Sean Brodrick – Concerning Macroeconomic Factors Causing Markets To Anticipate A Recession

Sean Brodrick, Natural Resource Analyst at Weiss Ratings and publisher of Wealth Wave, joins us to focus on some of the macroeconomic factors that have him worried, and the market expectations that these trends indicate that a recession is on the horizon. We start off by discussing the persistence of high inflation metrics forcing the Fed to keep aggressively hiking rates, and what effects this is having on the US dollar, gold,  the housing market, general equity markets, and the cryptocurrencies.  In addition, we review the slowing economy and downgraded GDP estimates that project 0% growth in Q2 of this year, after already seeing a negative quarter in Q1. 


With various sectors and markets under pressure, and the cost of corporate borrowing escalating, this has Sean remaining focused on the value sector and shunning the growth sector for the foreseeable future.   He outlines his outlook on the oil sector, precious metals, defensive posturing and provides his opinions on what is driving inflation.   We wrap up with the point that investor perceptions are often more important that what actually happens, as the future markets are discounted far in advance, based on the prevailing sentiment and narratives.



Click here to visit the Wealth Wave website and keep up to date with what Sean is investing in.

    Jun 16, 2022 16:29 PM

    Markets Have Bought The Fed’s Transitory Narrative Hook, Line And Sinker, Part Deux

    Jesse Felder – The Felder Report – June 15, 2022

    “April’s inflation figures came in hotter than expected and there are plenty of signs suggesting tomorrow’s report on May CPI will only add to that trend. As a result, you might think that markets may begin to price in an inflationary consensus. You would be wrong.”

    “That’s what I wrote this time a year ago but it remains true today, the only difference being that the inflation numbers are now nearly double what they were then. Friday’s CPI report showed headline inflation in May running at 8.6% year over year, the fastest rate in over 40 years. Still, markets are discounting a future in which inflation peaks right about now and then falls back to its long run trend very rapidly.”

    > As former Fed Chief Ben Bernanke wrote recently, the single most important factor in reining in inflation is the public’s confidence in the central bank’s willingness and ability to make it happen.

    “Inflation will not become self-perpetuating, with price increases leading to wage increases leading to price increases, if people are confident that the Fed will take the necessary measures to bring inflation down over time.” -Ben Bernanke

    > The trouble is that because the Fed’s forecasts for inflation have been so terribly wrong for so long now, it may be hard for the public to maintain that faith.

    “The Fed’s forecasts from March, saying that inflation would be coming down to 2 by the end of the year was, frankly, delusional when issued, and looks even more ridiculous today. Those mistakes mean they don’t fundamentally have credibility.” –@LHSummers

    Jun 16, 2022 16:44 PM

    Where Did All This Inflation Come From, And How Do We Make It Go Away?

    Grayson Quay – The Week – April 16, 2022

    “The painful rise in prices for everything, including mainstays like food and oil, is both an economic and political problem. So, how serious is it and what can be done about inflation?”

    “The Biden administration has been tirelessly pushing the narrative of “Putin’s price hike” to explain away inflation. Is it Putin’s fault?”

    “Conservative podcaster Ben Shapiro said Monday that “America’s monetary policy has been far too loose for far too long” and that politicians had caused inflation by “borrowing and spending” too much “fake money.”

    The Journal’s editorial board concurred: “President Trump signed onto an unnecessary $900 billion Covid relief bill in December 2020, and Democrats threw kerosene on the kindling with another $1.9 trillion in March 2021. The Federal Reserve continues to support negative real interest rates nearly two years after the pandemic recession ended. This inflation was made in Washington, D.C.”

      Jun 16, 2022 16:48 PM

      As pointed out in the article above:

      “President Trump signed onto an unnecessary $900 billion Covid relief bill in December 2020, and Democrats threw kerosene on the kindling with another $1.9 trillion in March 2021. The Federal Reserve continues to support negative real interest rates nearly two years after the pandemic recession ended. This inflation was made in Washington, D.C.”

      Bingo. The huge amount of new funny money created out of nothing, is a massive increase in the money supply chasing fewer goods. This is where inflation comes from…. (not from pent up demand from the “reopening trade” coming out of the pandemic).

        Jun 16, 2022 16:53 PM

        How Does Money Supply Affect Inflation?

        By Sean Ross – August 23, 2021

        “The money supply of a country is a major contributor to whether inflation occurs. As a government evaluates economic conditions, price stability goals, and public unemployment, it enacts specific monetary and fiscal policies to promote the long-term well-being of its citizens. These monetary and fiscal policies may change the money supply, and changes to the money supply may cause inflation.”


        – Inflation occurs when the money supply of a country grows more rapidly than the economic output of a country.

        – The Federal Reserve changes the money supply by buying short-term securities from banks, injecting those banks with capital.

        – The quantity theory believes that the value of money – and the resulting inflation – is caused by the supply and demand of the currency.

        – There are situations where increases to the money supply do not cause inflation, and other economic conditions like hyperinflation or deflation may occur instead.

        – During COVID-19, the Federal Reserve materially increased the nation’s money supply. As a result, the nation experienced higher-than-usual inflation.

          Jun 16, 2022 16:59 PM

          Another key quote found in the piece linked above:

          “When the Fed increases the money supply faster than the economy is growing, inflation occurs. In this situation, the increase in money circulating in an economy is higher than the increase in goods produced. There is now more money chasing not as many goods in this economy.”

          >> Bingo.

          When all those government stimulus bills were passed, there was massive new money supply that needed to be created into reality to fund these juggernauts. Also, much of this money was pumped out into the hands of citizens through stimulus checks, along side business PPP loans often misused and directed towards personal purchases. This put all that money directly into circulation in the economy (unlike former “too big to fail” bailouts that were more contained in smaller ecosystems).

          When reckless and excessive fiscal spending was paired with the Fed’s own monetary policy madness, then it only accelerated the inevitable inflation that would unfold. The Fed’s backstopping of the bond markets to the tune of $120 Billion per month, also increased their balance sheet all the way up to $9 Trillion. It was clear at the time and crystal clear today that the huge amount of new money supply is the real cause and culprit of the inflation we are seeing today.

          This is precisely why anyone with 2 brain-cells to rub together knew inflation would be the result and it definitely would not be “transitory.” Honest observers of the economy would have to admit that inflation had already reared it’s ugly head in daily life, long before it started registering in the government massaged numbers of the CPI. This is why when the Fed stated they had a target of 2% inflation, it was flat out laughable by anyone with a clue as to what the result of all the money printing would be. The pandemic supply chain issues, pent up buying, or war in Ukraine all are nice scapegoats, and they are accelerating factors, but they are not the reason for the inflation… but make nice headlines in shifting the blame away from Washington DC.

            Jun 17, 2022 17:21 AM

            Stock Market Today: Dow Closes Below 30,000 on Doubts Fed Will Avoid Recession

            Yasin Ebrahim – – Jun 16, 2022

            “The Dow closed below a key milestone Thursday, and slipped below a more than one-year low as the post-Fed surge quickly faded on worries that avoiding a recession is likely out of the reach.”

            “Investors appear to be bracing for growing possibility of a recession on concerns the Fed to turn even more hawkish because inflation will remain elevated for longer than the central bank currently expects.”

            “Bottom line is the Fed still believes core inflation is largely temporary,” Morgan Stanley said.


    Jun 16, 2022 16:19 PM

    I gotta put more money aside for my morning coffee since Starbucks China increased the price of a large Americano to 33rmb.

      Jun 17, 2022 17:41 AM

      Coffee inflation at it’s finest. Being in the home of Starbucks, I’ve heard they’ve jacked up the cost of their coffees here too. Now the baristas have unionized demanding higher wages, and in local news several locations were closed this week due to unionized employees protesting that they dared to fire a lady that had missed work repeatedly or left work because she was consistently too stressed and having panick attacks. Maybe all the coffee wasn’t helping calm her nerves.

      A cup of joe may be outpacing the price at the gas pumps, and yet there doesn’t seem to be nearly as much outrage about that. I’m sure it will somehow get blamed on the war in Ukraine too though, or the reopening trade.

    Jun 16, 2022 16:29 PM

    Few investors care about actual worth. If a stock price is going up that is enough. So many investors get trapped by penny stocks because you can buy so many for a small amount of money, but if you hold a 5 cent stock and it drops 1 cent you have lost 20% of your money. It makes one feel so much richer to be able to buy and sell in quantity. The stock market is a very cruel game, but that is what is so interesting! Like I always tell my sons who are pickers, Buying is easy Selling is hard! It’s better to make a fast nickel than a slow dime. DT

      Jun 17, 2022 17:48 AM

      I’ve not purchased a $0.05 stock in quite a while, but at the rate some junior miners have been going the last 2 years, some of them may eventually fall down to 5 cents if the beatings continue… haha!

      Wishing all the investors here at the KER good trading, and may all your nickels turn into dimes.

        Jun 17, 2022 17:23 AM

        Funny you should say that…….just bought some royal fox.🤞

          Jun 17, 2022 17:25 AM

          Interesting Wolfster. Your comment had me go briefly check them out. Looks like a good team, and project with some true prospectivity for a nickel stock. May your trading be prosperous sir.

            Jun 17, 2022 17:23 AM

            Hi Ex, this is how I feel about too much diversification. “The gun that scatters too much does not bag the birds.” Dale Carnegie

            Jun 17, 2022 17:08 AM

            Sure DT. But a concentrated bet that misses the few birds aimed at, has one going home empty.

            There are so many people that I’ve talked to over the years in this sector (or others like cannabis, cryptos, meme stocks, etc…) that came in with guns blazing, full of hubris and overconfidence in their “sure bet” concentrated positions, and lost a huge portion of their investing capital because they bet big, and lost big.

            Many of those concentrated betters left the sector (or their respective sectors) in disgust and are not around anymore because they blew up their trading accounts. Then, of course, they blamed the sector or newsletter writers or manipulation, instead of their own terrible trading and poor risk management protocols.

            Sure, if one takes a concentrated bet, gets the entry correct, and the exit correct, then those can be the largest life-changing gains… but how often does that actually happen? (very rarely).

            Most of that is “bar talk” about the few big trades that went right, and those people may stick around to toot their horns, but nobody discusses the mounds of investor corpses piling up that went all-in on a speculation and got murdered. If we had funerals for investors like that in the mining stocks, biotech, pot stocks, meme stocks, cryptos, or NFTs, then that’s all we’d do all day, because it so tragically common.

            It’s funny and instructive because I’ve watched people do it at casinos on craps tables and roulette wheel over and over again. Sure, a few throw it all on their favorite number and hit it out of the park, but sadly the vast majority lose. I utilize diversification in both craps and roulette and spread my bets around on various bets in proportion to the statistical odds of them hitting and regularly outlast and out-earn almost everyone at the table. Quite often someone with drink in hand will walk up, plop a large sum on the table feeling good about a very speculative bet, with very poor odds, lose it all, curse, and then walk away grumbling. I’ll make eyes with the pit boss and we’ll both shake our heads, as we’ve seen it over and over again.

            It’s the same thing in resource stocks. Sure we could have all piled into 1-3 exploration stocks a few years back and swung for the fences and have had life-altering gains if those happened to be Great Bear or Silvercrest (which I was in both) or be like most investors and pile into the 99% of other speculative drill plays and discovery narrative explorers that have either pulled back by 30%-60%, or totally imploded down 80%-90%.

            Personally, I sleep well at night knowing I’ve got a solid basket of gold & silver producers and royalty companies in my portfolio, along with the more speculative developers and explorers. Same thing in copper or PGMs or uranium. When so many were whining during rallies we saw the last 2 years that their “juniors” were not moving, I was still experiencing nice tradable rallies in the producers and royalty companies, or most advanced development stories, as they always get the bid first when the worm turns.

            It’s kind or crazy when people only pile into a very few “hot tip” exploration stocks, when they know producers and royalty companies will get the bid first. Sure they may not have as extreme of moves to the upside, but at least they’ll get a bid, and in a defensive sense, they won’t pull back as much as the riskier drillplays.

            I’d also point out that quite often the smaller to mid-tier producers or royalty companies or the most advanced developers do have really epic moves like in 2016, 2018, 2019, and 2020, and even in the short rallies the last 2 years. Even during the “silver squeeze” it was the larger dual-listed companies that had the double-digit gains, not the hundreds of penny dreadfuls.

            Why wouldn’t anyone want to have some money bet on the horses that are going to take off in the race first? One can always rotate out of those and move further down the food the chain as the bull unfolds, but to be out of position in these at turns is a huge error in judgement. It’s really a bit of a head-scratcher why so many resource investors didn’t diversify into at least some of the companies that actually have gold, silver, copper, nickel, PGMs, uranium in the ground, and it is not a surprise that they got bummed out when those companies moved and their drill plays didn’t. To each their own…

            Jun 17, 2022 17:50 AM

            “Sure, if one takes a concentrated bet, gets the entry correct, and the exit correct, then those can be the largest life-changing gains… but how often does that actually happen? (very rarely).”

            Ex, NatGas is a market that can be concentrated on, if mastered. I am doing that now. Thanks to Larry for emphasizing it last fall, which got me going! – BDC

            P.S. Last Tuesday I was considering KOLD (NG short), but needed a bit more info (didn’t know about the Freeport Texas LNG explosion) and while editing a KER post it took off, rising over 40% in about half an hour! I now check NatGas news many times a day – the only fundamental stuff I do…lol.

            Jun 17, 2022 17:58 AM

            Hi Ex again, great points as always, I like your reasoning! DT

            Jun 17, 2022 17:30 AM

            BDC Good points on Nat Gas, and good luck on the concentrated position sizing there. Yes, energy has been on one heck of a ride the last 2 years.

            DT – Thanks amigo, and it’s a good discussion on what amount of diversification is best and that really comes down to each investors own unique risk tolerance levels, the time horizon of the trade, the goal of the trade, and there are definite merits to a more concentrated position, as well as the benefits of diversification, and the drawbacks of too much diversification. It’s an interesting path we are all on to find know ourselves and which unique approach is best for us. Cheers!

    Jun 17, 2022 17:08 AM

    SEAN made lots of great points in his update…thank you all at KER

    Jun 17, 2022 17:14 AM

    Back in Discovery Silver. I think it has been a year or 2. Price down of course but Tony Makuch has taken over. He was a former CEO of Kirkland Lake which had some success. Eric Sprott has always had a big position in this one. Back in my day, Discovery seemed to be ahead in price movement but that was before the Great Suppression.

      Jun 17, 2022 17:30 AM

      Good point Lakedweller2. Yes, I was already happy with my position in Discovery Silver, but having Tony Makuch at the helm, just biggie-sized their management team. Legend.

      Also I agreed with the 2nd point you made that DSV had gotten a bit ahead of the price movement a few years back, and that is where I lightened up on most of my position, because it felt like they’d gotten out a bit too far over their skis in valuation at that point. However, they’ve continued to do good work honing in on the higher grade zone of a few hundred million ounces (versus the previous 1 billion ounces of silver at much lower grades that was the prior narrative). This is far more doable and digestible, as most of the market couldn’t really fathom or properly value 1 billion ounces anyway, so the approach now is more on target, and they still have all those other ounces there in the ground as optionality on higher silver prices (which is why Eric Sprott has it as such a large position of his).

        Jun 17, 2022 17:21 AM

        Lakedweller and Ex – Interesting commentary on DSV. I might have to pick up some shares. What is the juristiction? Thx.