Stock Market & Economy Are Going to Get Worse - Bizarro World 188

Hurricane in Florida, hurricane in the markets. We've now seen earnings warnings from FedEx, Walmart, and others for the upcoming Q3 reports. And GDP is going to come in close to zero. The stock market is now down more than 20%, and it's going to get worse before it gets better. Expect gold to trade in range as the dollar and bond yields remain strong. And expect the same thing for oil. 

1:41 Things Are Breaking: Bank of England Steps In
10:50 Hurricane Ian Leadership
17:49 Congress Won’t Vote to Ban Their Insider Trading Edge
24:18 Is Gold Bullish or Bearish?
27:33 Is Oil Headed Higher?
31:41 Who Blew Up the Nord Stream Pipeline?
35:14 Spokane’s Ironically Named “Camp Hope”
39:30 Frankie Lasagna Drops the Ball
41:18 Market’s Are Going to Get Worse

Gerardo Del Real: DeSantis did something good. There’s some delicate flowers out there. Biden sees dead people. Do you see a soft landing? Does it feel like a soft landing? The bond market's imploding overseas. As we told you last week, I suspected something bigger was about to break. The UK pension system was under attack, it almost imploded. Dems oppose a bill banning stock trading, the same bill they proposed. Edward Snowden is a Russian citizen. Our hearts go out to everybody in Florida being affected by Hurricane Ian.

Man, Nick, it's a lot to get to. This is episode 188 of Bizarro World, our therapy session known as Bizarro World. I am Gerardo Del Real along with my co-host Mr. Nick Hodge. Nick, it's interesting times. How are you, sir?

Nick Hodge: It's interesting times for sure. It's been a crazy week, volatility is spiking up as we told you it was going to do. The market's moving all over the place. A soft landing, it is not. The media is still pondering if a recession is here. It is.

Gerardo Del Real: I only laugh because it's tragic.

Nick Hodge: This will be my last podcast from this office, we'll have a new Spokane headquarters for Digest Publishing in the coming weeks. And we hosted a quarterly update call for members of Foundational Profits that was well attended with some good questions asked so maybe some of those themes will come up in this podcast, we'll see. How's it going, Gerardo?

Things Are Breaking: Bank of England Steps In

Gerardo Del Real: It goes well, it's definitely interesting times. Let's get right into it. Last week, you said things were already breaking and my response to you last week was that it feels like something bigger, like a bond market or something along those lines was going to start showing signs of a cracking foundation. And sure enough, we now realize that last week the Bank of England literally had to step in to avoid the pension system over there from imploding. So, I think the bond market is one of these instruments that most people don't understand. And I don't claim to be an expert in it, I just know how consequential it is when that market starts running away the way that it has and when central bankers lose control of it. That is the one market that can really cause economies to completely implode.

Forgetting inept government, corrupt government. We can talk about Venezuela, we can talk communist countries like that that do it to themselves. But we're talking about the Bank of England coming in and having to step in to stabilize the price of UK government bonds. And for those of you not familiar, the way that it works out there is the banks and these pension funds use hedges, they use derivatives. They create these instruments to provide a hedge against this type of volatility. But in order to get that hedge, they are required to put up collateral. And so, look at it as will you ensure my deposit and will you ensure my fund, what will that cost me? And the group comes back to me and says, "It's going to cost you $10, Gerardo. That's the collateral." And I say, "Okay, well I have $15, here's $10. This guarantees that I don't implode and blow up," and they go, "Yes, we'll cover any and all losses."

Well, as risk heightens and bond prices continue to run away from them, the bank then comes to me and says, "We need another $10 for collateral because the risk that we assessed a month ago is twice what it was a month ago. So, we need twice the collateral." Now, if I'm Gerardo and I had another $5 to give you but I don't have $10, now I'm looking around going, "I am managing these funds." These are pension funds, folks, these aren't penny stock funds, these are pension funds. If I don't have the collateral, they can pull the plug on my hedge, poof, money goes to money heaven. And that's literally what happened this past week.

And so, not only did we see the Bank of England have to step in with emergency funding but we saw the Bank of Japan say, "You guys are smoking rocks if you think we're cutting rates into the slowing global economy in a global recession that's engineered by the same central bankers that engineered the inflation. We're not cutting rates. Matter of fact, we're going to go in the other direction, run as fast as we can. We're going to intervene and see if we can slow down the rise of this dollar." Because as we said last week and we've been saying for years, a dollar index at around 115 is dangerous for global economies.

We talked about it last week, I've been talking about it since 2016. I've said since 2016, Europe is toast. Everything always takes longer to materialize than I usually think it will but, every now and then, I get a couple right in and that's one that it's just the writing's on the wall. And again, I laugh but only because it's so tragic to keep myself from crying because real lives are going to be affected by what's coming and what's coming isn't pretty, folks. And it's not pretty now but it's going to get uglier.

Nick Hodge: I don't have a lot to add to that except that the dollar is technically breaking out now. It's breaking out north of where it was back in the early '70s, for example. And if you're a technician and you look at the chart, well, there's no resistance really until 120 on the DXY. And so, where do they get the money, Gerardo, to bail out the bond market? Where does that come from?

Gerardo Del Real: The money gun. They just print it, baby. They just print it. There's a show I'm watching now, it's called Money Heist. I enjoy my shows and it's a pretty neat show and it reminds me a lot of what's going on right now. And without giving away any spoilers, if you haven't seen the show, people, and you want to watch the show, cover your ears for about a minute, I'll try to be brief. But the basic premise is about this all-star team of thieves and robbers and they go to rob the Royal Mint of Spain and their plan is, and it's a pretty damn elaborate plan. It's really well done, well written. Spanish show with English dub overs, voiceovers. But anyhow, their plan is to stay there as long as possible so they can run the printing machine for as long as possible. And so, it's this whole elaborate plot of cat and mouse to see how long they're able to keep the authorities from barging in while they print up all this money and then, eventually, and I haven't seen the end of it yet, but eventually try to get away with it.

And so, that's all that the central banks are doing. They're just making this stuff up as we go and, look, credibility is gone. Credibility for the Bank of England after this is absolutely gone. Bank of Japan, look, they've been doing this for 30 years, stepping into their bond markets, they're the only bid over there, we know that. And yes, the dollar is going to continue to be strong, but I tell you what, if it goes above 115, 116, it's going to get nasty real quick so everybody else better get on the printing train and get on board because it's not looking too good with the dollar where it's at right now, it's dangerous.

Nick Hodge: You're at 115 right now, Gerardo. And my question was a little tongue in cheek, where did they get the money? Of course, they just conjure it up the same way central banks themselves have been conjured up. Granted, that was a century ago but we're nearing the end of their, certainly, credibility like you say but, potentially, the end of their existence depending on how the rest of this unfolds. It's getting really bearish out there. I've talked about the COVID lows. Scenarios are starting to develop where stock markets go even lower than that as we continue for another two or three quarters of slow growth. And so, a bond market expert, I am not, but I can see wealth evaporating across the board.

You mentioned the people at the bottom of the totem pole and how pissed off they are. Real wages haven't grown in over a year, you've got protests continuing across the globe and breaking out in new countries as well. I saw mass protests in Haiti starting to go out the-

Gerardo Del Real: Colombia, Peru, Haiti, Iran.

Nick Hodge: The Pope was tweeting this morning that Jesus is going to save the poor but I'm not sure that Jerome equates with Jesus, we'll see how it goes. This is the real world we're dealing with here and so, yeah, there's real pain ahead. Companies that deal with that lower end of the spectrum are saying as much. McDonald's (NYSE: MCD) CEO says that recession in 2023 is all but a sure thing. Walmart (NYSE: WMT) is saying that their consumers are only buying food and not buying the discretionary things, the clothes and other things. And then all the way at the top of the spectrum, the Facebook (NASDAQ: FB) robot, what's his name? Zuckerberg, he's lost half his wealth in the past year, half.

Gerardo Del Real: The Facebook robot.

Nick Hodge: It's bad. So, yeah, again, I feel like a broken record but there's not a lot out there to buy, there's more downside ahead, there's more volatility ahead, there's slower growth ahead. There's sticky high inflation that, yes, may have peaked this year but it's still at 35 or 40 year highs and it's going to continue. And so, these people that wear the suits and pretend they know what they're doing just simply don't and I think more and more people are realizing that.

Gerardo Del Real: These are the same people, the central bankers in different posts but they're all mostly the same people. Mostly. The ones that didn't go to the private sector to go get rich off of the reach-arounds that the bankers and central bankers always participate in. But these are the same people mostly in different posts that are calling the shots, that are just academics, that are making it all up and engineering. It's absolute madness out there. Germany just printed its highest CPI number, the highest inflation since World War II. They printed 10% and there's a lot of people that speculate that number is being underreported the same way that China manipulates a lot of its numbers.

Nick Hodge: I was looking at fuel costs, which you've talked about, and the cost of wood pellets are up 87% year over year in Germany. It's crazy.

Gerardo Del Real: A lot of volatility out in the market.

Nick Hodge: We haven't even mentioned somebody is blowing holes in pipelines and nobody knows who it is.

Hurricane Ian Leadership

Gerardo Del Real: We're going to get to that, we're definitely going to get to that. Because again, last week I said DeSantis was an asshole for flying people around that weren't circumventing America's legal process, they were actually trying to abide by it. I said it was an asshole thing to do and that he was an asshole and a jerk for flying people around and spending $12 million of taxpayer money to do so. One, it's cruel, two, it's inhumane, three, it's a waste of taxpayer dollars. Four, now that we have what he's calling and he's describing as a 500-year flood disaster, something you don't see for 500 years in Florida. Look, it was just $12 million for that little political theater that he did but I'm sure they could use it.

In fairness, because like with Mr. Abbott who I dislike on several issues but also does a lot of good things here for the state of Texas, same with DeSantis. I don't know the guy personally but, when it comes to this hurricane, he did a pretty damn good job communicating to his base. And that means everybody in Florida, not just Republicans. He did a pretty good job getting out there and highlighting the risk. I saw clear guidance on when you can evacuate, when you can no longer evacuate and you have to hunker down, how much time people had, the order of things. So, again, I think he's a competent leader. I disagree on a lot of policy stuff.

But for the couple of you that wrote in saying that you thought that it was a, whatever. I think somebody said they didn't like the liberal propaganda, you probably haven't been listening for too long because I don't like either party and I can compliment a politician from both sides and I can disparage politicians and ideas from both sides depending on the idea, depending on the day, depending on the action. It ebbs and it flows. I don't know any of these people, I think they're all in it for themselves, I don't think they're all in it for us. And frankly, I think both parties need to be restructured from the bottom up. I lean more libertarian than anything so don't be such delicate flowers out there, people. It's just mostly people you don't know out there that are making decisions that affect your life.

But kudos to Governor DeSantis on this front and all the best energy and vibes to everybody in Florida because the early footage that I've seen, we're recording this on Thursday, the 29th of September, looks absolutely horrific for Fort Myers and some of the other surrounding areas. I saw President Biden who sees dead people now, I saw President Biden saying that the early projections for casualties was not good and so, just tough, just tough. And then if we're going to continue with criticism of both parties, let me continue with my rant briefly, Nick. And I say this almost every week here but can we not politicize every damn thing? Everything doesn't have to be political, folks.

This storm, you had a tweet that I thought was great, mentioning that hurricanes are not a new phenomenon. They didn't just start this decade or in the 2000s or in the 1900s, we've been doing this for quite a long time this whole Mother Nature thing, everybody. Everything doesn't have to be a, “See, I told you so” moment. Some things are just messed up, some things are just horrible natural disasters. I'm not saying climate change isn't real, I'm not saying that people on both sides aren't to blamed for delaying common sense solutions to making the planet a safer place on all fronts. Economically, as it relates to nature, as it relates to our infrastructure. But can we at least figure out how we're going to help the people of Florida as a country before we start finger pointing and turning everythinginto a political agenda?

Nick Hodge: Well, I'm sure they'll get written some checks, like happens from Congress from time to time. Where does that money come from again? Well, either from the taxpayers' pocket-

Gerardo Del Real: The money gun.

Nick Hodge: ...or from the money gun which is going to go brrrrr. And yeah, not a lot to add to that, obviously a sad situation. And it's like the comedian skit, when he talks about the kids who are allergic to peanuts and he says, "But maybe, if your kid's allergic to peanuts, they should be taken out of the gene pool." It's like, "Well, maybe"-

Gerardo Del Real: I think that was Ricky Gervais, right? It's either him or Bill Burr. Him or Bill Burr.

Nick Hodge: It was the red haired guy. That’s how much I know about pop culture.

Gerardo Del Real: Louis C.K.?

Nick Hodge: Yes, yes.

Gerardo Del Real: Okay, all right.

Nick Hodge: I've talked about this on the podcast before. He takes it all the way to slavery. Anyway he says, "But maybe all the great feats in humankind were a product of slavery. The great pyramids, this and that." Maybe if you live in a Gulf state, you should expect a hurricane from time to time. That's one thing I would have to add to the discussion. But back to the politics, somebody was asking on that call in session that I had earlier this week about how do you see the midterm elections impacting the markets. And I had to say I don't really pay too close of attention to that.

I see the ads out there with Republicans talking about how a democrat majority and a democratic president has led to inflation and spending and this and that and I continue to point back to the previous president who wanted his name on the checks. That guy wanted his name on the checks that got sent out. And so, when you talk about where the money comes from and what causes inflation, both parties run up the deficit. The past, whatever, four presidents-

Gerardo Del Real: Look at a 20-year chart. Yeah, look at a 22-year chart.

Nick Hodge: To say that a Republican majority is going to slow the spending is a non sequitur, man, it doesn't compute. But I look at individual topics and I'll give it to both sides. I look at the cannabis sector, for example, which is now at all-time lows. Canopy Growth is liquidating or divesting its cannabis retail operations in Canada. That was once the biggest, largest, most dominant cannabis company in the world. And you've got a president who was, at least on the campaign trail, talking favorably about cannabis and you've got a Senate majority leader in Chuck Schumer who has said for years on end that he was going to legalize it and done absolutely nothing to make that a reality.

So, I look at individual issues and how they're impacted by legislation. We've talked a lot about the Inflation Reduction Act and the incentives it gives to vehicles and nuclear and things like that.

Gerardo Del Real: That name, I'm sorry.

Nick Hodge: I know.

Gerardo Del Real: Inflation Reduction Act.

Nick Hodge: And that stuff matters. But to say, I don't know, Republicans are going to take back the House and that's going to turn the market around, that's not how it works, folks. That's just not how it works.

Congress Won’t Vote to Ban Their Insider Trading Edge

Gerardo Del Real: So much to say. Let's talk about this bill that the Democrats have been working on for months. This is where we're at with this stuff, man. The Democrats have been working for months, while insider trading by the way, to make it harder. This is what they're saying, for members of Congress to use information they receive on the job for their own financial gain. So, they've been working for months. They released the Combating Financial Conflicts of Interest in Government Act. Let me read that to you again because it's funny to me just like the Inflation Reduction Act where they're printing money out of nowhere, put it into the system and telling you it's going to reduce inflation. This is called the Combating Financial Conflicts of Interest in Government Act and it will prohibit, if it passes, Congress members, their spouses and their dependent children from trading stocks. That ban would also apply to the federal judiciary and high-ranking members of the executive branch as well as Congress.

Now, that seems all good and dandy and fair, a common sense thing to do so I would applaud that if that's actually all there was to this bill. I like to read some of these things sometimes and get past the bullet points and just dig to see if there's a loophole or two. So, I'm digging around a little bit on the internet with the Google, on the tubes, and what I find out is that there's also language in there that says that they would either be required to divest their stock holdings or-

Nick Hodge: Blind trust.

Gerardo Del Real: ... they could put them in a qualified blind trust. And guess who gets to define the definition of blind trust.

Nick Hodge: Congress.

Gerardo Del Real: Right, except they won't have to define it. Anything can be a blind trust. I could set up another account somewhere and say, "That is my blind trust." There will be no legal standard, the way that I understand it. I'm not an expert on this but this is what it reads to me. There would be no legal standard to define what a blind trust is and, if one emerges, it'll be them setting what a blind trust means. And so, again, neither side really cares about you all, folks, and this is why people are checked out. This is why people are checking out of the system. This is why it's laughable to me when you all write in and say, "Oh, well, there goes Gerardo with his liberal bias," or, "Oh, there goes Gerardo with his Republican bias."

Believe you me, folks, I have zero interest in being a supporter of either one of these parties. There's individual people with individual ideas that I support on both sides of it but the system is rigged and it's rigged for the rich. And yes, Nick and I are lucky enough to be well off to where, fortunately or unfortunately, they do a lot of our bidding whether or not we like them or not but it's definitely not the way the system is supposed to be. And yeah, don't get your feelings hurt over politicians that don't care about you people.

Nick Hodge: Well, you wonder why I'm so apolitical and agnostic and pessimistic. I knew exactly where you were going with that because I read it too. Of course, they wrote themselves in a loophole. What do you think they're going to give up that gravy train? Those Congress people, they go in there with, whatever, five-figure salaries and they come out of there millionaires. They're not going to end that gravy train. Well, term limits is always my answer, you shouldn't be able to stay in there and just get rich on the gravy train for years on end. Go in there and do your little thing for a couple of terms and get the fuck out of there. And I'm not sure if it was Steny Hoyer who wrote the bill or not but he was one of the key people. He's from Maryland and he's been in Congress forever and he was one of the people saying that he wasn't sure if he was going to lend support to the bill. So, yeah, jaded with the system, got to get these people out of there and, of course, Nancy and Paul aren't going to go quietly into that good night.

Gerardo Del Real: This will be the last, other than my Joe Biden take here in a second and my Kamala take. But here is the state of the people that are running for Congress right now. Not all of them, but some of them. Herschel Walker is running for a position in the great state of Georgia. He said this week that trans kids might not get into heaven because Jesus wouldn't recognize them.

Nick Hodge: He's too busy saving the poor.

Gerardo Del Real: Come on, man. I'm not getting upset over calling these people assholes. And if you all do, it's not meant to offend you so I'll leave that there. Let's go back to Joe and Kamala. Kamala's hyping up our great alliance, our very special alliance with North Korea. I don't know if you saw that footage. And Joe-

Nick Hodge: I did not.

Gerardo Del Real: Oh, she got up there for 30 seconds and gave a speech and said that we have this very special relationship and strong alliance with the People's Republic of North Korea. And then this was followed by Joe Biden calling out for a representative that died back in August, asking if she was there. And I don't mean to make fun of age or the lessening of cognitive ability but, back to our system, it just speaks to the fact that we need new blood, we need new ideas, we need term limits in this country. We need to redefine how we do politics so that somebody that is a good leader like Governor DeSantis can focus on good ideas for the people of Florida as opposed to doing political theater stunts that cost those same people resources. That's it, that's it.

Nick Hodge: Old Joe, I saw him asking for the dead lady. And I mentioned last week that he was on 60 Minutes. I happened to watch a couple more clips from that and Scott Pelley is asking him about inflation and Joe says, "It went down," and Scott Pelley is like, "Man, are you serious? It went down from 6.4 to 6.3," or whatever the number was. He's like, "You're telling me that's inflation going down? It's still at 40-year highs." And he's like, "Yeah, but it's flat. It's been flat." And it's like, man, you just got your talking points and you don't give a shit.

Is Gold Bullish or Bearish?

Gerardo Del Real: Let's go back to gold. We talk about the dollar surging. This time last week, Nick, I definitely thought there was a real chance that gold could touch the $1,500 handle, $1,580, $1,590, at least intraday, I didn't think it would close there but it's put in a good week in light up some pretty good dollar strength. I think it has to close month-end above that $1,674 support that we talked about, $1,680 maybe, last week. We have a day to do it. Everybody will see this and read this by the time we find out if it does indeed make it across the finish line. What do you think happens?

Nick Hodge: Yeah, it's really tough. You got one day left in the quarter, my line is at $1,684 here, I'm looking at it. You had a nice bounce from $1,614, I guess it was. It bounced up to the level that you said now of above $1,660. Gosh, I think I'll take a step away and say this minutia might not be the best focus to have. I think that, technically, you could see $1,600 or $1,500 handle still, I think, just looking at the chart and knowing that we're at the end of the month. On the whole, I think gold is still a relative hedge, has continued to not go down as much as many other asset classes. You've got an S&P now that's down — one in $4 have disappeared basically from people's retirement accounts, down 24 and some change percent for the year.

Meanwhile, you've got gold down, let me click the button so I give you an accurate number. It is down about 8% for the year, 8.5%, something like that. And so, I think, even if it pulls back to 1,500, which is still a possibility, that gold is still in a ... What do they call it?

Gerardo Del Real: Secular bull market.

Nick Hodge: A secular bull market. Right. But that's my take. I haven't been selling gold, I bought a bit more probably a bit too early when it first broke down towards that $1,684 level. I thought it was going to bounce off that and it's come down a little bit more. These are the times when I start pulling up the coins though, not just the GLD. I started looking at the Saint Gaudens and the Indian Heads and stuff like that. Gold's the cheapest it's been in two years. And so, if you have an inkling for that physical side of things, now might not be a bad time to look at that but, yeah.

Gerardo Del Real: And if you're looking for a reputable person, you know the best in the business. Anybody out there, reach out and we'll happily connect you with the gentleman. He'll help you from putting a $10 collection to a billion-dollar collection, whatever you need.

Nick Hodge: Yeah, it's Van Simmons, obviously, at David Hall Rare Coins and so you see his little banner on Resource Stock Digest and you can certainly hit him up. But I'm still holding my paper gold and really parsing through my individual gold holdings. The equities are getting battered around. So, taking small losses where I can on just some side beds that I had made and holding that cash to deploy when necessary. And I'll stop rambling because, hopefully, I gave you a decent answer there.

Is Oil Headed Higher?

Gerardo Del Real: No, great answer there. We talked dollar, we talked gold, we talked the bond market. Overall indices, you were pretty clear, there's definitely more room to the downside. Oil. You've been spot on the past two years calling early the oil price surge and then you were spot on saying it's a bit over bought, it's going to pull back. Given everything going on in the world right now and where it looks like it's headed, we talked about Russia and Nord Stream and the pipeline and the fact that somebody sabotaged it, it didn't happen on its own. I don't know who but somebody clearly, clearly has an interest in making sure that that scenario continues to be volatile.

Where do you think oil goes from here? And then, forget short term, because timelines are the enemy of anyone that's looking to make profits from a resource trade, whether that's in something very liquid or something that's not very liquid, that's very speculative. Time is your friend if you're a half decent stock picker in this game. If you're trying to come in and get cute for a week or a month or play options and do naked options on margin, you're setting yourself up for some heartbreak and some financial ache. But in the mid to long term here, in the next 12 to 24 months, where do you see the price of oil headed?

Nick Hodge: I think consolidating between $60 and $80 a barrel. And you can do the fancy stuff but you just got to be glued to your screen, which some people don't find fun and some people don't do well, they'll put on a short and walk away. And in this market, you almost got to be watching it definitely day to day, if not, intraday. And so, that's what I was saying earlier this week with that call in as well. I don't recommend shorts or put in that letter simply because they're not appropriate for many people and people get whipsawed and out of position and then blame you.

So, the answer for me is consolidating between $60 and $80 a barrel. There was someone that was asking, "What do you think this hurricane's going to do to the price of oil?" And again, that's not the right way to be thinking about this. The factors that are in play now as far as slowing economic growth, et cetera, are larger than a hurricane that makes landfall for 24, 36 hours and then it's gone. And you've seen that. There was no spike in oil on the hurricane. In fact, in the past five days, oil's been glued to $80, $82 or whatever. And there's bigger things than the hurricane going on that would typically have a more material upside impact on oil and gold for that matter as well.

Think about the unrest in Iran, the ongoing invasion of Ukraine by Russia. You had a major gas pipeline blown up this week, which I know you still want to talk about, and those things would normally be larger catalysts. Geopolitical turmoil and instability was typically bullish for gold and oil prices and you're not seeing that now and that's because you're in an economic contraction. The cycle is cycling and hurricanes don't change the economic cycle, it's just what it is. And so, would I'd be short oil? I'm not necessarily sure. Maybe not in the producers right now but in some of the MLPs that are a little bit more not affected by the price. In fact, I'd recommended one in Foundational Profits a couple of weeks ago. It's an okay place to be because those midstream companies are still making their profits at $80 a barrel but you're not going back to $100 or $120 like we saw in March. You've got a couple of quarters of economic contraction at zero or sub 1% US GDP. So, the demand just isn't there.

Who Blew Up the Nord Stream Pipeline?

Gerardo Del Real: Well said, well said. I think, again, you've been spot on. Oil is one of the commodities where I don't feel knowledgeable enough to give advice on. So, the few times I've speculated in oil stocks, it hasn't worked out for me so I leave those alone. I certainly don't give anybody advice on oil stocks. No, no, no. That was well said. I do want to talk about Nord Stream. There is this video floating around of Joe Biden back in February, I think, of this year where a reporter is asking Joe Biden what will happen if Russia invades. And he said, "Well, there will no longer be a Nord Stream, we will bring an end to it." And then the reporter's like, "Well, how are you going to do that?" He said, "Trust me, we'll do it.” And then the pipelines blow up and there's drones flying around.

Again, I'm no international geopolitical expert but I also don't believe in coincidences and this isn't that big of a coincidence if you ask me. There's video circulating now of President Vladimir Putin saying that, if Russia is not recognized and if there's any moves on any of its territories that they will use any and all weapon systems available to them. He's clearly, clearly referencing nuclear and dirty bombs and he said this is not a bluff. And a lot of people, you could tell when their bluffing, Vladimir isn't one who's bluff I would call. Consequences on all sides. Edward Snowden is a Russian citizen now, we mentioned that last week. You mentioned and wondered out loud if he was going to have to now enlist and go fight against the Ukraine.

There's dissent within Russia, there's a lot of footage circulating with soldiers that are fleeing and young men that are fleeing, they don't want to fight this war, they see it as senseless. It's just crazy times out there, Nick. Everywhere I look, from Florida to Russia to Mexico. The nine point something earthquake or 7.5 earthquake in Mexico a couple weeks ago barely made the headlines because everything's so crazy right now. Any thoughts on this pipeline? Any thoughts on Russia and the Ukraine? Look, we're sending another $12 billion. Again, money gun, money gun, money gun. We're sending another $12 billion to Ukraine, this is not ending anytime soon. Anybody that thought this was a one-month or two-month event, wrong, wrong. This is going to go on for years, I think. I don't know but I think it looks that way.

Nick Hodge: I'm not an international geopolitical expert either. We mentioned the potential for nuclear bombs on this podcast a couple of weeks ago when it appeared that Russia was retreating and Vladimir was backed into a corner. I'm not sure who blew up this pipeline. And I saw the clip that you referenced, I've read some things about some Balkan states that might have an interest in damaging it or bombing it or whatever. I don't think it was Russia, they had already shut it down, they don't have an interest in blowing up the Nord Stream pipelines. And so, I'm not sure who it is. 

Spokane’s Ironically Named “Camp Hope”

You mentioned the money gun, it's interesting and I'm just going to go on a tangent because I'm going to talk about this homeless camp here in Spokane for a second.

There's money to send countless and endless billions to all these places, and here in the States, I drive to work every day and I see more and more people camping underneath the awnings of buildings. I've mentioned before this homeless camp we've got in Spokane, it's called Camp Hope, a bit of an ironic name there. And there's 700 and some people in it and it's been there now going on a year, formed last December 2021. And now you've got the politicians and the state agencies just battling each other, they're writing letters back and forth. So, it's on State Department of Transportation Property and so, the mayor, Spokane Mayor wrote a letter to the DOT and the State Patrol and the housing coalition or the Department of Housing, Washington State I'm talking about, the other day saying, "Basically, we're going to sue you because you haven't removed this encampment on your property." And they wrote a letter back saying, "Good fucking luck." Basically it's what they said.

They said, "It's in your city, you haven't done anything to prevent it and good luck suing us because the state judges aren't going to allow that to happen. Oh, and also, we've already given you $25 million to deal with this so quit your whining and do something about it." And with that money, the city, Spokane City, I know I'm on a tangent, sorry, has bought a hotel and opened up another shelter because there was this court ruling that says you can't make people not camp if there's not enough shelter beds for them to go to. So, there was a court ruling that said that and so they've been hesitant about clearing the streets. And there's encampments, there's the big one, obviously, 700. We have a railroad that runs through downtown and, underneath all the aqueducts, there's homeless underneath all of them, dozens.

And so, they've been hesitant to clear those because of that previous court ruling. So they did open up one new shelter and they used some of that money to buy an old Holiday Inn that wasn't in business anymore and they want to convert it. But what happens, the people who live near the Holiday Inn-

Gerardo Del Real: Not in my backyard.

Nick Hodge: Fuck yeah. So, they've hired a lawyer, they're suing and obviously it's delayed while the court is ongoing and so they can't get this shelter up and running. Meanwhile, the sheriff whose name is Sheriff Ozzie, he's like Joe Arpaio, he's like that kind of guy. Sheriffs across the country are like that, but anyway. Now, this guy writes a letter and says, "I'm going to clear the camp. If nobody does anything by the second week of October, I'm going to go clear the camp." And the state agency writes a letter back to him, says, "The fuck you are. Good luck with that." So, the state is now working with this local charity to build a fence around the camp and they're going to have a curfew. If you're not in the camp by 8:00 p.m., they're going to lock the camp fence doors and you're not going to be allowed in.

And so, all this to say there's still going to be a homeless encampment with 700 people despite there being $25 million in money to deal with it. And so-

Gerardo Del Real: And a wall.

Nick Hodge: I don't know what that means for the Nord Stream pipeline or Russia and Ukraine but it seems like there's a ton of money to do all this stuff and yet it's a lack of will or it comes back down to politics and he-said-she-said-they-said-we-want type thing. And so, not that I have any good answers, which is why I don't fucking run for mayor or public office, but anyway, I think everyone needs to start doing a better job because I can sense it. I don't know how it is in Austin, maybe it's a bit insulated. But we talked about the people at the low end of the totem pole and I mentioned the Pope tweeting about Jesus helping them, call me a pessimist and an agnostic but I don't see Jesus coming to clear Camp Hope.

Frankie Lasagna Drops the Ball

Gerardo Del Real: Because 2022 is 2022, I have a positive story but it's tragic at the same time. But tragic not in a deadly way, just in a you dropped $3 million, dude. So, Aaron Judge, for those that are not familiar, is a phenomenal baseball player, just tied the American League home run record with Roger Maris. And so, there's a few games left, everybody's rooting for him to break that record but, at the very least, he tied it yesterday. He hits a home run, he hits it right at this gentleman who's got a glove, a gentleman by the name of Frankie Lasagna. I can't make this up, this is 2022. Not forgetting Frankie Lasagna's name probably ever in my life, right?

He hits it at Frankie Lasagna, Frankie Lasagna reaches out with his glove and misses the ball. And anybody that knows anything about baseball memorabilia knows that that ball would surely fetch millions of dollars at an auction house. And the look on this gentleman's face, again, this is the part that it wasn't tragic in a deadly sense, thankfully. But can you imagine being his girlfriend or his boyfriend, whatever his sexual preference is. Can you imagine being his partner and you're relatively young and you just dropped $3 million, dude, what? So, sad but congrats to Aaron Judge and that is 2022 in a nutshell for you, folks.

Nick Hodge: Come on, Frankie Lasagna. Get it together, baby.

Market’s Are Going to Get Worse

Gerardo Del Real: Come on, dude. We have October, we have November, we have December. A lot of stuff historically breaks in October in the markets and so I don't know what we'll be doing this time next week but I'm looking forward to it. Anything you're watching for in the markets this week particularly, Nick?

Nick Hodge: No, I think we've covered it pretty well. I'm up to half cash on the safe side of things and watching the world burn, frankly. Frankly Lasagna.

Gerardo Del Real: Frankie, oh, Frankie.

Nick Hodge: It's going to get worse. You're going to head into 2023 in a recession. You are going to see sub 1% growth for Q3. We've had a couple of warnings out, maybe that's the answer, is we're heading into Q3 earnings. We've seen some pre-announcements. You saw FedEx (NYSE: FDX), which is a bellwether for the economy, say it isn't good out there. We're seeing a low volume of shipments and that stock ate shit in the worst that it's ever eaten shit in a single day.

Gerardo Del Real: A technical term for those of you out there.

Nick Hodge: Yeah, down the most, it was ever down in a single day. And then everyone else is starting to walk out these warnings, I mentioned Walmart (NYSE: WMT) and McDonald's (NYSE: MCD) already. Ford (NYSE: F) said their profit was going to be half, half what the street consensus was and their costs were up by a billion dollars. Apple (NASDAQ: AAPL) said this week that they're going to halt production on a planned increase of iPhone 14 production because the demand simply didn't materialize when they launched the phone. Look, it's not good out there and it gets a bit in the weeds but earnings growth is still technically positive. It's the lowest it's been in two years but you haven't even gotten into negative earnings growth yet. There are still some things that need to unwind. And if you look at it from a valuation perspective, you're still historically above average on the PE ratio for the S&P, for example.

So, good luck to these bottom callers. Just like they got it wrong in June, you're not bottoming yet. Bottoming is a process and that chart is still down into the right, it's not plodding along bottom, it's not searching for consolidation or troughing, it's still going down and that's going to be the direction, I think, for a couple of quarters to come.

Gerardo Del Real: Couple of quarters is six months, folks. So, let's see you in March with that crystal ball prediction, right?

Nick Hodge: Yeah, now I'm giving away some copy things but I've been talking to this copywriter about a fear package and he's talking about calling it The Last Christmas in America. That's pretty pessimistic shit.

Gerardo Del Real: I'm not buying The Last Christmas in America, Nick. You're not making me pay for that, by the way. Opportunities-

Nick Hodge: Well, End of America was the best promos the industry has ever seen.

Gerardo Del Real: I didn't buy that one either and those were different times, those were different times. But yeah, I'll give everybody my quick two cents. Opportunities in the market, Patriot Battery Metals (TSX-V: PMET)(OTC: PMETF) has been silent for the past week and a half while it closes its C$20 million financing, which was fully spoken for right off the bat and was done at 109% premium. I suspect that closes right around the sixth, seventh or eighth, I can't see it lasting past next week. And I know that the company has publicly stated that they asked the assay company to just stack up the assays. They didn't want to see them because they wanted to make sure there were no material conflicts of interest with the financing.

So, look, I say all that to say that we've gone sideways despite the fact that it's been a down market almost everywhere else. There's a reason why Patriot’s held in the pocket very, very well, technically. People know those results are coming and I suspect there's going to be more blockbuster numbers and discoveries from those assays. There's also the ASX listing, which has taken out a lot longer than anybody would have liked but I think they're close to the finish line there. That's going to bring in a whole new market of very hungry Australian capitalists that want to make money. So, I think, between now and year end, it's going to be fun, fun, fun on the Patriot side of things.

And then look, Nevada Sunrise Gold has also been delayed. Nevada Sunrise Metals (TSX-V: NEV)(OTC: NVSGF), it just changed its name, they finally did that for us. They've also been delayed with getting the rig to the property. My understanding is that they've secured a rig and that we should see drilling within the next seven to 10 days. I think there's a heck of an opportunity there, folks. This is a discovery that is going to do kilometer-long step outs. And look, lithium is hot despite what Goldman keeps telling you or told you once and then never brought it up again. It hits new highs every single month, there's a reason for that. That's a very, very sustainable trend that you can get behind. So, those are my two largest personal holdings, they continue to be. I'm also bullish on uranium, that's what I'm watching here the next week or so.

Nick Hodge: I would've mentioned uranium as well. I know we're getting long in the tooth but Germany capitulated again after saying they were going to keep them running, oh, we're not going to keep them running, oh, yeah, we are going to keep them running, they said that this week.

Gerardo Del Real: Have to keep them running.

Nick Hodge: Yeah. And uranium continues to hold up well, both the spot price of U308 and the equities in general. Now, they bottomed in the June time frame, that would've been the real time to buy them but there's a couple of quality names that have diverged from the rest of the sector that are worth a look and I was writing about that this week as well. So, yeah, I would've called out uranium as well. Good job.

Gerardo Del Real: I like it. That's all we got for this week, everyone. Be safe, be nice. Disagree similarly, it's okay. Politicians don't care about you, I don't care what you believe in. I am Gerardo Del Real along with Mr. Nick Hodge. Thanks for listening in and watching our therapy session we call Bizarro World, this was number 188. Nick, send us off.

Nick Hodge: All right. See you.