Africa Equities: Multiple guests highlighted Africa’s outsized 2025 performance and argue it can continue, citing supportive commodities (PGMs, gold) and attractive valuations; AFK was used as the proxy.
Emerging Markets: EM outperformance versus the U.S. was a recurring theme, with the view that global rotation can persist as capital seeks cheaper, smaller markets.
Solar Energy: Solar’s surge (solar ETF up ~80%) is seen as structurally supported by rising electricity needs, policy shifts, and cost deflation; policy headwinds could flip to tailwinds, boosting renewables.
Battery & Precious Metals: Strong industrial demand (notably solar-driven silver) plus constrained supply underpin a bullish stance on battery metals and precious metals, despite near-term overbought conditions.
AI Power Demand: AI buildout is expected to pressure electricity grids and prices, driving interest in renewables and power infrastructure while becoming a key political issue.
Energy & Cyclicals: For 2026, several guests favor energy and cyclicals on resilient growth and fiscal impulses, noting energy’s small S&P weight could amplify upside if rotation occurs.
AI Mega-cap Risk: The AI trade (e.g., NVDA) is viewed as stretched and vulnerable; some expect a sharp correction in mega-cap tech with potential dispersion/trading structure risks spilling over.
Transcript
All right, friend of the show, Chase Taylor, founder of Pine Cone Macro Research, joins us again. Chase, great to see you, buddy. >> Yeah, long time no see. >> It has been It's You know what? It was such a a highly regarded episode that we had to get you back right away. Um, and and I'm not just I'm not just saying that. Actually, I got tons of uh compliments about what uh how many how much people enjoyed that. So, I do thank you for your time. And let's talk a bit about 2025. What surprised you over the past year um in terms of how markets have behaved that you weren't really expecting? >> Yeah. So, the funny thing is I I expected the rest of the world to outperform the US, but there there's like some stuff under the hood there that still like really caught me by surprise. Uh, I mean like the S&P is not even up 20% and we had Peru, Colombia, South Africa, you can do a whole Africa ETF, all that stuff's up over 60%. >> Wow. >> Right. Like I mean, South Korea is up like 90%. Like there's a bunch of stuff. If you just look at what what all is above 50%, it's like a third of the country ATFs out there. And then here, you know, people think the US is on fire and it's up like 17 or whatever. So there are countries that did not surprise me but then like I mean who who was shilling you know South African you know equities coming into the year but but if you did you you know 3xed the the S&P so that that that surprised me some some of those individual countries >> um I I didn't realize that the African countries were up that much. That is um a shock. Is that something that you think can continue? Yes, I think a lot of it can I mean I think the rest of the world's going to is going to outperform the US for for the foreseeable future. Um it's it's just the trick of trying to figure out where and I think I think when you look at Africa you know especially South Africa like platinum group medals gold all this stuff has had quite the quite the year. So that obviously was a significant boost. But um at the same time, like our our mutual buddy Rert, he has like the e-commerce business in Africa, like that thing's been great. Like the the whole continent's done well. And to to not spiral too far off into like macro land, but one like interesting thing here is as the US kind of stiff arms some Chinese imports, they're kind of getting flooded into places like Africa, which sounds bad. In some ways it is, but to get good very very cheap products, you know, it probably isn't at least short-term a bad thing for the continent. >> Uh, what else surprised you in 2025? Anything else? >> That that's the biggest one. But I mean like another example of something I liked, but but like wow was silver. Like it the the amount of silver that goes to solar like solar is worth 20% of the demand for silver now. And that made me really bullish coming into the year because I was like, man, if if you get any investment demand in silver on top of this really strong industrial demand and we know you're in a deficit, like man, that could be that could be pretty violent move higher. But if you told me it's going to be 110% move, you know, just in 2025, I would have, you know, I would I would have been happy to uh to make a bet on that and lose it. So, >> not only that, it seems like it feels like it happened all in the last month. >> It it really does. the chart is is very much straight up. >> Um uh do you think it can continue? >> So that one's tough on fundamental basis. I think yes, but anytime I see a chart that has peaked above the clouds, it just it bothers me from, you know, at least short term. I I it's to me both gold and silver probably have to do some digestion with RSIs like up in the 80s or whatever. like um but you know solar's not going anywhere and that that's just going to like keep eating into uh the demand side that much more that's that is very structurally bullish and it's not like people are tripping over themselves to get more out of the ground at the moment at least. So so yeah, it probably can keep going. >> I like that peaked above the clouds. All right, so those were the things that surprised you in 2025. Looking forward 2026, what do you think the market will be surprised by the most? Yeah. So, the market should be surprised by this this year, but I don't think the market has even paid attention. But this is something where to answer the can it keep going question is a is a big time yes for me. And that is uh particularly solar which I just talked about with silver like solar is up like 80% this year, the solar ETF. And I I think that will continue. Um, and you can even look at like the clean ETF. Like we we talked about this, you know, recently, but these battery metals and and sort of the electric stack metals, the stuff that makes up sort of the the the goods of the 21st century, as it looks like now, at least, robots, drones, electric vehicles, you name it. Um, I I think those metals are mispriced. And I think if you look at something like solar, it's mispriced because everyone thinks, oh, well, the US is anti-solar because of the election we had. But then you look at the last quarter and there was significant new solar put onto the grid in the US. I think that's going to continue. So electricity prices keep climbing. I think to to borrow from our buddy Marco Papich like the the constraintbased framework. You know even even President Trump would realize like his constraint on electricity is more important than his preference to have you know fossil fuel energy. And I think the US could even pivot within the next three years to get more serious on on something like solar. So you have solar up 80% with policy headwinds. Like what would it do if it had policy tailwinds is kind of the the point here. >> Got it. All right. And in terms of electricity, you mentioned that. Do you think that that's going to get a lot worse? Like do you think that this is going to be uh something that politicians start debating and that ends up being on the front page of papers like how much electricity is costing? >> Yes, I do. So, I think unless you get some weird, you know, price controls or, you know, building a fence around AI and be like, you guys figure it out for yourself, but you're not going to pull from, you know, the local neighborhoods anymore. That kind of stuff. I I think the answer is yes. And it looks to me like policy makers are all in on AI. Obviously all these uh you know policy papers and executive orders make it turn are turning it into a uh you know a total like existential thing that we have to win the AI war. So I my assumption there is they're going to get all the power they want and if that makes power more expensive for your grandma like then she's going to have to deal with it kind of thing. So yes, I I think it becomes a a major political issue and as it does that people are going to look around and like what else could we do and then you know some sheepish guy in the back of the room is going to like raise his hand and be like uh how about we we actually get behind solar and I think it I think eventually someone's going to be like all right let's do it you know what I mean and not just solar like there are great opportunities and stuff like geothermal that that not enough people talk about but uh I as >> contrarian play in this environment >> and To me, it shouldn't be. It's up 80% this year and and I I feel like nobody cares. But, uh, but it is still an aatrillion thing. It does have real policy headwinds. I just think that they're going to go away. Um, to me, it is always amazing that uh, you know, like in terms of us when we started talking about EVs and uh, you know, the government started telling all these automakers that we had to build build all these EVs, it had to be a certain percentage of the fleet. I was like, are we not like stopping and thinking about like how we're going to power these EVs? Because I know like here in Ontario, Canada, we had points where they were telling us to turn off our air conditioning in the summer. And I'm like, okay, so you're telling us to turn off the air conditioning because there's not enough electricity and then you're going and encouraging everyone to buy an EV. It makes no sense. Uh and you know, contrast that to China that went about it completely the other way and built the infrastructure first so that they could then put the EVs on it. Um it it it kind of feels little batchy crazy to me. Speaking of China, the capacity China added to its grid last year is equivalent to onethird of the US grid. Like just just bonkers how much electricity they're putting on their on their grid. And to to your point, we I lived in so SoCal a few years ago, and this was when electricity was still a bigger bigger problem there. Um, they've done a reasonable job of making it a little better since I left, but at at one point they've sent out one of those notices like the whole turn off your AC thing, but it explicitly said in that unplug your EV and like well that's funny from California who basically told me I better get an EV and then said please unplug it. Like no one thought this stuff through. >> There we go. All right. So Chase, thank you very much for joining us. The founder of Pine Cone Macro Research. Why don't you tell people where they can find out more about you? uh your your letters uh your stuff that you do with Zach, your podcast, you know, plug the whole spiel. >> Yeah. So, more about me and and my firm uh pinecom macro.com and then I'm the head of research at Bullwark Capital. Uh we're an RAIA based out near Seattle. Um and you can find out everything you want to about that at Bullwork Capitalmanagement.com and that that management part's MGMT and bullwark capitalmanagement.com. >> Thanks again, Chase. >> You bet. >> Okay, folks. It's that time. Uh, friend of the show and my good buddy Rupert Mitchell, author of Blind Scroll Macro, joins us. Rupert, thanks for making time for us. >> Hey Kev, good evening. >> All right, let's get right to it. 2025 was quite a year. What surprised you the most? >> This one, this one was really easy. Um, I did not expect African equities to outperform the S&P by 50%. Listen, are you like one second, I'm having trouble. Are you patting yourself on the back there? Like you're reaching over >> because obviously it was only a 1% position. >> Always the way it is. It was a great call. >> I got to show you a couple of slides. Look at this. Um >> the um where is it? Here. >> It's going to flash up in a second, isn't it? >> Yeah. Here we go. >> Okay. So actually this is the one. So look this is AFK the African ETF right in brown versus the emerging markets MSEI emerging markets EM and the MCI EHA which is IEFA and the and the spy. I mean I was calling for international outperformance this year but Africa really completely took took my socks off. >> So what happened why is that like why the huge run? Well, there's a big there's a big weight in in South Africa and so the big rally in in in um platinum group metals um is helpful, but you know, at the end of the day, >> it's not as though these these these markets have got cheap again. Can you see the the purple and blue ones here now? >> So, this is just the S&P um forward PE at 23.4 times next 12 months versus its 19 a half 10year average. Africa is not even at its mean yet after a 70% run. So, so, so my my my surprise for next year is is that is that it's going to do the same. Now, this this this will make you laugh. This will make you laugh. One of the reasons that confirm this. So, our mutual buddy Chase Taylor tweeted John Arnold yesterday >> and this is Can you see it there? Can you get a sense of how little electricity people use in subsahara and Africa? Imagine each person turning on a 50 W light bulb. That alone would instantly double consumption, >> right? >> Seriously, >> just wow. And then literally the next thing in my timeline was this um terrible maps. I love those guys. And a picture of Africa with the word Asia underneath. It's absolutely brilliant, right? You cannot make that up. Nobody Nobody is talking about this this, you know, frontier em type trade. I I've been I've been I've been pitching. It's not ready to pitch yet, but the um I did a did a really interesting interview the other day on Usbekistan >> and they are listing a privatization fund managed by Templeton on the London Stock Exchange in Q1 next year. I think that's going to be a really interesting trade to watch. >> Wow, you've turned into quite the emerging market or true emerging market specialist. >> I've always been an EM guy really. >> Have you? >> Yeah. No, I I joined Bearings in 94 because it was an EM investment bank, right? >> Wait, this is Bearings, the England's oldest >> one that went six months later. Yeah, that one. >> Like it's the oldest English bank in, you know, history. And it's in the EM bank. >> Yeah, I know. It financed the first original emerging market. You know, it financed the Louisiana purchase for the Americans. >> I did not know that. >> That's true. Like, >> yeah. Yeah, totally legit. I'll send you I'll send you I'll I'll send you I'll send you I'll send you the snippet from the from the history books. Yeah. Um can't remember which one it was. Um Henry or Oliver Bearing. I can't remember. Alexander Bearing. Yeah. He financed the Louisiana Purchase. $11 million. >> $11 million. >> That was probably a lot back then. >> Yeah. But you know that Louisiana purchase is is not just Louis what is modern day Louisiana. It is literally that entire panhandle that goes all the way up to your southern border. >> Yeah. No, I know. It was >> fast. >> Yeah. All right. I'm not gonna My surprise my surprise for next year is that EM's going to do the same, >> right? >> Uh I'm not going to let you off that easy, though. What else in 2025 surprised you? I I I I you know the violence of the international rotation in the first half of the year right um I am surprised that US risk assets bounced so aggressively out of liberation week it certainly it certainly caught me flat fortunately all happened so violently I didn't sell any sell anything at the lows um but you know I'd have loved to have taken in um taken in my credit hedge that week. >> Yeah. >> But know of course I thought that high yield spreads were going to be blowing out to 700. Yeah. And that didn't happen. Um the I mean I I'm just amazed and I know this is a favorite one of yours. I'm just amazed that there hasn't been a more serious implosion of the dispersion trade this year. >> Yeah. >> Yeah. I I I just I mean I was looking at I I I'm actually capitulating on my spy straddle strategy this week because I'm just going to come back to it next year. It's just been a disaster since May. >> Well, don't you think there's a certain amount of that that's got to be seasonal with these auto callables and this >> Yeah, >> they're all particularly the retail back product is all written on these these these these these annual cycles I'm sure. >> Yeah. And cuz that's what I'm thinking that there's actually something going on. And I I've seen a couple of things recently that have just kind of blown my mind about the size of this market and what's going on there. And you realize that they're selling volatility to these dealers in single stock names. And it really makes you understand why this dispersion trade is is what it is because you know the dealers are getting long all this single stock names uh volatility from these these auto callables and then on the other side you got like JP Morgan option Wales things people like that buying index protection and it's just like it's just a great trade >> you know while it continues to work. But here's a question I have for you in terms of that trade because I remember learning from Chem Carson and un for the first time understanding how the position creates the volatility. Meaning that >> once he explained to me that no, you know what, if everyone is long the strike, if all the dealers are long the strike, then that actually causes um a delta hedging strategy that reduces volatility. So, ironically, if a big client sells the dealers a whole bunch of, you know, options around that strike, it can cause the the volatility around that strike to be muted. At the same time, if there's a situation where the dealers are all short, it can cause the the um the volatility to be um expanded and to be more violent. And so, a little part of me wonders, and I haven't figured this out yet, but is the same thing happening with dispersion? Like, are we having the most uncorrelated market in history because of those positions? I mean has to be an input factor, hasn't it? That's what I got. >> This is this is just all energy that's you know risk risk is only ever transferred. Yes. Right. So that potential energy has got to go somewhere else in the market. Of course that happens. That's why we get these >> 10% moves on earnings, right? >> Yeah. >> It's got it's got to find a release valve somehow. >> I I though think that when this comes unglued, it's going to be bigger than people expect. And I and I'm with you. And I don't know how to time it. And every time I >> I only know one thing for I only know one thing for certain, Kev. I won't have my straddle position on when it happens. >> Me neither. I'll probably be long by then. Finally convinced that the stock market's hit higher. Okay. 2026. Uh, you told us EM's gonna outperform. I want to hold you to more than that, buddy. You got to give me another one. What else does the market surprised about? Um, I think that the energy stocks are telling us that energy prices could be higher next year. >> Oh, you think >> you think the stocks are giving you that signal like that? Like you're that >> Listen, I'm I I believe that I you know I I I increasingly believe that they're always signs of some other market moving, right? And if energy stocks are moving without the commodity, I think they're trying to tell us something. >> Yeah, I hear you. And one more. Give me one more. >> I will almost certainly lose money in natural gas in February and March. >> Okay. Rupert Mitchell, author of the Blind Squirrel Macro. Where can they find you? You got a podcast now. You got a million things going on. Give us the whole spiel. >> Well, easy onestop shop. Blindscirremacro.com. and my new show, which you have kindly just been on, Benny and the Squirrel, um, as 700 p.m. Eastern live on Sundays and Thursdays. >> And Thursday, >> yeah, we do it twice a week. We twice a week. The Thursday is a guest show and then Sunday nights just me and Benny shooting the breeze. >> That's awesome. Well, it's a real pleasure being on and it's a real pleasure having you on, Rupert. Thank you very much, sir. >> Thanks, Kev. All right, it's our great pleasure to welcome back to the show Marvin Bar from Thematic Markets and one of the greatest names on Substack. Seriously, Marvin, uh, just a terrific thing and I just it's stuck in my mind, Marvin. I I still laugh about that name. Thanks for joining us this morning. >> Well, thank you and and thank you for the plug and I'm glad I make people laugh. >> All right. Well, one of the things that uh might have made a lot of people laugh is what's happened in 2025. There's been a lot of twists and turns in the markets. what surprised you the most? >> Uh, so, you know, I think the thing that surprised me the most is frankly the market's reaction to Liberation Day. Um, you know, I I I think we might have talked about this before, but you know, I've gotten I guess some of the policies very right well ahead of other people and then been completely wrong on what happened with markets. Um, so I had that experience with Donald Trump before in 2016. I predicted he was going to win and I thought that people would see what I saw for Liberation Day and you'd get that reaction then. Instead, everybody said, "Hey, it's a Republican. He's going to cut taxes and, you know, assets to the moon." This time I was like, "Surely you all know who this guy is by now. There's there's no like obviously you've had eight years of him and of course he's going to hike tariffs to the moon. He's been telling you this. >> Yeah. >> And and people had this completely opposite reaction to that. And that was one of the big surprises to me. I guess it shouldn't have been, but that shocked me. I And I I found the same thing. I was kind of confused about, you know, when they were surprised by the tariffs. I'm like, he's been telling you this forever. All you had to do was listen to what he was saying. >> He called himself tariff man. >> He gave an interview to Bloomberg Business Week where he talked about it. He talked about the beauty of it. Now, having said that, he in that same article, he talked about the manipulators of the currency and how they're they're stealing things by keeping their the value of their currency too low. And one of the things that surprised me the most is that he hasn't gone after the currencies that it's been purely tariffs. Has have you been surprised that the dollar isn't more of an issue for him? >> Um, a little bit, but I think a lot of it comes down to probably Scott Bessant. Um, I mean, I do think that, uh, um, Bessant seems to have more capacity to tell the president he doesn't things he doesn't want to hear than anyone else. Um, and, you know, has has made it clear to him that uh, hey, you're not going to control this thing. This doesn't work this way. There's a, you know, $6 trillion dollar trades in this market every day. It's just not going to work. So let's try and work on these other things over here that we can get done. And so I I suspect that's a large part of the issue. Um uh but then you know, hey, how about the other surprise that it was a little bit less surprising to me given the rest of the liberation day reaction. But remember, everybody's assumption was that tariffs meant the dollar had to get stronger to provide an offsetting real >> um uh relative price and that didn't happen. So you you know I think everybody had a bit of a surprise in there, not just the uh Trump administration, but markets as well. >> Oh, for sure. And I I joked when he was elected, I said, "He's going to make macro great again, Trump." Uh and he's definitely done that. Exactly. >> It's been a terrific market for uh traders and especially from you know uh macro guys like for the longest time this stuff was boring and if you think about kind of postcoid here we've had a huge interest rate cycle we now had Trump with all these you know changing of the guard in terms of the underlying fundamental systems like we haven't had tariffs since what you know going this way since you know 100 or 80 years. Well, certainly not on on this scale, right? I mean, people do forget that like, you know, Reagan actually had pretty extensive tariffs. He had voluntary export restraints. You know, it wasn't on this scale. This is another we haven't had anything like this to exactly your point since, you know, effectively smooth Holly was the last sort of round of those things and and you know, that was by the way relatively small compared to what came before it. But right >> um yes this is this is this is something pretty new. Um I do think that it's interesting you know you say macro make macro great again. Um one of the problems is is that of course everybody forgot how to do macro. So a lot of people who claim that they're macro were like you know that that there are this specific rule books central banks do this and we do and you know um currencies are supposed to do this. and they really stop thinking about actual macro fundamentals. Um, and what drives all those processes that they have found correlations for. And so they were correlation traders, not macro traders. And I think that's been a big part of the problem. >> That is a great point. All right, let's look forward now, uh, put on our thinking hats and think about 2026. What do you think the markets will be most surprised about in the coming year? So, I think um when we were on earlier, I I I talked about this, you know, sort of low conviction view I've I've had that um you know, Donald Trump had specific reasons to talk down the Fed and talk down interest rates um in this last year. Um but that that he would never be held by those things and that when push came to shove, he would ultimately appoint a hawk. Um I if anything I think I've actually increased so I've both gained and lost confidence in that view. I've definitely gained confidence in the view they are going to go with someone who's going to rootto branch reform the entire Fed. >> Okay. >> Completely slim down its balance sheet which nobody seems to be thinking about that like this is actually the bigger thing they're going to do. they're going to take its balance sheet way down and that's going to require incredible regulatory reform. At the same time, in terms of the interest rate policy, I think that whomever they do will ultimately end up doing the right thing, which in my view means interest rates are going to have to be a lot higher. But I do worry, this is where I have lost confidence a bit. I do worry that all the people that they're considering do think that that balance sheet shrinking um is going to have such a negative effect that they're going to have to have lower front end, you know, um Fed funds rate to accomplish that. I think that's totally wrong and I think they'll find that out as inflation goes up. But I do think there is a worry about that. But I think the broader picture is people are going to be surprised that this administration is actually gonna choose someone who's going to be very hawkish. >> Do you think the market's got it wrong with Scott Beth? Sorry, with um Kevin Hasset being the leading contender right now. >> Um well, I'm I'm glad they've moved that way. I I've been saying that all along. I said it was either going to be Bessid or or or WH. Um and um you know when markets were at their peak with Hassid I was saying nope it's going to be Bessent or excuse me it's going to be uh War Bessant has dropped out for me. Um I would have thought that he was going to choose himself >> and Cheney move. >> Yeah exactly. I think we talked about it last time. Um, the reason why I've I've sort of pulled back on that one is I've learned from a variety of different sources that Scott Besson is really deeply involved in national security policies. >> Ah, >> perhaps maybe more so than Pete Hex. And that means he ain't going anywhere. One, because the president ain't going to let him. And two, because he's clearly he sees other things he's doing that are much bigger than anything at the the the Fed, which is where normally you think a macro guy would want to go. So I I think it's going to be worse. >> Oh, you think it's worse. So you think has wrong like that the market's over? >> Yeah. No, abs. Absolutely. I think it's definitely going to be worsh. >> And that would be >> I'm I'm I'm 99% sure it's not going to be hassle. >> Really? Why do you feel so strongly about >> Hass? >> Yeah. No, I I mean, look, whatever you want to say about Donald Trump, you can say that, you know, he's got crazy ideas, whatever, but he has certain personality types he likes, >> right? And he also is all about, you know, businessman of action, go do things, right? You know, Scott Hasset, no complaint amongst him, but what has he ever accomplished? like Kevin before. He's never done anything. >> Right. >> Right. >> And if you are really intent on completely reforming the Fed, you're going to appoint a leader, somebody who actually has a track record of getting things done. Now, I'm personally not convinced that's Kevin Walsh, but he has that persona and the president seems to look at him that way. >> Okay. >> I don't think he looks at Kevin Hasset that way. Obviously, the ideal person would actually be Besset. This guy is like >> all over the place, >> right? He's unstoppable. But for the reasons I said before, I don't think that's going to be the case. >> What do you think is the initial reaction if Kevin Worsh was appointed? Look, let's just say, you know, come January 1st, he says Kevin Worsh is the guy I'm putting him in. There's there's a fair amount of enthusiasm for Hasset and and the assumption that we're going to get lower rates. Worsh might be considered more of a traditionalist and and would the market sell off you think initially? Um I think that um the back end uh um sells off on this. Um now ironically it should be the opposite, >> right? Yeah. the um people aren't so Worsh has excuse me moderated his um interest rate stance a bit that seems more and this is why I said I have this kind of concern that these guys actually think that because they're slimming down the balance sheet and selling off all these treasuries they can still cut rates and they're going to be surprised that that doesn't work. Um but so I think because of that markets are going to not think immediately, oh well, we're actually going to get higher rates next year, right? That's they're still going to be questioning that. But they are going to know that Kevin Hasset has been saying since he left the Fed way back when. Do you remember that Wall Street Journal? You know, his his like mic drop moment as he leaves the Fed. Hey, and my colleagues suck. It was just like the guy has been on this train longer than anyone else. >> Your first thought is he's going to sell treasuries. I better start selling now. >> Right. Got it. All right, Marvin. For uh those who want to learn more about you and what your these outside the box takes that you have, where do they go? >> Uh so my primary research vehicle is Thematic Markets. Um, I publish it through Substack. Um, but you can also find it on my website, um, thematicmarkets.com. But, um, thematic markets.substack.com is the main thing. That's my paid research. But if you just want to get a flavor of it, I also have a free Substack that I sort of post all my um, shall we say unressearched, unconventional ideas. Um, and hence the title that you love. Seriously, Marvin. Uh, seriously Marvin.substack.gov. job. >> Thank you very much. >> Thank you. >> All right. It's my great pleasure to welcome to the show L Shrub, author of Shrubstack, one of my favorite people, one of the most popular shrubs that mean Substacks out there. L Shrub, thanks for joining us. >> Thank you so much for having me, Kevin. It's always a pleasure being on the huddle. Uh so you have just nailed a lot of the themes that we saw in 2025. Um in terms of how the market's behaving, the golden age of grift I think that's going to be imprinted on all of our psyches for the rest of our lives. Yet there must have been elements of 2025 that surprised you. What were they? >> Yeah. So I think um Liberation Day surprised me in the sense that I didn't expect them to come out so hard and then the the subsequent taco that you know they let Main Street win for about six days. That was like even more surprising. It's like you went through all this hassle. You just pissed off everyone, all your allies and all you gave Main Street was six days. Like literally I mean you know South Park sometimes uh just you know speaks the truth as does parody in general you know that's why I remain a parody publication because I mean it was such a joke that I couldn't come up with it >> the truth is stranger than fiction. Do you think that there's just zero plan and they're just throwing stuff against the wall like you know because you've highlighted the fact that this was all for not. Why bother doing all this? Like when you're sitting there analyzing, what what are your thoughts? >> Um I actually think that you know how the Chinese have like a hundred-year plans. >> Yeah. >> I I I think we're like the complete opposite in the West and we're just doing like with you know 100 minute uh Tik Tok videos. So, so I actually think there was no plan and they're just trying to see what sticks and and you know like you know they see the market reaction, they see the bond market reaction and you know this is the sad part about what we go through versus something that requires serious consideration. Although I will give them the benefit because I you know I I want to just give them the benefit that what they're doing on the strate on the critical minerals for example is very serious very thoughtful like there is a really clear plan and that's like really impressive for the world to emulate. Um but then on the liberation day I think it was kind of just like just let's just throw it there and see what sticks kind of. Do you do you think that on the um critical minerals that there's someone else driving the boat that he's like listening to that is that um is that Scott Bessant? Is that Rubio? Like who? >> I have a feeling. Yeah, I have a feeling like Besson is like on top of it. And I think it was like a perfect coordination with the department of war because you know they telling them this is what we need and then industry tells them this is what we need. So this was like a very good coordinated action that is going to make a big difference uh for the next decade by the way and for manufacturing and industrialization. Uh all right. So what other parts of the market in 2025 surprised you? Like was the fact that the bond market was so well behaved? How do you feel about that? US dollar anything like you look past else you know you stood up and say I wouldn't have picked I wouldn't have thought that would have happened. >> Um it's kind of weird because I got bearish the dollar early on. So, I got bearish the dollar from the moment that Trump met with Zalinski and I created this fictional character called Klaus, which was like your European fund manager that's going to basically just, you know, get the hell out of US assets. Um, so I was bearish the dollar. Um, I was so you know, we entered the year really bullish Brazil, bullish platinum, bearish dollar. You know, Brazil is up 50%, platinum's up 80, whatever. Miners are doing commodities are doing very well. But I got to tell you the one surprising thing was um I I was expecting an exodus from the dollar and US assets and all we've seen is actually an exodus from US dollar but we didn't really see an exodus from US assets right so again going back to our fictional character this Klaus which Klaus is like a tanker ship you know just sitting on a 100 billion of aum and he's wondering you know where do I allocate I think the think. So, so I think what Claus did, he sees Zalinski getting uh attacked by Trump in the February meeting and he's like, "Oh geez, I got to I got to get out of the US. I'm going to hedge my currency first. So, I'm going to sell my dollars, hedge my euro at, you know, 103 where it was. Now it's 117." But then when he sat down and he was like, "Okay, I need to allocate hundred billion dollars out of the US." He was like, "Oh where do I put that money?" like literally he couldn't find anywhere to put the money. So, so I think that's why we haven't seen the exodus out of the US. Uh it's just as simple as that. Like people just had no other choice and that's why they keep allocating into nonsense like private credit and building data centers in the middle of nowhere. >> Right. >> So that was my biggest surprise. >> All right. So 2026, what do you think the markets will be surprised by in the coming year? I think the biggest surprise so um you know the last couple of weeks we shifted our portfolio to what I call boomerification. So boomerification is a process where you you know you switch from like growth ponzies and all that stuff which work really well to boomer stocks but which I define as like just cheap stocks including commodities and emerging markets and everything. So I think what the market is going to be surprised most in 26 is that the AI trade is done. Uh which means NASDAQ is done. At best case it can ek out like a very small return or actually I mean it can even just crash out because you're going to have like Google fighting against Nvidia for dominance or something or chat GBT 5.2 two versus, you know, Gemini 3 or whatever. You know, once people figure out it's a zero sum game in a in a respect, you know, this thing can crash or it can just stay flat where it is. But I think the biggest surprise will be you're going to have some subsectors that are going to fly u and that AI trade is going to stay flat to down. So that great rotation where you know you and I joke about this Nvidia must die thing. I think people underestimate like some really simple facts you know like Nvidia trades $50 billion a day. The Russell trades like six. So so you basic and let's not even get about Europe by the way. So like Europe literally it trades so poorly like there's literally no capital invested in Europe right now. Um, so things trade so badly outside of the Mac 7, like you sit down a round table with, you know, with with big funds, all they're going to talk about is Nvidia, Google. They're not going to talk about anything else. So what's the most consensus trade amongst those guys? K-shaped economy. So the K-shaped economy is like getting everyone to invest on the top part of the K, which is like, you know, the max 7, and they just forget about the bottom K, the bottom part of the K. And I think the greatest trade of 26 will be the, you know, the the uno reverse card of that K. And uh there's so many, you know, there's so many beaten up names. >> Um that is going to be a great year. I'm I'm like super bullish. And by the way, and just to finish up on how how asleep people are, like I said, Brazil is up 50 on the year. Platinum is up a lot. Uh emerging markets are up a lot. the IBEX is up like 60 in a dollar basis or something like crazy numbers. No one talks about these things. All they talk about is NASDAQ is up 20. It's like yeah great guys but you know we kind of outperformed you know being like I don't have a single AI stock and I've I've outperformed the NASDAQ like by multiples and like but no one talks about these things like every even a boomer portfolio in Europe would have outperformed the the NASDAQ. No one talks about it. >> Yeah. >> And I think 26 is going to be the same thing. People are going to come in, you know, long Max 7 and then by the end of it, they're going to be like, "Ah, crap. I'm I'm underperforming just about every boomer out there." Well, and you know, you call them boo the boomer portfolio. I'm not sure the boomers own those stocks anymore. I kind of feel like that they've been sucked in. So, it's kind of like the the or the just few remaining value boomers. One of the things that I just I I'm completely in your camp and I think that people underestimate is how small those other markets are and you touched upon that. If we even get a little bit of rotation like if if the guys that are sitting there with their big mag seven wins over the last five years say I'm going to take a quarter of my portfolio and move it into these other stocks. These other indexes and these other areas and subsectors are so small. It's just going to move it huge. We're going to see like gold miners performance in all sorts of different other areas. >> Yeah. I think what um Hartnett from Bank of America he said he said something really cool which I absolutely agree with. He said at some point every commodities chart is going to look like the gold chart. >> Yeah. >> Because you know you just need some of you know forget about getting some of that Nvidia flow into the other stuff. Imagine getting some of the gold flow into the other commodities. That's another one. >> You know, gold is a big liquid market. So, >> I'm I'm with you 100%. Like, I think people really underestimate the liquidity. And again, going back to the Claus example, >> you know, they all got really cozy just being in the liquid big stocks that they're going to just I think they're missing out already. Like I said, like the the it's a surprising aspect to me because they're not even talking about the 25 performance of these assets. Like, they're not even talking about them. So coming 26, they're going to be like again in denial. So they'll probably buy everything in 27 and then we crash. >> All right. So great stuff. The shrub, why don't you tell people where they can find more about your great writing and and the stock picks that you have for 2026. >> Yeah, I'm on www.shrubstack.com. >> Thank you very much. >> It's our great pleasure to welcome to the show Vincent Daniel, partner of Porter Collins at Seawolf Capital. Vincent, thanks for making time for us. >> Thanks for having us. This is uh we feel like we've made it if we're on your podcast. So, >> I don't think so. I feel like our podcast has made it if you come on it. That's what I feel like. All right. Uh 2025, what a year it's been. What surprised you the most? I would think the thing that surprised me the most is the fact that so much crap was thrown at the market. The one I'm thinking of the biggest one is the obvious liberation day, right? Where where we threw this new concept which I it's hard for me to make it positive which is called tariffs, right? Yep. And not only that, he he he threw it in such a way that was just going to upset the apple cart eventually of the global economic system and markets just dusted it off, right? Just completely dusted it off and and just said, "Yeah, fine." And and it just goes to show it sort of confirmed our suspicion that we have of markets is that at the end of the day and you know to steal you know one of Luke Gman's term terms right is that the S&P and markets are now a matter of national security right and and and I remember when he said that and took me a while to really like hone in but now it's part of ingrained in in in sort of my thought process which is they can't let it go down >> and and the minute it starts going down. Not to say that there can't be 5 to 10% draw downs, but anything more material than that and you really slow this economy like if if it lasts for longer than than two months, I mean, we we truly have a problem with the economy. So, that has sort of been my default mechanism. But there every once in a while there are things where like uhoh this is bad. This is really bad. But doesn't it scare you a little bit when you start saying they can't let it slow because like it's the government like when since when did they become all powerful and and and able to dictate the terms to markets? >> I think it they became all powerful as more and more people are now involved in markets and everything is relying on it. Specifically, and I think we've discussed this the last time you were on the podcast. I view the entire capital market system as ridiculously overlevered, right? Too many people are using way too many derivatives, way too much leverage and and the the capital weights that are allowed for people to do all this stuff. And so anytime things get wobbly and and degree of measurement that you can look at that that determine that is the VIX and the move index, right? is whenever those get elevated, that's when you really start to see the helping hands or or maybe if you're watching behind underneath the surface, the helping hand step in. And so therefore, all that levered capital gets to continue to play their their spread game. Uh and that's the reason why I think it continues to happen. And to probably answer the question, what upsets that apple cart? When when does that stop? Because we all know this is sort of a charade or I'll say that differently. I think a lot of us believe this is kind of a charade. >> Yeah. >> It's really inflation once once the Fed has to >> I hawk back to 2021 and 2022 when Powell had no choice but to really slam the brakes and he had to say it a few times for the market to get the joke >> right. I I think the next time we have a real real event in markets absent some two three standard deviation event that we foresee that's geopolitical it's going to be when the Fed again some form of liquidity >> and we didn't get that we didn't get that today by the way right that kind of reminds me back to the Bill Fleenstein uh line about uh you know they're going to keep partying until the bond market takes away the keys and that's implicit in your argument that it's going to be inflation that really ultimately will do it in >> yes that's that and and I've come full circle to the David Ter point of markets which is that's when you really have to get nervous and and that's probably when for guys like us and you know we do a lot on the long side but we also like to short from time to time and for guys like us that like to short what we think are ridiculous stocks we sort we have to wait until the Fed draws a liquidity away from that excess and so then you could start playing target practice with some really really stupid names uh back and forth. But until then, we we sadly have to wait. >> All right. So, that's what surprised you in 2025. Looking forward 2026, what do you think the market, not you, what do you think the market will be surprised by the most? I think the market's going to be a little surprised by how resilient the economy is probably going to be in the first half of of 26. >> Okay. >> And so some of the people that I speak to and and you know obviously the the issues that people are talking the K-shaped economy it's real slowdown of economic growth it's real. uh however the market has been or the economy has been somewhat resilient. I think a lot of it is a function of fiscal deficit spending. As we all know, if we go take a go go back and retake a look at that one big beautiful law, right? Yeah. >> And do a do whatever your AI search you want to on that and then you realize that a lot of the goodies start coming into play in the first quarter in in turn of the calendar and it's a very front-loaded like many of these laws. Right. Right. uh is very front-loaded with with tax to the consumers that are retroactive to 2025 full full expenditures of capex. We could debate AI but for at least for the next year the actual deployment or or physical layout of AI will continue right >> uh rates are right now tame for right now energy is more than tame oil prices are in tame and assuming I don't go crazy about how the hell are we going to pay for all this right uh I actually think that it's going to set up because there's an agenda which is to win the midterm elections. >> Right. >> Right. And so as a result, I think economic growth is going to be a little bit better than people think or maybe better than people think. I actually think Trump's going to pivot to a more domestic agenda. He's starting to say that in in his rhetoric. And so from there we have become a little bit more bullish cyclicals again and as a result combined with the fact that I mean energy is what 2.8% of the S&P 500 right now >> I I mean yeah we could be wrong it'll go down maybe 10 15% but heaven forbid we're right on economic growth. Heaven forbid oil gets to go to 65 or 70. >> Yeah. or or Natty Gas stays where it is. Uh I just think there's some material upside in these cyclical names that is and no one's really there and particularly in the way we're focused on it is okay, >> we might be wrong, right? Clearly we might be wrong. So let's focus on some of the energy related names that are directly impacted to AI but are not being um rewarded as if they are naturally. >> Oh, really? There's still there's still names like that. >> Well, almost every direct power source, right? So, I'll give you a great example. Um, today is a great G Vernova, which is a direct AI play is up 120% for the year. It was up 15% today and it's up 25% for the last month. >> Okay. >> Okay. Yet you know expand energies is is trading at six times EVIDA right spot uranium prices have not moved one iota this year right everything around it has moved but that has not moved and a lot of the other energy names just sit there and no one wants to own them we know that like like no one you never walk into a P a generalist PM's office and the last thing they want to do is own energy or even if they need to own energy because it's 2.8%. >> But if it goes to 4% all of a sudden they might >> have to own it. So that to us the first half of 26 I think the surprise might be this might be a little bit better than you think and you might have to look at some of these cyclicals more than you would like. >> Love it. That's a great idea. Okay. Uh for those who want to learn more about great ideas like that, tell us a bit about your Substack, your podcast, the whole nine yards. So, we started this about two, three months ago, mainly because Porter and I and Danny said, "Well, we're doing this every day. Why don't we why don't we just create our own little communication group and our own little community?" So, it's called What are we doing on the trading desk? It it has three features to it. Uh I try to write like weekly or or whenever I have something to say, but I kind of enjoy doing that. Uh we do a weekly podcast called the Friday Night Dirty. >> Yeah. Uh, and in addition, I love we love well that that spawned from that of course almost all of our creative stuff comes from Danny Moses that he would he would and he probably runs more bearish than than than even the most of the people that you know, right? And he would always assume that on Friday after the close the Friday night dirty 8Ks would come out uh because that's when everyone was going home. And then lastly, we we have a community chat room on Substack and really on Discord, which is which is lively. And the only thing I would say is that Porter and I are engaged all day long in it because we we were doing this uh as sort of part of our process and speaking to various friends that you know and the like. And we said, well, why don't we do this on our own and bring the community to us? And so far so good. It's it's a lot of fun. >> That's awesome. Well, thank you very much. I I appreciate you sharing some time with us and we look forward to another great year. >> Awesome. Thank you and happy holidays. >> All right, it's our great pleasure to welcome to the show Paulo Macro, author of the Paulo Macro Substack. Paulo, thanks for coming on. >> Hey Kev, good to be back with you, man. >> A this is going to be fun. And by the way, I'm sitting here listening to your voice and I still remember the first time that we got to know each other. you left me that um voicemail on the WhatsApp and I was like, "Oh my goodness, this guy, we got to get him on the show." What What were like two years I was waiting for you to get on the show? >> Yeah. Yeah. And I always promised you you would be my first and it was worth the wait. >> I always like that you were very loyal. You were very loyal. Okay, so now this has been a crazy market. It's 2025. What surprised you the most over the past year? Well, Kev, without uh tipping my uh cloud bear avatar too hard, um and of course you're catching me on a day where, you know, hyperscalers just can't seem to, you know, come out with good news. Uh I was most Yeah, I none of us should be ever surprised about anything, right? Like we've seen it all. We've been around the markets a few decades, but uh what surprised me most about 2025 was the extremity across so many different outcomes and the confluence of these extremes and keeping it really short. If you had told me two years ago, three years ago as we were coming out of the hole of 2022 and the regional bank issue and office falling down the stairs that we would go full-blown 1970 to 72 nifty50. Oh, wait. No, 50 is too much. Let's make it seven, right? Let's take those 7 to 40% of market cap in the US. I'd say, okay, but that's not enough. Let's go full-blown 2000 retail mania, which we thought was done in 21 after all the stimulus checks and people, you know, unable to go see sports, so they'll gamble on Robin Hood. Let's let's go Max 11 right there and do tech large cap growth 2000 with a sprinkle of retail on top. Okay. And then we get to like August, September, and you and I are talking on the side and realize, oh no, that wasn't enough. We've got to go full-blown 2005, 2006,77. Let's securitize the hell out of data center debt. Take that stuff to 11. do a few hundred billion of that in the span of like six to eight weeks and then try to shove as much of that as possible into like Black Rockck total return stable fund so that moms and dads don't even know what the hell they're doing with like line item number 90 in the fund being CNBS of two data centers in Virginia. Let's take that to 11. I mean it's like a turducken of market risks of like 72 2000 and '07 all wrapped into one year and here we are and it's like a stocks are up like it's cool like you know like my buddy Shrub says like gag you know they'll just matchate more stimulus and you know let and then let's let's get the Fed to cut into the teeth of all that you know I just >> yeah I'm I'm surprised buddy like I just can't believe we're doing Listen, that line, a turducken of market risk, is got to be the greatest line. That is hilarious. And it's so, you know, bang-on, spot-on correct of what we're experiencing right now because it's not just one thing. It's it is across the board a million different parts. Um, was there anything in terms of that's the stock market. How about other asset classes? Anything else surprise you? Um, I thought that we were going to have a a good old-fashioned backside of the mountain credit cycle uh a lot sooner uh and a lot earlier than than now. Um I'm I guess I shouldn't be surprised, but like an evergreen loan, you know, a rolling loan, you know, gathers no loss, right? The Chinese did that well for years. And I'm I'm impressed that um you know that there's been so much leverage built up uh in and the optics are like oh the consumer is in better shape because of the GFC. Okay, great. But it the leverage is building up out of sight through pure regulatory arbitrage. Because we know bank lending hasn't really gotten in on the action until very recently in the last kind of 6 to 12 months. And it's mostly lending to non-depository financial institutions, you know, note-on-note financings. The ability of um private credit to fund, you know, a decade plus of private equity excess. And now the banks are starting to kind of be able to kick out their problems by a year or two or three, you know, stemming from postcoid defaults, commercial real estate office, what have you, is impressive. Um, but I think that 20267 will be the story of the backside of a credit cycle that a lot of people will look back in retrospect and say, "Yeah, see like we've been talking about, you know, private credit for years and, you know, like nobody even really knows the size of the number. Is it two trillion? Is it 4 trillion?" Um but people forget that the lack of transparency around that combined with the incredible growth over the last just couple of years since co in conjunction with the exposure therein to the real economy as opposed to mag 7 and what we see in trade every day that leads us to think the economy is fine. um the real economy as you know buddies like ours of uh you know like CPY have repeatedly flagged is is struggling and anything exposed to kind of the bottom 80% or what have you are the ones who service those debts um and you know these kind of leveraged loan you know floaters to junk companies and you knowmemes and middle market and you know companies that we've never heard of that are owned by private equity um it's going to be interesting to watch what a proper credit cycle looks like after so much excess has been built up out of sight in that area. >> So, you kind of ran ahead on me there, but let's talk about 2026. >> That's not my surprise, though. That's not like what I think. >> Oh, that's not you. Still Oh, that's No. Okay. >> That's just to set the table of like where the problems are kind of becoming most acute um right here. >> But yeah. >> Okay. So, let's let's you've set the table. Let's sit down for dinner. What surprises markets the most in 2026? >> I know people talk about risk the way I just did, you know, extremity of conditions, whether it's valuation, whether it's topheavy charts, what have you. Um, but I don't think people, you know, between their year- ahead price targets, which are always just fun to watch because they're just another element of crowding by the sell side and and kind of mostly a waste of time. But I don't know if anybody actually has like a a 40% peakto trough draw down in US equities on their bingo card at some point in the year. And >> and so you think that it will happen like you're not So I'm with you on the Mag Seven. So I I I completely buy that. I think we're going to get a 1/3 to a half haircut in those, you know, seven to 10 stocks. But you think that it drags down the entire market and that there's no chance of or littleer chance that there's going to be a rotation that keeps the indexes from really, you know, the bad end, you know, only being a 10% down or 15% down. >> Oh, that's um that's like the the million-dollar question. I'm open. >> It is. Yeah, it is the million-dollar question. I think that that is the toughest question cuz that it's it's difficult and I think we can all agree the Mag 7 are due for it. They're priced for perfection. It won't take much for that to occur. What does everything else do though is that that's the bigger question to me. >> I think it's kind of hard. So, an old buddy of mine used to say even pretty girls get hurt in the bus crash. Um, you know, for the S&P 493, there will always be opportunities. I'm not looking at a year where all 500 names are down a lot. But when I look at where the best opportunities are on the long side, um, materials, for example, is now down below 1% of the S&P 500. Like, how much of that can you really like elephant squeezing through a keyhole? How much can you really take out of Nvidia and put to work in the $200 billion of, you know, metals and mining and materials market cap in the S&P? You know, there's there's asymmetry in in corners of the market depending on how the year plays out. But at some point, I do think that we end up with a rupture where the riskoff might be less acute in space. that's, you know, kind of if it falls on your foot, it hurts sort of uh sort of sectors. >> Yeah. >> Um and that are more Trump adjacent to where the fire hose of the fiscal is pointed. >> But the market is just so topheavy that um I I'm I'm more bearish than you are on, you know, a 30 to 50% correction. I think in the draw um a lot of these names it'll it'll in the same way that people were surprised that we could see trillions of market cap created out of nowhere I think uh they'll also be surprised how quickly trillions of dollars of market cap can disappear and purely based on the waiting issue even if the rest of the market is only down 10 or 20% in the draw down. >> Yeah. Um, you know, the.com flush as well is a good analogy because there were periods where the Russell did well uh in 2001 and 2002, but eventually it gave up the ghost anyway, >> right? >> Um, so I would just be very careful. You know, Liberation Day is kind of a microcosm of what it could be, right? Where it didn't really matter if you were in metals and mining or energy or what have you. It all got tossed in a couple of weeks. And >> you know, you couldn't stand there and say, "I only lost 25% and the market's down 40." You know what I mean? Like >> Oh, completely agree. One of the things that worries me and we've discussed this at you know a lot off air you and I the dispersion trade and to me if that ends up being larger and and somehow starts to force if correlations start to increase enough that it forces them to go reach for VIX. It could just it could get ugly really quick. >> Oh, I got another uh little bit of stuffing to shove into the turducken that I forgot to mention. you know, like we look at uh I saw this data from Goldman a few days ago that um less than 10% of options traded have variant, you know, like are are more than one month out. >> Yeah. >> Just in terms of volume. We all know that over half of options every day are zero DTE or within one day of X-ray. Right. >> Right. um shades of like I mean think about the instability that that is like an inherently levered product with such a short amount of time ticking on the clock uh with retail use in the mix like there there's shades of portfolio insurance or or May you know May 6 2010 in there as well you know just because the market doesn't realize an insane you know uh open to close anymore more uh over the last few years I think it's lulled people like to ignore the kind of initial conditions around what zero DTE really means and people are kind of dancing on a plastic wedding floor and when that floor kind of gives way in the same way that it did uh during flash crash or during you know 1987 again like we're lulled into a complacency that because it hasn't happened in so long it couldn't possibly happen and we're ignoring the elephant in the room that is the presence of this zero DT nonsense and it it's like kindling, right? Where all it takes is a spark and then suddenly of course it's going to look obvious in retrospect. Oh, like we all called it like you know so like there's an element of that as well again like I don't know how else to describe it other than the turducken of market risks like topological risk market mechanics valuation you know concentration risks like just you you start running out of words right so >> well >> one thing you you know you never run out of words and turducken of market risk is a perfect example of the great stuff that we find in your substack why don't you tell people that want to know more about your theory, your calls, where they can reach out to you. >> Well, assuming I haven't switched, you know, turned everybody off with, you know, crapping all over, you know, the markets like just as we're two weeks away from Christmas. Like, come on. We all we all want the G.I. Joe with the kung fu grip. Let just just go with it, man. Get paid. Um why be a wet, you know, wet blanket? But uh yeah, if people are still curious to uh to read any anything uh that I've written, they can go to palomacro.substack.com. and I occasionally tweet a little bit as well uh under the handle uh Paulo Macro. >> Great. Thanks a lot for being here today, Paulo. >> Yeah, my pleasure. >> Okay, Robert, Kevin has been working really hard on the podcast this year and I think he's fully digressed from anything financial or educational. >> Absolutely. He's just he's just he's just graduated from hedge fund manager to entertainer. We should all aspire to that. >> Not funny. We know Santa spent a lot of hours getting the toys and gifts organized for the kids over the past few months. During this time, you've been spending a lot of time with Mrs. Claus. What's your strategy when Santa finally comes to visit your house? >> I only know one thing for certain. I won't have my straddle position on when it happens. >> It's been a difficult year for stock figures. In fact, less than half of the active managers have even managed to come close to the S&P 500 return. Do you hold hope that active managers will do better next year? Do you know any portfolio managers that are bucking the trend? >> I don't know. All my friends are underperforming your Reddit guys. I mean, I'm always reminded that I'm underperforming my mom most years and she just owns Apple. She has no idea what I do for a living. The market huddle has struggled and Kevin's analysis seems halfhearted and he almost seems to be dialing it in. Do you have any views on recent episodes? >> It's an abomination. >> Okay, Shrub, I've been researching different ways of getting new subscribers to the Market Huddle podcast and we're trying to find our brand. How would you describe us? Macro Monkeys talking chart segment is a fan favorite apparently. We're thinking about making this segment twice as long. Do you think that's a good idea? >> Oh god, I don't even know what that is, dude. >> And what do you think of Patrick's charts? >> I think they're useless. >> Do you not think Patrick's a good trader? >> Oh, absolutely. Look, this guy would be a market wizard. He should be named the next Treasury Secretary and actually no, put in charge of the SEC. >> Okay, Paulo. Over the years, you've watched a lot of Market Huddle on YouTube. How much joy did it bring to you? >> None. But I did I did uh enjoy watching some commercials. >> If you had to describe a market huddle episode, what would you say? >> Long slow bleed. >> Can you try again? >> I refuse to answer. Okay. So, let's pretend I'm Patrick. What do you think about my charts? >> That's the Mona Lisa and it looks bad, too. Your your drawing is not good. You should go back to art class. >> Surely you must have some charts you liked in the segment. Can you pick one of your favorites? >> They've all blurred together. It's a disaster. >> Okay, back to me now. I don't know about you, but sometimes I think Patrick's charts actually do make sense. That that's the contrarian angle on it at least. So there you go. >> Right. Okay. Vincent, can you relate to some of the trading ideas that Kevin has shared over the year on the market huddle? >> No, they're they're they're at the low they're low desile. >> Over the last year, whenever Kevin and Patrick agree on something, it's inevitably wrong. >> Do you think that this is a new development? >> Oh god, no. But I think it's been happening for God knows how long. Just it's not as it's more out in the open now than it ever has been. >> Chase, there is a lot of talk that the market huddle offers the most alpha out there in podcast land. Any comment? >> Uh that could not be further from the truth. They're just they're worthless. >> Okay, Marvin, what do you think of Kevin's trading acumen? >> He's a perfect reverse indicator. >> Okay. Patrick recently shared a chart of the Fibonacci retracements on the huddle. Some people were skeptical of the charts. What do you think about those comments? >> I don't even know what to say to that. That's just beautiful. >> The market huddle had a meetup in 20123 with Copy and some of the subscribers. Back then, Kevin and Copy were actually bullish. You were there. Can you share your experience? >> It was as bad and as crazy as you can possibly imagine. The stories do not exaggerate. >> Okay, Eric. So, Kevin and Patrick have claimed that they are the nicest guys in finance. Yeah, I've been working with Patrick for a couple of years now, and I can tell you he's not a good boss. To be honest, Kevin's a bit of a dick. >> No one's going to comment on that. >> I mean, at least some of their forecasts are pretty good. I mean, did you see Kevin's dollar trade or? >> No. Has it haven't his calls been terrible? >> Yeah. Well, some people like the market calls. I mean, some people even called him a market wizard. >> No, he's definitely not a market wizard. Market wizard of of entertainment and how to make a career out of this without sheer nonsense, but not not a market wizard. No. >> Okay, Vincent, we're dying to know, do you catch every Market Huddle episode? >> So, I try uh you know, I I I view it as smoking and drinking. I I I I do it, but I experience immediate shame after it. I do think though that they're probably going to consider continuing the show for at least another couple of years. >> You know, I I don't think societies can handle this. >> What do you think about Patrick's Crayons? >> I mean, I I got I got young kids, so they could have done this this drawing. So, my kids feel warm inside. >> Dario, you've been on the market huddle many times, but I have heard that the last time Kevin had to coach you to be on the show. Do you even like the market harder? >> Bollocks. >> Dario, I heard you say that in Canada you're even more popular than Kevin and Patrick. Why do you feel this way? >> Famous in Canada. >> Okay, so Patrick loves to show a chart of the US dollar as the most important chart in the world. Do you have a view on his obsession? >> It's a just a chart that is used for everything. >> I'm not sure I agree, but I do know that there's something else that you're famous for. What is that? the gold BMW. The only thing, this is the problem. You see, Perkins rules, all this stuff I've tried to become famous for, and that's the thing I'm famous for. Gold BMW from 20 years. >> Okay, Jacob Kevin has this theory that MMT is a good way to understand how the economy actually works. What do you think about his take? >> It's silly, but it's also pretty funny. We got to have some things to laugh at, right? >> Okay, next question. So, some folks seem to actually like The Market Huddle and even claim it's their favorite show. What do you say to them? >> I can't believe that we're having conversations about this. >> As you know, Patrick is pretty proud of his charts. And to be honest, he's even gone to the extent where he wants to frame them on his wall. Crazy, right? Do you think that that's a good idea? >> Uh, no. It's not. I mean, no. Uh, yeah. I mean, it would look great above a toilet somewhere. I'm sure there's a bathroom in which it would be really nice. >> Okay, Tony. When you get a macro tourist email, do you rush to go and read it? >> They're garbage and impossible. I throw most of them away. I don't even like mine. >> Sometimes Kevin seems a little bit touchy uh when Patrick ever mentions about the podcast that he cheats on him with. But the big question is, what do you think of the other podcast host? >> King. Absolute freaking king. >> Okay. So, what do you think of Kevin? >> Not a fan. I'm not a fan. If you had to sum up the Market Huddle experience, how would you characterize it? >> Comedy hour. >> All right, time for the after show. We have to go and we have to rate our beers and our wine. I'll start again. >> Although it's from Winnipeg and it is from my best buddy. It's a pretty crap beer >> and I'm sure to the whole show so he's not going to be offended by this at all. It it's like it's a beer. >> Transc Canada Brewing. Uh they did a good job. It's It's very Canadian. I don't know. I'm gonna give it a six. Amateur sport. >> Just There you go. I uh I have nothing good to say about this wine other than it gets me drunk. It's a it's it's a cheap wine that's been nicely uh made into hot wine and uh it's gonna get me a buzz. How about you? How's your How's your wine, Denny? I do you know what? I really like this wine. Again, I'm going to show it again because I I actually think it's worth anybody who can get a hold of it to get some. I think it's one of the best wines I've drank and it's good for the planet. So, you know, >> and if you're going to give it a plug, you got to at least say the name again. >> Uh the onion. It's like the what Portuguese word. >> The onion. >> The onion. It's onion. Yeah. There we go. >> Yeah. Yeah, it's it's called onion in in Portuguese. >> Well, they got to work on their mark. >> That's the easy That's the easiest way to remember it to be honest. If everyone can just Google translate that in there. >> Exactly. >> All right. So, I can't believe I can't believe it's the end of the year. Like, this is this is it. Like, what the next huddle is going to be a 2026 story. >> Yeah. And uh before we get on to that though, let's talk about Nazair or how do you say it? >> Nazare. >> Did you know what? It was way hyped. Uh like so they basically said the biggest swell in a decade. So everyone's was went there looking thinking they're going to get the 100footers. >> Yeah. >> Um and and see the record stuff. So it was it was worse than going to Disneyland. Like uh the the completely not ready for this amount of of people to show up. Uh and there's like shouldertosh shoulder on this thing. Can't find a bathroom. It was crazy. but some cool waves, but they were much more in like the 30 40 foot, which is still big and very entertaining. Those surfers were still like crushing some some great uh great waves, but they were nowhere near like that's the largest wave in the world was like a 110 footer that a guy surfed there. Like so it was nowhere near the record waves. >> Yeah. >> But uh still really entertaining. >> So those go and they build like all the way across the Atlantic. What? No. >> Like they don't >> Nazare is is um is unique because it has a canyon underneath. >> Yes. >> And so what happens is is the swell doubles on itself. So it comes in from the Atlantic and then the the canyon basically. >> There's only one little spot that that that this wave can come in because when the tide is right and the >> Oh, okay. Okay. So, it's a >> perfect a swell like it just perfectly lifts the water into a thing that in this one little area has these crazy ass waves. >> It's like God said I I will make a great place to surf and created >> Absolutely. >> So, Dan, you didn't go buddy? >> No, he was a millennial. >> No, unfortunately. Yeah, I I watched it on YouTube. You know, I didn't have to deal with the crowds, any social anxiety like all, you know, millennials have this problem. So, I just stayed at home and I just watched it live. >> Oh god, that's hilarious. All right, you know, we got to just say a big thank you to all of our wonderful listeners and guests throughout the year. Um, it's a real privilege to be doing this show and uh I always say that I would interview these pe, you know, the wonderful guests that we have, even if nobody was listening, but it's definitely better with uh all the great guests and we really do appreciate uh everyone's support throughout the year. Uh it it really means a lot to us and and Patrick and I and Danny are appreciative each and every one of you. >> You know what it is? Uh and what I love doing this show with with not only you guys but bringing these guests on is that uh we've created like a market huddle community and even our listeners uh our loyal ones feel that way. And it's it's an opportunity where we get together uh you know once every couple weeks and and just uh talk real about the markets and and try to understand things. And uh it's it's just uh such a privilege to be a part of this show and I thank all the listeners and all our guests for being a part of it. It's it's been awesome so far and I'm looking forward to many years to come. But um and I just like to say, you know, um people always mistake uh the relationship relationship I have with Patrick and assume that we've been good friends for like decades. People are like, "Oh, no, you must have known him years and years ago." Yeah. >> No, I've been just lucky enough to know Patrick for what has it been like eight years >> something like that 2016 17 we met and it's been just a wonderful wonderful you know I couldn't ask for a better podcast partner and I I do appreciate it and in terms of Danny he's been an absolutely terrific addition to the show I absolutely love >> wears all the the props like look at them like uh >> well and the only thing that I I kind of get upset about is you know such a handsome guy with the perfect lighting makes us look like a bunch of >> old parts. >> Yeah, nice. Danny, you've been a great addition. So, um why don't we just kind of say goodbye to everyone and let everyone go have a wonderful >> Happy New Year everyone. Merry Christmas. Uh and or you know, like it's it's a happy holidays. It's been it's uh been a great run and uh and looking forward to seeing you all on the other side. >> Yeah, happy uh you know, happy holidays. All the best to you and your families in 2026.
XMAS SPECIAL PT.2
Summary
Transcript
All right, friend of the show, Chase Taylor, founder of Pine Cone Macro Research, joins us again. Chase, great to see you, buddy. >> Yeah, long time no see. >> It has been It's You know what? It was such a a highly regarded episode that we had to get you back right away. Um, and and I'm not just I'm not just saying that. Actually, I got tons of uh compliments about what uh how many how much people enjoyed that. So, I do thank you for your time. And let's talk a bit about 2025. What surprised you over the past year um in terms of how markets have behaved that you weren't really expecting? >> Yeah. So, the funny thing is I I expected the rest of the world to outperform the US, but there there's like some stuff under the hood there that still like really caught me by surprise. Uh, I mean like the S&P is not even up 20% and we had Peru, Colombia, South Africa, you can do a whole Africa ETF, all that stuff's up over 60%. >> Wow. >> Right. Like I mean, South Korea is up like 90%. Like there's a bunch of stuff. If you just look at what what all is above 50%, it's like a third of the country ATFs out there. And then here, you know, people think the US is on fire and it's up like 17 or whatever. So there are countries that did not surprise me but then like I mean who who was shilling you know South African you know equities coming into the year but but if you did you you know 3xed the the S&P so that that that surprised me some some of those individual countries >> um I I didn't realize that the African countries were up that much. That is um a shock. Is that something that you think can continue? Yes, I think a lot of it can I mean I think the rest of the world's going to is going to outperform the US for for the foreseeable future. Um it's it's just the trick of trying to figure out where and I think I think when you look at Africa you know especially South Africa like platinum group medals gold all this stuff has had quite the quite the year. So that obviously was a significant boost. But um at the same time, like our our mutual buddy Rert, he has like the e-commerce business in Africa, like that thing's been great. Like the the whole continent's done well. And to to not spiral too far off into like macro land, but one like interesting thing here is as the US kind of stiff arms some Chinese imports, they're kind of getting flooded into places like Africa, which sounds bad. In some ways it is, but to get good very very cheap products, you know, it probably isn't at least short-term a bad thing for the continent. >> Uh, what else surprised you in 2025? Anything else? >> That that's the biggest one. But I mean like another example of something I liked, but but like wow was silver. Like it the the amount of silver that goes to solar like solar is worth 20% of the demand for silver now. And that made me really bullish coming into the year because I was like, man, if if you get any investment demand in silver on top of this really strong industrial demand and we know you're in a deficit, like man, that could be that could be pretty violent move higher. But if you told me it's going to be 110% move, you know, just in 2025, I would have, you know, I would I would have been happy to uh to make a bet on that and lose it. So, >> not only that, it seems like it feels like it happened all in the last month. >> It it really does. the chart is is very much straight up. >> Um uh do you think it can continue? >> So that one's tough on fundamental basis. I think yes, but anytime I see a chart that has peaked above the clouds, it just it bothers me from, you know, at least short term. I I it's to me both gold and silver probably have to do some digestion with RSIs like up in the 80s or whatever. like um but you know solar's not going anywhere and that that's just going to like keep eating into uh the demand side that much more that's that is very structurally bullish and it's not like people are tripping over themselves to get more out of the ground at the moment at least. So so yeah, it probably can keep going. >> I like that peaked above the clouds. All right, so those were the things that surprised you in 2025. Looking forward 2026, what do you think the market will be surprised by the most? Yeah. So, the market should be surprised by this this year, but I don't think the market has even paid attention. But this is something where to answer the can it keep going question is a is a big time yes for me. And that is uh particularly solar which I just talked about with silver like solar is up like 80% this year, the solar ETF. And I I think that will continue. Um, and you can even look at like the clean ETF. Like we we talked about this, you know, recently, but these battery metals and and sort of the electric stack metals, the stuff that makes up sort of the the the goods of the 21st century, as it looks like now, at least, robots, drones, electric vehicles, you name it. Um, I I think those metals are mispriced. And I think if you look at something like solar, it's mispriced because everyone thinks, oh, well, the US is anti-solar because of the election we had. But then you look at the last quarter and there was significant new solar put onto the grid in the US. I think that's going to continue. So electricity prices keep climbing. I think to to borrow from our buddy Marco Papich like the the constraintbased framework. You know even even President Trump would realize like his constraint on electricity is more important than his preference to have you know fossil fuel energy. And I think the US could even pivot within the next three years to get more serious on on something like solar. So you have solar up 80% with policy headwinds. Like what would it do if it had policy tailwinds is kind of the the point here. >> Got it. All right. And in terms of electricity, you mentioned that. Do you think that that's going to get a lot worse? Like do you think that this is going to be uh something that politicians start debating and that ends up being on the front page of papers like how much electricity is costing? >> Yes, I do. So, I think unless you get some weird, you know, price controls or, you know, building a fence around AI and be like, you guys figure it out for yourself, but you're not going to pull from, you know, the local neighborhoods anymore. That kind of stuff. I I think the answer is yes. And it looks to me like policy makers are all in on AI. Obviously all these uh you know policy papers and executive orders make it turn are turning it into a uh you know a total like existential thing that we have to win the AI war. So I my assumption there is they're going to get all the power they want and if that makes power more expensive for your grandma like then she's going to have to deal with it kind of thing. So yes, I I think it becomes a a major political issue and as it does that people are going to look around and like what else could we do and then you know some sheepish guy in the back of the room is going to like raise his hand and be like uh how about we we actually get behind solar and I think it I think eventually someone's going to be like all right let's do it you know what I mean and not just solar like there are great opportunities and stuff like geothermal that that not enough people talk about but uh I as >> contrarian play in this environment >> and To me, it shouldn't be. It's up 80% this year and and I I feel like nobody cares. But, uh, but it is still an aatrillion thing. It does have real policy headwinds. I just think that they're going to go away. Um, to me, it is always amazing that uh, you know, like in terms of us when we started talking about EVs and uh, you know, the government started telling all these automakers that we had to build build all these EVs, it had to be a certain percentage of the fleet. I was like, are we not like stopping and thinking about like how we're going to power these EVs? Because I know like here in Ontario, Canada, we had points where they were telling us to turn off our air conditioning in the summer. And I'm like, okay, so you're telling us to turn off the air conditioning because there's not enough electricity and then you're going and encouraging everyone to buy an EV. It makes no sense. Uh and you know, contrast that to China that went about it completely the other way and built the infrastructure first so that they could then put the EVs on it. Um it it it kind of feels little batchy crazy to me. Speaking of China, the capacity China added to its grid last year is equivalent to onethird of the US grid. Like just just bonkers how much electricity they're putting on their on their grid. And to to your point, we I lived in so SoCal a few years ago, and this was when electricity was still a bigger bigger problem there. Um, they've done a reasonable job of making it a little better since I left, but at at one point they've sent out one of those notices like the whole turn off your AC thing, but it explicitly said in that unplug your EV and like well that's funny from California who basically told me I better get an EV and then said please unplug it. Like no one thought this stuff through. >> There we go. All right. So Chase, thank you very much for joining us. The founder of Pine Cone Macro Research. Why don't you tell people where they can find out more about you? uh your your letters uh your stuff that you do with Zach, your podcast, you know, plug the whole spiel. >> Yeah. So, more about me and and my firm uh pinecom macro.com and then I'm the head of research at Bullwark Capital. Uh we're an RAIA based out near Seattle. Um and you can find out everything you want to about that at Bullwork Capitalmanagement.com and that that management part's MGMT and bullwark capitalmanagement.com. >> Thanks again, Chase. >> You bet. >> Okay, folks. It's that time. Uh, friend of the show and my good buddy Rupert Mitchell, author of Blind Scroll Macro, joins us. Rupert, thanks for making time for us. >> Hey Kev, good evening. >> All right, let's get right to it. 2025 was quite a year. What surprised you the most? >> This one, this one was really easy. Um, I did not expect African equities to outperform the S&P by 50%. Listen, are you like one second, I'm having trouble. Are you patting yourself on the back there? Like you're reaching over >> because obviously it was only a 1% position. >> Always the way it is. It was a great call. >> I got to show you a couple of slides. Look at this. Um >> the um where is it? Here. >> It's going to flash up in a second, isn't it? >> Yeah. Here we go. >> Okay. So actually this is the one. So look this is AFK the African ETF right in brown versus the emerging markets MSEI emerging markets EM and the MCI EHA which is IEFA and the and the spy. I mean I was calling for international outperformance this year but Africa really completely took took my socks off. >> So what happened why is that like why the huge run? Well, there's a big there's a big weight in in South Africa and so the big rally in in in um platinum group metals um is helpful, but you know, at the end of the day, >> it's not as though these these these markets have got cheap again. Can you see the the purple and blue ones here now? >> So, this is just the S&P um forward PE at 23.4 times next 12 months versus its 19 a half 10year average. Africa is not even at its mean yet after a 70% run. So, so, so my my my surprise for next year is is that is that it's going to do the same. Now, this this this will make you laugh. This will make you laugh. One of the reasons that confirm this. So, our mutual buddy Chase Taylor tweeted John Arnold yesterday >> and this is Can you see it there? Can you get a sense of how little electricity people use in subsahara and Africa? Imagine each person turning on a 50 W light bulb. That alone would instantly double consumption, >> right? >> Seriously, >> just wow. And then literally the next thing in my timeline was this um terrible maps. I love those guys. And a picture of Africa with the word Asia underneath. It's absolutely brilliant, right? You cannot make that up. Nobody Nobody is talking about this this, you know, frontier em type trade. I I've been I've been I've been pitching. It's not ready to pitch yet, but the um I did a did a really interesting interview the other day on Usbekistan >> and they are listing a privatization fund managed by Templeton on the London Stock Exchange in Q1 next year. I think that's going to be a really interesting trade to watch. >> Wow, you've turned into quite the emerging market or true emerging market specialist. >> I've always been an EM guy really. >> Have you? >> Yeah. No, I I joined Bearings in 94 because it was an EM investment bank, right? >> Wait, this is Bearings, the England's oldest >> one that went six months later. Yeah, that one. >> Like it's the oldest English bank in, you know, history. And it's in the EM bank. >> Yeah, I know. It financed the first original emerging market. You know, it financed the Louisiana purchase for the Americans. >> I did not know that. >> That's true. Like, >> yeah. Yeah, totally legit. I'll send you I'll send you I'll I'll send you I'll send you I'll send you the snippet from the from the history books. Yeah. Um can't remember which one it was. Um Henry or Oliver Bearing. I can't remember. Alexander Bearing. Yeah. He financed the Louisiana Purchase. $11 million. >> $11 million. >> That was probably a lot back then. >> Yeah. But you know that Louisiana purchase is is not just Louis what is modern day Louisiana. It is literally that entire panhandle that goes all the way up to your southern border. >> Yeah. No, I know. It was >> fast. >> Yeah. All right. I'm not gonna My surprise my surprise for next year is that EM's going to do the same, >> right? >> Uh I'm not going to let you off that easy, though. What else in 2025 surprised you? I I I I you know the violence of the international rotation in the first half of the year right um I am surprised that US risk assets bounced so aggressively out of liberation week it certainly it certainly caught me flat fortunately all happened so violently I didn't sell any sell anything at the lows um but you know I'd have loved to have taken in um taken in my credit hedge that week. >> Yeah. >> But know of course I thought that high yield spreads were going to be blowing out to 700. Yeah. And that didn't happen. Um the I mean I I'm just amazed and I know this is a favorite one of yours. I'm just amazed that there hasn't been a more serious implosion of the dispersion trade this year. >> Yeah. >> Yeah. I I I just I mean I was looking at I I I'm actually capitulating on my spy straddle strategy this week because I'm just going to come back to it next year. It's just been a disaster since May. >> Well, don't you think there's a certain amount of that that's got to be seasonal with these auto callables and this >> Yeah, >> they're all particularly the retail back product is all written on these these these these these annual cycles I'm sure. >> Yeah. And cuz that's what I'm thinking that there's actually something going on. And I I've seen a couple of things recently that have just kind of blown my mind about the size of this market and what's going on there. And you realize that they're selling volatility to these dealers in single stock names. And it really makes you understand why this dispersion trade is is what it is because you know the dealers are getting long all this single stock names uh volatility from these these auto callables and then on the other side you got like JP Morgan option Wales things people like that buying index protection and it's just like it's just a great trade >> you know while it continues to work. But here's a question I have for you in terms of that trade because I remember learning from Chem Carson and un for the first time understanding how the position creates the volatility. Meaning that >> once he explained to me that no, you know what, if everyone is long the strike, if all the dealers are long the strike, then that actually causes um a delta hedging strategy that reduces volatility. So, ironically, if a big client sells the dealers a whole bunch of, you know, options around that strike, it can cause the the volatility around that strike to be muted. At the same time, if there's a situation where the dealers are all short, it can cause the the um the volatility to be um expanded and to be more violent. And so, a little part of me wonders, and I haven't figured this out yet, but is the same thing happening with dispersion? Like, are we having the most uncorrelated market in history because of those positions? I mean has to be an input factor, hasn't it? That's what I got. >> This is this is just all energy that's you know risk risk is only ever transferred. Yes. Right. So that potential energy has got to go somewhere else in the market. Of course that happens. That's why we get these >> 10% moves on earnings, right? >> Yeah. >> It's got it's got to find a release valve somehow. >> I I though think that when this comes unglued, it's going to be bigger than people expect. And I and I'm with you. And I don't know how to time it. And every time I >> I only know one thing for I only know one thing for certain, Kev. I won't have my straddle position on when it happens. >> Me neither. I'll probably be long by then. Finally convinced that the stock market's hit higher. Okay. 2026. Uh, you told us EM's gonna outperform. I want to hold you to more than that, buddy. You got to give me another one. What else does the market surprised about? Um, I think that the energy stocks are telling us that energy prices could be higher next year. >> Oh, you think >> you think the stocks are giving you that signal like that? Like you're that >> Listen, I'm I I believe that I you know I I I increasingly believe that they're always signs of some other market moving, right? And if energy stocks are moving without the commodity, I think they're trying to tell us something. >> Yeah, I hear you. And one more. Give me one more. >> I will almost certainly lose money in natural gas in February and March. >> Okay. Rupert Mitchell, author of the Blind Squirrel Macro. Where can they find you? You got a podcast now. You got a million things going on. Give us the whole spiel. >> Well, easy onestop shop. Blindscirremacro.com. and my new show, which you have kindly just been on, Benny and the Squirrel, um, as 700 p.m. Eastern live on Sundays and Thursdays. >> And Thursday, >> yeah, we do it twice a week. We twice a week. The Thursday is a guest show and then Sunday nights just me and Benny shooting the breeze. >> That's awesome. Well, it's a real pleasure being on and it's a real pleasure having you on, Rupert. Thank you very much, sir. >> Thanks, Kev. All right, it's our great pleasure to welcome back to the show Marvin Bar from Thematic Markets and one of the greatest names on Substack. Seriously, Marvin, uh, just a terrific thing and I just it's stuck in my mind, Marvin. I I still laugh about that name. Thanks for joining us this morning. >> Well, thank you and and thank you for the plug and I'm glad I make people laugh. >> All right. Well, one of the things that uh might have made a lot of people laugh is what's happened in 2025. There's been a lot of twists and turns in the markets. what surprised you the most? >> Uh, so, you know, I think the thing that surprised me the most is frankly the market's reaction to Liberation Day. Um, you know, I I I think we might have talked about this before, but you know, I've gotten I guess some of the policies very right well ahead of other people and then been completely wrong on what happened with markets. Um, so I had that experience with Donald Trump before in 2016. I predicted he was going to win and I thought that people would see what I saw for Liberation Day and you'd get that reaction then. Instead, everybody said, "Hey, it's a Republican. He's going to cut taxes and, you know, assets to the moon." This time I was like, "Surely you all know who this guy is by now. There's there's no like obviously you've had eight years of him and of course he's going to hike tariffs to the moon. He's been telling you this. >> Yeah. >> And and people had this completely opposite reaction to that. And that was one of the big surprises to me. I guess it shouldn't have been, but that shocked me. I And I I found the same thing. I was kind of confused about, you know, when they were surprised by the tariffs. I'm like, he's been telling you this forever. All you had to do was listen to what he was saying. >> He called himself tariff man. >> He gave an interview to Bloomberg Business Week where he talked about it. He talked about the beauty of it. Now, having said that, he in that same article, he talked about the manipulators of the currency and how they're they're stealing things by keeping their the value of their currency too low. And one of the things that surprised me the most is that he hasn't gone after the currencies that it's been purely tariffs. Has have you been surprised that the dollar isn't more of an issue for him? >> Um, a little bit, but I think a lot of it comes down to probably Scott Bessant. Um, I mean, I do think that, uh, um, Bessant seems to have more capacity to tell the president he doesn't things he doesn't want to hear than anyone else. Um, and, you know, has has made it clear to him that uh, hey, you're not going to control this thing. This doesn't work this way. There's a, you know, $6 trillion dollar trades in this market every day. It's just not going to work. So let's try and work on these other things over here that we can get done. And so I I suspect that's a large part of the issue. Um uh but then you know, hey, how about the other surprise that it was a little bit less surprising to me given the rest of the liberation day reaction. But remember, everybody's assumption was that tariffs meant the dollar had to get stronger to provide an offsetting real >> um uh relative price and that didn't happen. So you you know I think everybody had a bit of a surprise in there, not just the uh Trump administration, but markets as well. >> Oh, for sure. And I I joked when he was elected, I said, "He's going to make macro great again, Trump." Uh and he's definitely done that. Exactly. >> It's been a terrific market for uh traders and especially from you know uh macro guys like for the longest time this stuff was boring and if you think about kind of postcoid here we've had a huge interest rate cycle we now had Trump with all these you know changing of the guard in terms of the underlying fundamental systems like we haven't had tariffs since what you know going this way since you know 100 or 80 years. Well, certainly not on on this scale, right? I mean, people do forget that like, you know, Reagan actually had pretty extensive tariffs. He had voluntary export restraints. You know, it wasn't on this scale. This is another we haven't had anything like this to exactly your point since, you know, effectively smooth Holly was the last sort of round of those things and and you know, that was by the way relatively small compared to what came before it. But right >> um yes this is this is this is something pretty new. Um I do think that it's interesting you know you say macro make macro great again. Um one of the problems is is that of course everybody forgot how to do macro. So a lot of people who claim that they're macro were like you know that that there are this specific rule books central banks do this and we do and you know um currencies are supposed to do this. and they really stop thinking about actual macro fundamentals. Um, and what drives all those processes that they have found correlations for. And so they were correlation traders, not macro traders. And I think that's been a big part of the problem. >> That is a great point. All right, let's look forward now, uh, put on our thinking hats and think about 2026. What do you think the markets will be most surprised about in the coming year? So, I think um when we were on earlier, I I I talked about this, you know, sort of low conviction view I've I've had that um you know, Donald Trump had specific reasons to talk down the Fed and talk down interest rates um in this last year. Um but that that he would never be held by those things and that when push came to shove, he would ultimately appoint a hawk. Um I if anything I think I've actually increased so I've both gained and lost confidence in that view. I've definitely gained confidence in the view they are going to go with someone who's going to rootto branch reform the entire Fed. >> Okay. >> Completely slim down its balance sheet which nobody seems to be thinking about that like this is actually the bigger thing they're going to do. they're going to take its balance sheet way down and that's going to require incredible regulatory reform. At the same time, in terms of the interest rate policy, I think that whomever they do will ultimately end up doing the right thing, which in my view means interest rates are going to have to be a lot higher. But I do worry, this is where I have lost confidence a bit. I do worry that all the people that they're considering do think that that balance sheet shrinking um is going to have such a negative effect that they're going to have to have lower front end, you know, um Fed funds rate to accomplish that. I think that's totally wrong and I think they'll find that out as inflation goes up. But I do think there is a worry about that. But I think the broader picture is people are going to be surprised that this administration is actually gonna choose someone who's going to be very hawkish. >> Do you think the market's got it wrong with Scott Beth? Sorry, with um Kevin Hasset being the leading contender right now. >> Um well, I'm I'm glad they've moved that way. I I've been saying that all along. I said it was either going to be Bessid or or or WH. Um and um you know when markets were at their peak with Hassid I was saying nope it's going to be Bessent or excuse me it's going to be uh War Bessant has dropped out for me. Um I would have thought that he was going to choose himself >> and Cheney move. >> Yeah exactly. I think we talked about it last time. Um, the reason why I've I've sort of pulled back on that one is I've learned from a variety of different sources that Scott Besson is really deeply involved in national security policies. >> Ah, >> perhaps maybe more so than Pete Hex. And that means he ain't going anywhere. One, because the president ain't going to let him. And two, because he's clearly he sees other things he's doing that are much bigger than anything at the the the Fed, which is where normally you think a macro guy would want to go. So I I think it's going to be worse. >> Oh, you think it's worse. So you think has wrong like that the market's over? >> Yeah. No, abs. Absolutely. I think it's definitely going to be worsh. >> And that would be >> I'm I'm I'm 99% sure it's not going to be hassle. >> Really? Why do you feel so strongly about >> Hass? >> Yeah. No, I I mean, look, whatever you want to say about Donald Trump, you can say that, you know, he's got crazy ideas, whatever, but he has certain personality types he likes, >> right? And he also is all about, you know, businessman of action, go do things, right? You know, Scott Hasset, no complaint amongst him, but what has he ever accomplished? like Kevin before. He's never done anything. >> Right. >> Right. >> And if you are really intent on completely reforming the Fed, you're going to appoint a leader, somebody who actually has a track record of getting things done. Now, I'm personally not convinced that's Kevin Walsh, but he has that persona and the president seems to look at him that way. >> Okay. >> I don't think he looks at Kevin Hasset that way. Obviously, the ideal person would actually be Besset. This guy is like >> all over the place, >> right? He's unstoppable. But for the reasons I said before, I don't think that's going to be the case. >> What do you think is the initial reaction if Kevin Worsh was appointed? Look, let's just say, you know, come January 1st, he says Kevin Worsh is the guy I'm putting him in. There's there's a fair amount of enthusiasm for Hasset and and the assumption that we're going to get lower rates. Worsh might be considered more of a traditionalist and and would the market sell off you think initially? Um I think that um the back end uh um sells off on this. Um now ironically it should be the opposite, >> right? Yeah. the um people aren't so Worsh has excuse me moderated his um interest rate stance a bit that seems more and this is why I said I have this kind of concern that these guys actually think that because they're slimming down the balance sheet and selling off all these treasuries they can still cut rates and they're going to be surprised that that doesn't work. Um but so I think because of that markets are going to not think immediately, oh well, we're actually going to get higher rates next year, right? That's they're still going to be questioning that. But they are going to know that Kevin Hasset has been saying since he left the Fed way back when. Do you remember that Wall Street Journal? You know, his his like mic drop moment as he leaves the Fed. Hey, and my colleagues suck. It was just like the guy has been on this train longer than anyone else. >> Your first thought is he's going to sell treasuries. I better start selling now. >> Right. Got it. All right, Marvin. For uh those who want to learn more about you and what your these outside the box takes that you have, where do they go? >> Uh so my primary research vehicle is Thematic Markets. Um, I publish it through Substack. Um, but you can also find it on my website, um, thematicmarkets.com. But, um, thematic markets.substack.com is the main thing. That's my paid research. But if you just want to get a flavor of it, I also have a free Substack that I sort of post all my um, shall we say unressearched, unconventional ideas. Um, and hence the title that you love. Seriously, Marvin. Uh, seriously Marvin.substack.gov. job. >> Thank you very much. >> Thank you. >> All right. It's my great pleasure to welcome to the show L Shrub, author of Shrubstack, one of my favorite people, one of the most popular shrubs that mean Substacks out there. L Shrub, thanks for joining us. >> Thank you so much for having me, Kevin. It's always a pleasure being on the huddle. Uh so you have just nailed a lot of the themes that we saw in 2025. Um in terms of how the market's behaving, the golden age of grift I think that's going to be imprinted on all of our psyches for the rest of our lives. Yet there must have been elements of 2025 that surprised you. What were they? >> Yeah. So I think um Liberation Day surprised me in the sense that I didn't expect them to come out so hard and then the the subsequent taco that you know they let Main Street win for about six days. That was like even more surprising. It's like you went through all this hassle. You just pissed off everyone, all your allies and all you gave Main Street was six days. Like literally I mean you know South Park sometimes uh just you know speaks the truth as does parody in general you know that's why I remain a parody publication because I mean it was such a joke that I couldn't come up with it >> the truth is stranger than fiction. Do you think that there's just zero plan and they're just throwing stuff against the wall like you know because you've highlighted the fact that this was all for not. Why bother doing all this? Like when you're sitting there analyzing, what what are your thoughts? >> Um I actually think that you know how the Chinese have like a hundred-year plans. >> Yeah. >> I I I think we're like the complete opposite in the West and we're just doing like with you know 100 minute uh Tik Tok videos. So, so I actually think there was no plan and they're just trying to see what sticks and and you know like you know they see the market reaction, they see the bond market reaction and you know this is the sad part about what we go through versus something that requires serious consideration. Although I will give them the benefit because I you know I I want to just give them the benefit that what they're doing on the strate on the critical minerals for example is very serious very thoughtful like there is a really clear plan and that's like really impressive for the world to emulate. Um but then on the liberation day I think it was kind of just like just let's just throw it there and see what sticks kind of. Do you do you think that on the um critical minerals that there's someone else driving the boat that he's like listening to that is that um is that Scott Bessant? Is that Rubio? Like who? >> I have a feeling. Yeah, I have a feeling like Besson is like on top of it. And I think it was like a perfect coordination with the department of war because you know they telling them this is what we need and then industry tells them this is what we need. So this was like a very good coordinated action that is going to make a big difference uh for the next decade by the way and for manufacturing and industrialization. Uh all right. So what other parts of the market in 2025 surprised you? Like was the fact that the bond market was so well behaved? How do you feel about that? US dollar anything like you look past else you know you stood up and say I wouldn't have picked I wouldn't have thought that would have happened. >> Um it's kind of weird because I got bearish the dollar early on. So, I got bearish the dollar from the moment that Trump met with Zalinski and I created this fictional character called Klaus, which was like your European fund manager that's going to basically just, you know, get the hell out of US assets. Um, so I was bearish the dollar. Um, I was so you know, we entered the year really bullish Brazil, bullish platinum, bearish dollar. You know, Brazil is up 50%, platinum's up 80, whatever. Miners are doing commodities are doing very well. But I got to tell you the one surprising thing was um I I was expecting an exodus from the dollar and US assets and all we've seen is actually an exodus from US dollar but we didn't really see an exodus from US assets right so again going back to our fictional character this Klaus which Klaus is like a tanker ship you know just sitting on a 100 billion of aum and he's wondering you know where do I allocate I think the think. So, so I think what Claus did, he sees Zalinski getting uh attacked by Trump in the February meeting and he's like, "Oh geez, I got to I got to get out of the US. I'm going to hedge my currency first. So, I'm going to sell my dollars, hedge my euro at, you know, 103 where it was. Now it's 117." But then when he sat down and he was like, "Okay, I need to allocate hundred billion dollars out of the US." He was like, "Oh where do I put that money?" like literally he couldn't find anywhere to put the money. So, so I think that's why we haven't seen the exodus out of the US. Uh it's just as simple as that. Like people just had no other choice and that's why they keep allocating into nonsense like private credit and building data centers in the middle of nowhere. >> Right. >> So that was my biggest surprise. >> All right. So 2026, what do you think the markets will be surprised by in the coming year? I think the biggest surprise so um you know the last couple of weeks we shifted our portfolio to what I call boomerification. So boomerification is a process where you you know you switch from like growth ponzies and all that stuff which work really well to boomer stocks but which I define as like just cheap stocks including commodities and emerging markets and everything. So I think what the market is going to be surprised most in 26 is that the AI trade is done. Uh which means NASDAQ is done. At best case it can ek out like a very small return or actually I mean it can even just crash out because you're going to have like Google fighting against Nvidia for dominance or something or chat GBT 5.2 two versus, you know, Gemini 3 or whatever. You know, once people figure out it's a zero sum game in a in a respect, you know, this thing can crash or it can just stay flat where it is. But I think the biggest surprise will be you're going to have some subsectors that are going to fly u and that AI trade is going to stay flat to down. So that great rotation where you know you and I joke about this Nvidia must die thing. I think people underestimate like some really simple facts you know like Nvidia trades $50 billion a day. The Russell trades like six. So so you basic and let's not even get about Europe by the way. So like Europe literally it trades so poorly like there's literally no capital invested in Europe right now. Um, so things trade so badly outside of the Mac 7, like you sit down a round table with, you know, with with big funds, all they're going to talk about is Nvidia, Google. They're not going to talk about anything else. So what's the most consensus trade amongst those guys? K-shaped economy. So the K-shaped economy is like getting everyone to invest on the top part of the K, which is like, you know, the max 7, and they just forget about the bottom K, the bottom part of the K. And I think the greatest trade of 26 will be the, you know, the the uno reverse card of that K. And uh there's so many, you know, there's so many beaten up names. >> Um that is going to be a great year. I'm I'm like super bullish. And by the way, and just to finish up on how how asleep people are, like I said, Brazil is up 50 on the year. Platinum is up a lot. Uh emerging markets are up a lot. the IBEX is up like 60 in a dollar basis or something like crazy numbers. No one talks about these things. All they talk about is NASDAQ is up 20. It's like yeah great guys but you know we kind of outperformed you know being like I don't have a single AI stock and I've I've outperformed the NASDAQ like by multiples and like but no one talks about these things like every even a boomer portfolio in Europe would have outperformed the the NASDAQ. No one talks about it. >> Yeah. >> And I think 26 is going to be the same thing. People are going to come in, you know, long Max 7 and then by the end of it, they're going to be like, "Ah, crap. I'm I'm underperforming just about every boomer out there." Well, and you know, you call them boo the boomer portfolio. I'm not sure the boomers own those stocks anymore. I kind of feel like that they've been sucked in. So, it's kind of like the the or the just few remaining value boomers. One of the things that I just I I'm completely in your camp and I think that people underestimate is how small those other markets are and you touched upon that. If we even get a little bit of rotation like if if the guys that are sitting there with their big mag seven wins over the last five years say I'm going to take a quarter of my portfolio and move it into these other stocks. These other indexes and these other areas and subsectors are so small. It's just going to move it huge. We're going to see like gold miners performance in all sorts of different other areas. >> Yeah. I think what um Hartnett from Bank of America he said he said something really cool which I absolutely agree with. He said at some point every commodities chart is going to look like the gold chart. >> Yeah. >> Because you know you just need some of you know forget about getting some of that Nvidia flow into the other stuff. Imagine getting some of the gold flow into the other commodities. That's another one. >> You know, gold is a big liquid market. So, >> I'm I'm with you 100%. Like, I think people really underestimate the liquidity. And again, going back to the Claus example, >> you know, they all got really cozy just being in the liquid big stocks that they're going to just I think they're missing out already. Like I said, like the the it's a surprising aspect to me because they're not even talking about the 25 performance of these assets. Like, they're not even talking about them. So coming 26, they're going to be like again in denial. So they'll probably buy everything in 27 and then we crash. >> All right. So great stuff. The shrub, why don't you tell people where they can find more about your great writing and and the stock picks that you have for 2026. >> Yeah, I'm on www.shrubstack.com. >> Thank you very much. >> It's our great pleasure to welcome to the show Vincent Daniel, partner of Porter Collins at Seawolf Capital. Vincent, thanks for making time for us. >> Thanks for having us. This is uh we feel like we've made it if we're on your podcast. So, >> I don't think so. I feel like our podcast has made it if you come on it. That's what I feel like. All right. Uh 2025, what a year it's been. What surprised you the most? I would think the thing that surprised me the most is the fact that so much crap was thrown at the market. The one I'm thinking of the biggest one is the obvious liberation day, right? Where where we threw this new concept which I it's hard for me to make it positive which is called tariffs, right? Yep. And not only that, he he he threw it in such a way that was just going to upset the apple cart eventually of the global economic system and markets just dusted it off, right? Just completely dusted it off and and just said, "Yeah, fine." And and it just goes to show it sort of confirmed our suspicion that we have of markets is that at the end of the day and you know to steal you know one of Luke Gman's term terms right is that the S&P and markets are now a matter of national security right and and and I remember when he said that and took me a while to really like hone in but now it's part of ingrained in in in sort of my thought process which is they can't let it go down >> and and the minute it starts going down. Not to say that there can't be 5 to 10% draw downs, but anything more material than that and you really slow this economy like if if it lasts for longer than than two months, I mean, we we truly have a problem with the economy. So, that has sort of been my default mechanism. But there every once in a while there are things where like uhoh this is bad. This is really bad. But doesn't it scare you a little bit when you start saying they can't let it slow because like it's the government like when since when did they become all powerful and and and able to dictate the terms to markets? >> I think it they became all powerful as more and more people are now involved in markets and everything is relying on it. Specifically, and I think we've discussed this the last time you were on the podcast. I view the entire capital market system as ridiculously overlevered, right? Too many people are using way too many derivatives, way too much leverage and and the the capital weights that are allowed for people to do all this stuff. And so anytime things get wobbly and and degree of measurement that you can look at that that determine that is the VIX and the move index, right? is whenever those get elevated, that's when you really start to see the helping hands or or maybe if you're watching behind underneath the surface, the helping hand step in. And so therefore, all that levered capital gets to continue to play their their spread game. Uh and that's the reason why I think it continues to happen. And to probably answer the question, what upsets that apple cart? When when does that stop? Because we all know this is sort of a charade or I'll say that differently. I think a lot of us believe this is kind of a charade. >> Yeah. >> It's really inflation once once the Fed has to >> I hawk back to 2021 and 2022 when Powell had no choice but to really slam the brakes and he had to say it a few times for the market to get the joke >> right. I I think the next time we have a real real event in markets absent some two three standard deviation event that we foresee that's geopolitical it's going to be when the Fed again some form of liquidity >> and we didn't get that we didn't get that today by the way right that kind of reminds me back to the Bill Fleenstein uh line about uh you know they're going to keep partying until the bond market takes away the keys and that's implicit in your argument that it's going to be inflation that really ultimately will do it in >> yes that's that and and I've come full circle to the David Ter point of markets which is that's when you really have to get nervous and and that's probably when for guys like us and you know we do a lot on the long side but we also like to short from time to time and for guys like us that like to short what we think are ridiculous stocks we sort we have to wait until the Fed draws a liquidity away from that excess and so then you could start playing target practice with some really really stupid names uh back and forth. But until then, we we sadly have to wait. >> All right. So, that's what surprised you in 2025. Looking forward 2026, what do you think the market, not you, what do you think the market will be surprised by the most? I think the market's going to be a little surprised by how resilient the economy is probably going to be in the first half of of 26. >> Okay. >> And so some of the people that I speak to and and you know obviously the the issues that people are talking the K-shaped economy it's real slowdown of economic growth it's real. uh however the market has been or the economy has been somewhat resilient. I think a lot of it is a function of fiscal deficit spending. As we all know, if we go take a go go back and retake a look at that one big beautiful law, right? Yeah. >> And do a do whatever your AI search you want to on that and then you realize that a lot of the goodies start coming into play in the first quarter in in turn of the calendar and it's a very front-loaded like many of these laws. Right. Right. uh is very front-loaded with with tax to the consumers that are retroactive to 2025 full full expenditures of capex. We could debate AI but for at least for the next year the actual deployment or or physical layout of AI will continue right >> uh rates are right now tame for right now energy is more than tame oil prices are in tame and assuming I don't go crazy about how the hell are we going to pay for all this right uh I actually think that it's going to set up because there's an agenda which is to win the midterm elections. >> Right. >> Right. And so as a result, I think economic growth is going to be a little bit better than people think or maybe better than people think. I actually think Trump's going to pivot to a more domestic agenda. He's starting to say that in in his rhetoric. And so from there we have become a little bit more bullish cyclicals again and as a result combined with the fact that I mean energy is what 2.8% of the S&P 500 right now >> I I mean yeah we could be wrong it'll go down maybe 10 15% but heaven forbid we're right on economic growth. Heaven forbid oil gets to go to 65 or 70. >> Yeah. or or Natty Gas stays where it is. Uh I just think there's some material upside in these cyclical names that is and no one's really there and particularly in the way we're focused on it is okay, >> we might be wrong, right? Clearly we might be wrong. So let's focus on some of the energy related names that are directly impacted to AI but are not being um rewarded as if they are naturally. >> Oh, really? There's still there's still names like that. >> Well, almost every direct power source, right? So, I'll give you a great example. Um, today is a great G Vernova, which is a direct AI play is up 120% for the year. It was up 15% today and it's up 25% for the last month. >> Okay. >> Okay. Yet you know expand energies is is trading at six times EVIDA right spot uranium prices have not moved one iota this year right everything around it has moved but that has not moved and a lot of the other energy names just sit there and no one wants to own them we know that like like no one you never walk into a P a generalist PM's office and the last thing they want to do is own energy or even if they need to own energy because it's 2.8%. >> But if it goes to 4% all of a sudden they might >> have to own it. So that to us the first half of 26 I think the surprise might be this might be a little bit better than you think and you might have to look at some of these cyclicals more than you would like. >> Love it. That's a great idea. Okay. Uh for those who want to learn more about great ideas like that, tell us a bit about your Substack, your podcast, the whole nine yards. So, we started this about two, three months ago, mainly because Porter and I and Danny said, "Well, we're doing this every day. Why don't we why don't we just create our own little communication group and our own little community?" So, it's called What are we doing on the trading desk? It it has three features to it. Uh I try to write like weekly or or whenever I have something to say, but I kind of enjoy doing that. Uh we do a weekly podcast called the Friday Night Dirty. >> Yeah. Uh, and in addition, I love we love well that that spawned from that of course almost all of our creative stuff comes from Danny Moses that he would he would and he probably runs more bearish than than than even the most of the people that you know, right? And he would always assume that on Friday after the close the Friday night dirty 8Ks would come out uh because that's when everyone was going home. And then lastly, we we have a community chat room on Substack and really on Discord, which is which is lively. And the only thing I would say is that Porter and I are engaged all day long in it because we we were doing this uh as sort of part of our process and speaking to various friends that you know and the like. And we said, well, why don't we do this on our own and bring the community to us? And so far so good. It's it's a lot of fun. >> That's awesome. Well, thank you very much. I I appreciate you sharing some time with us and we look forward to another great year. >> Awesome. Thank you and happy holidays. >> All right, it's our great pleasure to welcome to the show Paulo Macro, author of the Paulo Macro Substack. Paulo, thanks for coming on. >> Hey Kev, good to be back with you, man. >> A this is going to be fun. And by the way, I'm sitting here listening to your voice and I still remember the first time that we got to know each other. you left me that um voicemail on the WhatsApp and I was like, "Oh my goodness, this guy, we got to get him on the show." What What were like two years I was waiting for you to get on the show? >> Yeah. Yeah. And I always promised you you would be my first and it was worth the wait. >> I always like that you were very loyal. You were very loyal. Okay, so now this has been a crazy market. It's 2025. What surprised you the most over the past year? Well, Kev, without uh tipping my uh cloud bear avatar too hard, um and of course you're catching me on a day where, you know, hyperscalers just can't seem to, you know, come out with good news. Uh I was most Yeah, I none of us should be ever surprised about anything, right? Like we've seen it all. We've been around the markets a few decades, but uh what surprised me most about 2025 was the extremity across so many different outcomes and the confluence of these extremes and keeping it really short. If you had told me two years ago, three years ago as we were coming out of the hole of 2022 and the regional bank issue and office falling down the stairs that we would go full-blown 1970 to 72 nifty50. Oh, wait. No, 50 is too much. Let's make it seven, right? Let's take those 7 to 40% of market cap in the US. I'd say, okay, but that's not enough. Let's go full-blown 2000 retail mania, which we thought was done in 21 after all the stimulus checks and people, you know, unable to go see sports, so they'll gamble on Robin Hood. Let's let's go Max 11 right there and do tech large cap growth 2000 with a sprinkle of retail on top. Okay. And then we get to like August, September, and you and I are talking on the side and realize, oh no, that wasn't enough. We've got to go full-blown 2005, 2006,77. Let's securitize the hell out of data center debt. Take that stuff to 11. do a few hundred billion of that in the span of like six to eight weeks and then try to shove as much of that as possible into like Black Rockck total return stable fund so that moms and dads don't even know what the hell they're doing with like line item number 90 in the fund being CNBS of two data centers in Virginia. Let's take that to 11. I mean it's like a turducken of market risks of like 72 2000 and '07 all wrapped into one year and here we are and it's like a stocks are up like it's cool like you know like my buddy Shrub says like gag you know they'll just matchate more stimulus and you know let and then let's let's get the Fed to cut into the teeth of all that you know I just >> yeah I'm I'm surprised buddy like I just can't believe we're doing Listen, that line, a turducken of market risk, is got to be the greatest line. That is hilarious. And it's so, you know, bang-on, spot-on correct of what we're experiencing right now because it's not just one thing. It's it is across the board a million different parts. Um, was there anything in terms of that's the stock market. How about other asset classes? Anything else surprise you? Um, I thought that we were going to have a a good old-fashioned backside of the mountain credit cycle uh a lot sooner uh and a lot earlier than than now. Um I'm I guess I shouldn't be surprised, but like an evergreen loan, you know, a rolling loan, you know, gathers no loss, right? The Chinese did that well for years. And I'm I'm impressed that um you know that there's been so much leverage built up uh in and the optics are like oh the consumer is in better shape because of the GFC. Okay, great. But it the leverage is building up out of sight through pure regulatory arbitrage. Because we know bank lending hasn't really gotten in on the action until very recently in the last kind of 6 to 12 months. And it's mostly lending to non-depository financial institutions, you know, note-on-note financings. The ability of um private credit to fund, you know, a decade plus of private equity excess. And now the banks are starting to kind of be able to kick out their problems by a year or two or three, you know, stemming from postcoid defaults, commercial real estate office, what have you, is impressive. Um, but I think that 20267 will be the story of the backside of a credit cycle that a lot of people will look back in retrospect and say, "Yeah, see like we've been talking about, you know, private credit for years and, you know, like nobody even really knows the size of the number. Is it two trillion? Is it 4 trillion?" Um but people forget that the lack of transparency around that combined with the incredible growth over the last just couple of years since co in conjunction with the exposure therein to the real economy as opposed to mag 7 and what we see in trade every day that leads us to think the economy is fine. um the real economy as you know buddies like ours of uh you know like CPY have repeatedly flagged is is struggling and anything exposed to kind of the bottom 80% or what have you are the ones who service those debts um and you know these kind of leveraged loan you know floaters to junk companies and you knowmemes and middle market and you know companies that we've never heard of that are owned by private equity um it's going to be interesting to watch what a proper credit cycle looks like after so much excess has been built up out of sight in that area. >> So, you kind of ran ahead on me there, but let's talk about 2026. >> That's not my surprise, though. That's not like what I think. >> Oh, that's not you. Still Oh, that's No. Okay. >> That's just to set the table of like where the problems are kind of becoming most acute um right here. >> But yeah. >> Okay. So, let's let's you've set the table. Let's sit down for dinner. What surprises markets the most in 2026? >> I know people talk about risk the way I just did, you know, extremity of conditions, whether it's valuation, whether it's topheavy charts, what have you. Um, but I don't think people, you know, between their year- ahead price targets, which are always just fun to watch because they're just another element of crowding by the sell side and and kind of mostly a waste of time. But I don't know if anybody actually has like a a 40% peakto trough draw down in US equities on their bingo card at some point in the year. And >> and so you think that it will happen like you're not So I'm with you on the Mag Seven. So I I I completely buy that. I think we're going to get a 1/3 to a half haircut in those, you know, seven to 10 stocks. But you think that it drags down the entire market and that there's no chance of or littleer chance that there's going to be a rotation that keeps the indexes from really, you know, the bad end, you know, only being a 10% down or 15% down. >> Oh, that's um that's like the the million-dollar question. I'm open. >> It is. Yeah, it is the million-dollar question. I think that that is the toughest question cuz that it's it's difficult and I think we can all agree the Mag 7 are due for it. They're priced for perfection. It won't take much for that to occur. What does everything else do though is that that's the bigger question to me. >> I think it's kind of hard. So, an old buddy of mine used to say even pretty girls get hurt in the bus crash. Um, you know, for the S&P 493, there will always be opportunities. I'm not looking at a year where all 500 names are down a lot. But when I look at where the best opportunities are on the long side, um, materials, for example, is now down below 1% of the S&P 500. Like, how much of that can you really like elephant squeezing through a keyhole? How much can you really take out of Nvidia and put to work in the $200 billion of, you know, metals and mining and materials market cap in the S&P? You know, there's there's asymmetry in in corners of the market depending on how the year plays out. But at some point, I do think that we end up with a rupture where the riskoff might be less acute in space. that's, you know, kind of if it falls on your foot, it hurts sort of uh sort of sectors. >> Yeah. >> Um and that are more Trump adjacent to where the fire hose of the fiscal is pointed. >> But the market is just so topheavy that um I I'm I'm more bearish than you are on, you know, a 30 to 50% correction. I think in the draw um a lot of these names it'll it'll in the same way that people were surprised that we could see trillions of market cap created out of nowhere I think uh they'll also be surprised how quickly trillions of dollars of market cap can disappear and purely based on the waiting issue even if the rest of the market is only down 10 or 20% in the draw down. >> Yeah. Um, you know, the.com flush as well is a good analogy because there were periods where the Russell did well uh in 2001 and 2002, but eventually it gave up the ghost anyway, >> right? >> Um, so I would just be very careful. You know, Liberation Day is kind of a microcosm of what it could be, right? Where it didn't really matter if you were in metals and mining or energy or what have you. It all got tossed in a couple of weeks. And >> you know, you couldn't stand there and say, "I only lost 25% and the market's down 40." You know what I mean? Like >> Oh, completely agree. One of the things that worries me and we've discussed this at you know a lot off air you and I the dispersion trade and to me if that ends up being larger and and somehow starts to force if correlations start to increase enough that it forces them to go reach for VIX. It could just it could get ugly really quick. >> Oh, I got another uh little bit of stuffing to shove into the turducken that I forgot to mention. you know, like we look at uh I saw this data from Goldman a few days ago that um less than 10% of options traded have variant, you know, like are are more than one month out. >> Yeah. >> Just in terms of volume. We all know that over half of options every day are zero DTE or within one day of X-ray. Right. >> Right. um shades of like I mean think about the instability that that is like an inherently levered product with such a short amount of time ticking on the clock uh with retail use in the mix like there there's shades of portfolio insurance or or May you know May 6 2010 in there as well you know just because the market doesn't realize an insane you know uh open to close anymore more uh over the last few years I think it's lulled people like to ignore the kind of initial conditions around what zero DTE really means and people are kind of dancing on a plastic wedding floor and when that floor kind of gives way in the same way that it did uh during flash crash or during you know 1987 again like we're lulled into a complacency that because it hasn't happened in so long it couldn't possibly happen and we're ignoring the elephant in the room that is the presence of this zero DT nonsense and it it's like kindling, right? Where all it takes is a spark and then suddenly of course it's going to look obvious in retrospect. Oh, like we all called it like you know so like there's an element of that as well again like I don't know how else to describe it other than the turducken of market risks like topological risk market mechanics valuation you know concentration risks like just you you start running out of words right so >> well >> one thing you you know you never run out of words and turducken of market risk is a perfect example of the great stuff that we find in your substack why don't you tell people that want to know more about your theory, your calls, where they can reach out to you. >> Well, assuming I haven't switched, you know, turned everybody off with, you know, crapping all over, you know, the markets like just as we're two weeks away from Christmas. Like, come on. We all we all want the G.I. Joe with the kung fu grip. Let just just go with it, man. Get paid. Um why be a wet, you know, wet blanket? But uh yeah, if people are still curious to uh to read any anything uh that I've written, they can go to palomacro.substack.com. and I occasionally tweet a little bit as well uh under the handle uh Paulo Macro. >> Great. Thanks a lot for being here today, Paulo. >> Yeah, my pleasure. >> Okay, Robert, Kevin has been working really hard on the podcast this year and I think he's fully digressed from anything financial or educational. >> Absolutely. He's just he's just he's just graduated from hedge fund manager to entertainer. We should all aspire to that. >> Not funny. We know Santa spent a lot of hours getting the toys and gifts organized for the kids over the past few months. During this time, you've been spending a lot of time with Mrs. Claus. What's your strategy when Santa finally comes to visit your house? >> I only know one thing for certain. I won't have my straddle position on when it happens. >> It's been a difficult year for stock figures. In fact, less than half of the active managers have even managed to come close to the S&P 500 return. Do you hold hope that active managers will do better next year? Do you know any portfolio managers that are bucking the trend? >> I don't know. All my friends are underperforming your Reddit guys. I mean, I'm always reminded that I'm underperforming my mom most years and she just owns Apple. She has no idea what I do for a living. The market huddle has struggled and Kevin's analysis seems halfhearted and he almost seems to be dialing it in. Do you have any views on recent episodes? >> It's an abomination. >> Okay, Shrub, I've been researching different ways of getting new subscribers to the Market Huddle podcast and we're trying to find our brand. How would you describe us? Macro Monkeys talking chart segment is a fan favorite apparently. We're thinking about making this segment twice as long. Do you think that's a good idea? >> Oh god, I don't even know what that is, dude. >> And what do you think of Patrick's charts? >> I think they're useless. >> Do you not think Patrick's a good trader? >> Oh, absolutely. Look, this guy would be a market wizard. He should be named the next Treasury Secretary and actually no, put in charge of the SEC. >> Okay, Paulo. Over the years, you've watched a lot of Market Huddle on YouTube. How much joy did it bring to you? >> None. But I did I did uh enjoy watching some commercials. >> If you had to describe a market huddle episode, what would you say? >> Long slow bleed. >> Can you try again? >> I refuse to answer. Okay. So, let's pretend I'm Patrick. What do you think about my charts? >> That's the Mona Lisa and it looks bad, too. Your your drawing is not good. You should go back to art class. >> Surely you must have some charts you liked in the segment. Can you pick one of your favorites? >> They've all blurred together. It's a disaster. >> Okay, back to me now. I don't know about you, but sometimes I think Patrick's charts actually do make sense. That that's the contrarian angle on it at least. So there you go. >> Right. Okay. Vincent, can you relate to some of the trading ideas that Kevin has shared over the year on the market huddle? >> No, they're they're they're at the low they're low desile. >> Over the last year, whenever Kevin and Patrick agree on something, it's inevitably wrong. >> Do you think that this is a new development? >> Oh god, no. But I think it's been happening for God knows how long. Just it's not as it's more out in the open now than it ever has been. >> Chase, there is a lot of talk that the market huddle offers the most alpha out there in podcast land. Any comment? >> Uh that could not be further from the truth. They're just they're worthless. >> Okay, Marvin, what do you think of Kevin's trading acumen? >> He's a perfect reverse indicator. >> Okay. Patrick recently shared a chart of the Fibonacci retracements on the huddle. Some people were skeptical of the charts. What do you think about those comments? >> I don't even know what to say to that. That's just beautiful. >> The market huddle had a meetup in 20123 with Copy and some of the subscribers. Back then, Kevin and Copy were actually bullish. You were there. Can you share your experience? >> It was as bad and as crazy as you can possibly imagine. The stories do not exaggerate. >> Okay, Eric. So, Kevin and Patrick have claimed that they are the nicest guys in finance. Yeah, I've been working with Patrick for a couple of years now, and I can tell you he's not a good boss. To be honest, Kevin's a bit of a dick. >> No one's going to comment on that. >> I mean, at least some of their forecasts are pretty good. I mean, did you see Kevin's dollar trade or? >> No. Has it haven't his calls been terrible? >> Yeah. Well, some people like the market calls. I mean, some people even called him a market wizard. >> No, he's definitely not a market wizard. Market wizard of of entertainment and how to make a career out of this without sheer nonsense, but not not a market wizard. No. >> Okay, Vincent, we're dying to know, do you catch every Market Huddle episode? >> So, I try uh you know, I I I view it as smoking and drinking. I I I I do it, but I experience immediate shame after it. I do think though that they're probably going to consider continuing the show for at least another couple of years. >> You know, I I don't think societies can handle this. >> What do you think about Patrick's Crayons? >> I mean, I I got I got young kids, so they could have done this this drawing. So, my kids feel warm inside. >> Dario, you've been on the market huddle many times, but I have heard that the last time Kevin had to coach you to be on the show. Do you even like the market harder? >> Bollocks. >> Dario, I heard you say that in Canada you're even more popular than Kevin and Patrick. Why do you feel this way? >> Famous in Canada. >> Okay, so Patrick loves to show a chart of the US dollar as the most important chart in the world. Do you have a view on his obsession? >> It's a just a chart that is used for everything. >> I'm not sure I agree, but I do know that there's something else that you're famous for. What is that? the gold BMW. The only thing, this is the problem. You see, Perkins rules, all this stuff I've tried to become famous for, and that's the thing I'm famous for. Gold BMW from 20 years. >> Okay, Jacob Kevin has this theory that MMT is a good way to understand how the economy actually works. What do you think about his take? >> It's silly, but it's also pretty funny. We got to have some things to laugh at, right? >> Okay, next question. So, some folks seem to actually like The Market Huddle and even claim it's their favorite show. What do you say to them? >> I can't believe that we're having conversations about this. >> As you know, Patrick is pretty proud of his charts. And to be honest, he's even gone to the extent where he wants to frame them on his wall. Crazy, right? Do you think that that's a good idea? >> Uh, no. It's not. I mean, no. Uh, yeah. I mean, it would look great above a toilet somewhere. I'm sure there's a bathroom in which it would be really nice. >> Okay, Tony. When you get a macro tourist email, do you rush to go and read it? >> They're garbage and impossible. I throw most of them away. I don't even like mine. >> Sometimes Kevin seems a little bit touchy uh when Patrick ever mentions about the podcast that he cheats on him with. But the big question is, what do you think of the other podcast host? >> King. Absolute freaking king. >> Okay. So, what do you think of Kevin? >> Not a fan. I'm not a fan. If you had to sum up the Market Huddle experience, how would you characterize it? >> Comedy hour. >> All right, time for the after show. We have to go and we have to rate our beers and our wine. I'll start again. >> Although it's from Winnipeg and it is from my best buddy. It's a pretty crap beer >> and I'm sure to the whole show so he's not going to be offended by this at all. It it's like it's a beer. >> Transc Canada Brewing. Uh they did a good job. It's It's very Canadian. I don't know. I'm gonna give it a six. Amateur sport. >> Just There you go. I uh I have nothing good to say about this wine other than it gets me drunk. It's a it's it's a cheap wine that's been nicely uh made into hot wine and uh it's gonna get me a buzz. How about you? How's your How's your wine, Denny? I do you know what? I really like this wine. Again, I'm going to show it again because I I actually think it's worth anybody who can get a hold of it to get some. I think it's one of the best wines I've drank and it's good for the planet. So, you know, >> and if you're going to give it a plug, you got to at least say the name again. >> Uh the onion. It's like the what Portuguese word. >> The onion. >> The onion. It's onion. Yeah. There we go. >> Yeah. Yeah, it's it's called onion in in Portuguese. >> Well, they got to work on their mark. >> That's the easy That's the easiest way to remember it to be honest. If everyone can just Google translate that in there. >> Exactly. >> All right. So, I can't believe I can't believe it's the end of the year. Like, this is this is it. Like, what the next huddle is going to be a 2026 story. >> Yeah. And uh before we get on to that though, let's talk about Nazair or how do you say it? >> Nazare. >> Did you know what? It was way hyped. Uh like so they basically said the biggest swell in a decade. So everyone's was went there looking thinking they're going to get the 100footers. >> Yeah. >> Um and and see the record stuff. So it was it was worse than going to Disneyland. Like uh the the completely not ready for this amount of of people to show up. Uh and there's like shouldertosh shoulder on this thing. Can't find a bathroom. It was crazy. but some cool waves, but they were much more in like the 30 40 foot, which is still big and very entertaining. Those surfers were still like crushing some some great uh great waves, but they were nowhere near like that's the largest wave in the world was like a 110 footer that a guy surfed there. Like so it was nowhere near the record waves. >> Yeah. >> But uh still really entertaining. >> So those go and they build like all the way across the Atlantic. What? No. >> Like they don't >> Nazare is is um is unique because it has a canyon underneath. >> Yes. >> And so what happens is is the swell doubles on itself. So it comes in from the Atlantic and then the the canyon basically. >> There's only one little spot that that that this wave can come in because when the tide is right and the >> Oh, okay. Okay. So, it's a >> perfect a swell like it just perfectly lifts the water into a thing that in this one little area has these crazy ass waves. >> It's like God said I I will make a great place to surf and created >> Absolutely. >> So, Dan, you didn't go buddy? >> No, he was a millennial. >> No, unfortunately. Yeah, I I watched it on YouTube. You know, I didn't have to deal with the crowds, any social anxiety like all, you know, millennials have this problem. So, I just stayed at home and I just watched it live. >> Oh god, that's hilarious. All right, you know, we got to just say a big thank you to all of our wonderful listeners and guests throughout the year. Um, it's a real privilege to be doing this show and uh I always say that I would interview these pe, you know, the wonderful guests that we have, even if nobody was listening, but it's definitely better with uh all the great guests and we really do appreciate uh everyone's support throughout the year. Uh it it really means a lot to us and and Patrick and I and Danny are appreciative each and every one of you. >> You know what it is? Uh and what I love doing this show with with not only you guys but bringing these guests on is that uh we've created like a market huddle community and even our listeners uh our loyal ones feel that way. And it's it's an opportunity where we get together uh you know once every couple weeks and and just uh talk real about the markets and and try to understand things. And uh it's it's just uh such a privilege to be a part of this show and I thank all the listeners and all our guests for being a part of it. It's it's been awesome so far and I'm looking forward to many years to come. But um and I just like to say, you know, um people always mistake uh the relationship relationship I have with Patrick and assume that we've been good friends for like decades. People are like, "Oh, no, you must have known him years and years ago." Yeah. >> No, I've been just lucky enough to know Patrick for what has it been like eight years >> something like that 2016 17 we met and it's been just a wonderful wonderful you know I couldn't ask for a better podcast partner and I I do appreciate it and in terms of Danny he's been an absolutely terrific addition to the show I absolutely love >> wears all the the props like look at them like uh >> well and the only thing that I I kind of get upset about is you know such a handsome guy with the perfect lighting makes us look like a bunch of >> old parts. >> Yeah, nice. Danny, you've been a great addition. So, um why don't we just kind of say goodbye to everyone and let everyone go have a wonderful >> Happy New Year everyone. Merry Christmas. Uh and or you know, like it's it's a happy holidays. It's been it's uh been a great run and uh and looking forward to seeing you all on the other side. >> Yeah, happy uh you know, happy holidays. All the best to you and your families in 2026.