"Nasty" Surprise In Store For Stocks As Credit Markets & Dollar Weaken? | Jesse Felder

**Jesse Felder** (0:00)
So there are signs, if you look for them, that the credit markets are not healthy, and they're potentially deteriorating. And that's something I would pay very close attention to, too, because if business development companies are starting to write down stuff, we're starting to see more cockroaches, as Jamie Dimon recently said we might, then that plays into this theme of earnings disappointments and a turn in the cycle. Rising unemployment, as we talked about, could be bad for the passive bid. I think all of those things paint a pretty nasty potential picture for stock prices this year.

**Adam Taggart** (0:42)
Welcome to Thoughtful Money. I'm its founder and your host, Adam Taggart. Today's guest has been warning for a good while now that the current bull market in stocks is approaching its end, in no small part because corporate insiders, who know the most about their company's prospects, are selling their shares at record levels. It's not all gloom for investors though. He also predicts that commodities and the stocks of the companies that produce them are set to experience a boom. For a full update on his outlook, we welcome back to the program macroanalyst Jesse Felder, founder and editor of The Felder Report. Jesse, thanks so much for joining us today.

**Jesse Felder** (1:19)
Hey, good to be back with you, Adam. Thanks for having me.

**Adam Taggart** (1:21)
Hey, it's always a pleasure, Jesse. Thank you so much. Glad to hear that you are skipping out on the frigid weather that much of the rest of the country is having. You told me it's going to be almost 80 where you are today, so I'm sure we get a lot of jealous viewers here. Yeah.

**Jesse Felder** (1:38)
Well, it's a blessing to be able to be down here this time of year, and I feel for everybody around the country. It's why, part of the reason I moved out of Central Oregon was the winters were a little too harsh.

**Adam Taggart** (1:49)
Yeah, and that's in Oregon, right? It's getting everybody. Florida here has been freezing down in the 40s. New York, I just saw this morning, was nine degrees in Manhattan, but felt like negative seven. My little brother lives in Wisconsin, and a few days ago there, it was like minus 20, but feels like minus 35 I mean, these are just ungodly temperatures.

**Jesse Felder** (2:13)
Yeah, I was watching the outdoor NHL hockey game they had yesterday in Tampa Bay, and I thought, how can they do an outdoor hockey game in Florida? But the guys were huffing and puffing. You could see their breath and stuff. So it was a pretty cool experience to watch down there. All right.

**Adam Taggart** (2:30)
Well, sometimes novelty is nice, but I'm sure most of the country is saying, okay, let's wrap this up pretty quick. Right. All right. Well, look, speaking of wrapping things up, let me wrap up the intro and just get straight to the stake here. You and I are recording this on Monday morning, February 2nd, Groundhog Day, by the way. I don't know if this is a sign for the markets as well, but Punxsutawney Phil, the Groundhog, did see his shadow. Those folks suffering through winter right now might have six more weeks of it to deal with, that's normal. But on this day, it is the first day of trading since, we'll call it Silvermageddon on Friday. But it wasn't just silver. All the markets have been getting beaten up, but the precious metals have just been getting eviscerated. Let me just start by asking you a very simple question, Jesse. What the heck just happened?

**Jesse Felder** (3:26)
Yeah. Well, I've been bullish on the precious metals for the past 10 years, really. 2015, I started writing about how down and out metals had become. Sentiment had become, I think I even referenced at the time, a Mebb Faber piece that showed when any asset class or sector is down three years in a row, subsequent returns are really good. And metals, that was around the time the Wall Street Journal called gold a pet rock. And obviously, the last 10 years have been really good for gold bowls. I think generally, we're still in an environment where it's friendlier to real assets than to financial assets. We can dig into that. But I think over the past year, really, there was a speculative momentum trade that kind of came into the precious metals. You know, Bloomberg has reported today about how much leverage to buying there was among Chinese, you know, kind of retail investors. And whenever you see that type of parabolic advance, it always kind of ends the same way. It's impossible to time, although, you know, we were talking about our mutual friend, David Hay, who did a phenomenal job of timing it last week. I think he sent out a thing on Thursday saying, you know, it's probably time to be cautious towards the metals here. And that was right before they reversed. So yeah, for everyone else, besides Dave, it's really difficult to time these things. But they always kind of work the same way. Whenever you get that parabolic blow off, you get the kind of reaction that we saw on Friday. And probably should continue for a while just because you need some deal leveraging. There's been so much, you know, call option buying and leveraged buying of, you know, the ETFs and things that it just went a little bit too far to the upside. I still think we're in a structural bull market for real assets that will last another at least five years. But, you know, another thing that I've been talking about for the past 12 months is that, relative to gold, the rest of the commodity space looks really, really cheap. And that's actually one of the best ways, I think, for if you are a structural bull on the commodity space, to look at them, price them relative to each other. And when you look at oil relative to silver, you look at the oil price relative to gold, it suggests that, you know, the energy component within commodities had become unduly cheap, and the precious metals relative to the commodity space had kind of gotten overdone. That said, I will say that I think the precious metals typically lead these types of commodity bull markets. And so this huge move by the metals is kind of foreshadowing. And we've seen it, the rest of the commodity space starting to play catch up. You know, the Bloomberg Commodities Index has kind of broken out recently and been really strong, but I think the next leg is probably likely to migrate more towards energy and oil specifically.