Almost every price we see is being manipulated. Oil is being drained from our strategic reserve, global supplies of critical minerals are being used up, and food supplies are being drawn down as we speak. This gives the illusion that things are ok. This will keep many from preparing for what appears to be coming.

“Money” is being conjured up in the trillions globally to give the illusion that all is well while critical supplies are dwindling, debts are skyrocketing and inflation pressures are building almost everywhere. “Printing and Buying” worked for many years and many have become accustomed to central banks “printing” to solve every problem. The problem we have today is that they cannot print up oil, gas, fertilizer, food, etc.

In addition, the “printing and buying” schemes have gone so far that those “in charge” cannot even carry the interest expenses without going deeper into debt. I believe we are entering into or are already in a debt-death spiral.

Why is this important? Because it allows those “in charge” to give an illusion of normalcy to the masses while the supply/demand situation is worsening day by day.

LITTLE reporting is being done about the crisis our farmers are facing because of rising costs for fertilizer and diesel fuel. The cost per gallon of diesel reached an all-time high of over $6.50 recently and this is not only a problem for farmers but also for truckers, grocery stores and retailers who will have no choice at some point but to pass those increased costs along to you and me.

Bonds are being bought in unimaginable amounts (with cash from nowhere) to keep rates from skyrocketing higher and putting the economy at serious risk. Stocks are being bought to keep asset prices high.

With regard to stocks, the S&P 500 is commonly referred to as the best gauge for US stocks. Just last week the index closed near an all-time high. While the financial game shows imply this as proof that all is well, there is an unsettling truth that they would rather you not know- until it is too late, so you keep BUYING!

Only two times in the last one hundred years has what happened on Monday September 21 occurred. S&P gained 1% or more and was within 1% of an all-time high. While the S&P rose 1.49% on Monday, 30 S&P stocks hit 52-week lows while only seven reached new highs.

The last two times that this took place (More losers than winners near all-time highs) were in December of 1999 and July of 1929. Coincidence?

Keep in mind that the last two times this happened the markets did not fall immediately but crashes occurred within months. That is no guarantee that it will happen again, but it should be a cautionary warning that it could.

Adding more fuel to that fire, many states are questioning the viability of all of the AI plans that are being proposed. There is a lack of energy infrastructure, growing public backlash and increasing interest rates which cast a dark shadow over the exuberance of the very companies that have been the only real driver of economic activity and stock “market” gains. Even “investors” who invest passively are committing 40-45% to AI and AI-adjacent names.

I have written in the past about the uncanny similarities between 1999 and the circular financing that is taking place today. Cisco sold routers to companies that they funded and Nvidia is selling chips to companies that they funded. History does not always repeat but it often rhymes. “Those who choose not to learn history are doomed to repeat it.”

My best guess is that either we will have a catastrophe prior to the midterm elections so they could possibly be cancelled or nothing will happen until after the election when reality will likely be revealed. With our current leadership I do not think anything can be ruled out.

In either case, those unprepared will probably not fare very well.

Anyone who thinks the Fed has their backs- they are owned by the major banks and they have THEIR backs. That .25% interest rate increase in the overnight rate will do nothing to curb inflation. This is because it is a SUPPLY problem. The only way inflation will come down is with demand destruction- which will only occur with HIGHER PRICES.

How is that good for anyone but the extremely rich?

It now appears that the message from our “leaders” is get used to it. A while ago we were told that inflation was a democratic hoax. Recently, we were told higher gas, and diesel prices were “a small price to pay.” Just today, our US Secretary of Agriculture said, “simply switch to other protein sources if you find beef too expensive.” Of course, in the “inflation numbers” they have already substituted MANY items to rig the inflation rate lower so they can give the illusion that what we are seeing is not real and all of the inflation-linked benefits can be less than they should be.

These are just a few quotes that reveals the thinking of those “in charge.”

With all of the problems with private credit, commercial real estate, supply disruptions, rising interest rates and a crumbling economy I would have anticipated a lot more urgency on the part of the public. It appears to me this is the frog in boiling water scenario. The interventions allow for the ultimate outcome to be managed and slow so that many become comfortable and do not notice the heat rising until it is too late.

While many will say I have been saying this for years you are correct. I never thought it would take this long to play out. Right now, however, the cracks cannot be ignored.

Sovereign states can accumulate debt FAR beyond their means to repay and give the illusion with “printing and buying” schemes that it is sustainable. Right now, we are seeing that economic reality is starting to call out that illusion and even with MASSIVE interventions rates are rising as more and more people are waking up to the fact that many “promises to repay” are not likely to be kept.

Have ASSETS and not PROMISES.

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 prove 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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