On this week's Stansberry Investor Hour, Dan and Corey welcome Garrett Baldwin to the show. Garrett is a research economist, financial analyst, and investigative journalist. He's also a contributor to our flagship newsletter, Stansberry's Investment Advisory, as well as author of the Me and the Money Printer Substack.

Garrett kicks off the show by explaining how he got his start in finance, why leaving the gold standard was the American economy's "core breaking point," and how liquidity is driving boom and bust cycles. He says that even though Consumer Price Index inflation can come in at 3% officially, actual currency debasement is 6% to 8% per year based on real assets. This leads Garrett to break down the "Cantillon effect," how everyday folks are most disadvantaged by excessive money printing, and why the American manufacturing sector has been destroyed. He also delves into the troubling trend of Americans essentially paying rent to foreign investors, why we'll "hit a wall" in 2026 or 2027, and how you can protect yourself from the inevitable fallout...

I was not a gold bug before I dug into all of this. I viewed it as something that was shiny. I wanted to have a gun – I wanted to have bullets and green beans – after the COVID crisis. Now I want to have gold... I want to be involved in real estate. I want to be involved in the assets that are higher than inflation.

Next, Garrett analyzes a pattern that warns him to flee the markets, plus the contrarian signal of insider buying that he uses to time his reentry into the markets. He notes that this trend has been playing out consistently since 2008 and allows those aware to successfully buy the dip. Garrett says that company fundamentals still matter, however, and he explains what he looks for in a company before investing. He then reviews liquidity versus momentum, the Federal Reserve's relationship to liquidity, a core problem with the traditional banking system, and why the Fed tolerates shadow banking...

Look at the way that Lehman [Brothers] collapsed. It was run by the shadow banking apparatus... The Federal Reserve tolerates the shadow banking system because it creates the euro-dollar market. It creates the world for the demand for the dollar, going back to the dollar curse. It creates a system where the Fed now has to perpetually back up and provide backstops to that system.

Finally, Garrett talks about the relationship between liquidity and bitcoin, why he likes silver today, and how quantitative easing paradoxically leads to a higher dollar. He explains that many paradoxes in our fiat currency system started in the 1990s, thanks to six major policy shifts and their incentives. Garrett goes in depth on how such policy has affected our financial system today and made the Fed more consequential for our wallets than the president...

People ask questions, and they'll blame presidents and they'll blame Congress. But at the end of the day, it is the perpetual monetary policy shifts that have led to higher asset prices [and] led to higher food prices. People keep asking, "Why is everything so expensive?" They don't know what the central bank does... How many [folks] actually know that [the Fed is] consistently backstopping the global financial system, opening liquidity swaps, engaging in stabilization of hedge funds, and then tolerating other certain things?

Click here or on the image below to watch the video interview with Garrett right now. For the full audio episode, click here.

Additional past episodes are located here.)

This Week's Guest

Garrett Baldwin is a research economist, financial analyst, and investigative journalist. He also has experience consulting for hedge funds, private equity, blockchain, housing policy, supply chains, and public equity coverage. Plus, he's a contributor to our flagship newsletter, Stansberry's Investment Advisory, and author of the Me and the Money Printer Substack.

Garrett graduated from the Medill School of Journalism at Northwestern University. He later earned a Master of Arts in global security studies from Johns Hopkins University, a Master of Science in trade economics from Purdue University, a Master of Business Administration in finance from Indiana University, and a certificate in global business and international finance from Harvard Business School.

Dan Ferris:                 Hello, and welcome to the Stansberry Investor Hour. I'm Dan Ferris. I'm the editor of Extreme Value and The Ferris Report, both published by Stansberry Research.

Corey McLaughlin:    And I'm Corey McLaughlin, editor of the Stansberry Daily Digest. Today we talk with Stansberry's Investment Advisory contributor Garrett Baldwin.

Dan Ferris:                 Garrett is a very smart guy. He's studied lots of economics and lots of macro fundamental type stuff. I can't wait for you to hear this. Get your pen and pencil out and take notes because it all speaks right to the very thing that is in all the headlines right now about trade deficits and the role of the dollar in the world. You will want to hear this because not only does he explain it very well, he explains how to trade it very well. And he's been doing that. So, let's do it, man. Let's talk with Garrett Baldwin. Let's do it right now.

                                    Garrett, welcome to the show. Good to have you here.

Garrett Baldwin:        Thank you so much for having me today.

Dan Ferris:                 You're a new guest on the show, so maybe let's just get our listeners a little familiar with you.

Garrett Baldwin:        Yeah, sure. I have a bit of an odd background, but all roads point back to monetary policy. I was a financial journalist by trade for years, worked on Wall Street for two years before the 2008 financial crisis. And I honestly didn't really truly understand what had transpired in 2008. So, I ended up going on a four-university odyssey where I studied economics, studied finance, studied cross-border capital flows, and built out this kind of worldview that's shaped through liquidity, insider buying, and momentum. Those are the three primary things that I focused on for the last 12 years. I've worked at Tastytrade. I've worked at Modern Trader magazine. Spent some time at Money Map Press for years. We had a morning show there. And then had joined Stansberry roughly August of last year. So, been very, very busy.

Dan Ferris:                 Yeah, you've been all over the place. That's good.

Garrett Baldwin:        Yes.

Dan Ferris:                 Yeah, I have a weird background, too. That's good. We're on the same page with weird backgrounds.

Corey McLaughlin:    Yeah, me too, pretty much.

Dan Ferris:                 Yeah, that's right. We're all weirdos. It's a whole company full of them. But both Corey and I have perused your report called "The Dollar Curse." And the one thing about it, Garrett, is that not too long ago, nobody would have cared about any of this. Nobody cared about trade deficits. And nobody knew what the Triffin dilemma was. Nobody knew  ̶  you mentioned the Cantillon effect all of this stuff. Nobody cared about any of it. Then Trump gets elected and everybody – and he starts doing what he's doing with tariffs and so forth – and everybody cares about it. It's all anybody wants to talk about. So, let's talk about it.

Garrett Baldwin:        Yeah. Look, I think that this is one of those things where it seems like Trump seems to drive the narrative in everything today. It's interesting how much people care about certain things once it becomes time to talk about them because it's brought up by Bessent or it's brought up by Lutnick or it's brought up by Trump. But this is what I've studied for the better part of 15 years and it doesn't start with the day that Trump walks into office. It doesn't start with 2020. It doesn't start with the rounds of quantitative easing in 2008. It doesn't start with inflation targeting in the 1990s that really kind of drive a lot of these broader issues involving the deficit. It goes back to 1971. And –

Dan Ferris:                 Well, Triffin – wait a minute. Triffin talked about this in 1960.

Garrett Baldwin:        1960, right. Yeah. So, you can go back to 1945 with the shift in the reserve status, but it really amplifies in 1971. And there's a great website called "WTH Happened in 1971?" and it just shows that society just went bananas. The number of lawyers increases. The numbers of the production versus the amount of income generated by the average worker completely breaks. So, that was really a core breaking point when we go off the dollar standard and move directly into a floating free currency. That had a bit of a cascading effect for three years until we reached the petrodollar agreement in 1974. And now we start to move and evolve into this system of monetary policy – and we'll talk about this momentarily – that is a lot of boom-and-bust cycles in the market. So, that's the first part.

                                    And then the second part is the fact that we have to run these perpetual deficits, export our dollars, and really kind of violate the core motivations of what the Federal Reserve is, which is controlling inflation and the job market. No, there's a third responsibility, which is to provide and act as a backstop to the global financial system at all times.

Dan Ferris:                 Right. So, we start in 1971. And of course, what happened then was we severed the tie between gold and dollars. And as I read your report, that sort of kicked in to gear – it necessitated the U.S. just sending dollars everywhere around the world, just having to print plenty of them and send them all over the place essentially to keep them in demand, which sounds odd. Am I – do I have this right? Is that –?

Garrett Baldwin:        No, you're absolutely right. You have to run trade deficits and you have to continue to run these monetary deficits in order to ensure that the dollar, which is utilized for global trade, that they're constantly in in the hands of the people who are going to be sending those dollars back into our system. And when we're buying assets from them, we're buying goods from them, they're collecting our dollars. Those dollars are finding their way back into the United States. So, the deficits have increased dramatically over the last 54 years but so too has the financialization of the economy.

                                    And what's fascinating now is that roughly $26 trillion in U.S. assets are owned to foreign – are owned by foreign entities. If any other nation had that level of debt to the world, the currency wouldn't exist. But we are operating in an environment where we price things in those U.S. dollars and every time that there is a major financial crisis we engage in liquidity swaps. We provide liquidity to the global markets to prevent crisis abroad from coming home to the United States. And the U.S. Federal Reserve has acted as a backstop for a very long period of time, but really it necessitates with long-term capital management in the 1990s, opening up credit swaps in 2008, 2020, and then providing stabilization as recently as 2022 with the gilt crisis in the UK.

                                    So, it's been this perpetual system of increasing debt, increasing deficits, but the liquidity that is ultimately utilized to refinance debt and refinance the system is cyclical. And that is how and why we've ended up with so many of these every-50-year crises, that you're only supposed to have these crises, four-sigma events like the Nikkei last year. They seem to be happening every 18 months. This is all very heavily liquidity driven.

Dan Ferris:                 Liquidity is a funny word. When I try to nail it down and get people to talk about it, it's almost like nobody really knows what it is but everybody kind of feels like they do. What do you mean by it?

Garrett Baldwin:        The way that I define liquidity is based on the academic work of Pozsar in 2011, his report on the shadow-banking system and then the work –

Dan Ferris:                 Yeah. Oh, great – Zoltan Pozsar.  

Garrett Baldwin:        Yeah. And then Michael Howell. Michael Howell is the author of Capital Wars. And their work assesses that there is a whole world of money outside of the M2. There is a shadow-banking system. There is a Eurodollar system. Hedge funds and private equity and other alternative funds have been the primary drivers of liquidity dating back to the bottom of that 2022 crisis. And this was the missing piece for me in terms of trying to understand how the financial system really operates, because starting in 2023, the expectation was that the market was going to move much, much lower because the Federal Reserve was engaging in quantitative tightening. And they were raising rates and they were lowering and they were going to be running things off the balance sheet.

                                    That's not what happened. The S&P 500 goes up more than 20%. Why? Because roughly $9.5 trillion, according to Howell, was created from the beginning of 2023 through 2024. That is a massive amount of capital that's being created in the repo market through the money markets. It's an entire world outside of the traditional economic viewpoints of most people who are in the academic world. But it truly explains the boom-and-bust cycles going back to 1971, if you would like to go back there. But I think that it was really the 1990s that changed things with inflation targeting and the perpetual debasement of the dollar that has been dominating our financial system and has really gone undiscovered. Because you look at CPI and the CPI is at 3%, but the debasement, the destruction of the currency is 6% to 8% a year according to Howell. And that debasement shows up in real assets. It shows up in gold. It shows up in housing. And it's showing up in the equity markets as well.

Dan Ferris:                 Yeah, it really showed up, didn't it?

Corey McLaughlin:    Dan, we talked about this just a couple weeks ago with Larry Lepard just about how the dollar is just – the devaluation of the dollar to me – and I came to this similar way where I was trying to figure out what was going on with the economy and markets and eventually I landed on the dollar debasement just kind of driving everything that we see. And just, I guess, can you just explain that a little bit more to people about why that factor, how it shows up in in people's real lives that they may not fully understand.

Garrett Baldwin:        Yeah, so we mentioned the Cantillon effect moments ago, and that is the idea that all new currency, all new money that is created, the people who benefit from it the most of the ones who are most proximate to it. So, when this was first uncovered, and it was really Specie-focused when the when the economists came up with it, it was new coinage was created, so who would benefit in Ireland as a result of that? Well, most likely the military, most likely people who were engaged in agriculture, anyone who was close to the king.

                                    When it comes to this, debasement when new currency is created, when new money is unleashed into the system, it benefits Wall Street. It benefits Washington because Washington will utilize new spending for the purposes of driving policy. The green – the investment in green energy over the last decade is a very good example of that. And then it's finding its way into the defense sector as well. So, they're the closest, they're the most proximate to it.

                                    But when that happens, who are the people who are impacted most? Well, the people at the top are able to buy assets or they own assets and the people at the bottom might be on fixed income, or they own – they don't own a house. They don't own gold. They don't own some of these other assets. Some studies suggest that the average American is living – roughly 70% of Americans are living paycheck to paycheck. So, the value of their currency is going down. Meanwhile, the high street inflation, the inflation that is seen in the CPI, that's just a sliver of the actual destruction of the currency that is transpiring. And that debasement is being hidden in the asset prices. And it's one of these reasons why – it creates what is known as financialization of an economy. It creates a scenario where you have lots and lots of money pouring into unproductive parts of the economy.

                                    So, what's a good example of that? If you look at the market today, and Dan, I know that you love value investing, and you look at some stuff right now like shipping and housing, those are the stocks that are high quality, high Piotroski score, low price-to-Graham. And these stocks are trading at 6 times earnings. These are real assets but they're capital intensive businesses. OK, they're not moving. What's moving today? The double-leveraged ETF of Tesla. The triple-leveraged ETF of the S&P 500. We have all of these new products, these crazy products that are being created because that's what hedge funds want. That's what the market wants. You heard about MicroStrategy when – I'm blanking – Saylor. He said, "Why would I – these people want to try to make 60% a week." They don't want to spend money investing in a factory.

                                    So, that's what ultimately came out of this. We gutted our manufacturing sector because of our dollar policy. It has made it increasingly more difficult to manufacture here in the United States because, as JD Vance said, the dollar curse, the effect of sending the dollar abroad has created significant demand for the dollar. It has overvalued our currency by about 20% compared to other G10 currencies last year. And then, in the process it is a tax on our manufacturing. So, we've seen the middle class get hollowed out, but then more and more and more capital continues to flow into these unproductive parts of the economy. And it's going to be very, very, very difficult to break that chain without causing a broader problem in the financial system.

Dan Ferris:                 Yeah, how do you – that is sort of what – if you look around in the press and you see people like Ray Dalio and Tudor Jones and Howard Marks and everybody, everybody's trying to figure out: How does this play out? What happens? And there does seem to be sort of a consensus that you can't do this without some pain. And even Trump and Bessent, they've all said it. You can't do this without some pain. But man, I'll tell you what, that didn't stop folks from buying the daylights out of the dip. I mean, we got that little Trump tariff tantrum and they bought the heck out of it. And I was writing at the time before –

Garrett Baldwin:        With leverage.

Corey McLaughlin:    With triple leverage.

Dan Ferris:                 With triple leverage.

Garrett Baldwin:        With triple leverage, right. Record-level buying of the TQQQ on April 8 and April 9.

Dan Ferris:                 Yeah, insane. But so far, not insane. So far, a moneymaker, right? But what I want to know is, isn't it true – I mean, I think I already know this but we'll talk about it – isn't it true that when you – if we do more manufacturing in the United States, let's just keep it simple, if we do more of that here and we send fewer dollars overseas, this – the current account is – leads to an effect in the financial account, right?

Garrett Baldwin:        Right.

Dan Ferris:                 So that – you mentioned $26 trillion in U.S. assets owned by foreigners. Well, there's less of that money flowing in. So, as the current account deficit falls, so does the financial account follow it.

Garrett Baldwin:        Well, let me give you a little bit of an alternative view of that.

Dan Ferris:                 Please do.

Garrett Baldwin:        And I think that people aren't necessarily talking about that. So, I look at the current scenario. We're bringing a lot of investment back to the United States. It can be manufacturing. It can be they're going to invest lots of money into roads. They're going to invest money into cash-producing assets. So, I posed this question the other day in an article that I wrote and I said, "Who owns America? Who owns the firehouse?" That might be a triple net lease building that is owned by some private-equity company over in Australia. You look at the fact that, for example, in Chicago, there is a deal that they did in 2008 when the city was cash-strapped to sell all the future cash flow of their parking meters. They sold it for a billion dollars. Qatar is going to make, like, $70 billion out of that.

                                    So, again – and it's not Qatar. It's the UAE fund that's doing it. But the point of it is that a lot of the investments, a lot of the assets that are being – where the money's coming back into the country, that money's going back in the form of the cash flow from the toll roads, from the leases on the buildings, from the parking meters. So, they're going to get paid. My question and my concern is, when we're announcing all of these record investments, what are those investments going to be in? And are Americans going to be paying effectively rent to foreign sovereign wealth funds as a result? I think that this is just one thing that people are not necessarily thinking about. They hear the term investment, but they don't really know what that actually means.

Dan Ferris:                 Right. And so, this then sounds like – it just sounds like a continuation of the Warren Buffett's Thriftville-Squanderville scenario, where you're where you're shipping your net worth overseas or abroad, outside your borders.

Garrett Baldwin:        And with every – yeah, and with every crisis that happens, and this is one of the more important points on this, with every crisis that happens, we will engage in what is known as quantitative easing or we'll engage in a process that is not called quantitative easing but it leads to quantitative easing-like results. And that's the big difference. So, they will tell you the other day that the $60 billion they injected, the Fed injected in, was not QE. OK, but it was QE-like, and that's what really matters. You're trying to stabilize the bond market. You're injecting capital into the system. That money ends up somewhere. It tends to end up in risk assets.

                                    So, this is – every time that they do this – there was a study done on the backside of 2020. They created $42 trillion in wealth. Now, I'm defining wealth as assets minus liabilities. Sixty-three percent of that new wealth went to the top 1%. There is a direct relationship between the Cantillon effect and the top 0.1%. That number is much higher than QE2. That number was even lower – higher than QE1. Go back to the origins of QE 2002, then look at what happened when they started doing inflation targeting, which is intentional debasement of the currency. That's where the wealth trajectory really took off.

                                    So, it's going to be an issue because within the liquidity cycle, and I'll define that in a moment, I think we're seeing, again, a continuation of liquidity expansion in the global system. Howell has talked about that extensively. But we're going to hit a wall in 2026, 2027 that may be comparable to 2022. And the question at that point is how the bond market reacts. And we talk about the Trump bottom. That was a reaction. Calling off the dogs on this was a reaction to what could potentially happen in the bond market.

Dan Ferris:                 I noticed that, yeah.

Garrett Baldwin:        So, we don't want to see 5%, 6%, 7%. And there's a very distinct cycle. And I'll walk you through the cycle that we just went through because this has been the market since 2008. But the thing that I'm concerned about is just the fact that they're going to pump again. They're going to drive up real assets. They're going to drive up home prices. They're going to drive up equities. And again, we're not going to see enough intelligent analysis on how to protect yourself and take advantage of the situation.

Dan Ferris:                 How do you protect yourself against, what, the inevitable crash?

Garrett Baldwin:        Well, the way that you view it is that there are these cycles of liquidity. And you go back, and you look at coming off the dollar standard in '71. You had a pop, you had a sell-off, you had a pop in the '70s and it just keeps going like that until you hit the '87 crash. We pump the cycle up again. We have the '93 recession. Then we started perpetual inflation targeting. It's very clear that real assets, housing, REITs, these types of inflation-protection assets are very, very valuable. Gold remains a critical thing to protect yourself in continued debasement. There is a direct relationship between liquidity expansion since 2000 and gold prices. And I think that there's an ample upside to gold moving forward.

                                    I was not a gold bug before I dug into all of this. I viewed it as something that was shiny, that I wanted to have a gun – I wanted to have bullets and green beans after the COVID crisis. Now I want to have gold. So, I went long gold at $2000 and I still think gold is cheap at $3200. I want to be involved in real estate. I want to be involved in the assets that are higher than inflation, electricity moving forward, food moving forward, real assets. But in the process of this, I have to recognize when it is time to get out of the markets, when to build cash, and when to get back into the markets. And I'll walk you through exactly what happened on February 21 and what our playbook was and why this is going to happen probably two to three more times in the next 18 months.

Dan Ferris:                 OK, February 21. What happened?

Garrett Baldwin:        All right, February 21. I'm going to share my screen if that's all right. On February 21 – and I focus on something called just broad momentum. And this is only the S&P 500. And what I'm looking at specifically, is I take the number of stocks that are breaking out in a very specific pattern, up 5%. You can do a poor man's version of it, but up 5% in a week, up on the month, beta of one to two over the 20-day moving average. I come up with that number and I come to the number of stocks that are breaking down, minus 5% down on the month. This all goes back to a report to academic work done by a momentum trader named JD Henning. He wrote his dissertation in 2016 and I think it's the most important financial dissertation I've ever read. And I've read a lot of them.

                                    But we saw that equation. You have X minus Y. When that goes negative, something's wrong. And we don't know what it is because it's a lot of money leaving the S&P 500. So, if we go back to that point, you're going to see, interestingly enough, that the S&P 500 fell under its 20-day moving average. The thing that I use for confirmation is the FNGD. I don't trade this. This is a leveraged ETN that is effectively debt in the FANGs. But when this thing breaks its 20 and its 50, something is wrong in the financial system. And a good example of this was last July. We broke above the 20 and above the 50. This is August 1. This is my confirmation that something's wrong. Three days later, the Nikkei crash happened. This also happened on March 7, 2023, four days before Silicon Valley Bank crashed. And I think I'm – I don't think I'm showing the right screen. Forgive me. So, let me go back to that. Sorry about that.

Dan Ferris:                 It's all right.

Garrett Baldwin:        I just realized that as I was looking at my screen.

Dan Ferris:                 So, just for our listeners, FNGD is MicroSectors FANG+ Index -3X Inverse Leveraged ETN.

Garrett Baldwin:        So, just to talk a little bit about momentum, it takes a lot of money to keep the S&P 500 above its 20-day moving average. You have to have constant inflows. But what I'm looking at right here, with this other screen, and I don't know why I can't do all of them at the same time, but it is what it is. When this breaks above its 20-day moving average, something's wrong. There's your move right there. February 21. Here is this move July 18 of last year. Here's the move above the 50. Three days later is the Nikkei crash. And I can go back and I can show you this over and over and over again. Go back to 2022. Here's the August move. That's the gilt crisis right here. Go back further, right here. That's the SVB crisis. And go all the way back to February 21, 2020. That's the crash from COVID.

                                    So, this is where I get out of the way. This is where I move to cash, I protect myself. And now I'm looking for a very specific pattern in this market. And this is exactly how it played out here. It played out in 2020. It played out in 2022. What I'm looking for in the S&P 500, you have this sell-off that transpired. A lot of people think that this is trade related. It actually was related to global liquidity. There was excess liquidity leaving the market at that point. But when we got down here, March 13, remember that I said I'm tracking the number of stocks that are breaking out versus breaking down. There were no stocks people were buying. There was no aggressive buying in the market. And what happens with algos is they see that. They know they can't sell to anybody. And now you get a squeeze. And now you had a two-week squeeze. And then what happens? Well, we broke back under the 20-day. We sell off and we have this massive downturn.

                                    The next thing that I am looking for is a contrarian signal. I did not have that contrarian signal here. And the contrarian signal that I'm looking for is insider buying to selling. And I'm talking about insider buying to selling on the dollar-to-dollar level. And what this means, very simply, is the amount of money – and I've got to get this right, forgive me – the amount of money that is moving into the market via insider buying. This chart right here is just a five-year chart. This is what I sent out on April 10. You can see that this is the old version. But right here, that spike, that was the biggest insider-buying pop that we had seen since last December, and I'm talking dollar-for-dollar. I'm talking the amount of money that executives are laying down with their own pile of money.

                                    And why does that matter? Because insiders have collectively called the bottom of every major crisis going back to 2008. The ECB crisis in '11. The 2015 crisis. We saw it in 2018. We saw it with COVID. And what does that typically accompany? It accompanies a policy change. It's usually Fed-driven or it could be fiscal-policy driven, but in this case it came from a policy shift around trade. Trump came out that morning and he said, "Great time to buy." Record levels of TQQQ buying. That becomes the contrarian period to buy. You go alongside the insiders.

                                    Your next point to buy and buy with conviction is above that 20-day moving average. And that's where momentum returned. Momentum returned to this market around April 22. We were confirmed with a move above the 20-day and we've been off to the races since. So, this is a very high level macro view, but this is exactly what has happened during the Nikkei crash in 2024. It happened during the SVB crisis. It happened – this is the way that the policy equation works. And if you don't see insider buying, you see that extreme level of selling and you don't see insider buying, prepare for a bull trap. Wait for the market to really kind of phase out. Look for the policy change. And look for the executives who are spending a lot of money in consulting, both at the congressional level and at the Fed level, to step in and buy with conviction. And that's what that green candle is right there. That's it. That's the worldview.

Dan Ferris:                 That's it. We're done. Thanks for being here.

Garrett Baldwin:        We can leave now. But that's exactly what happened during COVID. We had a big sell-off February 21, dropped under our 20-day. We don't get any bidding into March 3. We pop for a week. We sell off. We have a policy shift of the Fed. We have record insider buying for that year. And then we broke the 20-day on April 7, and then we never looked back. And again, you could see it in the chart going all the way back to 2008. It has been this cycle over and over again.

Dan Ferris:                 Buy the dip.

Garrett Baldwin:        Buy the dip and look for the policy change.

Dan Ferris:                 That's what I feel like you just told me. Yes, you really can buy the dip because it happens over and over again.

Garrett Baldwin:        And it takes a lot of conviction, but you want to see the insiders and you want to see a policy change. Those two things. And that's what helped – that's what helped stabilize our bond market. That's what helped stabilize the short-term conviction. Turn the algos off. We broke above the 20-day and now everybody's not panic selling.

Dan Ferris:                 So, is there no place for company fundamentals? I mean –

Garrett Baldwin:        [Laughs] What are those?

Dan Ferris:                 Yeah, exactly. What –?

Garrett Baldwin:        Yeah, I think that that's a very fair question. And I think that you have to go back to the Stansberry approach of identifying companies that are highly capital-efficient, that are capable of turning $1 into $50 into $500 because they're the ones that are going to benefit from the expansion of the liquidity. And they're capital-efficient businesses. They're running the businesses the right way. And they kind of have that multiplier effect to them. And in that environment, you can see companies like McDonald's. You can see companies like Amazon. You can see those companies that have those high economic moats. They're the ones that have benefited from this post-2000 cycle the most. You can have those highly speculative trades. But at the end of the day, I want to sleep better at night and those are the types of companies that I want to own for the long term.

Dan Ferris:                 Right. And you did – you mentioned gold, too. So, you have a place for gold. You have a place for high-quality companies. That alone is a pretty good portfolio to me. But what else?

Garrett Baldwin:        Yeah. Then you start to speculate a little bit. And the places that I like to speculate is using the Piotroski-Graham model. So, the Piotroski-Graham model is a high F-score, a low Graham score. So, Graham is the intrinsic model – the intrinsic value of the company according to Graham's Intelligent Investor. So, I'm looking for high quality, I'm looking for quality value, and then I'm looking for momentum. So, specifically, I'm looking for a company that has been beaten up, that may be relatively cheap. A great name – example of this, given the current macroeconomic environment, was Weibo. Now, I don't necessarily want to be heavily engaged in Chinese stocks. But what was I looking for? I was looking for the fact that this was high F-score, low Graham score, broke its 20-day moving average, so in at $8, and it's run up to about $880. But you could see that when we kind of make these more speculative trading type of moves, I'm looking for those types of stocks that can just have these really significant catapult moments. Weibo went from $740 to $1275. This was heavily driven obviously by stimulus, by China. But once again, just looking to take what the market is giving me.

                                    I'll be in and out of some of these names for a couple of weeks but some of them I might be in for a year or a year and a half. A good example of that was Sky West. Sky West went from about $1650 up to about $120. And it just constantly had a low Graham, a very high F-score, a very, very fundamentally strong company that was left for dead on the backside of the liquidity bottom that we had in 2022. Stepped in, bought some of these industrials, and rode them higher and then took gains along the way, and was always very cautious if we broke both under the 20-day and the 50-day moving averages just in case because sometimes these high F-score, high-value scores will continue to fall for a reason and I think we just described it. They're not attracting capital the way that they used to because everything is so heavily momentum-driven and because funds are trying to eke gains out from these – this highly financialized economy.

Dan Ferris:                 The way you talk about liquidity and momentum, they seem to overlap heavily to the point where I'm not crystal clear on the difference.

Garrett Baldwin:        Sure. So, liquidity –

Dan Ferris:                 So, let's – yeah.

Garrett Baldwin:        Yeah. So, liquidity is the concept of all dollars past the M1 and the M2. So, it's every dollar that is created that could potentially be in your couch. This capital is created largely by central banks. Central banks back up the system. But roughly, I think Howell has the number at $176 trillion in capital in the global financial system for – in terms of liquidity. There's about $300 trillion in debt. The argument that he makes, and I subscribe to it, is the idea that the market is constantly in need of refinancing capital. So, the purpose of this financial system is no longer to invest in real assets that produce things. It's to constantly engage in refinancing of existing debt. And I believe his argument was $6 out of every $7 created today goes to refinancing existing debt. When you –

Dan Ferris:                 I'm sorry. Whose argument?

Garrett Baldwin:        Pardon.

Dan Ferris:                 Whose argument are we saying?

Garrett Baldwin:        This is Michael Howell. Michael Howell, Capital Wars.

Dan Ferris:                 OK.

Garrett Baldwin:        So, if that's the case and new capital is created, there's a direct relationship between the liquidity figure that he has and the MSCI World Index. So, a lot of capital created. That money finds its way into risk assets.

                                    Momentum is different. Momentum is a measurement of inflows and outflows in the S&P 500. Whether or not – you can do it with any index. But at the end of the day, my focus is: How much capital is flowing into the S&P 500? And I can measure that by just looking at the outliers on the bell curve. From there, I have to drill down into individual sectors. And then from there, if I'm trading momentum, I'm looking at the 20-day moving average and I'm constantly looking at the individual stocks within the ETF that I can trade accordingly. So, this is kind of a waterfall effect. Liquidity creates momentum and momentum, when it breaks down, is what ultimately fuels the insider buying activity and then ultimately fuels the policy shifts that are related to bigger financial issues in the global system. And when liquidity is created, particularly dropping it out of the sky the way that the central banks do to back up the system, that is typically where we see a dramatic rush back into the markets. We see a significant move in high-beta stocks, high technology stocks that will last two to three to four months, and then we see stabilization in markets. And it just moves in waves. This is Druckenmiller's way of approaching the markets.

Dan Ferris:                 Maybe you can answer my perpetual question that I never get a satisfactory answer on, which is: When the Federal Reserve prints money and does something like, buy securities from big banks, and then the money sits in the big bank's reserve account at the Fed, how does that make the stock market go up?

Garrett Baldwin:        It sits in the big banks. So, the Federal Reserve is not the primary driver of liquidity in the system. It is the backdrop of liquidity. The bulk of this capital is being created by hedge funds. A lot of that money is coming out of the repo market. It's coming out of the money markets, Euro-dollar markets, et cetera. So, the idea that reserves that go to banks at the Fed, they don't tend to go directly into the economy directly, and banks don't tend to lend or invest in some situations, that money may just sit idle. The problem is that QE tends to find its way to perpetually inflate assets. If money ends up in the money markets, that is ultimately utilized by the funds, by the private-equity funds to create new capital. That money ultimately finds its way into private lending. And I think that if you listen to what Mr. Bessent has said recently, the banking system is no longer the core driver of economic activity and the core driver of economic or financial growth here in the United States. It's largely coming from these other nonregulated institutions that are outside the Fed system.

Dan Ferris:                 Got it.

Garrett Baldwin:        So, the Fed can pump money into the system. The Fed will bail out the banks. The Fed will provide what is known as quantitative support to the banks. But at the end of the day, the mainstream banks are not lending the way that they used to. And I think that that's reflective in community banking prices. Community banks are trading under their tangible book value right now. Tons of them. Well, why is that? You would think that these banks would be valuable in an environment where banks need more capital to lend. But the reality is, they're not the primary drivers anymore. And unless we have some regulatory changes, which is utterly necessary, there's no reason post-Dodd-Frank that a community bank should have the same holding ratios as large institutions like Bank of America or JPMorgan. And when that changes, there's going to be a massive M&A wave in the community-banking space.

Dan Ferris:                 Right. So, it sounds like the answer is something like, during the '70s, we had massive inflation, and money was ripping through the banking system and lent into existence. But now you're saying that dynamic is outside of the traditional banking system and it's in hedge funds and PE and repo and all kinds of other stuff, the stuff apparently that Zoltan and Howell are both talking about. But it's the same basic mechanism. Money is being lent into existence.

Garrett Baldwin:        Correct. Yeah. And if you go back and you look at when shadow banking really became a huge deal, a huge, massive deal, you would combine it between the late '90s when it was growing. Now, you can make the argument this is where the LTCM crisis comes from. But in roughly 2002 on the backside of the massive crash that we had in the Nasdaq, I believe that the shadow-banking asset base grew from, like, $27 trillion to $50 trillion. And this is why Posner came back and said, "This is where the OA crisis originates from." So, by 2007, the shadow-banking system is larger than the traditional banking system here in the United States according to the New York Fed. And that goes back to Posner.

                                    What made the changes? Well, you had regulatory arbitrage. They're not subject to the same capital and reserve requirements. Money-market funds, repo markets. There's no regulatory friction in any of that stuff. Banks move their assets off the balance sheet to avoid some of the Basel rules. I think that that's critical. Securitization took over post-'90s. Massive demand for yield comes because we're in a low-interest-rate environment. There's a savings glut. And then just the repo-market expansion. So, there's a lot of moving parts here.

                                    And I think at the end of the day, when you look at the way that Lehman collapsed, it was run by the shadow-banking apparatus. It was not just a traditional banking crisis. And I don't think that they've ever really figured out how to adequately address the underlying problems. And more importantly, they tolerate it. The Federal Reserve tolerates the shadow-banking system because it creates the Eurodollar market. It creates the world for the demand for the dollar, going back to the dollar curves. It creates a system where the Fed now has to perpetually back up and provide backstops to that system. And it's not what the Fed – they say that the Fed is supposed to be doing. But it seems like it is the third mandate of the Fed. And I don't know how and when that goes away, but it will make for a very interesting new book written by Andrew Ross Sorkin.

Dan Ferris:                 Yeah. And then a movie. Right?

Garrett Baldwin:        Right.

Dan Ferris:                 OK. So, you owe Michael Howell a beer because I just bought his book while you were talking.

Garrett Baldwin:        Yes. Very, very, very good book. Helped shape the big questions that I had. I spent a lot of time and energy and academic work looking at momentum when I was in D.C. and then I spent a lot of time on insider buying when I was in Indiana. And then I focused on cross-border capital when I was doing some work at a small school up in Boston. But the focus has always been to try to ingrain this. And it's just a very different worldview and I'm going to trade it until it breaks.

Corey McLaughlin:    Yeah, I've got to say, I mean, it's – if you're a believer in the devaluation of the dollar is driving so much of this, everything that we see, which I happen to believe – I'm almost completely on the same page with you – even if – and then you combine that with the momentum and the technicals that you're talking about, I think just this shows that having a worldview, no matter what it is, and then pairing that with kind of a system that you believe in to actually trade off of that worldview and make decisions off that worldview is kind of totally invaluable. I think you're expressing that to everybody right now. And I happen to agree with the worldview as well.

                                    But I guess I just want to game out a little bit of – you talked about gold a little bit, high-quality stocks. I just want to game out, where do you see this going in your mind? What is the next book in the macro world of – where does this go in terms of – my mind's going to gold, to bitcoin.  How does all this stuff piece together?

Garrett Baldwin:        Yeah, interestingly enough, there is a direct relationship between that expansion in capital, that liquidity, and bitcoin. So, as I was saying, the idea, the concept of debt being exponential but liquidity being cyclical, the necessary refinancing, the down cycles, those winters, those crypto winters that everybody talks about, that is the backside of the liquidity cycle. So, when bitcoin went to $22,000 in October 2022 and then we started moving upward trajectory, that was really the time to start buying bitcoin. There's, I believe, about a three-month lag between liquidity expansion and bitcoin. So, there's a real case bitcoin could get to about $125,000 to $130,000 this year.

                                    But gold is a little bit of a different beast. And I really like silver in this environment, largely because of the industrial components of it, but you know, we're at that hundred-to-one ratio on gold to silver. A little bit of a lag, obviously, in terms of silver prices. And as far as the broader macro thing, when I went out and I told the story about the dollar curse, it was really, really important to tell that story but then also align it with a specific mindset in terms of investing that was – that certainly aligned well with it for the long term of how to trade it and how to invest it in for the long term. And I think that Stansberry has that.

                                    So the idea of those capital-efficient companies, the idea of focusing on gold royalty names, things along those lines, I think are very, very critical. And then having the necessary hedges in place, because there's going to be – and I say it over and over again. Watch the 20-day moving average on the S&P, watch buying pressure, watch the insiders, and then when you get into this environment where you have these deep sell-offs and you have the conviction with insider buying in a policy shift, double down and buy those same cash-producing assets for the long term.

Dan Ferris:                 Sounds good to me.

Garrett Baldwin:        Hopefully I'm passing your test, Dan.

Dan Ferris:                 Yeah. The only thing I would differ maybe with both of you is that to me it's not the persistent degradation of the dollar. It's the persistent strength of it. Because it's – they keep degrading it obviously, but it keeps not completely breaking. And I feel like – what I tell my readers is, think of gold as priced in dollars, think of dollars as priced in everything else, euro, yen and pounds, and I think you'll get it right, because if the dollar really falters and falls apart, those other ones are going to go first. And we've seen gilt, yen, we've seen this stuff happen right in front of our eyes, right in recent history. Start to. So, that's the only place – I put a finer point – I like Brent Johnson's milkshake theory. And there, even there, he says ultimately gold winds up being the last man standing. Gold, bitcoin, whatever you like, real assets. In the end the fiat regimes fall, as they have throughout all history.

Garrett Baldwin:        But I don't think that there's a disagreement in the – in terms of the strength of the dollar because that – the dollar curse involves the fact that because we are shipping that dollar abroad, we are doing liquidity swaps and taking these other weaker currencies to help allow them to refinance existing dollar denominated debt, that is the problem right at the end of the day. It's an overvalued stock, overvalued currency that has disabled our ability to manufacture and ship things abroad. So, that's part one.

Dan Ferris:                 That's it. Yeah.

Garrett Baldwin:        But the other side of this, I think that if you really assess it, one of the funny things about it is we engage in quantitative easing. We are intentionally – we're injecting trillions of dollars in the currency. And what happens? Money flows into the United States because sovereign funds and other big investment firms are chasing returns here and they're chasing yield here. So, that kind of becomes an interesting little paradox. And that was written about – that was in the report that we had put together. But the idea here is that QE actually leads to a higher dollar, which is – it doesn't make sense on the surface, but if you understand what's happening abroad, then it certainly makes more sense to see how we end up with $26 trillion in foreign investment.

Dan Ferris:                 Right. And inflation targeting is another way, as you mentioned. The inflation targeting gives wonderful Cantillon effect gains to one class and guts the rest who don't care really necessarily that the CPI is 2.3. They just know price level is up. They pay price level. They don't pay CPI year over year. So, yeah, we're all on the same page. We all see what's happening. And what's –

Garrett Baldwin:        I'm actually, yeah, on the same page. There's the internal, there's the domestic part within the United States that affects people on a day-to-day basis. And then, Dan, I totally agree, actually. Then there's the relative strength of the dollar compared to everybody else that just – I think what Garrett – and then that gets into the – just the cycle that that we're seeing as –

Dan Ferris:                 Right. But I'm glad – yeah, I'm glad Garrett used the word "paradox" too because there have been odd things. Like, a lot of us were really afraid coming out of 2008, that "Oh, they're going to inflate this thing away. Be careful. They're going to print lots of money to fix this." And they took rates to zero. And rates can't stay at zero for most of that – almost the entire period from '08 to '22 with a little bit of – a little attempt in between to fix it that failed and have a lot of economic growth. That's not the way it works. So, we didn't see CPI inflation. We saw the market doing great. It's just – things just haven't happened the way a lot of folks expected. I'll just leave it at that, right? Yeah.

Dan Ferris:                 Right. Yeah. And there are great paradoxes in the last 30 years of finance. "Too big to fail" became "Too big to jail." The Fed was supposed to fight crises; they create them. Risk-taking rose while volatility falls. Things like financial assets soaring while real wages stagnate. Things like financial engineering replacing real innovation. This all goes back to the incentives that are created by a currency system that has – that is not really based on anything. It is based on the paper that it is printed on.

                                    And a lot of crazy things have happened since the 1970s. They really went parabolic in the 1990s. You go back and you look at – 1993, I think, is one of the most pivotal years in financial history because there were major policy shifts, six major policy shifts that have kind of created the environment today. Something as small as the very first ETF being created. The SPY. Why is that important? Because pacification dominates our markets today. But another example might just be the fact that they tried to stop – they tried to tax any CEO who is paid over a million dollars. They didn't want to allow them to have that tax break. Well, what happened? They put a cap on it and now all the executives are paid in stock and options. And now they're incentivized to drive up the stock price and drive up the options. That leads to more buybacks. It all comes down to the incentives that are created by policy. And as I continue to argue on a regular basis, you've got to watch what is happening at the Fed because I promise you the person who is the chairman of the Federal Reserve has more of an impact on your life than any president ever will.

Dan Ferris:                 Yeah, arguably. Tell me how.

Garrett Baldwin:        Again, it all comes back to the monetary policy and the changes that they have made. I think that Janet Yellen is the most consequential member of the United States in the last three decades. I can't name you a single policy that has drastically changed the way that the financial system operates than inflation targeting. That was really her argument. That was the first time that we had brought academics in to really push on the Fed. She was an advocate of the 2% and Greenspan didn't want to do it. But that 2% has added up significantly over time.

                                    So, people ask questions and they'll blame presidents and they'll blame Congress, but at the end of the day it is the perpetual monetary-policy shifts that have led to higher asset prices, led to higher food prices. People keep asking "Why is everything so expensive?" They don't know what the central bank does. Only 7% of Americans know just what the mandate is. How fewer actually know that they are consistently backstopping the global financial system, opening liquidity swaps, engaging in stabilization of hedge funds, and then tolerating other certain things. So, if you listen to what Yellen said back around April 8, April 9, she said, "Well, this was all about a bunch of leveraged hedge funds selling bonds." And the question for me was: Why did they have the bonds in the first place? Why are we allowing this basis trade? Why do we allow it? Because it creates demand for U.S. bonds. There could be somewhere between $600 billion and $800 billion in U.S. bonds that are held by these leveraged funds for the purposes of trying to eke out 30% gains. It goes back to the financialization and the incentives that we just discussed.

Dan Ferris:                 Right. And that basis trade is – it's sort of – it's like the on-the-run,  off-the-run trade of LTCM?

Garrett Baldwin:        Yes, it is. Very similar.

Dan Ferris:                 With lots of leverage.

Garrett Baldwin:        With lots – anywhere up to 100 times leverage.

Dan Ferris:                 Yeah, I was going to say is it – I was going to ask you that very question. Is it 100 to 1? Wow.

Garrett Baldwin:        Yeah, 50 to 1 is what we typically see. And again, they're trying to eke out a 35% gain, but if it goes sideways, it goes sideways fast. And this is why I continue to – in that environment of that high level of – it all kind of comes back to the ability to cover these positions. That that was the lesson of the gilt crisis. You have to pay attention to what the S&P 500 is doing because the S&P 500 is reacting to liquidity events in the financial system. And we almost had one on April 8, April 9. We had a policy change. We had one with the Nikkei last year. The Bank of Japan changed its policy. We had the Silicon Valley banking crisis. Always watch the S&P 500 if it drops under its 20-day moving average. And don't be shocked if something significant in the financial system happens within the next two to three weeks.

Dan Ferris:                 Right. And we heard Trump acknowledge his and every president's fear of the bond market. James Carville famously said he wishes he could reincarnate as the bond market because you can intimidate anyone. And I thought maybe – I wasn't sure about Trump because he is a slightly different animal, but in the end, he even said it out loud. He said, "Oh, the bond market was getting queasy" or something. He used some word. And I thought "Yep, that was it." They're all the same. They're all going to – they always sacrifice the currency to save the banks and the bond markets. You go back thousands of years, and you see that same thing.

Garrett Baldwin:        I guess the question is, what would the alternative be? What would – what does an environment of 8% 10-year look like? What does – I don't know. And again, this is why I continue to say this is just the way the game is, and I'm just going to continue to play it until it breaks.

Corey McLaughlin:    Trump, they didn't – he didn't want to find out.

Garrett Baldwin:        They didn't.

Corey McLaughlin:    Bessent obviously – they didn't want to find out. And I remember that April 8, 9, the 10-year yield, the one-week change in it was the highest since, I believe, 2001. So, things did happen, were happening fairly quickly to your point about just the leverage involved. And the financialization of the system.

Garrett Baldwin:        So, just a quick question for you guys, and this comes back to we've had this big move off the bottom April 8. We broke the 20. We broke the 50. We broke the 200. And now we're kind of in this no man's land between the 200-day moving average and all-time highs. Is there anything that you're actually really excited that you have to buy right now? Or are you just kind of waiting this out a little bit to see what the direction will be over the next 30 to 60 days?

Dan Ferris:                 I don't know if I'm thrilled to buy anything. I'm thrilled to make sure that I'm prepared for a lot of stuff. I'm thrilled to make sure that I've got no garbage, no speculative garbage, lots of high-quality companies. I want – right now I want a Europe ETF and I want a Japan ETF. And I want gold and silver. And like you mentioned, silver will be a late-comer – it always is – but it'll move eventually. And I want to have plenty of cash. And I don't mind whatever it is right now, 4.5%, 5% in T-bills. And matter of fact, I look at that in my own portfolio and then I look at the rest of the world and say, "Show me. What have you got?" Because that's a reasonable – compared to fairly recent history, that's a reasonable hurdle rate and a reasonable reference point to say, "OK, well, if you're saying I can make more than 4.5%, 5%, how? And how much more risk?" So, that's where I am. And I've been there for months.

Garrett Baldwin:        Corey?

Corey McLaughlin:    I am curious of where bitcoin's going to go by the end of the year here – or by the fall, really, because I think personally it's still in that – it hasn't reached the top of that four-year cycle yet. And this move from April has been pretty strong. I think it's up 30% already. So –

Dan Ferris:                 Right. And there were some days there where it kind of was the – it moved contrary. And I thought at some point, if they're right about bitcoin, it starts – it stops behaving like the Nasdaq levered 20 times and starts behaving like this other payment asset or monetary asset or whatever its store of value, people have said. I'm like – so far I'm like "Dude, if that's a store of value, you'd better be careful. You'd better watch it like a hawk. Stores of value don't rip 30% in a couple of weeks, just so you know."

Corey McLaughlin:    To me, it's still in its early days. It's a little bit of everything,  where people are still – it's what you want it to be. But I'm interested in that. And gold, where has that gone? I mean, I've sold a little gold recently just because of the runups for the last two years. But I still think –

Dan Ferris:                 I'm still buying it.

Garrett Baldwin:        Yeah, I'm still buying too.

Corey McLaughlin:    I still think that goes higher. Other than that, I – just going back to April, I was buying some stuff in the middle of April when everybody else was panicking just because that policy switch was –

Dan Ferris:                 Well, actually –

Corey McLaughlin:    I was like "Here it is. It's happening again."

Dan Ferris:                 Yep, that the actually the other thing I –

Corey McLaughlin:    Longer-term thing –

Dan Ferris:                 I'm not talking about it to my readers, but the other thing that I own that I'm hanging on to and I kind of don't care how it performs is my leap puts – the puts on SPY, IWM, QQQ, Russell 2000, Nasdaq, and S&P 500 ETFs for our listeners – because I just want them to sit there. And they came to me on April 8 and I took some off and I'm just going to leave them there out a year and a half, two years. And I'm sure they'll come back to me. I don't need to think about them. I can be down 20%, 30%, 50%. I don't give a shit. I just want to let them – I'm just willing to wait until they come to me.

Garrett Baldwin:        That's the Spitznagel approach.

Dan Ferris:                 Right.

Garrett Baldwin:        At Universa. Yeah.

Dan Ferris:                 Yeah, he's probably a little better at it than – yeah.

Garrett Baldwin:        Yeah, and that's – no, it's a really funny story when in 2019, I went with my father-in-law to present the idea for a publication. And we wanted to build it around effectively black swan events. And the argument was that we were having these more sigma, high-sigma events that were transpiring. They seem to be happening more and more, 2015, 2018, two big spasms in the market. So, we sit down and we said, "Here's what we would recommend. And this is the way that we would trade it." We would wait for the S&P 500 to fall under its 20-day moving average. We would go down and go out a couple of weeks, just buy whatever call was on the SPY at a dollar. And one of the publishers just said, "Well, we don't know when black swan events are going to happen, so I don't know how this is going to be an interesting research product." And then, sure enough, four weeks later, COVID started and we had a 33% decline. And the trade that we had on went up 1800%.

                                    But again, I like that strategy. I like it as a hedge. And I like to combine – look at the SPY, look at the 20-day, look at the FNGD, look if it's breaking above its 20-day moving average, and that being an opportunity to go in and buy something a little more ultra-speculative, whether it's the SPY or even a leveraged ETF call that might be very, very cheap, so long as volatility is still in the 2020 range. And typically, we don't see the volatility levels get elevated until we're under both the 50 -and the 20-day moving averages.

Dan Ferris:                 All right. Garrett, I would like to keep this discussion going for hours and hours, but we can't do that.

Garrett Baldwin:        I know.

Dan Ferris:                 It's time for our final question, which is the same for every guest, no matter what the topic, even if it's a nonfinancial topic. Same identical question. If you've already said the answer, feel free to repeat it. If you need a minute, just take your time and think about it. And the question is simple. It's for our listeners' benefit. If you could leave our listener with a single thought today, what would you like that to be?

Garrett Baldwin:        So, in this environment, we have a very news-driven market. We are operating now on tweets. We are operating on sentiment. We are seeing massive shifts in sentiment. I think it's very important to do two things. One, recognize that when we are in extreme-fear environments to start to look for the contrarian reasons to buy. So, what I'm looking for in this example – we just talked about April 8 – massive levels of insider buying and virtually no one wants to buy. And that to me signals this is an opportunity to take advantage of the situation and buy the things that I want to own for the long term because I'm looking for a policy shift.

                                    But now we get into this environment. We're starting to move into an overbought situation. And now it's funny because people didn't want to buy at $4850, but now they're buying at $5800. I always recommend it as you get into these periods of time to start to think about the contrarian view of this environment, because at the end of the day, the purpose of the market is to sell. And once you think about that, you recognize that back [on] March 13 or April 8 nobody wanted to buy, so there was no opportunity for anyone to sell into that strength. Now that we've had a 17%, 18%, 20% move on a lot of really good assets, keep in mind that the purpose of the market is to sell.

                                    So, pay very close attention to the relative strength index, which is nearly overbought, and the money flow index, which is nearly overbought. This is that environment where it gets very easy for a retail investor and even some institutions, because I've seen PMs buy things at all-time highs when people are, again, willing to sell it to you. Remember, people want to sell things to you in this market. Take advantage of this environment if you own something that should not be in your portfolio. Right now, you've got an opportunity. You've gotten a pop and it's junk, but you were rescued by this market. Get rid of that stuff. And now start to focus on quality and start to think contrarian now that we're moving toward the overbought scenario.

Dan Ferris:                 All right. I like the sound of that.

Garrett Baldwin:        All right.

Dan Ferris:                 And I've really enjoyed talking with you, Garrett. I can't wait to have you back on. Maybe we'll get you back on in six or 12 months and –

Garrett Baldwin:        Love to.

Dan Ferris:                 – get an update.

Garrett Baldwin:        Guys, thank you so much for your time. Really happy to be here.

Corey McLaughlin:    Thanks.

Dan Ferris:                 Yeah, thanks so much.

                                    Wow, that was fun. I really enjoyed that.

Corey McLaughlin:    Me too. It's – this topic, it aligns with my personal worldview, the whole dollar story and why we have inflation and what to do to protect yourself and how to – or how to grow your portfolio within that framework. So, yeah, it's all speaking in my language. I was happy to sit back and listen for the most part.

Dan Ferris:                 Yeah, and he really got super nitty-gritty with some of these trades like – and I really enjoyed him showing me the chart that just went back – I think he went back to March 2020 or so explaining it happens over and over and over again. You get a crisis, and he talked about the 20-day moving average and that whole bit. And I thought "Wow, this –" and then at the end he said, "I'm going to trade it until it breaks." And I thought "You know what? This makes sense to me." Garrett is not saying, "This is how the world should be" at all. He's just saying, "This is how it is and this is what I have to trade with." So, that's a true trader's mentality. It's great.

Corey McLaughlin:    Yeah, he went looking for an answer to why things were happening and came – found his answer and then how to take action off of that. Like "OK, this is what I think. How do you take action off of that?" And, yeah, if you're curious for more, what's the report we're referring to, he wrote one – subscribers to our Stansberry's Investment Advisory can find it on the member page. And if you don't subscribe to that – to our – that's our flagship advisory. If you don't do that already, you can go to stansberryresearch.com and find more info on that. But that's where he gets into more of this story and kind of his playbook for recommendations for what to do with your portfolio if you're a believer in what he was talking about.

Dan Ferris:                 Sure.

Corey McLaughlin:    So, good report.

Dan Ferris:                 Yep. And a very important discussion right now that the whole world is having about trade deficits and the dollar and all the rest of it. So, I think we could have done better. We could have had him on a little earlier maybe and he could have maybe prepped us for some of this and we could have had a really nice trade off of the tariff tantrum. But you know what? This is still a great moment and I'm glad we had him on. And it was a great discussion. It was a fun interview. That was another fun interview and another fun episode of the Stansberry Investor Hour.

                                    I hope you enjoyed it as much as we really, truly did. We do provide a transcript for every episode. Just go to www.investorhour.com, click on the episode you want, scroll all the way down, click on the word "transcript" and enjoy. If you liked this episode and know anybody else who might like it, tell them to check it out on their podcast app or at investorhour.com, please. And also do me a favor, subscribe to the show on iTunes, Google Play, or wherever you listen to podcasts. And while you're there, help us grow with a rate and a review. Follow us on Facebook and Instagram, our handle is @InvestorHour. On Twitter, our handle is @Investor_Hour. Have a guest you want us to interview? Drop us a note at feedback@investorhour.com or call our listener feedback line, 800-381-2357. Tell us what's on your mind and hear your voice on the show. For my co-host, Corey McLaughlin, until next week, I'm Dan Ferris. Thanks for listening.

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