The Weak Jobs Market Will SEND STOCKS HIGHER (Yes, Seriously)

0:00Hello, everyone. Today, we've got a big show for you. First up, we've got the job market is getting weaker. and we're going to unpack why that's happening and how asset prices are actually going to go higher. Then we see Bitcoin, all of a sudden there's none of it left on exchanges. And Peter Schiff, the GOAT, he's here to break down the U.S. economy. We're live today from the desk of Anthony Pompliano.

0:29Before we get into today's episode, I need your help. My goal is to get to 1 million subscribers on YouTube right now. We're just over 29 ,000 subscribers, 29 ,072. Hit that subscribe button and let's get into it today. All right, ladies and gentlemen, the Federal Reserve cut interest rates back in September. They all did this under the guise of addressing a weakening labor market. It didn't matter that the data said, hey, yo, Fed, you should have already been cutting rates much earlier in the year. The central bank instead just said the labor market's weak. That's why we got to do it now. Jordy Visser, somebody I talk to every weekend, he's been pounding the table to point this out.

1:04He says that this is proof the Fed is more worried about the job loss than they are about inflation. I don't disagree with him. But this development begs the question, why is the labor market weakening? Apollos Torsten Slock, he took a stab at explaining the slow job growth. In that, he writes, there are three reasons why job growth is slow. Lower immigration, AI implementation, and fewer government jobs. He says specifically, at the current level of GDP growth, non-farm payrolls should be$263 ,000 every month. Second, a key reason for the slow job growth is that the growth rate in foreign-born labor force has been significantly weaker than normal.

1:40If fewer people are looking for jobs, that means fewer people get hired. The third thing he says is AI implementation, it's likely improving productivity. And fourth, government job growth was artificially high in 22, 23, and 24. Combined with those, government job growth is now returning to more normal levels. So the bottom line, he says, is that the weak labor market is not due to weaker labor demand, but rather to weaker labor supply because of immigration, AI, and normalization of job growth in the public sector. So this analysis by Torsten is very, very important. Pay attention to it. It highlights three major trends that are unlikely to change in the near term.

2:17So that suggests that the labor market is going to have continued weakness, which means that the Fed is going to keep bringing the cost of capital lower and lower. But here's where things get interesting. As the Fed cuts rates lower, we should expect asset prices to go higher. Think about that for a second. Investors and corporations salivate over cheaper capital. They can push further out on the risk curve. Companies can invest more in R &D, and investors can pour more capital into various assets. And a very simple way to think about this, the lower the labor market goes, the higher asset prices are going to go.

2:49But that's nearly the complete opposite of what had happened in history. Usually, a weaker labor market means a recessionary period, and that means that asset prices go down in a recession. But the inputs to this weaker labor market are not structural issues. Rather, they're signs that companies are becoming more productive and efficient, and the U.S. government is becoming less bureaucratic and bloated. Those are both big wins for the private sector. So moving forward, weak labor market, all-time high asset prices. Welcome to the future. Everyone knows that Bitcoin's price is driven by supply and demand.

3:22That's why recent data from Binance Research is worth paying attention to. Bitcoin and ETH held on exchanges has been falling since 2022 and 2020, respectively. Binance Research says that in their respective past peaks, Bitcoin held on exchanges has fallen 17 % and ETH held on exchanges has fallen 60%. Meanwhile, Bitcoin and ETH held in ETFs continues to rise. Bitcoin and ETH cumulative ETF AUM has reached new heights for both of them, and that represents anywhere between 3 % to 6 % of their respective market caps. This, according to Binance, signals market maturation and stable capital flows via ETFs reduce short-term speculation, which obviously increases reliance on macroeconomic and sentiment-driven momentum.

4:07Binance says as institutional investors gain influence, we should expect extreme volatility and speculative swings in major crypto assets to diminish. So we have crypto assets on exchanges disappearing. It's at all-time lows, but ETFs are seeing tons of inflows. That is a change in the market. And ultimately, that is going to mean a change in the volatility of these assets. I've got a very special treat for you guys today. Peter Schiff, not only a friend of mine, but somebody who really understands the economy. He's here to break down what's the state of the U.S. economy. Why is gold in a big bull market?

4:40How should we think about silver? Has he changed his mind on Bitcoin? And what does he give as a grade to the Trump administration for their new economic policies? Here's my conversation with Peter Schiff. All right, Peter, I thought a great place to start the conversation. Let's just let you get your victory lap out of the way. Gold's at an all-time high. Silver's at an all-time high. What is driving the bull run in precious metals? Well, I think what you're seeing is the acceleration of de-dollarization that began really a couple of years ago. I think what started it in earnest was the Biden sanctions against Russia, which really was a wake up call for the rest of the world that they need to get get rid of dollars.

5:24They need to have a a more secure reserve that can't be just confiscated at the whim of the United States. And then I think it accelerated with the election of Donald Trump and the complete reckless and irresponsible spending by the Trump administration, despite the fact that Trump campaigned to try to do something about the reckless Biden spending. He made it worse. The big, beautiful bill just, you know, expanded on the excess spending and made it clear that we're never going to get our house in order. Then on top of that, Trump imposed the tariffs and vilified a lot of our trading partners for basically participating in the dollar's reserve currency status.

6:13And he's beating up the Fed about how stupid and what a moron Powell is. And we've got to slash interest rates and he's trying to fire the FOMC members that he disagrees with so he can put his own cronies up there. So really throwing into question the independence of the Fed. And so we basically told all the foreign central banks, get out of dollars, get out of treasuries. You're going to get wiped out to dollar debasement, that inflation. And where are they going to go? There's only one alternative, one viable alternative to the dollar, and that's gold. They're not going to move into euros or pounds or Japanese yen or RMB.

6:58Gold is the one monetary asset that all these central banks can rely on. It is the system that dominated pre-Bretton Woods. And even in the initial years of Bretton Woods, up until 1971, even though the world was using the dollar, the dollar was redeemable in gold. So the world was still backing its currency with gold, even though they did it through the U.S. dollar. But now I think just like we went off the gold standard in 1971, the world is going off the dollar standard and it is going back on a gold standard. And now what's also significant is Wall Street has finally woken up to this reality.

7:41And now you're seeing major Wall Street banks that have never recommended gold now saying that their clients need to have exposure to gold, whether it's 10 percent, 20 percent. It's now something that, you know, mainstream investors are finally going to start to participate in. And prices, I think, are just going to head ballistic from here. Silver just hit a new all-time record high. It's above$51. We finally took out the peak from 1980. I think we're going to be at$100 pretty quickly. We could even be at$100 next year. And I think gold, which is now above$4 ,000, has a shot at$5 ,000 by the end of the year.

8:24But it may not get that high this year, maybe$4 ,500. but I think 5 ,000 is definitely in the cards for 2026. In fact, we could be at 6 ,000 or higher next year in gold. All right. So let's unpack some of what's happening in the gold market. Let's first start with gold as an allocation in a portfolio. In 2014, I saw a clip online of you saying that gold was going to go to$5 ,000 and you're getting laughed at, right? I mean, they're just, frankly, they're just clowning you on television. And it took a while, but here we are, gold is definitely headed to that. And so I think that you're going to get a little bit of a victory lap, although the critics will say it took too long.

9:00But that case is gold is also outperforming stocks over the last 25 years. Gold's outperforming stocks as well over the last five years. And so I think a lot of people are saying, wait a second, maybe this should be in my portfolio. I have seen Ray Dalio say that gold should be a 15 % allocation in your portfolio. I have now seen people say the 60-40 should actually be 60 % stocks, 20 % bonds, 20 % gold. How do you think about gold in a portfolio? Yeah, I mean, the reason I put that clip from 10 years ago up on my X account, and that was when gold was at$1 ,200, right? But that was typical of the way I was treated on like a CNBC when I recommended gold.

9:46Everybody laughed at it. They said it was a stupid investment. They said that the only reason I'm recommending gold is because I'm a skull salesman and I'm just trying to get people to buy gold. And of course, they never said that to stockbrokers, of course, which I also was. But you have all these investment advisors and stockbrokers recommending stocks and they never question their objectivity. They don't question the objectivity of the Bitcoin community. Somebody comes on like a Michael Saylor and says, buy Bitcoin. No one says, well, come on, Michael, you're only saying that because you're leveraged and loaded up with Bitcoin.

10:18No, it was only me who recommended gold that they just accused me of just talking my book and being disingenuous and trying to scare people into this lousy investment. And the bottom line is it was a good investment. Most people have done better in gold than in the stock market over 10 years, 25 years. And they're certainly doing a lot better in gold this year by a long shot. They keep talking about the record highs in the stock market. This is one of the worst years ever for the U.S. stock market if you price it in gold. So gold investors are doing a lot better. But my point is that now, finally, people are not getting laughed at for recommending gold.

11:04Now you have, okay, yes, maybe we should have gold in a portfolio. Yes, they should have had it in their portfolio 25 years ago. But the fact that they're now starting to include it, not only does that basically validate what I've been saying all along, but it means that the demand for gold is about to go through the roof because central banks are going to keep buying. They have a lot more gold to buy than they've already bought. But now they're going to be competing with private investors, both institutional and retail, in this market. it. And, you know, I have this gold company called Shift Gold and sales for the last three years have been very lackluster.

11:52I mean, it's, you know, it's not like gold has been going way up. It's doubled more than doubled in the last two years. Yet business has been slow because people were afraid that gold's topped out. You know, I don't want to buy the highs. So a lot of the normal buyers have been on hold. Now everybody is starting to realize that the sky's the limit on gold, that there is no top because there's no floor to the dollar. That's really what's happening. The dollar is going to be losing a lot of value as we open up the spigots. The Fed is cutting interest rates into rising inflation. Not only is inflation well above the 2 % target, but it's headed in the opposite direction.

12:31It's going up, yet the Fed is cutting rates anyway. I think by next year, They'll be back at QE because they're going to try to keep long-term interest rates from rising, which is what they're going to do. We're going to see a backup in interest rates as the world sells treasuries to buy gold. In fact, you mentioned Morgan Stanley said the 60-40 portfolio should be 60-20-20, where you cut the bond allocation in half. So if all these Morgan Stanley clients sell half their bonds, which would be a lot of U.S. treasuries to buy gold, not only does that push gold up, but that pushes treasury bonds down and pushes yields higher.

13:09And the Fed doesn't want higher yields. Trump doesn't want them. So the only way to bring them down is massive quantitative easing, which is just going to drive even more demand for gold because all that is is more inflation and more reasons to get rid of your dollars. Before we get into some of the structural macro stuff, China, their central bank has been a big buyer of gold. You may argue, actually, that China has been the catalyst for a big part of this move in gold. What is going on there? Is this a true decoupling? Are they preparing for something? Is there some strategic decision that they have made?

13:43Is it the Russia sanctions? How do you evaluate China's central bank buying so much gold? Yeah, well, first of all, we've made it clear that China is our enemy, right? And so China recognizes that despite the fact that they're our biggest supplier of goods and one of our biggest lenders. Right. So talk about biting the hand that feeds you. We have owed a lot to China and we've basically framed them as our enemy. And so why would our enemy want to hold its reserves in U.S. dollars and U.S. treasuries where they're extremely vulnerable? So I think China is completely divesting. It's on that path of replacing its dollar reserves with gold reserves so it can truly have an independent monetary system.

14:31I think eventually they're going to de-peg the Hong Kong dollar from the U.S. dollar and maybe peg it to an RMB that I think ultimately will be backed by gold. I think the Chinese are headed for a Chinese currency that is a back buy and maybe even convertible into gold just the way the U.S. dollar was once upon a time. I think that is the direction that they're going. And, you know, China is the world's biggest gold producer. So they have a lot of gold in China that they're producing. They just don't export any of it because the Chinese government buys it as fast as they could dig it out of the ground.

15:07All right. Now, one of the things that has become very popular over the last, I don't know, three months is the idea of a debasement trade. And the debasement trade is basically gold and Bitcoin. Hold Bitcoin for a second. We'll get to that in a minute. But the debasement trade, I think, is different than an inflation trade. And one of the stats that I think people don't realize is that the M2 money supply is growing two and a half times faster than US CPI. And so you actually have the currency circulation is exploding, which is related but different to CPI and inflation. Describe why you think the debasement trade narrative is now taking hold.

15:48Well, people are recognizing the path that we're on. I mean, the idea that the Fed is going to maintain 2 % inflation is now a complete fiction. Nobody believes that anymore. I don't even think the Fed believes it. And I don't even know that they have a target anymore. In fact, the only reason they had a 2 % target was because we were below 2 % for a while. And so they invented that target as an excuse to create inflation. But now that we're well above 2 % and they still want to create inflation, there is no target. But people are appreciating that fact and they're starting to get out of dollars and into other assets, whether it's gold, stocks, or crypto.

16:29I mean, I think the people that are choosing Bitcoin are making a mistake, but they're choosing it for that reason. They think they're getting out of the dollar into something, something better. And the CPI, right, when you're looking about inflation, the CPI is a very flawed measure of the effects of inflation. And that is by design. It's not a coincidence that the government designed a methodology for tracking inflation that understates how much inflation there is. because the government creates inflation on purpose. Inflation is a tool that the government uses because it solves a lot of their problems.

17:07Of course, it creates problems for the people, but governments love inflation. But since the people don't, government wants to create inflation, but not let anybody know how bad it is. And so that's why they shouldn't be the ones that track consumer prices, but they do. So the CPI doesn't really capture what's going on. So if you look at the CPI and, oh, prices are going up 3%, that's not even close to reality. You have to at least double it, if not more, to get a more realistic assessment of how much prices are going up. But what really is inflation is not prices rising. That's an effect of inflation.

17:45Inflation is an expansion of the money supply, which includes credit. So as we get more money and more credit into the economy, that's inflation. And we have massive, not only monetary growth, but credit growth. And that's what's fueling the debasement of the US dollar, which is why prices go up. And it's why people now want to get out. They want to get out of their US dollars and into something that will retain its value. Now, we see the Federal Reserve, historically, people talk about inflation and interest rates, and those are intertwined. But the Federal Reserve cut its rates in September and their excuse or their reason was the labor market.

18:25They said, hey, there's this weakness in the labor market. That's the reason why we're cutting. We aren't worried about some sort of inflationary thing, or at least we're less worried about inflation than we are about the labor market. There's the economist from Apollo, Torsten Slock, who recently came out and he talked about the fact that we are seeing weakness in the labor market because of immigration, a lack of immigration. We are seeing the AI implementation. and then also we're seeing less government jobs get created. And so when you look at this, how much is the Fed actually going to fuel the rise of these asset prices?

18:56Because historically, when we had loss of jobs, that was recessionary. Now it seems like if we get weaker job market, the Fed is actually going to push asset prices higher. It's almost the opposite of how it's historically been. Yeah. The Fed is using weakness in the labor market as an excuse to cut rates, as if rate cuts are going to strengthen the labor market. They won't. I mean, the labor market is not weak because interest rates are too high. I mean, interest rates are too low. I mean, that is one of the problems in our economy. The reason we don't have enough domestic savings, the reason we don't have enough manufacturing is because we've had interest rates too low.

19:33We've had excess consumer spending, excess borrowing that has inhibited real economic growth. So what these rate cuts are going to do is just strengthen inflation, not the labor market. And I think the rate cuts are actually going to weaken the labor market because higher inflation is going to dampen real consumer spending and it's going to lead to more layoffs. So what the Fed is doing is not going to work. Now, the other thing they're trying to do is prop up the housing market because home prices are too high and they need to come down. But rather than letting real estate prices fall, which is the obvious solution to the affordability problem, the Fed wants to drive mortgage rates down so that people can borrow more money to overpay for homes.

20:22That's not going to work either because mortgage rates aren't going to come down. I mean, the only rates that may come down would be the short term rates. So you may start to see more people taking a risky adjustable rate mortgage in order to get a payment that they can actually swing. But we've seen that movie before and we know how it ends. Now, when you start looking at the Federal Reserve, there's been a lot of questions about independence of the Fed. I think that there is something about gold and Bitcoin, which is I don't have to trust anyone. There's no monetary policy that's being set. There's no kind of backdoor meetings.

20:57There's no pressure from politicians in terms of what's going to change about these assets. The Fed is the complete opposite. And it seems like that's now coming to a head. And there's the political pressure. But also, there's a lot of folks just saying, look, regardless of which political aisle I'm on, these people are not the independent, unbiased folks that everyone has been saying that they've been. Yeah, well, I mean, first of all, I've always believed that Fed independence was a pretense that behind the scenes, the Fed and the U.S. Treasury, you know, worked hand in glove. But they didn't want that perception to be there.

21:32They wanted our creditors to believe that there was independence and that there would not be political pressure on the Fed to just create inflation and, you know, debase the dollar. Because if you're a creditor of the United States, you want to know that the value of the dollar, you know, is going to be maintained and not sacrificed for political expediency. But I think what the Trump administration is revealing is that that pretense is a pretense, that there is no legitimate Fed independence, that the Fed is very much political. And that is the problem because you destroy that pretense. And now why hold dollars?

22:15Because obviously a country that has as much debt as we do, there's a lot of political pressure to create inflation, to repudiate that debt rather than to honestly repay it. And so why would you want to be a creditor if it's obvious that you're not going to get paid? That, yes, you might get your dollars back, but by the time you get them, they won't buy very much. So why not get rid of them now? And so this is the danger that we're facing. We're accelerating the realization that this is just a pretense and that the Fed is an arm of the U.S. Treasury, which is it's not supposed to be. It's supposed to be completely independent.

22:54And, you know, the reason that it's independent and it's a private it's you know, it's not a government agency. It's private. The reason was because the Constitution didn't even authorize the federal government to issue paper money. So it couldn't do it. So it created a private enterprise of the Federal Reserve banks that could do what it constitutionally had no authority to do. But I mean, today, you know, the judges or the justices of the Supreme Court are unlikely to enforce the monetary restraints that are imposed by the Constitution. But they very well may uphold Trump's ability to fire Lisa Cook by claiming that the whole concept of an independent Fed itself is unconstitutional and really let the world know who controls the printing press.

23:46All right. I want you to take off your gold hat for a second. I want to put I want you to put on your hat of a truth teller. I want you to be a serious person and I want you to explain to me why gold has outperformed Bitcoin so far this year, up over 50%. Bitcoin's up about 30, 35%. But over the last five years, gold's up somewhere in the ballpark of 100%. Bitcoin is up 1 ,000%. Why do you think that Bitcoin is not valuable? Or have you changed your mind? You now own Bitcoin and maybe think that gold and Bitcoin is the debasement trade that everyone should be allocating to. Well, the reason that Bitcoin is up that much is because there was a big drop in Bitcoin and then it had a huge rally.

24:28Right. But if you if you look at the peak from Bitcoin, which was in 2021, when they had, you know, right after the the ETFs came out and all that or or there was, you know, Bitcoin got up to sixty nine thousand in in in November 2021. And at that time, gold was around 1900. Today, Bitcoin's around 123 ,000 and gold is over 4 ,000. Bitcoin is about 15 % lower today than it was at that peak priced in gold. And so to me, that was peak Bitcoin. Even though technically in August of this year, Bitcoin got a little bit higher than that in terms of gold, but not much, but has since collapsed. I mean, Bitcoin then declined by a full 20 % price in gold.

25:25All right. Maybe it's down about 18 % right now from its peak from August. I want to make a bet with you. I want to make a bet. This is a gentleman's bet. Right now, gold is up over 50%. Bitcoin is up somewhere 33%, 35%. By the end of this year, I believe that Bitcoin's 2025 return will be higher than gold. If I am right, you have to tweet out and say, Anthony Pompliano was right, Bitcoin beat gold this year. But if I'm wrong and gold outperforms Bitcoin in 2025, I'll tweet out and say, Peter Schiff was right, gold outperformed Bitcoin this year. Deal? Well, I guess we can make that bet. I mean, I have no problem collecting on that.

26:05So you think that gold will continue to outperform Bitcoin? And by the end of December 31st of this year, you think that gold will have outperformed Bitcoin for 2025? Yeah, I mean, I think Bitcoin, I think there's a lot of downside risk in Bitcoin. I mean, I think Bitcoin is much more highly correlated with the Nasdaq. And yeah, you know, tech stocks, the Nasdaq made a new record high yesterday as well. So risk assets have been in favor and there's been a big appetite for risk. But we can easily have a correction or a bear market in risk assets. And that would include Bitcoin. And I think if investors get more risk adverse, they're more likely to want to buy more gold, not less.