Gold, Oil, and Market Dynamics

Tom welcomes back Jesse Felder, publisher of The Felder Report to the show. Jesse provides a comprehensive analysis of current market conditions, highlighting several critical economic indicators suggesting significant potential risks ahead. He argues that the U.S. stock market is currently more overvalued than at any point since 1950, with valuation metrics indicating extremely limited upside potential and substantial downside risk. Felder emphasizes the market’s narrow breadth, noting an unprecedented number of trading days where the S&P 500 rose with fewer than 200 stocks driving gains. He also points to insider selling trends, which have been persistently bearish, signaling potential economic and earnings disappointments in the coming 12-24 months.

A key focus of his analysis is the declining U.S. dollar, which he sees as a critical indicator of broader economic shifts. Felder suggests the dollar’s weakness could catalyze a significant market correction, particularly given record foreign investment in U.S. markets and potential unwind of carry trades. Demographically and economically, Felder anticipates a stagflationary environment. He highlights how de-globalization and changing workforce demographics are creating inflationary pressures, while economic growth appears to be weakening. He sees particular opportunity in the energy sector, arguing that natural gas and oil are undervalued, with supply constraints and increasing electricity demand creating potential for a major bull market.

On monetary policy, Felder is skeptical of the Federal Reserve’s independence, suggesting potential political pressure could lead to more dovish policies aimed at managing government debt through financial repression. He draws parallels to historical periods like the 1971 Nixon shock, where currency devaluation and trade negotiations were used to address economic challenges. Ultimately, Felder recommends investors prepare for a potential market rotation, favoring natural resources and value stocks while being cautious of high-valuation momentum stocks. He sees gold and commodities as potential hedges against the anticipated economic environment of slower growth and persistent inflation.

Timestamps:
00:00:00 – Introduction
00:00:55 – Over Valuations & Markets
00:08:59 – Bearish Concerns?
00:11:04 – Surprise Correction Coming
00:13:23 – Treasury Cycles & Rates
00:15:44 – Dollar Demand Globally
00:20:36 – Fed & Powell’s Approach
00:23:37 – Fiscal Dominance & Inflation
00:28:02 – Big Picture Focus & Trends
00:29:36 – Stagflation Decade Ahead?
00:31:40 – Stablecoins & Treasuries
00:35:02 – Gold Mkts. & Fair Value
00:39:28 – Iran/Israel & Commodities
00:43:10 – Chevron/Exxon & Power
00:45:23 – Gold Demand Trends?
00:49:55 – Fed Q.E. & Gold Drivers
00:52:43 – Spending, Debt & Deficits
00:55:22 – Mkts. 6 Month Outlook
00:56:44 – Wrap Up

Guest Links:
X: https://x.com/jessefelder
Website: https://thefelderreport.com/
Articles: https://thefelderreport.com/blog/

Jesse Felder is the Founder, Editor, and Publisher of The Felder Report. He began his professional career at Bear, Stearns & Co. and later co-founded a multi-billion-dollar hedge fund firm headquartered in Santa Monica, California. Since moving to Bend, Oregon in 2000 and founding The Felder Report shortly thereafter his writing and research have been featured in major publications and websites like The Wall Street Journal, Barron’s, Yahoo!Finance, Business Insider, RealVision, Investing.com, and more. Jesse also hosts and produces the Superinvestors and the Art of Worldly Wisdom podcast.