While many in the mainstream media are touting how “well” we are doing economically the facts suggest otherwise. Goldman Sachs has come out and called the unemployment numbers “inaccurate” and have been joined by other major banks in saying the same. I have said for years that ALMOST ALL of the data we see is FAKE.

Anyone paying attention would have to ask how in the world we could have massive layoffs across all sectors of the economy, but have the initial unemployment claims surprise to the downside. One explanation could be that white collar people are being laid off now and they get severance packages that will allow them to postpone their unemployment claims. More importantly, the real unemployment numbers rival the Great Depression unemployment levels if measured the same way but when 99 MILLION people (who exist and need to be supported) are conveniently “left out” of the calculation of unemployed then does it really matter what the first-time claims are?

From the leaked tape from the FDIC meeting discussing how to prepare for bank runs while keeping regular people in the dark to massaging numbers so much that there is no relation to reality and everything in between, it appears that those “in charge” are doing all in their power to give an illusion of normalcy in an environment where nothing could be further from the truth.

We have Fed presidents and others saying, “many more have to lose their jobs to tame inflation”. What a plan! Kill the economy to make prices lower. There are FAR better options- like reducing the money supply but that is not mentioned. Just how are the banks going to survive with fewer loans, fewer deals, collapsing balance sheets and rising defaults? Any wonder why the FDIC is planning for a bank run?

We hear reports of inflation being transitory- then peaking- now disinflation. The fact is that inflation is still here and is likely not going away anytime soon- particularly for the goods we need to sustain life.

We hear how “well” the consumers are doing because they are SPENDING. What is rarely ever discussed is that people aren’t buying more things, but the THINGS are costing a lot more. The millionaires and billionaires don’t care- YET because they can easily navigate through this type of rising prices. The ones hurt the most are those that were struggling to get by when prices were far lower. Many “experts” offer as proof that the consumer is strong by the rising balances on their credit cards- which many are maxing out just to get by. The total amount of credit card debt in the US is at an all-time high and the savings rate is near an all-time low. To me this suggests just the exact opposite and that we are nearing a point where many are going to be throwing in the towel. Having the highest credit card balances in history would be bad enough but to add insult to injury the average rate across US credit cards also just rose to an all-time high of 19%. Could this be why Discover just doubled their expectations for charge offs in 2023?

There are many suggesting that 2023 could be a bounce-back year for the stock “markets”. While anything could happen, it looks to me like some former high-flying companies could actually go bankrupt if rates continue rising. Many may not make it even if rates stay where they are. Keep in mind that if a company goes bankrupt the common stock shareholders will lose 100%. Because of the massive debts of many companies the only debtors likely to not lose it all would be secured bondholders and they will have to go through a debt-for equity swap that could take a long time.

There are many good solid companies out there that may do well even in this environment but now is a time to carefully look at balance sheets and make prudent decisions. I believe the days of throwing darts and making money is over. Your choices going forward will be very important.

One of the biggest illusions of all is in the world’s debt “markets”. These are the instruments that are supposed to be giving signals about where the economy may be going. Unfortunately, since the central banks have hijacked the bond “markets” the only signal we get is from central banks who “print and buy” and try to manage the bond prices and yields. Does anyone in their right mind think that negative rates EVER made any sense? Does anyone believe that nations wouldn’t be paying 10 times what they are in interest if there was a free market and actual price discovery? Too bad we are so far away from reality that reality would likely wipe out the world as we know it.

In looking at the numbers that we are allowed to see (and they are likely FAR worse in reality) it is obvious that the debts the world has wrung up can NEVER be repaid with currencies maintaining even a fraction of their current perceived “value”. While many are content to bury their heads in the sand, I believe the prudent are recognizing the problem and preparing for a resolution which appears to not be too far off.

Those “in the know” are preparing for a far different world than we have become accustomed to. Central banks, major banks and their buddies are loading up on hard assets like gold and silver while suppressing the price for themselves. I believe the value offered by these assets is off the charts. How long this gift will last- I don’t know but the clock is ticking.

As confidence is lost in other’s promises to repay what they owe, I believe you will see a renewed interest in ASSETS like food, oil, water, metals of all kinds, etc. while broken promises will likely ruin many of the best laid plans. Don’t be a victim of complacency.

Be Prepared!

Any opinions are those of Mike Savage and not necessarily of those of RJFS or Raymond James. Expressions of opinion are as of this date and are subject to change without notice. The information in this report does not purport to be a complete description of securities, markets or developments referred to in this material. The information has been obtained from sources deemed to be reliable but we do not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct.

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