Trouble Ahead? There are a few things that I think we should be paying attention to.

Ever since Mr. Trump won the Presidency, we have seen cryptos flying higher and certain stocks leading the indexes to new all-time highs. The euphoria seems off the charts.

If anyone watches college football like I do, you have probably seen Lee Corso making predictions on Gameday. One of his favorite lines when he is going to pick against you is “Not So Fast!.”

While he is not always right- and I am not either I do think there are some warning signs out there that indicate that things could take a turn at any time.

Many think that since the new president will be coming in and reducing regulations along with the Fed lowering rates, easy money and good times will be right around the corner. With this in mind it appears that many are throwing caution to the wind and buying about anything.

In my opinion there are many possible warning signs out there.

#1 The Fed has lowered the overnight rate by .75% in the last two meetings. That is great and historically this means easy money is returning. What many may not realize is that in that same time the 5-year note has RISEN by .75% and the 10 -year yield has gone from around 3.75 to 4.41 as I am writing this. About .65% HIGHER. (Marketwatch). This indicates that the “easy money” theory may be in jeopardy. Remember, they can reduce the overnight rate by dictating it. All other maturities have to be BOUGHT to keep the rates down. With other countries selling our debt I have to wonder just how much the Fed is actually conjuring up from nowhere to maintain the illusion of control.

#2 I was watching a video of Michael Belkin of Hyperpyron Research where he has said that it is his belief that global interest rates may be poised to surge higher. To me, this makes good sense because of the level of debt the world is carrying these days. The numbers indicate that the debts that have been wrung up are unpayable without massive currency devaluation. In other words, they will have to “print up” the means of repayment. This also means that bondholders are not being paid a fair rate based upon the risk they are taking. We will see. Rising interest rates are generally bad for stocks.

#3 Assets currently being sold are commodities along with gold and silver. In the case of gold, it could be that “investors” are just shifting to stocks for the short-term and some is probably moving to Bitcoin. While I believe that this is the most likely scenario let me give you another one. (All info.om Macrotrends.net or Kitco.com)

In the year 2000 gold was $279.00 per ounce. After the dotcom bust the Fed started their major interventions (money “printing” and buying assets to manipulate prices) and gold went to $455.00 in 2004 and moved to $841.00 by 2007. In 2008 gold rose to $1123.00 (Large rise possibly signaling something wrong under the economic surface) prior to the meltdown and fell back to $872.00 during the meltdown. Why could this be important? In the past 12 months gold has risen from $1980.00 to as high as $2785.00. Currently, it sits at $2575.00 on 11/14/24.

In 2008 the gold pullback started PRIOR to the major stock meltdown in October of that year.

After the initial shock of debt “markets” freezing up and trillions being conjured up out of nowhere gold shot up to $1896.00 in 2011. Basically, gold was the canary in the coal mine and led all assets out of the doldrums until the banks started manipulating the PRICE lower. The VALUE remained but was hidden from public view so the “strong dollar” illusion could be maintained, and banks could make a fortune manipulating the price. (See JP Morgan’s conviction of rigging the precious metals markets tens of thousands of times and almost a BILLION dollar fine.) They were not alone.

Whether it is just a matter of “investors” moving money to make a quick buck or if it is something a little more concerning, I think now is NOT a time to throw caution to the wind.

P/E ratios, corporate debts, cash flow, company prospects, industry prospects and all of the metrics that have been used in the past to determine VALUE have not mattered since the central banks have changed our markets that used to be marketplaces into a gambling casino where the house seems to always win.

Gone are the days when a willing buyer and a willing seller set the price. Today, larger entities like central banks, hedge funds and major banks outbid everyone else, and they set the price. This is why, in my opinion, the VALUE you are receiving buying most stocks at this time is extremely low.

I also left out that almost all excess buying in the stock “markets” since the year 2000 have been companies buying back their own stocks. This too, is concerning because it says that instead of investing in new technology or opportunities it is better to pad the corporate insider’s pockets TODAY. Not great long-term planning there.

According to Lance Roberts of Seeking Alpha Pensions and Mutual Funds have sold $2.7 TRILLION in stock since then, Individuals and Foreign investors have bought $2.4 TRILLION and Stock Buybacks have been $5.2 TRILLION. Keep in mind that the very act of a buyback REDUCES the amount of shares available which not only gooses the earnings per share up but also affects supply and demand.

Many really good companies are just simply too expensive and do not offer good long-term opportunities. My guess is that at some time in the near future they just may be bargains again.

Be Prepared!

Any opinions are those of Mike Savage and not necessarily of those of RJFS or Raymond James. Expressions of opinion are as of this date and are subject to change without notice. The information in this report does not purport to be a complete description of securities, markets or developments referred to in this material. The information has been obtained from sources deemed to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. There is no guarantee that these statements, opinions, or forecasts provided herein will prove to be correct.

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