Inflation To 'Rebound', Crash Markets And Send Interest Rates Soaring | Louis Gave & David Hay

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Louis Gave, CEO of Gavekal, and David Hay, Co-CIO of Evergreen Gavekal, join forces to discuss the coming rebound of inflation and all the market implications that come with it.
*This video was recorded on April 8, 2024
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0:00 - Intro
1:36 - Rebound of inflation
7:37 - Fed policy
16:13 - 8% interest rate?
23:07 - Inflation and spending
33:14 - Invasion of Taiwan?
37:11 - Market bubble
46:00 - Market outlook
48:34 - Gold
51:53 - Asset allocation
#investing #economy #markets

[@TheDavidLinReport]

Sign up for an IRA with ITrust today using this link: itrust.capital/David Will the Fed lose control of inflation? Comment below on what will happen to inflation, as well as Fed monetary policy, and don't forget to subscribe! FOLLOW DAVID HAY: Haymaker Substack Page: haymaker.substack.com/ Dave's Biographical Page: evergreengavekal.com/team/david-hay/ Bubble 3.0 Audiobook: awesound.com/a/bubble-30-historys-biggest-financial-bubble (Enter LINREPORT50 for a 50% discount) Evergreen Compatibility Survey: evergreengavekal.com/compatibility-survey/ LinkedIn: www.linkedin.com/in/davidhayevergreencapital/ Twitter (@Haymaker_0): twitter.com/Haymaker_0 FOLLOW LOUIS GAVE: Gavekal: web.gavekal.com/ Twitter (@gave_vincent): twitter.com/gave_vincent

[@camwalker1186]

If you can’t project wether economic conditions or policies will produce one of either 2 extremes then you must accept you know nothing at all and that economics is an utterly illegitimate field of study.

[@arbor-sq4jk]

is silver same as gold ...i bought silver minning companys

[@bc4yt]

Hey David, I would love for you to ask someone about the prospect of Taiwan being attacked not to be secured for mainland China, but as a blow to the US. I.e. as a "well maybe we can't win, but we can make you lose" scenario. As mentioned, NVIDIA stock, which is propping up the entire stock market, would take a massive hit, and cause the entire market to panic. Plud, we have to remember that as Putin said, "whoever masters AGI first will rule the world" so there is an AI arms race ongoing as we speak. It would make sense for China to trip up the US side of that equation if they feel they are losing. The reduction in high end chip production would hurt China as a lot of the electronics they assemble rely on those chips, but I think China would survive and may consider it a worthy sacrifice to strike a blow to US chip dominance. Something to consider. This interview was great, very happy to hear more from these gentlemen. Great work as always.

[@dougcs]

I can't imagine the crazy house of cards made by reckless policy and governance not yielding wild instability, inflations and deflations.

[@joanngomez2289]

Gold’s price I think still has a margin to increase but not as much as it did since the early 2000’s (around $250 and now around $2,400 an ounce). That’s almost 10X. Gold is mostly a commodity, hence, it has a demand destruction. It is used as a good conductor of heat, as jewelries, as component of industrial machineries or gadgets like cell phones, etc. Imagine if gold’s price increase by 10X again, then all products that use gold will increase by 10X also. Who’s gonna by a product say for example a cell phone that previously costs around $1,000 but costs $10,000 now? Stocks on the other hand has more exponential growth especially those growth stocks. If you’re scared of putting a lot of money on growth stocks, then you can hedge by also balancing your portfolio through investing in large caps stocks. Stocks have always proven as the best performer of all assets, not real estate, not bonds, not cash and especially not gold. The S and P 500 index in 1928 was only $24 and now it’s around $5,051 (210X) whereas gold’s price in that same year of 1928 was $20 per ounce and now is only around $2,386 (119X). I still have faith in America as the safest haven on earth when it comes to financial investment because it still has the most stable and transparent government in all of the world. Heck, other countries may manufacture stuffs right and left but a lot of their companies and investors all over the world will still park their “scared” and “dumb” money in America especially when there’s global turmoil like what we have now. Those who want to invest in Russia, China, Iran, North Korea and their cohorts need to have an MRI of the brain because you may earn a lot in the beginning as a bait but will just lose almost all of it later because of their authoritarian governments where people’s right to redress the grievances of their citizens are muffled and met by violence and worse, by murder!

[@JonathanWilliam-is6wd]

“This is why you’re in debt”

[@JonathanWilliam-is6wd]

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[@JonathanWilliam-is6wd]

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[@JonathanWilliam-is6wd]

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[@BDA-ow7jh]

In debt 😂 you sound like a complete🐧

[@brayanmartinezmartinez8862]

I'm DCAing in Blcktken300 as well. ETH heavier DCA and ALGO. I'm taking your advice and starting Google tomorrow with a 50 dollar purchase and continuing Microsoft and Apple. VTI and VOO on another app and longterm portfolio. Here we go family!

[@smdutt]

Good point that the only thing that will be “higher for longer,” is inflation itself.

[@elreyfloresrodriguez5508]

Im betting Blcktken300 will perform well, it havent had a cycle yet and they have a strong community on both, and Blcktken300 update will make rollup fees even lower. Just my 2 cents. Great video goodvibes

[@chuqing99]

Louis is very good, provided insights that I have not heard from other guests. Love it!

[@chilll973]

David thank you for relentlessly bringing us articulable, and digestible up to date current market/financial information. Mainstream media would never!

[@nickhornsey5719]

Great chat! Love both Louis & Dave’s take at where we are in the cycle. TY David 🙏🏻

[@davidpate6095]

I could have listened for 10 hours. Great guests and they were good together.

[@mechannel7046]

2:00 manufacturing strong, uptrend in global manufacturing cycle. Energy price up: Chinese econ has bottomed, raising commodities and energy prices. India too 4:40 China now biggest car exporter, selling to first time car buyers, creating sub 10K car mkt 6:00 fed will still cut in June 8:25 wage growing at 5%. 9:20 even Germany rebounding, China back, emerging mkt booming. Under investment for decades, now investing 11:00 mkt and manufacturing data point to the same up trend 12:25 cut will be a policy mistake 13:10 to crush inflation, need right fiscal and monetary policy; none in the West 20:00 US debt to gdp 120%, not in productive investments 22:40 French economist on inflation 24:00 no recession bc massive govt spending 24:30 ST gain and LT crash. Lacy Hunt. Palo Macro, inflationary recession, illusion of prosperity, social discomfort 28:35 China no inflation, govt supporting stock prices, chinese stocksbsuper cheap. NVDA= Taiwan 34:00 China won't attack Taiwan 39:35 bond and CR spreads fueled the recent rally 43:00 china vs US stock mkt, don't buy when Wall St is selling 45:50 asset classes

[@shinobudev]

Thank you based AI summarizer.

[@mechannel7046]

46:45 gold demand comes from China Japan 47:45 yen down, rmb follows 48:45 gold bull mkt will end when China and Japan change policies 50:45 how to participate, miners, gold brokers 51:25 Western investors will realize they need gold too 52:00 big on miners and gold

[@JanRiffler]

Double interest rate are must to save the $.

[@MrGazzy]

You must get Louis Gave back on! He’s incredible 💯👌🏻

[@pasqualeperri5661]

Great commentary on Taiwan from Louis

[@HuiChyr]

The problem is not whether Xi JInPing wants to attack Taiwan. The problem is US wants a war with China (Why do you think Nancy Pelosi visited Taiwan?) With China's problem with Philippines, the war might come after all.

[@Casey-rr7th]

Fabulous content. I learned so much from the video (and I consider myself well informed). Just top notch guests!

[@bpb5541]

I think the 10 year is going to go above 12% maybe even higher. Most folks have no idea what that means but they will.

[@stuomsen5094]

Great guests and conversation i could have listened for hours!

[@martygroover]

I've been waiting for a conversation about this topic. Thanks.

[@bootcamptrader]

The comment at 13:10 is the gold nugget of this entire convo. The Fed is simply pissing into the wind with higher rates without the accompanying fiscal restraint that they are not going to get. So they’re getting all the downside(bond market, interest expense, …)of higher rates with little improvement in inflation. They’ve decided that instead of standing in the middle of the ring and fighting inflation with one hand tied behind their back that they’ll retreat and not take the beating. Fiscal has to join the fight for any hope of victory

[@MAMP]

I agree. The interest rate isn't highly relevant to the overall money supply (m3) at this point. The only thing the interest rate can do is move money between sectors.

[@msims6054]

Seems that interest rates don’t impact the pool of money as much as they impact the velocity of money.

[@KnaveChild]

Other analysts are reporting that China is collapsing. How can so many analysts have such different outlooks?

[@rocketj7449]

That's a good question

[@Eterna7Forms]

I was wondering the same thing. Also how can we even trust any CCP numbers?

[@uguralpkosar]

Clash of interest and prejudice

[@icarus369]

Western reporters like the ones claiming Ukraine was winning the war? 😂

[@jazzysnoopy1403]

As a Chinese Canadian, all I've been hearing from the Chinese community lately is all about China's collapsing in recent years.

[@Robyn-Hood]

Fantastic 🎉🎉🎉🎉 🎉🎉 both David’s need microphones 🎉🎉

[@SomeUserNameBlahBlah]

Fed is not cutting in June.

[@Jester2415]

The plan was to gaslight about cuts until the election in November, Powell knows he has to raise not cut to halt inflation. Israel just screwed their plans by antagonizing Iran.

[@RD-kz4wr]

Yup, it was just signaled today it would be later.

[@deseosuho]

Cutting in June 2024, much like the famed transitory inflation of 2021 is fed speak for "we will wait until there is a large problem and then overreact."

[@xmonikerhotmailcom]

Bond market is on brink of collapse. Cut incoming.

[@Truthseeker-iz3dj]

Cut rates without printing.

[@fubarbrandon1345]

Two great guest and information...thanks David.

[@geneadaway2671]

I think I’m ready to accept the Illusion of Prosperity.

[@doctordetroit4339]

Imagine if the Fed used real, truthful inflation numbers. Rates would be double digit.

[@cultleader3572]

It was 25% 😂 and they blame us for getting four to 5% increases but I have friends or engineers making six figures who only got three and a half

[@nadshe2548]

that discussion was awesome, Dav. Thanks for bringing w such quality discussion and knowledge to us. Cheers

[@riyadhbaksh2415]

I don't know why no one is listening to the central bankers. "Higher for longer" the msg is clear.

[@xmonikerhotmailcom]

Naw, bond market on brink of collapse and debt expanding faster and faster. Cut coming.

[@sbain844]

30:00 Russell Napier argues (in his recent Library of Mistakes talk) that we should consider where domestic capital flows are headed before deciding where to invest in the world. For China, domestic capital is flowing out of the country. Russell says that when foreign capital is flowing in, but domestic capital is flowing out, it's the foreign investors who are wrong! The Yuan is not depreciating because of a worsening trade deficit, it's happening because of a worsening capital account, so be vary careful about investing in China.

[@JohnSmith-ms8nj]

Great guests

[@Rick-wy4od]

Great interview. Really interesting insight from these guys - well done to all 👌

[@Carlos-im3hn]

huge debts ($34T) and deficits ($1T/100days), and rising debt servicing paying $1T/yr. interest at 5%. real US inflation 10%. rates and yields up to 6% then the US Debt Clock explodes into inflation and hyperinflation. rates and yields down then no one will purchase 4% treasuries billions and trillions to be sold in 2024. The US rates are stuck at 5% going forward. This is it.

[@RD-kz4wr]

US inflation is 6-8% currently. It seems like 10, but that's only because it was 15% for a few months last year.

[@papertrader3269]

@@RD-kz4wr I see hidden inflation in the work force. I'm starting to have to pay people bribe money to get things done. It's getting bad.

[@seandonnolley7843]

FED WILL BE SPIKEING INTEREST RATE'S HIGHER ? NOT LOWER ?? OBVIOUSLY ?

[@Brendita8]

Thanks for these two great guests. Brilliant discussion!

[@OracleDisected]

Great debate 👏🏽 lots of “gold nuggets” here. Kudos!!!

[@davebankes612]

Amazing interview David, love every minute, thx.

[@paulseidel5819]

Great interviews. What does it all mean for investors trying to protect our purchasing power?

[@geertterharmsel]

Precious metals or india

[@martinnotrevealed7910]

Brilliant guests!

[@josephduku6610]

Very valuable experienced guests, right on.

[@charleskilpatrick9704]

They are missing the point about Engineer populations. You can't just throw bodies at engineering problems. 1 Excellent Engineer > 10 Mediocre Engineers.

[@skydragon23101979]

When you have plenty of engineers you would have plenty of excellent engineers as well. The numbers even out automatically.

[@charleskilpatrick9704]

@@skydragon23101979 After 10 - 15 years of engineering work.

[@bobk6549]

A country can have many engineers, but if it's economy is a dying, centrally controlled communist system, with little innovation and with debt that is equal or higher than ours... those engineers aren't going to help.

[@charleskilpatrick9704]

@@skydragon23101979 Coming from an Engineer: The need for huge numbers of Engineers is highly over exaggerated. With proper capitalization a relatively small number of Engineers can execute a huge project. The most important factor is having a project that makes sense economically.

[@kmilton1593]

Thank you Louis and David H for this great discussion: so if Jamie Dimon thinks inflation will get worse in coming years, and when you look how cheap oil is (using present-day-values of past prices), to keep our net worth from devaluing we pretty much have to invest in oil equities.

[@xmonikerhotmailcom]

Ummm, bitcoin is the best performing asset the last 15 years. You might want to look into it.

[@reecemccullough4829]

Incredible!

[@annbernstein164]

Captivating because it was highly informative ( at least at my level of knowledge). Thank you very much for this opportunity for more knowledge and understanding.

[@ocox8659]

Louis is spot on on his takes on Russia/Ukraine and China/Taiwan. It’s refreshing not to hear mindless regurgitation of neocon propaganda.

[@valdomel]

Finally somebody honest, humble and courageous enough to not call them stupid ;) 14:40

[@aaronsullivan1628]

The FED can’t cut. The FED can’t do nuttin’… THE FED doesn’t set rates. The bond market does. If the FED isn’t going to buy a heap of US bonds and put their money where their mouth is, then jawboning about rates is immaterial. Rates will rise. Period. The bond market is already demonstrating this reality. So, your jawboning about their jawboning is just a lot of wind.

[@user-lb8bg6kj9m]

Then how come the bond market was ok with negative real rates since 2008

[@aaronsullivan1628]

@@user-lb8bg6kj9m Dude! You ain’t payin’ attention. Why am I educating you? The FED was actively buying bonds with printed money. Have you been living under a rock?

[@geneadaway2671]

@@aaronsullivan1628 During covid too, now our biggest silent partner.

[@Debbie.Burton]

What I don’t understand is, on one hand we are told the stock market will crash and yet on the other we are told ways of investing in the stock market. Oxymoron or paradox? I'm considering investing over $300k, but I'm uncertain about risk mitigation strategies.

[@benitabussell5053]

Invest in real estate, ETFs and high-yield savings account

[@menangal]

very very informative, knowledgable and stimulating discussion. thanks david and the guests!

[@marcome777]

We need to start asking who is collecting the data and if they’re being objective

[@prolific1518]

Bingo

[@Muser10863]

Outstanding interview, David, excellent guests, this is one of your best 👌

[@adamg4490]

Another strong interview David! Thanks!

[@jvin248]

David, do a deep dive on the "market metrics" that folks are throwing around/referencing. How much of the rising prices "demand" referenced as evidence of better business conditions are really just a figment of Inflation? Check food inflation and the real on the street price rise is like 30% over the last year or two, same effect happens on commodities as the buying power of fiat currencies goes down. Misreading economic data surging with inflation effects is dangerous: individuals and businesses will make poor investment decisions. The data seems to indicate a glut of buyers are chasing products so the business buys additional equipment and authorizes worker overtime which all pile up and sit on shelves.

[@MajorAALAN]

david lin is giga chad

[@rkalla]

Amazing interview

[@rasmeyyou8243]

Really great guests and interview

[@jennyadams108]

Congratulations David on a great interview 👏

[@billkellett311]

Great Macro info! Way to go!

[@motiveation1]

This was great

[@michaelalexander-kq8gh]

Need an individual interview with both these guys

[@ansa336]

It takes a Financial Analyist to explain the really reason for the Ukraine war, thank you!

[@ericblust5923]

The way to cut our current style of inflation, is to stop printing money out of thin air to fund government. Killing the economy by raising interest rates wont help.

[@juansantos8719]

great iterview

[@dohyunio]

Japan is not strong at all. They are facing insane inflation crisis with yen crashing against usd

[@ampiciline]

Best definition of inflation : 23:38 to 24:01 wow that was a heavy concept to digest .....i had to watch it 10 X to understand it

[@monlamias124]

Great conversation and great topics. Congratulations gentlemen

[@joejones4296]

David does a fantastic job.

[@joycekoch5746]

Spot on!!!

[@michaelholmes8848]

Which part? It was an hour long video

[@minnesotasalamander5913]

Good information from your guests.

[@ICPTERENCEXxx-pi2sg]

Thumb up to the great guests .

[@kenthughes4396]

I am personally shocked that David has bearish guess on his show. He is such a perma bull it is amazing.

[@lonewolf1766]

Really liked this show

[@whdndrn]

If inflation picks up and interest rates are raised will companies have massive layoffs? Will layoffs cause massive unrest? Or even if interest rates are rates will inflation continue to rise and doubling food prices cause massive unrest?

[@paulbrown4620]

excellent interview - when will the gold run end?

[@phoenixthottam5793]

Thanks!

[@TheDavidLinReport]

thanks!

[@erikbartone551]

Great guests!

[@edwardkierklo9757]

Odd twist to recency bias but despite Louis's points do not think China was ever investible for retail investors and will never be.

[@daviddunkelheit9952]

China is not collapsing but dropping prices to take greater market share. Exporting deflationary goods.

[@toddbroyard5124]

Great interview!!! 2 very smart investment professionals who are right on point!!!

[@eh7599]

awesome guests

[@thehungergames8918]

Silver 🥈 baby 😃

[@CMGUK1]

One of the best interviews!

[@gandakita]

David...maybe next time interview Louis solo...He has so much good info to say...one hour is not enough

[@BluegrassStoic]

Dude, 'reaccelerating'? IDK about that. Opec has cut oil supply, Russia's supply has been cut and throttled, just to maintain price, that doesn't say accelerated demand to me. Not to mention peaking credit card debt and delinquencies, that also doesn't say acceleration to me... Maybe LONGER term but right now it seems to me we're in recession.

[@DanDang2]

Great conversation

[@0mar9]

You should have a debate between inflation vs deflation

[@rolandbraun1197]

This 6% budget deficit in monetary terms is larger than personal and corporate savings as at 2024 !! Since savings is really low, investment will also be insignificant and that in turn means that America's stock of capital equipment will not grow significantly enough for productivity growth and more productive employment !!

[@user-si6mj7ex2v]

Great discussion!!

[@radmirov8541]

The Federal Reserve is deliberately inflating with deficit spending and refusal to raise interest rates further (mind you, 5.25% rate is not high), meanwhile verbally fear-mongering the markets about fighting inflation. Look at their actions, not their words. With their actions, the Fed is continuing to run deficit spending, keeping interests rate at a very low 5.25%, refusing to increase interests rates; but with their words they pander about how serious they are about fighting inflation. The fact of the matter is, the Fed knows that the U.S. economy is weak, job numbers are also very weak. And in order to stimulate a failing economy, the Fed is desperately seeking for a reason to lower interest rates. The Fed will fudge numbers to make it seem like inflation has been crushed, in order to lower interest rates; when in fact the actual inflation rates will continue to spike up at the grocery stores, at the fuel pump, as the cost of living will be inflated higher and higher. The truth of the matter, is that the world is actively and aggressively dumping the U.S. paper dollar. The U.S. economy has now been transformed into Venezuela.

[@SebastienMauroyPhoto]

Amitiés à votre soeur et a votre papa Louis! Merci à toute la famille Gave!

[@jaygreenakajackstax9345]

This vid is awesome.

[@SalkoSalcinovic]

I like the guy with headphones on. Smart and sensible bloke.

[@fredcrossman5133]

David Hay is on an echo chamber. Hard to hear

[@OlcayMumun]

Not the best year but celebrating $AKDMTTP now! What a time to be alive guys, seriously

[@suebowman7258]

Excellent video! David drank Starbuck drink. SBUX 😊

[@leonie563]

....or they drain your super/401k....downsize and get out of the way

[@lorilacour7816]

Very good discussion

[@Ashort12345]

(CAPE) ratio," also known as the Shiller P/E ratio. The CAPE ratio is a valuation measure that uses inflation-adjusted earnings over a 10-year period to calculate the price-to-earnings ratio for the stock market. It was developed by the economist Robert Shiller. The key points about the cyclically adjusted KPE (CAPE) ratio are: It is used to assess whether the stock market is overvalued or undervalued compared to its historical average. It looks at the price-to-earnings ratio, but uses a 10-year average of inflation-adjusted earnings to smooth out short-term fluctuations in earnings. The "cyclically adjusted" part refers to the fact that it accounts for the business cycle, rather than just using the current year's earnings. A high CAPE ratio (above its historical average) suggests the market may be overvalued, while a low CAPE ratio suggests potential undervaluation. Investors and analysts use the CAPE ratio as one input when evaluating the overall valuation of the stock market.

[@jeffsurfanderson]

David you should have mentioned to him that the market is not the economy

[@user-qh7rj9wj4p]

Why cant u buy gold spot like xauusd? Is that not the correct way?

[@SezaiAhmet]

It would be great if you had a deep dive on the $AKDMTTP

[@simonlaw9234]

David looks knackered.

[@SeymaMahmut-zi4dr]

Got my fingers crossed for BRETT and $AKDMTTP

[@zelareka]

what did gavekal say in 2008? I still remember.