The Market Is Priced For A Fairytale Economy, But Stagflation Is Much More Likely | Jesse Felder

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Today's guest expert is concerned that too many investors, giddy with the ferocious market gains since November, are increasingly willing to pay prices for assets that only make sense if the pace of gains continues into the far future.
This is called "extrapolating the unsustainable" and is a hallmark of late stage price melt-ups.
Historically, this behavior has not ended well for those engaging in it.
Will it prove different this time?
To find out, as well as hear his outlook for markets, we're fortunate to speak today with Jesse Felder, founder & Editor of the respected market research firm: The Felder Report.
Jesse warns that while the market is currently priced for a Goldilocks economy, stagflation is much more likely.
Follow Jesse at thefelderreport.com/
#stagflation #recession #marketcorrection
_____________________________________________
Thoughtful Money LLC is a Registered Investment Advisor Solicitor.
We produce educational content geared for the individual investor. It’s important to note that this content is NOT investment advice, individual or otherwise, nor should be construed as such.
We recommend that most investors, especially if inexperienced, should consider benefiting from the direction and guidance of a qualified financial advisor in good standing with the Financial Industry Regulatory Authority (FINRA) who can develop & implement a personalized financial plan based on a customer’s unique goals, needs & risk tolerance.
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[@adam.taggart]

SUBSCRIBE TO OUR FREE NEWSLETTER at adamtaggart.substack.com (or upgrade to premium to receive our "Adam's Notes" summaries to this interview & all others on this channel)

[@jasonirby3382]

"Stocks have reached a permanently high plateau." - Irving Fisher Oct 1929

[@michaeljacobs4546]

Yes one of the greatest economist with respect to the yield curve got caught up in equity market mania, and died broke in a poorhouse if my faltering memory serves me.

[@deanchristie3829]

The earth is flat. Just don't fall off the edge.

[@davidmcdevitt9071]

It was for many years

[@jasonirby3382]

@@davidmcdevitt9071 It always is, until it isn't.

[@nav8888]

Highly recommend putting in time stamps for your insightful interviews. Thanks Adam.

[@batmanfromgotham5845]

Long time follower. Almost never comment on anything. This was my favorite video. Very informative! Painted a great picture.

[@briancutsinger]

Great Jesse Felder!🌞 Thoughtful Money just keeps crushing it!🌞 Thanks Adam Taggart!🌞

[@junglecat7263]

Crushing what? Their poorly positioned defensive portfolio has been trailing the bull market by double digits for two years

[@neilsmith4732]

@@junglecat7263not sure what you are talking about…. The energy and commodity trades have been some of the most profitable trades this FY.

[@MattMatusiak]

July 26th Never go short in a money printing environment. Priced to gold the S&P is lower than the high of 2000.

[@sivi9741]

Doesn’t mean the stocks aren’t high enough today , it means gold isn’t if those stocks are at a deserving valuation So yeah putting money in gold makes more sense in both cases instead of stocks . Gold will crash less then stock or gold will go higher in % then stocks for fair valuation . Guess it explain gold going up .

[@danelias8658]

This was a wonderful conversation!

[@insomniactravels6185]

everything Jesse Felder said makes sense.

[@elliotthovanetz1945]

Too bad the equities market doesn't make sense. Bond market is a good gauge for the economy.

[@mattanderson6672]

Brilliant interview, really enjoyed listening to Jesse's points!! Thank you for having him on.

[@adam.taggart]

Glad you enjoyed it!

[@johnfkeating]

So very grateful for both!!!!!

[@4000angels]

Excellent interview as always. Thank you, Adam.

[@PE-TX]

Outstanding! And thank you both for sharing about your love for our friends, our dogs. Couldn't agree more!

[@martintheguitarist]

Excellent interview, especially Jesse's comments about AI. I've been working in IT for 25 years and see absolutely no use for AI. A lot of the products are just what they were 5 years ago and now have an AI sticker on them. I evaluated commercial AI tools not just consumer toys like ChatGPT. Congrats to Adam for being the only channel on youtube and possibly in the world that speaks some sense about AI.

[@mattiasw8465]

The example with mother and son is incorrect and is handled by gpt4.

[@martintheguitarist]

@@mattiasw8465 That's the least of the problem with AI. It needs large datasets to train but those datasets like wikipedia, stackoverflow, are already well structured and you can find with a few clicks what you need. I've been touch typing for 25 years and clicking is way faster than trying to explain everything to a chatbot. In my job there are maybe 5 SMEs at my airline who understand what I do so there is nothing to train on. This is the case in all corporations. 99% of the work in IT is in enterprise systems. Obviously LLM code generation is useless for this as nobody would be able to maintain or debug millions of lines of code generated by a chatbot with no structure.

[@Sollicitus_civis]

By far the best YT opening graphic!

[@jmcmob608]

Thank you very much...

[@nexttimeism]

Great guest (as usual).

[@seattlecommenter]

Adam please interview Kristina Smallhorn. She is a KZbinr and longtime real estate agent who tells the truth about private equity and its effect on the market. She made a very good video two weeks ago about how the American dream is being stolen by PE, and even exposed that the companies are buying up small trade companies like HVAC operators. (That means that even if you manage to keep your home, they’ll price you out of maintaining it.) I really think your viewers will enjoy her perspective, as she readily dismantles the “there aren’t THAT many investors buying single family homes” propaganda.

[@squarewheel142]

Great video!

[@asafgr]

Enjoyed this interview very much, thanks!

[@dustinhartlyn]

So good!

[@Jalleur14325]

Great interview. I found the insider comments particularly helpful and actually reflects what Lance was saying that retail investors are the ones showing up to FOMO buy. I have been trimming my tech positions, and actually even trimmed some of my bad purchases (typical retail investor who bought at the top of the 2021 market!), as I know they will tank further, so it's about reducing my loss and just recognising that I overpaid and probably will never get my money back. Good reminder from Jesse here on that one. I would imagine that food commodities are going to go up quite substantially. I can't see how they won't with more unstable weather, more protectionism, trade wars, growing populations, and wars blocking routes. The cocoa and coffee prices are spiking. That's just the beginning imo.

[@ashanesubasinha8313]

Great interview. Thanks

[@shana5300]

Great interview. Awesome guest

[@malackaraj]

he is absolutely spot on regarding semiconductors boom/bust

[@melindaxbc5605]

Great interview!

[@petergozinya6122]

Thank you Adam

[@stevensmith8580]

I learned a ton from this interview. Thanks

[@rickferyok2462]

Great Guest.

[@vincent_a4564]

The last bear Adam interviews before markets correct is going to look really smart…the 100 in line behind them, not so much.

[@jeffsurfanderson]

Great interview Adam.

[@rwd0418]

Great stuff Adam as usual. I am never disappointed with your guests. Always a wealth of information.

[@michaeljacobs4546]

I as a tike but with a dad as a small business owner I acutely felt stagflation, and Spidey sense is flashing that on all full cylinders right now. And thew sad part is all we have NOT learned about economics and markets since then that we are facing this when we really should not have to.

[@2LFlynn]

50X insider selling ! What more do you need to know ? Especially when you aggregate this with all of the other metrics on the markets and economy.

[@Falconlibrary]

Don't listen to the millionaires on tv, watch their billionaire bosses

[@johnsharp900]

Love all the Tony Hillerman books on the top shelf!

[@justinwiedeman5017]

Interesting perspective. I learned much. Simple question. MMT or not? Is that not the current path?

[@detectiveofmoneypolitics]

Economic investigator Frank G Melbourne Australia is following this very informative content cheers Frank 😊

[@Falconlibrary]

CORPORATE OWNED MEDIA: Everything's fine, peasants! Buy houses! Spend money! OLIGARCHS: I'm selling everything and stacking cash. NO, DON'T LOOK OVER HERE! DON'T COPY ME! Hm, what to do, what to do?

[@walkingintheway]

What a great ending just talking about the adoptsend of dogs.

[@Kukaboora]

Not only good professionally but also good humanistically.

[@manfredh.7460]

Time stamps would be very helpful, thank you.

[@neilsmith4732]

Great discussion again Adam. Learned a new term; Titanic Syndrome, which is as scary as it sounds! Interesting to learn too in relation to insider sales vs purchases. Thank you for another opportunity to learn from an interesting guest.

[@momofomomofo]

The problem CAN'T be solved by LLMs. This is what every AI researcher knows but doesn't say as they reap the free funding and publish increasingly auto-generated papers. LLMs ARE "advanced auto-complete" - they cannot do anything else. There is no thinking, symbolic reasoning, etc. going on. It really isn't AI. The confusion about this mixed with the uncanny valley "there must be something magical here" it so easily triggers in us has created the biggest "We'll figure it out later" I've ever seen. AI researchers know they hit a wall because what they're saying they'll fix requires something other than LLMs/transformers, and transformers took decades to arrive at.

[@jarrodnunn]

Not an expert but I thought I was the only one thinking this Thanks for the comment

[@Tential1]

​@@jarrodnunnthing is, llms are a small part of ai. The only reason it gets so much attention is, you can use it. Do you use the most profitable part of Amazon? Or Microsoft? So why are you so focused on customer facing stuff. It's self centered. The most important application of ai is not customer facing. Just like you don't care about the most profitable parts of Amazon and Microsoft, azure and aws, the most important use cases for ai, are going to be nerd things you don't care about. Mainly data center stuff. This is the equivalent of saying "I can't use Microsoft azure, so it's worthless." lol? You can't use the most important applications of ai, but does that matter? Adobe is very profitable, and I don't hear you say "well, 10 dollars a month, 120 a year for Adobe is useless to me, I don't edit video or images," but to the niche of people who do, if does matter. Ai matters for a lot of very nerd stuff, like data compression ( it's not really data compression but it's the best way I can describe it to you) that is so mind bogglingly profitable. But well, try explaining this to a dude in their 70s.....

[@ralphsimpson4593]

There is a whole industry promoting the next big thing. Someone is making huge money pumping and dumping this stuff.

[@andreasnarum]

@@Tential1there are indeed many applications of so-called AI in different physical sciences but the commenter has a good point about LLMs being like autocomplete. I don’t think the umbrella term AI is good as it is not really ‘intelligence’ in the way we humans think about intelligence, but it is a good marketing name.

[@martintheguitarist]

Completely agree. I have a degree in Computer Science and spent my entire life working in IT. The commercial AI tools are even more useless than ChatGPT.

[@carolku434]

I decided to invest in farmland you introduced on thoughtful money. Do you have any other private firms that specialize in crude oil or other energy resources?

[@MorganBrown]

good guest. his take on AI was really insightful

[@Firehorse39]

Obscene parasitical property taxes and home insurance do not add up to any middle moderate or modest persons “sitting pretty.”

[@fjb7380]

💯

[@MichaelHarrington17]

Adam - I think at this point we have to take the Mag 7 and AI adjacent one by one in analysis. For example, if the makers of chips, NVDA, etc. see declining demand and are forced to lower prices, how does that affect the buyers of those chips, i.e. MSFT, AMZN, META, GOOG, etc. These are all well-diversified companies seeking to reap the efficiencies of AI. Will their business applications still thrive while chip sales decline in price? I'm not sure how closely the Mag 7 are correlated. And does passive fund buying just shift from one sector to another? In other words, I'm wondering how much of MSFT, etc.'s fate is tied to the semi-conductors fate in the course of the cycle.

[@marcfd3756]

Couldn't agree more with Jesse about the joys and rewards of adopting and training dogs. Great advice to adopt a dog and care for them for life!

[@Zummbot]

The thesis on demographics contradicts the thesis on a new commodity supercycle. Fewer people use fewer commodities, not more.

[@Tential1]

Yes, however the demographics aren't going to decline, they'll taper off growth, and the people in developing countries are exponentially increasing their power usage, compared to demographic decline. If I think about where my family is from, Nigeria, you add more stable power generation, which means even if the population was declining (it isn't), going from no fridge, to fridge, is a huge power consumption vs 0.5% population decline. Nowhere is declining fast, and demographics still have populations increasing. It's just, soon we are f'd.

[@robertbrauer8909]

I agree with you Adam a 50 to 1 dollar sell to buy ratio by insiders tells it all.

[@ohyeah_its_good]

buy the one

[@darrenhere5856]

excellent interview. this guy is way to rational !! people don't understand how hard and expensive it is going to be to implement this stuff. it will be implemented, but like he says, waay after the reality of the ROR kicks us in the teeth.

[@josephsmith9130]

I am nowhere near a financial expert, however I see the world around me. The stock indexes, Real Estate, Gold prices, the Government deficit, employment, inflation and interest rates. There is a problem, yet most representatives behind the steering wheel are driving without a license.

[@georginapoloni6980]

Well said

[@boomerfett]

I’m personally fully hedged against ‘erection risk’ 😂 Appreciate you Adam!

[@chemicalhalf]

Dogs are life.

[@joechan8549]

Jessie very good especially on Ai that companies spend billions, so far, real profit have not come back. Also, machine learning did not improve like what they advertised.

[@tcboes]

Using Reddit data to program AI reminds me of Igor using Abby Normal's brain for Frankenstein's monster, RE: 'Young Frankenstein'. "Could be worse... could be raining!"

[@mikealeshire2195]

"You put an abnormal brain into a 6'5"....GORILLA!!

[@sameerai2174]

Excellent interview. Jesse may not have full knowledge of the future, but his points were well-reasoned. Unlike many guests who shoot off lots of opinions without sound, or sometimes any, logic.

[@louispoore6015]

Adam - Please consider having Jesse back on to discuss "Titantic" indicators of a market downturn. It will be a great information!

[@michaelnauer7875]

Fielder has been bearish for 3,000 handles. Perhaps you can find a copy of his “turning bearish” from 2012.

[@victorsperandeo3609]

The economy and markets which are many ie stocks bonds commodities,currencies Gold etc . Are different because the Fed ,the BLS +BEA has distorted the markets from the economy . The markets are a function of how much liquidity not classic value measures like PE.

[@martinithechobit]

YAAA BOI!.

[@JimAndreas]

Thank you for the shout out to @GaryMarcus as an LLM skeptic!

[@philrowlands1087]

Will you give me a job?? I love your attitude and outlook

[@98akv]

I tested your Susan and Jesse question on perplexity.. first attempt it tried to find related characters in internet or literature history.. then I asked it to ignore search and answer the statement logically by itself, it answered correctly that Susan and Jesse have mother-son relationship.. the thing about AI is you need to contextualize the question correctly.. I understand AI is not fully mature , but I am amazed at what it is capable of now already ..

[@riverraven7359]

The two points I am happiest he brought up are the debt sabotaging inflation control and outlandish P/E ratios. He confirmed much of my own opinion on the trends we are seeing.

[@mrsterling5306]

And please everyone, feed those new fur babies only human grade quality food for their best health!!!❤

[@PE-TX]

I highly recommend The Felder Report. You get Jesse's weekly Market Comments, his Monthly Chartbook, and his updates on Strategy & Positioning. Well worth the small subscription fee.

[@Tential1]

50:00 yes, invest in natural gas, the literal widow maker trade, instead of technology.... Because data centre's need gpus and cpus, but why invest there, when you can invest in the power of the data center needs, and specifically the most volatile commodity that goes into it, Natural Gas....

[@skygreen5939]

eh, pretty sure "Platinumlocks" would mean "grayhair" ...

[@ImRickSanchez]

Adam, you need to have Gary Stevenson on the show. He was a trader who now is working on the economic disparity front. Check out Gary's economics

[@vincentmurphy9252]

I’ve been in stock market since Was working in Wallstreet as a kid 1980 15 years old then at Wall Street 87 crash Canned 1990 meltdown Been through it This is ending bad bad bad It’s just so hard to when since they invented Covid and now can play monopoly- it should end by 2032 but a big crash by 2028 high odds I mean crash 2008 2000 29 crash Working Wallstreet

[@ask_why000]

Jerome is hoping for a dainty landing... Not-- "Mayday! Mayday! Foam the runways, stock markets are coming down haaarrdd--" Ahhhh! Loud thud. ... well, that just happened. MSM: "No one could have seen this coming."

[@lak1294]

Completely agree about the fundamental limitations of AI models that can't be solved by data alone. Not to mention that AI cannot learn from direct experience with the real world because it exists only in a virtual world. It has no frame of reference to understand the real world because it doesn't have a sensory or body interface to give it feedback for learning from the real world. Nor has the problem been solved of how human drivers would signal with self-driving cars to yield into traffic, proceed through 4-way stop signs, and many other similar scenarios. Hence, why fully self-driving vehicles haven't happened yet. Autonomous vehicles only work in a predictable, closed system where all vehicles are autonomous (such as an elevated tram system). You can't have a mix of unpredictable human-driven vehicles and self-driving vehicles on complex roadways where cars, pedestrians, bicycles, e-bikes, etc. all jostle within the same limited physical space.

[@Rogersrecycling]

I don't buy anything at the top ever

[@johnpanos2332]

these guys know..........

[@RWROW]

Wow, good taste in mystery writers on the shelves.

[@peterbedford2610]

Inflation.... Higher for longer

[@tcboes]

I see a lot of Husky rescues at the local dog park. It's great to have people adopting these beings after so many people abandoned them post Covid. When you're looking for a intermittent companion, get a lizard or a turtle, NOT a Husky. The oldest domesticated dog breed, they are not dogs anymore and need a totally different degree of relationship.

[@jeffreygoss8109]

Uh, turtles live for years. These people shouldn’t even be allowed fish. Get a pet rock.

[@cwcobo]

I love my 3 yo yellow lab. She is a spaz, but a super kind and lovable one. She "forces" me to get my 10,000 steps each day.

[@stevenblack122]

How much of price increase activity in oil is driven by political / international instability? Must that continue ( Mideast war and shipping issues) to offset what appears to be slowing international economic activity…..as China, Europe and the US may be facing continued slow growth for the foreseeable future…

[@StockGenius152]

🚀🚀🚀🌙

[@GringoAzteco]

First by inflation, then by deflation…sounds familiar ⚠️

[@Rethanos]

The housing market has low rates and inflated prices. One of those does give

[@cstrum]

Need to interview the great economist Richard Werner.

[@boblorne875]

When you become independent as much as we can. You're giving them the finger . Have coined term Modern Day Hobo for mobile off grid. Buy small parcel of land with great view. Small shed with no permit. Solar roof with power wall with bathroom. With Indoor and outdoor shower. Water cistern with light based water cleaner. Off grid freezer well insulated shed. New RVs coming for off grid.

[@joechan8549]

People said AI can fix the house for you, can actually make baby, can cook, clean your house, as long as one buy a 20,000 chip from Nada, is it true? have doubt in this advertising, but the whole world going crazy.

[@unaldurmaz250]

One shouldn't say stocks. So general . Which is wrong and good picks always go higher highs

[@bdek68]

That’s not true. Give me an example

[@unaldurmaz250]

@@bdek68 ask Adam taggart I always consult him he had the secret sauce 😂🚀

[@RachelCunningham-ut9ks]

Holy shit that insider ratio omg

[@k.dermer2168]

Says to me they want to move money out of US starting soon. It is not a good time to be rich in a country that is increasingly becoming not socialist per se, but a big wealth grab from the rich to the proletariate that doesn't want to work after Pandemic giveaways. I am at heart a socialist, but this new endless borrowing from our kids to live easy today is not socialism. It's a scary prospect when productivity trends to zero.

[@robertbunnell9590]

Not caused by ferrytale economy it's a dying dollar

[@annc9166]

I work on a platform where they have added AI. One they priced it so high that not many people pay for the extra. Second the new generative AI stuff is not good enough to use directly with clients, so back to one, why pay the high price. And their AI models could expose sensitive data into non client databases as well as much of it is built on stealing copyrighted information from the internet. It will be helpful but definitely a hype right now.

[@markusrudin9719]

Platinum is not even half price to gold... so goldilocks is better

[@Falconlibrary]

Rhodium is $262,233 per kg Gold is $52,870 per kg Not many people know that

[@markusrudin9719]

@@Falconlibrary Gold is 74700 $ or 68000.-sfr per kg...I changed my kg gold to platinum since it is rely cheap

[@mktwatcher]

You've Got AI Just like AOL. Remember that one, when Time Warner paid $182 Billion in Stock and Cash for AOL? Talk about bending Stockholders over!

[@mattiasw8465]

Adam, please get a new camera! Compare the quality of your image and Jesse's.

[@divamom1000]

yes - plus more light and a better background - even just a virtual one would be better

[@mktwatcher]

Insider Sales Titanic Syndrome 50 to 1 Inside Sales to Buys! 35:25

[@Erikpdx]

Don't spoil it if Santa isn't real!

[@14Unow]

House prices will not drop until real unemployment takes hold. That only happens when the economy takes a sizeable downturn.

[@michaeljacobs4546]

Some online real estate broker has the commercial with Goldilocks and the Bears, and she is getting kicked out 😝

[@WeekendsOutsideFL]

I don’t think it even matters what they set the funds rate at. The rate is going to rise on its own due to debt and inflation. It’s not good

[@lawLess-fs1qx]

BTW Goldman have cut their deposit rate by .5%. today. What do they know?

[@darcyrogers8881]

When do Econ start pricing in the 10MM (illegal) emigrants and the Fed stating jobs and revising. JPowell said the quit part out loud in his 60minute interview. Are the emigrate the soft landing?

[@Tential1]

30:00 again, remember, 9-12 months ago, during the crypto boom, they said Nvidia would never be able to justify those numbers. Nvidia was a ~900B company. Now, looking back, that was a 30 pe, backwards looking. You paid 900B, and in one year, 30B net income. Nvidia had 9B of net income at the time, and Adam said it was impossible for nvidia to grow a net income to justify the 900B price tag yet one year later they doubled sales and tripled profits. Stop listening to people in their 60s and 70s about tech.

[@k.dermer2168]

I'm in my 70s, but I agree with you. A lot of the billionaires are planning for succession, and they need to put money in other things for posterity. Changes in tax laws have made me reprogram my wealth. It hits high income the most. So insider selling, it's just personal. I know they have smarter lawyers than I do, but still, you have to cash in to get control vs dealing with IRS.