Fed Fight, Market Nerves

We unpack the fight over Fed independence, the DOJ subpoena, and why politics is pushing into central banking while markets pretend not to care. Then we tie Venezuela, Greenland, and Iran risk back to rates, sectors, and the case for cash, gold, and selective equities.

• DOJ subpoena and Powell’s rare response as signals of pressure on the Fed
• Supreme Court decision on Cook’s tenure and implications for Board control
• Markets’ mixed message: equities resilient, metals bid as risk hedge
• Venezuela investment reality after expropriations and boardroom memory
• Greenland and Iran talk as alliance and oil risk, not just headlines
• AI leadership cooling, sector rotations, and bank sensitivity to rate policy
• Portfolio stance: fewer assumed cuts, patience on duration, caution on REITs
• Defensive sleeve in cash, gold, and returning to silver exposure
• Equity selection via lower beta, low short interest, and sector-neutral tilt
• Watchlist: tariff rulings, Cook decision, Powell’s tenure, and election calendar

Our next podcast is gonna have Robert Powell. He runs a webpage called retirement.com. He works for Market Watch, and he's considered one of the experts in this field, interviewing some of the best and brightest around the concept of making your retirement great

Straight Talk for All - Nonsense for None

Please check out our other podcasts:

https://skepticsguidetoinvesting.buzzsprout.com

Disclaimer - These podcasts are not intended as investment advice. Individuals please consult your own investment, tax and legal advisors. They provide these insights for educational purposes only.

Chapters

• 0:00 Welcome And Today’s Stakes
• 0:59 Trump, DOJ Subpoenas, And Fed Pushback
• 3:05 Markets Shrug, Risks Pile Up
• 5:51 Supreme Court, Fed Seats, And Powell’s Tenure
• 11:15 Overreach Abroad: Venezuela And Greenland
• 15:16 Iran Scenarios And Geopolitical Risk
• 18:35 Are Markets Pricing Risk? Gold, Silver, And Commodities
• 23:21 Sector Rotations, AI Peak, And Banks’ Rate Sensitivity
• 27:07 Is The Fed Under Siege Or In Crisis
• 31:32 Election-Year Noise And Policy Whiplash
• 35:07 Investor Playbook: Rates, REITs, And Duration
• 38:48 Defense Through Cash, Gold, And Silver
• 41:55 Financials, Insurance, And Position Sizing

Transcript

Clem Miller: 0:26

Hello, everybody, and welcome to Skeptic's Guide to Investing. I'm here with my partner, Steve Davenport. This is Clem Miller. We're talking today about the developments involving Trump's threats against the Federal Reserve. Uh as many of you might know, the the Department of Justice filed at least one criminal subpoena against the Federal Reserve relating to its alleged cost overruns on a construction project. And in the Federal Reserve, Jerome Powell stepped before the mics on Sunday evening, very unusual, , to say that that they essentially they would fight that and and that it wasn't you know, wasn't didn't have anything to do with cost overruns, that it had to do with you know with Trump trying to control the Fed and and lower interest rates. And so, you know, we're at a point now where where Trump is trying to control the Fed, , where the Fed is fighting back, where different individuals are taking sides. You've got Senator Tom Tillis, who who is trying to come on the side of the Fed and say that this is it's kind of crazy what the Trump administration is doing, and they're gonna hold up their future appointments from the Trump administration to the Fed. It's kind of a crazy circumstance, and I know a lot of people are hyper focused on it because you know there's a lot of Fed watchers out there.

Clem Miller: 2:29

Let me Steve, let me ask you how important is this and where do you think it's going?

Steve Davenport: 2:41

The the part about this that I find just outrageous as I was talking to other professionals starting the year, people say, 'when is it gonna slow down or stop'? We've got Venezuela, which occurred, we've got this rhetoric from Trump about defense companies and Raytheon and defense contractors that shouldn't buy back stock. We've got him, telling Exxon that they don't he doesn't think they're good enough to be included in this Venezuela situation. You still get an overhang from Epstein, you still have several decisions being made by the Supreme Court. It feels like we're in management by confusion and distraction. I don't think when you look at the Fed structure, I'm not sure this is an ultimate challenge to the institution as much as it is a challenge to a guy that they don't like the way he's been ruling and making decisions at the Fed. I think Trump wants more them to cut rates faster, and he believes that's the way the economy is gonna take off, in his language. Remember, he sat there in um April and said, you know, my cutting back on these tariffs and and giving more time is gonna cause the market to take off. And sure enough, it did take off, which I find more troubling is the way the market has reacted to everything has been to shrug it off and say it's not that important, it's not that important. You know, yesterday I expected this action by Powell to speak on Sunday night as a pretty significant event when you have a Fed chairman who's giving an video of why he disagrees with the president and why he'll continue to do his job. I don't think it's I don't think we've ever seen this kind of relationship where people have verbalized I think you're doing something to, you know, just increase your interests and not really in the interests of the American people who I was hired to to protect and to improve their lives with better financial conditions. It's it's unprecedented in the way that it's happened. Is it structurally gonna change things? I think there's a lot of variables here and a lot of checks and balances. So the first thing that's gonna occur is in February, we're gonna get a Supreme Court ruling as to whether Trump can fire Cook, who's on the Supreme Court, the Supreme Court's gonna rule on whether Cook can stay in the Federal Reserve and complete her term through 2030. Why does Trump want her out? Because one, it seems like she has some weaknesses in the way that she filled out some home applications, although the Secretary Treasurer, the Secretary of Treasury the Sent has the same problems. So I'm not sure this is gonna go anywhere, but it just shows you how he wants to get those seats and have his own people in the seats for the Federal Reserve so they do what he wants. It's the same as every other president. Every other president wants to be able to appoint their own people and move things along. I I don't think the Supreme Court is gonna vote with Trump. So I think that Cook will stay. Yeah, I don't agree with it. I agree with you. I don't see this underpinning of when Powell steps down, there's just gonna be chaos. And then I think what Trump has inadvertently done is I think he's hardened Powell's back, where he has the option to stay an additional two years on the board. And in my mind, if he did that, everybody would look at it and say, well, that's really good for markets because we have somebody who is more experienced helping a new Fed chairman who is probably going to be a little bit lost in some of the data and the resources and the way things are done. So I'm not as afraid of you know a loss of independence of the Fed because I think Donald, like he's done in Venezuela and like he's done other places, is playing a little bit too far out ahead. I think he's thinking he has more power and influence than he does. And in reality, what that does for him is he overreaches and then he has to pull back. He overreached on the tariffs, he had to pull back. He overreached on China, he had to come back. He's overreached in Venezuela, assuming every energy company in the world would want to engage in a you know communist dictatorship. And guess what? I think he's gonna pull back. I I really think this is about him distracting, and I think he would like us to focus on what he's doing in the Fed and what he's doing in Greenland, and I think he will take a distraction away from affordability and what's happening with the Epstein files. Those are his two biggest problems, and those two problems, should they exist in November, will cause a turnover that he's gonna be very unhappy about. And so, therefore, I think he just wants to try to grab an issue, and this issue is the issue de jour, and he wants to bring it out and get a lot of discussion going and show how influential and differentiating he can be. Is that management? It's one type of management by chaos. Yeah, I think it's not. Um, the problem I have with all of this, Glenn, is the trumpification of the market. I think that the market's reaction should have been hey, there's a lot of foreign policy risk if we continue to try to manage governments and overthrow and capture leaders, especially if the next thing he does, which he has brought up, is a change of regime in Iran. I think that would be a tremendously disruptive event. I think mentioning it should be a disruptive event. Mentioning troops in Greenland should be a disruptive event to the peace of NATO. The market just ignores. And so if the market is all wise, some of these events, they they all can't be inconsequential. Because if they were, well, why the hell didn't we do this? Five years, ten years, fifteen years, we got billions of free oil from Venezuela. We've got all the rare earths we can take out of Greenland. We've got, you know, all these things, if they really are meaningless, which the market is saying, then why why why are they viewed as unusual?

Clem Miller: 10:11

Are they all meaningless to you, Clint? Well, it depends on on the specific issue, but I don't see I mean the top three Venezuela, yeah, the Fed and taking appropriating more governments in the sense of Iran or Greenland. Okay, well, I think with regard to Venezuela, , you know, he had that meeting with the oil company executives and you know, the head of Exxon. You know, I listened to that whole um meeting, right? You had the company, you had the CEO of Exxon say that Venezuela was uninvestable. I think what Trump and his crew didn't understand was that this particular government that they're still connected to expropriated um assets of these companies back under Chavez in the late you know around 2007. And so, you know, if you've had expropriations of your assets like that and the Venezuelan government hasn't paid at all and fights you in court, why would you want to put more money into Venezuela? I mean, why didn't anybody in the administration actually know this history?

Steve Davenport: 11:27

Uh, you know, they don't it's because they don't have anybody left because they fired everybody, they overwhelmed those resistances with the idea that this is his idea and we've got to promote it. Right. And I don't think you can say they necessarily didn't know about it because everybody has heard of Chavez and everybody's I mean, I don't know.

Clem Miller: 11:51

I don't know. They they fired a lot of people within the State Department, and so , you know, do they really know the history? I don't know. Um they may not know the history. Uh, or if if what you're thinking is right that they did know the history, then we've got an even sorrier situation with regard to um our president and and the people immediately around him who are you know obviously suck-ups to the president. Um so that's that's Venezuela. With regard to um with regard to Greenland, you know I I would like to think that Trump would come to his senses and not try to take over Greenland, but I'm not so sure about that. Um I think there's you know, I think there's a good chance that he might actually he might actually try something there. And the only reason he wants Greenland, he doesn't want Greenland for the minerals, right? He doesn't want that. He wants Greenland because it looks, it makes the U.S. look bigger on a map. And he wants to be Thomas Jefferson and Louisiana Purchase. Um that's or um he wants to be, you know, Seward and and Alaska. That's what he wants. He wants to show a legacy of expanding the territory of the United States, and this is a way to do that, and he doesn't give a crap, really, about what's in Greenland, about whether about the people there, or about how this impacts NATO or about the minerals, which are incredibly difficult and costly to extract from Greenland. So it's , you know, it would be, you know, that's he doesn't care. I mean, so that's what he wants to do with respect to Greenland. And with regard to the Fed, he's been putting pressure on the Fed for a long time to try to reduce rates. And , you know, this was well signaled that he was going to pursue this issue that was brought to him about um about the cost overruns. And you know, he's he's gonna continue with that. And he was well signaled.

Steve Davenport: 14:06

I guess I'm I'm not I mean I'm I'm I like to get things done. I'm very impatient. So he went there, he visited the site, he looked at all this stuff, and he waited seven months well before doing anything.

Clem Miller: 14:20

Right. Well, he needed he needed an intervening testimony by you know by Jerome Powell to Congress, and now he's claiming that Jerome Powell lied to Congress, right? Which is , you know, it's it's a claim again.

Steve Davenport: 14:37

That doesn't add up. He does a quarterly testimony, yeah. So he he brought this issue up in May or June, right? And he waited. I I'm just saying it looks yeah. Why you know why he waited? Why he waited because he's trying to distract us from all the other problems he has.

Clem Miller: 14:56

He's not well no, there's another it's some scientific process where he's going to that's true, but there's another reason he waited too. He doesn't need the Fed to lower rates now, he needs the Fed to lower rates in the summer of 2026 before the midterms. That's what he wants.

Steve Davenport: 15:13

I agree, Clem. That's you know, but is the way he's doing this to you the sign of a of a deeply complex and thorough plan that he's unveiling things piece by piece over the next 10 months to ensure Republican success? Is that how is that what you think is happening?

Clem Miller: 15:56

I think some of the people around him are are perhaps are perhaps a little bit more strategic than he is. Uh well, I mean, that's for sure.

Steve Davenport: 16:07

That would be you could find a mouse in the corner of your house is what's being but I I think it's it's really thrashing about is really what's going on with him.

Clem Miller: 16:18

Correct. Um he's he's thrashing about, and if he doesn't get his way on Greenland, he'll get or he loses interest in Greenland, he'll you know, he'll put that aside and he'll you know look to something else um to do. Uh maybe he does something with Colombia. There's been some talk about that, or you know, Panama or Iran. Yeah, we haven't heard much about Panama. Iran, I think would be pretty um, I mean, who would you attack in Iran in order to deal with human rights violations? I mean, really. I think he's trying to remove the the leaders there from the religious but the problem with that problem with with that is that there is a huge politico slash religious establishment in Iran, and if you remove the top, there'll be others behind that guy. So this is not, I mean, we we can call Iran a dictatorship. And but you know, when you think of the word dictatorship, you think one leader, you think of one leader, but there's a there's a regime there that has many potential leaders, and so you know what do you do? You you kill or abduct all of them? You can't do that, right? So I don't know.

Steve Davenport: 17:40

He says that they're in there in talks right now too, you know. I don't know, Clun. I just find the can we can we talk about the trunkification of markets? I mean, do you believe the markets are properly reacting to the risks that all of these things he's doing are not really that risky?

Clem Miller: 18:02

No, I think the markets writ large are reacting in a way that is consistent with higher risk. And and let me explain, let me explain that. I know you if you look just at the stock market, you know, you've seen the stock market rise, and that's largely because of AI related issues, although that's sort of tailor sort of um slowed up recently um the AI propulsion of the markets. But when I say that markets have reacted to a higher risk level, what I'm talking about are gold and silver. Uh because gold and silver have risen a lot, and that's where I think investors are going. They're going into hard metals. Um you know, copper's been doing well too. Um, so you know, you got copper, silver, gold. That's where investors have been going um as a safe haven trade and have been really pushing up those prices. And, you know, in my portfolio, um, you know, I've been invested in gold, and I have a lot in gold, and I've been doing quite well in um you know beating the market on most, beating this the S ⁇ P 500 on most days because of my gold holding. And I think I made a little bit of a mistake in getting out of silver too soon. So, you know, my you know, I'm willing to admit my mistakes, and so I'm gonna go back into silver because I think silver is going to do well in um in 2026, not just because of risk, but because you've got China putting on some export controls on silver like they've done with the with the rare earths. Uh so um so I'm I'm going back into that. Um so you know, I think I think that's where the risk recognition is coming from. I think you have a lot of folks who are getting into this. Uh and um I think that you know, I think that that's where that's a recognition that there's higher risk. I think people just in terms of the if they just look at the SP five hundred by itself, that's you know, that's been going up, but it hasn't it hasn't been going up as fast as gold and silver have been going up, that's for sure.

unknown: 20:40

And

Steve Davenport: 20:42

I'm saying usually the trade is stocks are riskiest, bonds are lowest risk, and there are alternatives in between. And sometimes when you sell your riskiest, you put it into that alternative. And you're saying basically the alternative is going up, so therefore the market recognizes the risk. Yeah. They're not selling any equities to do that. Are they recognizing risk or are they taking more? They're going from cash or bonds to this.

Clem Miller: 21:12

Well, I think I think it's important not to think of the market as being a zero-sum game. I think there's money going in, um, and there's money going out. And I think it's really hard to say that you know, money is coming out of one and going into another, because you know, there's money that's coming in and out of the market all the time. So I think it's a question of what's going up, what's going down. It's not a question of what what things are, you know, it's not a question of whether this money going into um you know going into gold and silver is coming out of bonds or is you know coming out of particular stocks. I think the market is recognizing that gold and silver are a not just a risk diversifier, but are a way to diminish risk in your portfolio. So I think that I think that's where that's where the smart money is going into into commodities, like those, right? Not commodities in general, but but the the hard the hard precious metal or industrial metal, you you know, you can call silver an industrial metal as well as a precious metal. But I think those are the things that that are diminishing risk. And and within the S P 500 universe, , I think you're seeing an awful lot of volatility, right? Banks actually were doing quite well for a while. I'm talking about volatility among sectors, right? Banks, you had AI doing really well, then you had a rotation, banks were doing really well, and then Trump comes up with this 10% cap idea on interest rates, and that really killed some of the more credit card um dependent banks over the last week, week and a half. Uh so there's a lot of volatility. It's hard to be able to pick a sector within banks. And so, you know, over the you know, recently I would say, Steve, that that, you know, the strategy, you know, you've got some strategies that are sort of equal, or not equal weight, but um, you know, sort of sector neutral, let's put it that way, um, strategies. And I think that's made a lot of sense over the last few weeks rather than um or a few months, rather than a sort of an AI um, you know, strategy, which has really not done well over the last few months.

Steve Davenport: 23:52

And yeah, I mean I think that I mean I saw an article that showed very clearly that in the last two to four months is when AI peaked. And that since then, if you look at all of the names, they were all trading off of that, some as much as 20%.

Clem Miller: 24:07

Right. So the AI theme, I think, is one that you know people still a lot of investors are still clinging on to that theme, and , I think they really need to rethink things. That's not to say that AI doesn't have a future, it does have a future, but it got too expensive, or it got too risky, or people didn't really think through the implications of the energy costs with the data centers. Um, you know, there are a number of things that could have caused the the pullback on AI, and it's just right now not, you know, maybe there are a couple of names that are you know worthwhile being in AI, but you know, to have you know 10 names in a 40 stock portfolio in AI, I don't think makes any sense, or even five make make you know, makes any sense.

Steve Davenport: 25:02

Um yeah, I mean I think the problem that we've had and what other people have had is how much? You know, what's the right amount? Do you go to the cap weight of the SP? Do you go to five percent? Do you go to six? You know, as you keep raising your interest in these mega caps, does it get to a point where you're just exposing yourself too much to five names or seven names, then you should. And I think that the sector weights and other things are good guardrails. Um, but let's get back to the Fed. Yeah, is the Fed um, in my mind, a an organization in in crisis? I don't think it's in crisis, I think it's under siege. Um if Cook loses to the Supreme Court and is eliminated or removed from the board or fire, I think that is putting it in into a crisis because then it will allow Trump to appoint someone who will basically be the vote that they need to um to to hold a majority.

Clem Miller: 26:12

Well, yeah, not just one, Steve. He could he could pick a number of them to fire, and he could put you know a number of folks on the Fed.

Steve Davenport: 26:21

Yes, he his his parley took against Cook could go into more people, as he's trying to do with Powell. And I think he's you know, he's trying to show this is another way I could but again, Clem, I I put the probability of Cook being fired as somewhere around 10%. I don't see it as a 50% event, I don't see it as a zero event, I don't see it even as a halfway to likely event. I see it as below halfway. I agree. Uh and then I look at Powell and I say, you know, is is he going to resign because of this lawsuit before not? Clearly not. Clearly not. And so those two things tell me that this looks like it's it's a it's it's a game that we're playing, right? As with most things with Trump, he wants to push you, and then maybe you'll come back halfway. And he's and in his mind, he won. He won the negotiation, he won the game. And so if we're just playing a game, um, I think that his cards and the way he's playing them, by switching from the Fed to defense contractors to banks' interest rates, and every time he does anything, he says, This is for the good of the American people. Well, I'm not sure if you cut the interest rates to 10% and credit cards were credit was not granted to 70, 80 percent of the country, I think it would cause chaos. We're a retail-dominated culture. And so if he did that, I think it's it's just another example of something that causes a big kerfuffle, but it doesn't, you know, it doesn't lead to something that's really a sustainable idea.

Clem Miller: 28:18

He he has no appreciation for the fact that Congress makes laws and he's supposed to implement Congress's laws. He thinks he's the lawgiver, , the lawmaker. Uh I mean, clearly, I mean, what it's clearly Congress has not done or stood up like an institution that believes they are the ones in charge of the budget, right? Yeah, this whole thing has flipped around where you know, where it's not Congress that that creates the law, it's the president that creates the law, and Congress gets to veto it, right? It's I don't know, I think it's totally the other way around.

Steve Davenport: 29:01

I think that he has shown the Republican Party, and the Republican Party said, Hey, we would like to clean out the swamp. And by that they meant the swamp is all the Democrats, and the Democrats have said, we would like to clean out the swamp, and they want to get rid of the Republicans. So everybody is in view of cleaning things up, doesn't include themselves. So I think that he's questioning the power of the Fed. I think the Fed has done enough things wrong in the last five to ten years that I think they they are are an organization that is not exactly killing, right? I mean, the way they conducted themselves around COVID, not very good. Um I think they were extreme in their in reaction, and I think the fact that they have many board members who were making investments with knowledge of rates cutting, it should have been illegal. There should have been people who, you know, when everybody talks about the Department of Justice, you know, why didn't they do anything about those fed governments? Why, why why don't we have you know a system where people who behave in ways that is not appropriate in power positions of power, you know, they they do need to have a better system into how it's run. And right now the Congress has abrogated all authority and they are letting Trump go. And in my mind, that's gonna lead to, you know, a turnaround or a takeback by the by the Democrats in the House and possibly the Senate. I don't I I don't think anybody should think that now that we're in 26, and 26 is an election year, everything they do should be taken with a a bit of hesitancy and skepticism because it's all about the election. It's the election stupid. Carbul said at one time, it's the economy stupid. And I would say right now, it's the election stupid.

Clem Miller: 31:15

Yeah, everything you're right. Uh as the months pass by, you know, we're already in almost mid-January, right? I think as we approach as we approach the midterms, there's going to be a lot more, a lot more chaos, and , and it's all going to be it's all gonna be cast in a partisan light. Right. And I I just don't think, you know, the American people, they're gonna look at this and they're gonna say, well, you know, what we're seeing now is not Biden's fault, right? They're gonna see it, they're gonna see it correctly as as Trump's fault, and they're going to um vote accordingly. And I think as the year progresses, you're gonna see more and more Republicans stand up to Trump. And I don't think the the Trump magic of being able to you know threaten primaries and whatnot, I don't think that's going to continue.

Steve Davenport: 32:17

Yeah, I mean the I I I think he's gonna continue to threaten and bully people. I think going after the the congressman there who's um you know taking away his military pension because he told people to not follow orders. Yeah. Illegal. Um, I think that's like saying, you know, don't kill people. Um, yes, we know we know that you're not supposed to do things as a soldier or as anything.

Clem Miller: 32:46

That's political because Mark Kelly could be a presidential candidate in the future. Right.

Steve Davenport: 32:51

I know it's political. I'm just saying that's another example of him not holding back at all and trying to intimidate to get what he wants. And look, if you want to play that all for the next 10 months, I think it amplifies his he aggressively put on tariffs. The tariffs led to higher prices. Higher prices have made things less affordable. End of end of story.

Clem Miller: 33:19

Yeah, and and speaking of tariffs, you know, we were supposed to hear something last Friday about tariffs. At least that was the rumor that went around. And now they're talking about, I think tomorrow on tariffs. Could be today, I guess it could be Friday. Uh, but I I heard tomorrow, Wednesday, , on tariffs. So we'll we'll see what happens with that. Uh, my expectation on that is that the Supreme Court is going to rule against him on tariffs, on his tariffs, right? The so-called reciprocal tariffs, even though they're not reciprocal. And they're going to say, look, you can do the tariffs that have been approved by Congress and maybe give him a bit of advice on how to implement those. Uh, but you know, they're not going to approve, I don't think they're going to approve his tariffs. Right.

Steve Davenport: 34:09

I mean, I guess, I mean, I'd like to hear your opinion. Do you agree with you know that Fed outlook or do you think it's more dire?

Clem Miller: 34:20

Uh, I in in terms of what, Steve?

Steve Davenport: 34:23

They're in terms of like I'm saying, I I don't see him being successful with Supreme Court and Cook. I don't see him bullying Powell away by May.

Clem Miller: 34:32

Well, I don't see it as a if you think about if you think if you think about um if you think about it just in the context of Lisa Cook or just in the context of these DOJ subpoenas, , I think that the I think that it doesn't look so negative and that it's worthwhile, that you can look at that and say, okay, well these these you know these aren't really having that much influence on what the Fed is going to do or not do. There has to be but there has to be a situation where you know Trump and his people look at the fact that they're not getting getting the job done, right? The job meaning influencing the Fed, and they'll come up with some other more drastic way of trying to control the Fed. And I don't know what that is, , but you know, they're good, they're imaginative at being able to come up with stuff. So, you know, do they send the marshals in or I mean what what are the you know, is there some other way that they can use to to try to control the Fed? And and you know, they have to, you know, it's there's a small window here of their ability to act in the sense that they need they want to be able to control interest rates, but they want to be able to do this without taking action that can tremendously upset markets. So right. I guess let's break it down for our investors.

Steve Davenport: 36:15

What should investors do with the latest actions against Powell and against the Fed? How do you, as an investor, adjust what you're doing to account for the fact that I would you could I I'll go first. I believe that what investors should do is investors should look and say, this is noise. The the main thing that I'm concerned about as a Fed watcher in terms of my investment portfolio is rates. And what are rates gonna do? It looks to me like it's gonna be harder for rates to come down much this year. So instead of anticipating three cuts, I think I should probably anticipate one to two, and that those cuts um will be very measured because they are concerned about inflation and they are concerned about the economy going in the wrong direction in terms of more we're pulling too much stuff forward, and therefore I don't see um changing my bond allocation because of this. I think that this means that maybe I can stay longer for what for a while because I don't think the the rates are coming down as fast as we thought. This also means that things like housing and auto, which would benefit from lower rates, are probably not going to benefit. I don't have a lot of housing or auto in my portfolio. So in my mind, it's not like I'm missing out on an opportunity there. I wasn't thinking of, you know, the area this concerns my portfolio is REITs. Because REITs depend on redoing their um debt obligations for those properties on a regular basis. And so in my mind, if rates stay higher longer, REITs aren't the big performer that I thought they were gonna be this year. I thought REITs, if we saw four cuts, REITs were gonna have an unbelievable year because they think they've been beaten up for a while. How do you look at it in your portfolio, Bum?

Clem Miller: 38:20

So I see I'm focused less on the rate cuts than you are or the number of rate cuts.

Steve Davenport: 38:28

Well, what is the Fed if not rate cuts?

Clem Miller: 38:30

Oh, I'm more focused on the general chaos that this is part of. Okay, you got chaos with the Fed, you've got chaos with foreign policy, you've got chaos with ICE and its actions. Uh you've got the administration throwing out all these policies and then the courts stopping them. Uh you've got the whole tariffs issue. Um, how is that going to be unwound? Uh who knows what Trump is going to come up with next in terms of chaotic policies. So when I when I put all of that together into one big pot, you know, I think to myself, there's a lot of uncertainty and risk out there. And so, you know, I have a not insignificant, you know, part of my portfolio in cash and gold. And , and I'm gonna go back into silver as I as I mentioned. Uh and where are you gonna take the money for to go into silver? Uh cash. Cash. Um, so you know, right now I have I would say I have about 75% of my portfolio in stocks still. So it's not like I'm totally out of stocks. You know, I it's just I have less stocks than a lot of people do. Um, and um, I don't have any bonds, right? I wouldn't be in bonds at all. Um, but you know, I have I have gold, I have silver, or I will have silver back into silver. Gold has been doing really well. Uh silver has been doing spectacularly, and I think it will continue to do so. Um, so I'm gonna go back into that. You know, on my equity side of the portfolio, as as you know, as a lot of our listeners know, I go for low short interest, low forward peg and lower beta type stocks. I try to keep my stock part of my portfolio under one beta. Right.

Steve Davenport: 40:44

If we look at what benefits, if we just try to, I agree with you that there's a lot of chaos going on. I would call it a lot of noise because I think his actions are showing you that they're not that well thought out and they're not thought out step numbers two, three, four, and five. If we just look at the Fed and said, I'm looking at what the Fed and how that affects my portfolio, does this make you less likely to be in financials because financials need lower rates to try to have that extra, you know, oomph in their portfolios that they don't like rates rising, they prefer rates dropping. And so therefore, disrupting that is going to be bad for your financials, or you're um you you're into insurance, right? How does how does how does the Fed affect insurance companies?

Clem Miller: 41:35

So, you know, insurance hasn't been doing that well either. And I've been I've been you know lowering my insurance weight for quite a while now. So I'm not um I'm not terribly happy. I haven't been for like the last four or five months all that happy with insurance. You know, I used to have one of my favorite stocks was Progressive Insurance, and that you know, that had an incredibly good run until it didn't.

Steve Davenport: 42:03

So you like the ads. I thought I thought that was an ad-based buy. You liked the the ads on TV, so you bought the car. No. So so it is not like you're looking at this Fed thing and saying, this is gonna really change what I'm doing, how I'm doing it. No. So it's more that it contributes to overall chaos that you think makes it a more more of a danger to your portfolio.

Clem Miller: 42:29

That's correct.

Steve Davenport: 42:30

Is that is that a fear yeah?

Clem Miller: 42:33

I mean, they have no the the the Trump administration seems to have no guardrails about what they're gonna do about what they do. Okay, , and they're not thoughtful about what they do.

Steve Davenport: 42:44

And I think that's yeah, I think that's probably an under under analysis of it, but yeah. Well, I'm not used to the skeptic in you isn't coming out. It's when you say they're they're just a little bit, you know, underwhelming in their planning. I think that's probably a a pretty but all right. Um I'm I'm I'm done with the Fed. I think we've devoted enough time to it, and I think that we should keep our eyes up. But I I think the next major issue for us is Cook and the Supreme Court. But the first issue before that um is not about the Fed, it's about tariffs, and we should see that this week. Any other closing ideas for everyone, Bob?

Clem Miller: 43:33

No, I think I think we've we've covered these Fed issues. Uh I think this is gonna be a um very interesting year. I think we're probably gonna have a lot of these skeptics podcasts to talk about things as we go along. Uh and you know, I really I really look forward to it. And I hope all of our all of our listeners and watchers you know stay with us and and stay informed. I think you'll get some opinions from us that you may not get you know from talking heads elsewhere. Uh so thank you.

Steve Davenport: 44:11

I wanted to tell everybody our next podcast is gonna have um Robert Powell. Robert Powell is the expert on retirement. He runs a webpage called you know retirement.com. He works for Market Watch, and he's considered one of the experts in this field, interviewing some of the best and brightest around the concept of making your retirement great. So we look forward to that next podcast. And I want everybody to have a great day and hope your 26 is going well and full of fun and joy and excitement. Thanks for listening, everybody. We appreciate you.