U.S. Economy is Strong But Canada is in Trouble | Daniel Lacalle and Jimmy Connor
Summary
Market Outlook: The guest is bullish on the United States with robust growth, healthier GDP composition, and strong private sector employment versus stagnant developed peers.
US Equities: He argues the S&P 500/Nasdaq are not expensive relative to soaring global money supply and expects a supportive backdrop for risky assets into 2026.
Energy Commodities: He sees an “interesting” setup to start looking at energy commodities, noting OPEC’s production stance and the monetary backdrop supporting commodities.
Argentina: Positive on reforms under Milei, citing falling inflation, rising real wages, budget surplus, and recovering growth, while acknowledging more deregulation and monetary normalization are needed.
Inflation Risk: The main 2026 market risk is inflation re-accelerating; an oil spike to $80-$100 could trigger recessions in commodity-importing Europe and pressure global equities.
Monetary Policy: He expects Fed rate cuts to aid SMEs and households, with money supply growth likely lifting risky assets, but warns ongoing deficit spending remains a structural concern.
Tickers: No specific public companies or tickers were pitched; the focus was on macro themes like US Equities and Energy Commodities.
Transcript
Daniel, thank you very much for joining us today. How are things in Madrid? >> Things are okay. We can't complain. Good weather and uh yeah, Madrid is like an island here in Europe. So, it's and it's doing exceedingly well. So, we can't complain. Everything good >> and thank you very much for having me. >> I have yet to have the pleasure of visiting Spain. If I was to go to one city, what would you recommend? Madrid or Barcelona? >> Oh, I would recommend Madrid. Barcelona is beautiful, but Barcelona unfortunately has slipped quite a bit in terms of security, in terms of of a lot of couple a few things. No, but still a great city. The great thing about going to Spain is that you can catch a train and you'll be uh in in in a couple of hours in Barcelona as well. So So I I love Barcelona anyway. >> I definitely have to go there. So, I'm going to move overseas now and I want to talk about the US economy and get your opinion on the US economy. What are your thoughts as it stands right now? And do you have any concerns with what's happening in the US economy? >> Well, in general, the US economy is much stronger than what a lot of people were assuming at the beginning of the year. The beginning of the year, we even heard that there was going to be a recession and it was going to be a disaster. And and the US economy is doing uh really really well. the the the latest estimates of the Atlanta Federal Reserve are at 3.8% for the third quarter annualized growth. Um and it's a robust level of growth because coming from also reducing government spending. It's interesting how uh we we look at many economies and we tend to look at GDP and it doesn't matter the quality of the GDP. So the quality of GDP in the United States is is much better now than what it was a year ago when about a third of of the of the of the growth came from government spending. No. So government spending down. Uh consumption quite strong to be fairly honest. Investment doing really well. Uh so it's an economy that is that is doing better. the the the the employment figures that have been talked uh that have been dissected quite quite significantly by a lot of people. If you think about it, the employment figures are not bad either because uh once you take into account that there is a significant reduction in immigration uh jobs and at the same time there is a massive reduction in government jobs then private sector jobs are actually doing relatively well. they could do better if the Federal Reserve had not decided to keep elevated rates uh when there was no no reason behind it. No, because of the of the tariff narrative and also the tariff the tariff tantrum as I call it. I think it's now over. No, people have finally realized that you can criticize tariffs for other reasons but not think that tariffs are going to cause inflation because they don't mean more units of of currency in the system. What causes inflation is more government spending and more and more printing of money. No. So in [clears throat] general, I would say compared with all of its peers, the United States is doing very very well. Uh Japan is in stagnation, the UK is in stagnation, France is in stagnation, Germany is in stagnation. I mean the the word for the developed economies is stagnation. The United States is growing faster than it grew before with lower government spending. So in general I would say that on on a relative and on an absolute basis doing pretty well. >> You didn't mention Canada. [laughter] >> Well, yeah, Canada as well. Oh my god, Canada should be growing so fast right now with all of the opportunities and in in uh commodities and everything else. and and unfortunately Canada uh Canada not Canada obviously but the the the Canadian governments decided to go down the route of of Germany, France and the UK and delivered the level of growth of Germany, France and the UK. It's a great country. I mean Canada has all the opportunities. Canada Canada could be growing at 2 and a half% right now without any problem whatsoever if it wasn't for all the regulatory fiscal and administrative burdens that that the country is suffering. No. >> Yeah. I listen I'm based in Toronto. I think we live in one of the greatest countries in the world. We just don't have great leadership and under the last 10 years under the Liberals uh they've just destroyed this economy. We had virtually over the course of 10 years zero economic growth. It's just insane what's happened. You did say you're very bullish on the US economy. And you're right. Like a year ago, everybody was talking about recession and they thought tariffs were would lead the country into a recession, but here we are a year later and it's I can't get over how strong it is. And the stock market, we're a chip shot away from hitting 7,000 on the S&P. Do you have any concerns about the valuation on the S&P or the NASDAQ? >> Well, I have concerns but on a relative basis. No. Uh the the S&P 500 is expensive maybe, but not if you look at it relative to money. money supply growth globally is soaring and therefore it it's misleading to look at the multiples of the S&P 500 or the NASDAQ or or of any stock exchange for that matter in absolute terms and compare them with 20 years ago when we have almost 20 trillion dollars more of of of global of global money supply no uh so I think that uh actually more than 20 trillion we're talking about more than 38 to 40 trillion. But what I'm what what is important then is also the the divergence between stocks. No, there's there's enormous level of of uh optimism and rightly so with technology giants. But if you look at the S&P 500 for example uh by sector and you strip technology and you look how are banks trading relative to European banks, how are consumer stocks relative to European consumer stocks? The there is a certain premium but it's not an elevated premium. So, I'm not worried about the S&P 500. I may be worried that there's one or two of the uh now magnificent four. It's gone from the magnificent 7 to the magnificent four uh that may be exaggeratedly uh valuated relative to to the the long-term perspectives. But overall, the S&P 500 I don't see as as expensive, particularly as I said before compared with the amount of money supply out there. >> I got to get your thoughts on inflation and we recently saw a CPI print. It was at 3% and the market was very happy because it was below expectations of 3.1%. But I I can't get over like I I'm like I said, I'm in Toronto and food inflation is just crazy. Like coffee is up 20% year-over-year. Ground beef is up 12% year-over-year. Beef tenderloin. Okay, I love beef tenderloin, but I only have it on special occasions. I went to the butcher shop recently and it was $52 a pound. That's Canadian dollars. That's up $4 in the last month. And if you go back to early 2020, it was probably $25 a pound. And even President Trump is quite concerned about the beef prices. And I'm sure you uh saw the news on the Argentinian beef tariffs and uh he reduced the tariffs and also increased the quotas and his whole premise is he wants to get the beef prices down in the US. But >> are you concerned about these inflation rates and do you think inflation >> I'm concerned about food inflation because it's unjustified relative to the availability and supply that could be uh delivered. No. And and there's there's another another factor here is how stupid regulation all over the world is hurting the uh the the the consumer and uh it's making uh eggs uh you know basic goods and uh very very expensive. No, but if you look at expan at the at the level of of uh inflation in essential goods in the United States, most of the of the rise, 99% of the rise happened between 2021 and 2024. What we're having right now is basically a a yearon-year very limited increase in prices. But still, I am worried about inflation because um inflation is a monetary phenomenon now. And what I don't see anywhere in our nations and developed nations and emerging nations is any government willing to reduce government spending, willing to reduce therefore money artificial money creation and no government willing to really uh reduce all the regulatory burdens that have completely obliterated the primary sector. It's it's it's ridiculous that we have this kind of food inflation. uh and and we we must remember that it's not a fatality that is not something that just happened out of nowhere is that in Europe uh regulation has decimated the available uh farming uh ground has completely destroyed the the farming sector, the agriculture sector. All these things end up creating an additional level of inflation than the one that is been that is purely created by by the increase in money supply. No. So I am very worried about that because I don't see um an improvement in that area. I think that there is a widespread understanding that we that in many countries in the UK I I hear it all the time. uh in in in the in Germany etc that we have gone way too far with net zero policies and regul regulation but what I don't see is okay what are we going to do about it are we going to bring back the the uh the the the the importance of the primary and secondary sectors and it doesn't seem to to be the case so that that worries me because it's not just the monetary inflation that that is happening in the in the food uh in in most of the mo of the of the essential uh goods that we that we purchase, but the the those regulatory burdens that are making it more scarce than it that it would be in normal in normal times. >> And Daniel, just because we're on the topic of inflation, why don't we talk about the Fed? The Fed has a dual mandate of full employment and also to control inflation. But despite the persistence of inflation, the Fed has become less restrictive here in the last few months. Maybe it's for political reasons. Who knows? But do you think they're making a a policy error by cutting interest rates? >> Uh I don't think that they're making an error by cutting rates. I think that they made a a chain of mistakes of such magnitude in the past four years that the that we are now suffering persistent inflation. first because they denied the inflationary pressures in 2021 which were obvious to anyone when they increased money supply by 21%. Uh because they continue to deny it for a very long time and then and this is a key element is that people need to understand that rates themselves don't have a very significant impact on inflation uh if there is not at the same time a significant reduction in money supply. Hm. So one of the things that happened in 2023 2024 was that uh the Fed was hiking rates which was hurting [clears throat] the uh productive sector small and medium enterprises and families but government didn't even pay any attention. No, historically the reason why we think that elevating rates is going to be a way to curb inflation is because that would have immediately triggered a reduction in government spending. Now we we remember that uh from a long time ago people like me that have seen so many so many different crisis. Um but the the the problem in 21 to 24 was that the entire burden of monetary restriction came on the shoulders of the productive sector. H so the government continued to deficit spend and and crazily so in the case of the United States um didn't care about how much they were borrowing. In fact, Janed Yelen in implemented the most ridiculous policy which was to uh issue mostly very very very short-term debt expecting some kind of a miracle. I don't know what they what she was expecting but so the government did not care about the r the the increase in rates. In fact, they were passing it on to consumers as well through taxation. But the entire burden of the hike in rates fell on the shoulders of small and medium enterprises and families, creating a larger problem of inequality. Because obviously for people that are wealthy, people that have uh good uh earnings and a tremendous uh and and already a significant level of of of of income, hiking rates is not a problem. But tell that to somebody that make $30,000 US dollars a year. No. So, um, so why does the Fed why did the Fed make a mistake by not cutting rates these past months? Number one, because they fell into their own creative narrative that tariffs cause inflation. Tariffs don't cause inflation. Huh? H. And number two, because they thought that that would maintain, as they tend to say, inflation expectations anchored. They talk they talk about anchored. No, whatever that means. And so, so the Fed needs to cut rates in order to uh allow the productive sector and families to recover from the mistakes of the Fed itself. A lot of people tell me, "But why would you care about 25 basis points in terms of rate cuts? How is that going to helpmemes and families?" Well, if you when you go to the United States and you see that an average mortgage is at 6%. And when you see thatmemes are not suffering only from a problem of cost of borrowing but no access to borrowing because government bond yields were so elevated that banks were simply hoarding on government bonds and they were not lending to the to the productive economy. So you've seen between 2020 uh 2022 particularly and 2024 a massive erosion of the opportunities for families and for small and medium enterprises. While obviously the stock market didn't care because large companies don't care if the rates are 25 or 50 basis points higher or lower particularly those of the S&P 500 that swim in trillions of cash. Um and the government did not even care and therefore monetary policy was actually not working because the Fed was hiking rates but the government was not cutting spending was actually increasing spending therefore creating uh a double whammy for for families persistent inflation and high rates. No. So I think that the Fed now needs to cut rates and I don't think that it's going to be inflationary for the same reason that uh we saw that when uh they cut rates in September uh despite not having any reason to do so in the middle of an election of all things they uh the the the levels of inflation did not rise either. people are not are not going to go out and spend like crazy just because you uh cut rates by 100 basis points. >> So that's a great overview of the US. Why don't we move on to another another country that you know very well and that's Argentina and Argentina. Argentina just had uh midterm elections and Malay won by or won 41% of the vote. Clear mandate to continue on with his austerity plans. However, inflation is still running a little bit hot at 32%. That is down from 200%. But overall, how do you feel Malay is doing and do you think the country is heading in the right direction? >> Uhhuh. I think it's important to put it in context because when I speak in in in interviews or when I speak with people in developed economies, it's difficult to to to grasp the poisonous heritage that that he received. No central bank with 12.5 billion dollars of negative reserves, which is insane. which means basically that the central bank is completely bankrupt and that means higher inflation in the future. No. Second, uh an economy that was completely destroyed with negative uh real GDP growth but also a massive increase in poverty, 50% poverty, u level of destruction of the purchasing power of citizens that was completely unheard of. You just mentioned how in Argentina people talk about monthly inflation. No, if monthly inflation was at 25% and going to 50 when Malay arrived. So think about that inheritance and what he has done. He has brought inflation down from 25% to less than 3% as you rightly say still elevated inflation but you need that's why he needs to continue with those reforms. Second, massive reduction of poverty. 10 million people taken out of poverty. Uh real wages started to increase for the first time in almost a decade. And the and the budget in a surplus, the uh economy starting to deregulate and therefore allowing to breathe small and medium enterprises and exporters. So all those things have been positives and now the economy is growing at around 5% annualized which means that it has fully recovered the entire slump inherited from the paranists. Now is that enough? Obviously not. Argentina has been devastated. Devastated. No. And the Argentines when you go to when you go to Buenosides or any any of the regions in in Argentina, they always say, "Be very careful cuz we come from the future." No. They say to us in Canada, in Spain, in in in France, keep doing it. We did that 70 years ago. No. [snorts] Um so it needs to do a lot more. And now is when you're going to have uh at least a clear path in which he can take uh important uh uh measures like uh an entire uh regulation of the labor market overhaul, complete a complete change of the of the labor market. um uh the taxation reform and also uh lifting entirely all of the monetary all of the monetary limitations that the country unfortunately still needs to have because of this inherited poison pill of the of the negative reserves of the central bank. >> So all in all you think he's heading in the right direction? >> Yeah. Yeah. I think he's doing I think he's doing I think a lot of people say the Malay experiment. No, the experiment was that what they did before. The experiment was what we saw in the last in the last years and the path to Venezuela in which uh in which Argentina was was headed to. No. And um I think that yes, he is doing the right thing and more importantly he is doing the right things at the right time. A lot of people say ah he should have dollarized already. Uh tell me how do you do you deal then with the negative reserves of the central bank which means that if you immediately uh default on those obligations that would obliterate the banking sector now. So he is basically he's he's dealing with one of the most dangerous and difficult um uh economic situations in the world. And more importantly, and I think that this is what a lot of people unfairly uh don't understand or don't want to understand, which is the number of poison pills that the parents had left so that they would explode in subsequent months and generate a change in power that would bring them back to to controlling uh the government. No. >> Daniel, I want to move on to another country in South America and that's Venezuela. is is been in the news quite a bit here in the last few months. The US has destroyed seven vessels, killing 32 people, allegedly all drug traffickers. And the US has also deployed a carrier strike group from the Mediterranean to the Caribbean. The purpose is to detect, monitor, and disrupt illicit actors and activities in the Western Hemisphere. There's been a lot of speculation that Trump wants a regime change in Venezuela. What are your thoughts on this? Um, does Trump want a regime change in Venezuela? I think that Trump wants the results of the elections to be honored. No. Uh, let's remember that Maduro is assurping power in Venezuela. is that he has for the second time uh cheated on election and maintained himself in power and that uh because he is uh in a in a very challenging situation. uh in the past uh 7 years he has embraced uh uh sort of partnership with the uh with with drug traffickers, armed traffickers and all these the the cartels that are that are sending drugs to to the United States. No. So it's become narco dictatorship to such crazy extent that anybody that lives in in Venezuela understands that the uh the the the drug traffickers, the the criminals uh are the new the new uh authorities in many of the regions in Venezuela. Something that is not uh that different either in Mexico and in Colombia. very very dangerous path. A lot of these uh authoritarian uh leaders tried to perpetuate themselves in power by embracing partnerships with with these drug cartels. No. So um the the situation is basically it's basically very simple is that Maduro needs to step down or needs to be allowed to step down in uh in a forceful way because Maduro has lost the elections over and over at least in the last two times inequivocally and maintains his grip on power only based on violence and on uh repression. No. So uh the United States is the United States go going to force a regime change. I think that what the United States is not going to do is what the Biden administration did, which was to believe that the regime change or that the return of a democratic regime would come from a negotiated and uh sort of agreement between the Maduro regime and the opposition. It's ridiculous. It's ridiculous to believe that Maduro that has uh killed more than 9,000 people in Venezuela that maintains hundreds of political prisoners is simply going to relinquish power or negotiate something with people that he simply does not even consider as accepted uh uh as accepted opponents. No. So I think that that has to change at some point. I think that the position of the European Union and of the United States between uh 2016 and 2024 was a mistake was a mistake because ba ultimately what happened was that Maduro retained power through violence and repression and uh basically always said oh yeah yeah we're going to have a dialogue and and never had any dialogue and obviously it did not lead to anything. Go. >> And from an economic point of view, Venezuela is a total mess. Like we were talking about how high the inflation is or was in Argentina. It's significantly higher in Venezuela. >> Yeah. Significantly to the point that you can travel around Venezuela. You go to uh Marbo. You look at the at the at the at the water and you see notes. No. in the water floating uh you see in karakas you can see them on the street the bolivar is worth absolutely nothing. No what what Maduro has done is to uh is to dollarize the economy uh in a hidden way. So basically the the the civil servants and the people receiving a salary are still being paid in this completely worthless currency that they that they issue. But uh when you go to Karakas, you you don't you kind of believe it because you see these incredible cars, restaurants are completely full. You see like it seems like everything is booming. And that's because this this uh sort of hidden economy uh built over the drug trafficking and the the uh agreement with the government is is that is actually uh taking over everything and uh and controlling and controlling what what uh could be a thriving economy. What they're doing basically is make it make it a a hostage state. >> And just because we're focused on s uh South America right now, we got to talk about Colombia. U President Trump has also been has expressed concern about what's happening there. What are your thoughts about Colombia and what happens going forward? It's incredible that Colombia that has seen the inflow of immigrants from Venezuela escaping the disasters of the Chavist regime and the Madura regime which were both the same party uh decided to vote for the same thing. It's pretty amazing to me. I just cannot believe that Petro Gustavo Petro the the the current president of Colombia actually was in power because what what he is basically doing is exactly the same as what Ugo Chavez did at the beginning of uh of his uh uh time in power. No, which is to demolish independent institutions to destroy the economy internally and to uh and to give a lot of subsidies to people that are paid with a currency that is going to be massively devaluated in the future. No. So, um the situation in Colombia is really really poor. uh is really poor as well because uh Pedro has already established a number of um elements of of disruption in independent institutions that have elevated the the power of the terrorists the armed terrorist and the drug dealers. No. So ultimately that is also uh that is also a very very dangerous situation and at the same time the economy is not doing well in any shape or form. It's a it's a very very weak economy. It's just been downgraded. The government continues to spend money that they don't have. Um doing ex I mean it's it's it's point by point what the Chavis regime did. A lot of people ask me why would they do it if they know that it's not going to work? because it works perfectly for the people that steal the money, the leaders at the top. No, the the Maduro family is immensely wealthy. No. And that is it's a it's a it's an extractive and confisc confiscatory system that is that is certainly uh it's going to be very difficult because I don't the the other problem in Colombia is that the opposition like in Venezuela with Chavith at the beginning they continue to believe in the past they continue to believe that things are going to be oh there will be an election people will vote and everything will be different. No, he has already destroyed independent institutions, the legal system, the count the the vote count system, etc., etc. So, I'm not I'm not optimistic about Colombia, unfortun Unfortunately. >> You raised a very interesting point when you said the the people from Venezuela who migrated over to Colombia, why would they vote for the same type of government? And it's always impossible to understand how people think and why they vote the way they do. And the same thing has happened in Canada. Like as you know, we just had an election a few months ago. We have a new prime minister. >> But this is the fourth consecutive term that Canadians have voted for this government. >> And I don't understand why to me if you had if you couldn't get things right in 10 years, you don't deserve another chance. But yet the Canadian, you know, majority continue to vote for this government. So it's just one of those things. >> Well, the it's it this is this is what happens. No, is that a lot of people fall into the trap of believing that these interventionist policies have not worked because they were not implemented by the right person. But it's not a problem of the cook. It's a problem of the recipe. And people just don't understand that it just doesn't work. It's not a question of whether it's Trudeau or where it's carne. It's a question of those policies destroy economies in France, in the UK. It doesn't matter if it's Macron. It doesn't matter if it's Merkel. It doesn't matter if it's if it's Rishiak from a Conservative party or if it's uh Starharma from a Labor party. Is that cons consistently destroying the productive sector with more regulation, with more taxes, putting more and more burdens on investment, more and more burdens on economic growth, believing that the private sector will always have plenty of room to adapt to those. And at the same time, increasing immigration and uh public spending is a monster recipe that always ends up with stagnation and social discontent. And and and Canada, as I said prior, is that Canada is a country that can have that should be growing at a 2 and a half minimum 3 and a half% level right now. But obviously what you what you hear over and over again from pension funds, from investment firms, from uh business owners, from companies, oh, it's impossible. We can't do this. We're going to just to receive uh uh just to receive a permit, it's going to take 5 years. The the taxation is completely ridiculous. The regulation is completely out of control. That obviously is is the problem. No. Um and uh and and people think, "Oh, it didn't work because it was implemented by Trudeau, but if it's implemented by Carne is going to be better." No, it's going to be exactly the same. No. A a good friend of mine always says that socialism is judged by its intentions and capitalism is judged by its worst results, not by its results, by its worst results. So what happens is that the Colombians they see what happened in Venezuela and they say ah yeah but that's because it was implemented by Chaveis and Maduro we're going to do it better and it's the same it is exactly the same in Mexico in Mexico you have seen it as well no ah lopeador etc in in Argentina over and over for 70 years is this mirage I always say that uh that the average human being suffers the worst economic shock when they're a kid, which is to find out that Santa Claus doesn't exist. And then from that moment onwards throughout their lives, they try to find in the state, the Santa Claus that they uh found doesn't exist. And obviously, it's it's a it doesn't work. Daniel, we only have a couple of months left in the year, and we're going to be in 2026 before you know it. hard to believe, but when you look out into 2026, uh what are your views on the US economy? Do you have any concerns or do you think it's going to continue to grow at this 3% rate? I think that the US economy is going to do well in 2026, particularly because all of the uh all of the headwinds that came from trade negotiations from a new administration from the animosity of many many uh investors etc is likely to be left behind and people just just move on and remember what happened in the second year of the Trump first Trump administration. So I think that the US economy is going to do relatively well and particularly well compared to Germany, France, UK, Japan. Um concerns. My biggest concern is that the new administration doesn't do enough to reduce deficit spending. No, so far government spending has been reduced a little bit. uh a lot of new revenue is coming from tariffs but there needs to be a lot more done uh in terms of reducing government spending in order to rain on the deficit and that is a challenge. >> And in terms of the stock market, do you have a target for the S&P? So we're just a chip shot away from 7,000. Where do you think we go a year from now? Well, uh, my estimate is that in 2026, global money supply will likely grow between 10 to 13%. Which means that uh risky assets should rise uh more than that. No, simply to maintain the same level of valuation relative to money supply. The only thing that would change it would be if the fiscal problem of Japan, the fiscal problem of France, the fiscal problem of uh the UK would lead to their governments uh reigning on spending and therefore bringing down money supply growth. I don't think it's going to happen. Look at, you know, look at what happened in Japan. They voted for somebody that would print even more and spend even more. No. So I think that it's still a good environment to invest in equities. It's still a good environment to invest in gold despite the current correction. It's still a good environment to and it's an interesting environment to start looking at for example uh energy commodities that have been very very weak in the past in the past couple of years. uh because the monetary aspect is certainly supporting uh the the situation that we've just mentioned an improvement in risky assets and at the same time the the biggest challenge on a macro level are likely to be behind uh the trade war the uh challenges of these of these fiscal problems so I think it's more likely to be a here in of of consolidation probably not the same level of exuberance that we have seen this year uh but but with with a positive outlook for for risky assets. So bullish on the US economy. You don't see any risk of a recession at all in 2026. You're >> not going. Do I see a risk of recession? Could we have two quarters of negative GDP growth? We could, but that doesn't mean necessarily a recession. No, that is a technical recession. But uh we already had that in 2021 if I'm not wrong. 2022, sorry. in 2022 and uh the stock market continued to rise. So I'm looking more at how at the at the increase in money at the obviously we're going to have a much more accommodative position from central banks. Central banks are going to be mostly cutting rates in 2020 uh 26. So what is the biggest risk for equity markets in 2026? Inflation. M inflation if the situation of inflation right now goes from persistent to rising uh that would be a problem because then obviously margin calls would start to would start to appear in in many places. >> Yeah. I think one of the things that's saving us right now is uh the price of oil. It's hanging around this $60 level and uh if it were to rip to 80 or 100 bucks for any reason, oh my god, all bets would be off then. >> Yeah. No, that would be exceedingly negative. Think about this. It's a very good point. We're talking about stagnation in the UK and Germany and France. Those are huge commodity importers. If any of those had $80 barrel oil, all of them would be in a huge recession. No. So um we have let's say we know that OPEC and the US producers are very comfortable at these levels and that OPEC is willing to continue to increase production to support the Chinese economy. Uh OPEC is increasing production because they don't want to uh upset their clients. No. Um but obviously uh if there is a strong uh shift in supply versus demand and or any type of of of secular or at least short-term trend upward that could certainly generate a significant impact on on developed economies. No. >> Well, Daniel, that was a great discussion and I want to thank you very much for spending time with us today and sharing your thoughts. If someone would like to follow you online or check out some of your services, where can they go? Oh, thank you very much. I thoroughly enjoyed it. I think I always say that it's easier to find me than to avoid me. So, if you key in Google Daniel Laya, you will find that I have a Twitter account in English, a Twitter account in Spanish, a YouTube channel in Spanish, and a YouTube channel in English. And my website da.com is also in Spanish and English. Always remember that if the first thing that you find is in Spanish that there is an English alternative. So, so it's it will only take you a little bit uh more time to find the the English alternative. >> Daniel, once again, thank you. >> Thank you very much. Great pleasure. [music] [music]
U.S. Economy is Strong But Canada is in Trouble | Daniel Lacalle and Jimmy Connor
Summary
Transcript
Daniel, thank you very much for joining us today. How are things in Madrid? >> Things are okay. We can't complain. Good weather and uh yeah, Madrid is like an island here in Europe. So, it's and it's doing exceedingly well. So, we can't complain. Everything good >> and thank you very much for having me. >> I have yet to have the pleasure of visiting Spain. If I was to go to one city, what would you recommend? Madrid or Barcelona? >> Oh, I would recommend Madrid. Barcelona is beautiful, but Barcelona unfortunately has slipped quite a bit in terms of security, in terms of of a lot of couple a few things. No, but still a great city. The great thing about going to Spain is that you can catch a train and you'll be uh in in in a couple of hours in Barcelona as well. So So I I love Barcelona anyway. >> I definitely have to go there. So, I'm going to move overseas now and I want to talk about the US economy and get your opinion on the US economy. What are your thoughts as it stands right now? And do you have any concerns with what's happening in the US economy? >> Well, in general, the US economy is much stronger than what a lot of people were assuming at the beginning of the year. The beginning of the year, we even heard that there was going to be a recession and it was going to be a disaster. And and the US economy is doing uh really really well. the the the latest estimates of the Atlanta Federal Reserve are at 3.8% for the third quarter annualized growth. Um and it's a robust level of growth because coming from also reducing government spending. It's interesting how uh we we look at many economies and we tend to look at GDP and it doesn't matter the quality of the GDP. So the quality of GDP in the United States is is much better now than what it was a year ago when about a third of of the of the of the growth came from government spending. No. So government spending down. Uh consumption quite strong to be fairly honest. Investment doing really well. Uh so it's an economy that is that is doing better. the the the the employment figures that have been talked uh that have been dissected quite quite significantly by a lot of people. If you think about it, the employment figures are not bad either because uh once you take into account that there is a significant reduction in immigration uh jobs and at the same time there is a massive reduction in government jobs then private sector jobs are actually doing relatively well. they could do better if the Federal Reserve had not decided to keep elevated rates uh when there was no no reason behind it. No, because of the of the tariff narrative and also the tariff the tariff tantrum as I call it. I think it's now over. No, people have finally realized that you can criticize tariffs for other reasons but not think that tariffs are going to cause inflation because they don't mean more units of of currency in the system. What causes inflation is more government spending and more and more printing of money. No. So in [clears throat] general, I would say compared with all of its peers, the United States is doing very very well. Uh Japan is in stagnation, the UK is in stagnation, France is in stagnation, Germany is in stagnation. I mean the the word for the developed economies is stagnation. The United States is growing faster than it grew before with lower government spending. So in general I would say that on on a relative and on an absolute basis doing pretty well. >> You didn't mention Canada. [laughter] >> Well, yeah, Canada as well. Oh my god, Canada should be growing so fast right now with all of the opportunities and in in uh commodities and everything else. and and unfortunately Canada uh Canada not Canada obviously but the the the Canadian governments decided to go down the route of of Germany, France and the UK and delivered the level of growth of Germany, France and the UK. It's a great country. I mean Canada has all the opportunities. Canada Canada could be growing at 2 and a half% right now without any problem whatsoever if it wasn't for all the regulatory fiscal and administrative burdens that that the country is suffering. No. >> Yeah. I listen I'm based in Toronto. I think we live in one of the greatest countries in the world. We just don't have great leadership and under the last 10 years under the Liberals uh they've just destroyed this economy. We had virtually over the course of 10 years zero economic growth. It's just insane what's happened. You did say you're very bullish on the US economy. And you're right. Like a year ago, everybody was talking about recession and they thought tariffs were would lead the country into a recession, but here we are a year later and it's I can't get over how strong it is. And the stock market, we're a chip shot away from hitting 7,000 on the S&P. Do you have any concerns about the valuation on the S&P or the NASDAQ? >> Well, I have concerns but on a relative basis. No. Uh the the S&P 500 is expensive maybe, but not if you look at it relative to money. money supply growth globally is soaring and therefore it it's misleading to look at the multiples of the S&P 500 or the NASDAQ or or of any stock exchange for that matter in absolute terms and compare them with 20 years ago when we have almost 20 trillion dollars more of of of global of global money supply no uh so I think that uh actually more than 20 trillion we're talking about more than 38 to 40 trillion. But what I'm what what is important then is also the the divergence between stocks. No, there's there's enormous level of of uh optimism and rightly so with technology giants. But if you look at the S&P 500 for example uh by sector and you strip technology and you look how are banks trading relative to European banks, how are consumer stocks relative to European consumer stocks? The there is a certain premium but it's not an elevated premium. So, I'm not worried about the S&P 500. I may be worried that there's one or two of the uh now magnificent four. It's gone from the magnificent 7 to the magnificent four uh that may be exaggeratedly uh valuated relative to to the the long-term perspectives. But overall, the S&P 500 I don't see as as expensive, particularly as I said before compared with the amount of money supply out there. >> I got to get your thoughts on inflation and we recently saw a CPI print. It was at 3% and the market was very happy because it was below expectations of 3.1%. But I I can't get over like I I'm like I said, I'm in Toronto and food inflation is just crazy. Like coffee is up 20% year-over-year. Ground beef is up 12% year-over-year. Beef tenderloin. Okay, I love beef tenderloin, but I only have it on special occasions. I went to the butcher shop recently and it was $52 a pound. That's Canadian dollars. That's up $4 in the last month. And if you go back to early 2020, it was probably $25 a pound. And even President Trump is quite concerned about the beef prices. And I'm sure you uh saw the news on the Argentinian beef tariffs and uh he reduced the tariffs and also increased the quotas and his whole premise is he wants to get the beef prices down in the US. But >> are you concerned about these inflation rates and do you think inflation >> I'm concerned about food inflation because it's unjustified relative to the availability and supply that could be uh delivered. No. And and there's there's another another factor here is how stupid regulation all over the world is hurting the uh the the the consumer and uh it's making uh eggs uh you know basic goods and uh very very expensive. No, but if you look at expan at the at the level of of uh inflation in essential goods in the United States, most of the of the rise, 99% of the rise happened between 2021 and 2024. What we're having right now is basically a a yearon-year very limited increase in prices. But still, I am worried about inflation because um inflation is a monetary phenomenon now. And what I don't see anywhere in our nations and developed nations and emerging nations is any government willing to reduce government spending, willing to reduce therefore money artificial money creation and no government willing to really uh reduce all the regulatory burdens that have completely obliterated the primary sector. It's it's it's ridiculous that we have this kind of food inflation. uh and and we we must remember that it's not a fatality that is not something that just happened out of nowhere is that in Europe uh regulation has decimated the available uh farming uh ground has completely destroyed the the farming sector, the agriculture sector. All these things end up creating an additional level of inflation than the one that is been that is purely created by by the increase in money supply. No. So I am very worried about that because I don't see um an improvement in that area. I think that there is a widespread understanding that we that in many countries in the UK I I hear it all the time. uh in in in the in Germany etc that we have gone way too far with net zero policies and regul regulation but what I don't see is okay what are we going to do about it are we going to bring back the the uh the the the the importance of the primary and secondary sectors and it doesn't seem to to be the case so that that worries me because it's not just the monetary inflation that that is happening in the in the food uh in in most of the mo of the of the essential uh goods that we that we purchase, but the the those regulatory burdens that are making it more scarce than it that it would be in normal in normal times. >> And Daniel, just because we're on the topic of inflation, why don't we talk about the Fed? The Fed has a dual mandate of full employment and also to control inflation. But despite the persistence of inflation, the Fed has become less restrictive here in the last few months. Maybe it's for political reasons. Who knows? But do you think they're making a a policy error by cutting interest rates? >> Uh I don't think that they're making an error by cutting rates. I think that they made a a chain of mistakes of such magnitude in the past four years that the that we are now suffering persistent inflation. first because they denied the inflationary pressures in 2021 which were obvious to anyone when they increased money supply by 21%. Uh because they continue to deny it for a very long time and then and this is a key element is that people need to understand that rates themselves don't have a very significant impact on inflation uh if there is not at the same time a significant reduction in money supply. Hm. So one of the things that happened in 2023 2024 was that uh the Fed was hiking rates which was hurting [clears throat] the uh productive sector small and medium enterprises and families but government didn't even pay any attention. No, historically the reason why we think that elevating rates is going to be a way to curb inflation is because that would have immediately triggered a reduction in government spending. Now we we remember that uh from a long time ago people like me that have seen so many so many different crisis. Um but the the the problem in 21 to 24 was that the entire burden of monetary restriction came on the shoulders of the productive sector. H so the government continued to deficit spend and and crazily so in the case of the United States um didn't care about how much they were borrowing. In fact, Janed Yelen in implemented the most ridiculous policy which was to uh issue mostly very very very short-term debt expecting some kind of a miracle. I don't know what they what she was expecting but so the government did not care about the r the the increase in rates. In fact, they were passing it on to consumers as well through taxation. But the entire burden of the hike in rates fell on the shoulders of small and medium enterprises and families, creating a larger problem of inequality. Because obviously for people that are wealthy, people that have uh good uh earnings and a tremendous uh and and already a significant level of of of of income, hiking rates is not a problem. But tell that to somebody that make $30,000 US dollars a year. No. So, um, so why does the Fed why did the Fed make a mistake by not cutting rates these past months? Number one, because they fell into their own creative narrative that tariffs cause inflation. Tariffs don't cause inflation. Huh? H. And number two, because they thought that that would maintain, as they tend to say, inflation expectations anchored. They talk they talk about anchored. No, whatever that means. And so, so the Fed needs to cut rates in order to uh allow the productive sector and families to recover from the mistakes of the Fed itself. A lot of people tell me, "But why would you care about 25 basis points in terms of rate cuts? How is that going to helpmemes and families?" Well, if you when you go to the United States and you see that an average mortgage is at 6%. And when you see thatmemes are not suffering only from a problem of cost of borrowing but no access to borrowing because government bond yields were so elevated that banks were simply hoarding on government bonds and they were not lending to the to the productive economy. So you've seen between 2020 uh 2022 particularly and 2024 a massive erosion of the opportunities for families and for small and medium enterprises. While obviously the stock market didn't care because large companies don't care if the rates are 25 or 50 basis points higher or lower particularly those of the S&P 500 that swim in trillions of cash. Um and the government did not even care and therefore monetary policy was actually not working because the Fed was hiking rates but the government was not cutting spending was actually increasing spending therefore creating uh a double whammy for for families persistent inflation and high rates. No. So I think that the Fed now needs to cut rates and I don't think that it's going to be inflationary for the same reason that uh we saw that when uh they cut rates in September uh despite not having any reason to do so in the middle of an election of all things they uh the the the levels of inflation did not rise either. people are not are not going to go out and spend like crazy just because you uh cut rates by 100 basis points. >> So that's a great overview of the US. Why don't we move on to another another country that you know very well and that's Argentina and Argentina. Argentina just had uh midterm elections and Malay won by or won 41% of the vote. Clear mandate to continue on with his austerity plans. However, inflation is still running a little bit hot at 32%. That is down from 200%. But overall, how do you feel Malay is doing and do you think the country is heading in the right direction? >> Uhhuh. I think it's important to put it in context because when I speak in in in interviews or when I speak with people in developed economies, it's difficult to to to grasp the poisonous heritage that that he received. No central bank with 12.5 billion dollars of negative reserves, which is insane. which means basically that the central bank is completely bankrupt and that means higher inflation in the future. No. Second, uh an economy that was completely destroyed with negative uh real GDP growth but also a massive increase in poverty, 50% poverty, u level of destruction of the purchasing power of citizens that was completely unheard of. You just mentioned how in Argentina people talk about monthly inflation. No, if monthly inflation was at 25% and going to 50 when Malay arrived. So think about that inheritance and what he has done. He has brought inflation down from 25% to less than 3% as you rightly say still elevated inflation but you need that's why he needs to continue with those reforms. Second, massive reduction of poverty. 10 million people taken out of poverty. Uh real wages started to increase for the first time in almost a decade. And the and the budget in a surplus, the uh economy starting to deregulate and therefore allowing to breathe small and medium enterprises and exporters. So all those things have been positives and now the economy is growing at around 5% annualized which means that it has fully recovered the entire slump inherited from the paranists. Now is that enough? Obviously not. Argentina has been devastated. Devastated. No. And the Argentines when you go to when you go to Buenosides or any any of the regions in in Argentina, they always say, "Be very careful cuz we come from the future." No. They say to us in Canada, in Spain, in in in France, keep doing it. We did that 70 years ago. No. [snorts] Um so it needs to do a lot more. And now is when you're going to have uh at least a clear path in which he can take uh important uh uh measures like uh an entire uh regulation of the labor market overhaul, complete a complete change of the of the labor market. um uh the taxation reform and also uh lifting entirely all of the monetary all of the monetary limitations that the country unfortunately still needs to have because of this inherited poison pill of the of the negative reserves of the central bank. >> So all in all you think he's heading in the right direction? >> Yeah. Yeah. I think he's doing I think he's doing I think a lot of people say the Malay experiment. No, the experiment was that what they did before. The experiment was what we saw in the last in the last years and the path to Venezuela in which uh in which Argentina was was headed to. No. And um I think that yes, he is doing the right thing and more importantly he is doing the right things at the right time. A lot of people say ah he should have dollarized already. Uh tell me how do you do you deal then with the negative reserves of the central bank which means that if you immediately uh default on those obligations that would obliterate the banking sector now. So he is basically he's he's dealing with one of the most dangerous and difficult um uh economic situations in the world. And more importantly, and I think that this is what a lot of people unfairly uh don't understand or don't want to understand, which is the number of poison pills that the parents had left so that they would explode in subsequent months and generate a change in power that would bring them back to to controlling uh the government. No. >> Daniel, I want to move on to another country in South America and that's Venezuela. is is been in the news quite a bit here in the last few months. The US has destroyed seven vessels, killing 32 people, allegedly all drug traffickers. And the US has also deployed a carrier strike group from the Mediterranean to the Caribbean. The purpose is to detect, monitor, and disrupt illicit actors and activities in the Western Hemisphere. There's been a lot of speculation that Trump wants a regime change in Venezuela. What are your thoughts on this? Um, does Trump want a regime change in Venezuela? I think that Trump wants the results of the elections to be honored. No. Uh, let's remember that Maduro is assurping power in Venezuela. is that he has for the second time uh cheated on election and maintained himself in power and that uh because he is uh in a in a very challenging situation. uh in the past uh 7 years he has embraced uh uh sort of partnership with the uh with with drug traffickers, armed traffickers and all these the the cartels that are that are sending drugs to to the United States. No. So it's become narco dictatorship to such crazy extent that anybody that lives in in Venezuela understands that the uh the the the drug traffickers, the the criminals uh are the new the new uh authorities in many of the regions in Venezuela. Something that is not uh that different either in Mexico and in Colombia. very very dangerous path. A lot of these uh authoritarian uh leaders tried to perpetuate themselves in power by embracing partnerships with with these drug cartels. No. So um the the situation is basically it's basically very simple is that Maduro needs to step down or needs to be allowed to step down in uh in a forceful way because Maduro has lost the elections over and over at least in the last two times inequivocally and maintains his grip on power only based on violence and on uh repression. No. So uh the United States is the United States go going to force a regime change. I think that what the United States is not going to do is what the Biden administration did, which was to believe that the regime change or that the return of a democratic regime would come from a negotiated and uh sort of agreement between the Maduro regime and the opposition. It's ridiculous. It's ridiculous to believe that Maduro that has uh killed more than 9,000 people in Venezuela that maintains hundreds of political prisoners is simply going to relinquish power or negotiate something with people that he simply does not even consider as accepted uh uh as accepted opponents. No. So I think that that has to change at some point. I think that the position of the European Union and of the United States between uh 2016 and 2024 was a mistake was a mistake because ba ultimately what happened was that Maduro retained power through violence and repression and uh basically always said oh yeah yeah we're going to have a dialogue and and never had any dialogue and obviously it did not lead to anything. Go. >> And from an economic point of view, Venezuela is a total mess. Like we were talking about how high the inflation is or was in Argentina. It's significantly higher in Venezuela. >> Yeah. Significantly to the point that you can travel around Venezuela. You go to uh Marbo. You look at the at the at the at the water and you see notes. No. in the water floating uh you see in karakas you can see them on the street the bolivar is worth absolutely nothing. No what what Maduro has done is to uh is to dollarize the economy uh in a hidden way. So basically the the the civil servants and the people receiving a salary are still being paid in this completely worthless currency that they that they issue. But uh when you go to Karakas, you you don't you kind of believe it because you see these incredible cars, restaurants are completely full. You see like it seems like everything is booming. And that's because this this uh sort of hidden economy uh built over the drug trafficking and the the uh agreement with the government is is that is actually uh taking over everything and uh and controlling and controlling what what uh could be a thriving economy. What they're doing basically is make it make it a a hostage state. >> And just because we're focused on s uh South America right now, we got to talk about Colombia. U President Trump has also been has expressed concern about what's happening there. What are your thoughts about Colombia and what happens going forward? It's incredible that Colombia that has seen the inflow of immigrants from Venezuela escaping the disasters of the Chavist regime and the Madura regime which were both the same party uh decided to vote for the same thing. It's pretty amazing to me. I just cannot believe that Petro Gustavo Petro the the the current president of Colombia actually was in power because what what he is basically doing is exactly the same as what Ugo Chavez did at the beginning of uh of his uh uh time in power. No, which is to demolish independent institutions to destroy the economy internally and to uh and to give a lot of subsidies to people that are paid with a currency that is going to be massively devaluated in the future. No. So, um the situation in Colombia is really really poor. uh is really poor as well because uh Pedro has already established a number of um elements of of disruption in independent institutions that have elevated the the power of the terrorists the armed terrorist and the drug dealers. No. So ultimately that is also uh that is also a very very dangerous situation and at the same time the economy is not doing well in any shape or form. It's a it's a very very weak economy. It's just been downgraded. The government continues to spend money that they don't have. Um doing ex I mean it's it's it's point by point what the Chavis regime did. A lot of people ask me why would they do it if they know that it's not going to work? because it works perfectly for the people that steal the money, the leaders at the top. No, the the Maduro family is immensely wealthy. No. And that is it's a it's a it's an extractive and confisc confiscatory system that is that is certainly uh it's going to be very difficult because I don't the the other problem in Colombia is that the opposition like in Venezuela with Chavith at the beginning they continue to believe in the past they continue to believe that things are going to be oh there will be an election people will vote and everything will be different. No, he has already destroyed independent institutions, the legal system, the count the the vote count system, etc., etc. So, I'm not I'm not optimistic about Colombia, unfortun Unfortunately. >> You raised a very interesting point when you said the the people from Venezuela who migrated over to Colombia, why would they vote for the same type of government? And it's always impossible to understand how people think and why they vote the way they do. And the same thing has happened in Canada. Like as you know, we just had an election a few months ago. We have a new prime minister. >> But this is the fourth consecutive term that Canadians have voted for this government. >> And I don't understand why to me if you had if you couldn't get things right in 10 years, you don't deserve another chance. But yet the Canadian, you know, majority continue to vote for this government. So it's just one of those things. >> Well, the it's it this is this is what happens. No, is that a lot of people fall into the trap of believing that these interventionist policies have not worked because they were not implemented by the right person. But it's not a problem of the cook. It's a problem of the recipe. And people just don't understand that it just doesn't work. It's not a question of whether it's Trudeau or where it's carne. It's a question of those policies destroy economies in France, in the UK. It doesn't matter if it's Macron. It doesn't matter if it's Merkel. It doesn't matter if it's if it's Rishiak from a Conservative party or if it's uh Starharma from a Labor party. Is that cons consistently destroying the productive sector with more regulation, with more taxes, putting more and more burdens on investment, more and more burdens on economic growth, believing that the private sector will always have plenty of room to adapt to those. And at the same time, increasing immigration and uh public spending is a monster recipe that always ends up with stagnation and social discontent. And and and Canada, as I said prior, is that Canada is a country that can have that should be growing at a 2 and a half minimum 3 and a half% level right now. But obviously what you what you hear over and over again from pension funds, from investment firms, from uh business owners, from companies, oh, it's impossible. We can't do this. We're going to just to receive uh uh just to receive a permit, it's going to take 5 years. The the taxation is completely ridiculous. The regulation is completely out of control. That obviously is is the problem. No. Um and uh and and people think, "Oh, it didn't work because it was implemented by Trudeau, but if it's implemented by Carne is going to be better." No, it's going to be exactly the same. No. A a good friend of mine always says that socialism is judged by its intentions and capitalism is judged by its worst results, not by its results, by its worst results. So what happens is that the Colombians they see what happened in Venezuela and they say ah yeah but that's because it was implemented by Chaveis and Maduro we're going to do it better and it's the same it is exactly the same in Mexico in Mexico you have seen it as well no ah lopeador etc in in Argentina over and over for 70 years is this mirage I always say that uh that the average human being suffers the worst economic shock when they're a kid, which is to find out that Santa Claus doesn't exist. And then from that moment onwards throughout their lives, they try to find in the state, the Santa Claus that they uh found doesn't exist. And obviously, it's it's a it doesn't work. Daniel, we only have a couple of months left in the year, and we're going to be in 2026 before you know it. hard to believe, but when you look out into 2026, uh what are your views on the US economy? Do you have any concerns or do you think it's going to continue to grow at this 3% rate? I think that the US economy is going to do well in 2026, particularly because all of the uh all of the headwinds that came from trade negotiations from a new administration from the animosity of many many uh investors etc is likely to be left behind and people just just move on and remember what happened in the second year of the Trump first Trump administration. So I think that the US economy is going to do relatively well and particularly well compared to Germany, France, UK, Japan. Um concerns. My biggest concern is that the new administration doesn't do enough to reduce deficit spending. No, so far government spending has been reduced a little bit. uh a lot of new revenue is coming from tariffs but there needs to be a lot more done uh in terms of reducing government spending in order to rain on the deficit and that is a challenge. >> And in terms of the stock market, do you have a target for the S&P? So we're just a chip shot away from 7,000. Where do you think we go a year from now? Well, uh, my estimate is that in 2026, global money supply will likely grow between 10 to 13%. Which means that uh risky assets should rise uh more than that. No, simply to maintain the same level of valuation relative to money supply. The only thing that would change it would be if the fiscal problem of Japan, the fiscal problem of France, the fiscal problem of uh the UK would lead to their governments uh reigning on spending and therefore bringing down money supply growth. I don't think it's going to happen. Look at, you know, look at what happened in Japan. They voted for somebody that would print even more and spend even more. No. So I think that it's still a good environment to invest in equities. It's still a good environment to invest in gold despite the current correction. It's still a good environment to and it's an interesting environment to start looking at for example uh energy commodities that have been very very weak in the past in the past couple of years. uh because the monetary aspect is certainly supporting uh the the situation that we've just mentioned an improvement in risky assets and at the same time the the biggest challenge on a macro level are likely to be behind uh the trade war the uh challenges of these of these fiscal problems so I think it's more likely to be a here in of of consolidation probably not the same level of exuberance that we have seen this year uh but but with with a positive outlook for for risky assets. So bullish on the US economy. You don't see any risk of a recession at all in 2026. You're >> not going. Do I see a risk of recession? Could we have two quarters of negative GDP growth? We could, but that doesn't mean necessarily a recession. No, that is a technical recession. But uh we already had that in 2021 if I'm not wrong. 2022, sorry. in 2022 and uh the stock market continued to rise. So I'm looking more at how at the at the increase in money at the obviously we're going to have a much more accommodative position from central banks. Central banks are going to be mostly cutting rates in 2020 uh 26. So what is the biggest risk for equity markets in 2026? Inflation. M inflation if the situation of inflation right now goes from persistent to rising uh that would be a problem because then obviously margin calls would start to would start to appear in in many places. >> Yeah. I think one of the things that's saving us right now is uh the price of oil. It's hanging around this $60 level and uh if it were to rip to 80 or 100 bucks for any reason, oh my god, all bets would be off then. >> Yeah. No, that would be exceedingly negative. Think about this. It's a very good point. We're talking about stagnation in the UK and Germany and France. Those are huge commodity importers. If any of those had $80 barrel oil, all of them would be in a huge recession. No. So um we have let's say we know that OPEC and the US producers are very comfortable at these levels and that OPEC is willing to continue to increase production to support the Chinese economy. Uh OPEC is increasing production because they don't want to uh upset their clients. No. Um but obviously uh if there is a strong uh shift in supply versus demand and or any type of of of secular or at least short-term trend upward that could certainly generate a significant impact on on developed economies. No. >> Well, Daniel, that was a great discussion and I want to thank you very much for spending time with us today and sharing your thoughts. If someone would like to follow you online or check out some of your services, where can they go? Oh, thank you very much. I thoroughly enjoyed it. I think I always say that it's easier to find me than to avoid me. So, if you key in Google Daniel Laya, you will find that I have a Twitter account in English, a Twitter account in Spanish, a YouTube channel in Spanish, and a YouTube channel in English. And my website da.com is also in Spanish and English. Always remember that if the first thing that you find is in Spanish that there is an English alternative. So, so it's it will only take you a little bit uh more time to find the the English alternative. >> Daniel, once again, thank you. >> Thank you very much. Great pleasure. [music] [music]