Doubling Down On Hard Landing: Signs Of Coming Bear Market | Lobo Tiggre

Summary

In this insightful discussion, the guest, referred to as Lobo, shares his outlook on the macroeconomic landscape, predicting a hard landing due to post-pandemic market distortions. He argues that while recession indicators suggest a downturn, the response from central banks and fiscal policy could mitigate the impact. Lobo also discusses the role of AI in the job market, the potential for a copper shortage, and the changing dynamics between gold and silver as investments. His views offer a blend of economic analysis and market speculation, providing a comprehensive look at the potential challenges and opportunities ahead.

Takeaways

• 📉 The speaker predicts a 'hard landing' for the economy, suggesting that post-pandemic market distortions have delayed an inevitable recession.
• 💹 The Bank of Japan's decision to raise interest rates for the first time in 17 years is seen as a potential indicator of an upcoming recession, based on historical patterns.
• 📊 Despite historical indicators like the leading economic index suggesting an overdue recession, the current 'uncharted waters' due to COVID-19 make it uncertain whether these patterns still apply.
• 💼 The speaker emphasizes the importance of distinguishing between a recession and a market crash, noting that they are not the same and can have different impacts on various asset classes.
• 📈 Recessions have traditionally been bullish for monetary metals like gold and silver, while industrial metals and commodities tend to suffer.
• 💭 The speaker questions the effectiveness of the Federal Reserve's tools in the current economic climate, suggesting that fiscal policy may be more impactful.
• 🤖 The rise of AI is causing a shift in the job market, particularly in tech roles, with a projected decrease in IT jobs in the US and a need for workers to adapt and learn new skills.
• 🥇 Gold has outperformed silver in recent years, which is unusual and may be related to changes in the use cases for these metals, with silver increasingly being used industrially.
• 🌐 Global economic trends and supply chain disruptions, such as those caused by the war in Ukraine, have impacted commodity prices, but these effects are not always long-lasting.
• 📉 The speaker suggests that the gold-silver ratio is not a reliable trading tool due to its volatility and the fact that it doesn't specify which metal will move in which direction.
• 📊 For investors, understanding the nuanced relationship between different asset classes and economic indicators is crucial for navigating market conditions effectively.

Q & A

What does the speaker believe is the impact of labor hoarding and post-pandemic distortions on the market?

The speaker believes that labor hoarding and post-pandemic distortions in the market have delayed the onset of a recession, potentially making it more severe when it does occur.

What historical pattern is mentioned regarding the Bank of Japan raising interest rates and its correlation with recessions?

The historical pattern mentioned is that every time the Bank of Japan has raised interest rates in the past, except during the COVID-19 pandemic, a recession has followed within 6 to 8 months.

What does the speaker suggest about the effectiveness of traditional economic indicators in the current economic climate?

The speaker suggests that traditional economic indicators may not be as reliable in the current economic climate due to the unprecedented circumstances and distortions caused by the pandemic.

What is the significance of the long-term unemployment versus current unemployment rates chart mentioned by the speaker?

The long-term unemployment versus current unemployment rates chart is significant because it has a 100% success rate in predicting recessions when a 'death cross' occurs, which the speaker suggests is imminent.

How does the speaker differentiate between a recession and a market crash?

The speaker differentiates by stating that a recession and a market crash are not necessarily the same thing. A recession is a decline in economic activity, while a market crash is a sudden and significant drop in financial markets. They can occur separately, and the speaker suggests that the market may actually respond positively to a recession if it anticipates a monetary policy response.

What is the speaker's view on the performance of gold and silver during a recession?

The speaker believes that historically, gold and silver, particularly gold, have performed well during recessions as they are seen as safe-haven assets. However, the speaker also notes that the relationship between gold, silver, and the market has changed recently, with silver showing more industrial characteristics.

What is the speaker's outlook on the copper market in the short term versus the long term?

In the short term, the speaker does not see a significant deficit in the copper market this year unless there are more shutdowns. However, in the long term, the speaker believes there will be a shortage due to increasing demand for electricity and the challenges in permitting new large mines.

What is the speaker's perspective on the impact of AI on the job market?

The speaker believes that AI is leading to creative destruction, where jobs are being destroyed, particularly in the tech sector. This is expected to continue, with AI requiring new skills and leading to a reduction in roles and potentially lower salaries for those without AI skills.

How does the speaker view the Federal Reserve's potential rate cuts in response to economic conditions?

The speaker suggests that while historically the impact of rate cuts on stock markets has been mixed, in the current context, investors have been trained to see rate cuts as a signal to take more risk. However, the speaker also notes that if rate cuts are a response to bad economic conditions, it might take some time for the negative reality to assert itself in the markets.

What does the speaker say about the gold-silver ratio as a trading tool?

The speaker does not recommend using the gold-silver ratio as a trading tool for making decisions on which metal to buy or sell. The ratio can widen or narrow due to movements in either gold or silver prices, and it does not provide clear guidance on which direction each metal will take.

What is the speaker's stance on the idea of agricultural commodities as a safe haven during a war?

The speaker is skeptical about the idea of agricultural commodities as a safe haven during a war, noting that while there may be short-term disruptions to supply chains, these effects tend to be temporary and do not necessarily lead to long-term investment safety.

Outlines

00:00

📉 Economic Hard Landing and Market Distortions

The speaker discusses the likelihood of an economic hard landing, attributing it to labor hoarding and post-pandemic market distortions. They reference the Bank of Japan's interest rate hike as a potential indicator of an upcoming recession, noting historical patterns where such hikes have preceded economic downturns. The conversation also touches on the disconnect between traditional economic indicators and current realities, questioning the validity of past patterns in the face of uncharted economic waters. The speaker suggests that while a hard landing may be inevitable, the response from central banks and governments could mitigate its impact.

05:01

💼 Recession Indicators and Their Implications for Investors

This paragraph delves into various recession indicators, including the leading economic index and the long-term unemployment rate versus current unemployment rate. The speaker discusses how these indicators have historically predicted recessions with a high degree of accuracy. They also explore the concept of 'uncharted waters' in the context of the economy, questioning the reliability of past indicators in the current economic climate. The conversation then shifts to the impact of a recession on different asset classes, highlighting that while some assets may suffer, others like gold and silver could potentially perform well. The speaker emphasizes the importance for investors to understand which assets thrive during a recession.

10:03

💬 Fed Policy and Market Reactions

The discussion in this paragraph revolves around the Federal Reserve's role in the economy and how market participants interpret and react to Fed policy. The speaker suggests that while a recession may traditionally be bad for risk assets, the market's expectation of a Fed response could lead to a different outcome. They argue that the market may view a recession as an opportunity for central banks to inject liquidity, thereby creating a potentially positive environment for risk assets. The speaker also touches on the distinction between a recession and a market crash, cautioning against conflating the two and explaining the different implications for investors.

15:05

📈 Market and Economic Outlook

The speaker shares their economic outlook, predicting a hard landing and discussing the potential triggers for the next economic boom. They consider the impact of Fed policy and fiscal measures, suggesting that these could counteract the negative effects of a recession. The conversation also includes a discussion on the impact of AI on the job market, with the speaker acknowledging the potential for significant job displacement. They reference a Wall Street Journal article that highlights the changing landscape for tech job seekers, emphasizing the need for AI skills and the potential for lower salaries and fewer roles.

20:05

🤖 AI's Impact on the Workforce and Economy

In this paragraph, the speaker and David discuss the transformative effect of AI on the workforce and the economy. The speaker endorses the concept of creative destruction, viewing AI as a productivity-enhancing tool that will ultimately benefit society, despite the acknowledged short-term job losses. They compare the current AI revolution to the Industrial Revolution, noting the challenges faced by displaced workers. The speaker argues that while AI may lead to deflation in the long term by reducing the cost of living, the transition will involve significant disruption and pain for affected workers.

25:06

🥇 Gold, Silver, and Copper Market Analysis

The speaker provides an analysis of the gold, silver, and copper markets, discussing the potential for a copper shortage due to increasing demand from electrification and AI technologies. They debate the gold-silver ratio and its use as a trading tool, with the speaker expressing skepticism about its predictive value. The conversation also touches on the reasons behind gold outperforming silver in recent years, attributing it to changes in the use cases for silver and its growing industrial applications. The speaker predicts that gold is likely to outperform silver in the coming year based on the current economic outlook.

30:08

🌐 Global Economic Challenges and Opportunities

The speaker and David conclude their discussion by considering the global economic challenges and opportunities. They evaluate the potential for agricultural commodities as safe havens during conflicts, questioning the logic behind this narrative. The speaker shares their thoughts on the gold-silver ratio and its implications for investment strategies. They also address the importance of adapting to changing market conditions and the need for investors to be aware of the evolving dynamics between different asset classes. The speaker promotes their weekly newsletter as a resource for followers to stay informed about their investment insights.

Keywords

💡Hard Landing

A 'hard landing' refers to a rapid economic slowdown following a period of growth or inflation, often as a result of monetary policies aiming to control inflation. In the video, the concept of a hard landing is central to Lobo's economic outlook. He predicts that the accumulation of post-pandemic labor market distortions and other economic imbalances have increased the potential severity of a forthcoming economic downturn. Lobo's perspective suggests that delaying necessary economic adjustments could result in more severe consequences when they eventually occur.

💡Labor Hoarding

Labor hoarding is the practice by businesses of retaining more employees than necessary, often to avoid the costs and difficulties of rehiring in the future. Lobo mentions labor hoarding as a post-pandemic distortion that has delayed the onset of a recession. This concept is critical because it implies that companies are artificially maintaining employment levels, which could lead to a sudden and sharp correction if economic conditions worsen, contributing to a hard landing.

💡Bank of Japan

The Bank of Japan (BoJ) is Japan's central bank, responsible for the nation's monetary policy. The video references the BoJ's decision to raise interest rates for the first time in 17 years, highlighting it as a historically accurate predictor of recessions. This point underlines the interconnectedness of global financial systems and the significance of major policy shifts in one economy potentially signaling broader economic trends.

💡Recession Indicators

Recession indicators are economic signals that suggest an upcoming recession. The video discusses several indicators, including the Leading Economic Index and the relationship between long-term and current unemployment rates. These indicators help economists and investors predict downturns, but Lobo emphasizes the unprecedented nature of current economic conditions, questioning the reliability of traditional indicators.

💡AI Impact

The impact of Artificial Intelligence (AI) on the job market is a key theme discussed in the video. The rise of AI is transforming the demand for certain tech roles, leading to job displacement and the need for workers to adapt by acquiring new skills. Lobo views this shift as part of the broader economic landscape affecting 2024, suggesting that AI's influence could exacerbate the challenges of a potential recession by displacing jobs even as it boosts productivity.

💡Monetary Metals

Monetary metals, primarily gold and silver, are discussed in the context of their historical performance during recessions. Lobo differentiates between the two, noting their varying responses to economic conditions. He highlights how recessions and economic uncertainty typically boost demand for gold as a safe-haven asset, while silver's industrial uses can influence its performance differently.

💡Fiscal Policy

Fiscal policy involves government spending and taxation decisions. In the video, the potential for a fiscal response to an economic downturn is mentioned as a countermeasure to a hard landing. Lobo suggests that government interventions, alongside monetary policy adjustments, could mitigate the impact of a recession, though the effectiveness of such measures is uncertain.

💡Commodities Market

The commodities market, including metals and agricultural products, is discussed in terms of its sensitivity to economic cycles. Lobo points out the distinction between industrial commodities, which are likely to suffer in a recession, and monetary metals like gold, which may benefit. The video also touches on the nuanced impact of wars and global events on agricultural commodities, challenging simple narratives about their performance during crises.

💡Gold-Silver Ratio

The gold-silver ratio measures the amount of silver required to purchase one ounce of gold. Lobo addresses this ratio to explain the changing relationship between gold and silver prices, especially during economic uncertainty. He suggests that while traditionally, silver might outperform gold in bull markets, recent trends and industrial demand have altered this dynamic, making past patterns less reliable predictors.

💡Copper Demand

Copper's role as an essential industrial metal, particularly in electrification and renewable energy, is highlighted. Lobo discusses the potential for a supply-demand imbalance in the copper market, particularly over the long term, as electrification efforts increase. This imbalance could lead to higher copper prices, reflecting broader economic and technological trends.

Highlights

The discussion emphasizes the potential for a hard economic landing due to labor hoarding and post-pandemic market distortions.

The Bank of Japan's rate hike after 17 years may signal a forthcoming recession, based on historical patterns.

The leading economic index has remained negative for an unusually long period without resulting in a recession, challenging traditional predictive models.

Long-term unemployment vs. current unemployment rates, or the 'death cross,' is highlighted as a reliable recession predictor.

There's a distinction between a recession and a market crash, with different implications for investors and asset classes.

Monetary metals like gold and silver tend to perform well during recessions, historically.

The Federal Reserve's actions, including interest rate decisions and balance sheet management, may have limited impact on certain economic factors.

A hard landing could potentially trigger the next economic boom due to expected government stimulus measures.

The rise of AI is leading to job displacement in the tech sector, with a projected shrinkage in the IT job market.

Uranium prices are influenced more by supply and demand dynamics than by overall economic strength.

Inflation is expected to remain stubbornly high, with a likelihood of staying above 3%.

The Federal Reserve may cut rates not only in response to a recession but also to maintain a level of restrictiveness as inflation falls.

The unemployment rate is anticipated to rise, reflecting the possibility of a hard economic landing.

Copper production may face a significant deficit in the coming years due to increasing demand and permitting challenges.

Gold has outperformed silver in recent years, indicating a shift in their traditional relationship and market dynamics.

The gold-silver ratio has been widening, suggesting a change in the historical pattern of silver outperforming gold during bull markets.

Investors should be cautious about viewing agricultural commodities as a safe haven during conflicts, as their prices can be influenced by various factors.

Transcripts

if you if you want a headline David my

headline is lowo doubles down on hard

Landing I really do think that's coming

I think that the the degree to which

these things I'm talking about Labor

Hoarding post-pandemic distortions in

the market have prevented or held off

the recession from you know or the piper

from being paid to the degree that you

hold him off that you increase your

interest payment when he does show up

for payment so I think the hard Landing

left to its own devices would be much

harder than it would have been had it

been left to sort itself out Lobo of the

independent Speculator joins us once

again to give us his updated outlook on

the macroeconomic landscape what's next

for stocks the economy and commodities

Bank of Japan raised rates for the first

time in 17 years uh I was talking to you

offline I'm going to quote a um an

economist I know Peter barison he he uh

posted this on his LinkedIn um in the

history of uh Finance no better

indicator has been this perfect in

predicting recessions in the Bank of

Japan raising interest rates this chart

uh I think it's a ton and cheek chart

but every single time the bank of Japan

raises rates in the past barring the co

uh Co pandemic uh there's been a

recession like 6 to8 months later Max so

here we are um it's it's kind of funny

that that comes up you know every time

except covid so I think it's actually

kind of important David because we are

in uncharted waters and you can say oh

except Co but Co was the last incident

and the things that have been done have

been you know so many charts have been

broken with lines going through what was

the top before through this floor before

so it is it is reasonable to question

whether patterns that have held true

before still hold true I'll give you an

example a contra Lobo

indicator um the leading economic

index has never gone this long negative

for so many months without the recession

we overdue so you know according to and

those are leading economic indicators

right they're supposed to lead where

we're going they turn negative I don't

is it 20 months ago now or more and they

have never gone that long without the

ensuing recession and so there's people

saying well if it hasn't happened by now

it's not going to and to point at that

you know they would seem to be right but

but if we are in uncharted waters you

can't go by previous charts that seem to

work uh you know back on the plus side

you know clearly if if the bank of Japan

is forced off zero which they really

didn't want to do until they absolutely

had to you it's it's indicative it means

something so let's throw another chart I

don't have it handy but Jeff

gunlock I think most of our audience is

familiar with him he frequently does

monthly updates with lots and lots of

charts but his most compelling recession

chart is always long-term

unemployment versus Uh current

unemployment rates and when you get you

basically you get a death cross in that

chart and that is an uninterrupted 100%

success rate at predicting recessions

and we're headed right there now I think

the long-term line hasn't quite crossed

yet the short-term one but but we're on

the verge of that um that death cross

and if you use a medium-term or or

shorter term lines they have crossed

already so so the softening that even

the mainstream cheer leaders of the

administration and or the economy in

general are admitting to some softening

in the labor market that's showing in

the charts and you know smart

experienced guys like gunlock are saying

that is the most Ironclad predictor of

recession including

2020 what are your before we talk about

your indicators of recession and what

you may look at uh to make this

assessment back up a minute why do we as

investors care if there's a recession

let's really think about that question

what moves during a recession which

assets do well well we know which assets

do poorly but I think what we want to

know is which assets do well during a

recession right ultimately why are we

talking about this right right no that's

a good question and actually let me I

will answer but let me go slightly

sideways and point out that there's a

there's an important distinction between

recession on the one hand and a market

crash on the other and a lot of people

seem to think that the two are the same

or assume that if there's going to be a

recession it's going to market crash and

that's not necessarily true cuz you know

if it was true then recession obviously

markets crash then that's a reason to

you know go short uh risk and go into

other Safe Haven assets which includes

gold sorry mainstream as well as bonds

and you know yeah I would I would much

rather go with the gold with the bonds

in this environment but um but that's a

mistake and especially now that the FED

has trained the markets it's almost a

pavlovian thing and that's why we've

been scat ing our heads about bad news

being good news for Wall Street for

years because of the expected fed put

and in this case I think that's not an

unreasonable expectation I think if we

had uh the fed's second mandate called

in that they would pivot you know fast

as you could and not just monetary

policy I think we'd see a fiscal

response and markets are forward looking

so markets could look at a recession and

say yay the floodgates are going to open

the easy money is going to flood the

markets and the money helicopters are

going to fly so hey go long go risk

because the the money is coming so it's

it's important not to conflate the two

market crash with recession but if the

reality on the ground is recession uh

those have been historically always very

bullish for monetary Metals that's gold

and silver not platinum or Palladium or

rodium sorry those are Industrial Metals

so it's primarily gold secondarily

silver it's also at the outset at least

uh you know depending on monetary policy

that the the fear can be good for bonds

but we have to see how that works in

uncharted waters it's bad for Industrial

Minerals and commodities and you know I

it should be bad for the stock market as

a whole but as we said in the bad news

is good news World on Wall Street it may

not be but it probably will be bad for

Commodities so Commodities markets don't

seem to get the same treatment from wall

stre that the equities markets do and

bad news is just bad news for for

Commodities if there's a downturn in the

economy that's bad for iron it's bad for

oil bad fed can't the FED can't save

Commodities is what you're

saying yes you know well it's actually

arguable whether the save the FED can

save anything here we are on fed day and

you know what they do does it really

matter their tool box is actually quite

limited and if if it's fiscal large s

that's really still that pig working its

way through the python that's making

inflation sticky do their inflation

sorry do their interest rate decisions

really matter that much you know are

they trying to hammer a screw or turn a

nail yeah arguably what's more important

is what they do with their balance sheet

you're right um Okay so we've answered

what does well in a recession recession

indicators that you look for then let's

talk about that well we've seen quite a

few already we've seen an earnings

recession even Wall Street is not

entirely divorced from Main Street so

that's interesting to me we certainly

seen a Commodities recession if Dr

copper is called that for good reason

okay we've seen higher copper prices

with some interesting optimism coming

out of China but still U the Commodities

complex has been signaling an economic

downturn we've got conventional

indicators from Germany to the UK to

other you know large EC eies flashing

red around the world I think it's not

much of a stress to say that there

actually is a global recession going on

we're not just looking at indicators

we're looking at a reality right now on

the ground and then the question is is

the US the exception is American

exceptionalism apply here and I would

argue that the

um again we're in uncharted waters but

given how we got here if we have and you

know the postco distortions in the labor

market you know the labor hoarding the

companies not wanting to fire people

they really don't need uh because of how

hard it was to find people during and

after the covid situation so then that

that pillar that the this American

exceptionalism rests on of the strong

consumer laborer right if that is not as

strong as it looks or if it's

artificially been propped up post

pandemic and then that breaks down then

things change in a big way so if you if

you want to headline David my headline

is low doubles down on hard Landing I

really do think that's coming I think

that the the degree to which these

things that I'm talking about Labor

Hoarding post-pandemic distortions in

the market have prevented or held off

the recession from you know or the piper

from being paid to the degree that you

hold him off that you increase your

interest payment when he does show up

for payment so I think the hard Landing

left to its own devices would be much

harder than it would have been had it

been left to sort itself out and then

the question of course becomes what are

the powers that be do so I'm doubling

down on hard Landing but I do think the

money helicopters will fly and and the

timing of this is is really the critical

point do the powers at be open the Easy

Money floodgates the moment it looks

like that recession is coming or do they

wait until the NBR declares in hindsight

oh yeah we're in a recession I have a

feeling they may not wait I mean there's

as we speak on fed day it's really quite

striking to hear the debate about

whether the FED should be loosening how

quickly it should be loosening when

supposedly the economy is doing so great

right the the Biden team not not to get

political here but the Biden team keeps

pulling their hair out over why Joe

doesn't get credit for wonderful biomics

how great that's doing for the economy

but the reality on the ground is is not

that great these numbers that they look

at don't account for the reality that

people are experiencing on the ground so

you know I'm saying things are worse

than they look in these contrived

averages and GDP numbers and you know

CPI and hedonically adjusted you know

supercore CPI all these numbers they

keep coming up with uh but the reality

is different and I think the reality

will be out and I I suspect though that

you know Powell and Company they that

they know this they can't admit it but

they know it and so I I sorry I'll stop

talking David my point is though that

this recession this hardlining I'm

looking for could trigger the next boom

because of the pavlovian fed put

response and also fiscal policy

sure so so so equities could do well but

still industrial Commodities are likely

to take it on the chin for some by the

way the we talked about uranium before

but let's just revisit that okay is the

price of uranium indicative of

either the market perceiving economic

strength or actual economic strength or

they not related at all I ask just

because as you know and we've talked

about this the price of uranium shot up

I want to ask you if that's an indicator

for anything on the um on the

economy I I wouldn't dismiss it entirely

you know I've said that uranium is

recession resistant not because nothing

is entirely Recession

Proof uh but it is the best source of

247 365 Basel load power um and that's

not the sort of thing that you want to

mess with you you you may decide in a

recession not to go visit Grandma's

often and drive less and use less gas

but you still want the lights to come on

and broadly speaking as a society you

still want the energy for your airports

and hospitals and things and that's

where nuclear really excels

so I won't say it doesn't mean anything

David but I will say that it is a

separate consideration it's much more

important when you're looking at uranium

to look at the supply and demand balance

in the market look at what secondary

Supply is doing to that I don't think

that uranium going to over $100 meant

that the economy was going to go zooming

off to the moon and I don't think that

uranium correcting now is particularly

that's not a recession indicator that

I'm looking at I just think the market

got ahead of itself and some correction

was to be expected and boy did I get a

lot of heat for saying that in Vancouver

when we met last but I'm not sure where

you want to go with this but no I don't

see

I I just I I I just want to know if

iranium going up means the economy is

booming no let's yeah simple as that you

could yes no you could you could

absolutely have the economy in a in a

significant recession and uranium still

go up because the supply isn't there for

all the reactors that are being built

around the world which is scores of them

David let's play a quick game of true or

false okay pretty simple just true or

false give your justification true or

false inflation will not come down below

3% this

year talk about headline headline CPI

yes yeah okay

yeah doesn't matter sorry true and false

I don't know it could but it would

really matter I think it's going to be

sticky so let me

say so let me go with false then I'm

closer to false than true all right

you're GNA put that where so the

justification would be it's sticky

already I said it was going to be sticky

I was right about that and if you look

at the charts they're pretty much flat

over the last nine months months and

that means we're getting the end of Base

effects which will no longer help so the

stickiness is about to get stickier and

more difficult

um I I don't have a crystal ball so I

don't know where it's going to go but

but much closer to false than true next

true or false the FED will only cut if

the economy shows obvious signs of a

recession

false Okay C other reasons yeah yeah

because if if I'm wrong and inflation

does get unstuck and goes down further

then doing nothing would be increasingly

restrictive by their definitions and

they've already talked about this that

yes it does make sense to them if if

inflation keeps going down to maintain

the same level of restrictive which they

say not me this is the Fed they say

they're at sufficiently restrictive now

so if inflation keeps going down you'd

have to cut rates to maintain that same

distance or else you would be you would

increase the restrictiveness of policy

if you didn't cut so there is a path

where that would happen but that's not

what I'm expecting I'm expecting them to

cut because they have an obep moment

when they realize they've broken

something else or that that hard Landing

is

coming uh true or false the unemployment

rate will not tick up later this year

false it's already ticking

up um let me rephrase that considerably

more than 1% higher than what it is

now more than one if you just said

considerably I would have said true if

you say more than 1% I don't know it

could depend on what they do and how

they Define it discourage workers but I

think there's a good chance that we will

see it Go a percent higher if if I'm

right about hard Landing even because

even if they throw the money at it David

it takes a while for policy to impact

things and if companies that have not

fired people that they didn't need

anymore suddenly start doing that or

going bankrupt and then you know firing

everybody right the easy money isn't

going to instantly create those new jobs

so I I think there's a pretty good

chance that the answer will be yes to

that this is an article from The Wall

Street Journal this has nothing to do

with a softw or hard Landing but it's

just AI wiping out jobs okay Tech job

Seekers without AI skills face a new

reality lower salaries and fewer roles

the rise of AI is affecting job seekers

in Tech who accustomed to high paychecks

and robust demand for their skills are

facing a new reality learn Ai and don't

expect the same pay package PES you were

getting a few years ago they want a job

for $200,000 and they're not finding it

because they don't have the skills he

said if they were an accounts receivable

project manager and they don't know

anything other than that they're going

to have a hard time finding a job AI is

projected according to this uh report

it's projected that uh the IT job market

in the US is expected to shrink by

20,000 to 30,000 jobs in 2024 this

year sorry was there a true or false

question in David no this is this is

just uh I want you to react to this no I

I'm in that camp and you know as a

person who who has an Austrian economics

perspective on the on the world and the

economy I believe in the concept of

creative destruction Innovation happens

you know old ways of doing things are

broken new ways of doing things in power

I I think AI is going to be a

tremendously uh creativity and

productivity enhancing Boom for our

species it's a great thing but clearly a

lot of jobs are going away and that's

not just going they're gone I mean last

year we had a whole swass of people who

would type repetitive real estate

listings entries in that you know that

job just doesn't exist anymore and you

the same way that you know uh horse

buggy or or candle lighters and horse

buggy whip makers and so on that that

started immediately with chat

gpt3 um now as the applications apply

this this new technology to specific

solutions for businesses I think this

year this isn't a someday some when

imminent or inevitable this is happening

now there are jobs being destroyed right

now so I I have no doubt about that and

this is part of my my concern now it's

it's interesting that there are very

smart people out there that's saying

well the AI productivity is actually

going to be the thing that holds the

recession off and I I have a hard time

with that I'm I'm I'm actually very

optimistic but cre cretive destruction

is a real thing and the destruction

happens before their creativity I I I I

have to just point out a lot of people

were making the comparison to the

Industrial Revolution when farmers were

you know losing their jobs because

Machinery um made a lot of farm Farmers

you know human Farmers obsolete so they

moved to the cities in the UK to work in

factories yeah but that was more or less

a lateral move we're talking about

manual labor to manual labor um here

we're talking about people who have

trained for years gone to school for a

certain profession and now all of a

sudden that profession is Obsolete and

so making a lateral move is difficult

they're going to have to either uh be

underemployed for a while and gain new

skills or yeah no I'm going to push back

on that one David I mean if you were a

farmer and you spent your day looking at

the hind end of a mule in front of a

plow and now you went to work at a

factory tightening bolts like Charlie

Chaplain in modern times that was a very

different thing you you did need to

learn new skills uh and by the way some

people went to work you know make making

the machines servicing the machines

there were different jobs and some of

them were higher paid I think

urbanization as much as it's reviled in

the in movies and stories at the time it

did accompany a rise in the average

standard of living so I'm not sure I

would see that as a lateral move but

clearly highly disruptive and people

throw the word disruption around oh you

know we're going to disrupt mining with

this or whatever like that's a good

thing well the eventual creativity is a

good thing but the disruption causes

problems along the way which are painful

so I I'm not sure where you want to go

with this but but my view is that this

is actually a red flag for 2024 we're

going to see more pain before we get the

game and it's happening now that's my

view long term would it be deflationary

the Advent of AI yes oh no

question and and you know this is

actually a Doug Casey ISM my mentor the

longest Financial Trend all of history

is deflationary the lowering cost of

living you know where you know the poor

people today have a infinitely better

lifestyle than the kings of Y who didn't

have dentist or Nova cane or or Cancer

Treatments or whatever right um you know

over the long

term progress means stuff gets cheaper

let's just close off your economic

Outlook and then I want to close and

then I want to move on to the final

segment which is Metals uh the core area

of your research so bottom line you're

doubling down on hard Landing uh what

was your take on the markets CU I know

we've talked about the fact that just

because we're getting a recession it

doesn't necessarily mean the markets

will you know will move down bare market

and recession not always they don't

always come together right so well with

bare Market they they usually have I

said crash crash okay it may not

necessarily crash what's the difference

between Bare market and crash for the

audience well a bare Market can be a

long grind lower that doesn't have a

waterfall

event you

know a crash is a in my mind it's a 2008

or or

1929 or 2020 perhaps you know flash

crash you know that sort of

verticality um and you know a multi-year

bear could take you as low as a sudden

crash but if it happens over years you

have time to see it coming you have time

to adapt your portfolio it's it's a much

different experience for the investor

than waking up on a Black Friday and

being worth 25% of what you were on

Thursday can we just settle this uh once

and for all I've heard different

theories um the Federal Reserve cutting

rates is that good or bad for stock

markets historically it's been mixed

sometimes immediately following a Fed

cut uh the stock markets have fallen

sometimes uh lowering rates actually is

is a boost for equities it really

depends the context if they're cutting

because the economy is bad usually that

means stock markets will will will fall

afterwards but what's your view on fed

Cuts you You' put your finger on the

important thing it's there's you know it

should depend on what the cut is the

reason for the cut why they're doing it

in our current context investors have

been so trained like I say it's a

pavlovian reflex you easier money means

go go risk on I'm not sure that even if

the FED did cut for bad news that

investors wouldn't look for forward to

oh well there'll be easier response more

easy money and everything will come back

it might take a while for reality to

assert itself like you know holy cow the

FED is cutting because they problems and

its Cuts aren't fixing the problems like

bad like for bad news to really become

bad news on Wall Street again might

take let me not mince words I think it

probably will take some re-education of

investors and that re-education is going

to be a very painful education true or

false moving on to Metals uh there is a

lot less production of copper than there

will be potential demand or current

demand meaning there's going to be a

shortage or deficit of copper production

therefore the price will be uh you know

significantly higher because of that

demand Supply imbalance true or false

time

frame I I this year next five years 10

years what are we

talking

because the answer would be different

you know this year I would say how would

the answer would be yeah how would the

answer be different this year I'd say

false maybe like there have been some

problems we had Cobra Panama go offline

last year we have some shutdowns in Peru

we have things going on so you know

borderline for this year but not for

sure if we're looking five 10 years

ahead or even just a couple years ahead

I think there's there's just nowhere

near enough copper and it's so difficult

to permit these big mines the ones big

enough to matter the the MEAP pit

projects and so on that can really help

Supply the world of the increasing

electrification which does not depend

just on electric cars dear audience you

know the world needs more electricity

anyway oh and the latest big craze is AI

right AI is going to make our

electricity demands go through the roof

even if that doesn't happen even if

people go completely back to Industrial

sorry internal combustion engines

there's still going to be more need for

Dr

copper um so the answer depends on the

time frame David but for this

year you unless we get more shutdowns I

I don't see a huge deficit this year and

if I'm right about a hard Landing

there'll be demand destruction and so we

could actually see the market remain

imbalance or slightly in Surplus this

year we'll have to see not a true false

question but I'm wondering why uh gold

has outperformed silver in both the last

two years and and the last one year at

12 months so I'll just give you I'm

looking at the charts here as of the

beginning of of 2022 Gold's up 20%

Silver's up

6.97% as of the beginning of 2023 I'm

zooming in here Gold's up 15 16%

Silver's up only

4% um you

know my Darth silver Mas here to answer

the question I thought I thought I've

asked this to a few people this week I

want to get your take I thought silver

outperforms gold during a bull rally

usually but that wasn't the case the

last two years well you even even even

Darth will agree with me here there's

several what's the story behind that

mask by the way you can't just bring

that on without any context here you

don't know that the Wall Street Silver

guys called me Darth silver no I'm not

aware of that oh wow you've been out of

the loop so okay so the reason for the

mask is that I have been I've had whoops

sorry Darth had the tarity to say that

there's been a change in the

relationship between gold and silver uh

and these numbers that you're pointing

out are case in point right the the the

use case has changed and you know the

good news is that clearly there's a a

vastly increased industrial use case for

silver and I do think that is good news

because you know the investment case the

monetary case doesn't necessarily go

away and

so if I'm right about the hard landing

and monetary medals get a bid because of

the recession then that would be gold

and silver that'd be good for silver

if I'm wrong and the economy takes off

well that's good for industrial demand

for silver so that's good for silver not

so much gold so you know people call me

Darth silver and all that but I'm I'm

not anti-s silver I'm not even a silver

bear the reason for the name though is

that something is clearly changed these

numbers that you're pointing to you can

see it on a daily basis there's over the

last year or two you look at gold and

silver and copper on a daily basis and

the silver line intraday will frequently

with

more with the copper line than with the

Gold

Line it's it's it seems to be responding

to the same stimuli to the same

decisions that copper buyers are making

than gold buyers frequently now it is

still money of course it is the word for

money in many languages and especially

since the new war in the Middle East

broke out we've seen Silver go back to

tracking gold more closely I find this

very reassuring yes it is still a

monetary metal so I like that win-win

but but the industrial side could

certainly hold it back this year and you

said that silver outperforms gold what

even di hard silver bulls will tell you

it outperforms gold at the end of the

bull market it typically lags at the

beginning and then more than catches up

at the end so if we're going in you know

we've been consolidating sideways since

2020 we're going on four years David

this is no longer the same bull market

of 1919 sorry 2019 2020 if we break out

again and and and we seem to be doing

that on the gold

side history tells us that silver will

lag at first anyway when I first started

in this industry it I've observed that

silver has had a higher beta to Gold if

you want to use gold as of sort of the

base case basically it just follows gold

with a higher beta it's more volatile so

you'd expect it to move up more in Bull

markets move down more in bare markets

it just hasn't been the case in the last

two years so I'm wondering why but that

was a good explanation um well sorry

just just one more thing I mean it's

it's really important if you're if if

you want to be uh fanatical about

defending your favorite metal or

commodity or whatever fine not you know

knock yourself out if there's an

ideological agenda here fine but don't

mistake that for being an investor if

your goal is to make money what what

David is saying right now I mean these

this is like truth with a capital T

these are the facts just look at it in

2020 we had this flash crash gold and

silver fell off a cliff gold immediately

starts coming back up again as it should

as a monetary metal should as a safe

haven asset should and silver just kind

of stayed on the map right it's been

struggling just to get back to and it

still hasn't hit a new all-time high

nominally even as gold has so the market

now is the data is telling us something

is different and you could I suppose

chalk all of that up to manipulation but

you know the scale of manipulation to

keep silver in the 20s when gold is over

20 100 uh globally it's just uh not

credible it's it's not an easy thing to

believe yeah nobody talks about

manipulation when the prices are going

up so you know that's something to

consider uh okay well would you use a

gold silver ratio as no as as a trading

tool like go it goes above 80 your short

gold or whatever no no no first first

because it's been continually widening

or not continually it has with

volatility been widening for decades now

like there was a big breakdown in 2020

but that was just the latest in a in a

trend um and the gold silver ratio can

close by gold coming down just as easily

as silver going up you know if you if

anything that gets to an extreme you

know if the gold silver ratio blows out

over 200 say I would I would at that

point be willing to bet that it would

close or at least somewhat close but it

doesn't tell me which metal is going up

and which one's going down

I had I heard a very interesting um case

for agricultural Commodities during a uh

during a war kinetic War usually grains

with uh Wheats things like that um

things that get imported or exported

over distances those prices go up

because of disruptions to the supply

chain and so ironically it's become a

safe haven to invest in agricultural

products during a war uh can you

evaluate that is that true it it's hard

for me to see something that can rot in

a ships cargo hold as a safe haven David

uh and I don't want to I don't want to

use the abused word transitory but those

cruffles tend to be ironed out and there

was a big story out there in

2022 when the second invasion of Ukraine

occurred about you know food scarcity

and and starving in Africa because

Ukraine and everything and and and

basically you know none of the dire

scenarios worked out I mean it was real

it was a phenomenon there was food

inflation there's still food inflation

how much of that is due to the war and

how much of that is due to money

printing I couldn't tell you um but I

can tell you that anybody who who you

know bet the farm on this huge

agricultural Commodities going to the

sky narrative um I I don't know how many

of them lost the farm but I think

they're they're in Jeopardy okay so

final TR truth or true or false and

we'll leave it there uh given your take

on the economy it's more likely that

gold Will outperform silver this year by

the end of the year true okay well that

was that was a fantastic session we ran

through everything thank you uh where

can we follow your work Lobo I know you

cover stocks we haven't talked about

mining stocks we talked about that by

the way Lobo and I had a very thorough

discussion about Miners and Mining

stocks in our January interview from two

months ago I'll put a link in the

description down below if you want to

revisit that episode uh so watch that

and also follow Lobo where can we follow

your work on miny stocks yeah the easy

answer is please sign up for our free

Weekly Newsletter at Independents

Speculator tocom if you do I promise I

will not spam you with a flood of daily

advertisements I mean you get one email

per week and then you can see if you

like my thinking you know via that free

product okay thanks very much we'll put

the link down in the description below

appreciate your time as always Lobo good

to see you we'll see you again

soon