Economic Shockwaves Unleashed: Episode 2 Exposes Global Threats | The Weekly Money Clip Unveils Financial Turbulence

[00:00:00] Could a UK recession pose global risks? Huge stakes for Nvidia, retail sales fall, and

[00:00:19] will the Fed wait a while to cut rates. Welcome back to the weekly money clip. In a market

[00:00:24] with millions of podcasts, it is tough to stay on top of the essential business and

[00:00:29] tech stories beyond headlines. This week we will be counting down five key moments from

[00:00:33] last week to give you context for the week ahead. As always, clips are under five minutes

[00:00:38] from voices you trust adding context to headlines from the week behind to prepare you for

[00:00:44] the week ahead. Before we jump in, let's review the week's top headlines. In the past

[00:00:50] week, global financial markets had serious fluctuations driven by several factors. Concerns

[00:00:56] over inflation and interest rates continued to weigh on investor sentiment as central

[00:01:01] banks signaled potential tightening measures to combat rising prices. Stock market saw

[00:01:06] mixed performance as investors grappled with these inflation worries alongside corporate earnings

[00:01:11] reports. The week started with a strong rally fueled by positive earning surprises from tech

[00:01:17] giants like Google and Meta. However, gains were tempered later in the week amid lingering

[00:01:22] inflation fears and uncertainty surrounding geopolitical tensions. Cryptocurrency markets

[00:01:28] experienced volatility with Bitcoin having sharp price swings, regulatory concerns and macroeconomic

[00:01:35] factors contributed to the uncertainty leading to choppy trading sessions throughout the week.

[00:01:40] Commodity markets remained in focus as prices of essential goods like oil and metals continued

[00:01:45] to surge. Supply chain disruptions, geopolitical tensions and robust demand fueled the upward

[00:01:52] trajectory further exacerbating inflation concerns. Meanwhile, central banks around the world

[00:01:58] closely monitored economic data and provided guidance on their monetary policy stance.

[00:02:03] The Federal Reserve hinted at accelerating its tapering of asset purchases and raising

[00:02:08] interest rates sooner than expected to curb inflation. Similarly, the European Central Bank

[00:02:14] signaled readiness to adjust its policy measures if inflationary pressures persist. Overall,

[00:02:20] market participants navigated through a volatile week characterized by inflation worries,

[00:02:25] corporate earnings, geopolitical tensions and central bank actions, underscoring the ongoing

[00:02:31] uncertainty surrounding the global economic outlook. This week we welcome Scott Stantis,

[00:02:37] Michael Lee, Mitch Rochelle, Kenny Polkari and Josh Hammer to the show. So let's dive right in.

[00:02:43] At number five in our countdown, we begin with Scott Stantis addressing the ramifications of a

[00:02:47] recession in the UK. Scott is an internationally syndicated editorial cartoonist, senior fellow

[00:02:54] at the Alabama Policy Institute and co-host of DMZ America podcast. In this segment,

[00:03:00] Scott discusses some disappointing news from the United Kingdom. The UK's GDP fell by 0.3%

[00:03:06] in the last quarter, marking a second consecutive quarter of negative growth. This raises concerns

[00:03:12] about a potential recession. He observes global recessions often start unexpectedly,

[00:03:17] like we saw with Portugal, Spain, Greece and Italy. The UK's economy has been under strain since

[00:03:23] Brexit and a recession there should come as no surprise. The worry now is how this economic

[00:03:29] situation will impact the rest of the world. The worldwide economic community may need to isolate

[00:03:35] the UK's economy to protect others but only time will tell. What are the ripple effects? Here is

[00:03:41] Scott's analysis. Hi, I'm Scott Stantis coming to you from MoneyClip. Well, bad news from the

[00:03:47] United Kingdom, their GDP fell 0.3% this last quarter. This is on top of the last report that saw

[00:03:55] the GDP fall by 0.1%. And as you already know, recession is defined as two quarters in a row

[00:04:02] of negative GDP growth. So why should we care here in the United States? Well, world recessions

[00:04:08] tend to start in the darnedest places. Remember when Portugal, Spain, Greece, Italy? Yeah, well,

[00:04:16] hopefully that's not what this is because the UK is a special case after they voted for Brexit

[00:04:22] and they extracted themselves from the European Union. And their economy is not designed and had

[00:04:29] been less so over the years to be self-sustaining. So watching the UK slide into recession

[00:04:37] is really not a surprise. The worrisome part to us here in the United States

[00:04:43] in the world is that this could drag the rest of the world with it. How can we localize it? I think

[00:04:49] the world economic community has to work to quarantine the UK economy to make sure that it doesn't

[00:04:56] affect the rest of the world, but that remains to be seen just something to keep an eye on. For

[00:05:02] MoneyClip, I'm Scott Stannis. We now continue the countdown with number four. And Vitya is set to

[00:05:12] announce its earnings next Wednesday, a moment that carries high stakes. Michael Lee is the founder

[00:05:18] of Michael Lee's strategy and markets and economics commentator. Here he shares his opinion ahead

[00:05:24] of the report next week. In this piece, Michael says artificial intelligence has driven much of

[00:05:30] this year's market movement and it is poised to boost productivity for major corporations worldwide.

[00:05:36] He believes this will trigger a technological investment boom similar to the 90s internet surge.

[00:05:42] Among the magnificent seven companies positioned to profit and Vitya with its GPUs and services

[00:05:48] is the front runner. Revenue is expected to soar from $25 billion to over $100 billion.

[00:05:55] Contrary to common belief, and Vitya's stock trades at 36 times earnings, not 94 or 95.

[00:06:02] As the key player in the upcoming technological revolution, and Vitya is primed to profit,

[00:06:07] Lee continues by saying AI currently represents a small portion of global technology spend but is

[00:06:13] predicted to increase exponentially over the next few years. The largest corporations dominating

[00:06:19] the indexes are those best positioned to benefit from this boom. And Vitya's stock is up 47% year to date

[00:06:25] and its positive outlook suggests continued growth. Tune in this Wednesday at 4 p.m. EST for

[00:06:31] the full report. Until then, here is Michael's take. This is Michael Lee from Michael Lee's strategy

[00:06:38] for center clip. Next week, NVIDIA reports their earnings on Wednesday after the close.

[00:06:45] And this earnings report, you know, the stakes could not be higher. You cannot use a better

[00:06:52] cliche than it's for all the marbles, the whole enchilada much of what's happened in the market

[00:06:56] this year is driven by artificial intelligence. And before we kind of get to the esoteric things that

[00:07:02] artificial intelligence can do, it's going to be a big productivity jump for a lot of major

[00:07:08] corporations in the world, meaning it's going to spark a massive technological investment cycle

[00:07:15] in the providers that can offer this a lot of the routers and networking companies in the 90s

[00:07:22] in the internet boom when that came about. And right now, the best name to profit from that or

[00:07:29] part of this magnificent seven, the Google's, the Microsoft's, the Amazon's, these big names,

[00:07:34] and then our most important is NVIDIA. So NVIDIA makes chips or GPUs, graphic processing units.

[00:07:40] They sell for a ton of money and they have services and software attached. And their revenues go

[00:07:46] on from 25 billion to what should be over $100 billion this year. Part of the issue with what you

[00:07:51] hear about in the market is that is, you look at Yahoo finance, it says it's trading in 94 95

[00:07:57] terms earnings. It's just not true. The stock is going to probably earn close to 50 billion dollars

[00:08:02] this year at a $1.8 trillion market cap that puts it at 36 times earnings. The historical price

[00:08:08] to earnings multiple for NVIDIA is between 35 and 40. So you're right in line with where the stock

[00:08:15] has historically traded. And when you're the linchpin to the latest technological boom, which

[00:08:24] could be the biggest one yet. And out of global technology spend AI represents about a one and a

[00:08:30] half to 2% market share on its way to 10 or 15 or 20 percent over the next five to 15 years.

[00:08:37] Look, there's a lot of money to be made and there are issues in the underlying economy, but

[00:08:42] the biggest companies that dominate the overall indexes or the ones best positioned to profit

[00:08:49] from this boom coming in AI. And that's why we've seen the market take off this year especially

[00:08:54] the Nasdaq NVIDIA is up 47% year to date. So look, the big question is how are they going to not

[00:09:01] so much do in 2024 or 2025? Does this demand to stay in itself? And everything we know about

[00:09:07] artificial intelligence is that of exponential growth, not normalized level growth. So I still

[00:09:13] think you buy NVIDIA. It's my hope that the market is unimpressed with their earnings and

[00:09:18] with a very good report and that I get to buy the stock cheaper. But we'll see, be watching Wednesday

[00:09:26] night 4 p.m. East Coast time because that is going to determine where the market's going to go.

[00:09:31] I am Michael Lee for CenterClip. Thank you.

[00:09:39] Welcome back for number three in our weekly business rundown. Mitch Rochelle discusses

[00:09:44] the surprising decline in retail sales figures released by the Commerce Department.

[00:09:49] Mitch is a media commentator, macro strategist, podcaster, public speaker on the economy,

[00:09:55] real estate and policy. He can be seen regularly on Fox News, Fox Business and News Nation.

[00:10:01] He highlights the significant impact of consumer spending on the US economy

[00:10:06] and suggests that the decrease in retail spending could be due to factors such as reduced credit

[00:10:11] availability, financial discipline, stagnant household income or fallout from holiday shopping.

[00:10:18] Mitch points out the Federal Reserve aims to slow down the demand side of the economy by raising

[00:10:24] interest rates but the availability of consumer credit has enabled consumers to accumulate

[00:10:29] high interest credit card debt. This has unintended consequences on businesses access to capital

[00:10:35] and can lead to inflationary pressures. Rochelle considers this report as a potential early warning

[00:10:42] sign of economic troubles in the US and emphasizes the need to closely monitor various economic

[00:10:48] indicators for signs of a slowing economy. As a reminder, you can hear real-time commentary from

[00:10:54] Rochelle all throughout the week on CenterClip.com. Now let's join Mitch for his full analysis.

[00:11:00] Mitch Rochelle with a business topic of the day. If not the week, here on CenterClip,

[00:11:05] today the Commerce Department released retail sales. That's a monthly indicator of how much

[00:11:13] people are spending in retail establishments that also includes online retailers. The number

[00:11:19] surprisingly fell. It fell greater than expected. Economists had expected a point to percent decline

[00:11:28] and that I'm being a point eight percent decline. But rather than getting into the weeds on the

[00:11:34] numbers per se, I wanted to just talk about this from a directional perspective in terms of the US

[00:11:41] economy. We've discussed many times here and elsewhere that the consumer individuals buying stuff

[00:11:50] make up about 70 percent of economic activity. This is a consumer-led US economy.

[00:11:59] Consumers are slowing down on retail spending, which is not surprising because we've seen

[00:12:07] consumer debt, credit card debt in particular hit an all-time high about $1.2 trillion worth of credit

[00:12:15] card debt. Whether it's credit card companies sending bills in the mail, lowering credit available,

[00:12:24] whether it's just discipline on the part of the consumer, whether it's household income not

[00:12:29] keeping up with inflation, whether it's Christmas shopping, holiday shopping, hangover, all it

[00:12:34] translates to is a slowing consumer means a slowing economy. Now let's remember this is what the

[00:12:42] Fed wants. The Fed raises interest rates for the purpose of slowing down the demand side of the

[00:12:48] economy. Fancy name for it, that economists use is demand destruction. Sounds pretty draconian,

[00:12:54] but that's what the Fed has looked to do. However, the availability of consumer credit in the form

[00:13:02] of credit cards and other revolving credit facilities has enabled the right word I'm using there,

[00:13:09] enabled some bad behavior on the part of the consumers to load up on credit card debt and high

[00:13:15] interest credit card debt if you don't pay your balance often full at the end of the month.

[00:13:20] The demand that the Fed often tries to curtail unintentionally is the business side of the

[00:13:29] equation because businesses have less access to capital, and when businesses let less access to

[00:13:34] capital because the credit market has shrunk, the money supply has shrunk. Then businesses can't

[00:13:40] borrow money to fund their operations and if they can't borrow money to fund their operations,

[00:13:45] what happens is the supply side of the economy suffers and the supply demand in balance actually

[00:13:52] fuels more inflation. But this report could be a little bit of a canary in a coal mine to tell us

[00:14:00] that there are darker clouds ahead as it relates to the US economy. One report does not

[00:14:06] attend make, however, I'm looking closely at this quarter to see if we see other indications of

[00:14:15] a slowing economy whether it be jobs, whether it be industrial production, whether it be any of

[00:14:21] the sentiment surveys that are out there paying close attention. Mitchell Shell with a business

[00:14:27] brief here outside of the clue.

[00:14:33] At number two this week, we go back to Wednesday for a market snapshot courtesy of Kenny Polkari,

[00:14:38] the founder of Case Capital Advisors. Polkari shares his real-time take on several issues.

[00:14:44] These include the how the CPI exceeded expectations, suggesting fewer rate cuts in the future.

[00:14:50] Kenny observes this led algorithms to send cell orders, causing stocks and bonds to plummet

[00:14:55] earlier in the week. Despite some recovery, all sectors experience losses with technology,

[00:15:01] real estate and financials hit the hardest. Concerns remain about future bond market demand

[00:15:07] and oil prices are rising while gold has declined. He predicts certain economic data won't

[00:15:12] significantly impact the market and upcoming speeches from Fed officials will be interesting to watch.

[00:15:19] Here's the entire moment from Wednesday. Good morning, it is Wednesday, February 14th and I

[00:15:24] am Kenny Polkari for Santa Clip. And here is what you need to know. Well, yesterday the CPI exceeded

[00:15:31] expectations which was not good, suggesting fewer if any rate cuts in the future.

[00:15:38] Algos react and become anxious sending wave after wave of cell orders into the marketplace

[00:15:45] and that sense stocks, reeling bonds, reeling as well. Services inflation,

[00:15:51] right, that part of the CPI, that serves. Right, the highest in two years signaling fed

[00:15:56] challenges above because remember we are a 75% services economy. So this is not what JJ wanted to see.

[00:16:05] Stock losses accelerated throughout the day but partially recovered by the end of the day while

[00:16:11] still lower they closed off their lows every sector suffering losses technology, real estate

[00:16:17] and financials getting hit the hardest small and mid caps also down significantly.

[00:16:23] Contrary trade such as the inverse ETFs, thank the SH to PSQ and the DOG all saw gains amid this

[00:16:30] market downturn. The VIXI, the fear index ETF, the VIXY surge by 13% at one point before settling

[00:16:40] up the day with a 7% gain. Concerns remain over the future bond market demand, right? As the fed

[00:16:47] plans a massive 2.7 trillion dollar debt issuance in 2024 alone, never mind what we need in 2025 and

[00:16:56] 2026. So the question now is what will demand be like? What will buyers be willing to pay?

[00:17:03] They've been lower yields go higher and that will present challenges for stocks in the future.

[00:17:09] Oil prices rise on the OPEC forecast and some new geopolitical concerns this morning is trading

[00:17:15] at 78 dollars. I think preparing getting ready to kiss 80 gold declines as those rate expectations

[00:17:22] faded. I told you that plunging through all trend line supports taking it right down to gold

[00:17:28] 2000. Do not be surprised to see gold test 1975 before this is over as expected the dollar is

[00:17:36] strengthened of course it did they're not cut and raised and it busted right up into resistance

[00:17:41] with 106 now in the bullseye so 10429 becomes support that was resistance. It's now support 106 is

[00:17:49] now the target today's economic data includes nothing other than mortgage apps and PPI revisions

[00:17:55] neither one do I think is going to be enough to really move the market fed up move the market

[00:18:00] because of that the market will move because of the action yesterday not because of the economic

[00:18:05] data that's what I meant. Fed officials are getting ready to speak out today right this post

[00:18:09] of CPI release what will these guys say about the CPI report and then how that might affect

[00:18:16] Fed think I don't think it does because I think the Fed's been very clear they're going to

[00:18:19] stay on hold I think that's going to be the message market reactions are still unfolding

[00:18:24] and they're going to angiously await the comments specifically by Austin Gools B futures are

[00:18:29] showing that early rebound at the essays losses that should not be a surprise right but I'm

[00:18:35] still advising that you be cautious ahead because I don't think this was one and done.

[00:18:39] European markets have rebounded after the essays losses. UK inflation data is what's in focus

[00:18:45] more central bank officials from around the world to speak in the coming days right ECB

[00:18:51] speeches are going to happen across Europe this button repressing was expected if you were surprised

[00:18:57] by this then you haven't been paying attention trees do not grow to the sky what were you thinking

[00:19:04] all the more reason to have a plan and then execute on it calm it and discuss them always

[00:19:09] happy to talk to you until tomorrow take good care

[00:19:16] to round out our countdown this week Josh hammer discusses a hot CPI number

[00:19:22] and what might be around the corner. Josh is the newsweek opinion editor the Josh Hammer Show host

[00:19:28] syndicated columnist and Edmund Burke Foundation research fellow in a surprising turn of events

[00:19:34] the consumer price index CPI also known as the inflation index is now higher than anticipated.

[00:19:41] Josh says this indicates the federal reserve will not be reducing rates during their next meeting

[00:19:46] contradicting previous expectations the assumption that inflation would decrease more than it actually

[00:19:52] has means that we are still far from the peaks seen in the summer of 2022 CPI reached a staggering

[00:20:00] 9.1% annualized rate in mid 2022 the highest in 40 years since Jimmy Carter's presidency

[00:20:07] hammer says unfortunately this news is disadvantages for prospective homeowners especially

[00:20:13] for millennials and generation Z who are lagging in homeownership compared to previous generations

[00:20:18] unless rates start declining this disparity is unlikely to improve causing concern for many including

[00:20:24] hammer as a newly wed looking to buy a home here is the segment from Josh CPI the inflation index

[00:20:33] coming in a lot hotter than expected all signs are now pointing towards the federal reserve

[00:20:39] not not cutting rates at their next upcoming meeting lots say about that it looked like inflation

[00:20:46] was going to be coming down a bit more than it was obviously we are still a very long way from

[00:20:50] the summer of 2022 highs it was the summer 2020 to around junior July of that year when the CPI

[00:20:57] index reached 9.1% on annualized basis I think that was the highest that also was the highest of

[00:21:03] course that had been in roughly 40 years since the Jimmy Carter era of stagnation but still the news

[00:21:10] that CPI is coming in a little hotter than expected and the Fed is not going to be expected anytime soon

[00:21:15] to cut rates big dagger certainly for those of us who are not yet homeowners who are hoping

[00:21:23] to get a home you know as it currently stands the millennial generation and Gen Z as well

[00:21:30] are chronically are chronically behind their previous generations are chronically behind

[00:21:35] the boomers are chronically behind Gen X when it comes to rates of homeownership at an equivalent age

[00:21:42] and unfortunately on less rates start to come down that trend is not going to get any better so

[00:21:48] that's what my biggest takeaway right now as someone who is newly married to get married in December

[00:21:53] and like many others of my generation looking to formally go ahead and purchase a home for the first

[00:21:59] time not great news unfortunately when it comes to this latest CPI inflation measure which again

[00:22:07] does indicate that the Federal Reserve is not going to cut interest rates anytime soon

[00:22:16] we'll have to hold it there please remember this episode presents the personal opinions of these

[00:22:21] individuals and should not be viewed as investment advice thank you to Scott Stantis

[00:22:26] Michael Lee Mitchell Shell Kenny Polkari and Josh Hammer for their work and more in real time

[00:22:32] please visit centerclip.com one topic at a time leaders on both sides always under five minutes

[00:22:39] that is elevating discourse again centerclip.com for more throughout the week we'll be back next week

[00:22:46] this has been the weekly money clip

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