‘Ends In A Great Depression’: Where Stocks, Gold Go In Final Melt-Up | Gareth Soloway

Yes, the charts are saying higher. This is the final throws before something much worse is on the horizon that's going to hit. By 2029, 2031, we'll be at 13,000 on gold. The reporter asked him, "Hey, why didn't you guys raise interest rates today? You have three descents." And Kevin War said, "Actually, if you look at interest rates, they've been going up for the last 40 days." meaning >> I know the Fed funds rate yeah didn't go up but the bond market did our job for Gareth Soloway is back he's a president of verified investing welcome back Gareth it's good to see you my first question to start the discussion today are you buying this rally uh V-shaped recovery since the beginning of August pretty much everybody not everybody but most people that I've talked to have become more bullish than the previous month and you can gauge that from market sentiment a lot more euphoria than a month ago. >> Yeah, and that's a great question and and like many others, the charts at least are pointing to potentially further upside. So near-term, I am bullish. I still think there are massive issues out there that are starting to become worse. Mainly, we saw retail sales this morning coming in at minus.6 versus a consensus estimate of.1%. So the consumer is suffering. We're seeing the jobs data getting weaker and weaker uh per the last number and we're still seeing inflation while it's kind of in line with expectations. We're still at a 3.4% inflation rate um per the headline number. So yes, the charts are saying higher that we're likely headed I have a target of around 81 to 8200 on the S&P by year end. But I think again this is the final throws before something much worse is on the horizon that's going to hit probably in early 2027. Let me just pull up a chart real quick. Uh and then I'll let you share yours. So I'm going to show the S&P 500. Uh let me actually just show the S&P here. So the S&P uh and this is I'll just overlay this with gold, but you could do this with a lot of different things. You could do this with the 10ear yield. Something happened, Gareth, on the 31st of July. >> Yep. >> Now, I know the Jen intervention happened um and perhaps that was the trigger because that may have signaled that the government was willing to stop the uh interest rate from going up further by preventing a selloff of US treasuries if the yen carry trade and wines. But was there something else? Because on that day, the end of July, risk assets moved up together. And so if it was just a few stocks reporting good earnings, you could make it a earnings argument. But this seemed to be a macro narrative here. >> Yeah, I think it was a combination, right? I think what you saw here is very clearly the economic data has weakened. We talked about retail sales. The jobs report, inflation numbers are becoming, again, I I don't want to call them low because they're not low and it's ridiculous, but at least they're not continuing to spike. So, you throw that into the pot and stir it around and what do you get? You get a Federal Reserve Fed watch tool telling us that now there is a 70% chance that there is no rate hike in September. If you go back to July 29th when the markets were bottoming out, there was a very high probability, in fact, over 70% chance that the Fed was going to hike in that next meeting. And so that's been the change. Interestingly enough, the Cosby, which had fallen dramatically, and let me jump into the charts here because I think this is really fascinating to take a look at. But if we look at the Cosby here, it actually bottomed out right on that same point right here. And that was a big correction. I mean that was scaring a lot of people. We had a draw down in the Cosby which is the uh South Korean stock market of 44%. Imagine if the stock market here fell 44% in a month. That would panic everyone. And then you look at stocks like SanDisk, you look at Micron, they all bottomed out right there as well. And so there was a combination of macro data which then changed the odds of rate hikes to rate rate stationary play. And potentially, I honestly think that we'll get cuts in 2027. That means risk on because it's cheaper money. It doesn't have to worry about the higher rates. And that means again, Cosby, semiconductors, you name it. It all goes back to rallying. >> What right now is overbought for you? >> So overbought, there are some plays. I mean individual stocks for instance um a MongoDB MDB again this isn't going to be something that's macro related but if you look at this chart incredible surge just since July 24th when it was under 300 is now approaching $500 major trend line right up here so these are the types of things I also think there's a bigger dynamic going on with the US dollar you brought up the dollar yen just a little while ago but look at the US dollar breaking here and we know the stock market likes makes a weak dollar. Multinationals make more money when they convert those other currencies back to dollar if the dollar is dropping. And then the 10-year yield and the 30-year yield, which still remain at ridiculously high levels, at least they're not pushing up, right? So, if we go to the 10-year yield here and we take a look, you can see it's really flatlined ever since, interestingly enough. I mean, you could really go back to May, the high pivot in May. We've just been stalling around here. And that's giving investors a little bit more confidence that, you know, essentially we're seeing a slowdown. And I think we can't we can't overlook, and sorry to ramble here, but we can't overlook the oil price as well. Oil again was popping up as as missiles were flying and strikes were going on. And all of a sudden, basically, the president has said, "We're going to do economic sanctions on Iran, but we're not going back to missiles and attacks." And what does that mean? It means the midterms are getting pretty darn close, so we can't be having a war and and continual casualties going on going into midterm elections. >> Are you are you saying that the government is going to make sure through whatever means necessary that the markets remain elevated into November? Um, I would say it's not the government per se, but I think that people that are in charge of the government. I think the president, we know President Trump looks at the markets as a gauge of how the economy is doing and also looks at it as popularity um and votes to some extent and therefore yes, I do think he will do whatever it takes to keep the markets at or close to all-time highs into November. Now, after that, that's where things could get a little bit choppy. And listen, we also are going to watch the Federal Reserve. We'll have to watch inflation, but I would say that until the midterms, there will be no more major strikes on Iran until after the midterms. Then we'll have to see where that all pans out. >> Okay. Right now, are you expecting the Federal Reserve to raise interest rates further? >> No, I don't. And I I didn't even believe it or not. I ever since Kevin Walsh was put into the chairmanship, I have been steadfast on this and I I've even said I think we can go back to our past interviews. I said he will not raise interest rates. And two factors there. Number one, I actually believed President Trump when he said he would never appoint someone that was going to raise rates. And number two is while Kevin Worsh in his last press conference talked this great game, we're going to get, you know, prices under control. We're going to do this. And we've even had hawkish members of the Fed come out and be super hawkish and talk about raising rates. There's been very little detail like like it's a lot of of hardcore talk, but but there's nothing backing it up. And that's telling me everything I need to know. And now miraculously, we're seeing all the pieces of the puzzle fall in. Labor markets weakening, retail sales, which tells you the consumers hurting. We see oil prices staying somewhat elevated, which but not at their highs, so it's not really pushing inflation up. Everything's falling into place, including the supposed CPI and PPI numbers, which came in this week. And we're basically muted in line or slightly better than expected. It takes all the pressure off and thus the Fed watch tools now telling us that. Before we continue with the video, let's talk about your most important asset, your personal privacy. Now, you've probably never voluntarily handed your personal information to a data broker, but they have it anyway. Your name, home address, phone number, even details about your family are collected and sold to whoever is willing to pay for it. That's why today's sponsor, Delete Me, is a service I use to cut that down. Setup takes a few minutes, and after that, their team does all the work. They find where your information is listed, verify it, and submit removal requests to hundreds of data broker websites around the internet. Then they keep checking because these listings tend to come back. Since June 2024, they've been reviewing my listings. And my most recent report showed 335 listings reviewed last month alone. Scan the QR code here on the screen or go to joindeleteme.com/david, link down below, and use the code davidin for 20% off. take back control of your privacy today. Now, back to the video. I think it takes I'm just looking this up, four fed governors, how many uh to make a decision on a rate hike or cut. So, I I I think the point is Kevin Worsh is just one member. Yes, he's the chair, but the committee itself votes as a whole. So, if the majority want a rate hike, it unfortunately doesn't really matter so much. if Kevin Worsh wants the other the the the other way to happen. Am I am I am I right there? >> You are absolutely right. But I would not overestimate the influence that can be put on other members of the Federal Reserve. Now listen, there's going to be a few that won't be influenced. And we've seen that in I think last last one there were multiple uh Fed governors that wanted to hike rates. But there is always going to be someone who can be swayed. Especially when the data is starting to weaken. I mean, think about it. If you're one of those four governors that votes for a hike and you raise rates and then all of a sudden the jobs data collapses. Think about the pressure. So the easy out as human beings, we like to generally take the easy out is to say, "Oh, well, at least if we're wrong, it gets blamed on Kevin Worsh." But if Kevin Worse doesn't want to raise rates and you're one of the people that pushes it, then it's falling on your head and people just don't want that pressure. And so I I think that some will and I think they want some I mean, think about it like this. The Federal Reserve is going to want people to say, "Hey, we want to raise rates." And even some vote for it because it keeps the independent look of the Fed. It keeps the hawkishness on there. And so it keeps control of the situation. But ultimately, what is the outcome? I guess we'll find out. But I say no rate hikes the rest of the year. And I say cuts in 2027. >> Wow, that's a pretty bold prediction. Cuts because the labor market is going to deteriorate or inflation is going to return to normal. I think inflation is going to stick in this 3 to 4% range and then ultimately the labor market is going to continue to weaken here. Um, and we will see essentially a mini stagflationary scenario in 2027. And that's really where I worry about the stock market. And I think through the midterms probably fine maybe 2% 3% draw downs which is just normal but then pushes to all-time highs. I think we hit 81 8200 by year end then starting in 2027 that's where I'm going to get concerned. Now let me show you this chart here and this is why I think the the 82 to 8300 level is appropriate to to mark on. So number one here's a chart of the S&P 500. Right? So, we were in this parallel channel since CO's low bull market 2021 highs and we talked about this in past interviews. Here's your lows of the bare market in 2022 and 2023. Here's your tariff selloff down to that same trend line. We then went to the high end, but look, we broke out. So, we broke out of the channel and then all of a sudden a resistance level, remember, it was resistance here and resistance back here. It now became support. And so, this is kind of my level in the in the sand, if you will. As long as we stay above here, it remains bullish and it held and we've gone higher. Now, if we continue up, there's one thing that is paralleling here. We take a trend line right from here, right? So, these these levels and essentially we bring it up to this high point here. Okay? And I'm going to change the color on that so it pops out for all you guys that are watching. If you look at that, that's the logical next parallel to get hit. And where is it? It's right around 8,200 8,100. Now, you might say, "Okay, well, it's a parallel. No big deal." I want to show you another chart that's even wilder here. So, let's get rid of these drawings. Let's do the S&P divided by M2 money supply. Now, the reason why M2 is so important is that M2 is how much money is in the system essentially. So, in theory, the more money in the system, the more money that's being created, the higher the stock market can go because some of it always finds its way in. So, if we go to USM2, so let's divide S&P by USM2 and we bring up this chart. I want to show you this. If we go to our weekly chart and we go back to the dot high right here. So, here's your dot bubble high. Here's your low from 1982. Here's your collapse financial repression or or or recession, you know, the big financial crisis low. So, you're connecting two pivots. And guess where this would go? how much higher it would go if we hit 8,200 on the S&P, we would top out on the M2 money supply uh factoring when looking at the S&P. And I hope I explained that clearly enough, but that would essentially mean that we are more expensive in terms of M2 than at the do, but it would be essentially the the high of the parallel channel or resistance. of the two factors, the S&P level there and the S&P divided by M2 money supply right there at 8,200. I think that's where we're headed and that's where we could see that next big draw down. >> Let me present a bullish case for you, Gareth, and let me see if you argue or disagree or refute this. So, this is I get what you're saying about a potential recession or a slowdown or even a weakening labor market next year. Um, I'm here to make the argument that that doesn't matter because what I what I've noticed in the past two quarters, especially the last quarter, is that earnings across corporate America were through the roof. Goldman Sachs reported the best performance ever. Uh, a number of tech stocks reported record earnings. Uh, Google just raised the most amount of the just raised the largest equity raise in corporate America history. that that in itself is not a bullish signal but that's that copes to show that most of the GDP in the last year was created by the AI buildout and the infrastructure build out around AI compute and most of the corporate revenues from the big mag 7 companies is just B2B companies selling stuff to each other. So, as long as that continues, as long as they continue lending money to each other, giving them each other money, then the little guy, the retail consumer, you and me, maybe we spend less next year. Who cares? Google's still going to print money >> and that's what's going to drive earnings. >> You're honestly 100% right. Right now, it does not matter. 100%. When you throw in the amount of capex from these mega caps, the we know that let's be fair, at least 80% of the US probably feels like they're in a recession. Yet, if you look at the stock market, it doesn't even look like that. Why? Because earnings have been great. Capex spending is off the charts. I mean, literally, capex spending is like us going through COVID again and the government printing that much money. It's just coming from these mega caps. My one drawback would be is that that spending at some point will top out and the markets always forecast that six to 12 months in advance. So I'm thinking that by the end of 2027 you'll have to start to say hey listen these companies which now are cash flow negative >> they at some point have to pull back and actually show us some sort of actual cash flow positive nature to it. Right? Um, in addition, I would also say that a lot of these AI models eventually are going to rely on companies to be spending tokens, which which already they are, and individuals like you and me to be using the AI. And at some point that is going to get stretched if you and I find that we don't have enough money to spend on that type of things. So then you take into account that eventually the consumer does pull back, the debt actually matters. I mean, think about how much debt has been issued and we've already seen scares of that. I mean, Oracle and all these others, if this debt issuance continues, which it probably will, at what point does that break? What time what point does that become the next financial crisis out there? And so, while you may be right and maybe it prolongs it into further later in 2027, I would just caution that for me at least, I have to follow the charts and at least expect some significant pullback off of that level. Now maybe it's only a 10% draw down then we go higher but the charts are saying 818200 is the top near-term here over the next 6 months and ultimately even if we do go higher at some point it all comes back to roost here and I think you agree with that. I mean at some point the amount of debt that's being pumped out there it's unsustainable right and that that by the way the US just hit 40 trillion national debt. We sold we the US sold 25 billion in 30-year bonds yesterday at the highest interest rate. They had to pay pay people the most interest that has been paid in 25 years on a 30-year which tells you there is a concern out there about the amount of debt. So you're right. We can finance our growth on debt and spending from these mega caps for a certain amount of time but it will end in a great depression. The other issue is well the Iran issue hasn't been resolved and we don't know how high uh oil can go. I worry about what you said earlier which is if the Federal Reserve doesn't raise interest rates, what will happen is the bond market, the bond vigilantes, if you want to call them that, are going to revolt and they're going to start selling treasuries and and raise the yields themselves. In fact, Kevin War said something pretty alarming to me uh at the last FOMC meeting. The reporter asked him, "Hey, why didn't you guys raise interest rates today? You have three descents and you know, today seems like a good time to raise interest rates." And Kevin War said, "Actually, if you look at interest rates, they've been going up for the last 40 days, meaning >> I know the Fed funds rate, yeah, didn't go up, but the bond market did our job for." If they adopt that attitude, rates are going to keep going up. And I wonder, Gareth, as a trader, at what point will higher rates really scare you? >> Yeah. And and I would say you get above 5% on the 10-year, that is going to get scary. And the issue here is now is that it's it's it's not just, wow, my mortgage is going to be a little bit higher. We already know that the the housing market is really struggling. In certain areas of the country, it's okay still. In places like Florida, it is bad. Like I just talked to a broker in this in this area here and she said it's as bad as '08 uh the same as that point that the crickets out there right now. You're not seeing the obviously the defaults and that stuff but in terms of business it is as bad as '08. But the point here is you're right Kevin Worsh basically the market's doing it for him. And what's scary about that is that if the market just does what it wants anyways then what's the relevancy of the Federal Reserve? like is there relevancy or is the market just going to take control? And that's what I think is going to happen. The market's just going to do what what it needs to do, right? Because at some point when you have 40 trillion in debt, how high can these things go before the amount that we're paying on of interest, which is already north of a trillion, is just going to break the whole economy anyways? And I mean, these are all questions that are just so freaking scary to think about. >> But as a trader and an investor and an economist, I have to be looking at this. And I want you guys out there watching, >> even if you even if you still go long and do whatever, at least don't have your head in the sand. Understand what's happening. >> All right. Well, comment down below uh what you think is going to be the most bullish or bearish assets going into the end of the year. Gareth, we have about uh couple minutes left before the end of the session today. So, let's wrap it up with your market outlook going over specific assets. We talked about the S&P 500. We talked about the tech sector. Let's move on to gold. Now, uh, like I mentioned at the beginning, gold spiked at the same time that the S&P did. Uh, right now though, uh, is momentum strong enough that you would be looking at another retrace towards $5,000 an ounce. So, I I think gold is going much much higher. It's just a matter of the time. So, number one, great wedge pattern. Look at how when it broke out, it was a awesome breakout. Now, I do think you are going to get a retrace here. We're probably going to come back towards 4,000, maybe even 39, 3,900. But at this point, once you get the breakout, you buy the pullbacks. Um, this downtrend has been broken. All right, that's number one. We're starting to get slightly higher lows and now slightly higher highs. And so, again, the breakout is there. Um, I do have it pencileled out based on a calculator and calculations that I've done is that by 2029, 2031, we'll be at 13,000 on gold. That's that's my my calculation at this point. So, I think listen, there's a small part of me that still thinks gold could go down to 3500. That was kind of my worst case scenario where I'd be like buying with both hands, physical metal, etc. It only got down to 3,900. But at this point, you know, you see the writing on the wall, like we've talked about it in this in this interview, all the negatives that are on ultimately a positive for gold, even silver, and so on and so forth. You know what's interesting and I I'll come back to gold in just a minute, but you know what's interesting is that we talked about the gold price popping. We talked about S&P popping around end of July. Bitcoin's still flat. >> Fact, it's down today. >> Yeah. >> In fact, gold's up and Bitcoin's down today. Yeah. Bitcoin. Oh, yeah. Just whatever moved the markets, by the markets, I mean the stock market, whatever moved the stock market at the end of July at whatever moved gold, that force did not have any impact on Bitcoin whatsoever. It's still flat. >> Yeah. And and what what we're seeing is so number one, we we actually did get a breakout on Bitcoin and it's probably one of the weakest breakouts I've ever seen in my life because you can see this is trend line goes to the alltime from the all-time high down to this pivot. We hit it then we hit it again three times here and we finally got through the line. Now with gold, what did gold do? When gold got through its line, it it like ripped higher. Bitcoin just petered out and as long as it stays above this white line, there's actually a bullish angle to this, meaning probability actually favors upside here in the near term on Bitcoin. But I think what's going on here is that you have all these other assets. I mean, semis are starting to rally. The stock market's at all-time highs. Gold is going Bitcoin. Who wants to be in Bitcoin at this point? Like no one. I mean, even Michael Sailor had to sell like 100 million to cover and buy other things and cover dividends. The one thing again I will say, I'm short-term bullish on Bitcoin. Um, and I think also the Clarity Act issue. So, you had the the Congress punt the Clarity Act to the next session. Um, that just happened days ago when they went on break. Now, they're not coming back till September. So, I would think that probably late August you start to see an uptick here. But, we're just continuing to hear that these meetings, these things on clarity, it's just not helping. It's not getting forward. And that's honestly disappointing for anyone in crypto who voted for Trump because he was pro crypto. the crypto stuff has really not panned out. And my thesis here is, and I'll tell you this, one of the reasons why I'm near-term bullish is I do think that the president will want to get crypto voters back to the back to the polls or back to the voting boxes in November. And he's going to try to push that clarity act through before the midterms. And I think that will give you a 10% to 15% run in Bitcoin, maybe even more, taking it into the 70 75,000 range, >> you know. Um, when I think about why Bitcoin didn't move and I assign reasons to myself, this is my thought process. I well, I don't know the answer. This is why I ask Hespers like you. But I think to myself, look, one of a few possibilities. One, like you said, there's a Bitcoin specific narrative. We we're waiting for the Clarity Act. We're waiting for more more legislative clarity, no pun intended, in the crypto space before people move back into Bitcoin. That's number one. Number two, all the people who are investing, trading crypto, including Bitcoin, the retail crowd has moved into the crypto space or even, sorry, not the crypto space, the AI tech space or the prediction markets. And so that capital has been drawn out and now it's just institutional capital and that's not as volatile. And number three, uh perhaps Bitcoin being the ultimate risk on signal. That's the true indicator of risk on sentiment. You know what I was talking about earlier? How people are euphoric? Maybe Bitcoin is telling us the market really isn't that euphoric and the spike in stocks in tech stocks. That's just a result of really good earnings coming in the last quarter and is a temporary one-off because it's not a reflection of true sentiment. I don't know if uh any of these make sense to you or if you have another explanation. >> Honestly, they all make sense to me and I agree with you. I mean, once the prediction markets got popular, you saw le less interest. I mean, again, when you could go into Doge in 2021 and make, you know, a,000% or 100x your money. That was exciting. Now, the prediction markets have taken over. And also the tech stocks. I mean, look at earlier this year. You had names like Applied Materials running 200% from their lows in a matter of months. SanDisk, Micron, all of these. And so you have sucked a lot of those players away and also they head over to zeroday options where the zero day options is the gambling kind of thing that people were doing on the altcoins. What I will say at least for Bitcoin is Bitcoin is the one thing out of all of them that at least maybe there's a glimmer that it's that that alternate to gold or that that angle to, you know, diversifying against money printing and fiat. Now again, every bare market people doubt it, but so far the bare markets have been every four years and so and it's come out the other side. I'm not convinced the ultimate low is in for this cycle, but I am convinced pretty highly that we will see a rally in the near term here over the next month or two in Bitcoin. That'll send it up again, you know, back into the mid70s, maybe even touching 80. Uh again, that'll be based on whether or not the president starts to court those investors and gets excitement back. >> Okay, excellent. We got uh a minute and a half left. So comment below what you think Gareth Gareth is going to pick for his top uh bullish and top bearish trades. So I'll just ask you straight up what do you like the most? What do you like the least right now? >> All right. So I'll just talk from what my portfolio where my money is actually invested. And right now I have positions in IBIT from from this area based on the chart. Um I have positions even in XRP. Um I couldn't care less about XRP. People get so excited one way or they hate it the other way. I look at the chart, dollar pierce, major wedge pattern breakout. These are the good chart setups and I'm looking for catalyst there. So, I'm mostly in the crypto markets or in the ETFs that track crypto. And then on the other side, I'm waiting patiently for these these plays like Micron and SanDisk to retrace 61.8% 8% Fibonacci retrace of their recent falls which were like 40% and then I will start nibbling on shorts again in the AI space. I'm watching SKH same thing looking for these bigger moves up. I still think there's more upside in those semis. Once they get there I'm going to start loading the shorts on those again. >> Perfect. Gareth, tell us where we can find you. >> Find me at Verified Investing, folks. We always say all charts and data, no BS. It's all about the charts. I trade everything on the charts. No personal feelings. I always found that I lose money when I get emotionally involved. So, we look at the charts. What are the charts saying? And I understand it's probability based. So, it doesn't mean I'm going to win every time. I just need to win a lot. Essentially, I want to be the casino, not the gambler. Gareth, thank you so much. We'll put the link down below. Make sure to follow Verified Investing there. Appreciate your time. See you next time, Gareth. >> Take care, David. >> And see you. Thanks for watching. Don't forget to like and subscribe.