Chris Temple, Editor and Publisher of the National Investor, joins me to discuss the market moves coming out of the Fed  FOMC meeting and press conference this week, and weaker employment data mid-week, where US equities and commodities rolled over on increasing recession concerns.  Chris reiterated the view towards a September rate cut, but that even if we do see a couple of 25 or 50 basis point cuts, that is just going to end up being what Jerome Powell is calling mid-cycle course corrections.   Those investors in US equities, and in particular the small cap stocks that were recently surging in the Russell 2000 index, that have front run these cuts expecting the low borrowing interest rates of yesteryear are likely out well over their skis at this point.

When discussing the overall health of the economy, Chris points out that inflation is going to remain stickier and higher for longer, even it if has moderated some from the very high rates of the last couple years.   When this higher inflation, weaking jobs market, and contracting economy is added together, then it feed into the stagflation backdrop he’s been outlining.  If one then layers on the delinquencies in credit cards, the defaults in the subprime auto loans, retailers disappointing on earnings and guidance, and delivery companies slowing their growth outlooks, then the economy could be transitioning into a full-on recession. We also review the steepening of the yield curve, and how as the curve transitions from inverted, as it has been since 2022, to more flat and then normalizing the long end of curve, that can also be another signal for recession in the medium-term.

Chris and I wrap it up with a nuanced and wide-ranging review of how this all ties into his outlook on the commodities sector.  He remains bullish on gold, natural gas, and uranium as key focuses for now, and then on a longer-term fundamental supply versus demand outlook the critical minerals like copper, nickel, and lithium. The companies that have strategic partnerships with auto makers, battery manufacturers, or government funding sources are the ones that he is most interested in.  One of the recurring themes in the resource sector centers around the challenges in government policy, permitting timelines, getting funding to the right projects, and the glaring personnel bottlenecks standing in the way of getting more mines into production to feed the growing demand for critical minerals in North America.  Chris also points out that the western nations now need to rapidly play catchup and overhaul many policies to stimulate more domestic supplies or supplies from friendly nations of raw materials, and that all of this is fixable but that the US and Canada are way behind in having strategies that adequately address the future demand needs.

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Click here to follow along with Chris at the National Investor website.