Expert Global Macro Strategist: "What Everyone Gets Wrong About the Fed"

Summary

• Market Outlook: Fed likely to stay on hold with sticky inflation; tariffs seen as inflationary and fiscal-driven, raising policy-error risk.
• International Equities: Preference for non-US markets (Europe, Nikkei, LATAM) as global growth and a weaker dollar support outperformance versus the US.
• US Dollar Weakness: Expectation of a multi-year dollar downcycle as foreign capital repatriates, aiding global risk assets and easing global imbalances.
• Trade Tariffs: Tariffs viewed as a persistent sequence of one-off price shocks and a revenue tool, potentially shifting tax burdens and amplifying inflation.
• Rising Yields: 10-year yields drifting toward ~4.7–5.0% seen as the likely trigger for the next equity leg down; watch private credit stress and margin compression.
• Europe Equities: Stronger PMIs and tourism tailwinds; index composition explains Germany/France lag (autos/luxury) versus Spain/Italy/Greece strength.
• Latin America & Brazil: LATAM a top pick, with Brazil favored on weak dollar, commodities, and political catalysts; Mexico seen more tied to a potentially slowing US.
• Gold & Miners: Bullish on gold with shallow pullbacks and ongoing central bank buying; miners poised for earnings leverage with high gold and relatively low oil.

Transcript

It's Friday, May 9th, 2025, episode 264. I'm Patrick Szna. Kevin Stiletto enjoying his taxpayerf funed escape room, cleverly disguised as a jury duty. And last uh so last episode, we had Chase Taylor raising the show's intellectual bar. This week, I'm doubling down on that strategy by bringing in Vincent Delaware from Stone X. Vinc Vincent's here to inject some actual expertise into the conversation while my main contribution will be to expertly timed nodding and uh thoughtful sounding grunts. Afterwards, Vincent is sticking around to talk some charts with me. So, let's dive into this. I'm going to crack open a beer and I'm going to uh give some disclaimer here. Nothing in this podcast should be viewed as investment advice. Listeners should consult an investment professional uh before making any decisions regarding topics covered in the show. Side effects of too much market huddle may include quantitative queasiness, flash crash fatigue, and break out breakdown disorder. All right, Vincent, welcome to the show. It's it's an honor. I have some huge huge shoes to fill in. Absolutely. We'll average down the intellectual level after after last week. You averaged up, you know, got to blend it a little bit. Exactly. All right. Listen, before we get to some talking charts, I just want to uh a lot's been happening in the last two weeks. We had jobs numbers come out. We had um the Fed speaking. We're going to have inflation numbers coming up. Uh and I just wanted to kind of get your thoughts as to as this unfolding reality uh is unfolding before us. Uh what's going on here like uh first off like I want to start with just talking about the Fed, right? So their focus remains on this stagflation stickiness of inflation forcing them to keep uh interest rates unchanged in a wait andsee mode. while all other global central banks that typically would be synchronized with the Fed are all cutting. How do you size this all up? What's what's going on? Is there a Fed policy error here? Uh what's your interpretation of all this? Um so this is how I expected things to to play out. So I I was not too surprised. I think listen the the market now has a has a long history of uh inventing recessions and then projecting non-existent cuts into the curve. Uh sometimes the Fed plays along and gives them some some some food. Uh sometimes it's just the market doing it itself. And I always thought the obviously May was completely you know out of the table but like the the June was 23. I mean, we we had a note telling clients, take the under, take the under. Um, and the most important part was was the Fed, I think, mentioning Powell saying that there's a scenario is no rate cut at all. Um, so are they late? Um, I think there there's a chance that they are. I mean, ju just by virtue of what Powell said where he said, I I want it's like St. Thomas, you know, who wanted to touch the wound of Jesus before believing he was back. Uh he wants to do the same thing with the economy. Like I I'm only going to start cutting after he's bleeding and crucified. Like, oh well. Uh so yeah, he told us he wanted to be late. Now, he may change his mind and and and you know, come back to his uh ways of of of September, you know, the 50 basis point for no good reason in September. Um but yeah, as as of now, I would guess the the Fed told us uh we and they told us that before. If you look at the the March um February economic projection, you know, they they basically said we think tariffs are stationary and uh we think that all else equal. They raise the um the ar whatever that that thing that doesn't exist is. Um so um yeah uh and but I would say that it's it's somewhat backed by the data. Um so I'm a big believer in in tax collection. I I don't pay a lot of attention with to GDP or PMI all these things. I look at the daily Treasury statement. I actually had yesterday a long conversation with Kevin on Bloomberg on how to use his data best. and and I'm glad that he's I mean he's also fiscally obsessed. So uh on that I know I can feel feel in the shoes and the tax collection data uh suggests that yeah I don't know why it was really strong in April and April is when people pay taxes and they pay a lot of taxes now maybe some of that are capital gains from last year but we saw that even in employment income and with that so something's going on with the economy my my my playbook for 2025 was that we ended super strong in in Q4 24 and the economy was slow because the fiscal impulse was was negative. We'd have the slow and and and and variable lag of monetary policy finally hitting. It was playing out like that in Q1. We saw my tax data was weaker February, March. Uh certainly we had this growth scare. Everything looked the way I expected. Kind of, you know, slowly falling into stlflation, not necessarily recession, but stackflation. And then I don't know what to make of the rebound in April. There are basically two theories of the case. One, it's it's only illusion. It's basically people are rushing things out ahead of tariffs and then in one month this will go away and we'll go back to to trend or the one that I would not rule it out is that hey we lived with uh we consumer kept consuming despite COVID despite the Russian war despite mortgage rate at 7% uh despite the Silicon Valley bang despite the SAM rule maybe this whole tariff thing won't matter all that much and maybe the economy is just going to power through this um despite all these headwinds and I think that's what Powell is trying to suggest that he wants to keep his options open. Now I mean there's two elements. There's the actual impact of tariffs on the economy and consumers and then there's the secondary effect of everyone trying to plan for potential tariffs and therefore businesses may potentially hold off on capex spending and do all sorts of other um kind of uh you know not do the additional hiring all these things until they have clarity on what actually the uh the the new uh kind global front will look like. Um like what are in your minds in your mind the the impacts of of these um tariffs that are going on? First of all, what do you believe is kind of the strategy? Uh is is this all just about negotiation or is this an actual goal of collecting money from tariffs? Like how do you size this all up? Yeah. So on the tariffs I'm with Kevin uh that I think he's he needs to be taken seriously and literally like doesn't mean that we'll end up with 145% on China but we're not going down to zero and the primary goal of tariffs is is the external revenue service. Uh he wants to raise money for the government uh via tariffs. Uh this is not just a a negotiation ploy and I have no idea what the end result will be but it's not going to be back to free trade. uh we'll have significantly higher tariffs. um how much revenue uh we can raise uh right now the the effective with the Trump so we'd go from 3% tariff rate if we have the crazy Rose Garden formula tax on penguin um um tariffs we'd be looking at 23% effective tariff rate uh we have about um um uh three trillion uh in in goods export uh sorry goods import. So some exemptions whatever would be looking at raising $600 billion from these tariffs up from a hundred billion a year. Uh so that that's a big uh that's a big number. My guess is that this number is going to finance some other spending. Um otherwise that would be the frankly the biggest one of the biggest tax hike in US history. And I don't think that's what Trump wants to do. So at the end of the day, I think that the net effect of tariff will be to raise revenue so that we can do the political thing and and tell boomers uh hey you don't need to pay taxes on social security. No tax on tips, no tax on overtime. So we effectively shifting the tax burden from um uh boomers, lowwage workers onto tariffs um onto consumption. And that to me that's that's that's double inflationary blow, right? Because tariffs I mean I I know all these smart guys who tell you no tariffs are not inflation. I'm I'm dumb. Okay. If you take the price of something and you double it, I I see that as inflationary. Okay? Like especially the currency is selling off at the same time. So there's one factory blow there and then there's this the second effect which will be uh hey all your all your uh Gen Z that are working as as as bartender no tax on tips uh no boomers are going to take on crews. So you're yeah to me you you're really uh hitting both sides and also from a pure efficiency of of government taxation you're replacing something that's super efficient and hard to evade like social taxes on social security like the government pays it to you so that's that's fant and that's growing very fast because the population of boomers exploding with one of the crappiest tax in the world which is tariffs I mean there's a reason why typically as governments kind of develop over time they start indeed like Trump was saying in the 19th century we got all our money through tariffs and then you realize it's not so efficient we can get more money in a more predictable way by taxing income capital whatever so we are again turning somewhat Brazilian and and and walking back um and that means that the you know it's very hard to over time tariffs erode uh while the the things that we are funding with them which is basically uh more money to boomers grow at 10 15% a year. Okay. So now the the question okay let's let's actually come back to that inflation topic for a moment uh that you were suggesting because I don't think anyone disputes that rising prices are inflationary. I mean this is this is like a a basic economics thing but um when you look at like the type of inflation that comes from uh a monetary driven thing like money supply expansion, credit expansion, uh that's almost sustainable. Tariffs, would you know agree with the statement that tariffs are the very definition of um transitory inflation, right? like this idea of it's going to cause the numbers to be high, but it's not going to be high on a sustained basis. It's going to be almost like it's going to rebalance itself at a higher level unless then they keep raising tariffs over and over again, then this is only going to be a short-term impact. And when you look at things like uh long-term bonds pricing in inflation expectations over the long term there I can't see this kind of having a long-term impact on on inflation. Is that am I off base? Do you have a different view than that? No in the sense that yeah I agree it's a all else equal I agree with you one time adjustment the price level. uh but I would say that every inflationary era is just a sequence of one time adjustment in the price level right in the same way that every forest is just a collection of trees uh and you you can just some trees are bigger than others okay but yes but that's and I have a lot of you know super smart friends who you know I've had these clients who had this conversation and they keep telling me no but look at the CPI and take off this and take off that and and take the three month finalized of this and and then you realize that it's not like not yes but in in three months you'll have the same conversation about something else and that's the point about that I'm trying to make about inflationary era is that when you have an inflationary era everything becomes inflationary every shock um you could have said the same thing covid yeah okay onetime shock right it was same thing Russian invasion one supply chain one one time thing Biden deficit one time thing uh tariffs What? Why does it keep happening? It will keep happening. I don't know what it will be after that. I agree with you. All else equal, but maybe it's because the central everybody agrees with that and sees it as one time. Uh so there I'm not going to react, right? This this is very much what Arthur Burns did in the 70s and at the time it looked right like what why should have Arthur Burns in you know made mortgages more expensive in the US because OPEC had done an embargo on Israel. It could be like yeah this is just repricing oil prices. I'm just going to see through that. Right. Yeah. Um but then it kept happening again again. Central bank keeps saying oh it doesn't matter doesn't matter. And that's what creates the secular inflation. So my guess is yes, tariffs should be a one-time price shock, but there will be something else that will come after that that will be inflationary. My guess is that it's going to be fiscal. Something big is going to happen on fiscal. Um I I don't think Trump can let this train wreck continue without reaction. I you know, he's not going to get the deals that he want. He's not uh the the stock market pooped all over his plan. The bond market didn't like it. He needs to come up with something and I think it's going to be fiscal. Well, I I mean that's been the trend for the government for the last four years. So I don't see why that should stop anytime soon. Right. The um so now are you in the camp uh that the market is overestimating recession risks or do you think that uh that uh like I mean obviously each analyst has a different metric of what the percentage is. I I uh use the uh the completely um neutral thing of looking at poly markets where basically it's the betting markets where people are putting money so why not you know and right now the it's the chances of a recession at least by people putting money on it is over 50%. Now do would you take the over or under on that? Probably the under but it's not a very high conversion call. Okay. I I I I I think I have greater conviction about saying that global growth will be better than the the IMF just came up with their their spring meeting and they the world economic outlook and it just trashed their production for for growth and I'm like guys you to me this was like a political move because they hate Trump, they hate tariffs. Uh but I think we'll be surprised to see that nature is healing. Um the weak dollar is you know tremendously helping uh LATAM the the the fact that Asian currencies are are rising like the Taiwan dollar is going to help consumption. Uh the fact that Europe is spending again uh the fact that energy costs in Euro amazing like okay look at look at Brent in Euro or even better NAT gas out of Amsterdam. you know the whole story that the German industry was going to die because of the the well now they have margins again. So my guess is that global growth will surprise the surprise to the upside. Uh probably the US as well. Um but I have somewhat less conviction because I again I worry all else equal and again that's that's a very hard thing to say because all else is never equal but we have a tightening of policy in the US. We I mean if nothing changes we have a very big tax hike. Um on the spending side, um the the federal government, we can't seem to cons constrain this fiscal spend, but at the state and local government side, it's going down a lot. Like we used to have this boom in state and local government spending. That's over. Uh we're going to have some sort of an effect from Doge in September. Uh we're going to have the student loan stuff. Uh there's some also HUD FHA change on on housing. So there is a bunch of of policy that will tighten conditions. because we have a lot of debt to roll over. I think a lot of the companies still you know average corporate month is 5 years right so everything that was issued in 2021 at the super low rates needs to be rolled over. So there are a lot of reason why I would expect the US economy to slow down and on top of that you have this kind of um act of god policy risk of of tariffs. So that's why I'm more hesitant on the US than I am the rest of the world. I would just say that in general a lot of people have made that mistake again again of underestimating um US growth and it looks based on what April April's done it looks like maybe maybe the consumer is going to consume through this. Does your economic outlook for the globe versus the US also equally translate to the fact that you would uh favor being long global equity over US equity? Uh are you uh in that same camp of being long Europe, long NIKK, long Latin America? Like is that your theme? Yeah. Yep. Uh well, we'll talk charts then. We'll like when we we'll we'll get that up and we'll we'll take a look at a bunch of these charts and and we'll we'll take a a look actually not right now, but we'll we'll take a look uh at um at some of these different things as to where you stand. But I want to nail a a bigger question. Okay. like um so many people are today like okay I still uh am leaning more towards the idea that uh this um market correction that's underway has still something to play out into the summer and that there's vulnerabilities uh on the intermediate time frame to the downside. But so many investors are focused on uh the tariffs uh and what Trump says as the kind of trigger of what's going to cause the next leg down. And and my uh argument as a trader always is is that what whatever everyone is focused on and is not going to ever be the catalyst that actually causes a market drop. It's always the thing that you don't know that you don't know. That one variable where there's a vulnerability that isn't on page one of the newspapers but on page 16 as Kevin always says, right? So um when we talk about market vulnerabilities that thing that uh what is the the things that uh people uh that the media is not talking about that are the kind of soft spots the vulnerabilities in the markets that could end up being um what causes stress in the markets let's say over the next three to six months. Do you have anything in mind? Um but I agree with your your your presentation and and and the risk. I I would be in the same cam that there is there's probably a do we make a new low or do we retest? I don't know. But I I would guess also with the timing. I think the timing is about right. Um um I don't I don't I I can't tell that it's something that the market doesn't have its eyes on, but I I know it's going to come back. To me, it's the you got to watch your 10ear yield. you got to watch bond yields and uh yeah the stock market is a derivative of the bond market and and the um we don't have a big buffer right I mean today we're at uh what 4.3 on on the 10 year um not not impossible to see 4.7 in a couple months um and that to me that would be the one that that would get the the second leg going I mean we we haven't we still don't have a budget we still don't have an agreement on the debt ceiling, but eventually we'll need to have one. The deficit is running much larger than than than what's despite what I said about taxes being really strong. Despite what I said about tariff money rolling in, despite whatever Doge did, which may have been nothing, but the deficit today is the same as it was last year, even though we had the best tax season ever. Um and you know we want to spend 150 billion more on Pentagon and so um I I and and then the buffer on on the yield is very low. So my my idea is that bond yields would would start drifting higher and higher in the summer until they become a problem uh for the stock market again and that that would be the trigger for the um the second leg of the the bare market. Right. Right. So, you know, the uh when when we're um when you're talking about yields, uh obviously treasury yields are the the kind of point that you're talking about and the stress points, but I want to touch on um uh corporate yield, particularly let's say high yield uh junk bonds like uh high yielding bonds that obviously credit spreads during the April event uh finally blew out on the upside. side. Uh the first we we were basically at 10-year lows on on some of the different uh uh credit spreads uh back even at the start of the year. And uh the question is does this in your mind also translate to uh there being big stresses in the other parts of the bond market? Right? like are we are we going to be in a situation where default rates could rise on some of these uh very poorly cap um capitalized companies that are overinded? Like do you think that these are stressful? Is this really just a government bond issue and the fact that the government is spending this way and where are general yields at the government level? Like what's how do you kind of size this up? This may be my my bias because of the time I spend uh looking at fiscal and u the traditional account and what so I I I don't spend a lot of time looking at that corporate uh balance sheet and then you know analyzing bonds and and spreads and what's pricing and what's not. So my default would be it's primarily um it's primary about the um the the treasury not not not not the spread but of course um you know one could feed the other right I mean we have all these uh all these debt to roll over that was issued at low rate um so if you you know if you have to refinance much higher that that that can create stress on its own another area that you know would worry me but I I unfortunately don't have a lot of um insight I to share is we've seen this explosion in in private credit and and private debt. And I I I wonder if that's not where the um you basically added something like $ 1.5 trillion dollar. That's bigger than the whole junk market to private debt strategies since COVID. Um and these things on paper, they still work well, but you hear reports that oh maybe there's some stress there. So maybe that's it starts there and then it spreads to uh the junk um to to junk bonds and that's how it it tightens the economy. Well, yeah. Know, Kevin's talked about the private equity uh bubble in his mind as well uh numerous times, and so it'll be really interesting to see whether uh cracks start to emerge in those kinds of areas. Uh because, you know, at least in my mind, I don't think that there's an I don't know what Trump would have to say that will now shock the markets into another leg down. I think that that it's going to now start to be actually on fundamentals that is that um that the next leg down is like when the realization that that the economy is weaker and that there is uh the knock-on effects that I think it'll be something driven by some negative feedback loop of something that could potentially uh be what drives the next leg down. All right. Well, Vincent, uh are you uh up for it? Let's talk some charts. You good? You good to do this? I'm good. All All right. Listen, uh what I want to start with is uh we always cover what are the top three things to watch in the coming uh weeks and um uh really to me these are all uh data points because obviously uh the jobs numbers came out last week uh and while Jolts and ADP were a little bit on the soft side uh on that front, but the uh the much anticipated kind of break in in jobs numbers um didn't emerge on on the Friday jobs numbers. First of all, like how do you size up um how the jobs numbers came in? And do you agree that like watching these kind of data points uh as to when are we going to see some economic weakness starting to really emerge? Is this what we should be watching? So I expected a uh a higher than average higher than expected job market uh because primary because of tax data. Uh I could see the uh that that that economic rebound. Um we could see it in the tax data also unemployment paid by the Department of Labor. So I'm not surprised as far as where I think it comes from. Um I think it's it's uh the the behavior you were described being earlier for companies where um they just like a a deer in headlight, you know, oh Trump can say one thing the next thing to the next. So I think that the default is just to wait and hold labor. Um I think corporations um learn from their mistake during COVID when they let go of their staff and then they had to um you know compete very hard in 2021 2022 to get this Gen Z and like oh yeah bring you your pet support dog to the office. Yes, you can work from the swimming pool. Uh pay, you know, all these all these kind of um uh lazy girl job, uh quiet quitting, uh act your wage, all that insanity. Um so I think in a weird way like the US is becoming more European. That's that's something typically see in Germany, right? where you have if you have a hate to demand corporation just tell tell that okay stay put maybe get some part-time we'll keep you on payroll things are not going to come back and the US used to react much much faster maybe now the US is more like like Europe um which can cut both ways it can also mean that at some point you know when if they do realize oh tariffs are for real and there's a slowdown then you have to let go of more people so maybe the next job reports and That's kind of part of also my scenario for things to get worse in the second end is um yeah at this point we can probably eat it and just wait but the more it the more it lasts the greater the chances that we have to kind of make up for that right um so sorry what was your question it was just really how the the jobs numbers reactions to it and as well we can just move on because yeah you did answer the question I mean it was just about the jobs We we're watching the retail sales which are coming up next week. Oh, I I think my guess would be I take the over on that. Uh things that I like to look at are uh open table dinner reservation, they were really strong. Red book index of of of same store sale really strong. Tax collection really strong. Um have anybody who wants to spend money, you know, wants to do it now before the tariffs are over. Uh it's summer, you know, the sun is out. Uh people yeah never never underestimate the US consumer's ability to put stuff on the credit card. There you go. All right. So number two I want to talk about uh not next week but the week after we have all the flash manufacturing and services PMIs not just in the US but actually uh many European ones and so on coming out. uh do you uh do you think that uh the kind of uh economic slowness in Europe uh will continue to persist and and how do you think it all comes in? Do you have any opinions? Okay, first of all, I'm really not a PMI guy. I think it's it's you know it's it's a horrible data point. Dolly tells you is you know whether these guy you know survey 50 guys whether stock market is up and it's really completely circular um this obsession with PMI uh and I don't follow it um to the extent that I make a bet yes it would be that it's stronger than people think in Europe um uh you [Music] know some in Europe you know people you know people go to the beach they spend Um, Americans are still coming to Europe, obviously. I mean, yes, the euro is 1.1, but you know, it's still pretty cheap. Uh, Europeans are no longer coming to the US. I think that there will be a shock in the US. Like a lot of Cana obviously Canadians are really really pissed and I mean for good reason. Uh, so yeah, you I think we'll have a great great tourism season in Europe and I think that will that will boost activity. Uh we have good news on on on Germany uh spending again. Um so yeah, I would take the over on on on PMIs in Europe. All right. And the number one thing to watch is obviously the inflation numbers, the CPI and PPI coming out next week. And so the only thing that on my mind here on on the inflation numbers, is this the month where we're going to start to see um those uh price increases even if it is transitory or not? Is this the month where we're going to get a hot print or has already the forecasted numbers that people are anticipating already baked that in or you think this is going to be a beat on the upside? Ah, that's a hard one. Uh so I I look at the the tariffs the revenue collected by customs and it hit last month. So if you they get it around the 22nd of a month is when you see the these bumps uh and and you know they usually get like 5 billion it's more 11 billion. So tariffs are being paid. Um so my guess is we'll see it in the data. Now, will we will we see it more than the market expects? Um, my default is I'm I'm I'm an inflationary guy, so I guess so. Uh, but I I I've kind of refrained from making bets on on on CPI short term. I I Yeah, it's really hard. I mean, at the same time, shelter is coming down. there's a possibility that we see we see shelter come down the rants oeer faster. Uh so you really need to really understand how the index works. Um my guess on inflation I I prefer to hide at the long end. If you ask me to predict inflation next month I I think it's kind of fool's end and I'm specific. Okay. So let's not actually talk about what the inflation number will be but rather the response mechanism because obviously the market has inflation on its mind because they all know that tariffs are going to uh to um drive higher inflation numbers. So, what is it that you believe that could potentially happen to the number that would uh warrant a response by the market? Like where we come in and we see the market freak out and and not like the number. You think it would would that be a hot number that comes in too high? Is that what would uh drive uh a market turn? And how hot would that number have to be in your mind in order for a market to kind of be outright disappointed by this? Do you have any speculation on this? So the expectation I think is for.3% month over month. U so anything above that would would constitute a negative [Music] surprise. I guess the market would be more indulgent if this surprise was driven by core goods. um you know things like we buy from Trump okay just a tariff impact you know who knows what what happens you know Trump will get a trade deal um if it's driven by your super core um uh especially like I mean it's been so sticky so so so sticky every every podcast I do I keep going back to my haircut uh indicator which I think is great uh and I'm gonna do it again again if forget all the three month finalize this x that if you want to know where inflation is going look at the CPI for haircuts and it's fantastic it's not adjusted for hidonic adjustment it's not there's no tariffs there's no China there's no Russia there's no shortage of this there is no AI there's no GPT just how much does it cost to hire someone who hasn't gone to college uh rent a small retail space and pay a bit of insurance uh and And there you can really clearly see what I've been talking about for four years is before COVID were at 2%, now we're at 4%. And it's really not coming down. Um so yeah, if we look at this kind of core X, you know, X core goods X goods X energy, right, which we agree is probably um what we should do for for sticky inflation. um you got this this push and pull dynamic between shelter that's going down uh and then these core services that's that stay at that four 5% level and I think one reason they stay at that four five% level is because insurance costs are insanely high in the US and they're not properly measured into the CPI um I mean I've in California I see the you know the the huge increase in premier after the the the fire people in Florida and the south tell me the same thing uh because because of the hurricanes down there. Uh so to me that's accumulated inflation that will want to to show up. Um and um yeah, if if that's right, I think that's what the um the market cannot really uh brush it off the way it can say, "Oh, don't worry, it's just Taris. It'll be over in a month." Right. Right. Okay. Let's talk some charts. All right. So uh we got to start by talking about this S&P 500. Obviously uh we had a very challenging March and April month uh that saw uh one of the uh fastest declines of uh outside of the few bare markets that we've had over the last couple decades. Right? So, we wiped out 21% on the downside in a in a pretty clear fluid motion and a short-term low comes in and since then the stock market has been in a rally and the big debate is this a bare market rally or was the bottom already formed and now just like a COVID bottom you know this thing uh starts to progress higher from here and it's all behind us. Uh I'm obviously in the bare market uh camp and and another leg down. But first of all uh are which one do you kind of lean towards uh on there? And the second question to that is that if I'm wrong and this market does progress higher, what would be in your mind the tailwind behind a market that will continue to bull if uh my thesis is incorrect? I'm I'm with you. Um I uh I I think the tops are are long processes. Um I wouldn't I you know the COVID stuff it was so weird. Yeah, that was a clear you know V-shaped bottom. Um but again it was such extraordinary like that I don't think it really applies uh to me. is still in this kind of topping formation and it can be um painfully long um and there are retracement and there's nothing extraordinary about this retracement. We retrace about half typically retrace to third uh so I think we could go to you know the the fibo whatever uh Fibonacci retracement level that that's your thing uh maybe that's a good target there. Um remember wait I mean it was so long right I mean we had the first Yeah. I mean the burst blow up was at what Mar February of 2007 right? Yeah. And then the market kind of tread waters makes a marginal new high in the summer of 07. Um and then even even even the first half of 2008 was quite good. I remember what is the big that was that was the crazy part right. So this is what you're talking about the bare sterns blow up. Uh we had about a 12 15% decline in the market and the market managed to still make a higher high in October in spite of the fact that we already have subprime blowing up. Banks were uh already 20 30% off their highs and still the market was hovering along those highs. Um the the but the part to kind of uh respond to your analysis is that here we had about a 20% market decline but then Q1 of Q Q1 Q2 of weight is not bad at all. Yeah. And then and more importantly that was almost well from the act depending on which low you want to go but let's say the lowest level that was from the kind of crash drop it took 118 days four months that the bare market rally lasted as it um as it retraced. And so, you know, here we are literally just one month into um into this bounce, but we've already retraced half of the of the losses. So, the it's one of these kind of puzzle pieces. Well, there probably, if our thesis is right, there probably is only a limited upside, but maybe no immediate catalyst to go down. And so, we're we may end up spending the entire second quarter chewed up in trade ranges. kind of failed failed rallies, fake out breakdowns that that sucker short sellers back in to only have it rip back up like it could it could be messy. Uh can I can I plug my research shamelessly? Yes, please do. Thank you. Thank you. And we're all here to make money. So, uh my my 2024 2025 outlook December is called Beware the Eyes of March. and I I probably never had a a better time title and and all that. So, and then as I saw the and to be honest, I did not expect the tariff to be so crazy like that was just icing on the top. My my case was just it was going to look stackflationary anyway kind of things that I talked about the the negative fiscal impulse blah blah blah. I mean, so I saw the tariffs by by by uh early April. I was like, "Okay guys, this is I published another report which was called uh spring rebound summer full correction." And I think that's exactly what you described. um it was so oversold right by um midappril that it's like okay it's gonna bounce and I think we got that spring rebound and now we're kind of transitioning into that similar area where uh yeah we remain range bond it's not very interesting people you know in the summer people go to the Hamptons or whatever and then the real action happens in the fall and then depending on where the economy goes um I suspect it's going to be going down But you know uh and then we that's where we retest the lows that would be my playbook. So uh the question I have for you is this. So typically um market corrections uh are that are not bare markets typically correct uh when the multiples get too high again everything gets a little too frothy the market just mean reverts back to a more normal level and then kind of resets and starts up again. And that's a market correction happens once a year or on average whether it's five or 10% but they they happen frequently. But when you're talking bare markets whether it's 2022 whether you go back to the financial crisis whatever there usually has to be a genuinely fundamental driver behind sustained decline. And now 2022 was really a bond bear market that dragged equities down, right? Like that was, you know, everyone looks at it from an equity, but I'm like, no, it was it was it was a bond bear market. Now in this sequence uh or at least in typical recessions in the past you would see uh corporate earnings contractions uh and and that uh when we see that uh expectations for guidance and everything start pulling back then they start um pulling multiples out uh for what they're willing to pay for these stocks. And those are the the kind of scenarios where you could see 30% off the highs, 40% off the highs on the stock market. Is your September scenario driven in your mind by corporate earnings being a contributor to uh to a deeper correction or is it just really this yield story that you're you're talking about? like what what do you or obviously both of them could be happening at the same time but like what what in your mind when you're constructing this you obviously did your analysis on this now how do you envision the the catalyst being or the drivers for a deeper correction it's both um it's both so let me start with the the the yields 100% on you your point being you know 2020 is a bone bear market that spills over into equities I I think we haven't done the full speed over yet. Like I think the equity market still thinks, you know, if you look at that the long-term cost of capital, it's not where it needs to be. Uh it's not ready for what I think is the real world, which is yeah, may maybe f you know, in your dividend discount like you know, risk-free rate is is 5%. Uh because inflation is is you know, whatever 34 and term premium is structurally higher and all these things. I think there's still a bit of juice uh from that. Uh there's still, you know, excessive bets on how the Fed's going to cut. You see that in in the Fed funds futures the um so there is some of that 2022 juice left uh in and it keeps coming back like in a bad movie where the dead guy won't like the the ghost of the secular stagnation uh lower for longer is still not fully dead. in the same way that the ghost of the high inflation in the 70s kept haunting the market in the 80s you know the bond market vigilantes whatever like but we had hyper sensitivity to anything that s inflation in the 80s I think we have hyper sensitivity that anything that sounds like low rates um now and and and we need to fight that and that that means that you need progressively your your your implied cost of capital needs to go higher so that's the first part and the second part is exactly what you indicated on on on earnings uh and margins Especially I mean there's this big debate why the US exceptionalism why US companies so much more profitable than the rest of the world and you know being Americans it's obviously because we're better than everybody else. I mean that's that's obvious, right? We obvious obviously uh I would be open to the possibility and I'll just suggest a crazy hypothesis that the you know 7 billion or so humans that are not Americans are not structurally dumber and their politicians are not as may not be structurally dumber than the obvious genius that are currently running the White House. uh but that the maybe the reason why US margin was so high is because we're the only country in the world that kept running a deficit of 7 8% of GDP 5 years after COVID uh and that this abnormal uh deficit fed into the margins of companies that you know maybe even directly contract with the US government. Uh and uh if we uh we also benefited from basically free capital. Um so we had a much lower cost of capital. Uh we had this massive uh effective subsidy from from the government. I I see both both rugs being pulled at the same time. Uh foreigners are no longer wanted to just oh you know just buy Microsoft and Nvidia. Um, so we we we lose our access to cheap capital at the same time as we need to get real on on deficit. So at least maybe the deficit keeps going, but it's no longer painless because we finally sucked out all the liquidity from the reverse report facility. We no longer just can sell it to foreigners. So we actually have to compete for capital. So the cost of capital goes up and we realize that this these 13 14% S&P margin where uh the exception, not the the norm. uh and um yeah if you look at how EPS EPS expectation are I think shortterm people have have written it down because of of tariffs but it's it's the idea is that EPS is going to rebound in in Q4 um my expectation is the opposite in Q4 it's finally when it hits maybe we can we still have like you know a little bit of because people sell inventories or whatever they adjusted the tariff pause so maybe we don't get we still got because earnings this season have been great comp you know maybe we have one more but the more time passes the to me the more like the likelihood it becomes that we see this margin come down right and it's really uh I think about uh when when the guidance has to be adjusted like when when these companies finally say that you know you guys are the the the bar is too high we're not going to clear this and and they start guiding lower there's an enabling effect like the the moment you see a couple big companies do it it's like okay now now it's okay now we can talk about almost an overtone window, everybody does it and then oh that's when people start laying off and that that that's when the recessionary dynamic starts to play out again. My guess is that it probably Q2 Q like when they report Q2 maybe they start getting lower for Q3 Q4 maybe that happens when we report Q3 in Q4 but it's it's around that time. There you go. All right. So let's um overall just leaving the the uh stock mark leaving uh this topic I want to just top touch one thing um what would you view as a realistic expectation for downside risk of this S&P like do uh are we just retesting lows around 4,800 or uh or I've heard some quite bearish views that we're going to go 4,000 on the downside of the S&P. Uh like uh what's how would you like obviously you have you're biased that there's another leg down, but what's the severity in your mind that you think is a downside risk? I'm bearish, but I'm not that bearish. Um I would say yeah, that four 4,800 number you suggest is so yeah, 4,800 on the S&P uh is probably where it needs to be. So we retest maybe go a little bit lower but again I'm not in the recession camp. So if if you don't think there's oh maybe there is a recession but it's it's kind of a 2022 recession right? Oh two quarters of negative GDP but not everything turns at the same time right or maybe like 20 thou so so it's this big 50% plus decline like we had in a way like like we had in 2000 uh typically happen with with a recession. So I, you know, I think top to top to bottom. So going off the the February peak, maybe 25 30% from from the top. So that would probably take us in that 4 4,800 range that you mentioned. Yeah, perfect. All right. So let's move on to the US dollar. And so let's start here with the chart on the US dollar index. And uh what it was quite the doozy of a drop that basically is now uh has the dollar had having broken uh below that 100 level that acted as a very key low throughout the last two years. And uh not only did we break below to a lower low, but the bounce arguably in the last month off of the low is nothing short of pathetic. Like uh to me there's a reflexivity in markets which is why the stock market shot up 10% in one day after a dropped you know in violently there's usually some sort of proportionality. So you would think that with a a drop of you know five six uh um Dixie points in a span of a month that you would see a a reflexive rally that in some way had the dollar making higher and it's not materializing even right now as we speak there there was that little pop in uh in the um US dollar and they're already giving a chunk of it back. This has been a very weak rally. So is in your mind this kind of 98 level on the Dixie fair value for the dollar and we're going to see far more stability at these prices even though the price action is weak or do you think the dollar is vulnerable for still even further lower uh repricing like maybe we see 95 or lower on on the Dixie? What are your thoughts? lower. Um I and and I I see that as I see that as a good thing. Um the dollar has been too strong for too long. The only way we solve a lot of these global imbalances is to have a a weaker dollar. That would also help caution the economic outlook. I I mean basically, you know, if you go with a dollar milkshake and you know, Euro dollar, all these guys you had on the podcast, many of whom are are friends. Uh it's a very dark scenario, you know, with the dollar wrecking bowl. Uh I I tend to be a little bit more optimistic and and I think things that are unsustainable eventually are not sustained. And I I don't really believe in in doom loops and I think economies adjust humans figure it out one way or another we need to get that down uh the dollar down and I think um yeah uh we are you know that that's what's transpiring there was this view that um you know the tariffs would Trump won the dollar went up on the tariffs right that the tariffs would be the trigger for the dollar to just going parabolic and and and break down the world economy it's the exact oppos opposite. Um, the other thing that I'll point on the dollar is, you know, these these moves and I think that's that's the logic behind the the driver behind what you said about this crappy bounce is these these moves are self reinforcing. Um, so why is the dollar going down? Uh, because foreigners are freaked out and they're putting money away, right? As they do that, it brings the dollar down. Now, these foreigners, who are they? They're they're you know an insurer in in in Germany, a pension fund in Japan, a life insurance company in Taiwan that you know bought treasuries that are hedging that now suddenly they look at the TNL and they see holy crap like my US position. Why am I doing this? It's underperforming my my my my index. The currency is killing me. Uh the regulator is bringing down my neck. The politics are horrible. Yeah, I'm going to and and these guys are all loaded US. I mean that's my job is to talk to pension fund in LATAM and Canada in Europe and I spend all my time talking about the US when I talk to a US pension fun I don't the reverse is not true right I mean this is a this is a one-sided love affair here um so that that movement of of bringing capital back is self reinforcing and this is why these dollar cycles are so long right you can break it down in decades almost like uh since 2011 dollar everything international down and you can every decade before that was the opposite right in the 2000 it was the bricks it was the EU enlargement a decade of out performance international 90s the exact opposite internet bubble Mexican tequila crisis east Asian crisis in the 80s we had the plaza so it almost fits decade by decade my view is we are in a decade of of you know capital repatriation weaker and again it's a good thing it is healing the world. That's what the world needs, right? So, we here's the monthly chart of the US dollar index going back to the 80s. And what we saw was the two s significant US dollar bare markets that happened uh the one uh in the kind of um uh postrean period or organ. Exactly. And then you obviously had the um the the 2000s which was an extraordinary commodity bull and and so the one thing to highlight is is that you know a lot of people when you say I'm bearish US dollar and the US dollar is going to go down they often are oh you're you know the end of the petro dollar and all this doomsday but like but the thing is the dollar has lost you know 30 to 50% of its value on multiple occasions and it wasn't the end of the dollar system and it wasn't the end of the world. It was just a a massive repricing over a decade um that that was playing that out. And so we have been over the I would argue over the last decade uh been blessed with two incredibly boring trade ranges of uh of uh of dollar levels, right? where we've all complacently got used to there being no currency volatility. And um and you know, the idea that we could return back to a period where currency volatility is uh is back doesn't have to result in some sort of a doomsday scenario, just simply a massive repricing. So I I could see that the the puzzle for me to solve Vincent though is is that you know what time frame is like well sure we got this huge you know 12point drop in in the Dixie in a very short window of time but uh what is the where's the the money flow for the rest of this year because okay you could make the call that the decade we'll see you know maybe we'll see 80 or on the Dixie or something like this but uh What about this year? Like do do we get down into the mid to low 90s in just one year or or is this already uh is it going to be much more gradual over the course of uh of multiple years? Keep trying to nail me on short-term coal. I prefer not to you're avoiding it, you know, decade plus. Uh uh let me first address one thing that you mentioned uh which was this these trading ranges uh the two trading ranges that uh you highlighted on shorts they were not accident they were the product of policy choices they were basically central bank coordination right you had the Asians that were basically pegging to the dollar and recycling their surpluses and preventing their currencies from rising and then you had the euro the Europeans and Japanese at time explicitly coordinating with the Fed, you know, when they had the CRA pact or um there was a couple of these arrangements where the central bank coordinated and said, "Okay, we're going to manage volatility uh to keep it where it's at." Um and to your point on volatility coming back, it's very hard to see this kind of cooperation happening going forward given the amount of bad blood that there is. Uh, and I think we are moving in a world where everybody is is is on their own and um, you know, we're no longer kind of taking one for the team. Oh, well, yeah, the Japanese need a low yen, so we'll all help that out. Or, yeah, power needs to hike rate. Uh, maybe it's not good for my economy to do it now, but, you know, we don't want the dollar to go up that all that much, so I'm going to raise in Europe as well, even though it may be too early for me. Like, this kind of calculations were part of that world of yesterday. and um and I I don't think there'll be there'll be much of that going forward. So that would argue that that the norm is not these these training ranges are managed and if we go unmanaged we'll see wide ranges. Um which you know I'm not trying to dodge your question. Um I I I I I think we can go lower. Yeah. On the dollar. I mean listen we haven't the dollar index is a hard one because you got such a huge weight on the euro which is not the not the sexiest of the currencies. Uh but even at 1.1 I don't think the euro is that expensive, right? Same with the yen at 140. Uh you know, we're basically back where we were six months ago. So um yeah, I I would think the um um by your end, yeah, dollar index is lower. All right. So, uh, you know, for me, I I was looking for a bounce that would be a little bit more pronounced. And the fact that it's such a weak bounce to me means that the prevailing distribution and and sell cycle is still dominant. And that does continue to make the the downside vulnerable. Like it's it hasn't neutralized itself in any way. Like I would argue that when we look at things like the Euro stock index or the NIK with these rebounds uh of such u enormous strength it they've almost neutralized the sell cycles but that's not evident in the dollar whatsoever and so the prevailing downtrend is is is definitely underway. I'm going to talk gold but before we do we got to talk about the asset that shall not be named Bitcoin. Um but uh the the the crypto asset uh had a big breakout. Uh it ripped uh almost 6,000 points on the upside yesterday and uh broke those fib levels you mentioned earlier, but uh we now are approaching its uh its December and January highs. And uh and so begging the question, you know, is this going to surprise again with another leg higher on there. Do you have uh uh any opinions or do you generally avoid talking crypto? I generally avoid talking crypto. Um I have philosophical sympathy. I I I see a role it can play in international monetary system. Uh but it's really not my area of expertise. So I'll uh I'll I'll what's what's your take on it? Well, listen. I all I'm just observing is that uh the breakout was pretty real. Like it was lagging. Gold was trending. Obviously, a lot of the people that own gold like to own Bitcoin as well. A lot of them view it as a a diversifier. And um gold's been running and Bitcoin was left behind. And the fact that Bitcoin had this breakout in this manner, I think that it will once again get a lot of attention if it can break to an all-time new high. And one of the things I believe a crypto needs more than anything else is momentum and headline press and for for flows. And um and if this manages to break to an all-time new high, it could feed that uh feedback mechanism of buying uh that that could drive a move to 120 to 130,000. So technically, I'm watching whether or not this follows through and manages to break out uh because it's going to get once again all the headline press uh on that upside. Let's uh quickly change the topic before I get you get you uh talking too much of that. But let's talk gold. And and gold broke out this week. Almost attempted to make a fresh new high on a on a closing basis. It was very close to almost a fresh new high. Pulled back a little bit, but it's still a prevailing bull trend uh on the upside. What's interesting is things like silver, platinum, platium, other precious metals, almost no participation in this. This is very much a gold thing. Kevin makes the argument quite a bit about uh not argument but but clearly there's evidence of it of the Chinese central bank buying and other things driving this. Uh but in your mind uh is this still midame or is this gotten too frothy and and and gold is uh is uh going to run out of momentum? Do you have uh what's your bias? Uh long I mean it's been like that for for several years now. Uh again I'm kind of a you know secular inflation. Uh financial repression is the solution. uh and we need to fix the global monetary system one way or the other. Uh so all these things um and to Kevin's point um you're really fighting an elephant here. You know the the Chinese have I think it's around 4% in gold reserve. They probably wanted to get closer to 10. Um they have the money. Um so and and every time it drops they keep buying which is why it's exact opposite. This chart is the opposite of the dollar, right? In the dollar, you see these bounces and they kind of weak. Um, in in gold, the corre the retra the the corrections are short and shallow and and the bounces are bigger. So, even from a chart perspective, I think you can you can see that in the charts. So, um yeah. Yeah. For me technically, uh this um the bulls need to really like obviously I'm bullish longer term just like you. So, we're in agreement. So, I'm going to just observe some short-term technical uh levels that for for our listeners listening. But to me, 3,300 uh that held this morning is is actually a pretty important short-term level because so long as the bulls uh use that as support, rally it back up to the highs, then you want to consider the bulls playing immediate short-term offense and that 3700 upside target is still 100% in play. The the one thing that ends up happening, Vincent, is that even gold being long-term bullish, it enters periods of uh multimonth consolidations like here and here. And what really in my mind is is that either gold is in the bull phase and it's still ripping or we've gone too far too quickly and it takes a break and consolidates then just buy the miners, you know. Yeah. Yeah. That's they're printing money at this, you know, at if we stay above 3,000. Oh my god. You know, uh the worst the worst you expect for gold prices is a two-year consolidation at 3,000. Yeah, absolutely. The uh but uh to me uh like if you look, let's say uh on both of these prior corrections, the market kind of retests the highs and then just sits in a pause. to kind of retest the highs and and sits in in this trade range. And so to me, 3,300 has to hold and the bulls need to clear 52- week highs in the next week or two in order for uh this bull trend to be intact and and still going. If we break below 3,300 and and are hovering down at the 50-day moving average, it is materially uh increased odds that that the shortterm run on the upside is paused. and we've entered one of these consolidation periods that may define the entire second quarter as as uh as gold kind of taking a break and uh and so that's but now I want to talk about your call here on gold miners. I I get it they're going to be printing money at these levels but generally there's been an incredibly strong correlation between gold and gold miners. Uh but in your mind can this they decouple? Can they uh almost take over and and uh and just run even if gold doesn't move? Is is that what you were implying? Yeah. Through just through the earnings game, it's been very hard to get significant investor interest in in gold miners. Uh even even as gold has has really gone up. I mean, if you look at the flows, it's just nothing happening there. Um so I guess one way that they could make it is just through the the quant models of qu like you know companies are looking for positive earnings revision expanding margin growing stronger balance sheet um gold miners are going to start popping up and and that's how they get bought just because the fundamentals are so good. I mean could you think of a better envir $60 oil and 3,300 gold? I mean, this is at the end of the day, gold miner is that, right? So, synthetic long gold, short oil and and it's just just the best environment for them. And um so and then they still Yeah, they r quite a bit this year, but they still lag if if you do a longer longer chart since since gold started to run. I mean, B miners only started to participate um six months ago. Absolutely. they l literally since the start of the year they they've uh the moves really gotten underway. So, uh I want to uh move on uh to just going back to bonds now because I mean we talked about this. Um now obviously you feel that the 10-year uh yield, let's look at the yields versus the bonds. So, the 10-year yield in your mind is where uh that upside risk is where where it could shock the economy. Um now, what the question I have for you is this. First of all, um what's your take on the short end versus the long end? Are we talking uh a a huge uh steepener in in the yield curve? And if we are uh is it dri driven by the bull steepening of of the fact that the Fed is inevitably going to have to ease or are you are you in that bear steepening where you think that this is we're going north of 5% inevitably and and we're going to just see this huge divergent driven by long bonds getting hammered. like what how do you size this up and what like what charts can I put up here to collaborate this? Um so the curve moved a lot after last week right I mean if you had asked me this question uh last two weeks ago last whatever I you know when they're pricing these June June calendar I would tell you it's it's it's the the front end that needs to to move higher. um we we've had a lot uh I I would look maybe uh [Music] uh like 2026 so one year out uh is probably where the the so to answer your question is it's not the front still kind of frontish but like uh one to two year maturity I guess is maybe where where it needs to to go back up Um because uh yeah, there's a chance that yeah, the economy remains stronger. The Fed wants to stay we keep pushing these cuts out. You know, the the Fed's not cutting June and then the same keeps happening. There's no cut in 2025 and and then so the one that needs to move the most is is probably uh um I think that the low for rates is around uh yeah, December 2026. We we still have a 3% Fed funds rate implied by by the curve. That that seems wrong to me. What what level on the a 10-year do you think uh we'd have to see for uh the Treasury and and the FOMC and everyone to start uh being concerned and like I mean are we is it just a north of 5% number or do would it have to be considerably higher than that before you you'd start getting uh you know the all of the important people talking about uh how we can rein this in. I think it depends on the the market's reaction, right? The market just whistles through it and and spreads don't move and uh looks like the economy is fine. Okay, we just we just reset to high um higher rates. Um yeah, my guess is that based on experience, the market really starts to puke when we get um tenure sustainably above 4.7 4.8%. Um, and my guess is that it's going to happen again in in in in the fall or in the summer, right? So, so you you continue to think like you were saying earlier that this is going to be one of those things that the market's not ready for on that. Now, do you think that this is driven uh by issuance? Is this by driven by the fact that uh that the foreigners are selling so aggressively? like what are the precipitating drivers that will push yields this way? Um so we solve the uh the debt ceiling. We refill the TGA. We have to issue a lot of debt. Uh this is uh again the reverse shipo facility is all but empty. So we we going to have to take the money from from somewhere bank reserves selling assets. Um and yeah, foreigners are not not not not buying, don't want to add to it. We have all these noise about a Mara Lago uh Zultan Centennial bond. So, who wants to uh you know, if you're a foreign central bank, that's not exactly confidence building. Um so, yeah. Um and again, we're not that far off. So, you know, you could get there in a couple days. Now, how how much do you um follow uh European markets versus uh American? Are you predominantly uh focused on the American markets? No, now I am more focused on US. I mean for for 15 years I followed Europe. Um it used to be so boring that I almost quit and now I think Europe is getting interesting again. So I I don't What do you want to ask about? Yeah. Okay. Well, like you know, I thought it was really interesting because Okay, we could look at the Euro stock which was uh relative here. put on a daily. It was obviously outperforming at the start of the year. Uh clearly rotation there was going on, but uh once we got to the liquidity event of the Trump tariffs, uh we had a very rapid uh decline on the downside. Uh obviously there's been a rebound, but what's interesting is is that it is a lot of the smaller uh European equity markets that have been running so hot like uh let's say Spain uh uh dipped immediately rocketed to a fresh new high. Uh Italy uh rocketed to a fresh new high after that drop. Greece rocketed to a fresh new high on there. Like I I'd love to under I I don't know why these smaller equity markets are getting more of the the juice on the upside than obviously German or or French markets. Uh do you do you have a thesis as to why this could be underway? It's not really a thesis. Just has to do with the the the composition of the market. I mean, if you know what what people say about the Max 7 and the S&P 500, I mean, you can say the exact same thing about uh Germany and and France. I mean, Germany uh S is about 17% of the index. So, bigger than uh I think Nvidia is probably like what five seven% of the UI. I mean, yeah, it's free time. You know what I'm saying? Uh Sean's 10% Alliance. So these are names that you know in a trade war don't do so good. Um so that's why Germany is not participating as much. Uh and then for for France uh it's it's LVMH. Uh let me let me get the exact number on on France. U LVMH is 8% of the index. Um so a bit less but you'd have to add L'Oreal Hermes to that. um these guys get hit by the terrorists real bad. So it makes sense. Or or if you look to at Spain or Italy, your biggest players Spain is probably gonna be uh Sand Bola U which you know domestic or LATAM, right? That that's what drives them, which which is fine in both cases. Spanish economy is pretty strong. Uh Latam I is my my top pick for for 2025 is Latam. Uh you know they they mint money over there. Um so yeah index composition right right so uh what now one of the hottest stock markets in the world has been Argentina uh and um so we've basically had this thing since uh Mele's come in basically it's been two three years of this thing going three 400% to the upside and it looks like it's about about to break to a fresh new high is someone late to this game now uh buying in here or is this still uh an outperformance story here? I I don't follow Argentina as much. I would say that if you're worried about being late, then play with Brazil. Uh because one thing that the the Brazilians can withstand a lot in terms of looking like fool and and and messing things up, but they cannot withstand lose losing to the Argentine. That that's a level of of humiliation that's not not okay. You know, they can be the the joke of the world. As long as the Argentines are below them, that's fine. But if you see Argentina getting its act together, Brazil will follow. And you can see the politics already playing out, right? I mean, Luda's approval rating is super low. They just look south of the border like, "Oh, wow. Looks like looks like it working." You know, Brazil has this huge real rate problem that is really a political problem at the end of the day. It's because the central bank and and and then and and Luda butting heads. Uh but if we have this kind of weak dollar, uh better global growth as I expect, then you play it then Brazil is going into election next year. Um, I think the market will sniff that out. I mean, I'm sure you had my friend Paulo on he can talk to you. Yeah. And what I like about Paulo is that he's usually a big Brazil bear. So when you see him turn like that and he knows what he's talking about. So I I would say if you if you're worried you're late on the Argentina party, buy Brazil. The other thing about Argentina, you such a big weight on on on Mecado Libé. Um I don't know the Argentine index all that much, but I I think you get more diversification out of Brazil. It's just a bigger market, bigger more exposure to commodity stocks which uh which have been dragging their heels quite a bit, you know, and the pro bras and the val and everything. Exactly. All of these all of these plays. Uh the do you is there a part a particular Latin American market outside of Brazil that's uh that's uh one that's high on your watch list? I would say Brazil is the is the biggest one and as Brazil goes it it will carry uh everybody with them because it was interesting uh the the the Mexican uh stock market which was in a pretty tough bare market uh for uh for 2024 on the downside really looks like it's banged out uh some sort of a short-term low and turning up it's above its moving averages broke out of the trade ranges uh looks like it earn early innings. You think that this um is a is a would you basket this in the same kind of Latin American trade as uh as the others? I mean big picture, Mexico is a derivative of of the US. Brazil's derivative on China. I am more positive on on China than I am US. I think that that bounce in Mexico was um shining bone the the the the president being quite astute in the negotiations with Trump and kind of dodging dodging the blows but um it's you know it's still you know if I think the US economy is slowing and we'll have this kind of erratic policy making I mean Mexico really gained from the first trade war you know basically it was you know we punished China and and French and you had this huge boom in Montter Noon, Super Pezo. Um, yeah, there was a 2024 was bad, but if you if you zoom out the chart, you'll see this fantastic rally of of Mexican assets. So, to me, the the story in Mexico, I I see more downside risk in Mexico, uh, or at least the the up the up story has been played out where in Brazil it has not. Awesome. You know, I love it. So, bye Brazil, everyone. There you go. All right, Vincent, is there any uh stock or market that I didn't mention that we should have covered or uh or you think does good? I think it was awesome. All right. Listen, Vincent, we have a whole bunch of uh listeners that uh if they want to find you or or follow your stuff, where can they find you? Best place to go is well, if you're a client of Stone X is to reach out to your uh SonX rep and say, "Hey, I want to get Vincent stuff." Uh if you're not familiar with StoneX, uh we are the uh largest financial company you never heard of. Uh we're Fortune 100 company. Uh we have uh pretty much our hands on in everything. Initially it was commodities but now we do everything options, ADR, securities, uh rapidly growing. Uh stock has been on a tear. Uh so talk to us. Uh and then if you cannot talk to us, uh yeah, Twitter is great. My handle is Vincent Deard. V I N C N T D L U A R D. Under my profile, there's a pin tweet uh where you can sign up for a free trial. Um you can also reach out via DM. Uh I try to to answer them. Yeah. Uh and then um podcasts. I mean, it's it's just great. I mean, I um uh I hope Kevin can can come back and uh Oh, I you know, Kevin loves chatting with you. you're you're going to be on the huddle back in no time. It's uh it's always a pleasure, Vincent. It's uh thank you uh thank you for joining us so much. Uh so well, this is where we'll wrap up today's market huddle. Thanks all our listeners for tuning in. Uh there's a very good chance that Kevin may make appearance in the the next huddle episode, but uh we'll we'll keep you all up to date on that and see how that goes. Anyway, thanks everyone and we'll catch you all next week. Cheers.