU and we have in the UK. Technically the US is not, but it's slowing. It's slowing now technically to be in a recession, to be two negative quarters, we're not at that point yet. But it's the trend, it's the direction that we're trying to pay attention to. We can see that motor vehicles and parts and building materials saw the largest decline month

over month on a year over year basis. Gas stations building materials were the big drag, while online retailers and food services were the biggest upside drivers of this. We also saw core retail sales declined zero point five percent month over month, which dragged the year overyear levels down to the lowest level since the COVID lockdowns. Again, so we can see that this is starting to be a big problem. Basically, if we sum this up, Americans just

aren't buying as much stuff as they used to. That's basically what this means. And so are we get into that recession? Will we get to a recession? We don't know how do we fight that, but we already know the constraints that we're in. I believe, and I say this all the time, I believe that when push comes to shove, when you're forced to choose, when the central banks, the BOJ, the ECB, the FED, when they're forced to choose between one of two choices. And this is what

people don't understand. They have to choose one or the other. They're trying to go right down the middle, but unfortunately one or the other prevails. And the two choices, as I already laid them out, are one we continue easing the monetary cycle so we don't crash the entire economy. People don't lose their jobs, business don't go under, and we can continue to fund all these wars and all these social programs and all these other programs. So we ease.

The problem if we do that is we have high inflation. On the other side is we want to bring inflation down because people get unhappy when they can't afford the quality of life. But the problem is that then we crash the economy. And I believe when flaced between those two choices, they will choose inflation every time. And the reason why is I think inflation is more incremental. I would rather see my assets going higher. I would rather see my bitcoin going up, which, by the way, it's

shooting to the moon right now. I love it. I'd rather see my value of my homegowup. I'd rather see the value of my stocks, my retirement account going up. And if the prices of all my assets were going up and my pay is going up, I can stomach the higher prices I have to pay at the gas pump and the airline tickets and my food and all those things. However, if I lose my job, I lose my business, and I lose all my income, I'm very unhappy.

So I think most people would be okay paying a little bit higher prices, but seeing the value of all the things go up, then to lose everything, lose their business and lose their job, and so I think, and then that's the government's trying to keep us, as we

the people happy, complacent. But if you think about it from a government perspective as well, if they have a recession and then we go into some sort of deflation, that could be the end of the governments as we know it, right because all the debt is collateralized, and so then it starts to unwind this debt bubble. I'm not going to go through all that right now, I've talked about it extensively. But if they're forced to choose between the people, do we want to give them inflation

to deflation? But if they're forced to choose for themselves, do we allow deflation and everything just to fall apart and we go bankrupt? Or do we continue to print money to pay our debts? Of course, they're going to continue to print money every single time. All right, Now, here's what I want to talk about though. So we're going into recessions. So what so what? Well, I've already said, so what maybe your job? So think about your job

or your business. Are you like in a recession proof business or job or are you more at risk from that? So that's one way you need to think about that. But now let's talk about our money, our assets. So, as I said, in twenty twenty, things really changed. We saw first and foremost that no longer do the economy,

no longer does the economy equal to markets. As I said, we saw the entire economies of the world literally shut off with a light switch, and yet markets went to new all time highs Now, was that an anomaly in the COVID era or is that the way things are now today? And is that the way things are going well, maybe some of both. As a matter of fact, what we can see is that the UK and Japan show that markets are going up, not down after technical recessions.

Very interesting. So we have the UK and Japan are slipping into technical recessions with their GDP releases. It's an opportune moment to underscore that while such developments may generate a lot of headlines, they have no forward looking information content for investors. That's a key piece. They have no forward looking information. You see, markets are what we call future discounting. We're basically trying to buy something cheaper today than it's worth in the future. So we're not buying

something for how much it's worth today. We're buying for something for how much we think it will be worth in the future. So we have to be forward looking. And what happens is some of these data we have lagging indicators, we have leading indicators. So GDP is a lagging indicator. GDP tells us what happened in the past, but we're trying to guess on where things will be in the future. And so what they're saying here is these GDP releases they have no forward looking information. For US,

technical recessions typically precede rising asset returns. It's pretty weird. It's the opposite of what most people think. But as we can see both of these countries going into recessions, we can see this playing out in real time. Why is this the case, Well, there's two main problems with this categorization. One, when we look at just the recession

and the GDP, it's overly simplistic. Okay, when we look at like Japan, like I said, it was like zero point one percent two percent, there's little to no difference between an economy that contracts it zero percent zero point two percent one quarter and is flat the next, which would be no recession, or one that sees growth fall by zero point one percent for two quarters in a row,

which would be a recession. You see what I'm saying, So technically a technical recession, what's the difference if I get zero point two percent one year and one quarter in the next quarter, it's flat or zero point one percent both, Right, So that's what I'm talking about, overly simplistic. Second of all, which is why probably why the Biden administration said that's not technically the recession. We need to

look at more data than them. Second is because like I said, GDP's a lagging indicator, is telling us where the economy was, not where the economy is going. But the markets are trying to predict the future. They're forward looking, and so us as investors, we need to focus our energies on leading indicators of the economy rather than GDP,

which is again a lagging indicator. Some information content can be gained by gap by looking at by trying to discern by gauging the composition of the growth, but there's nothing in a GDP report that will give us any indication of an approaching turning point when markets typically see the biggest moves When it comes to the UK, leading indicators are rising, So what are those. I'm going to come back with those in a minute. If you're just tune in your listening to the markmas Show, I'm going

to take a very quick break. When we come back, we'll talk about the leading indicators that show it's rising. Don't go away, I'll be right back, all right, Welcome back. If you just tune in your listening to the Mark Maas Show, We're talking about how the major economies of the world are all slipping into recession. But yet surprise, surprise, surprise is the markets are making highs, which is pretty interesting.

So we're talking about why looking at the GDP and stuff are lagging indicators and it doesn't tell us what's happened in the future. And so that's one of the reasons why we see that it's going down but markets are going up because it told us what already happened. But the markets are telling us what is going to happen.

So better understand that we're trying to look forward leading indicators, not lagging indicators, and when it comes to the UK, leading indicators are rising, suggesting the worst could have already passed for the economy. That's what people are saying. I mean, that's what the market's telling us. Anyway, they're saying it's already happened. It's similar same thing in Japan. The yen

and the JGB yields fall in the shorter term. Then when that happens, the Nikki, which is their index, their stock index, treads water in the short term after the technical recession, but after twelve months it returns an average

of ten point seven percent. That's what we've seen. Good now again back in the US, the US is nowhere near a technical recession at the moment, but same we're also the average mean positive returns after we can see that after recession, we see that we see big returns over the next three to twelve months historically, So what we see is technical recessions generate a lot of heat, but not much light. There are sometimes oftentimes most times

just a distraction for us and as investors. So we can see again back to the United States, we had a technical recession, then the Bide administration told us it wasn't. But then market's rallied in one of the best years that we've had in decades. And that's exactly what we're seeing. And so the recession in the UK, the EU and Japan could already be over because it's lagging. Indicators in

the markets are giving us those forward looking indicators. Now, some of the things that we can pick up from Japan is, like I said, because it's forward looking, it sort of tells us what's going to happen. And so Japan had been wanting to and the ECB and the FED as well been wanting to again fighting inflation, wanted to raise rates. Japan specifically wanted to get out of

this negative interest rate policies they've had. But going into the recession right now, EU, UK, JGB, potentially the US going to that recession shows us that there's no way they can tighten that market back up, and most of these countries ecb US, etcetera are going to have to start easing, and that's what the markets are picking up on. You See, you have to understand the causal, the cause

and effect mechanism here. If we go into recession, then the Feds will ease, and so what the markets are saying, well, okay, we get the recession, but that's what happened last quarter. Now we understand because of that the central banks will have to ease, and so we now expect an expansion. So we're going to bid the stocks up, right, That's

what we're talking about. So, like back to Japan, the Nikkei Index more than doubled from the COVID lows and it's about to breach its all time bubble highs that were set in the back in nineteen eighty nine. So the Nikki index is making a new high that hasn't been set for multiple decades, and it's right after Japan technically entered a recession. You see what we're talking about here.

So the recession happened, but what's happening next? The markets are trying to tell us, at least what they think. Now it's anybody's guests. None of us have a crystal ball. But people are putting their money where their mouth is, so to speak. And that's exactly what the markets are saying. And so it's confirming that only central banks matter in a world where the economy clearly does not. Back to twenty twenty, the entire economy was turned off like a

light switch all across the globe simultaneously. At the same time, the economy, the jobs, the businesses, but yet the markets screamed to all new time highs. And so what that means is that the money printers override real businesses. Now, this is fake, it's artificial, it's non sustainable, and it only leads to paying death and destruction eventually. But for now, in the short term, this is what matters, which is

why we focus on the central bank policy. We focus on are their policies going to be tight, are they going to be loose? What will they do? And we try to understand the leading indicators that show us what they'll have to do. So, for example, this is exactly what we're talking about. The central banks say they want to tighten, but given the fact that economies are going into recession, they can't, and so we can start to

front run them. We can start to guess where they're going to go based off of understanding these natural constraints, and rather than trying to spend all our time focusing on what the economy is doing, really what we're understanding is it's the central banks that matter the most. That makes sense. It's why I talked about probably the greatest investor in I don't want to say he's the greatest, he's one of the greatest investors in history. I don't know,

I don't I don't know totally. But he went forty years without a loss in a twenty billion dollar portfolio, forty years without a loss and averaged a thirty percent return. Arguably one of the greatest ever. Talking about Stanley drucken Miller, he worked under George Soros, and I mean, he's just

a legend. But what we saw is that there there was a book written New Money Wizards, New Market Wizards, and he talked about how when he first started his career, he win did all this research into these stocks and these companies and looked at all the fundamental analysis and looked at, you know, the earnings and the profits and all these things, and he took it to the fund manager and they said, this is this is all garbage's none of this matters to us. And he's like, what

what do you mean None of this matters? He said, go find out the real thing that drives prices up and down. And Stanley Druckon Miller was kind of confused. He said, what do you mean, go find out the real thing? I thought I did, So he went back to the drawing board and what he concluded was that none of those fundamentals matter. What really matters is the liquidity. That's what matters. And liquidity is supplied by the central banks. They're the ones that change the price of money, they're

the ones that add money whatever. And so it's basically what led to his success for thirty or forty years. And it's the same playbook that we can and we're seeing it front and foremost right here Japan, EU, UK and now potentially the US slipping into recession. Wall markets are screaming to new all time highs. It's pretty incredible. And again we're seeing it in the US as well. Now the US is not technically in a recession, but growth has slowed way down, and everyone's afraid that we're

going to go into recession any moment. But we can see that Wall Street is at its highest level ever, the S and P five hundreds breaking new levels. We see that we have higher retail sales and markets are going up. US stocks closed higher on Thursday as retail sales data declined more than expected. So the sales data went down, meaning the economy is not doing good, meaning we could be slipping into recession, but stocks went up. Huh, how does that work? Wait, so sales the business went down,

but the stocks went up. Are you starting to understand? Are you starting to understand why? Well, because then we understand what comes next. If retail sales go down, that means the economy is slowing down. That means the recession is coming. If that happens, then what you have to ask yourself, second, third, fourth, fifth order? Then what well? Then the Federal Reserve will start cutting interest rates in

coming months. You see, and this is what stocks are starting to price for a Commerce Department report showed US retail sales dropped zero point eight percent in January, so you know things are slowing down pretty bad. Investors are cheering the fact that we got a weaker than anticipated retail report. When our investors cheering that, why do they

want a weaker than anticipated retail report? Well, because if the retail port was stronger than anticipated, then the FED would push off the pivot, they'd push off the rate decreases. But because it was weaker than expected, the investors are cheering it because they want that to come. It says, it shows that maybe the economy might be a little weak, and so that's sort of bad news. That's potentially good news,

good news, bad news. It's good it's it's bad news that the economy is getting weak, but it's good news because it means the FED is more likely to cut rates, said Thomas Martin, senior portfolio manager at Globalt. So this is this is where we're at. You have to understand what is the problem I'm afraid of? What am I trying to protect myself from in a recession? Is my job? Is my business at risk? What can I do to shore that up, and then what should I expect with

my investments? To understand those are two separate things that have to be addressed and managed separately. I know this is we I know this is a new world. But as Einstein said, the answers have changed. The way the central banks and the politicians and the governments interact in the markets changed in two thousand and eight, it changed again in twenty twenty, and we are a new paradigm.

If you're just tuning in your listening to the Mark Maus Show, talking about the way the world is changing as we look at through lens of politics, finance, and technology. And that's what I got for today. That's a wrap. Thanks so much for listening.