Deficit Spending Will Send S&P 500 To 6,000 And Beyond | George Robertson & Mel Mattison on the True Risk-Free Rate and The Fed's Control of The Treasury Market
Episode publishedPodcast: Forward GuidanceForward Guidance
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Jack: Forward guidance is brought to you by VanEck, a global leader in asset management since 1955. You'll be hearing more about a VanEck ETF later on. But for now, let's get into today's interview. I am joined by 2 guests, Mel Madison and George Robertson. Both guests over the past year have been on this program with very bold bullish calls in the market that the stock market would rise, and they did so with reasons that are a little out of the box.
And so I'm so glad that they are both here. George is the author of the Monetary Frontier Substack, a market veteran. He can be found on Twitter at Bicker in Brattle, and, Mel Madison is a veteran investor as well and author of the book Quas. He can be found on Twitter at Mel Madison 1. Since both of you have been on, the S and P has been up, about 10 to 20%.
George, up 20% since your very, very bullish call in November of last year. George, you said last year when the S and P was a lot lower than it is now that the S and P, by the end of this year, could be at 6,000, and we're not too far away. Mel, you've got very bullish, targets as well. I first want to ask both of you, why have you been bullish? Why do you think it's worked out?
Are you still bullish on the stocks, and and why? George, let's start with you.
George: Sure. I take a a rather, dogmatic point of view, and, I know many people see me as, contrarian, but it's anything but. I'd be one of, like, many, many people, prior to, like, 2014 in terms of my analysis of the market where the S and p 500 is gonna go and also what's going on with US treasuries. But since 2014, it's suddenly become very unique and contrarian, and I I think it's because there's a mistaken idea that there's a continuum from Volcker to today. And, actually, what there's been is a really radical change in the monetary policy formulation, which if you do not realize, I thin
I think right now that everything's on track. It all goes back to, understanding of the fiscal, status, which is still very strong, even though it's abated a lot from, the highs of, COVID, with the emergency COVID remedies. But we still have large industrial policy and various other programs, and also we're going into election with a chicken in every pot type of idea that will probably get heightened with with Harris, and the fiscal, spend is still pouring in. If we didn't have the COVID experience, you would say it's at record high and it's scary. But of course we've had the COVID experience
This very simple, but I think very robust and useful understanding insist that I still have a very positive view on S and P 500. And the second part of this is that I don't really see any signs. Forget about, like, thesis and the, you know, the stuff, but just signs in terms of, like, okay, what they said they're gonna do and then what's happened over the next year or 2, 3 years of fed monetary policy. It doesn't exist. And maybe someone can say otherwise, but I think that in 3 years, they'll be able to look back and not not be able to justify their views that they have now.
There has been such a radical change in how the Fed formulates monetary, policy perhaps for the, for the better, for the gotten for the common good, but it has disconnected the Fed from any sort of, input in terms of where risky assets gonna go, like the S and P 500. So with that idea of the monetary policy, and my understanding the fiscal, which are very broad strokes, I mean, anybody with Fred, could quickly stitch this together. It also makes this very, very hard to argue with me. Otherwise, I can't see any reasonable conclusion other
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