You may remember yesterday in our time together we talked about the economic theory of price and we showed that the determination of price is based upon preferences that people have and then demonstrate and making bids to buy things and making offers to sell things and how in markets we get the clearing of the market and the efficient or economizing allocation of consumer goods and producer goods. You also learned about the the same approach of pricing with respect to money in the lecture given by Dr. Sandy Klein where she explained how the purchasing power of money is determined in the same way by this process of preferences and voluntary exchange and so on. Now all of these prices that we talked about yesterday then the prices of consumer goods, producer goods and money were what Murray Rothbard would call cash transaction prices by which he means that the two parties engaged in the trade fulfill their obligation in the trade at the same moment in time so there isn't any inter-temporal dimension to these prices. So what we want to do in our time together today is talk about the inter-temporal price of money. What happens in pricing when one party in the exchange fulfills his or her obligation in the exchange sooner and the other party fulfills his or her obligation later and so here we get the inter-temporal aspect of action. Now in order to assess this or to think about the inter-temporal nature of pricing we need to set it in the broader context of time in human action more generally and so that's where we'll begin. We'll start with some fundamental principles of time or the temporal aspect of human action and then we'll move to a brief description of the two different ways in which persons value their action with respect to time and the first of these Joe Salerno likes to call time placement and this refers to the timing of action or what we talked about again yesterday the chronological aspect of action so yesterday we talked about the logic of action but now we can talk about chronology when our actions taken is this begin just haphazard or is there an economizing structure to decisions that people make about the timing of actions so we'll deal with that briefly but that consideration has nothing to do with the interest rate which is our main topic right this has to do with the second way in which people value their actions with respect to time which I've already mentioned is the inter-temporal aspect what happens when they start an action sooner and end it later than what you know how is economizing done with respect to the inter-temporal dimension and then and then we'll get to the theory of interest once we have all of that as background so to begin let me again refer to what we talked about on Monday there we focused on the finitude of the human condition that were finite beings in a finite world and as such we distinguish between ends and means and then given that basic distinction we worked out the the various relationships between means consumer goods and producer goods and the the process of valuing and imputing value and then pricing and so on and so forth with respect to that aspect of human life and what we want to do today and thinking of the inter-temporal aspect is to of course focus on the fact that we're temporal beings that we exist in the stream of time and therefore time is an ever-present consideration for us when we think about our actions and its temporal beings we the basic distinction we make is between sooner and later and so everything is built upon that particular distinction just like everything we talked about on Monday was built upon the distinction we make as finite beings between ends and means now some of the basic principles with respect to sooner and later we've already seen a little bit and I'll just mention those first and then we'll get to the main part that we need to focus on we know that action always exists in a sequence of steps so it's always started at one moment in time we begin an action let's say we want to produce an automobile and then have the automobile as a consumer good we start by mining iron out of the ground and then producing steel and then right and then forming parts for the car and then assembling the parts and so on and so forth and then we have the car and then we use it and so on you know through time and so this is what we're pointing out that every action always has the same inter-temporal structure to it we start the process of production we decide yes we're going to act in this respect and then we start the process of production and then we produce the consumer good and then we begin to use the consumer good to satisfy our ends and this is this implies then some of the things that were talked about yesterday for example Dr. Peter Klein talked about entrepreneurship and entrepreneurship of course is centered around the fact that the future is uncertain when we make decisions about action but the but the reason the future is uncertain when we make the decision to act is because as temporal beings that are finite we don't know and can't perfectly predict the future stream of events we can only anticipate how the realization of our end will work out at the moment that we're deciding to act in a particular way and so you've already been introduced a little bit into this question of the temporal nature of things but what we want to focus on is a different aspect and this is the duration of action so every action has a duration it has a beginning point and an ending point and of course this duration is always set within the stream of time at a particular point and so there's always the time before an action begins and then the time during an action again from the start of the process of production to the end of the usefulness of the consumer good in generating its services and then there's the time after action so this is the you know a general categorical structure of the duration of action and the duration of action I've been speaking about already these two parts but we can break the duration of action always into these two parts right the period of production the time from the start of action to the beginning of the attainment of the end is the period of production and the period of production has further subdivisions like working time so I mentioned this again with an automobile if you want to produce an automobile you have to extract rubber out of rubber trees and then to go through this process of producing the rubber and then forming it into tires and then once you have the tires you ship them to the auto plant and then you assemble the tires onto the other parts of the car so on right you have this period of you have working time as a period of production and with an automobile you also have maturing time because the body parts will be painted and once they're painted the paint has to cure and there you're just sitting there right twiddling your thumbs while the paint cures now it is true that in human action the the economizing investments will be made to adjust these processes of production right we can we can lengthen them out or shorten them you can auto entrepreneurs can you know use technology that where the curing process is shorter right they can have capital goods that that cure the paint faster or something like this right so the point is that these processes these time periods and processes within them are subject to human choice they're subject to economizing and so but there's always a period of production right and it always at least in principle has these subcomponents and then there's a duration of serviceableness of the consumer good and some consumer goods of course are perishable you get a you get a you know burrito at hothead burrito and eat it and that's it you get a car and it lasts for 10 years or whatever right and so when once again these durations of serviceableness will be structured by entrepreneurs in a way that is economizing the way that people prefer right though they'll try out different configurations more durable less durable automobiles or houses or whatever it is and and with it with an attempt to satisfy more fully the preferences consumers have for this aspect of of a good whether it's more or less durable and then the other thing to notice about duration is that not only are these component parts of the duration of an action subject to human choice and therefore economizing so is the time placement of the action itself and and that's what we want to turn our attention to here let's say we have this timeline the timeline from the left to the right and the action any particular action can be placed in this timeline according to whether or not the value of the action would be greater at one moment in time as opposed to another so let me just use this example my wife and I will be celebrating our 40th wedding anniversary on November 17 1983 so so those those very appropriate applause go only to my wife you know she had me to put up with me all these years so but 40 years and so you know it's it's possible for us as human persons my wife and I to agree to you know celebrate our 40th anniversary tomorrow that like the left side of the timeline right we could do it any day of the year but it's going to be more valuable to us if we do it on November 17th that's just an illustration of exactly what we're speaking about this this is a general principle then of any action any action could have a different value depending upon we the time that a person chooses to take it and as Mises like to put this time is an irreversible flux that is the moments of time are not homogeneous with respect to action because as the moments in time progress on the timeline they they entail different circumstances in which action could be taken and therefore the action could have different value or costs associated with it in these different moments in time right just like my celebration with my wife of of our wedding anniversary so this again is a generalizable generalizable principle about about action and so what we try to do of course then is economize with respect to this fact this you know realistic fact about action we take this into account right so when it's appropriate we we would we would have a time placement of our action at that moment in time we would start the action and stop it at the moment in time or across the moments in time when we think the value of it would be enhanced or again the costs would be lowered now if this is true for action itself it's also true for the goods that could be used in the action right and so there's a time placement of goods as well that follows out from the time place time placement of the action itself so the value of a good can vary the same exact good right could vary depending on when it's applied in action and of course if that's true then again the persons who possess these goods will pay attention to that fact and take into account you know having the good at the moment you know or providing it at the moment in the market when its value is the highest think of a case like oil so we have you know spot prices for oil and we have forward prices for oil and their entrepreneurs who are producing and refining oil and so on are interested in anticipating what the price of oil will be in a month or two months or six months or you know with these future dates because it will impact their their profitability of their operations and so obviously it follows out then that as a condom minding condomizing human beings these traders would be interested in making exchanges that reflect that right and these exchanges are called forward transactions and forward transactions are just when the two parties making the exchange agree to make the exchange at some date at the future you know the future date at which they agree on the delivery of the good and the price and you'll notice that this exchange is still a cash transaction this is not an intertemporal exchange one party isn't fulfilling obligations under contract sooner and another later they're agree instead of doing the cash contract today in what's called the spot market they agree to do a cash transaction at some future date six months from today three months from today something like that and if the forward price is you know significantly higher for oil than the spot price today then there can be a better allocation into different temporal moments of oil oil could be reallocated from the present where the price is low to the future date where the price is higher and as that happens the prices will come together and so this is just the arbitraging activity that we see across people and across places and now across time right this consideration has nothing to do with the interest rate right we're just sort of setting the stage for discussing this sometimes people conflate these but they're actually conceptually quite separable elements so let's turn to the consideration of the interest rate oh I'm sorry we got the as I mentioned the forward price material that that I already mentioned so we get this efficient we might call this temporal allocation right this efficient time placement allocation of some particular good as opposed to just you know using it willy-nilly with respect to when it will be used so then we move on to the question of the interest rate and here we're talking about not time placement as a way of valuing our action with respect to time but what economists call time preference and time preference is referring to this intertemporal dimension and it works in the following way suppose we have an action now in the timeline that's already placed in its economizing time placement it's already the start and the stop is where the person wants to do the action in time so we've set that consideration aside so the action now is where the it's economized getting its greatest value with respect to that starting point and that stopping point time preference then refers to what happens within the duration it doesn't it isn't talking about what happens in placing the duration in one point or another and what what the consideration is so we have this fixed place time placement and we see the two parts of the action the period of production and the duration of serviceableness what what time preference refers to then is the preference to begin the satisfaction the duration of serviceableness part it's a preference to begin that part closer to the start of the action there is always a conceptual preference to shrink the period of production because the period of production with respect to time is again just waiting time we're just we're going through this process of production we're no no satisfaction is coming to us we don't have the car yet we don't have the you know the the experience of going going out and having a nice meal on my wedding anniversary we don't we don't have that yet we're just in the preparatory part right the production part and with respect to time this is just this is just waiting and as Mises likes to put it we as temporal beings have a disutility of waiting we don't that's just just waste right to wait we prefer in other words to if this is again a production of an automobile let's say we prefer to just shrink that period of production so that we just snap our fingers and have the car right we don't have to go through the mining and the extraction and production of intermediate goods and all that all that rigmarole it would be better if we could just boom have the car right shrinking the period of production and bringing the duration of serviceableness closer to the start of action now again you can see the way the diagram exposes this you could see that whether or not there's a time placement element in when the action starts or stops we've already settled that issue right so suppose in other words that the duration of servo service ableness this person has said they want the duration of service service ableness to start at the point in where the middle bar is the middle blue bar is they want that moment to for the good to be in their hands and for whatever reason that that's preferred well then time preference means the start of the action we prefer to be closer moved to the right towards that middle bar right but what what would happen if the start of the action is preferred at the left hand side where it says start well then we would prefer the the middle bar to be moved to the left toward the start of the action right you see these are two separate aspects of action time preference and time placement they're not intertwined conceptually okay so there's this disutility of waiting now that's the background most of the time when you see in the literature a discussion of time preference you'll see it defined this way which is perfectly fine if you understand this background is perfectly fine way to put it right so time preference is often defined this way the satisfaction some particular satisfaction is preferred sooner as opposed to the same satisfaction later that's the way time preference is usually defined and that's perfectly okay to define it that way again as long as you're not conflating that with time placement which could be done right if you're you know if you just see this statement it could be that you would conflate the two but again that it's quite clear in Mises's writing that these two things are entirely distinct now another thing to mention about time preference is something we mentioned about preference yesterday this is a logical category of action this is apodictic it's essential there isn't any possible action that finite beings can take in the face of the scarcity of means it doesn't involve preference preferring one thing to another choosing and preferring one thing to another with temporal beings there isn't any possibility that we could ever engage in action that has this significant temporal dimension without making a distinction between sooner and later and therefore having time preference right when we talk about preference we're not talking about as dr. Hoppe put it on Sunday night we're not talking about the empirical magnitude of how people experience the intensity of their preference or the intensity of their time preference we're not speaking about that right that's an empirical question that will vary from one person to another and you know for one person at different moments in time they'll have different degrees of time preference or preference for one thing and as opposed to another and so on that's not we're talking about we're speaking about the theory of the framework conceptual framework within which we're trying to understand action as a general category right so we don't want to conflate time preference with the idea that you know this is like the impatience of waiting psychologically the impatience of waiting is just referring to the intensity of a person's time preference if a person's impatient they may have higher time preference rates than a person who's not impatient but a person who's patient still has time preference because it's a requisite category of all intertemporal action so that that's something to consider as we think about this now there's a couple of implications that we can draw out of this definition this concept of time preference and you'll see some of this in the in the lectures following out today especially about capital and the business cycle things like this and the first of these is the intertemporal production choices so we have alluded to this already right that as human beings we can have different links of production processes we can extend production processes out in further out in time or we can shrink them and again it's another fact of reality about the human condition that the very shortest periods of production that we can engage in as finite beings do not satisfy very many of our ends because the shortest production processes we can imagine are just immediate extraction of a consumer good out of nature you pick berries off a bush or you right you gather apples under an apple tree and eat them and well okay so not too many of our desires or our ends can be satisfied in this way but time preference means then that as we begin to lengthen out production processes it must be the case that we're anticipating that they'll produce either more goods for us or goods that we cannot produce by mere extraction out of nature like an automobile right or a computer obviously we can't produce with a with extremely short production processes and so the idea of time preferences it's our time preferences that regulate the extent to which we're willing to engage in longer production processes remember in that period of duration of the action in order to get something more valuable a consumer good that's more valuable to us you know after the period of production so we are we are willing to engage in longer production processes as long as the payoff in terms of the duration of service about me right the consumption services that we get from the consumer good are worth it to us but they have to overcome our time preferences and so we don't immediately start to engage in the longest possible production processes right after the fall of Rome people you know in in the outlying areas of the old Roman Empire didn't immediately begin to try to produce computers right or right or you know some some production process that would take them a long period of time no no they just they just engage in you know production processes are feasible for them and then we progress slowly over time as a as a civilization we we progress to the point you know building on the capital structure that's built up by our previous generations into these longer and longer production processes that give us more and more valuable consumer goods in the end so that's one consideration and hopefully you can see right away that this will have a great impact on the question of the business cycle so in the business cycle the the basic problem is credit expansion through monetary inflation of the central banking system and fraction reserve banks extends the length of the capital structure in a way that's unsustainable because it's not consistent with time preferences and the underlying rate of interest that will eventually be reasserted by people as they trade in markets and then and then of course the other thing that we want to focus on now is the rate of interest and here again there there's some nuances and so we have to be careful to proceed in a way that's expository of you know exactly what the arguments are and so we talk about the pure rate of interest and the pure rate of interest is as I got on the slide it's the time preference premium of present money over future money this is the pure rate of interest and the pure rate of interest as we'll show in just a minute is based upon nothing but time preference we're not saying that that's the only consideration people need to make in discussing the value of money in their hand versus money the prospect of money in some future period it's not the only consideration but it's the fundamental one and so we start here and then we'll build a few toward the end of our time together we'll build a few other considerations in into this so the pure rate of interest follows out from time preference present money allows the period of production to be shortened so you know the classic example of this is you get married you're newlyweds you're earning some income but you're living in a rental apartment and you want to buy a house well you could just you could cut back your expenditures relative to your income and you could save 10 years later you can have the fun to buy a house you could do that or you could borrow the money and if you borrow the money the period of production is shortened by 10 years right and that's why people do it they borrow the money and then they and then they pay principal plus interest back over this time because because they want to shift the the duration of serviceableness closer to them closer to the start of this action so so this is again a generalizable principle of of intertemporal activity in in human life and in this way we get the efficient by doing this by lending and borrowing we get the efficient intertemporal allocation of goods these potential homeowner is willing to pay the interest in order to get the present money and whoever the lender is is willing to accept the future money payoff which is larger than the present money in order to part with their sooner consumption activity right they're giving up their funding and so it's mutually advantageous trade generates this more efficient allocation of the funding away from those who value it less relative to future money towards those who value it more with respect to present gratification right present goods that they could use to satisfy their ends okay so that gets us to the argument itself the the economic theory itself and I juxtapose the the bottom row where we're talking about the argument with respect to time preference against the top row which we talked about on Monday remember on Monday I have this this bigger schematic where we had the illustration of price theory from consumer goods down to producer goods well this is just the top three rows of that previous chart that I have now on one row at the top right it's just that the argument is that what fundamentally determines prices of consumer goods is just our preferences we just have we just have different preferences for things you know we possess certain goods and then some people wish to acquire these goods and willing to pay prices that the people who possess the goods are willing to accept an exchange and then we get the market and we get market clearing prices and so on and so forth but the whole thing is is resolves back into just our subjective valuations of the ends that we can attain through these two different possibilities right I own a good and I can attain certain ends with it but if I sell it I can get money and then I can use the money to attain other ends that I value more highly when I sell the good right or vice versa if I buy the good if I buy the good I'm surrendering ends that I could attain with the money but I'm acquiring the ends that I can attain with the good and I value those ends more than the ones given up and so that's the argument right it's exactly the same with time preference exactly the same structure it's just that now what's being traded as present money for future money as we suggested already we just have those who are demanding to acquire present money in exchange for paying future money and those who are willing to supply the present money to the demanders their lenders who are willing to lend to the borrowers and who are willing to accept the future money which will be of greater amount right because of the interest payment in exchange for giving up the present money why do they do this well because they have a future in that they that they think that accumulating the fund will allow them to acquire that's more valuable to them than the present ends that they could they could engage in with the money that they have so so it's exactly the same argument right and then the other thing to note about this just to stress this one more time is that this exchange is always in terms of money and never in terms of goods that is lending and borrowing is always in money we have a monetary economy it's always in money and not in goods and the reason for this is because if we were to trade in goods if we were to lend and borrow in goods then the outcome of what happened in the future would be an intermixing of these two valuation processes of time placement and time preference they would not be just based upon time preference this is because goods have consumptive value or value as producer goods and the value as we've already said right the value of a consumer good or producer good can vary depending on the circumstances that change from moment to moment over time but the circumstances of consumption and production don't affect the usefulness of units of money to perform the function of the medium of exchange the medium of exchange function is is ongoing for any both across people and across places and across time this is what economic calculate will elaborate on this in just a minute if you're not convinced just by just by this claim I'll show why this is so in just a minute but but the basic point again is that if you think about using a particular let's say ten dollar bill to buy lunch it doesn't matter which one you use right they're interchangeably useful it it there wouldn't be any difference and the same so it so it doesn't matter you know you give one ten dollar bill or another to the to the seller the seller would be indifferent between them right wouldn't care they're equally useful as a medium of exchange it doesn't matter what the consumptive changes are you know going on in the minds of one person and another production changes or anything like that and this this of course it also works then we can see this right away across space right if i buy something remotely from someone else across space then it doesn't matter it doesn't matter which you know if i have two bank accounts it doesn't matter which one i transfer my you know debit account claim from right if it's a hundred dollars it's it's a hundred dollars it's performing the same exact medium of exchange function there's no difference it doesn't matter what the consumptive and productive considerations are between the two people in the different places that that's not it has no effect and so what we're saying is that because we have intertemporal exchange and we have an interest rate the same thing is true intertemporally same thing is true if you take money today and you and you trade it for money in the future we can show that the that there's an equivalence between the two right whereas we could not show this with goods precisely because goods value can be different depending on the consumptive or productive conditions for using the good in the future but the medium of exchange is independent of those conditions as long as it's a medium of exchange it's going to be useful regardless of the consumptive and productive circumstances that people find themselves in so this is the this is the argument that that we make here and once again i i stress this a little bit because there's some there's some ambiguity in the way in which terms are used in this field of interest that messes people up with respect to exactly what we're referring to when we talk about time preference and the expression of interest and so on conflating money and goods and and all sorts of things that i won't go into detail about all right so now let's just go through the logistics of that the details and the logistics of that trade so here i've i've posed two different people just again so we can see how interest would emerge from preferences that people have in the left hand side we've got person a who notice would accept a well person a prefers a thousand dollars today to a thousand dollars in one year right you can see the preference rank of a thousand today is above a thousand in a year and we're assuming for the sake of our argument at this point remember the pure time preference element so we're saying that the purchasing power of the thousand dollars is going to be the same so we're setting that consideration aside we'll get to that later and so there there would be a hundred dollar premium that person a places on having maintaining a thousand dollars a day versus getting eleven hundred dollars a year from today but that person would lend the thousand dollars a day at at an interest rate of ten percent or above right if somebody came and offered twelve hundred dollars to person a in exchange for the person a giving up a thousand today person a would be a lender but if a person came to a person b or some other person c i guess would come to a and say i'll give you one thousand fifty dollars uh a year from today for a thousand today person a would not lend right that's what that preference rank says person b on the other hand uh has a higher premium on present money than person a it would take three hundred dollar premium for person b to lend his one thousand dollars today and uh person b would be happy to pay uh up to uh two hundred ninety dollars that would be the maximum buying price as we say for obtaining the thousand dollars from person a um person b has a more urgent uh end to satisfy with this present money and so economizing social economizing would mean that the present money ought to go to b because b has a more valuable uh end to which he or she's going to put this present money relative to a with respect to the present money right with respect to what's being exchanged and so that's exactly what would happen um the maximum buying price for obtaining a thousand dollars for person b is twelve hundred ninety the minimum selling price for person a to to supply the one thousand dollars is uh one thousand one hundred dollars right and so they can come together and negotiate settle on some particular interest payment let's say a premium of two hundred dollars and the interest rate would be twenty percent you can see how the pure rate of interest is just set by preferences there isn't anything else you know all the other considerations the circumstances of life uh uh have their impact on the interest rate through human judgment that that's the argument we're not saying that conditions of human life don't affect um interest rates or or prices you know consumer goods prices and producer goods prices we're saying the effect is always through human judgment and this is the filter if you will through which people express their demands and supplies and therefore prices emerge okay then then the only other thing we need of course is the market so just like we did with consumer goods there'll be a market uh it won't be just two isolated people making this exchange right there'll be all sorts of uh potential borrowers you remember the data point here is point a i looked this up yesterday if we want a particular example the two-year uh treasury note interest rate yesterday was four point eight one percent that's what we're talking about that's the r zero why is it four point eight one percent and economists say it's four point eight one percent because that interest rate cleared the market yesterday for trading in uh you know supplying and and um and demanding uh these these funds right through trading this this uh this claim that's what we're talking about so the the blue line the light blue lines are just conjectures this is just the logic of action right just what must happen if uh instead of being four point eight one percent interest someone were to offer a treasury a two note treasury at an interest rate that was five percent well the person wouldn't find a buyer right and you know and and vice versa for interest loans right loan rates of interest that were below this there'd be excess demand then and excess demand and excess supply are avoided by participants in the market since their preferences aren't satisfied when that particular uh result occurs okay so what we see from this just in summary is that just like with uh preferences for goods for consumer goods time preferences determine jointly or or singularly determine two effects one is the pure rate of interest just like preferences that people have for bags of apples determine the price of apples and the quantity of bags of apples traded so time preference determines jointly the rate of interest and the amount of lending and borrowing that occurs or we could say the amount of saving and investing that that occurs time preference time preference determines them both right again this is sometimes a point of ambiguity that trips people up in this field so that's important to stress and now let me get to this uh claim that um once we have a time market where there's trade of present money for future money and an interest rate that emerges the the uh the time market interest rate makes present money and future money equivalent for economic calculation so this is what you all learned about uh you know if you take in business classes about or classes in finance about uh how interest uh can be compounding or discounting of present money in the first case or future money in the second case right so if i take a thousand dollars and i lend it out on interest at 10 percent uh for one year then at the end of the year i'll get a payment of eleven hundred dollars i'll get the principal back plus the interest payment of a hundred dollars and if i enter into a contract whereby i'm going to receive eleven hundred dollars a year from today then the present value of that eleven hundred dollars just by simple arithmetic right or simple algebra is a thousand dollars it's eleven hundred dollars divided by this interest rate term of uh one plus the interest rate so in other words through the time market these two amounts of money a present money of a thousand dollars and money in one year of eleven hundred dollars are equivalent i can have either one and therefore i can do economic calculation using the interest rate right because the interest rate is making the it possible for me to have either the present sum of money or that calculated future sum of money and so they're equivalent and so the economic calculation is in fact preserved uh intertemporary through uh through the time market that is through through uh lending and borrowing now in order to get to the nuance we we need to introduce the complications that i mentioned earlier and this is uh as mary rothbard likes to put it this is the distinction within the time market of credit markets and in the capital structure and with credit markets we have a credit transaction that i alluded to before where one party is the lender fulfills his or her term of the contract sooner and the other party is the borrower who fulfills his or her term of the contract later and these credit transactions then could be either for consumer loans and then the consumer loans could be subdivided into the various consumer goods that are bought so houses we have the mortgage lending markets and for cars we have auto loan uh market for general merchandise we have credit card markets right and we have a different interest rate for each of these different kinds of consumer loans we don't see a uniform interest rate right we see this we see this variation and uh the the other part of the of the time market is the whole entire structure of production because here the entrepreneurs are fronting present money to the owners of the factors of production in anticipation of producing a good and selling the good and receiving revenue from the consumers at some later date and in order for them to make this loan in order for them to you know suffer the opportunity cost of foregoing just lending the money that they have today out on interest and earning a rate of interest if they if they plow the money into the production process by buying factors of production they need to account for the interest return that that investment is commanding right when they sell the output and receive the revenue from the from the consumers and so that's the other part of the time market and now since I'm uh almost out of time I'm going to run just to the end of this now I always do this why do I always why do I always do this so so in any case it's a period of production is too long so so in any case uh given that we have the this variation right different kinds of loans that are made in different contexts right we can then see what the other factors are besides time preference that I've called here sources of the market rate of interest so the time preference element right if people have higher time preference interest rate structures will be higher and if they have lower time preference interest rates on that account would be lower but there's also entrepreneurial uncertainty and so if the if there's greater entrepreneurial uncertainty in particular kinds of lending that's why we get get subprime mortgages let's say or you know junk bond interest rates right then the interest rate will be higher to compensate the lender for the possibility to fault and other uncertainties involved and if the uncertainty is is less intense then the interest rate structure would be lower for that kind of loan and then there can be price premiums that emerge from uh you'll learn about this again later today from what are called cantillon effects that occur when the monetary relationship has changed so when there's a monetary inflation the earlier receivers of money will see the prices of things that they're buying they will bid up the prices of things that they're buying right and the sellers of these things will see a premium in their in their net income that other producers will not who receive the newly created money later when the price structure and the economy has moved up and so that too would enter in right to that would enter into the rate of return in certain lines of production as an interest return and then finally there's what again you learn from Dr. Klein Dr. Peter Klein yesterday about dealing with uncertainty the unanticipated changes in the ppm and the predictions that entrepreneurs are making with respect to whether the whole purchasing power structure of money will be higher or lower so this is what we've seen of course in the last few years as price inflation has picked up right the interest rate structure moves up and I'll end on this note the the weird inversion of the yield curve that's been going on for a very long time is partly a reflection of the fact of these expectations that investors have about the about the transitory or non transitory nature of the heightened price inflation right this is why two-year interest rates are above 10-year because apparently investors in these fields don't think that the price inflation is going to stay that high for 10 years and so they're not willing to you know engage in transactions at the higher interest rate where they think that yes price inflation is going to be pretty high for the next few years all right thank you very much for your kind attention thank you


Welcome, then we will be continuing with our course and now we will be going back we have seen what all the different agriculture practices which have been which people were following it for the past so many years and what are the impacts and if you have to do what all the concerns about from the micro level that is from the farmers level plant level farmer level village level and area level then what are the new practices with the making use of the advanced technology in the term for precision agriculture purpose and what are the issues which are related to the precision agriculture activities.  So what does it what are the different constituents of that particular climate smart agriculture that is the actions on the farm level as well as beyond the farm levels then incorporate technologies now what and also policies institutional and investment availability or non availability now what happen is the farms yes fine how the farms will be affected by nature how the farm producers will be able to sell it out in the market what are all the different institutional and investment methods which are available for growing these crops. So all these practices all these things they have to be put integrated and look at it agriculture as a holistic approach rather than piecemeal approach I am a farmer I can do only this much and I am a person which is a grower or pesticide supplier I can do this much. So instead of leaving away all the things our goal need to be a food security for the future purposes and minimizing the damages crop damages and getting high field high crop yield conditions that is what is the goal of this climate smart agriculture. Now if we do the sustainable agriculture what happens is one thing is for the other human race the agriculture productivity increases the food security is assured for the farmers his income goes on increasing whereas towards the food security managers there is some type of positive note and they can relax a bit for that particular area now another aspect of that management includes managing the farms managing the crops managing the livestock and other resources better or with knowingly what type of after learning this type of courses and move courses which tells about different ways how to manage your resources produce more and increase the resilience and also at a multi level multi level in the sense farm level village level then regional levels. Now see I am interested these are all the things which is ideally need to be done but at the same time farmers they may not be able to implement necessary changes for that what is needed is some amount of institutional and in investment as well as policies need to be slightly modified or totally modified wherever it is needed. So this is the another kind of agriculture another way of or another concept of food security in the with reference to climate change in the future. Now what are the different programs this has been in the conception stage or to some extent it has been happening so there are FAO action programs are there mitigation of climate change in agriculture incorporating all those areas then there are X act that is agriculture investment projects there is a small policy changes investment methodology changes as well as there is a use UN rate programs which focus on the climate smart agriculture what all the problems how do you come out in terms of technology in terms of policies in terms of institutional investments. Now what is needed for us as a farmer what I am supposed to do that so you may have to identify what all the gaps what all the filling up of data which is missing what type of knowledge which is missing with me like maybe in understanding the policies and executing it at your level that is what I mean by the knowledge gaps then it is the agriculture is driven by knowledge not only your knowledge and the knowledge and the experience which is gained by other people so that climate change policies also can be incorporated in this type of activities that is what the climate smart agriculture which has been proposed. The main aim of the entire thing in the previous areas convert every drop of water to food that means the wastages of water needs to be curtail every drop you added there should be a growth related to growth otherwise some of the flooding irrigation types there is the return flow from the agriculture areas is estimated to be about 20 to 30% of the quantity of water which you give it to them that we wanted to use it for other people so what is how do we do it or how do you go about it is the multi-level information should be there multi-level in the sense you have the plot agriculture plot villages then area then region then the country of that kind of category with a different spatial accuracies maybe 1 meter 10 meters 100 meters of that type of data collection temporal is nothing but how frequently you try to do that daily, weekly, monthly or a seasonal voice so that should be done on a in a different geographical locations so that the water could be saved. Now what do we do with this type of multi-level information is the observations are carried out by different people with a different information and they are not to be uniform they are may not be in a same scale depending upon the convenience and the problems which they come out they have a different type of scale factor. So those scale factors need to be rectified if there should be a common scale of merging all the data sets by georeferencing then it should be stored in a computer system so that the input storage modifications withdrawal or output are using it in a different decision making information they could be make use of by way of integration of information. This helps us in analyzing the data not only today's data this year's data even the data which is collected 10 years back they may be able to integrated and analyzed that information can be disseminated to all the people either in the form of an adversary or in the form of a bonus. So it is not only a regional or a area wise it will be at a individual level also individual level means see we have all we have our own mannerisms we have our own ways of producing the results so some of them many of them if many of them or some of them or at least minimum one of them can be corrected or may be changed or something else need be done depending upon the availability of the things. What do you do when you compare integrate and then start adopting to the new technology new methods of working what will happen is your goal is agriculture production is likely to be increased when you increase the agriculture production the food security of the country food security of the area food security of the individual families food security for the family in terms of food availability for them as well as money availability for their own activities they will all will get improved the wastages will be reduced redundancy will be removed from the system. So what is needed information support is what we need to do is collate information collate information is nowadays now after the digital world previously getting a information is very very difficult we are not sure where that information is available now the first job is identify the information requirement for the agriculture related activities collate them collate in the sense you collect it from a different sources then so that the knowledge gap I do not know and I do not know where it is available I do not know how to apply this type of knowledge gap will be reduced in terms of and many of them what happen is the oral methods may is no longer going to help us in proceeding further it should be measured it should be monitored and it should be analyzed. So another thing is on the community many of our descents in agriculture is the community level property related issues the reason is the property information is not widely seen by others or it is not widely standardized by people so it is there in their own way and there is no standardization and as if you are written down in a piece of paper from 20 30 years back the condition of the paper will be in a different mode the maintenance of that type of record maintaining is one among the major issues in the community level property related issues then is about the resources management this is the natural resources human resources human resources what happen is he natural resources they are there and they have reduced or they have not increased of that kind of category whereas the human resources is might be measured by the knowledge base in the agriculture practices that need to be updated at a regular interval to increase the yield as well as in conservation of the resources. Now conservation is one thing which is very good if it is practiced at the immediately now what are the different technologies are available for us to do this type of now macro level as well as the micro level synergies they need to be understood there should be a pyramid all the villages and village practices at the bottom decision making should be at the top of the pyramid. So that type of synergy has to come from for the agriculture production it is not only crop development crop related factors but also other peripheral factors are important factors like water fertilizer pesticides machinery human trained human human resources all those things comes into pictures. Now in this case what is happening is the grass root level resources especially in the terms of a human resources that needs to be improved that skills need to be improved so there is a skill development is needed the developed is skill development is one thing everybody knows okay I get trained up so as a man as a person who wants to manage or who wants to do a climate smart agriculture he needs to know how many trained people are there and where they are there how they are employed can be used for some other areas also so that same practices can be replicated elsewhere for that purpose there is a need for a development of skilled developed people database now see this is another digitization of a legacy database is related to the land parcels which are there in the villages which is coming up in the land records are not maintained not they are not able to maintain it properly because of so many problems so that has to be come out so it should not come in the way of development then the last and the least is the crop water information system which needs to be updated at every time so that it will be available to all the people so that it will be able to get a better information driven activities now so this is the need for the hour how do we need it what we were all talking about is we were talking about the collision of information and bridging the graph between one pair one activity to another activity then georeferencing it nowadays georeferencing is the only way of addressing a particular information because what we have seen the physical identification or a reference numbers in terms of stones which separated one field from the other they are all removed or they are all taken away so identification of this type of information is very difficult so we may have to go back to the georeferencing with that is nothing but latlan identification which you get it on the even at your mobile and integrate those information now the decision making what is a decision making in the agricultural practices to go for a first major decision is to go for a cultivation of that particular area or a field to go or not to go if you go then what are the issues whether sufficient amount of water good seeds as fertilizers if it is available that is the major issue in case water becomes the major issue then do I have a alternative source alternative source in the sense do I have a supplementary irrigation source wherein I can do that when you do not have a supplementary irrigation source then your dependability your success rate is slightly on a lesser side so that is how the sustainable agriculture could be done this is what in the first lecture which we would like to sum up is these are all the requirements requirements can be done then we were talking about what is the geographical information geographical information what is it so we will be able to talk about geographic information is nothing but geography geography is related to the latlan of that particular portion of the earth's surface information is of the attribute table table which is described that and the entire computer system which manages that is what the system is so which will be able to see it in the next class next lecture thank you.


as a presentation of TFNN. The Tom O'Brien Show is produced every business day. Tom takes your phone calls toll-free at 1-877-927-6648 internationally at<PHONE_NUMBER>. Let's go to Alan Homassassa. Hey, Al, what's going on? Isn't it wonderful, this gentleman here with the Goldie port right before the market fell apart ended up with PAAS. We have a 98% gain in the year. And I mean, you want 99% proof like Irish whiskey, but we had a good gain there. You always told us to do what we feel comfortable with. And I lose a little bit of money on the table, I will, but I know that I just pocketed $8,000 or $9,000 in two weeks. That's a beautiful thing, man. Now, Tom O'Brien. Oh, welcome, folks. This is Tom O'Brien of TFNN. We go five days a week. We go seven hours a day. We go 24 hours a day on the internet at TFNN.com. Always remember, folks, whatever you think about, you bring about whatever you focus on grows. Hope everyone's having a great day, safe day. It's a TGIF, folks. Let's make it a great one. Create the perfect relationship between you and your body. Treat your body with all love, on a gratitude and respect. You only have one body, folks. When you're making your goal to adore your body and accept yourself completely, you're learning to have the perfect relationship with anyone else you are with. Mug it wise, let's take a look at it out here. We have the Dow Industries down 104 and Aztec off 827, S&P's off 23. Gold, gold contract trading up $6.10 at 17.82 an ounce. We've got Silver up 18 cents, $22.16 an ounce. Lightsweep crew up 86 cents, $71.80 a barrel, notes and bonds. The 10-year right now, flat 30-year up one at 160.10 a king dollar. King dollar's down 176 ticks, trading out at 9609, Euro 113, Yen 113 and a half and a British pound 132 to one US dollar. Offer numbers 877, 9276648. If it's called, folks, I know it's going on in your world and the world of the S&P's, let's take a look at it. What do you have? Well, it's a market that wants to get up to highs. We'll see how it can, well, we know how it's getting there. It's getting there with a dramatic drop on volume. There's no doubt about that. Bottom line though, we're into this bar. The bar that we're into is the last high, last high inside the spy 473.54, the low 467.36, you can see we're at 468.90. That's saying, guess what? It wants that high. NDX 100, we go take a look at the NDX, same type of setup inside the NDX. My take still is that the NDX isn't only going to be able to handle a low of the high, which is 399.19. In fact, let me do this. I want to put this on a weekly for a second. Okay, so on a weekly, it's saying we're going to go higher next week. Oh my God, okay, yeah. On a weekly, the bottom line is that, yeah, you're into 89. That's saying he wants to go to the high. So it's not ready yet to basically sell into that market. Man, this is a trip. There's no doubt. We'll see where this baby shakes out. Gold, gold contract out here, building cause for higher price. We haven't had a huge amount of movement. There's no two ways about that. Bottom line is that when I show you both of these lined up, you can see that the correlation and the correlations is, you know, it's there in spades. So we take a look at this one here. You're going to see that the gold contract has been going sideways right now for two and a half weeks. Okay, and what you have, which is subtle out here today, is that you've got a small expansion of volume. We've done 137, up to six bucks. We go into the dollar and what you're going to see, just the opposite, okay? The bottom line is that that has been going sideways since the first leg down on the 26th of November. Today you gave it up again and we'll see when you have a choppiness that is like this and you're going back and forth. Bottom line is that most times, as I said yesterday, if I had volume on this, I'd have a better indication of where this baby wants to go. But we gave it up on price again. That's saying that, guess what? Monday it wants lower price. Some of the higher volume equities that we have out here today, let's go take a look at it. You got apples up 360, you got AMC down 290. Let's go look at AMC and see if it finally is going south. So that's down 296. Okay, so that the lower end, six months ago AMC was, my God, $64. It's 26. This thing's not worth $10, nevermind. Okay, so the beginning of the breakout, I see now, okay, 13, 12 bucks is game again. That's how this works. One second, let me see this. That break, 367, 250, 226. Yeah, the selling's getting less. But I suspect we're gonna be hitting that $12 area. That's how it looks out here. Let's go take a look at MP for our man, Frank from Gloucester. Okay, so MP is MP Materials, Produce Market Rare Earth Specialty Materials, the Lowes 23, the Highs 51. This baby here, revenue wise, next time I come out is March 18th. They take in 350 million this year. They're looking to take 429 next year. Oh, look at this baby, okay. Well, this is always nice. See, this is all, just, okay, so you can check this out. This is like classic, man. Yeah, it's going for the highs, Frank. I mean, this thing's going for the 51 bucks, 51.77. This is a classic, folks, if you wanna kind of look at how markets like to move, okay? You had a huge run up that started in November. It started at $10, gets all the way to 51, has volume up there, comes off the high with volume, comes back, you know, has some volume, but it's actually going against strength. Builds, cause again, you get a little blurp.  This thing's gonna go after its highs, more than likely next week, we're at 47.83, and that 51 is game out there. We're gonna take a look at the, let's see what else volume wise out here. So we have, let's see, Microsoft, oh, that's good, Microsoft's up $7, that's a month. The city group's down 170. You get Robinhood up down 196. So Microsoft, okay, so Microsoft wants to hit a tie too. You know, Microsoft, bottom line is that you're up 26 million shares, you're at 340, the low of the bar of the high is 339, that's 55. I bet, okay, so let's go back inside the NDX100. We take a look at the NDX100. The lead is out here today. Oh yeah, look at this Broadcom, Broadcom, what a monster. It's up 7.5%, you get Costco up 6%, Pindaladu is up 2.8, and Adobe's up 2.6. Taken away from it. Peloton's down 6.8, you get Moderna off 6%, DocuSign is down 4.2, and Lululemon is off 2.7. So let's go to Broadcom first. This was just one monster move, man. They came out with numbers, good numbers, bottom line took some monster money to the bottom line. Oh, look at this, I should have seen this earlier. So look at this, folks, okay? I hope some of the targets, the targets has got into this. On Wednesday, this broke a B point with volume. I mean, it's a monster too. Oh my God, look at this, 472.5, it's 105.8 a B, which gives you six, 648. Man, I don't know, why did someone call me about that? Let's go, you gotta start doing your job out there. Kidding folks. Stay right there, folks, you're coming right back. We have the Dow Industrial's up 133, NASDAQ up 35, S&P's up 27, come right back. Are you looking for a way to consistently add winning trades to your portfolio? Tom O'Brien is here to help. Tom O'Brien has been successfully trading markets for over 30 years, a frequent contributor to TD Ameritrade Network and CNBC. Tom O'Brien founded TFNN over 20 years ago to help educate investors just like you. Tom's Daily Market Newsletter, Market Insights, is published every morning when the market's open to give you the competitive informational edge you need to succeed. 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Watch online at TFNN.com or on TFNN's YouTube channel and become the investor you were born to be, TFNN. Educating investors. Toll Free at 1-877-927-6648 internationally at<PHONE_NUMBER>. Welcome back, folks, to Dow. Dow Industries finished up 132. You get the NASDAQ 42, SMPs are up 28. Bottom line, folks, you had the CPI come out this morning, so CPI is running 6.8% year over year and something to just take into consideration depending on how long you've been in these markets, right? So if we look back inside of the markets when the Fed was even basically telling us that inflation was running at 2% because you gotta remember something, these CPI numbers that they give you, what you have is you have food, clothing, and no, food and shelter is not in it. So it's like, okay, really? So we don't have a place to live. We're not talking about food. The inflation is much larger than, my take is that it's much larger, and we're gonna see that. Do you have the administration coming out today because that number come out and saying that they think that President Biden said he thinks it's a peak of the crisis? I think you'll see change sooner and quicker and meaning going lower than more people think. Listen, my take, it's not his fault, okay? This has been going on for a while and what we had, we had program after program, plenty of bread was out there. We all wanted the bread, we took the bread, okay? That's the bottom line, and that's worldwide folks, okay? And now there's more bread than there is supply. So that's a classic case of inflation. Inflation is absolutely through the whole system and once inflation is through the whole system, folks, okay? It's not going away overnight. There's just no way. That's not how inflation works, okay? You have Larry Summers out here saying that he thinks that, and I'm not really a fan of Larry Summers, just so you know that, but the bottom line is that he's out there, he's been out there for a while and he was correct for sure that, hey, we're gonna be in inflation.  All you have to be is be out inside the economy and he's looking that we will be running at 4% per year and he doesn't think it was gonna back down. I think it's still gonna be larger than that and it's not gonna get back down. That's the real bottom line.  It's gonna be here until someone really puts the jam on it and no one's gonna put the jam on the economy this year, I don't think next year either. And if you've never seen the jam get put on an economy, I remember the first time that I saw this that the Fed put the jam on the economy and I was thinking like, why are you doing that?  Everyone complains about the flow of bread, but when the flow of bread stops, it's like a madhouse also. So we'll see where it's gonna shake out, but inflation, you can, my take is you get 23 to 30%. I think what you have is this, is that we did one step up across everything. I mean a step up in a monster way. Then you're gonna have smaller increases, okay? And the step up has been done. That's the real bottom line. The step up has actually been done. Okay, so, yeah, so companies are not gonna get down on prices. Why would, it's not gonna, that isn't how it works, you know? The companies are gonna go up on prices.  That's the bottom line. What we're gonna see here, and it's about time we've seen it, is that large companies, CEOs, executives, all this, they're making way too much money compared to the man and woman on the street.  And yes, I'm a union person, folks. So that's what you're hearing also, okay? So the bottom line is that unions are established because companies in general, okay, won't pay people what they should be paid. You know what drives me crazy? This is what really drives me crazy. You know, like Basos, right? Basos, smart beyond belief, okay? Bottom line, did the job. No one gave him anything, I'm not taking any of that away. What I, when you go through this, though, it's like, okay, so you do a foundation, and you give money out to the foundation from the money that you've already made.  Why don't you take care of your family first, your workers, your team?   And we've seen that, I've seen that absolutely accelerate the last 20 to 30 years, and I think that's gonna change, you know?  If you saw the, did you see the statement by Schultz, okay? So what's gonna happen now is that you're gonna have, Starbucks are gonna start voting for a union. And Schultz comes out, no, Schultz started Starbucks, okay? And, you know, no big companies want unions, for sure, so his quote, this was in the Wall Street Journal, I think, yesterday. So his quote was, why would you need someone else to bottom line, represent you to talk to management? Well, that's pretty simple. You know, you need someone to organize workers so that you can get more off the company. Let's see, let's just look at the couple of these, SBUX, let me just look at this. So if we look at Starbucks, and of course, this has to do with stock investors versus, you know, I mean, because what ends up happening, you have to get more to the workers, what ends up happening, there's less for the shareholders. Okay, so here you go. So they take in 29 billion, they bring 324 to the bottom line, and they have, let's see, they have 383,000 employees. And you're paying, like, see this, this is still expensive. You're paying $33 for $1 of earning, you know? You get the gist of it though, folks, and we'll see where this whole thing's gonna shake out. Okay, so let's see, the CEO, what is it now, Dan? Do you know, okay, so the Tigers have helped me out here. So the CEO to work a rate was 58 to one at Amazon in 2020, better than Walmart and CVS, yeah. Well, look at Walmart, it's 983 to one, that's pretty sick. Well, CVS is 434 to one, that's pretty sick too, yeah. You can get the gist of it though, that has to stop. And the only way that can stop, guess what?  We're gonna see, we're in that era, this era has just started, trust me, I know how this deal goes. Anyone that is from a union city or been involved in a union, this is how it goes. My father was the general chairman of the New Haven Railroad Signalman. And so what Signalman does is this, folks, and I did it with him, I was so lucky. He brought me with him, and I used to walk the tracks, okay, so we would walk the tracks, and he was a mechanic, okay, so you know, all those things you see, red lights and green lights, well, in the fifties, you have to do that by hand, okay? Walk the tracks, and guess what? You think the railroads that ever give those workers money? No, they needed a union. Stay right there, folks, we'll come right back. 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This segment is brought to you by Think or Swim. For more information, just click the Think or Swim banner on the front page of tfnn.com. Welcome back, folks, Dow. Dow Industries right now are trading up 152. You get the NASDAQ up 29, S&Ps are up 32, and the Justice Department, folks. So the Justice Department is launching a big criminal investigation about shot-selling by hedge funds and research firms.  So check it out. This is the ultimate of Wall Street getting the Justice Department involved in equities that should be shotted and because, guess what, they're not gonna make any money. What is amazing here is that they, and so specifically with the Justice Department, looking for is this, they're looking for, let's say you had five different hedge funds, and those five different hedge funds turn around and they call each other up in the phone and say, hey, we should shot this, this stock is no good. That type of behavior, folks, I don't see that happen. That's the bottom line. Everyone knows inside of this business that those types of charges against equities, my take is that they don't fly. Most of this, and what the SEC is saying, I'm not the Justice Department saying, which is so weird, is, hey, let me see what, okay. So, let me see this. Okay, so here it is. Government attorneys are trying to determine whether shot sales engage in some form of deception, say by misleading the public about financing, what appears to be independent research. Now, let's stop right there. Independent research, like when we talk about the long side of the market, let's talk sparks. When you talk about sparks, the Justice Department and the SEC folks just allowed for the last two and a half to three years sparks to go public and with just about zero disclosure. That's where they should have been, that's where they should be, okay. And this is normal, I'm just bringing it up because if a lot of the meme traders are getting excited about this, this is like, that is so off the left-hand side. And I'm not saying right, liberal, left, I'm just saying it's crazy, it's absolutely crazy because the bottom line is that I would argue that there is more pushing and propaganda to go long stocks than there ever has been, ever, okay. And the bottom line is that they don't do a thing about it. But that's how it's always been, by the way, too, with shots, that's just how it works.<PHONE_NUMBER>, let's go take a look at the XAU and the HUI. We have no help on these babies out here today again. Bottom line, the XAU trading down to $1.33, we are at $1.2387, okay, so yesterday it did, that's $31 million, they're coming up to $43. Okay, so today's gonna be a little bit lighter. Let me just go to Newmont for a second. Oh, that's good, okay, Newmont's hanging up there, so that's actually sideways move today, that's really good. Let me just look at Barrick, okay, Barrick's lower. Barrick's lower by 22 cents. You do have lighter volume than yesterday. So that's saying that the XAU as well as the HUI are going to have lighter volume today, which we need. Gold Bugs Index right now that's going after the last swing low that we've had out here about two weeks ago, a week and a half ago, that swing low where we got 241 today or 242. Yesterday we had 25 million, you're going into 35 million, that's good. Okay, so it's gonna be lighter volume. Now the question is, the baby has to hold. That's what it comes down to. The NVIDIA, let's go take a look at NVIDIA. NVIDIA at all time highs, bottom line, it backs off. NVIDIA's gonna go test the lower end of this consolidation, which is the 280, right now you're at 301. Monday you're at 324, so this thing wants lower price and we'll see how that baby is gonna shake out down at these lower levels. We go take a look at the XO, Exxon Mobile. Okay, so this wants higher price. Top of the range on Exxon Mobile, 66. You're trading 62, that's what I expected. It's gonna go Halliburton, same setup. Halliburton's gonna need some more volume. But actually Halliburton is looking like it's setting up an ABC structure on the way up. This is something you want to watch, folks. So it hasn't hit the B point yet. The B point's 23.94. Well actually we hit 23.98 today. It'll go after it again though, that's what's going on. Okay, so here, well let's watch this. So this is a good exercise so you can understand like how an ABC structure can get done. You have the A to B that's in place. Now what you'll also have with Halliburton is this. Is that you only pull back on one day. So that's a very strong equity that we just went from a price point of $20 up to 23.94. Then you pull back yesterday and then you are basically going after the B point again. So what you're gonna see there, okay, is that if you, I suspect Monday or Tuesday keep an eye on it because the bottom line is that you get a 4.8 B which would get you about $27 and that's 27 is the high? Yeah, 26.67. So that's saying that, guess what? But the bottom line is that this thing wants to go up to highs. That's the way this thing is shaking out right now. So you can get some real action here. Let's see. Let's go take a look at Disney. There's a question on Disney, is it gonna fill the gap at 129? You're at 152. We put this on a weekly, so it came down there on a weekly with 142 million. You're going into 98 rejected at the first time. Well, it's a close call.  Yeah, that can get filled. Yeah, it can get filled. So what you're gonna wanna see now is this. Might take, right now, Disney's off the lows. You've had a correction, okay? Let me see, so if we broke that. Oh, this is pretty cool, one second, hold on. So let's do this. Disney was in ABC down. So, A point on Disney was 203, the high, 203 down to 167. So what do we got? That's 37, that's 40 bucks, right? Then the C is 187, so it gets you 147, and we hit 142. Okay, this is cool, man. So what we did here, you did a full ABC structure on the way down. You can see, we broke the B point. We broke that B point the week of the 13th of November. It's always cool, folks, when you finish an ABC structure, because whatever way it's going, most times it changes, and just goes the opposite way. And that's exactly what we just had in Disney.  That's gonna be the range. It's gonna try to get back inside, and we'll see whether that can make it back inside that area.  Stay right there, folks. It's gonna come right back with John from Orlando. We're gonna be talking about RBLX. Dow Industries up 178 and Aztec up 78. S&P's up 35. We'll come right back. 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The NASDAQ's up 80. SAPs are up 36. Let's go to our man, John, in Orlando. John, what's going on, brother? Good afternoon, Tom. How are you? I'm doing great. How you been, man? Good, good. Staying alive, staying safe, you know? Staying alive is a good thing, man. That's a good thing to do. I'm really happy to hear that, man. We're all happy. I know, man, seriously. I got an option on one year out on Roblex, RBLX. What do you think of it as a stop, as a company? Well, the good news is that you're out a year. The low is $60. The high is $141. Bottom line is that they have a lot of money. One bottom line is that they have some monster growth going on. There's no doubt about that. You can take a look at it. I mean, five years ago, they did $325 million. This year, they're going to do $2.6 billion. They're going to do $3.1 billion next year. But they still lose money, and they're going to lose money next year also. Now, they're saying, fundamentally, they're going to lose less money. This year, they're losing $0.25 a share. Next year, $0.16 a share. Now, what they have, you can see this growth. This growth is big. They're growing 20% in the United States. They're growing 30% in Europe. They're growing almost 30% in Asia. So those numbers are there. That being said, John, this thing is dangerous, man.  When you get volume off the high, it's a problem. And it did here. We went from that $144 to $117 down hard. And then you got this monster gap, man. That gap at $76 is $79 a game, you know? Because that was the initial breakout, you know? So, you know, and what happens when you get it, what happens if he has a year out, folks, which is an option leap. And so what happens, which is pretty cool, have you done these before, John? This is the first time. OK. So watch what you're going to see. This is what's cool. Cool. So listen to this. You're not going to see that price. Let's say the price goes down like that. You're not going to see the option go down that much, you know? Which is pretty cool. Right. So because what happens, folks, on a leap is that the delta inside it, meaning the delta means that what the option moves versus the stock moves, OK? And if you have TD Ameritrade, he'll show you right there what the value of the delta is, OK? And so just to explain for a second, the value of the delta could be like 10%. So that means if the stock moves $1, the option is only going to move 10 cents. So the good news is that you're not going to see it move that much even when it gets down there. Because the way that leaps really work is that you're not going to see a lot of price movement in the leap until about 90 days before that expiration. I mean, unless you get a dramatic move topside. That's how they work. Oh, I see. Yeah. Listen, I used to do a lot of them in the 90s. In the 90s, then I got just frustrated because it's like, oh, man, when I first started doing them, I was thinking, OK, if the stock moves up $10, you're going to get some action. And it's like, it doesn't move, man. But listen, inside of portfolio, it's a good thing to have. I'm not discounting it. But you just really got to understand, if that stock moves $10 or $20, once you understand what the delta is, you might only get a $0.15 move. Right. But in general, what do you think of the market? Are we in a bearish kind of tone? Or is this just a correction? I would say it's a correction. This is a great question, man. I am not in the camp, OK, that we are going to go into, like, a two- to three-year bear market. I'm in the camp that we could have a two-year consolidation. You know, two years goes pretty quick. You could go sideways for two years, and if we were going to do that, I'll pull this up. I mean, some people will think this is pretty bad. But if we put this up, because, see, what has happened, folks, is this, we haven't had one real 10% to 15% correction inside the S&P since the lows that were established in 2006. So there's plenty of people that have never seen a correction, which is amazing. So it's like, OK, to me, on the cash S&P, you can get down to, what, 4,300 real easy. You know? Oh, OK. Yeah, yeah. And then I think you're just going to sideways move. If you actually look at, when you look at this market, what you're going to see is this here, I'm going to mock this up right now. If you're watching TFNN, let me just show you this, how the market consolidated then went higher again, then consolidated and went higher again. Watch this. Oh, close that one. Let me do this one. OK, OK. So when you're looking at this, right, actually, let me do this one, because this did it too, right here. This will basically, OK. When we came off the lows, you're going to see that we, we came off the low of 666 inside the cash S&P. You came off the low in, what is that? That's 2000, that's, it was March 10th, actually, March 10, 2009. We ran all the way up to May, almost more than a full year, and then we consolidated from May of 2010 all the way over to May of 2012. Two year consolidation, look at that. Then you made the next leap up, but then we went folks on the cash S&P who were from 1266 all the way up to 2134. You almost went 900 points up. Then what do we do? We consolidated from May of 2014 over to May of, no, August of 2016. Then what do we do? Your bottom line is that we went from a price point of 1,800 all the way up to 2,900. Then what do you do? You consolidated for, what's this? February of 2018 over to August of 2020. And then we made the run. So I'm looking for another couple of years of consolidation. Wow, OK, OK, good explanation. Yeah, for all of us investors and traders folks, this is something you really should wrap your head around, because I remember when I first started in the business and I remember I had John Bollinger on. I'm going back to 1997 or something. Actually, it was 1996. I had him on a lot during that time. Anyway, he was talking about that the market was going to go into consolidation. He was absolutely right. That's what ended up happening. Mentally, I was going out of my mind. Like, what do you mean consolidation? I don't want to hear a consolidation. Well, what you get to understand is that consolidations are really good because it digests what you have. And people don't lose a lot of money as long as they're not buying highs and selling the bottom of the consolidation. If they realize the consolidation, OK, it takes time and that's where the whole building cause comes up for the next level up. And that's kind of my point that once you're in the market for a while, you want consolidations. Consolidations are great for markets. They're fabulous, OK? They get a whole base going. You go up to the next level, OK? And, you know, if you have that, that's a very healthy market. And you can see when we just went through that exercise, the bottom line is that, you know, we've had a great run. And so if you can consolidate for two years, there's no big deal.  Cookin', brother. You have a happy holidays, OK? Have a merry Christmas, man. Can't believe a merry Christmas is right here. Ho, ho, ho! Dow Industries up 211. NASDAQ up 92. SAP is up 41. Stay right there, folks. We'll come right back. Sharpening your skills as an investor is like getting better at playing a musical instrument. You have to practice, sure, but you also need excellent instruction from experts. At TFNN, you'll get advice and guidance from the authority and technical market analysis. 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This is the lost and golfing on a weekly, too. This is a dangerous one, man. I suspect first, you're still going to go to highs. That's my take here. This S&P wants to go to highs, but if you are candlestick pertinent, that is not a bullish occurrence, folks, right there. It's a bullish occurrence if it happened at lows, not at highs. So we'll see where it shakes out. Expedia, let's go take a look at Expedia for a couple of targets out here. So Expedia, what you have is that this is a consolidation.  When you gap all over the place, see how this gapped up, a gapped higher going back in November, a gap lower. Beginning in November, a gapped higher. End of November, a gap lower. That's what consolidations do. So this is really cool that this was brought up to look at because this is, you know, I remember when I, someone taught me this years ago, and I forget who it was, but it's really cool because when you understand that, the bottom line is that if you get the tops of consolidations, you can decide, you know, should I sell some out? When you get to bottoms, you don't have to be worried about, well, you'll always be worried when you're in the marketplace, but what I mean is that you could pull the trigger and in Expedia's case, the bottom line is that, yeah, I suspect this can build more cause and, you know, it can get higher. That's the bottom line. Man, always remember, folks, the bank and Claudia, hide out the book and run you over and thank God. There's always another trade. Health happens in prosperity, have a great weekend, have a safe weekend, come back and visit Tommy Monday morning, kicks us off 9 in the morning and I'm going to bring my $10 Starbucks and I hope they do get a union. Wee! I'll get them, folks.