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Best of Caller Questions - Friday Juneteenth

InvestTalk

# Full Transcript

**Podcast:** Investtalk

## Transcript

This is a Best of InvestTalk episode from KPP Financial. Listener questions will be answered and commentary provided by Justin Klein and Luke Guerrero. Richard in Santa Clarita wants to talk about Treasury bills. Yes, thanks Justin for once again taking my call. I've been a listener of this show for a long time, like over 10 years, and I try to catch every episode.

But one of the things, I have a question going back to what Steve Teasley used to say, and maybe emphasized it because it were the conditions back then. But he always said that whenever the 10-year Treasury is lower than the two-year, when you have the inverted rate there,

he said historically always it follows with a recession. And he said that that recession, it may not be next month or in five months or maybe even 18 months, but we did have a period of time a while back where the, was an inversion that took, was a long time lasting.

And then finally it's, you know, switched back to more, you know, the normal. So does that mean, and given what you've said about there are so many factors now from the war to AI and a lot of things competent, will that, how does that hold? I mean, taking that into consideration, I don't think we've had a recession since the last inversion.

Yeah, that's, that's definitely true that we didn't have an official recession because it did invert back in 20. What was that 20? Yeah. So that was back in 2023 early into early 2024, where it was inverted. I think that we're in a new era, you know, that was post-World War II when things were a bit different.

Now what we have is what I call, what we call in the industry now fiscal dominance, where yes, there can, and there's a lot of manipulation of the yields curve by Treasury, the Fed. They can do it based on issuance, are they issuing in the long end or the short end, all of that. And then the powers that be, they don't, they don't want a recession. They don't want to preside of a recession.

So they'll put through some sort of spending packages, whether that's an emergency through some sort of a war, things like that, whatever it is, they're, they're, they're, they're manufacturing. And that's why I say the, the, the risk to most, for most people, the risk to markets, excuse me, is really a crash up. That's kind of what you're seeing now. Everyone's worrying about 08 type of deflationary bust crash. And that certainly could happen for short stints, but you've seen the short stints are hit with some sort of stimulus.

And in the background now you have such a large deficit and that large deficit means huge interest payments. We know it's now over a trillion dollars a year higher than the military spending, at least for now. And what that is, is that is basically government spending. Right? That's government spending because they're spending on interest and that's going into people's pockets. That's dollars being created.

And so that is kind of underl...

Best of Caller Questions - Friday Juneteenth

Transcript

Built for investment professionals

Every day you wait, your competitors are finding
edge in conversations you're not hearing.

Best of Caller Questions - Friday Juneteenth

Transcript

Built for investment professionals

Every day you wait, your competitors are findingedge in conversations you're not hearing.

Every day you wait, your competitors are finding
edge in conversations you're not hearing.