The Hidden Flaws In The Economy with Dr. Gary Shilling

Dr. A. Gary Shilling, President of A. Gary Shilling & Co., an economic consulting firm and a registered investment advisor, joins Julia La Roche on episode 157 for a wide-ranging conversation on the economy. 

In this episode, Dr. Shilling discusses the current economic picture, including the possibility of a soft landing and signs of a potential recession. He highlights the narrowing focus of the stock market and the amount of speculation in certain areas. Dr. Schilling also discusses the labor market, the Federal Reserve's interest rate policy, and the impact of inflation on interest rates.

Elsewhere, he shares his investment themes, including the US dollar and the preference for US Treasuries. Dr. Shilling addresses the debt situation in the US. He also points to the risks in commercial real estate.

He concludes by emphasizing the importance of finding hidden flaws and going against the consensus in making investment decisions.

00:00 Introduction and welcome Dr. Shilling
01:01 Current macro picture, economy isn’t looking like it’s going into a major recession
06:21 Not a healthy economy, highly dependent on labor market and employment
07:07 Federal Reserve and interest rate policy
10:09 Consumer bifurcation
11:35 Interest rates
17:40 Hidden flaws
21:00 Investment themes
25:35 US Treasuries
27:26 Debt situation in the US
32:12 Bubble on the radar? Commercial real estate
36:42 Conclusion

#economy #stockmarket #realestate

[TheJuliaLaRocheShow]

Hey everyone! I'm so happy to welcome Dr. Shilling back on the show. I hope you enjoy this one as much as I did. Also, please be sure to hit the subscribe button. It would make my birthday extra special 😉💙Julia

[DonRua]

When Dr. Shilling was questioned about why the economy hadn't faltered despite a 5% increase in interest rates, he pointed out that the pandemic-induced labor shortage led employers to retain workers even as interest rates rose.

However, pls allow me to respectfully suggest a different narrative. Around $2 trillion was quietly injected into the market during quantitative tightening (QT), including funds from initiatives such as the $757 billion Paycheck Protection Program, a $474 billion Employee Retention Credit, deferred student loan payments, and a Treasury cash injection of over $500B when the federal budget hit ceiling. Concurrently, the Federal Reserve's reverse repo balance decreased from $2.5 trillion to $400 billion, indicating over $2 trillion of additional liquidity flowing from banks into the general economy.

Taken together, these actions amounted to a cash injection of over $4 trillion into the US economy from end of 2022 throughout to 2023. However, with these programs now ceased, the true effects of quantitative tightening are anticipated to emerge, typically followed by a recession around 11 months later.

[CarolinaInman]

Investors are still in denial about the fundamentals of the economy. They expect rares will soon be cut and believe the topline GDP numbers signal a strong economy. However, they dont. Credit card balences are maxed out, more credit is hard to come by for consumers, a ton of companies are about to beforced into refinancing their debs at far higher interest and the regional bank backstop program is out this month. There's also the fact that inflation ticks higher than expected every single time the markets believe a rate cut is around the corner and a rate cut would cause a surge in inflation. The fed sees this stuff, guys. The only wild card for us investors is to actively engage the market by trading, we always over complicate things when we speculate. It's not about guessing the market's next move; it's about playing it smart and steady during trading...managed to grow a nest egg of around 100k to a decent 732k in the space of a few months... I'm especially grateful to Linda Wilburn, whose deep expertise and traditional trading acumen have been invaluable in this challenging, ever-evolving financial landscape.

[pete]

I have a great respect for intelligent people that are humble.
Informative interview, thank you for your efforts.

[ats]

Awesome interview! It's great that Julia lets her guests speak so that you get the full gist of what they are trying to convey. This is especially useful when interviewing someone like Dr. Shilling, who is one of the smartest and most experienced people in the industry...

[Deepak_Tao]

Belated Happy Many returns of the day Julia🕉🙏🤗 Thank you for hosting him again

[jj]

Julia, you two nailed this interview. Well done!

[williamparker]

It's interesting to listen to a smart guy who isn't calling for the end of the world.

[nirvaanmeharchand]

Great guest and great interview Julia. Thank you.

[joebiz]

It's good to see he's still going strong.

[excelblackbelt]

Dr. Robert Eggert Sr. was a good friend, the man who named the Ford Mustang, and the best man at my wedding. He was the C-Suite head of Market Research at Ford and in agreement with Dr. Shilling, he always said that he wore a bolo tie that depicted his opinion of the leading indicators of the economy. This was because he often encountered Mr. Ford in the hallways and knew if he said anything, it was as good as being fired. He wore a red bolo for an economic prediction of a recession, a yellow one for as a cautionary note, and a green one for good times ahead for the automaker. He's passed on now but lived to 94.

[MrFargo]

Like Shilling says, when you're Wealthy, there's no such thing as a Recession.

[Kristenshwan]

I'm so happy I made productive decisions about my finances that changed my life forever, hoping to retire next year.. Investment should always be on any creative man's heart for success in life

[mariomader]

It was interesting to see Shillings old school economics and political indoctrination thinking. Consensus contrarianism is what all speculators use to visualize when the sentiment trend begins to change and it was great to see he is still active.

[ThetaBurnVictim]

Great interview.. Dr. Shilling is a wealth of knowledge… BUT that crooked picture on the wall triggered my OCD so bad I tried reaching through the screen to fix it 😂

[davidcpugh]

Schiller is the best of his generation!

[edmundlively]

Go short before September but if you can remember go long before Columbus Day for a Santa December. Don't forget to remember sell before April then buy in May

[detectiveofmoneypolitics]

Economic investigator Frank G Melbourne Australia is following this informative content cheers Frank 😊

[unconditionallove]

Freight is destroyed. 20-30% reduction in orders across the board for major companies. Ask any trucker hows it going right now...unbelievable how this is being overlooked.

[markcooper]

I basically agree with his comments on the nation debt so long as they can service the debt at market based interest rates, which they cannot, and debt is being issued for infrastructure and other productive activities, which it is not. We are racing to a point where taxes will only fund entitlements and interest so in my opinion, the debt is a big problem. America is far from bankruptcy, but the debt is a huge problem and should be addressed immediately. Great show, very informative. Thanks.