Not A Good Time To Be Long Stocks Or Real Estate Right Now | Chris Whalen

**Chris Whalen** (0:00)
Inflation is the rule in America. It's the one constant in our history. So you have to caution, and I think adjust your investment strategy based on that. There are times when you want to be long stocks and real estate, and there are times when you don't. Unfortunately, I think we're heading into one of those times when you don't.

**Adam Taggart** (0:27)
Welcome to Thoughtful Money. I'm its founder and your host, Adam Taggart. Despite the best efforts of Elon Musk and the DOGE team, the US fiscal deficit for 2025 is $1.3 trillion so far. That's the second highest six-month level on record. And while the US is at least giving lip service to its plans to reduce its deficit over coming years, much of the rest of the world's largest economies, like the EU and China, are actively ramping up their fiscal spending, all of which makes today's guest perspective incredibly timely. He just released a new second edition to his book, Inflated, Money, Debt, and the American Dream. Now, is there a way we can stop and perhaps even reverse this loss of purchasing power that our fiat currencies are suffering from? Or is it only going to get worse from here? To find out, we'll ask the author himself, Chris Whalen, Chairman of Whalen Global Advisors LLC, an expert on the banking, mortgage finance, and fintech sectors. Chris, thanks so much for joining us today.

**Chris Whalen** (1:28)
Thank you, sir. It's always a pleasure.

**Adam Taggart** (1:30)
Same here, my friend. Well, first off, congratulations on the new book. It is a revised second edition. I want to get into the details of all that in just a quick second. Just because it's been a little while since you have been on the program, Chris, and a lot has happened, particularly with the new administration and the subsequent tariff tempest and the knock-on effects in the markets and all that. If I can, let's just start. What's your current assessment of the global economy and financial markets?

**Chris Whalen** (2:00)
Well, the US markets are deflating. We've given back most of 2024's gains, if I measure it based on the financials that I follow. We've gone to somewhat of a defensive posture. I was just setting up a new portfolio, and the first thing I did was the long-gold short-dollar trade, which I think most people have figured out by now. And, you know, unfortunately, the Trump administration is attacking some obvious issues, but in a very disruptive way. So while it's perfectly fine to talk about the role of the dollar and the cost of running the dollar as a utility for the rest of the world, how you do it is very important. And the disruptive effect of volatility of Donald Trump is very expensive. It's tens of trillions of dollars. The banks did okay this quarter. They made a lot of money trading, not so much on banking. But the ones I'm really worried about, frankly, are my mortgage lenders. Because of the volatility of this quarter, I think hedging is going to be a mess. So you know, mortgage rates are up.
Most of the indicia you would use to measure how consumers and voters feel about all this are probably not where you would like to see them. But you know, Trump has told us to be patient. But we have to just see what happens. But I think the markets are in a defensive posture. That's how I would describe it.

**Adam Taggart** (3:31)
Okay. And I'm just curious, we can get more into this later if you like. But is he more disruptive at this point than you anticipated? Or is it pretty much part of the course?

**Chris Whalen** (3:42)
No, I had called this for a lot of my clients years ago. He wasn't prepared the first time around. He really wasn't staffed. He hadn't done the homework because they didn't think they were going to win.

**Adam Taggart** (3:54)
He was the dog that caught the car, right?

**Chris Whalen** (3:56)
Oh, yeah. But this time around, the Trump team, Susie Wiles, and the whole team around him are extremely well prepared. So for example, this past week, they just rolled out what's called Schedule F, which is how the president has used an executive order to re-characterize a lot of civil servants. If they're actually involved in policy, if they're involved in things that are at all partisan, they can be dismissed and changed. So he's making big structural changes to the government a lot of people still don't understand. And there's more to come. For example, we've already seen some Supreme Court decisions which have had a pretty significant impact on the liberal state. There's one involving delegation. That is to say, when a federal agency basically tries to figure out what Congress wanted without explicit instructions. If that one drops the way I think it will, Adam, Congress is going to have to micromanage federal agencies going forward. That means they're going to have to do their job for once. And that's going to be a radical change. If the federal agencies can no longer just issue rules the way we saw under Joe Biden with the Consumer Financial Protection Bureau, that's going to basically kill the liberal state. And I think that was one of the big objectives of Trump and conservatives. Remember when the head of Canada Fitzgerald, our esteemed commerce secretary, said that everybody involved with the Heritage Foundation project for 2025 was going to be toxic? No, they're driving the bus and they're extremely well-prepared. They have lawyers and the whole shebang as they move forward.