If you're not confused, you're not paying attention.

追加: 2026-05-15

[00:00:26]Hello everybody, Luke Groman FFTT. Hope you are well. Hope you're having a great week. We've got a big game coming up for the Cleveland Cavaliers tonight against the Detroit Pistons 22 series. Need to win this game five. So, I'll be excited to watch that tonight. Uh before I jump in any further, this week we are running a special on tree rings. Uh you can learn more about it below here in uh at the at the banner. uh four free weeks if you sign up this week. Uh so check that out if you want want to learn more about it. I'm going to jump right in. In the interest of brevity uh from John, longtime follower of yours here, it's been hard to decipher what your current market views are. I see you repost many headlines about the US being in a bad spot and that disaster is coming for Western financial markets. Can you concisely describe your viewfor?

[00:01:20]Uh it's a great um you know there's a quote by Tom Peters. If you're not confused, you're not paying attention.

[00:01:26]That's maybe describes the last five, six weeks better um than than anything else. So, uh my market view, I'm cautious. Uh I'm overweight cash, T bills, gold, gold miners, electrical infrastructure. Uh why valuations are fully in La La Land. Um Warren Buffett metric, people always talk about that.

[00:01:47]What we've been highlighting over the last uh three weeks has been what something we've called since 2018 the adjusted Warren Buffett metric. So in 2018 if you remember people said hey Warren Buffett metric hit the all-time highs that we saw in 1q2000.

[00:02:03]Bad for stocks. At the time FFTT said no no no 1q2000 we weren't in the QE area QE era yet. Now we're in the QE era.

[00:02:12]What does that mean? That means the Fed will print whatever they have to do to monetize deficits. And I know the purists hate that, but it is effectively what it is. Because the Fed will do that, we can't just look at the Warren Buffett metric on a standalone basis.

[00:02:25]And as a reminder, Warren Buffet metric is total equity market cap of the US divided by GDP. So we created the adjusted Warren Buffett metric which is total equity market cap minus federal debt that identity divided by GDP. And what it showed us in 2018 was that far from being as bad as 1Q2000 2018 actually suggested that markets would have to rise another 60 65% to get back to 1Q2000. Fast forward eight years.

[00:03:00]Actually, fast forward three years, 4Q1, it got there. Boom. And 2022, you had a bad year in markets.

[00:03:10]Now, we have completely left the reservation. As of 4Q25 U and early 1Q 26, adjusted Warren Buffett metric is higher than it was in 1Q 2000. higher than it was in 1Q22, 4Q21 and those are the only only other times going back 80 years it's been like this.

[00:03:34]So from a valuation perspective like eh there's there's no reason to chase here in my opinion. Number two, equity market breadth is terrible. Terrible. I was just reading one from Jason Gford who's a great follow on X uh GeFor T. I can read it to you here what he just said because I retweeted it. Um it is a fascinating point. Here it is. Ready?

[00:04:09]So again, this is just shouting into a void, but this is the most new lows within the S&P 500 on the a day the index poked above a prior all-time closing high ever. Like ever, ever. And as Thomas Thornton added, can't recall when on a day of new all-time high, there were more 52- week lows than highs in the S&P. And both S&P and NASDAQ breath was negative, all on the same day with all-time highs. Okay, so we've got the Warren Buffett metric, adjusted Warren Buffet metric in La La Land, another metric I've looked at, a 10-year Treasury yield uh times uh oil price going back to 1980, it's only been as high, that number combined uh has only been as high as it is today two other times. January 1980 before a vicious two-year double dip recession and March of 2008.

[00:05:04]Okay. And now so not great environments to chase. Then we get breadth. Breth is absolutely terrible which we were just talking about Jason Gford, Thomas Thornton. Um that kind that that you know breadth and valuations associated with bubble highs. Uh inflation was already accelerating pre-Iran war. Now the Iran war is going to send inflation much higher. We 6% PPI and we're just getting warmed up, baby.

[00:05:31]CPI follows PPI and PPI is just getting warmed up. We haven't even really seen the shortages yet. Those are still really coming. That's going to force a save the currency or save the bond market decision on the US, UK, Japan, across the West. And the Iran war is not going as well as advertised. That started to be leaked out, but Hormuz we've been saying all along is going to be closed longer than expected. Uh we've been wrong for the right reason. We we were one of the only people saying it was still going to be closed in midmay.

[00:05:59]Here it is. It's miday in the last five, six weeks. Uh markets have gone whoop straight up on terrible breath. Um but what that means look I think horm is still going to be closed on June 1st. I think it's going to be closed on July 1st. It might still be closed August 1st because nobody's doing the work and talking to anybody about how it's actually going. What is Iran's actual fire control status of the straight hormuz? And if they ask the question they might go uhoh.

[00:06:29]You know, yes, it's partly an insurance issue, but it's an insurance issue because insurance companies don't like their boats going boom. That's why. So, what that means is that physical supply chain reality is about to enforce itself on a market where inflation's already accelerating. Probably going to get a lot worse. Valuations are in La La Land relative to like like beyond 1Q2000. And you've got narrow, terrible breadth.

[00:06:55]And so, um, look, it's possible the whoosh down we came into the year looking for was to start 2026 was the February 28th through March 27th 9% decline in the S&P. We got our three bad treasury auctions, March 23, 24, 25. Um, we got our move volatility index on treasuries to 115 on and then, you know, uh, then we got a crash in volatility.

[00:07:22]We got uh bond yields not allowed to go over 4.4% on the 10-year till this week.

[00:07:27]Uh you got oil getting smacked down with fake news. Uh Hormuz reopening peace deals every time it hit 100 102 over the last month. Um look, it's very possible that policy makers are just going to go straight to you know injecting more dollar liquidity into 8 to 10% plus inflation to maintain the nomal sovereignty of bonds. And in that case, we're going to be wrong in our cautious view of markets. But I'm not going to care because gold gold miners and infrastructure is going to sore. So cautious, complicated, but the Iran war is is forcing a choice.

[00:08:07]It's going to force a choice soon. Save the currency or save the bond market.

[00:08:11]Save the bond market looks like print a bunch of money into an inflation spike to make sure yields don't run away on us. save the currency is eh let bonds go where they're going to go wherever inflation takes them and let the whole thing burn to the ground. I think they're going to print the money. Maybe that's what we're seeing markets, but if that was the case, I don't think breadth would be as bad as it is. So, at any rate, that's, you know, if you're not confused, you're not paying attention.

[00:08:34]Um hopefully that elucidates our thought process. Is it crystal clear? No. But I don't think it can be in this environment. I think it has to be conditional because there's it can change based on what changes. Okay, next question. Bill, hi Luke, the DXY has been grinding down sideways since April. In your mind, why is this happening? How is this going to play out the deeper we go into the supply chain crisis? I've been surprised that currencies like the pound and the Aussie dollar have actually been strengthening in the recent uh against the dollar. Uh look, DXY peaked the same day that the US Treasury move volatility volatility index hit 115. It was March 26th, 2026.

[00:09:24]That was after three really bad treasury auctions on the 23rd, 24th, 25th. Uh since then uh when you look at what has happened in markets since then, DXY down, equities, gold, Bitcoin up as the seeming capping of bond yields at the 10-year and equity volatility and bond volatility and oil prices all happening.

[00:09:57]That's the market saying someone is injecting liquidity to manage markets.

[00:10:02]That's what the price action says to me as I look at it. And then when you also look at futures, Ryan, the the markets doing what they're doing with the breath being as bad as it is. It's probably possibly another symptom of that. But I think that's why DXY is down in a war. I think that there's been a a liquidity injection and whether that is a combined the jawboning of lower oil, lower rates, lower v uh the reserve management purchases from the Fed, who knows? But that's that's my message of DXY grinding down sideways since uh March 26. And the final question from GGX, how do you build a diversified portfolio to survive in this environment? Obviously, not specific investments. Maybe just a general overview of how you approach it.

[00:10:53]One of the wisest investors that I know, most experienced investors I know, have been doing this 50 plus years, uh, at very high levels, uh, told me at a dinner that we had together probably three years ago, maybe, Luke, there are times of wealth accumulation and there are times of wealth distribution, and we are now in the latter.

[00:11:16]And so that is borne out and I think diversification is key. That's, you know, we've talked obviously said before cash, Ta bills, gold, bullion, low debt, um, real estate. I I think you go back to the Jacob Fuger portfolio, right? If we're in, broadly speaking, a time of wealth distribution and higher volatility and and things are crazy, I think you want to take away the tail risks. Your investor, there's only two tail risks.

[00:11:49]massive deflationary depression and hyperinflation where your currency is destroyed. I don't think either one of those are I don't think either one of those are going to happen. But let's say we want to take away both tales. I think the portfolio that does that is the Jacob Fuger portfolio we've talked about, which is 25% cash, 25% gold, 25% real estate, productive preferably, and 25% equities.

[00:12:13]And I would put Bitcoin in with gold, right, in in terms of where which bucket it fits into. Uh, so your tales are hyperinflation and depression. So you, let's say we get hyperinflation. Again, I don't think it's going to happen.

[00:12:25]Let's say we get it. You get hyperinflation. Your cash poof gone.

[00:12:29]Thank you. Gold to the moon. Real estate.

[00:12:34]Actually, in hyperinflation, real estate doesn't do well. It falls to crash cash values because nobody makes loans on real estate in hyperinflation because the value of the loan goes to zero overnight. So actually real estate in a real hyperinflation falls to cash value.

[00:12:48]So your real estate you still have a hard asset that goes up but it actually it doesn't do well and equities do really well. So there you go. Right. So worst case one you know right tail hyperinflation you survive. You're going to be fine.

[00:13:03]You're you've you've ported your wealth from one side of the chasm to the other.

[00:13:08]Let's take the left tail. Deflationary depression.

[00:13:12]Okay. Cash. Awesome. Do great. Gold, awesome, do great. Real estate, oof, get crushed. Equities, oof, get crushed. But here too, you have survived. You've thrived.

[00:13:24]You've ported your wealth from one side of the chasm to the other. So, as I look at this environment, and I, you know, it's been crazy. I think it's going to get crazier the next four to six years.

[00:13:36]Um, if anybody tells you that they know how this is going to go, including me, run. because they don't um for me that's how I'm thinking about it is just you know that kind of fuger balance take away the tail so I make myself really hard to kill as my friend Ratigan calls it and then I have low debt as well very low debt um so it's a lot easier to sleep and and I'm a big freedom guy and you can't if you have debt you're not free not at uh you are you're not free till you have no debt. And uh and quite honestly, if if if you're not in really good health, you're not free. You have a health debt.

[00:14:22]So, that's the other thing I think I would just kind of throw on there. So, with that, um again, uh this week, we do have a special on FFT tree rings. If uh you like these updates, 10 most interesting things, brief synopsis on each one, what grabbed their attention about them, if they are either uh confirming or changing a way we've been thinking about the world. Uh you sign up this week, you get four free weeks, a little bit more information down here in uh in the link. And as always, thank you very much for joining me. Appreciate it.

[00:14:54]And we'll talk with you soon. Go Cavaliers. Take care, everyone.