Big Picture: Navigating the Bubble

January 17, 2025 – In today's Big Picture episode of the Financial Sense Newshour, Jim Puplava dives deep into the heart of current market conditions, questioning whether we're in the midst of a bubble or on the cusp of a "Roaring 2020s" economic boom. Join us as Jim and co-host Cris Sheridan explore the critical interplay of fundamentals, technicals, and the political landscape that could shape the year ahead. We discuss the unprecedented fiscal and monetary policies post-COVID, the looming threat of rising interest rates, and the potential for a historic bubble peak. Don't miss out on understanding the pivotal role of the bond market, the implications of massive government debt, and the wild cards like tariffs and geopolitical events that could steer the market's direction. Tune in now for an episode packed with insights, predictions, and practical advice for 2025 and beyond.

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Transcript

Cris Sheridan:
Welcome everyone to the Financial Sense Newshour. Today we're going to talk about navigating the bubble. And that's because when you look at current stock market valuations, we are either in or very close to record bubble territory. And one of the major themes that you're going to be hearing on our show over the course of 2025 is that the three main pillars we use for analyzing the market and the investment landscape are, one, the fundamentals; two, the technicals; and three, the politicals. And the political component, we believe, is going to be exceedingly important this year because that includes fiscal policy, monetary policy, regulatory policy, and, of course, what we see happening geopolitically as well. So that's all in the political bucket. So Jim, kick things off for us. Where would you like to begin?

Jim Puplava:
Well, Chris, why don't we go back to the Great Financial Crisis in 2008, where we saw a massive fiscal stimulus in the first year of the Obama administration. And then in 2010, the Bernanke Fed decided that they were going to drive interest rates down to zero, and they basically kept them there for 13 years. So a lot of what you see in the market, especially now, is being driven by monetary policy. What do we talk about? Is the Fed going to lower? Are they going to remain on pause? Are they going to raise? And now we've shifted from the markets talking about, well, maybe the Fed may not cut, to talking about the Fed may raise rates. So here's another example where monetary policy is having a great influence. And of course, we saw this towards the end of the year with the Santa Claus rally. In the December meeting with the Fed, they said, well, maybe we won't be lowering interest rates as much as we thought. It was originally thought they would lower rates this year by four times, or let's say four quarter-point reductions, a full percentage point. Now that's down to two. And now they're even talking about raising them. So here's another example. But one thing that really stood out in terms of how politics influence the market and the economy, just go back to Covid and take a look at what we did. It's hard to believe, Chris, but since COVID, we have added $10 trillion in debt; that is, our deficits are running well over 6% of GDP. They got as high as seven and a half. And I think in the year 2020, they were in double digits. But the debt has tripled in the last 10 years. And eventually, fiscal deficits are going to become dominated by interest costs. This is something you're going to hear on this program. You're going to hear it in the media, probably more so towards the end of the year and going forward, because right now, the interest on the debt is more than we spend on defense. It consumes 20% of all government tax revenues. And we'll be talking about this later on in the podcast, but right now, the government is going to have to raise between 2 and 3 trillion dollars to finance the deficit this year. And then on top of that, we have $6 trillion of old debt that's going to be rolling over. So right now, the government pays roughly about 2.7% on all its debt. That $6 trillion that's going to be rolled over, plus the $2 to $3 trillion that will have to raise as new debt, that's about $10 trillion, Chris. That's going to be at interest rates between 4 and 5%, not 2.7. So we can see interest costs go up by nearly a half a trillion dollars this year.

Cris Sheridan:
Yeah. And Jim, when you're talking about the political component and how much of a factor that this is going to have in the market and economic outlook, not just for this year but, of course, for the remainder of this decade, you know, I want to do a real quick segue because we have a number of our listeners that email in and call in, just making sure that we're okay with the fires. We are in Southern California, thankfully. We're still a bit south from where the fires took place and leveled, you know, however many tens of thousands of homes and structures. A horrendous thing. But you, Jim, actually have your own personal anecdote that I think would be very instructive for our listeners in terms of some of the difficulties and regulations that we face here in California when it comes to wildfire risk. Do you mind sharing that real quickly, just in terms of how much politics plays a role here?

Jim Puplava:
Yeah, let's begin with California because about two decades ago, we began to change the way the state manages the forestry. And this is the influence of the "banana greens" coming in. Where you used to have controlled burns, where the fire department would go into the forest, they'd clean out the kindling, the brush, they stopped that. And when they stopped that, we're starting to see more forest fires. A second thing that Gavin Newsom did is he tore apart four dams for fish. He wanted the rivers to flow freely, didn't want to store water with dams, so he destroyed four dams. And so, Chris, the concern that all of us have here in California now is we had three years of record rainfall, and we were unable to save it. It just flushed out to the river. And you saw in Los Angeles where the fire department, the reason I know this is because my nephew is a firefighter. He's in the thick of that right now. And he sent me some videos where they were going up to a neighborhood. They were hooking up the hose to a fire hydrant. There was no water. They didn't even have water in the reservoirs in the Palisades. So we live up in the hills, and we have brush just like much of California around us. We have eucalyptus trees, and there is a creek on the side of our bed with these huge eucalyptus trees. They're very messy. They're always shedding. There's a lot of kindling on the ground. And they were growing tall enough that they were hanging over our roof. And so I called the fire department out. They came out, and I said, isn't this a risk? I'm really concerned about this because the trees are in protected property next to mine. And they said, "Oh, this is definitely a fire risk." And I said, "What do I need to do to remove them?" He said, "Well, you need to get the city out." And so the city comes out, and they go, "The fire department said this is a fire risk." And they go, "Well, you can't do that. This is protected land." I said, "Well, then tell me what happens when there's a fire when these are hanging over my land." And they said, "Well, you can't do that." Well, I don't care what you say. If it's hanging over my fence, I hired somebody to come in, cut those trees, and top them so it wasn't a risk because that would be a big fire hazard. And then I had my own landscaping people go down into the creek bed and clear out all the kindling and all the dead wood and things like that that would just be kindling for a fire to come through here. And the reason we're concerned in California, it looks like we're going into a drought. We normally get heavy rains in November and December. We haven't had a drop of rain, so things are pretty dry around here. And so what you're seeing in L.A. with the winds, and by the way, the Indians have been talking about these winds going on for 100 years, because the standard excuse made by politicians is climate change. You know, that's the catch-all. But that's kind of my own story of how bad it is here.

Cris Sheridan:
Yeah, so here you have the fire department saying, "These trees, which are in this protected zone, again, are a clear risk to your house and a fire hazard." And then when you go to the actual city and tell them these trees need to be taken out, according to the fire department, because they're putting your house at risk, they say, "You can't do that because it's protected land." That is something that we hear over and over and over when it comes to why they're not clearing forests or taking certain steps that need to be taken in order to mitigate the risk of wildfires or even if it comes down to having water with desalination plants and things, not making those changes, doing what needs to be done because of either a fish or the ecosystem or the habitat when it's putting people's homes at risk. So that was such a good anecdotal example of what we face here in California when we think about bureaucracy, red tape. Elon Musk commenting numerous times how he had to leave California. It was just too hard to do business. You couldn't get things done. So that is an issue that needs to be dealt with. So, again, we're talking about politics having a major influence. And obviously, we are going to see an inauguration on January 20, just days from when this podcast is released. Trump's going to be making some big, bold promises, but he's also going to have some constraints on him.

Jim Puplava:
Yeah, this is going to, you know, Trump 2.0 is going to be different. And what I would like to do is just contrast. I think he's going to be limited in what he would like to do, and what's going to limit him is the very nature of the debt that we've been talking about. We're at roughly about 36 and a half trillion. We'll probably be at over 38 to 39 trillion by the end of the year. And if you take that and contrast that, when he took office, when he was running in 2016, the debt was 19 trillion. Today, it's 36 and a half trillion. Oil was at 30 to $40 a barrel. The shale revolution was taking off. Today, oil is at $80 a barrel. And more importantly, shale oil and US production may be peaking. We're seeing productivity gains fall in the Permian. And, of course, you've had Rosensweig on your program. And their contention is that the Permian Basin peaks either at the end of 2024 or early 2025. And that is going to be really important going forward because in the 1970s, US oil production peaked in 1970 at 10 million barrels. And then with the oil embargo, when the price of oil went from three to $12 a barrel, President Nixon initiated a number of policies to make drilling for oil more productive. Drill rigs almost quadrupled. And despite that, over the next 40 years, with all that spending, US oil production went from 10 million barrels down to 5 million barrels by 2010, when the shale revolution took off, and we went from 5 million to 13 million barrels. That may be peaking. And that could create a problem. And we'll talk also why it's going to create a problem for oil companies unless prices remain elevated because Trump is promising to bring the cost of energy down. The other thing is we got to take a look at his tax proposals. So he's done a number of things on the campaign trail. He talked about not taxing tips, not taxing Social Security. Believe it or not, up until 1984, Social Security wasn't taxable; it was tax-free. But if we take a look at what he is proposing and what is likely to get passed, now he wants to pass a bill and get everything done in one bill. I don't know if he's going to be able to do that. But if he extends his tax cuts, that'll cost 5.3 trillion. Exempt overtime from income tax, that's 2 trillion. Exempt Social Security from tax, that's 1.3 trillion. Lower the corporate tax rate, that's 200 billion. Exempt tips from tax, that would be 300 billion. Strengthen the military, 400 billion, border deportations, 350 billion, housing reforms, 150 billion. And boost support for health care. In total, his proposals would increase the deficit by about six and a half trillion dollars over a ten-year period. So whether he's going to be able to get away and do that, I think the number one thing he's going to face early on in his office is going to be constrained by the national debt heading to over $40 trillion. And the fact that you may see interest, just interest on the debt, consume almost 30% of government tax revenues by the time we get to the end of the year.

Cris Sheridan:
So again, the forecast that we're making for this year is that we are in a bubble-like environment. Of course, there is some varying data depending on the valuation metric that you look at. Some showing that we are just below 2000 tech bubble levels, some showing that we are right about equal, some showing that we're above the 2000 tech bubble. So you could either say we're first, second, or third highest valuations in US history, depending on the metric. That's obviously some concern. The question is not whether or not we're going to see a major bubble peak this year, but how to navigate it successfully. So tell us, Jim, what's the main message you want to get across to our listeners today?

Jim Puplava:
Let's describe what a bubble is. There are a couple of characteristics, and you can see them clearly today. Highly irrational exuberance. You know, going back, harkening to Alan Greenspan's comment of irrational exuberance back in 1996. Well, he said it too early. He was about four years too early. Adoration of subject companies or assets and the belief you can't lose kind of, you can go back to the nifty 50 in the late '60s, early '70s. And then, of course, you had the Internet stocks. You know, you can't go wrong. It's a new economy. And now we have AI stocks. Another thing, FOMO, absolute fear of being left behind and missing out. Now, the stock market has had two back-to-back years of 20% gains. But what you don't often talk about is, the bulk of those gains came in seven stocks. So you may be invested in the S&P 500, but it's basically seven stocks that are driving the returns. The other 493 stocks are not doing as well. And there's also this belief that there is no price too high to pay for these stocks, whether it's Internet stocks in the '90s, real estate and mortgage-backed securities in the '00s, or now the Mag 7. So here we are, and the market was up 26% in 2023, 23% in 2024. And now they're projecting this year, depending on whether you look at the low side or the high side, further gains of another 12 to 20% this year. This would be unprecedented. But we'll talk about how that might take place as this bubble heads for a peak. But the cautionary signs are visible today. Basically, if you look at investor optimism, it's prevailed since 2022. The multiples on US stocks versus the rest of the world, we are way higher than any other place around the planet. The enthusiasm over AI and everything associated with AI, the distortion created by index funds. And I need to emphasize this because when the bubble bursts, if you're an index fund, you're going to get hammered and could lose 40, 50, and 60%. Very much like what happened to the Mag 7 stocks in 2022, where the S&P was down over 25%. The Dow was down 20%. The Nasdaq was down 33% while the Mag 7 stocks were down 40, 50, and 60%. Because as money comes into an index fund, almost 35% of every dollar goes into just seven stocks. The other $65 goes into the other 493 stocks. Likewise, when money comes out of an index fund like it did in 2022, and the sell-off 35 cents comes out of those Mag 7 stocks, so they will be more heavily sold than the other members of the S&P 500. So, I mean, if you look at just some of the things that we've seen, Nvidia is up 2600% since 2000. Microsoft is up 200%. Apple is up 320%. And here's the thing. Apple's market cap got up to almost 4 trillion. And there are analysts that are predicting they'll hit 5 trillion. Well, if you look at the fundamentals of Apple, their growth has declined. Unit sales are down. Apple no longer reports unit sales for their iPhone. Earnings were $6.11 in 2022. They were down to $6.08 in 2024. So the stock is up 320% on earnings that are declining. You take a look at the Dow, it's selling at 26 and a half times earnings with the dividend yield under 1.9. The S&P 500 selling at 25 times earnings, dividend yield a little over one and a quarter. Likewise with the NASDAQ, about 33 times earnings and a dividend yield of under about three-quarters of a percent. But more importantly, if you want to look at this historically, the Shiller PE ratio is almost 37 and a half. It's the second highest in history. It's higher than the crash of 1929. It's just a smidgen below where it got in the Internet bubble. It peaked the Internet bubble; the S&P got up to 44. Currently, it's almost 38. So we're not too far away from where we were in 2000. And we're starting to see, Chris, we've been talking about inflation over the last couple of years. I'm starting to see it when we're looking at companies. Companies aren't raising their dividends as fast as they used to. They're seeing increasing costs for materials. They're seeing increasing costs for labor. So margins are shrinking. And so, and the reason I'm mentioning that is the consensus view of what's going to drive the market this year is not an expansion of PE multiples, which is simply people willing to pay more for a dollar of earnings. What's going to drive the market higher this year is robust corporate earnings. And what we're seeing when we get into the weeds, when we look at companies, we're seeing shrinking margins, higher costs, lower growth rates, as I just explained with Apple.

Cris Sheridan:
Well, Jim, I've got to ask you here because these are objective facts that you pointed to. When we look at the fundamental situation, and of course, we're talking about record high valuations in the stock market. But as you know, we've had a number of people on our podcast like Ed Yardeni, who is forecasting a roaring 2020-like scenario for the remainder of this decade. And he's even doubled down on that since Trump was elected, given his very low tax, pro-growth, low regulatory type policies that he's going to be implementing. And again, we're talking about how important the political component is going to have on the market and the economy. So what about the possibility of a continued roaring 2020 market?

Jim Puplava:
I'm really not buying that from the standpoint. I mean, it's great that AI is, you know, if it brings greater productivity. What we're watching is liquidity. What we're watching is the deficit, the debt, and the interest on the debt. And just like in England a couple of years ago, they call it the Liz Truss moment. She came with these tax proposals that were going to dramatically lower taxes, which would have increased part of the budget. And the yield on gilts, I think, doubled overnight, and she was out of office six weeks later. So I think Trump has a lot of good ideas. Deregulation, Doge, reducing government spending. If that can happen, that might mitigate it. But if that does not take place, if Doge does not, you know, they're talking about reducing spending by almost $2 trillion. You know, I don't think they're going to get that far. So that is why I would question that outcome based on what we're seeing right now, and you're seeing it reflected in what's happening with interest rates. We've had three versions of why interest rates are rising. One is inflation is heading higher. We subscribe to that. Inflation is heading higher. But it's not just one. A second factor: if growth picks up, so deregulation, let's say he gets his tax cuts and growth picks up. Normally, when economic growth picks up, interest rates rise as there's the greater demand for money. But a third factor I'm going to throw in here is the deficit and the debt itself. And that's another reason that you may see because, as we mentioned, the government's going to have to finance close to $3 trillion of new money. And you have $6 trillion of existing debt that's going to be rolling over from interest rates at a half a percent, 1 or 2%. Now, that debt is going to be issued at interest rates between 4 and 5%, and God forbid if it's over 5.

Cris Sheridan:
So I think, as you pointed out, the key is going to be on just how high US interest rates go if we do start to get into that 5, 5 and a half, 6% range with the high US debt levels that we see. So let's move on to the US economy. As we discussed last week, the consensus view is for somewhat of a Goldilocks environment with continued steady growth in the US economy and further disinflation. What's your forecast for 2025?

Jim Puplava:
We see an inflationary uptick coming in. Simply, if you take a look at the government stimulus, the Biden administration passed $7 trillion of new spending. And, Chris, not all of that money has been spent. A lot of people think, "Oh, they passed a bill, they're going to spend, I don't know, $2 trillion while they spend it." No, that may be phased in over years. So, government stimulus. And right now, there just isn't a lot of excess capacity in the economy. The other thing that could happen with deportation is labor markets could start to tighten. Another big factor, and this is a big unknown: Trump tariffs. Now, he's a negotiator, so he throws things out, and will those tariffs be as high as they expect them to be? But one thing that the government is looking at is they're looking at tariffs as a source of revenue because, remember, we have massive deficits, massive debt, a lot of debt coming due. The government and the politicians are looking at tariffs as a source of revenue. Well, it is a source of revenue for the government, but those tariffs are going to be embedded in the cost of the goods that you buy. I mean, take a look at anything you order on Amazon, any manufactured good. Take a look at where it's made. It's made in China, it's made overseas. You start putting tariffs on those items, importing them into this country, you're going to pay a higher price for merchandise. And that's why a lot of stores and businesses getting ahead of it are ordering inventory to get that inventory at a lower price. So, we've got tariffs coming on. So right now, it looks like stronger economic prospects in the first half of the year. But as these things come to fruition, whether it's tariffs, deportation, government spending, inflation begins to turn up. And you're going to see the language of the Fed begin to change from, "Well, we may pause," to "Well, we're thinking we may have to raise." So the Fed begins to talk about that. Whether they get to raise or actually do it is another thing. But they can jawbone the market by not doing it but saying they are, because the Fed tries to play and guide the market. So the increase in inflation means a change in equity leadership. We like things like energy, financials, mature materials. We're very big on commodities, especially in an economic recovery. And as the economy begins to heat up with a lot of this stimulus, whether it's existing government programs that were passed that the money has yet to be spent, or new stimulus programs coming from the Trump administration, small cap stocks look really good. A lot is going to depend on three factors: what happens to the dollar. Because if interest rates rise, as they're doing now, that strengthens the dollar. What does that mean for S&P 500 earnings? Most of the S&P 500 companies are international companies that get their sales from overseas. The dollar gets stronger. That means when they translate their foreign sales into US dollars, it gets less. They lose money. So the strength of the dollar, what happens to taxes, and most importantly, what's going to happen to interest rates? Also earnings. As a lot of the people that we are talking about, what's going to drive the market this year is not P/E multiple expansion, as it was in '23 and '24, but it's going to be more on company earnings. Well, those earnings are going to be at jeopardy with the strong dollar, especially with a lot of these international companies that make up the Dow and make up the S&P 500. So if you look at where things stand today, credit spreads have not blown out yet, but we think that is coming probably in the first half of the year. Multiples are much, much higher than in previous recoveries, and the rates of return have been much higher. But one of the things that you're going to see in this kind of recovery, typically at the beginning of an economic cycle, you see real estate lead because interest rates have fallen, mortgages are cheaper, so people are able to afford a home. You're not going to see that right now. Mortgages are in the seven, seven and a half percent range. And also at the beginning of an economic recovery, it's very much like a risk-on scenario where, you know, "Alright, the economy is improving. It's time to go for risk." What makes that somewhat suspect right now is the elevated P/E multiples on many of these companies. We're already starting at a very, very high historical level, the second highest in the market's history. So we're starting at that level. So that's going to limit it. So you know what you're really going to want to look for is value, and you're also going to want to look at quality because as we said in last week's program, three things you're going to see, in our opinion, are volatility in terms of the markets, whether it's the bond market, the commodity market, or the stock market. The second thing you're going to see is a correction. And especially if interest rates start going north of 5%, that's going to really hit the growth stocks, especially the "Magnificent Seven." And the third is at some point the Fed is going to come back in, depending on the outcome of the correction and what happens, they're going to come in and they're going to have to start QE and monetizing the debt. We'll get into this in just a bit here, but there was a report put out by the Treasury Committee taking a look at 2025, and they came to the conclusion with the amount of new debt that would have to be financed plus the $6 to 7 trillion that will be rolling over, there's no way the markets can handle that massive amount of debt. And they are basically predicting by the end of the year, I don't know if it's the third or fourth quarter, the Fed will have to start monetizing debt. And when that happens, that's going to inject a lot of liquidity into this market. And we could see an incredible bull blow-off bubble going into the end of the year because that's the way bubbles burst. There is this final finale, and I think back, Chris, to the year 2000. We got out of stocks in December of '99. I literally liquidated 100% of every stock we owned. And I looked like an idiot because for the next three months, the Nasdaq went up another 20% before the big downturn where the Nasdaq would then lose over 70% in the next two years.

Cris Sheridan:
Going back to what I brought up earlier with this "Roaring 2020s" thesis through the end of this decade. Ed Yardeni, a number of other people that we've had on our show discussing that. What are some of the factors you're looking at that could extend the cycle much further from here, given where we're at already with high valuations?

Jim Puplava:
Well, a mania. Like I said, we're in a bubble, and I think we're in the final stages of a bubble. But bubbles can go on longer than you think they can. So a lot of people have been killed trying to go short when things get basically out of whack as they are today. What if oil prices drop? What if Rosenzweig is wrong on the Permian, and that productivity increases, companies pump out more oil with incentives, the price of oil goes down from $80 down to $40, as it was at the beginning of the Trump administration? That would be positive for the market. Employment rate remains strong, and interest rates actually start to decline. So we see a disinflationary trend. Those are things that would just elevate and extend the stock market. But I really think as we get towards the end of the year, we're going to see the Fed monetize much of the debt because it's too large at this point.

Cris Sheridan:
So what are some of the things that you think could go right for this year and moving forward?

Jim Puplava:
You know what could go right? A weak GDP in the rest of the world would help the US with inflation and interest rates because they've been cutting more aggressively than we have. So if growth picks up in China, if growth picks up in Europe, that would have an impact here. But if it remains weak as it is right now, China's talking about a new stimulus program, things are a mess in Europe. That could take some of the pressure off here. OPEC achieves significant cost savings, which could keep a lid on interest rates and the debt. Energy production increases and lowers oil prices. That's a big factor when it comes to inflation because the cost of energy is embedded everywhere, from service to the goods that we produce. And then AI takes off, producing greater efficiency and productivity gains. And maybe they come up with some killer apps that you can take this AI and use it to increase productivity or change the way a business operates. And then finally, US cyclical data begins to improve. Employment conditions begin to soften, taking some of the pressure off the labor market. So there are a number of things here, Chris, that can go right. I mean, you know, maybe Trump will get lucky, and a lot of these things will go in his favor. You know, they'll cut budget expenses, they'll end the wars. There are a number of things. Deregulation, open up drilling. Maybe a number of these things, if they kick in, can offset some of the negatives we talked about.

Cris Sheridan:
So as we're discussing, we see record high market valuations. There are some risks, particularly if we see a continued higher move in borrowing costs or interest rates, which would press upon, of course, businesses and the consumer. There's also some implications for fiscal solvency. When we think about rising debt costs, the ability to service that debt. There's also some things that could go right. We could see interest rates plateau or fall. We could see further disinflation, higher productivity achieved from AI. We could see a number of efficiencies and pro-growth policies from the Trump administration being implemented as well. So I think it's good to remain flexible, understanding the different outcomes that we could see, keeping in mind, again, that risks are elevated with valuations where they are. So with all that said, as we discussed last week, when it comes to some of the surprises and outrageous predictions from Doug Kass, Byron Wein, that was taken over by Hudson Partners, of course, but also Saxo Bank, what are some of the major wild cards for this year?

Jim Puplava:
You know, I think right at the top of the list has got to be tariffs. How high, how big, and who? That would impact a lot of, for example, inflation coming into the US treasury yields as the bond market could limit what Trump is able to do. We're seeing yields back up. Right now, we're in the middle of that. Oil. Will production increase, remain flat, or gradually decline? Fiscal, inflationary stimulus. And if you look at the four pillars of Trump's program—trade, fiscal, immigration, deregulation. And one that could happen if things go wrong is just a deficit blowout. We saw this early on in my career. In 1991, the deficit got up to $450 billion. It caused George H.W. Bush to go back on his pledge: "Read my lips. No new taxes." He raised taxes because back then, a half a trillion dollars in deficits was a really big thing. Today, we're talking 2 or 3 trillion. So a deficit blowout and basically the bond vigilantes show up and the bond market rebels. It's just that famous saying that James Carville said, if he was to be reincarnated, he'd come back as the bond market because you can intimidate anybody.

Cris Sheridan:
That's right. And again, we're going to see a Trump inauguration on January 20, a State of the Union speech that's going to be coming in after that, weeks following. Trump is going to be making some big, bold promises about what he wants to do. That's going to be on, again, as you said, those four main pillars. A huge part of that is going to be what we see with fiscal policy and deregulation. And he is going to be making a very big pitch, as we all know, on promoting US energy and increasing production, opening up drilling offshore, onshore, you name it, trying to lower inflation by lowering gas prices and oil prices. It's going to be a question mark as to whether or not he's going to be able to achieve that. He's likely also going to be making some big, bold promises when it comes to nuclear energy. Of course, Chris Wright, who he has appointed to the Department of Energy, is a big nuclear bull, not to mention a big believer in fossil fuels. Of course, a number of other people in his administration are also very pro-nuclear, so we could see some big moves in that direction. It's just a question of how successful will Trump be in implementing these policies going forward. So, again, there are things that could go right, could go wrong. The timing of which is going to be very important. And certainly, looking at a number of the more important indicators to use for tracking the markets in the economy, which we do discuss on our program periodically, being liquidity, credit markets, leading economic indicators—all of which you do want to follow to navigate the market bubble successfully. So, Jim, as we close out today's show, what are we doing here at Financial Sense Wealth Management for the beginning of 2025 once again?

Jim Puplava:
Chris, we began reducing our tech holdings last summer. We built up a cash position, so we're below neutral in terms of weighting in stocks. And a lot of that has to do with rising interest rates. When you consider the Fed began to cut interest rates in September. And since they've cut, interest rates have gone up almost one and a quarter percent on long-term, which is not good. And there are so many things that are going to weigh on the markets this year. It's politics. What policies will get passed? Will the Trump tax cuts be extended over the next 10 years? They'll get that through budget reconciliation. And right now, because of that, we have a neutral weighting because of this unknown. So we're trying to maintain flexibility. But we're also changing a little bit from tech on AI. We are playing AI through energy because we've reduced our tech holdings. We began doing that towards the end of last summer. And you know, it's funny because Nvidia has gone nowhere since July of last year. So that's kind of like a warning sign that we see. And the one thing that all this AI needs, AI needs electricity. And that's how we're playing this. So we've moved in that area. Other areas of technology that we're looking at are drones. That's going to have a big impact in terms of what we do with the defense budget because warfare is going. You know, you can't send a $2 million missile against a $400 drone. You'd go broke with that. The other thing that's coming with drones, you know, you will see this in the next couple of years. You will call in your prescription at CVS or Walgreens, and a drone will deliver it to your doorstep. Amazon's looking at drones to deliver goods. So we're looking at drones. We're also looking at driverless cars. And more importantly, with the shortage of labor and an aging population, we're looking at robotics because manufacturing is coming back, and in order to compete with the rest of the world, we're going to have to go to robotics to keep the cost down of producing goods. So robotics is another area we're looking at. We love Bitcoin and precious metals. We've been invested in Bitcoin since the summer of '23, and we still like it here. We think it's going higher. We own precious metals. Probably the most undervalued sector of the market is commodities itself, and especially the precious metal stocks. I mean, you take a look at gold, which has gone from $1,900 to almost $2,800 now. Silver has gone from the low teens to now over $30. Some of these companies that are going to be reporting earnings are going to be reporting earnings that are going to blow out in terms of expectations because they're selling them at a higher price. Even though costs have gone up, the price has gone up faster than costs. So we like commodities. The other thing that we've been doing in one of the accounts, one that I manage, is we moved to high-dividend-paying stocks because the dividend increases aren't as much. So 40% of the portfolio is in stocks that pay 6 to 8% in dividends. And Chris, the way we look at it, if I can get 80% of the return of the market long-term in dividends, that's more predictable to me than betting on the market going up 10% every single year. And of course, right now, we have a lot of T-bills, and our bonds are being kept short in duration. We don't go beyond two or three years. The nice thing I like about it is I know what predictability is, I know what the interest is, and I know when the bond comes due, we get our money back. So the key thing is you've got to be flexible, and you're going to have to be. This isn't the kind of market in the rest of this decade, especially with the debt and interest, where you just buy index funds and sit on them as you did in the last decade. I don't think that's going to play out this decade.

Cris Sheridan:
Well, as we close, we want to remind all of you listening that Financial Sense Wealth Management has been ranked as one of the top registered investment advisors in the US by the Financial Times. If you want to come on board and be a part of what we're doing here or speak with any of our investment advisors, you could do so by visiting us at financialsensewealth.com or by giving us a call at (888) 486-3939.

Jim Puplava:
In the meantime, on behalf of Chris Sheridan and myself, we'd like to thank you for joining us here on the Financial Sense Newshour. Until you and I talk again, we hope you have a pleasant weekend.

For a link to our full podcast archive, see Financial Sense Newshour (All) and don't forget to subscribe on Apple Podcast, Spotify, or YouTube Podcasts!

To learn more about Financial Sense® Wealth Management, give us a call at (888) 486-3939 or click here to contact us.

Advisory services offered through Financial Sense® Advisors, Inc., a registered investment adviser. Securities offered through Financial Sense® Securities, Inc., Member FINRA/SIPC. DBA Financial Sense® Wealth Management. Content is for informational purposes only and does not constitute financial, investment, legal, or other advice.

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