Tom Bodrovics welcomes Jesse Felder, the founder, editor, and publisher of The Felder Report, to The Competent Investor. Felder highlights the unusual correlation between stocks and gold, noting that while they typically move inversely, they have been moving together recently. This is attributed to a transitional period where the market is shifting from favoring financial assets to favoring real assets like gold and commodities. Felder suggests that gold’s performance indicates a potential struggle for financial assets in the future.

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The discussion also covers the potential impact of a market correction, comparing it to the dot-com crash. Felder argues that a significant correction could have a more profound negative wealth effect due to the larger size of the equity market relative to the economy. He also warns about the risks of a corporate earnings bubble, driven by massive deficit spending, which could lead to a prolonged period of stagnant earnings growth.

Felder expresses concerns about the AI bubble, noting that the massive investment in AI technologies and data centers could lead to oversupply and underperformance.

He believes that the energy sector, particularly oil and gas exploration and production, could be a good counterbalance to the tech-heavy market, as it is relatively uncorrelated with the broader market and has been starved of capital for years.

The conversation also touches on the challenges faced by the Federal Reserve in managing inflation and supporting the economy. Felder argues that the Fed’s focus on wealth effects and low-interest rates has created risks, and that a future recession could lead to a fiscal debt crisis. He also discusses the implications of a Trump-led Fed, suggesting that it could lead to a replay of the 1970s stagflation.

Timestamps:
00:00:00 – Introduction
00:00:18 – Gold Stocks Correlation
00:02:22 – Market Correction Wealth
00:06:09 – Negative Wealth Effect
00:11:03 – AI Bubble Concerns
00:15:23 – AI Business Model Shifts
00:17:54 – Data Center Overspending
00:22:16 – AI Funding Constraints
00:24:33 – Energy Sector Opportunities
00:29:25 – Capital Cycle Commodities
00:31:34 – Stagflation Treasury Yields
00:34:57 – Fed Policy Challenges
00:42:48 – Investment Strategies Insights
00:50:23 – Concluding Thoughts

Guest Links:
X: https://x.com/jessefelder
Website: https://thefelderreport.com
Articles: https://thefelderreport.com/blog/

Jesse Felder is the Founder, Editor, and Publisher of The Felder Report. He began his professional career at Bear, Stearns & Co. and later co-founded a multi-billion-dollar hedge fund firm headquartered in Santa Monica, California. Since moving to Bend, Oregon in 2000 and founding The Felder Report shortly thereafter his writing and research have been featured in major publications and websites like The Wall Street Journal, Barron’s, Yahoo!Finance, Business Insider, RealVision, Investing.com, and more. Jesse also hosts and produces the Superinvestors and the Art of Worldly Wisdom podcast.