Not So Fast!

A quick recap of where we've been this past year... and where we're likely headed next...

(Source: Getty Images)

Joel Bowman, checking in today from Buenos Aires, Argentina...

Inflation... or deflation? 

A new bull run... or a bear market rally? 

Globalization... or de-globalization? 

The dollar... or gold... or both?

Whoa, dear reader. Not so fast!

Let’s back up a bit. As you probably already know, the first half of 2022 was the worst start for stocks in half a century... the worst for bonds in over two centuries... and the worst for a standard, 60-40 portfolio in... well, ever. 

Meanwhile, inflation is running at generational, 40-year highs, the job market is softening (the labor participation rate is back to where it was in March... of 1977) and both GDP and productivity are falling. 

But...

Stock markets have rallied hard off their mid-June lows. July’s inflation reading of 8.5% marked a slight decline from June’s 9.1% print. And nary a word is to be heard about the ongoing war in the Ukraine (whatever did happen to all those blue and yellow flags, anyway?)

Plus, president Joe Biden just signed something called the “Inflation Reduction Act” which promises, among other things, 87,000 new jobs. (Ok, so government spending bills don’t always do what they say on the box... and those jobs are actually for IRS agents... and the government doesn’t actually have the money to begin with...)

So where does that leave us? On the road to recovery? Or about to head over the cliff? 

Your weekend editor, now happily ensconced in his home “studio” back here in Buenos Aires, was delighted to catch up with Bonner Private Research’s macro analyst, Mr. Dan Denning, earlier this week to record a long-overdue episode of our Fatal Conceits podcast. 

Over the past month, we’ve welcomed thousands of new readers to our little publication, so we thought it might be a good idea to back up a bit for this conversation... to take stock of where we’ve been so far this year (both in terms of the market and the economy, and regarding the Bonner Private Research project itself)... and to take a look at where we’re likely headed for the rest of 2022... and beyond. 

If this is your first time tuning into one of our podcasts, welcome aboard! If you’re a returning listener, you know the drill. Click below to tune in (you can play it directly from the site or from the Substack app), and look out over the next day or so for a full transcript (we’ll let you know when it’s on the site).

Also, feel free to share our episodes far and wide. As you might have noticed, the mainstream press isn’t exactly asking the tough questions these days (the once proud Forth Estate is practically an arm of the establishment by now)… so it falls increasingly to fringy cranks, curmudgeons and skeptics to figure our way through this mess. We appreciate your spreading the word!

Dan Denning on Where to From Here?

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Meanwhile, Bonner Private Research’s Investment Director, Tom Dyson, welcomed new readers in his August Report, published this past Wednesday. Here he is, bringing everyone up to speed on our mission here at BPR. (Long time readers might like to consider this a helpful refresher.)

My name is Tom Dyson. If you’re just joining us, I’m the investment director for Bonner Private Research. As Investment Director, it’s my job to turn the big picture thoughts and ideas that we come up with at Bonner Private Research into an actionable investment strategy using publicly traded investments.

Here at Bonner Private Research, we view the investment markets through a very simple model we call “inflate or die.” In short, the Feds have been printing money, manipulating interest rates, providing guarantees, bailing out banks and other troubled institutions, sending out stimulus checks and jawboning the markets higher since the 1990s. They’ve created an enormous debt bubble… and a huge malinvestment problem. 

We call this 3-decade-long intervention in the economy “the greatest financial experiment in history.” And it resulted in “the greatest speculative bubble of all time.” 

And now it’s burst.

Unless they turn the printing presses back on and restart the experiment again, the bubble will continue deflating. And even then, it’s not clear to us they’ll be able to inflate the bubble again. Hence “inflate or die.”

We think this experiment culminates in a massive systemic default on dollar-denominated liabilities at all levels of society, from the United States Treasury right down to the individual borrower. The default will mostly be what I call a “soft” default, meaning the Feds will debase the currency instead of outright reneging on their debts. But there will be plenty of hard defaults too, and many bankruptcies. 

In very broad terms, our strategy is founded on holding cash now, while the Feds are fighting inflation. And then when the pain of recessions, defaults, layoffs, profit warnings and stock market losses becomes too much – and the Feds go back to inflating the bubble again – we’ll shift our focus to owning gold. “Cash now, gold later” as the late and great Richard Russell used to say. 

In the meantime, we look for tactical trades to keep our capital growing through the bear market. 

If you’d like to begin receiving Tom and Dan’s twice weekly market updates, in which they go into fine detail on the macro setup, tactical trades, overall portfolio strategy, trade of the decade and plenty more, you can do so by becoming a member right here.

The modest fee is a fraction of what you’d pay for a comparable service through traditional financial publishing channels and the research they’re producing is top notch. Membership also includes access to Bill Bonner’s inner circle of market analysts, money managers and professional investors through our private briefings. (We published the latest of these a week or so ago… which featured Doug Casey, Porter Stansberry, Alex Green, Chris Mayer, Rick Rule, Byron King and Jim Rickards, as well as Tom and Dan.) That’s the kind of line-up you’ll only see here, at Bonner Private Research.

Join us today and begin your own path to financial independence, right here...

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And now for Bill Bonner’s missives from the past week...

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And that’ll do it for today. We’ll return tomorrow with your usual Sunday Session, in which we ponder the world’s many and varied problems, oddities and assorted dilemmas, one glass of high-altitude malbec at a time.

The podcast transcript should be ready by then, too, for those who are less audio-inclined. We’re also working on adding video recordings of the podcast to our YouTube channel, so keep an eye out for that in the near future. 

Until next time...

Cheers,

Joel Bowman