Fighting Fire With a Toy Water Gun By Charles Sizemore, Chief Investment Analyst, The Freeport Society Note from Michael Salvatore, Editor, TradeSmith Daily: If you take our government leaders at their word, all is well and dandy with the U.S. economy.
But when you look deeper, you start to see troubling trends coming together. The ongoing crisis in commercial real estate, rising tensions with China, and the crumbling of the American Dream are just a few.
Charles Sizemore has made a point to reject the establishment narrative, uncovering the truth of the economy you'd never hear about elsewhere.
In today's guest feature, Charles discusses the two biggest economic issues he's seeing right now… and offers a bold strategy for taking advantage of all this hidden chaos… |
Whenever I watch a press conference out of Washington, D.C., I'm reminded of the quote often spuriously attributed to Albert Einstein…
"The definition of insanity is doing the same thing again and again and expecting a different result."
It's abundantly clear that our leaders have no idea what they are doing. They really are just putting on a good show, flying by the seat of their pants, and hoping the rest of us don't catch on.
But it is not working.
Remember when Federal Reserve Chair Jerome Powell kept telling us that inflation would be "transitory?" Although, I suppose "transitory" could mean that it wouldn't literally last until the end of time… if we want to make an academic argument about the accuracy of the language.
But let's get serious…
We have people fighting inflation they never expected and clearly don't understand with tools that haven't worked, hoping — just hoping — that maybe this month will be different. They're fighting a fire with a toy water gun.
That's our reality.
Now Powell's out here saying of course his interest-rate policies have had "the effects that we would hope for." "The evidence is pretty clear," he says.
Jerome Powell seems pretty happy with the state of affairs. But if you look past the press conferences, you start to see lots of areas of the economy buckling under the Federal Reserve's weight…
The Real Wave of Distress Is Starting Pimco, one of the world's largest bond managers, reported recently that more regional bank failures are in the cards.
"The real wave of distress is just starting," according to John Murry, Pimco's head of global private commercial real estate. "The combination of rising rates plus recessionary pressures creates real challenges for commercial real estate, from both a capital markets and fundamentals perspective."
In other words, the properties themselves are in a real mess.
Their borrowing costs are resetting higher, but their tenants are in no position to pay higher rent…
And most are still happy to make do with less square footage than they had before the pandemic.
These rough fundamentals make the loans toxic. Few investors are willing to buy commercial real estate debt at anything close to face value.
How bad is it exactly?
A good 20 years ago, as a lowly risk analyst, I used to work in the Burnett Plaza tower in Fort Worth, Texas. It's the tallest tower downtown, and it dominates the skyline. From its upper stories, on a clear day, you can see the skyline of Dallas 35 miles away.
Well, it just sold at a foreclosure auction for a measly $12.3 million. Three years ago it was sold for $137.5 million.
More than $125 million in value just… evaporated.
When you have downtown office towers selling for less than 10 cents on the dollar, you have the potential for major, systemwide chaos.
And if only it stopped there…
More Ominous Words Billionaire hedge fund manager Ray Dalio was in the news recently with some of the most ominous words I've heard in a long time. He noted that while presidential candidates Joe Biden and challenger Donald Trump are very different across a wide range of issues, they are virtually identical when it comes to trade, and specifically trade with China.
One of the founding themes of The Freeport Society is that globalization is dying and that the foreseeable future will be one of deglobalization, with all of the inflationary consequences that entails.
But Dalio took it further, noting that "economic warfare precedes military warfare."
Just. Bloody. Fantastic!
Apart from inflation, Fed incompetence, and a slow-motion meltdown in the regional banking and commercial real estate sectors… we have a potential hot war with China on the horizon.
The recurring theme here is chaos.
We live in an "Age of Chaos," and that's not changing. We can either bury our heads in the sand or we can accept this as true and invest accordingly.
In an Age of Chaos, it pays to stay nimble… and to follow the money.
It also pays to consider an age-old investment strategy from a completely fresh – dare I say "revolutionary" — perspective.
And if you throw in the input of one of the top fintech companies in the world… you have a quant-driven strategy that could help you not only survive this Age of Chaos, but thrive despite it.
I've just released a new video detailing how this works. Be among the first to watch it here.
Here's how we're going to turn this chaos into opportunity…
RECOMMENDED LINK Between now and June 30... Luke Lango predicts Elon Musk will shock the world with "Project Apollo." He believes it will mint new millionaires because... According to Elon, "[Project Apollo] has the fastest rate of innovation maybe ever for any internet company."
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It's Time to Start Thinking About Money Differently Money has no memory. And nobody cares where your money came from (so long as it's legal).
The store… your doctor… your kid's school… your dentist… that fancy restaurant… none of them cares whether you earned that $100 you're spending with them from selling handmade, crocheted doilies… Ubering for extra income… investing for the long term… investing for income… or trading.
Those dollars in your pocket are the same, no matter where they came from. So, why stick to the old rules for income investing?
To mainstream financial journalists, "income investing" means buying stodgy old assets like big blue-chip and dividend-paying stocks, government bonds, and corporate bonds.
But unless you're already a multimillionaire, that won't cut it.
To generate the kind of income that generates true wealth, never mind just covering the basics of maintaining your lifestyle into and through retirement, would require a significant capital infusion into those traditional income investments. I'm talking upward of $100,000 per stock for the dividends or interest payments to be worth anything.
So do yourself and your future a favor: Don't stay beholden to the traditional income-generating strategies. They are useful, yes. But there's a better way that you can add to your toolbox.
It's an income strategy that can pay out as much as $5,000… $6,000… or even $10,000 a month. Regardless of what the markets are doing… where interest rates are… what happens with inflation… or how bad the Age of Chaos gets.
We call it the C.H.A.O.S. Cash System, and we developed it in partnership with a top fintech firm. It stands for Comprehensive Hedging and Algorithmic Optimal Strategies.
In these unprecedented times where a 0.1% drop is enough to send investors into a happy dance, ensuring your wealth is protected has never been more vital. The C.H.A.O.S. Cash System aims to be the lifeline you need.
Click here to watch the presentation I put together to explain how this system works.
To life, liberty, and the pursuit of profit,
Charles Sizemore
Chief Investment Strategist, The Freeport Society |
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