David Haggith: Weathering the Storm - Coping with Recession, Inflation, & Market Volatility

Tom Bodrovics welcomes back David Haggith, author of the Daily Doom Substack. The conversation centers around the current economic situation in the U.S. and repercussions on the Federal Reserve policies. Last summer, David predicted continued inflationary pressures from factors like housing costs with a one-year lag time, oil prices, and producer prices. Despite the Fed's potential intentions to cut interest rates, David cautions about the possibility of another inflation spike, compelling the Fed to reconsider their decision.

David argues that markets misjudged the Federal Reserve's stance on interest rates based on ambiguous comments from Chair Jerome Powell. Though Powell didn't signal a change in policy, markets believed there would be a pivot due to vague statements. This misunderstanding led to significant market fluctuations and the dissolution of the Fed's tightening efforts, necessitating further tightening by the Fed.

David also discusses the impacts on the economy during the covid period and impact on labor metrics. He believes that labor remains 'tight' due to a substantial drop in laborers as a result, leading to production issues. Despite some recovery, the labor pool has not returned to its previous trend line, signaling ongoing labor supply problems.

Mr. Haggith also touches upon potential market implications during the election and compares the current situation with the dot-com bust in 2000, where AI stocks were overvalued based on future potential. David warns of a possible correction similar to what occurred then. Regarding the ongoing geopolitical tensions between Israel and Iran, David discusses the potential impact on oil prices and the challenges of de-dollarization.

David also explores strategies for safeguarding assets during uncertain economic times, suggesting alternatives to keeping money in banks or dollars due to risks of inflation and bank troubles. He advocates for gold as a store of wealth but acknowledges its limitations. Other recommendations include building skills, focusing on relationships, and preparing for transactions if locked out of central bank digital currencies.

Time stamp references:
0:00 - Introduction
0:33 - Fed Resolve & Pivots
10:00 - Lag Effects & Landings
13:24 - Sahm Recession Rule & GDP
16:50 - Covid Era & Economy
20:34 - Consumer Debt & Recession
22:26 - Market Volatility & Elections
27:00 - Comparisons & Conflicts
34:52 - Unknowns & Dedollarization
38:00 - Dollar & Global Trade
39:57 - Yen Carry Trade
41:10 - Defensive Measures
44:44 - Gold & Other Metals
49:07 - Wrap Up

Talking Points From This Episode
- Further potential inflation spikes despite Fed's rate cut intentions due to lingering economic pressures.
- How markets misinterpreted Powell's statements, resulting in market volatility and necessitating further Fed tightening.
- Why labor supply issues persist as a result of the Covid Period, affecting production and labor metrics.

Guest Links:
Substack: https://www.thedailydoom.com/
Twitter: https://twitter.com/EconomicRecess

David Haggith is the publisher/editor-in-chief of the Daily Doom Substack. David began the Great Recession Blog back in 2007 when he realized the U.S. housing market was on the verge of collapse. He urged family to sell their homes near the peak of the market. He decided the world needed a voice that would present more insightful commentary on the economic news of the day than what had been available anywhere in the mainstream media. Furthermore, he was amazed that so few people we're able to see through the nonsense. He doesn't associate with any political party, as politics keep people focused on blaming the other side and not recognizing the flaws on theirs. He's made a number of successful market calls and forecasts for past recessions. David believes we are now entering a Second Great Recession and provides advice on how to avoid the consequences.