Scott Shellady AKA The Cow Guy joined Benzinga's Premarket Prep team ahead of Fed Chair Jerome Powell's Jackson Hole speech.
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00:00All right, Scotch lady, the cow guy here.
00:03First question is, are you out of your yen carry trade?
00:08Well, I'm happy I never got involved with it, but I don't think that's over by the way.
00:14I know that the market wants to brush everything under the rug very quickly.
00:18Nothing to see here.
00:19Please move along.
00:20But I think that was a little bit of a warning shot.
00:23I still think we're going to see volatility, actually a lot of volatility.
00:26And I think that whomever's going to be the president on January 1st is going to be given
00:30a bleak, a big hot plate of warm you-know-what to manage going into 2025.
00:35Okay.
00:36All right.
00:37Let's go a little bit shorter term here.
00:39I'm sure you've been sitting on pins and needles for the Jackson Hole speech at 10 o'clock
00:46for Mr. Powell.
00:47What a bunch of nonsense here.
00:49I guess a quarter, a half or whatever.
00:52I'm the only one that thinks we don't need an interest rate cut, but whatever.
00:56Just anticipation, dovish, hawkish, nothing-ish, all the ballyhoo about the Fed and Jackson
01:03Hole today.
01:04Well, they've painted themselves into a corner, haven't they?
01:06I mean, you've got part of the market, I would say a large part of America that believes
01:10that they already feel like they're in a recession, so they maybe would benefit from starting
01:14to cut rates.
01:15But at the same time, I've asked anybody that wants to come on my show, I'll pay their airfare
01:19and their hotel to come in and tell me, explain to me how cutting rates is going to help inflation
01:23go lower.
01:25So they're in a damned if you do, damned if you don't.
01:27If they cut rates, they're going to have an inflation problem.
01:29If they don't cut rates, they're going to have an American story problem.
01:33On top of that, the reason why we haven't been in an official recession, because NBER
01:40has not been able to label one.
01:41We had two quarters of negative growth, but they didn't want to do anything about that
01:44because that would have hurt the current administration back in 2022.
01:48But we've had government spending hand over fist.
01:51We've basically spent our way out of not having a recession.
01:55If you look at those jobs numbers month over month, the government spending has kept us
01:58out of a recession and that's it.
02:01But then we've come to learn a couple of days ago that we can't even do that right.
02:05We got ripped off because all the money that we've been spending to keep ourselves out
02:08of a recession, apparently we bought 818,000 jobs that actually weren't there.
02:14What?
02:15Yeah.
02:16Yeah.
02:17The BLS came out with the revision saying that from last April to this March, they overstated
02:24their jobs numbers by 818,000.
02:27So that's a huge revision.
02:30The biggest one in the last 15 or 16 years.
02:32How does that happen?
02:33How does that happen?
02:34Well, I mean, how does it happen that we have continually month over month headline beat,
02:39but then the last two months get revised lower?
02:41That also flies in the face of, I mean, that's like we're talking four and five sigma stuff.
02:47It just doesn't happen.
02:48Yeah.
02:49So we got ripped off.
02:50We've been spending money to stay out of a recession and we bought 818,000 jobs were
02:53absolutely fictitional.
02:55So I, you know, look, I'm, I'm, I'm bearish on, on what the economy looks like here.
03:00But I am bullish on, I think that, you know, artificial intelligence is here to stay.
03:03I think there's some, some good things out there, but that doesn't mean we can't go lower
03:07for a little while here and maybe even go sideways.
03:10And my last thing I'll say is this, you know, I've got all, I had all the licenses myself
03:15for my entire life, you know, to sell stocks.
03:18I've been a stock broker, commodity guy, income guy, fixed income guy.
03:24But what I don't like, what I'm seeing now from 2008 forward, if you go back and take
03:27a look at the SMP going back to say 1970, there's a clear line, a demarcation line in
03:322008, 2009, where you can see the Fed becoming ultra accommodative.
03:37And it seems like now, and I guess three weeks ago, whenever that was the hiccup we just
03:42had two and a half weeks ago, it just seems disingenuous to me that every time we see
03:46a decent sell-off in stocks, everybody comes out of the woodwork calling for the Fed for
03:51an emergency 1% rate cut.
03:53The Fed's got to rescue us.
03:54Why?
03:55I mean, if the Fed's not going to let the market go down, this is a rigged game.
03:59I mean, I would love to go back to be a stock broker, because if you come into my office
04:03and say, I've got a three-year time horizon or longer, I'd say, just put it in the market.
04:06The Fed's not going to let it go down.
04:08Commodity guys have to worry about markets going down.
04:10And I would argue, even say sometimes interest rate guys do.
04:13But with the Fed coming to the rescue all the time for the equity guys, it just smacks
04:18of disingenuous, and I don't like it.
04:21So whenever they change that tune, which I don't know if they ever do, but they have
04:26to come to, you can't continually screw with the laws of nature all the time, because ultimately
04:32it will come back and boomerang back and hurt you twice as bad had you just let the market
04:37do what it was supposed to do.
04:39Because they're continually trying to manage an outcome, and it's not going to work.
04:45So at some point in time, we have to come and pay the piper.
04:48But right now, put your money in the market, because they're not going to let it go down.
04:52It's short-term gain for long-term pain.
04:55Yes.
04:56I mean, this is really what the Fed, this is really what everything is, our administrations.
05:03And it's not just the Dems.
05:05It's obviously the Republicans.
05:06Oh, it's both.
05:07Yeah, I agree.
05:08I mean, it's apolitical.
05:09I mean, and fellas, look, we can't, I talk about it all the time on my show because it's
05:16the biggest thing that nobody talks about, that's our debt, $35 trillion.
05:21We have a $2 trillion budget deficit, annual budget deficit.
05:24And so just the reason why we don't talk about it is because people can't imagine what a
05:28trillion dollars is.
05:29They hardly can imagine what a billion dollars is.
05:31But if I said it to you this, if you would have spent a million dollars every day since
05:36Jesus Christ was born, you would not have spent a trillion dollars yet.
05:41It's unbelievable when you say that.
05:44I know.
05:45And it's like 700, you know, whatever, $750 billion.
05:49So we're $35 trillion in debt.
05:52You know, if a second is a dollar on a clock, a trillion seconds ago was 31,677 years ago.
06:00I mean, it's mind-boggling, and nobody cares.
06:03Because at some point in time, we're not going to be able to sell our bonds, and interest
06:06rates are going to go through the roof because of it.
06:08Just saying.
06:09Wow.
06:10And then just how long is this, like, again, this is where interest rates have to eventually
06:15come back down too, because the debt's so high, they won't be able to service the interest
06:19payments.
06:20Right.
06:21We've crossed that threshold, the Rubicon of we're starting to print money just to pay
06:27the service on our debt, not even the principal.
06:29We're printing money to pay the service on our debt.
06:34And our service on our debt will be the biggest line item in our budget next year.
06:38It's sickening, really.
06:39I mean, it's farcical, but nobody wants to do anything about it because it's unelectable.
06:45You can't make it to Washington saying, we're going to stop spending, and I'm going to trim
06:49back your entitlements.
06:50That's just not electable.
06:51So, Scott, you said you mentioned, you know, you think AI is here to stay.
06:56Yeah, I do.
06:57How are you playing this?
06:58Are you buying NVIDIA?
06:59Yeah.
07:00Well, I haven't bought it yet.
07:02I missed my opportunity.
07:04I wanted to get it below a hundred bucks.
07:05But when I got...
07:06You had about one hour there, that moment.
07:11That's me.
07:12That's me being too much of a trader.
07:13Right.
07:14I got too cute for school on that one because I bought, well, it went down to 90 so quickly.
07:18Here we go.
07:19Right.
07:20I'm 70 big.
07:21Come to papa.
07:22Well, it didn't quite work out like that, but it doesn't mean that's over yet either.
07:27You'll be able to pick those things up.
07:28I mean, there's going to be a time where we start to run a little long in the tooth when
07:31it comes to AI.
07:33But it's still going to be a great place to invest.
07:34And I still love American Ingenuity and our tech sector.
07:39It's going to be the leading.
07:40I lived in London for 16 years.
07:42Our tech sector is the envy of the world.
07:46So those things are going to be safe place.
07:48You just need to buy them on dips and get good prices for them and hold on to them for
07:52a long time.
07:53And again, as long as you have a three-year time horizon, the Fed's going to be in your
07:56back pocket too.
07:57They're going to help you out.