Hey, everybody. Who am I, economic ninja here? Hope you’re doing great. Just got off. All right, look, I got, crap. It’s windy out here. I got news. It’s a little windy and this is big news, but it’s not about the size of the story. It’s actually a small story on big cardboard, but, oh, crap, I’m messing with the mic. I’m all over the map. It’s a little windy, but it’s why this story is happening and it’s happening with other banks.
Okay, so we’re going to talk about the stock market. Look, I got to get these. This is for the end. Stand by. This has got to go in here. Windy. We’re going to talk about the stock market. Irrational exuberance, very similar akin to what happened during the. com bust. We’re going to talk about what’s going on in the banks. We’re going to talk about, well, here, let’s just start.
What am I doing? Jeez, I’m all over the map. You think you’re ready and you’re just not. Are you ready? Oh, here. You want to talk about ready? Stand by. Got some eggnog late going on right here. Homemade. I’ve already put up my Christmas decorations. Go ahead and let me know how bad, how stupid or how cool I am because everyone’s got an opinion when it comes to when Christmas decorations are going to go up.
I say the second you see eggnog in the store, Christmas decorations go up. So there you go. All right, here we go. Out of Yahoo. Finance, the first story, the stock market is edging toward extremes of Great Depression and. com era. This is not a joke. It is actually happening. There is something big brewing in the mortgage backed securities market with this investigation going on right now, with Freddie Mac telling you right now, you’re going to see a lot of truth come out in 2024 that a lot of people should not be given mortgages again identical to what happened in 2006 and seven.
This is exciting times. Okay, but let’s go into this story. It says after a rally that defied high interest rates and recession calls, stock valuations are now edging towards levels seen before some of the greatest market meltdowns in US history by one measure at least. I was warning about this last year, that as inflation gets worse, investors will be chasing yield. So they’ll be chasing the bond market, which did not bode well for them, or they’re going to be diving into the stock market.
And historically, anytime we see any heavy inflation plus moving into hyperinflation, depending on when a country in the past was able to quell this deal, inflation. Stock investors dive in and the stock market rises, but it never keeps up on a percentage basis with the real rate of inflation. Okay, you might as well. You would have been better off buying food or electricity or commodities, things like that.
Those always tend to go better, right? But we’ve got these crazy bubbles. We’ve got so many derivatives in our market, so many ways for investors to stack the deck. But all of those stacking the deck, like with options and things like that, the leverage that’s involved in that is it’s vaporware. And when it pops, it pops. It breaks the downside. There’s a reason why Berkshire Hathaway is selling stock and they’re not out there going, hey, let’s go buy a bunch of options.
Let’s margin up. No, they’re the smart ones in the room. If you want to be rich, do what the rich people do. They’re out there buying gold, they’re moving to cash, they’re selling stuff while all of the speculators, the sheep, are running around. And just look at what I just made in GameStop, like, are you high? Are you high? Are you still looking for deals in AMC? I don’t know if you know this.
Less people are going to. I mean, don’t get me on a tangent. Sorry, but the point being is that we’re in a very serious time. Most people don’t see it. So if you see it, then you could do something about it. So a time tested way of assessing whether equities are fairly valued is by comparing them with government bonds, considered to be one of the safest forms of investment.
I’m going to be honest with you. I believe there’s a day where the government is going to have a problem keeping its obligations with its bondholders. I believe that that day is coming in the next few years. And by that metric, stocks are looking historically expensive. According to experts from PIMCO and GaM Asset Management, a key measure of the richness of stocks relative to debt is the so called equity risk premium, or the extra return on shares over treasury bonds.
The metric has plunged this year, indicating stretched stock valuations toward levels seen during the Great Depression of the 1930s and the. com bubble era of the late 1990s. Another thing I want to stress is that companies that come out with not good earnings calls and they’re announcing layoffs, these stocks are popping up 2-3-6 on the fact that they’re losing money and having to pull back business. We’re going to be talking about that next soon.
That’s what’s on that cardboard now, they say delivering deeper into, delving deeper into historical data. We find that in the past century where there have been only a handful of instances when the US equities have been more expensive relative to bonds, such as during the Great Depression, the. com crash, PIMco portfolio managers Aaron Brownie, Gerald Sunderstorm and Emmanuel Sharif Wright. In a recent research note, history suggests equities likely won’t stay this expensive relative to bonds.
I still personally believe. Let me know down below if you agree. Bond rates are going to rise. The government’s insolvent. They’re trying to buy votes. They’re pulling debt out at record levels right now. This is insanity to even comprehend. Hey, did you know the government borrowed $1. 1 trillion just in the last quarter alone? And people just don’t even, can’t even comprehend that. I believe you’re going to see a month in 2024 where a million dollars is borrowed in one month.
And that bond issuance that happened back in quarter three from this summer, it shocked Wall Street. But see, the government knows something that you don’t or most people don’t. They’re insolvent. They’re totally done. I know it’s one thing to say, oh, no. Yeah, government’s insolvent. No, it’s bad. And they’re not going to be able to pay those debts. So bonds are going to have to rise. I mean, look at what just happened the other day with a 30 year treasury auction.
The government’s out there trying to raise money for 30 year bonds and no one’s buying. And then after the end of the day, they ended up having to give much higher interest rate than they planned on giving. By the end of the day of that auction, they had to go and blame a bank hack on Russia. That happened to China, but it was only the Chinese US arm of that bank, world’s largest bank by assets, by the way.
It’s a big deal. There’s so much being covered up. See, it’s funny. People go now, watch the movie the big short as entertainment, and they spend money on a movie that was written about their lives. Every American was affected by that in one form or another. Whether they lost their home or they lost their job or there was decreased economic activity. Every single person in America was affected by that.
But most people just put it off like, oh, that was just a really fun movie. That was cute, but it’s reality and right now. And what that movie showed was there was so much hidden behind the scenes and that stuff’s happening right now. So it says here the historically low equity risk premium, which is a deterrent to investing in stocks. According to Julian Howard of Switzerland’s gam Asset Management, it means stocks are offering investors little incentive to choose them over risk free assets such as government debt.
You’d say. Well, ninja, yeah, but the stock market keeps going up. Check this out. Let’s dive into this next story. I think it’s very, very important. Zada, Yahoo as well. Investors are pushing bank stocks higher. Analysts are urging caution. Investors pushed bank stocks higher last week, riding a stock market rally. And this is just one segment of the stock market, right? Fueled by hopes that the Federal Reserve might be done raising interest rates and that a soft landing in the US economy was now possible.
That is not possible. There is zero chance in my humble opinion. And I know it doesn’t seem like I’m being humble right now, but it’s crazy when you have something shoot up so fast, so high, you have supply chain disruptions that are so gnarly, you have the freight index that is imploding right now, the consumers being squeezed so hard by inflation, there’s no way you could have a soft landing.
It’s Einstein’s theory of relativity at work right now in the economy and very few people see that. So you see this is happening. You are getting prepared. Last Tuesday, after inflation data showed pricing pressures cooling quicker than expected. It’s because they were being lied to. The government said that your insurance costs dropped over 30% in the month of October. They straight up lied to you. Let me stop.
Start something else. They’re doing something in this data releasing or reporting called smoothening. What they’re doing is they’re not going to tell you the month over month real numbers. They’re going to take a time weighted average and they’re going to smooth out the data. And I want you to see, and I’m going to explain this in very basic terms, concept. What that does is it gives them time to show you the truth because then as crap gets bad, the dudes comes out slower, it’s smoothened, it’s softened.
They don’t want you to know these month over months, this is a big deal, okay? You’re going to look back a couple of years from now, I mean, while you’re crushing it, buying up homes for pennies on the dollar, and you’d be laughing and go, I remember this guy on YouTube, they’ll saying, yep, this is just like every other time while everyone on the TV is like, no, it’s not.
Just buy our stocks that we’re trying to sell you as we’re getting out. You’re seeing behind the veil right now. I’m going to be honest with you. It’s awesome. Everyone’s like so freaked out. Doom and gloom is everywhere. It’s getting crazy. Good news. The world’s always been like this, but you could never see it Unless it got really bad. Most people, they just deal with crap all the time.
It’s like this chronic sort of pain going on and it’s until somebody comes and slaps them right upside the face and they get that initial what the fudge just happened to me? Until they see it. But right now we’re all being slapped upside the face by all this information. Now we’re talking about bank stocks going up now. Check this out. I think this is really important. I’m going to go get this story.
It’s on my cardboard. It’s super official, but it’s windy out here. So this is a small story if you think about it. Let’s just dive right in. Bank of New Hampshire New Hampshire will stop accepting new applications for home mortgages and the company is laying off 19 employees. This isn’t a very big bank, but let me explain this news. Nine has learned that the bank of New Hampshire has stopped taking applications for any residential mortgage and consumer loans after laying off 19 people.
No mortgage and consumer loans. Okay. All right. So think any kind of loan. But the president insists that things aren’t going to change much for their clients. Yeah, it is. You’re not giving loans. Jesus, these bank presidents. This has been in the works since this year, says Chris Logan, the president and CEO of the bank of New Hampshire. On Monday, leadership from the bank of New Hampshire told Nine News that they’ve stopped taking applications for any residential mortgage and consumer loans.
That was done because over the past several years the industry that the cost to originate the loan has exceeded the premiums of what we should earn on those loans, Logan said. Logan said most clients won’t notice any major changes unless you try and go get a loan. Gosh dang. What school did this president go to? We’ve been here for 192 years servicing New Hampshire and we’ll continue to do that unless you need a loan.
He said the bank will continue to service the loans in the pipeline and any loans that they’ve previously originated. Well, no duh. So here’s the deAl. It’s too windy. I’m going to put this away. Here’s the deal. That’s a small bank, right? But it’s not the only bank. All around the country right now, banks are walking around, away from certain loans. I did a story the other day on one of the largest banks in the country, the 20 eigth largest bank, actually.
What is the name of it? Citizens Bank. It gets so confusing. There’s like a hundred different citizens banks. We’re talking about, the one that’s out of Rhode Island. They’re walking away from wholesale wholesaling loans. That is a certain segment of business, just like with the bank of saying, hey, you know, we’re no longer giving out any loans, consumer loans or mortgages, okay? That means. And they’re laying people off because now they’re going to be bringing in less money.
Less money. That’s what’s happening to the banks. So the news story I just brought you about, all these bank stocks are lifting. And then the story before that, I said, the stock market’s rising because of segments like the banking industry that are in the middle of massive layoffs. They’re losing money and their stock keeps popping because of algorithm trading and by stupid speculators that are like, oh, this is a great.
Obviously, this bank’s going to save tons of money. Amazon’s going to save tons of money for laying off all those people and using AI. It’s not good. That is why it is so dang easy. I don’t give a crap at what the stock market valuation’s at. Do you know, in Venezuela, Turkey, these places, they actually see during hyperinflation, their stock market rise. But guess what? All the stock investors are still losing money because they weren’t in the right assets.
They didn’t have a certain amount of cash set aside for deflationary drops in certain segments, because not everything goes up at the same time and not everything goes down at the same time. They didn’t have gold, they weren’t pushed into precious metals, and they were too far leveraged, and they all lost their butt. You ain’t going to hear this crap on Jim Kramer. You ain’t going to hear this stuff from Dave Ramsey.
You ain’t going to hear this stuff from anywhere. And you know what? It’s cool. I’m okay being the only one running up the stream the opposite direction of all the sheep. But I’m planning on taking some of you with me. And this is why. This isn’t financial advice. This is life advice. When did following the herd ever bode well for you. Let me know down below. Because the fact of the matter is, it’s the ones always throughout history.
Because it’s like the broken clock is right twice a day. Yeah. That’s the dumbest thing I’ve ever heard. Yes, that’s absolutely right. It’s because everything is in a cycle. Everything. It’s in the Bible. There’s nothing new under the sun. As the sun rises, the sun sets. Winter comes, and some spring comes, then summer. It’s always the same. So if you are ahead of the pack, you’re going to be called stupid and an idiot.
Then when you’re right, they’re not going to want to acknowledge you at all because they’re all embarrassed. And then you’re going to flip around to the other side. Okay, now it’s time to sell these assets that I’m buying. And it happened to me in 2006, happened to me in 2009, really happened to me when Bitcoin was low. Look, it’s time to smile. This is not doom and gloom.
This is reality. This is the end of a cycle. Economists are warning us that we have an epic stock market bubble about to pop. And we’re going to take advantage of that. We’re going to buy up real estate for pennies on the dollar. Hope you guys got something from this. The economic ninja is out. .