Countries Are DUMPING US Treasuries And BUYING Gold And Bitcoin

0:00Hello, everyone. We've got a lot to discuss today. Central banks around the world are dumping U.S. Treasuries, and they are now buying gold hand over fist. We've got Bitcoin data that suggests this recent drawdown may be over. And Ryan Dietrich's here to discuss the current state of the U.S. economy. We're live today from the desk of Anthony Pompliano.

0:27Before we get into today's show, I need your help. We've got 19 ,910 subscribers on our YouTube channel, and my goal is to get to 1 million. In order to get to 1 million, we need to get to 20 ,000, and that's where you come in. I need you to hit that subscribe button right now. Let's get into today's show. All right, ladies and gentlemen, we're living through a very, very important shift in macro investing. You can see it clearly with a brand new development that hasn't happened in the last 30 years, three decades. So what is this development? Well, macro analyst Tavi Costa points out that foreign central banks now officially hold more gold than U.S.

1:01Treasuries. It's the first time since 1996. So let that sink in for a second. If you think that this buying streak is ending according to Tavi, just look at what happened in the 1970s. He says that this is likely the beginning of one of the most significant global rebalancings we've experienced in recent history. That's an important thing to pay attention to. So there's a few different reasons for this outcome in my personal opinion. First, the United States is debasing the dollar at an accelerated pace over the last half decade. The dollar has lost nearly 30 % of its purchasing power since 2020.

1:32Second, the United States has aggressively used sanctions against Russia, Venezuela, and other adversaries. This abrasive decision highlighted the risk that foreign countries have when they hold U.S. Treasuries as their main reserve asset. And maybe most importantly, the rise of Bitcoin, which has coincided with an epic run for gold. It has solidified the belief that sound money principles never go out of style when trying to transport value throughout time. Central banks are waking up to the idea that holding paper probably isn't the best strategy. Paper and treasuries can be printed at will.

2:03But hard assets, they're outside the control of anyone, and they cannot be printed. So what would you rather hold? Well, to me, the answer is obvious. But then there's an even more interesting way to think through this problem. If you hold U.S. treasuries, they may bring a negative real rate of return. Although the Fed continues to pair at a 2 % inflation number, the real rate of debasement is 4 % since 1971. This means that a treasury that's paying you less than 4 % is actually losing you money on a real return basis. So now you have a central bank around the world who says, wait, you mean I was holding an asset that could be created out of thin air.

2:39It could be confiscated by the US government at any time. And it was essentially guaranteed to lose me money? Well, makes sense why they've been dumping treasuries in exchange for gold. And eventually, I think that they will add Bitcoin to their reserves as well. We live in a world where everything is fake. The money's fake. The bonds are fake. The photos on Instagram are fake. And the food is even becoming fake. This means real things, things that have objective value through finite supplies or sound money principles. Those will become even more valuable over time. Fake is a fad. Hard assets are timeless.

3:12And central banks realize that. So I wouldn't want to fade the central banks. They're some of the most powerful institutions globally. They got a hell of a lot of money. They got a money printer. And one day, I believe that they will even accelerate their printing to buy more gold in Bitcoin. So you should upgrade your portfolio. Fortify it with hard assets. Sound money is the only money that ultimately matters. Bitcoin's price has been crashing and everyone keeps asking me, is the bull market over or will we go back up? Well, here to understand it better is analyst Frank Fetter. Frank points out that on the pullback to$109 ,000, Bitcoin tapped the oversold zone on the short-term holder MVRV Bollinger Band.

3:53The last occurrence was at the$74 ,000 bottom in April. Since then, Bitcoin's up 51%. Now, Frank also says that Bitcoin hit the short-term holder price, and it bounced like a kangaroo right off of it. And then lastly, Frank points out that the short-term holder capitulation is near. Their seven-day cost basis change is on the verge of flipping negative. Once they're underwater, they'll be dumping Bitcoin and we'll go right back up because the long-term holders will be back in charge. So again, there's lots of noise out in the media. There's plenty of people over social media who've got negative sentiment.

4:24All you gotta do is look right on chain. Look at the data. The data tells us, yeah, this drawdown, it's a drawdown for ants. And my guess is Bitcoin will be right back to future prices before we even know it. I've got a very special treat for all of you today. We've got Ryan Dietrich, a fan favorite. He's the chief market strategist at Carson Group, and he's back to help us understand the current state of the U.S. economy, what's going on in the stock market, and why he thinks that we are in a global bull market and all of the bears are wrong. Here's my latest conversation with Ryan Dietrich. All right, Ryan, these 90-90 days, I've seen you've been tweeting about this nonstop.

5:00I don't think a lot of people understand what is a 90-90 day and why is it so important to understand? Yeah, first off, they're rare, Anthony, but thank you for having me back. I appreciate this. So that was last Friday when the Fed, you could say, turned a little more dovish. We took a look at 90-90 days when 90 % of the stocks on the New York Stock Exchange were up and when 90 % of the volume on the New York Stock Exchange is up. This is super rare stuff. Like the last couple we've seen were coming off the COVID lows in March of 2020 and then just this recent April. So they're extremely rare.

5:33We just had one last Friday. Okay, well, what does it mean? Normally, they happen after weakness, and it means the weakness is over, right? 11 of 12. I went back to 1980 using data from our friends over at Ned Davis Research. Only 12 times this has happened, all right? A year later, higher, 11 times, up like over 23 % on average. No, I'm not saying 23 % a year from now, but these clues that we see are worth listening to. And one more thing to build to this, when we looked at it, Anthony, it was amazing to us how many of these 90-90 days took place with a major shift, meaning like early 2000, like when the Fed makes a change or when there's an interest rate policy change or some like major, major thing out of Washington.

6:11Well, again, we just had a major change, we think, with the Fed coming more dovish. History to repeat itself, it often rhymes. Mark Twain, I think this is a bullish event. Now, that is specific to the U.S. market, but one of the things I've also seen a lot of people debating is whether we are in a global bull market. And so the U.S. has done very well over the last few years. I think emerging markets have kind of been lagging behind. Other markets, people are kind of saying to themselves, hey, should I actually be looking there? Are they cheap stocks? How is that going to compare to the U.S. outlook?

6:40How are you guys thinking about a global bull market versus just a U.S. bull market? Yeah, I don't know how you can even argue it at this point, Anthony. I think we're in one, right? I mean, I felt like 39 different stock markets. They're all higher on the year, okay? So that's just one way to look at it. But we look at like Europe. I mean, Europe is breaking out above the peak from 2007. I mean, European stocks, as most listeners probably know, haven't done much for a long, long, long time. Well, they've taken the baton a little bit this year. Now, we still think the U.S. is just fine. We like the U.S., but the way we're managing the billions of dollars my team manages, we have some equal weight to developed international, specifically Europe.

7:12We have a little bit of emerging markets. We don't like emerging markets quite as much, but nonetheless, you look around the globe, there is a lot of strength. Because, again, the last couple of years, what happened? U.S. led, India led, and Taiwan led. Okay, that was about it, honestly. Now we've got leadership coming from all over the globe, and I think that's a really good thing from a diversified portfolio point of view. Because, again, last comment here, the U.S. isn't going to lead every single year. That's just how it works. We like the U.S., yes. But again, this year is a perfect example of why you'd keep a global diversified portfolio, again, tilting overweight to equities.

7:42That's how we've been doing it all year, and it's been working nicely. Now, when you start to look at, let's say, Europe versus maybe other places internationally, why is it Europe specifically? Is it just because you're looking from a technical basis? Are there other drivers that you're paying attention to, maybe central bank actions? Walk me through kind of why Europe specifically is so interesting. Absolutely. You know, what is Sir John Templeton? This time is different. the four most dangerous words. Well, one thing that caught our attention coming into this year, maybe let's call around February, March, Germany came out and said, hey, we're going to have a massive fiscal plan, right?

8:13I mean, that's not something Europe usually did. And we kind of looked at that and said, OK, there's something changing here. Again, you can argue it's some of President Trump's policies, to be honest. Everyone told us how bad tariffs are going to be for the global economy and how bad it's going to be for different countries. Well, the exact opposite is honestly happening. I mean, just look at the numbers, right? And again, now that we have Germany and different parts of Europe kind of doing things on their own, They're stimulating their economy on their own. At the start of the year, Germany, or not Germany, Europe is supposed to be 0 % growth, U.S.

8:383%. Well, now we're looking at probably 2 % each of us. It's all about expectations. And we think, again, maybe a little more upside in the growth in Europe specifically is a reason to have probably a little bit of allocation to develop international here. Now, when the ex-U.S. index is surging, does the U.S. draft off of that? Is there a world where when the U.S. goes up, they pull everyone else up with them and there's kind of a sloshing of money around the global economy? And then vice versa is also true when everyone else leads, the U.S. should catch up later. Or do you look at these as kind of separate and distinct economies and stock markets and there's not really that big of a relationship between the two?

9:14Yeah, I'd say separate because honestly, the last couple of years, U.S. was up a lot and the rest of the globe really wasn't. I mean, you could argue there's some years they go together. But I think the big thing that we have is we know at the middle of the year, U.S. is up 8 % or 9%. Most European markets up high teens with the U.S. place catch up. But I don't think we're catching up with Germany's over 20 percent gain. I mean, Mexico, Mexico, Mexico's up like 24, 25 percent on the year. That's not what they told us on TV a couple of months ago when all this stuff started. But with the U.S. place catch up, it doesn't totally catch up in terms of the absolute return by end of the year.

9:45Now, there's going to be a lot of people who are watching this and say, hey, I really like what Ryan's saying here. My whole portfolio is in the United States, Mexico, Germany, other places. How do I do that? Right. Is it a countrywide index? Is it I got to go and set up an account on one of these stock exchanges internationally? How are you guys working with your clients in terms of it's one thing to identify from like a data standpoint, say, hey, Germany is interesting. Mexico is interesting, but actually doing the action, the actionability of it. What does that look like? Yeah, great question there.

10:15I mean, we use a lot of those big ETFs. I'm kind of limited what I can mention, but it's not too hard to find them. Right. There's there's there's developed international ETFs, European ETFs, emerging market ETFs. Like you mentioned there, World XUS ETFs. I mean, honest to goodness, that's the easiest way to do it. Go 10 or 15 percent in one of those global ETFs that's XUS, and you're going to get a lot of international exposure, a lot of emerging market exposure. I mean, we're not warm and fuzzy necessarily in the foreign, kind of some of the smaller foreign markets, but they are really, really exploding higher as well.

10:46So there's just so much global strength out there. That's an easy way to do it. Now, I've seen you talk about hidden inflation risks, maybe specifically related to the stock market here in the United States. What are you guys seeing there? Yeah, that's one of the things that we've kind of come out at that we don't think the Fed's going to cut quite as much. I think a Fed cut's coming. I mean, one thing for listeners, when the Fed cuts near all time high a year later, the S &P is higher 20 out of 20 times. They're going to cut in September. That's hopefully a good sign to think about. But when we kind of peel back that onion, we know good services are trickling up a little bit because of tariffs.

11:15We all get that. And what did Powell just say last Friday? It's probably a one-time tax, a one-time jump in pricing. We agree with that. We've said that all year. But all of a sudden, services pricing is starting to go higher, right? The producer level, PPI, had an eight sigma event in terms of how much that beat. Just keep this simple. So this happened once every 6.2 billion years. It happened two weeks ago, all right? So we're not saying inflation is coming soaring back. But it's something we're watching very, very closely because I work with a real smart guy named Sonovar Geese on our team who really dives into this stuff.

11:44He's saying for a couple of months, there's a couple of things in inflation he's not too warm and fuzzy about. But the honest truth, the labor market's been slowing down a little bit more. And that's why the Fed said they're going to cut, probably going to cut a couple of times this year. And all in all, hopefully the market likes that still. Now, that inflation, are we able to pinpoint what's driving it? Is it the tariffs that are driving it? Is it monetary policy? Is it something else? How do you start to identify what is the source of the inflation? And does it matter? Or is it just, hey, inflation is going to be back and that's the price they're going to go higher?

12:12Yeah, a lot of levels to this one. I mean, like frozen vegetables were up 40%. I mean, that's probably a one-off thing, but you've got these different things that are taking place. Honestly, though, when we look at it, you can look at like, go to St. Louis Fed, pretty easy website, public website you can use. You can look at like CPI, right, consumer prices, and look at services and look at goods. Well, goods have been trickling higher, but services have also. Services is a very, very big part, and that's a part that, again, has caught our attention. Now, the other side of this, you know, I mean, well, I think you were talking about housing in a second, but shelter shelter has been kind of pulling back a little bit for a while.

12:47We expected that to pull back on inflation. And again, it's kind of evening things out a little bit. And I'll put a bow on this. You know, I don't know if people are going to listen to this, but on Friday morning, we get the Fed's favorite measure of inflation. So they tell us the PCE. We'll see what happens with that. But again, that's going to be really important because that's been trickling higher. I believe it's four months in a row now. It's been kind of inching, inching higher. And we'll just have to dive in and see what it does. And one of the things about inflation that I always get a good kick out of is inflation can go up, but it can come in lower than expectations.

13:16And people will celebrate that. Now, how do you guys look at the relationship to the expectations versus just the raw increase or decrease of the inflation number? That's a great point, because what was inflation like nine, 10 percent, you know, in the summer of 2022? And then it started going down to seven percent. Oh, seven percent inflation. But the market loved that. But I mean, the thing I've learned in the 25 years or so I've been in this industry, markets don't care about good or bad. Markets care about better or worse. Markets care what's priced in. And again, that's why you have these big rallies, even though the data is not great sometimes because it's better than expected.

13:50That's why we just had this rip roaring almost 30 percent rally off those lows in April because everybody was telling us it's going to be recession. I would tell us we're going to have massive inflation, massive inflation because of these tariffs that are coming in. And that's not been the case. And that's, again, why we're literally hitting all time highs globally the time we're doing this. I think it's more about those expectations. But, you know, the good news is, hey, have me back and we'll talk a little bit more about this inflation if we continue to see problems. Now, you mentioned that housing is pulling back a little bit.

14:14I think that we have seen home prices drop for four straight months, which is interesting because all I see in the headlines is how unaffordable housing is, which both things are true. Right. Homes are very unaffordable. I saw a stat recently that if you go back to like the 70s, people used to have a home price that was about two and a half times their income level. Now it's seven times. So there's a very material increase in the relationship between how much money somebody makes, what the cost of a home is. But it has been going down for four months. So is that progress or is this not nearly enough to make a dent in kind of affordability?

14:49Yeah, I think it's a little bit of both of what you just said there, because the honest truth, we know with interest rates where they are. We were in the opinion back in January, February, the Fed should have been cutting. And then the tariff stuff started. The Fed had to kind of be on pause. Now we're looking at the second cut in September, two years in a row. You know, the reality, though, again, is the Fed cut a couple times last September, last September, November, December. What did interest rates do? They went straight up. Kind of not quite what you'd expect to happen, but that is exactly what happened.

15:14So where we are now, we do think the Fed should be cutting a little bit. You talk about the economy. Consumer's OK. Got a bunch of retailers coming out this week saying the consumer's pretty darn good. All in all, you can always pick pockets of weakness. I understand that. We get it. But overall, consumers are still solid. But where are the weak parts of this economy? It's clearly housing. And we know why. It's because interest rates, right? Interest rates are probably still a little bit too high. Yeah, I've got some minor inflation concerns, but we don't need 4.5 % Fed funds rate right here. So again, that's why the door is wide open.

15:39I mean, what's the market say? I'm a message of the markets guy. The market's saying we're going to get five rate cuts over the next year because it knows there's a new leadership in the Fed coming in May next year. And it's probably going to be somebody dovish because President Trump gets to pick it. So we'll see. But the market's going to start sniffing that out, in our opinion. And again, that's where probably some lower interest rates are coming. And that's going to help that housing market in a big, big way, help some of that affordability when you look at your mortgage and say, oh, my goodness, I can't move to the house.

16:02But hey, you take off 100 basis points, that's probably going to make a big difference. Now, what's interesting to me is as the stock market has gone up and asset prices have gone up, investors are celebrating. They have exposure in their portfolio. They're making more money on paper. That's a good thing. You would also expect, though, investment bankers, companies, and investors to be demanding, pulling companies through the IPO process because, you know, feed the ducks while they're quacking, right? If everyone's all excited, bring the companies public. We haven't seen that many IPOs yet. Doesn't mean we won't get them, but so far this year, we've not seen that many IPOs.

16:34But you shared a data point recently that said the average IPO company is up 35 % on their initial day, which seems pretty good, right? That seems really good. That's my friend Callie Cox at Ritholtz who did that data there. But yeah, we haven't seen a ton of IPOs, but we all turn on TV and the ones that have happened have really, really done well. So you got to think you look around. A lot of other companies are going to see that. We're going to see that. But you talk about markets like, yes, people are feeling pretty good. But I travel the country all the time and present and talk and do industry events.

17:03I'm telling you, Anthony, people are not wildly excited. I mean, this is not like late 2021 or other times when it just felt over the top. Just today, we got something called the AAII cinnamon poll. Hope I get it right on recording this live. American Association Individual Investors. There it is. cinnamon pull. All you got to know, four weeks in a row, more bears than bulls. We're hitting all-time highs. We're not seeing over-the-top optimism, which from a contrarian point of view is a quite positive thing. Honestly, if we start seeing a ton of IPOs, then I'll start looking around wondering, are we getting a little late 2021-y with a little too much excitement?

17:37We're not there, which again is, I think, structurally bullish. Now, when you see more bears than bulls and we're hitting those all-time highs, does that tell you that that's where the market's made and actually we've got a lot more room to run? Or do you start to say, hey, wait a minute, maybe the quote unquote masses are right and they're all of a sudden woken up and they're smart and they say, hey, right around the corner is a crash. Well, I'm going to take the opposite side, which is the masses are usually wrong, right? If everybody's thinking alike, somebody isn't thinking, General Patton, I mean, I still see a lot of trepidation, still see a lot of worry.

18:09What's been fascinating, I think you and I talked about this before though, off these lows, the retail crowd's been buying, retail crowd's been fairly optimistic. It's the big hedge funds, big institutions that have been scared to death and been listening to too many of the scary bears on TV telling you how bad it's going to be. So I think it's really nice that the smaller retail crowd's done better. But even then, again, someone who works with retail crowd every single day with financial advisors all over the country, I just do. I never get asked. I was in Augusta, Georgia, yesterday. Great crowd.

18:34Had good conversation. Trust me. Nobody said, hey, Ryan, this is great out there. How high is this thing going to go? I've never heard that question yet. And I used to hear that question, you know, in a past life. So I think that's a comforting sign from a contrarian point of view. Expectations are low. We keep beating those low expectations. And I think it's bull market keeps going. Now, in the Bitcoin world, there's these four year cycles. And if you look at those four year cycles, we should expect if they hold somewhere in the October, November timeframe, that would be the peak of the market, which also happens to be around the same time that we peaked in 2021.

19:06And we kind of go down and we enter into a not so fun time for, you know, 18 months or so. So the stock market historically has at times followed. Obviously, in 21, when we peaked, we then got all the interest rate increases and there was kind of a macro environment that really accelerated this. Do you think that the bull market from a timeline standpoint, is it a, hey, later this year, we think is kind of it and runs out of gas? Do you think that this is like a multi-year thing? How are you guys thinking about not necessarily how high, but how long it can last? Well, those are great points there because next year is a midterm year.

19:39and historically from a stock market point of view, midterm years are like the weakest year by far, right? So that's something that's in the back of our head. We're thinking about also markets don't always like new Fed leadership. There's usually some volatility around new Fed leadership. So you got that coming in May next year. You got a midterm year. These are things we are thinking about, but to answer your question specifically, this bull market will be three in this October, right? October, 2022, so this bull market will be three. We looked at the last five bull markets that made it to this point going back 50 years.

20:08The average was eight, the length of eight years. The shortest was five, had an 11 and a 14. So I call this, it's like a cruise ship. Bull market's like a cruise ship. They're hard to slow down. They're hard to stop. And they're really hard to turn around. Yeah, 100 year pandemic stopped it before. And then we had the terrible war in 22 and interest rate spiked. And the Fed was way behind the eight ball, honestly, I think looking back. But the reality is this is likely a global bull market. It's a strong bull market in the US. that probably has many, many more years left to it is how we see it.