David Hunter: The Final Melt-Up of a 43-Year Bull Market Before The Global Bust
Summary
Market Outlook: Calls for a parabolic final leg of a 43-year bull market with S&P potentially reaching 9,500 before a 2026 global bust and deep bear market.
Breadth and Sectors: Expects a broadening rally into small and mid caps (Russell 2000 target ~3,800) with cyclicals like Financials, Industrials, and Consumer Discretionary participating.
US Treasuries: Bullish on bonds with Fed easing and falling yields; sees the 10-year potentially hitting 0% in the bust, making Treasuries a key capital protector.
Precious Metals: Very bullish pre-bust (gold ~$5,000, silver ~$100) and post-bust (gold ~$20,000, silver ~$500), with miners likely to outperform the metals.
Energy & Commodities: Forecasts oil ~$30 during the bust then ~$500 by early 2030s amid an inflationary, commodity-driven cycle; broad demand for copper, steel, and other materials.
Reindustrialization: Anticipates reshoring and an industrially driven recovery that strains existing capacity, boosting commodity prices and Materials/Industrials leadership.
Risks & Policy: Warns of high global leverage, potential domino bank failures, policy hesitation, and significant dollar swings (DXY to ~82 then ~120) during the bust.
Strategy Shift: Advises against passive buy-and-hold of last cycle’s tech-heavy leaders; expects leadership to rotate toward commodities, Energy, and Industrials post-bust.
Transcript
I'm describing this as a final leg of a 43-year secular bull market. Uh, and I think it's going to go parabolic. Probably the biggest rallying in history in my opinion over the next couple months. I am expecting 2026 to be a pretty negative year. In fact, I'm calling for a global bust. And I define a bust as something worse than a normal recession um but not as long as a depression. But it will be it will be accompanied by a big financial crisis. So it's a lot like 20089 except I think it could be bigger than 20089 because >> don't forget to sign up for a free portfolio review with one of our endorsed investment partners at wealthon.com/free. With markets hitting all-time highs, now is a great time to stress test your strategy and be prepared for what comes next. Hello and welcome to Wealthon. I'm Maggie Lake. Joining me today is David Hunter, chief macro strategist at Contrarian Macro Advisors. Hey David, thanks for joining us. >> Hi Maggie, thanks for having me on. >> So we seem to be at an in interesting juncture for markets. What's your Let's kind of start big picture. What's your macro outlook as we close out Q4 and turn the corner into the new year? >> Yeah, I am I have been and I remain probably the biggest bull on the street. Um I am looking for 9500 uh for the S&P. um not not by the end of the year, but certainly first quarter is very possible and and likely, I think. Um I'm describing this as a final leg of a 43-year secular bull market. Uh and I think it's going to go parabolic here in in coming weeks. So, um I know people have reacted to the recent sell-off and started talking about a top and getting a little more bearish. Um, but I see it as it's amazing. The the sentiment is still very um skeptical, still very cautious, and yet we're at all-time highs or very close to all-time highs. So, um, that's the kind of uh setup I think for what I'm describing, which is, you know, uh, probably the biggest rally in history in my opinion over the next couple months. >> Wow. So, talk to me a little bit about the nature of that. Is it is it you know uh kind of concentrated again in those tech names that have been leading all the way or do you see this as broadening out um as we sort of accelerate and and and spreading to the whole equity market? Are you sort of bullish across the equity spectrum? >> I think it is going to broaden out. It's it's unusual to go into a major top and not narrow. We have been narrowing obviously um but uh I think it's actually going to broaden out into the top. I am I have a a target for um the Russell 2000 of 3,800. So that would be from here probably I haven't done numbers recently but 50% type thing whereas you know the S&P probably is maybe high 30s or 40%. So so um I think it is going to broaden out into smaller caps and midcaps. Um I also think some of the um areas that um have lagged technology certainly are going to uh do very well here in this last leg. Financials look great. Um I think industrials continue to look good. Even surprisingly even consumer discretionary uh looks like it's going to certainly participate if not do very well. So um it's hard it's hard to imagine that when the economy is slowing and um you're seeing some signs of stress in the economy and yet it's almost feeling like um it does at the beginning of a cycle you know um like 1982 or 2009 um it's as the Fed begins a big easing cycle you see some of those uh cyclicals really take off and I think that's what we're going to see. >> So so that's interesting. I'm just going to ask you what is the driver of this if we're going to see this strength at this point because it does feel like there's so much worry out there. So, what's driving it? It sounds like you think the Fed easing is part of it. >> It certainly is part of it. I'm I'm a a big-time contrarian, so sentiment is a big part of my work. >> And there just is tremendous caution, particularly on the part of institutions, as I've said, and I was bullish uh in October of 2022 and said we're taking off. You know, back then I was calling for 6,000. I've raised my targets several times. But all the way up here in the last three plus years, institutions have remained cautious, have had, as I've said, have had one leg out the door. Um, kind of thinking valuations are high. This thing can't go much farther. And they've reluctantly kind of gone along with the momentum. But I think they're about to turn more bullish. They're you're starting to see it. Um, and I think what you're going to hear in the next few months is that with the Fed really beginning an easing cycle, um, that you may have a couple years to run. I don't believe that. I think we're going to see a top in a matter of months. But, um, I think what will drive this is a feeling that, hey, this is, you know, we've got a lot more, um, road ahead. um that with the Fed easing um you know earnings are going to pick up and the economy is going to pick up again. I think that's a part of it. I also think the bond market looks great here with or without the Fed, I think rates are going to come down quite significantly. So again, I'm contrary to I think most of the street, but I think um even the long end I think is going to do very well here. So, so lower rates, uh, still very good earnings and a Fed, uh, the Fed's easing and wind at your back, um, I think can help propel this. And then, of course, yet on to that, the need for the institutions to catch up, um, you know, so FOMO will play a role here. >> Yeah, it's so it's interesting though because if you think bond yields are going lower and the Fed's easing, usually that's because there's weakness that they see. So, how are you kind of squaring that? Because I think that's what has a lot of people a little bit confused or a little bit, you know, um, sort of stuck in this phase of worry that wait, you know, it's like not necessarily a thing to celebrate if the Federal Reserve is worried enough that they need to be reducing interest rates. >> Yeah, it's that's why I say it looks a lot like an early cycle move where if you go back, you know, I started in this business in 73. So if you go back to 74 or you go back to 1982 or um the early 2000s or you know 2003 or 2009 those are all beginnings of cycles where the Fed was at your back. You know they were easing. >> The economy was not doing well when those markets bottomed and took off. The the difference this time is we're at all-time highs and we're going to get that. So I I am actually predicting uh we we could be in recession already. We we certainly have a have and have not economy. So half more than half the economy is um people struggling to just meet their their daily needs. But the wealth out there and the other half of the economy or certainly the top 20% of consumers are still spending because you know they have a lot of equity in their homes. they're the market's at all-time highs and you know they're doing well. So, so I think um under the surface even though you get a GDP number that says we're close to 4%. Under the surface you could actually when they go back and date a recession um which they do after the fact. >> Uh the NBER very often dates it and it's earlier than you ever thought it was. So I would not be surprised if it gets dated prior to now. Uh so we may be in recession already and if not we're definitely slowing. Um but with the Fed easing and I think going to have to get more aggressive easing in the months ahead. Um that's going to at least initially propel the market. >> Yeah. You're going to get that boost to liquidity, right? That'll that'll it sounds like you think find their your way to asset markets. It sounds a little bit like it sounds great what you're talking about except I you said the final leg and then you talked about it topping maybe as soon as the first quarter. So it feels a little bit like you know wy coyote off the cliff like things are great but you don't realize that there's nothing underneath you. How do you how do you see that sort of transition? walk me through the sequence of um your kind of bullish stance right now, but it sounds like you're going to flip that as we get into 26. >> Yeah, I I am expecting 2026 to be a pretty negative year. In fact, I'm calling for a global bust. So, if we are in recession or if we're moving towards a recession, I think that recession will morph into a bust. And I define a bust as something worse than a normal recession. um but not as long as a depression. So it'll happen in the speed of a recession. So 12 to 18 months long, >> but it will be it will be accompanied by a big financial crisis. So it's a lot like 20089 except I think it could be bigger than 20089 because leverage this time around is so much higher than it was back then. Uh you know we've got 330 trillion in global debt. We've got we know what our our debt is here in the US in terms of government debt, but we also have tremendous leverage in the system throughout the world. And we know from business school, leverage works great on the on the upside. It enhances returns um allows people to do well, but in the in the downturn, um leverage really exacerbates the downturn. So, um I think it's going to hit banking pretty hard. Um, excuse me. Um, I think we could see uh bank failures domino across the world. >> If you're looking for a simple, secure way to invest and own physical gold and silver, visit our sister company, Hardass Assets Alliance at hardassallalliance.com. That's hardassallalliance.com. Well, that sounds that sounds like a little bit more than that sounds like it's getting pretty close to depression if you have that level of how what is the catalyst for us to be going from this super bullish scenario which is being underpinned by some real things as you point out uh and then all the sudden cascade into something that's worse than the GFC which you know the wheels almost came off and that was a terrible situation. What? >> Yeah. I think what makes this worse than 20089 >> is we pulled back from the cliff. Then as you say the wheels almost came off >> when the um commercial paper market froze and the rumors were around the GE was going under. >> That was when the government finally stepped in and said we got to do a lot more >> and it pulled us back from the cliff. this time around partly because of 20089 I think particularly the the central banks but also the government is going to be reluctant to go that far again and they will have to and they will but it's that pause or that hesitation when things are unraveling in a in a a deleveraging that happens very quickly. So even if you are you know a month or two late it can lead to things going over that cliff. So um you know my guess is the Fed will be easing here but getting to a right-siz policy if this thing is moving ahead of it so that it's starting to unwind and they're you know they're lowering rates but they're reluctant to print money. So and then when they print money they say but yeah but we're not going to do the the printing we did last time. you know, we're not going to do five trillion like we did in 2020 and we're not gonna, >> you know, go crazy with money. We're not here to bail out the stock market. That hesitation, it's during that period of time that things can really um hit the skids. Um so >> it strikes me as you say that that this is happening against a backdrop of I mean, not that there's ever been unity in politics. Let's not kid ourselves. Um, we saw them vote down TARP and the literally the the floor floor fell out of the stock market in real time and we I watched that. I was on air while that was happening. Uh, but we are this is all playing out now in an incredibly divisive time politically across the world and a rise in populism and a disconnect between those who have benefited from financial markets and assets and those who feel really angry and left out. Does that complicate efforts to address something that's unraveling as you see this playing out? >> Sure does. And and I think we saw with the government shutdown, the other side is more than happy to let things get negative because they figure it'll be blamed on Trump and there's nothing they want more than to have Trump fail. So it's almost like that takes precedence over, you know, the country. Well, well, Trump, the Trump administration has also made it clear that they're focused on the real economy, not the financial economy. Although easier said than done. >> So, you can also see a situation where they are very reluctant to step in. Every politician feels reluctant to step in and save Wall Street. I mean, that is the legacy from uh the the great financial crisis, right? And it's not just in this country, in Europe, in their in their sovereign bond crisis and European debt crisis. There's a lot of anger that lingers about that decision. >> Yeah, precisely. It's almost it's almost a perfect storm >> in that uh they're learning the wrong lessons. >> They you know, even Wall Street is is telling the Fed, >> don't do what you did last time. You know, Wall Street does not think big money is a solution. And by the way, I should say this is not an endorsement. I'm not saying this is a good policy or a bad policy. I'm just saying this is inevitable. ultimately if they, you know, I think what leads up to is that they're reluctant to do what they did last time, but ultimately they will have to do it. And when they do finally have to do finally do it, the unwind that's happening right before their eyes um will mean I'm estimating you could see 20 trillion come out of the Fed in QE. So we did, you know, we did 3.7 over a course of a few years in in following 2008. We did five trillion in the pandemic. This could be four times that. And I mean and probably 50 trillion around the world when you look at all the central banks having to do the same thing. So So we will I think that's the easiest prediction I can make is what will ultimately happen. How we get there is the harder part is how bad it gets before you know the deer in the headlights moment comes where they say hey forget what we should do or shouldn't do we got to do this or else the system's fail you going to just collapse >> so they will save it and that's why I call this a bust and not a depression as long as they have the printing process and by the way I think we're the bust will mean we're heading into deflation short term so 20 by the end of 2026 six, we could be in negative inflation. In negative inflation, um the Fed will have no concern about inflation. They'll be concerned about saving the system. That means you can print money infinitely uh almost infinitely because the leads and lags to when that will then reflate things is well probably nine months to the economy and maybe 18 months to the inflation. So, so they'll be dealing with the here and now and not worrying about, well, if we print this money, it's going to be inflationary. So, um, ultimately they'll do whatever they have to do to save the system and that kicks the can down the road one more time. Even though it's going to be a pretty ugly year or 12 to 18 months, you will have a recovery. You will have another cycle. And then I think by the mid30s you'll have hyperinflation and and probably before that probably early 30s have hyperinflation, deficits through the roof, the debt through the roof and you can't solve that equation and things collapse. So so you know >> I love that we started out this conversation. I'm I'm contrary and I'm very bullish. You're you're bullish for four months or five months and then it all goes to hell in a hand basket from what you're saying. We're gonna have to put a little parenthesis on that when we >> Yeah, there there is just just to kind of follow um you know through to the process. It it is a case where ultimately this ends very badly. Um but they got to you know policy makers have to deal with the earn now. So they're not going to be thinking about anything that could be the consequence of what they're doing. And so my guess is it it probably the printing press got shut off in the early 30s if not before depending off how fast inflation comes back. I think we're looking at maybe as high as 25% inflation at the at the end of this. And if you've got, you know, debt of by then probably 50 trillion um and you have to service that and we can't service it at 5%. It pretty much is the end of the game, the end of the Ponzi scheme that's been going on for 80 80 or 90 years. Basically this is the end of a super cycle that I'm describing that started post great depression. Each cycle you know each economic cycle after that you kind of ratcheted up the excesses. So early on we came out of depression so there were no excesses and we had world war. Um but by the time we got to the you know the 60s mid60s and then the 70s and 80s 90s and beyond each successive cycle we've had greater excesses followed by greater tightening to take down those particularly inflationary excesses leading to bigger money to get us out of that. And so you've had this, somebody's described as a buggy, what, you know, the cycle's just got more vi volatile, violent, and we're at the end of that game where it reaches that point where there's no return because you've got inflation and you've got big debt and you have no printing press to print your way out of. And that's when it comes to an end. Now, the the Austrians, you know, people like Peter Schiff think we're at the end now. But because we're going to see, you know, very low inflation or deflation during this bust, you've got one more chance to kick the can down the road >> and then I think basically mid30s and it's not just us. It's a systematic it's a systemic collapse of you know around the world. Yeah, that's that that was one of the questions I had and it seems pretty clear that everyone's kind of stuck in in this problem. Uh when you talk about I just want to back up and and ask a couple things. When you talk leverage, uh where where is the leverage in the system that you think is so worrying because a lot of people will say, you know, like well American consumers delever in the financial crisis. Yes, maybe they're starting to take on more debt now, but you had a kind of cleanup of consumer balance sheets and to a certain extent of corporate balance sheets. Where do you see the that dangerous leverage lurking in the system? >> Yeah, certainly. And the other thing people will say is a lot of that leverage is sovereign leverage. You know, it's it's government debt. So, you know, governments have printing press and things. So, I don't think we have a sovereign crisis this time. I do think that gets kicked down the road until the next cycle and then the collapse is a sovereign collapse. Um but but um there are areas I mean certainly commercial real estate um is one area certainly private credit um you know as I say when I you know back in the mid 80s we we called um private equity leverage buyouts right now it's been renamed to private equity sounds nicer sounds more benign you know it's still very leveraged um companies so you've got that, you know, the junk bond area, you've got um I think because of the pandemic, you've got a lot of fragility in the system and beyond leverage as well that you know, small businesses are certainly not on the same strong footing they were pre- pandemic >> um in many cases. So I just think you've got the combination of very high leverage around and it's true consumers uh certainly many consumers are on a macro basis consumers are less leveraged than 20089 for sure banks in this country are less leveraged than they were back then but I think banks around the world are more leveraged Canada didn't learn the lessons our lessons of 20089 they were in great shape then they're in terrible shape now Europe banks I think are in bad shape. Um you know certainly we know Asian banks are in trouble. Um so I I do think there's plenty of leverage that's private leverage that can come to the four and create a problem. >> Yeah. And I know we we put them in buckets and act like they're not connected. But we, you know, one of the things we learned um very harshly in the great financial crisis in '08 and 09 is that counterparty risk is everywhere and it's it's opaque. We don't know it and it's very hard to untangle. Um and think that there's some sort of firewall. Um and I know there were reforms that were done to try to create some, but I think it's still a big question mark. What happens to bonds in this kind of situation? You mentioned a deflationary bust. Are we going back? Everyone sort of thought we closed the chapter on zero interest rates. Are we headed back there? >> Yeah, it's a great question. I I I am very alone, I think, out there in saying the lows in 200 um in in 2021 in terms of rates getting down to point4 on the 10-year I believe. And so that that was in most people's mind that was the top in the bond market, secular top. I think there's one more higher high. I think the 10 year will go to zero. I think the 30 year will go to a quarter or a half ne short rates probably go negative in this country. Um and but I think it's very shortlived. It's probably the end of next year at the bottom of the bust or early 2027. Um, and then I believe you'll see the 10-year go from zero to very high teens by early 2030s because of inflation >> and not driven by central banks because the bond market demands, >> right? Yeah. I've said I've said all along here, uh, people are, you know, always worried about what the Fed's going to do. I go, the rates are going to, you know, the bond market's going to lead, the Fed will follow. And so I don't really worry about what the Fed does meeting to meeting. Ultimately the bond market is going to recognize the economy slowing and inflation's going towards, you know, their target and below. And so um it'll happen in stages, but I think we're very close to another bond rally here that'll take, you know, the 10 year probably towards 3% maybe below 3% and then from 3% to zero during the bust. who's going to I mean, you know, I think that this this idea that we're close to a system reset and that we we face this really difficult ticking time bomb of debt, uh, which, you know, there may be some who disagree, but certainly what you're describing, why would you take 10ear duration risk at all if you can see this coming? I mean, it's out there in the, you know, I think in in the sort of public mind. Um, I could see short rates going to zero. But why would anybody if they know that we're going to turn around and it's going to lead to, you know, devaluation and, you know, you have those cartoons of people with wheel wheelbarls full of money that aren't isn't worth anything. Why take duration risk? Why would the long end respond to the conditions you're talking about? >> Well, keep in mind my my view is not a by any means a consensus view or or the institutional view. So, um, and there'll be a there'll be a shortage of yield. there'll be a shortage of returns. If I'm I'm also calling as an accompaniment to the um bust an 80% bare market. >> So if the stock market's going down 80% and short rates are going, you know, negative, you're going to be glad to get 2% or 1% on your tenure because you have no return anywhere else. Not to mention the the biggest reason we'll get to zero is to get 20 trillion whatever the number is into the system the Fed will be buying every bonded every buying and the banks will have >> so they'll be the buyer of last resort. I I have kind of laughed at all the worries about where's the foreign buying and what's going to happen when China doesn't buy our bonds and etc. you know, that may be an issue down the road, but it's certainly not going to be an issue next year >> because they can just print and buy. So, that must mean huge devaluation for the dollar. >> Uh, well, I'm calling for a dollar down to 82. Um, but I think most of that happens pre-bust or in the early stages of the bust. Um, I think we'll see the traditional run to the safety of the dollar during the worst part of the bust in spite of because don't forget we're not printing in a vacuum. Every central bank's going to be printing proportionally similar. So I think >> the whole system gets devalued but relative to each other. >> Right. Right. So the dollar I think goes to 82 first but then goes from 82 to 120 in a flight safety and then postbust you know dollar I think could go to 50 over over time um you know over 10 years or over seven or eight years but but um so I'm not at all a bull on the long-term bull on the dollar. I think what we're doing is, you know, we're going to be troubled, but but and we are the biggest out there in terms of, you know, we we are the ones have to bail everybody else out or the Fed does more than anybody else. All that's fine in the short term, but ultimately it's going to lead to us having the biggest problems, too. >> So, what's the investment solution against this backdrop? I mean, precious metals the answer. >> I am very bullish precious metals as we speak. I mean, I think I think um this little pullback we little the sharp pullback we had is over. And I think silver can go to 100 tier pre-bust, gold can go to 5,000 pre-bust. And I think I'm probably conservative there. Um during the bust, I think all almost all assets other than treasuries get hit. Um, so you know, as I said, >> winners, >> you you have to be careful that you're not standing on the south rim of the Grand Canyon looking across the north rim and thinking you can just hold these things right through because there's a canyon in between. >> But post bust, I'm calling for 20,000 gold and 500 silver. Um, probably in the early 2030s. Um, you know, if inflation does what I expect, Pete, you know, precious metals are going to be the the top game in town. By the way, I'm also calling for $500 um oil by that time. So, that's another reason why um this is going this is going to be um a secular peak in the stock market. If it goes to 9,500 or 10,000 or 9,000, wherever that peak is, I think that peak will stand for decades. >> So, you're you're talking about $500 oil as in the in the kind of parabolic meltup, not in the bust. No, I'm I'm calling for a $500 post bust. >> Postbust $30 $30 oil in the bust, >> right? >> And we'll go from 30 in the bust to 500 by the early 2030s. >> It's just because infl just because inflation because you need that many dollars to buy the same barrel. Not because there because the the global economy is in tatter. So it's not because of demand. Um well actually what you're going to have when you when you print 20 trillion dollars you will have a you will have a recovery cycle. That's the important point is that's why they will be bailing us out. We will have but it will not be a recovery cycle like the last 30 or 40 years which was disinflationary. It will be an inflationary commoditydriven um industrially driven cycle. We'll be reshoring. There'll still be a lot of that going on bringing back manufacturing to this country. um when you when you have to reindustrialize that requires a lot of commodities. We've spent the last 40 years rationing rationalizing down our capacity because in industry at least in this country had you know gone away. So uh everything got to just in time inventories and it was harder to find the resources and companies got more careful about return on investment etc. So we don't have nearly the capacity um to meet what's going to be you know sharp sharply higher demand because when you print that much money and it's focused on you and the the activity is going to be focused on the industry um there's going to be a demand for all commodities tin steel copper etc oil um and with you know the demand goes up fast because you print the money in over the course of 12 or 18 months and within you know with some lag that that pushes demand fast and will push it year by year by year through the cycle. You can't you can't build capacity. It takes you know 10 years or more to to build new new fields, new oil fields and all of that. I mean they'll be able to expand some the capacity but the demand will far outstrip the ability to meet it and the only thing it can give is price. So, do you have to in this if the if the sort of um recovery from the bust, it sounds like a lot of that money will get funneled into commodities and into gold and into silver. It's going to be that sort of and maybe some assets come along connected to those sectors come along for the ride. Uh do you need to be in the do you need to be holding the physical metals themselves or do you think an ETF and and like does it matter expression in that kind of environment? Well, for example, you know, the miners in bull markets usually outperform the metals and I think that will will hold true in the postbust period. Um, so if if if silver goes from, you know, let's say it goes to 100 pre-bust goes down to maybe um 40 or 30 in the bust and then goes to 500. So it's, you know, a 15fold increase, let's say. um miners probably have a bigger increase than that, at least the good miners. Um so, so there'll be plenty of opportunities in stocks, but the indexes, the the um you know, the broad indexes like the S&P and the NASDAQ and the Russell, etc. Um keep in mind how the math works. At at the top, they're heavily weighted in this cycle's winners, right? So technologies heavily weighted, energy is 3% of the index or whatever. Um, so coming out of it, they'll they'll all be hit, but coming out of it, you'll still have the heaviest weightings in the cycle in the sectors that were last cycles winners and the lowest weightings in the things you should own. So that means index, if you're a passive investor, your portfolio is upside down. You know, you're you're buying you're buying the wrong things. by the end of the cycle it'll be flipped and energy will be the top of the um index you know will be the heaviest weighted or commodities will be industrials will be heavily weighted technology will probably be somewhere in between because we'll still be seeing AI and other you know technological things winning um but overall growth stocks will be hurt very badly by rising interest rates um consumers are not going to be in good shape after getting hit hard in the bust and then facing inflation. Um, real estate's not going to be doing all that well because mortgage rates are going to go through the roof. Um, so your your price of your homes are probably going to be down, etc. So, utilities probably won't be doing well because they're more tied to their dividends. um you'll have some growth in in the demand for energy, but um and so you go across the the the board and basically as as I've known through my 52 years of doing this, every cycle has different leadership and if you stay with the old leadership, you end up regretting it. So >> it's great. It's a it's a really really important point to make because of the passive nature of how most investors operate. You really have to pay attention to that. And I just want to underscore, I love the timeframe discussion because most of us think of ourselves more as investors and not traders. And you're you're all of what you're talking about is happening within a pretty much five-year time range. So this is these are events if if they unfold and if they're resonating with people are listening, you need to start thinking about and positioning for and preparing for now or at least having a really robust conversation with your financial advisor which we'll will all help you out. You can get a free portfolio review if you are not yet doing that. We'll tell you how to do that in a minute. So uh David, what what would make this not happen? What would change your scenario? What is something that is like if if I were to see this, I'm going to go back to the drawing board and revise this very kind of scary um outlook that you've laid out. >> Yeah, before I get to that, if I can, because I think your other point is important to talk about. Um, you know, I've said from the mid 80s, financial institutions as a financial industry recognize you got the rat going through the snake. You know, you've got the baby boomers who are now beginning to accumulate assets starting to think about retirement. And so right around then is when they said, "We we've got to change this. We've got to change our industry." It used to be turnurn them till you burn them. You know, stock broker dials you up and says, "Hey, I got a good idea for you." >> And they went to asset accumulation. Um it's time in the market, not timing the market. And if you listen to them from the you know mid 80s till now it they they far you know index funds typically outperform most active managers. It was great advice. It worked well. Now we're coming to a period within months um where it is timing the market because if you just ride this through >> you're going to be devastated. uh you know first of all if you if your index goes down 80% and I don't have a crystal ball so it may not be 80 it might be 70 or what have you but it's going to be a big decline if it goes down 80% you have to do a lot like you can you can quadruple coming out of the bottom and you're not getting back to where you were >> right so um so it is really an important understanding that the advice that got you here was great, but it's not going to be the good advice going forward. And then secondly is that that question of index funds, it's not that coming out of the bottom, index funds will have a triple quadruple, but if if my numbers are right, you know, it's it's still going to fall thousands of points short of the S&P top. Um, so you can have a big it's not that this is the end. there is money-making opportunities on the other side. But understanding that the leadership's changing, understanding how an index is is made up, um it really makes sense then to become more focused on the leaders of the next cycle early on and set yourself up so that in the ensuing five or six or seven years, you've been able to accumulate assets that may be the difference between you being able to survive what's coming after that or being just hopelessly lost cuz cuz if I'm right about a collapse of the system, uh not to be gloom and doom, but if I'm right about that in the mid30s, um that means we could have 50% unemployment, no unemployment system, no welfare to speak of, um limited Medicare, Medicaid or or Social Security if if any Medicaid. Um and and you know, people just desperate and not being able to turn to a government for help. Maybe that's that's dire, maybe that's extreme, but that's where I think this whether it's to that degree or not, that's where we're headed. And so you really have less than a decade now, probably seven or eight years to make the right moves to set yourself up to at least have a fighting chance after that. >> That is that is some heavy stuff. But I think the important thing is there are going to be a variety of opinions and you yourself say you're contrarian by nature but it's important to just have a robust discussion uh about what you should expect from your portfolio. Seek some advice. Make sure you're diversified. Even if you think this is a minuscule chance of happening, are you ready? And and what are the time frames? How often are you talking and looking at your portfolio? and also what in other parts of your life, you know, what are you choosing in terms of leadership? Um, and what are you demanding from your uh civic and political leaders in order to address some of these really big problems that are are looming at us? I think this is a good time for us all to assess. Um, David, what are you what would what would change your scenario? What would make you say, "Okay, hang on a second. Maybe the worst case is not going to actually transpire." >> Sure. I mean certainly the worst case doesn't have to happen. It's my forecast. Um based on putting all those pieces together. Um you know we could have a recession without a bust and and the econ could fall 30 or 40 or 50% instead. I think more towards 50 is likely given how extreme we are now. Um the Trump policies could maybe offset some of my worries and you know surprisingly have all this capital flowing in here and things help offset and soften some of that blow. Maybe I'm wrong that the banks are as leveraged as they are overseas and that you know we can avoid some of that. Japan's a worry. I mean, Japan's got, you know, they've defied logic in basically um printing money or or, you know, buying up all the bonds and keeping zero uh interest rate policy there for so long. And to me, I'm a more or less a monitorist. At some point, inflation breaks out and you can't hold those rates down. And they're very, you know, dependent on that. So, I think they're a wild card in the bust if that starts. dependent on that and a lot of people have used that as a carry trade and it's a sort of at the hub of a lot of financial activity that's problematic. >> But back to what can you know certainly you know Trump's progrowth policies and deregulation and all those things may soften the downside and things but but again I'm calling for global bust and Europe's not in good shape. I mean uh Canada's not in good shape. Um China's not in good shape. um you know, emerging market economies are not in good shape. And I just think, you know, cycles have not been um uh done away with. You're going to have down cycles. And again, I go back to kind of a simple um logic that when we're disleveraged, the downturns get more exaggerated by that. So, um, and I, you know, it it's unusual because normally if you have something like we had in 20089, >> that's a once in a generation thing and you you kind of come out of that and it's not you don't see something worse. >> But I just think we didn't fix problems in 20089 and there in fact leverage is far higher today than it was in 2008. >> So we we really are in worse shape not better shape. So, what is your I think you've you sort of laid the breadcrumbs out, but what is your your strategy? What is the best protective strategy to hedge against uh what you see coming down the pipe? >> Yeah, I can't as a strategist, I can't give advice, but what I do say is, you know, um if you walk through my my overall forecast, you can understand that treasuries will be one of the very few things to protect capital in in a downturn. So, it would make sense to have a pretty heav heavy waiting in treasuries to weather the storm. Um, it would make sense in my scenario, if I'm right, to not be a buy and holder and think that we always go to higher highs because I'm I really mean that. I think the highs we make in the next few months or if it is a few months um will probably stand for decades. And so, you know, again, we've we've brought investors up on this whole idea of markets always go to higher highs and, you know, because of printing money, it it always works out that, you know, at least nominal terms, markets go to higher highs. And I just think we're at that turning point where that's not going to be true. So, buy and hold is probably not the best strategy going forward. uh if you are going to buy and hold, recognize the changing leadership and and look forward to that because if somebody chooses, and I can't say they're wrong, to say I'm not smart enough to pick the top and bottom of gold and silver, I'm going to just ride it through. You'll be fine because they're going to much higher highs, you know, in the next cycle. But if you're in um you know Proctor and Gamble, uh good luck because Proctor and Gamble is going to struggle in an environment where interest rates go to 15 or 20% and inflation goes 15 or 20%. >> Yeah. Uh and this is where it's so important also understand your risk and when you're going to need that money. Um Dave, you gave us so much good material to think about um and and to go back and you know do a proper review of our readiness, I think. So, I really appreciate that. Thank you so much. >> Yeah. Thanks, Maggie. >> And and as I mentioned, um in order to do that, if you need some help uh and you want a free portfolio review from one of the adviserss in the Wealthon Network, we're going to drop a link in the description and you can also go to wealthon.comfree. Thanks so much for watching everyone. We'll see you again soon.
David Hunter: The Final Melt-Up of a 43-Year Bull Market Before The Global Bust
Summary
Transcript
I'm describing this as a final leg of a 43-year secular bull market. Uh, and I think it's going to go parabolic. Probably the biggest rallying in history in my opinion over the next couple months. I am expecting 2026 to be a pretty negative year. In fact, I'm calling for a global bust. And I define a bust as something worse than a normal recession um but not as long as a depression. But it will be it will be accompanied by a big financial crisis. So it's a lot like 20089 except I think it could be bigger than 20089 because >> don't forget to sign up for a free portfolio review with one of our endorsed investment partners at wealthon.com/free. With markets hitting all-time highs, now is a great time to stress test your strategy and be prepared for what comes next. Hello and welcome to Wealthon. I'm Maggie Lake. Joining me today is David Hunter, chief macro strategist at Contrarian Macro Advisors. Hey David, thanks for joining us. >> Hi Maggie, thanks for having me on. >> So we seem to be at an in interesting juncture for markets. What's your Let's kind of start big picture. What's your macro outlook as we close out Q4 and turn the corner into the new year? >> Yeah, I am I have been and I remain probably the biggest bull on the street. Um I am looking for 9500 uh for the S&P. um not not by the end of the year, but certainly first quarter is very possible and and likely, I think. Um I'm describing this as a final leg of a 43-year secular bull market. Uh and I think it's going to go parabolic here in in coming weeks. So, um I know people have reacted to the recent sell-off and started talking about a top and getting a little more bearish. Um, but I see it as it's amazing. The the sentiment is still very um skeptical, still very cautious, and yet we're at all-time highs or very close to all-time highs. So, um, that's the kind of uh setup I think for what I'm describing, which is, you know, uh, probably the biggest rally in history in my opinion over the next couple months. >> Wow. So, talk to me a little bit about the nature of that. Is it is it you know uh kind of concentrated again in those tech names that have been leading all the way or do you see this as broadening out um as we sort of accelerate and and and spreading to the whole equity market? Are you sort of bullish across the equity spectrum? >> I think it is going to broaden out. It's it's unusual to go into a major top and not narrow. We have been narrowing obviously um but uh I think it's actually going to broaden out into the top. I am I have a a target for um the Russell 2000 of 3,800. So that would be from here probably I haven't done numbers recently but 50% type thing whereas you know the S&P probably is maybe high 30s or 40%. So so um I think it is going to broaden out into smaller caps and midcaps. Um I also think some of the um areas that um have lagged technology certainly are going to uh do very well here in this last leg. Financials look great. Um I think industrials continue to look good. Even surprisingly even consumer discretionary uh looks like it's going to certainly participate if not do very well. So um it's hard it's hard to imagine that when the economy is slowing and um you're seeing some signs of stress in the economy and yet it's almost feeling like um it does at the beginning of a cycle you know um like 1982 or 2009 um it's as the Fed begins a big easing cycle you see some of those uh cyclicals really take off and I think that's what we're going to see. >> So so that's interesting. I'm just going to ask you what is the driver of this if we're going to see this strength at this point because it does feel like there's so much worry out there. So, what's driving it? It sounds like you think the Fed easing is part of it. >> It certainly is part of it. I'm I'm a a big-time contrarian, so sentiment is a big part of my work. >> And there just is tremendous caution, particularly on the part of institutions, as I've said, and I was bullish uh in October of 2022 and said we're taking off. You know, back then I was calling for 6,000. I've raised my targets several times. But all the way up here in the last three plus years, institutions have remained cautious, have had, as I've said, have had one leg out the door. Um, kind of thinking valuations are high. This thing can't go much farther. And they've reluctantly kind of gone along with the momentum. But I think they're about to turn more bullish. They're you're starting to see it. Um, and I think what you're going to hear in the next few months is that with the Fed really beginning an easing cycle, um, that you may have a couple years to run. I don't believe that. I think we're going to see a top in a matter of months. But, um, I think what will drive this is a feeling that, hey, this is, you know, we've got a lot more, um, road ahead. um that with the Fed easing um you know earnings are going to pick up and the economy is going to pick up again. I think that's a part of it. I also think the bond market looks great here with or without the Fed, I think rates are going to come down quite significantly. So again, I'm contrary to I think most of the street, but I think um even the long end I think is going to do very well here. So, so lower rates, uh, still very good earnings and a Fed, uh, the Fed's easing and wind at your back, um, I think can help propel this. And then, of course, yet on to that, the need for the institutions to catch up, um, you know, so FOMO will play a role here. >> Yeah, it's so it's interesting though because if you think bond yields are going lower and the Fed's easing, usually that's because there's weakness that they see. So, how are you kind of squaring that? Because I think that's what has a lot of people a little bit confused or a little bit, you know, um, sort of stuck in this phase of worry that wait, you know, it's like not necessarily a thing to celebrate if the Federal Reserve is worried enough that they need to be reducing interest rates. >> Yeah, it's that's why I say it looks a lot like an early cycle move where if you go back, you know, I started in this business in 73. So if you go back to 74 or you go back to 1982 or um the early 2000s or you know 2003 or 2009 those are all beginnings of cycles where the Fed was at your back. You know they were easing. >> The economy was not doing well when those markets bottomed and took off. The the difference this time is we're at all-time highs and we're going to get that. So I I am actually predicting uh we we could be in recession already. We we certainly have a have and have not economy. So half more than half the economy is um people struggling to just meet their their daily needs. But the wealth out there and the other half of the economy or certainly the top 20% of consumers are still spending because you know they have a lot of equity in their homes. they're the market's at all-time highs and you know they're doing well. So, so I think um under the surface even though you get a GDP number that says we're close to 4%. Under the surface you could actually when they go back and date a recession um which they do after the fact. >> Uh the NBER very often dates it and it's earlier than you ever thought it was. So I would not be surprised if it gets dated prior to now. Uh so we may be in recession already and if not we're definitely slowing. Um but with the Fed easing and I think going to have to get more aggressive easing in the months ahead. Um that's going to at least initially propel the market. >> Yeah. You're going to get that boost to liquidity, right? That'll that'll it sounds like you think find their your way to asset markets. It sounds a little bit like it sounds great what you're talking about except I you said the final leg and then you talked about it topping maybe as soon as the first quarter. So it feels a little bit like you know wy coyote off the cliff like things are great but you don't realize that there's nothing underneath you. How do you how do you see that sort of transition? walk me through the sequence of um your kind of bullish stance right now, but it sounds like you're going to flip that as we get into 26. >> Yeah, I I am expecting 2026 to be a pretty negative year. In fact, I'm calling for a global bust. So, if we are in recession or if we're moving towards a recession, I think that recession will morph into a bust. And I define a bust as something worse than a normal recession. um but not as long as a depression. So it'll happen in the speed of a recession. So 12 to 18 months long, >> but it will be it will be accompanied by a big financial crisis. So it's a lot like 20089 except I think it could be bigger than 20089 because leverage this time around is so much higher than it was back then. Uh you know we've got 330 trillion in global debt. We've got we know what our our debt is here in the US in terms of government debt, but we also have tremendous leverage in the system throughout the world. And we know from business school, leverage works great on the on the upside. It enhances returns um allows people to do well, but in the in the downturn, um leverage really exacerbates the downturn. So, um I think it's going to hit banking pretty hard. Um, excuse me. Um, I think we could see uh bank failures domino across the world. >> If you're looking for a simple, secure way to invest and own physical gold and silver, visit our sister company, Hardass Assets Alliance at hardassallalliance.com. That's hardassallalliance.com. Well, that sounds that sounds like a little bit more than that sounds like it's getting pretty close to depression if you have that level of how what is the catalyst for us to be going from this super bullish scenario which is being underpinned by some real things as you point out uh and then all the sudden cascade into something that's worse than the GFC which you know the wheels almost came off and that was a terrible situation. What? >> Yeah. I think what makes this worse than 20089 >> is we pulled back from the cliff. Then as you say the wheels almost came off >> when the um commercial paper market froze and the rumors were around the GE was going under. >> That was when the government finally stepped in and said we got to do a lot more >> and it pulled us back from the cliff. this time around partly because of 20089 I think particularly the the central banks but also the government is going to be reluctant to go that far again and they will have to and they will but it's that pause or that hesitation when things are unraveling in a in a a deleveraging that happens very quickly. So even if you are you know a month or two late it can lead to things going over that cliff. So um you know my guess is the Fed will be easing here but getting to a right-siz policy if this thing is moving ahead of it so that it's starting to unwind and they're you know they're lowering rates but they're reluctant to print money. So and then when they print money they say but yeah but we're not going to do the the printing we did last time. you know, we're not going to do five trillion like we did in 2020 and we're not gonna, >> you know, go crazy with money. We're not here to bail out the stock market. That hesitation, it's during that period of time that things can really um hit the skids. Um so >> it strikes me as you say that that this is happening against a backdrop of I mean, not that there's ever been unity in politics. Let's not kid ourselves. Um, we saw them vote down TARP and the literally the the floor floor fell out of the stock market in real time and we I watched that. I was on air while that was happening. Uh, but we are this is all playing out now in an incredibly divisive time politically across the world and a rise in populism and a disconnect between those who have benefited from financial markets and assets and those who feel really angry and left out. Does that complicate efforts to address something that's unraveling as you see this playing out? >> Sure does. And and I think we saw with the government shutdown, the other side is more than happy to let things get negative because they figure it'll be blamed on Trump and there's nothing they want more than to have Trump fail. So it's almost like that takes precedence over, you know, the country. Well, well, Trump, the Trump administration has also made it clear that they're focused on the real economy, not the financial economy. Although easier said than done. >> So, you can also see a situation where they are very reluctant to step in. Every politician feels reluctant to step in and save Wall Street. I mean, that is the legacy from uh the the great financial crisis, right? And it's not just in this country, in Europe, in their in their sovereign bond crisis and European debt crisis. There's a lot of anger that lingers about that decision. >> Yeah, precisely. It's almost it's almost a perfect storm >> in that uh they're learning the wrong lessons. >> They you know, even Wall Street is is telling the Fed, >> don't do what you did last time. You know, Wall Street does not think big money is a solution. And by the way, I should say this is not an endorsement. I'm not saying this is a good policy or a bad policy. I'm just saying this is inevitable. ultimately if they, you know, I think what leads up to is that they're reluctant to do what they did last time, but ultimately they will have to do it. And when they do finally have to do finally do it, the unwind that's happening right before their eyes um will mean I'm estimating you could see 20 trillion come out of the Fed in QE. So we did, you know, we did 3.7 over a course of a few years in in following 2008. We did five trillion in the pandemic. This could be four times that. And I mean and probably 50 trillion around the world when you look at all the central banks having to do the same thing. So So we will I think that's the easiest prediction I can make is what will ultimately happen. How we get there is the harder part is how bad it gets before you know the deer in the headlights moment comes where they say hey forget what we should do or shouldn't do we got to do this or else the system's fail you going to just collapse >> so they will save it and that's why I call this a bust and not a depression as long as they have the printing process and by the way I think we're the bust will mean we're heading into deflation short term so 20 by the end of 2026 six, we could be in negative inflation. In negative inflation, um the Fed will have no concern about inflation. They'll be concerned about saving the system. That means you can print money infinitely uh almost infinitely because the leads and lags to when that will then reflate things is well probably nine months to the economy and maybe 18 months to the inflation. So, so they'll be dealing with the here and now and not worrying about, well, if we print this money, it's going to be inflationary. So, um, ultimately they'll do whatever they have to do to save the system and that kicks the can down the road one more time. Even though it's going to be a pretty ugly year or 12 to 18 months, you will have a recovery. You will have another cycle. And then I think by the mid30s you'll have hyperinflation and and probably before that probably early 30s have hyperinflation, deficits through the roof, the debt through the roof and you can't solve that equation and things collapse. So so you know >> I love that we started out this conversation. I'm I'm contrary and I'm very bullish. You're you're bullish for four months or five months and then it all goes to hell in a hand basket from what you're saying. We're gonna have to put a little parenthesis on that when we >> Yeah, there there is just just to kind of follow um you know through to the process. It it is a case where ultimately this ends very badly. Um but they got to you know policy makers have to deal with the earn now. So they're not going to be thinking about anything that could be the consequence of what they're doing. And so my guess is it it probably the printing press got shut off in the early 30s if not before depending off how fast inflation comes back. I think we're looking at maybe as high as 25% inflation at the at the end of this. And if you've got, you know, debt of by then probably 50 trillion um and you have to service that and we can't service it at 5%. It pretty much is the end of the game, the end of the Ponzi scheme that's been going on for 80 80 or 90 years. Basically this is the end of a super cycle that I'm describing that started post great depression. Each cycle you know each economic cycle after that you kind of ratcheted up the excesses. So early on we came out of depression so there were no excesses and we had world war. Um but by the time we got to the you know the 60s mid60s and then the 70s and 80s 90s and beyond each successive cycle we've had greater excesses followed by greater tightening to take down those particularly inflationary excesses leading to bigger money to get us out of that. And so you've had this, somebody's described as a buggy, what, you know, the cycle's just got more vi volatile, violent, and we're at the end of that game where it reaches that point where there's no return because you've got inflation and you've got big debt and you have no printing press to print your way out of. And that's when it comes to an end. Now, the the Austrians, you know, people like Peter Schiff think we're at the end now. But because we're going to see, you know, very low inflation or deflation during this bust, you've got one more chance to kick the can down the road >> and then I think basically mid30s and it's not just us. It's a systematic it's a systemic collapse of you know around the world. Yeah, that's that that was one of the questions I had and it seems pretty clear that everyone's kind of stuck in in this problem. Uh when you talk about I just want to back up and and ask a couple things. When you talk leverage, uh where where is the leverage in the system that you think is so worrying because a lot of people will say, you know, like well American consumers delever in the financial crisis. Yes, maybe they're starting to take on more debt now, but you had a kind of cleanup of consumer balance sheets and to a certain extent of corporate balance sheets. Where do you see the that dangerous leverage lurking in the system? >> Yeah, certainly. And the other thing people will say is a lot of that leverage is sovereign leverage. You know, it's it's government debt. So, you know, governments have printing press and things. So, I don't think we have a sovereign crisis this time. I do think that gets kicked down the road until the next cycle and then the collapse is a sovereign collapse. Um but but um there are areas I mean certainly commercial real estate um is one area certainly private credit um you know as I say when I you know back in the mid 80s we we called um private equity leverage buyouts right now it's been renamed to private equity sounds nicer sounds more benign you know it's still very leveraged um companies so you've got that, you know, the junk bond area, you've got um I think because of the pandemic, you've got a lot of fragility in the system and beyond leverage as well that you know, small businesses are certainly not on the same strong footing they were pre- pandemic >> um in many cases. So I just think you've got the combination of very high leverage around and it's true consumers uh certainly many consumers are on a macro basis consumers are less leveraged than 20089 for sure banks in this country are less leveraged than they were back then but I think banks around the world are more leveraged Canada didn't learn the lessons our lessons of 20089 they were in great shape then they're in terrible shape now Europe banks I think are in bad shape. Um you know certainly we know Asian banks are in trouble. Um so I I do think there's plenty of leverage that's private leverage that can come to the four and create a problem. >> Yeah. And I know we we put them in buckets and act like they're not connected. But we, you know, one of the things we learned um very harshly in the great financial crisis in '08 and 09 is that counterparty risk is everywhere and it's it's opaque. We don't know it and it's very hard to untangle. Um and think that there's some sort of firewall. Um and I know there were reforms that were done to try to create some, but I think it's still a big question mark. What happens to bonds in this kind of situation? You mentioned a deflationary bust. Are we going back? Everyone sort of thought we closed the chapter on zero interest rates. Are we headed back there? >> Yeah, it's a great question. I I I am very alone, I think, out there in saying the lows in 200 um in in 2021 in terms of rates getting down to point4 on the 10-year I believe. And so that that was in most people's mind that was the top in the bond market, secular top. I think there's one more higher high. I think the 10 year will go to zero. I think the 30 year will go to a quarter or a half ne short rates probably go negative in this country. Um and but I think it's very shortlived. It's probably the end of next year at the bottom of the bust or early 2027. Um, and then I believe you'll see the 10-year go from zero to very high teens by early 2030s because of inflation >> and not driven by central banks because the bond market demands, >> right? Yeah. I've said I've said all along here, uh, people are, you know, always worried about what the Fed's going to do. I go, the rates are going to, you know, the bond market's going to lead, the Fed will follow. And so I don't really worry about what the Fed does meeting to meeting. Ultimately the bond market is going to recognize the economy slowing and inflation's going towards, you know, their target and below. And so um it'll happen in stages, but I think we're very close to another bond rally here that'll take, you know, the 10 year probably towards 3% maybe below 3% and then from 3% to zero during the bust. who's going to I mean, you know, I think that this this idea that we're close to a system reset and that we we face this really difficult ticking time bomb of debt, uh, which, you know, there may be some who disagree, but certainly what you're describing, why would you take 10ear duration risk at all if you can see this coming? I mean, it's out there in the, you know, I think in in the sort of public mind. Um, I could see short rates going to zero. But why would anybody if they know that we're going to turn around and it's going to lead to, you know, devaluation and, you know, you have those cartoons of people with wheel wheelbarls full of money that aren't isn't worth anything. Why take duration risk? Why would the long end respond to the conditions you're talking about? >> Well, keep in mind my my view is not a by any means a consensus view or or the institutional view. So, um, and there'll be a there'll be a shortage of yield. there'll be a shortage of returns. If I'm I'm also calling as an accompaniment to the um bust an 80% bare market. >> So if the stock market's going down 80% and short rates are going, you know, negative, you're going to be glad to get 2% or 1% on your tenure because you have no return anywhere else. Not to mention the the biggest reason we'll get to zero is to get 20 trillion whatever the number is into the system the Fed will be buying every bonded every buying and the banks will have >> so they'll be the buyer of last resort. I I have kind of laughed at all the worries about where's the foreign buying and what's going to happen when China doesn't buy our bonds and etc. you know, that may be an issue down the road, but it's certainly not going to be an issue next year >> because they can just print and buy. So, that must mean huge devaluation for the dollar. >> Uh, well, I'm calling for a dollar down to 82. Um, but I think most of that happens pre-bust or in the early stages of the bust. Um, I think we'll see the traditional run to the safety of the dollar during the worst part of the bust in spite of because don't forget we're not printing in a vacuum. Every central bank's going to be printing proportionally similar. So I think >> the whole system gets devalued but relative to each other. >> Right. Right. So the dollar I think goes to 82 first but then goes from 82 to 120 in a flight safety and then postbust you know dollar I think could go to 50 over over time um you know over 10 years or over seven or eight years but but um so I'm not at all a bull on the long-term bull on the dollar. I think what we're doing is, you know, we're going to be troubled, but but and we are the biggest out there in terms of, you know, we we are the ones have to bail everybody else out or the Fed does more than anybody else. All that's fine in the short term, but ultimately it's going to lead to us having the biggest problems, too. >> So, what's the investment solution against this backdrop? I mean, precious metals the answer. >> I am very bullish precious metals as we speak. I mean, I think I think um this little pullback we little the sharp pullback we had is over. And I think silver can go to 100 tier pre-bust, gold can go to 5,000 pre-bust. And I think I'm probably conservative there. Um during the bust, I think all almost all assets other than treasuries get hit. Um, so you know, as I said, >> winners, >> you you have to be careful that you're not standing on the south rim of the Grand Canyon looking across the north rim and thinking you can just hold these things right through because there's a canyon in between. >> But post bust, I'm calling for 20,000 gold and 500 silver. Um, probably in the early 2030s. Um, you know, if inflation does what I expect, Pete, you know, precious metals are going to be the the top game in town. By the way, I'm also calling for $500 um oil by that time. So, that's another reason why um this is going this is going to be um a secular peak in the stock market. If it goes to 9,500 or 10,000 or 9,000, wherever that peak is, I think that peak will stand for decades. >> So, you're you're talking about $500 oil as in the in the kind of parabolic meltup, not in the bust. No, I'm I'm calling for a $500 post bust. >> Postbust $30 $30 oil in the bust, >> right? >> And we'll go from 30 in the bust to 500 by the early 2030s. >> It's just because infl just because inflation because you need that many dollars to buy the same barrel. Not because there because the the global economy is in tatter. So it's not because of demand. Um well actually what you're going to have when you when you print 20 trillion dollars you will have a you will have a recovery cycle. That's the important point is that's why they will be bailing us out. We will have but it will not be a recovery cycle like the last 30 or 40 years which was disinflationary. It will be an inflationary commoditydriven um industrially driven cycle. We'll be reshoring. There'll still be a lot of that going on bringing back manufacturing to this country. um when you when you have to reindustrialize that requires a lot of commodities. We've spent the last 40 years rationing rationalizing down our capacity because in industry at least in this country had you know gone away. So uh everything got to just in time inventories and it was harder to find the resources and companies got more careful about return on investment etc. So we don't have nearly the capacity um to meet what's going to be you know sharp sharply higher demand because when you print that much money and it's focused on you and the the activity is going to be focused on the industry um there's going to be a demand for all commodities tin steel copper etc oil um and with you know the demand goes up fast because you print the money in over the course of 12 or 18 months and within you know with some lag that that pushes demand fast and will push it year by year by year through the cycle. You can't you can't build capacity. It takes you know 10 years or more to to build new new fields, new oil fields and all of that. I mean they'll be able to expand some the capacity but the demand will far outstrip the ability to meet it and the only thing it can give is price. So, do you have to in this if the if the sort of um recovery from the bust, it sounds like a lot of that money will get funneled into commodities and into gold and into silver. It's going to be that sort of and maybe some assets come along connected to those sectors come along for the ride. Uh do you need to be in the do you need to be holding the physical metals themselves or do you think an ETF and and like does it matter expression in that kind of environment? Well, for example, you know, the miners in bull markets usually outperform the metals and I think that will will hold true in the postbust period. Um, so if if if silver goes from, you know, let's say it goes to 100 pre-bust goes down to maybe um 40 or 30 in the bust and then goes to 500. So it's, you know, a 15fold increase, let's say. um miners probably have a bigger increase than that, at least the good miners. Um so, so there'll be plenty of opportunities in stocks, but the indexes, the the um you know, the broad indexes like the S&P and the NASDAQ and the Russell, etc. Um keep in mind how the math works. At at the top, they're heavily weighted in this cycle's winners, right? So technologies heavily weighted, energy is 3% of the index or whatever. Um, so coming out of it, they'll they'll all be hit, but coming out of it, you'll still have the heaviest weightings in the cycle in the sectors that were last cycles winners and the lowest weightings in the things you should own. So that means index, if you're a passive investor, your portfolio is upside down. You know, you're you're buying you're buying the wrong things. by the end of the cycle it'll be flipped and energy will be the top of the um index you know will be the heaviest weighted or commodities will be industrials will be heavily weighted technology will probably be somewhere in between because we'll still be seeing AI and other you know technological things winning um but overall growth stocks will be hurt very badly by rising interest rates um consumers are not going to be in good shape after getting hit hard in the bust and then facing inflation. Um, real estate's not going to be doing all that well because mortgage rates are going to go through the roof. Um, so your your price of your homes are probably going to be down, etc. So, utilities probably won't be doing well because they're more tied to their dividends. um you'll have some growth in in the demand for energy, but um and so you go across the the the board and basically as as I've known through my 52 years of doing this, every cycle has different leadership and if you stay with the old leadership, you end up regretting it. So >> it's great. It's a it's a really really important point to make because of the passive nature of how most investors operate. You really have to pay attention to that. And I just want to underscore, I love the timeframe discussion because most of us think of ourselves more as investors and not traders. And you're you're all of what you're talking about is happening within a pretty much five-year time range. So this is these are events if if they unfold and if they're resonating with people are listening, you need to start thinking about and positioning for and preparing for now or at least having a really robust conversation with your financial advisor which we'll will all help you out. You can get a free portfolio review if you are not yet doing that. We'll tell you how to do that in a minute. So uh David, what what would make this not happen? What would change your scenario? What is something that is like if if I were to see this, I'm going to go back to the drawing board and revise this very kind of scary um outlook that you've laid out. >> Yeah, before I get to that, if I can, because I think your other point is important to talk about. Um, you know, I've said from the mid 80s, financial institutions as a financial industry recognize you got the rat going through the snake. You know, you've got the baby boomers who are now beginning to accumulate assets starting to think about retirement. And so right around then is when they said, "We we've got to change this. We've got to change our industry." It used to be turnurn them till you burn them. You know, stock broker dials you up and says, "Hey, I got a good idea for you." >> And they went to asset accumulation. Um it's time in the market, not timing the market. And if you listen to them from the you know mid 80s till now it they they far you know index funds typically outperform most active managers. It was great advice. It worked well. Now we're coming to a period within months um where it is timing the market because if you just ride this through >> you're going to be devastated. uh you know first of all if you if your index goes down 80% and I don't have a crystal ball so it may not be 80 it might be 70 or what have you but it's going to be a big decline if it goes down 80% you have to do a lot like you can you can quadruple coming out of the bottom and you're not getting back to where you were >> right so um so it is really an important understanding that the advice that got you here was great, but it's not going to be the good advice going forward. And then secondly is that that question of index funds, it's not that coming out of the bottom, index funds will have a triple quadruple, but if if my numbers are right, you know, it's it's still going to fall thousands of points short of the S&P top. Um, so you can have a big it's not that this is the end. there is money-making opportunities on the other side. But understanding that the leadership's changing, understanding how an index is is made up, um it really makes sense then to become more focused on the leaders of the next cycle early on and set yourself up so that in the ensuing five or six or seven years, you've been able to accumulate assets that may be the difference between you being able to survive what's coming after that or being just hopelessly lost cuz cuz if I'm right about a collapse of the system, uh not to be gloom and doom, but if I'm right about that in the mid30s, um that means we could have 50% unemployment, no unemployment system, no welfare to speak of, um limited Medicare, Medicaid or or Social Security if if any Medicaid. Um and and you know, people just desperate and not being able to turn to a government for help. Maybe that's that's dire, maybe that's extreme, but that's where I think this whether it's to that degree or not, that's where we're headed. And so you really have less than a decade now, probably seven or eight years to make the right moves to set yourself up to at least have a fighting chance after that. >> That is that is some heavy stuff. But I think the important thing is there are going to be a variety of opinions and you yourself say you're contrarian by nature but it's important to just have a robust discussion uh about what you should expect from your portfolio. Seek some advice. Make sure you're diversified. Even if you think this is a minuscule chance of happening, are you ready? And and what are the time frames? How often are you talking and looking at your portfolio? and also what in other parts of your life, you know, what are you choosing in terms of leadership? Um, and what are you demanding from your uh civic and political leaders in order to address some of these really big problems that are are looming at us? I think this is a good time for us all to assess. Um, David, what are you what would what would change your scenario? What would make you say, "Okay, hang on a second. Maybe the worst case is not going to actually transpire." >> Sure. I mean certainly the worst case doesn't have to happen. It's my forecast. Um based on putting all those pieces together. Um you know we could have a recession without a bust and and the econ could fall 30 or 40 or 50% instead. I think more towards 50 is likely given how extreme we are now. Um the Trump policies could maybe offset some of my worries and you know surprisingly have all this capital flowing in here and things help offset and soften some of that blow. Maybe I'm wrong that the banks are as leveraged as they are overseas and that you know we can avoid some of that. Japan's a worry. I mean, Japan's got, you know, they've defied logic in basically um printing money or or, you know, buying up all the bonds and keeping zero uh interest rate policy there for so long. And to me, I'm a more or less a monitorist. At some point, inflation breaks out and you can't hold those rates down. And they're very, you know, dependent on that. So, I think they're a wild card in the bust if that starts. dependent on that and a lot of people have used that as a carry trade and it's a sort of at the hub of a lot of financial activity that's problematic. >> But back to what can you know certainly you know Trump's progrowth policies and deregulation and all those things may soften the downside and things but but again I'm calling for global bust and Europe's not in good shape. I mean uh Canada's not in good shape. Um China's not in good shape. um you know, emerging market economies are not in good shape. And I just think, you know, cycles have not been um uh done away with. You're going to have down cycles. And again, I go back to kind of a simple um logic that when we're disleveraged, the downturns get more exaggerated by that. So, um, and I, you know, it it's unusual because normally if you have something like we had in 20089, >> that's a once in a generation thing and you you kind of come out of that and it's not you don't see something worse. >> But I just think we didn't fix problems in 20089 and there in fact leverage is far higher today than it was in 2008. >> So we we really are in worse shape not better shape. So, what is your I think you've you sort of laid the breadcrumbs out, but what is your your strategy? What is the best protective strategy to hedge against uh what you see coming down the pipe? >> Yeah, I can't as a strategist, I can't give advice, but what I do say is, you know, um if you walk through my my overall forecast, you can understand that treasuries will be one of the very few things to protect capital in in a downturn. So, it would make sense to have a pretty heav heavy waiting in treasuries to weather the storm. Um, it would make sense in my scenario, if I'm right, to not be a buy and holder and think that we always go to higher highs because I'm I really mean that. I think the highs we make in the next few months or if it is a few months um will probably stand for decades. And so, you know, again, we've we've brought investors up on this whole idea of markets always go to higher highs and, you know, because of printing money, it it always works out that, you know, at least nominal terms, markets go to higher highs. And I just think we're at that turning point where that's not going to be true. So, buy and hold is probably not the best strategy going forward. uh if you are going to buy and hold, recognize the changing leadership and and look forward to that because if somebody chooses, and I can't say they're wrong, to say I'm not smart enough to pick the top and bottom of gold and silver, I'm going to just ride it through. You'll be fine because they're going to much higher highs, you know, in the next cycle. But if you're in um you know Proctor and Gamble, uh good luck because Proctor and Gamble is going to struggle in an environment where interest rates go to 15 or 20% and inflation goes 15 or 20%. >> Yeah. Uh and this is where it's so important also understand your risk and when you're going to need that money. Um Dave, you gave us so much good material to think about um and and to go back and you know do a proper review of our readiness, I think. So, I really appreciate that. Thank you so much. >> Yeah. Thanks, Maggie. >> And and as I mentioned, um in order to do that, if you need some help uh and you want a free portfolio review from one of the adviserss in the Wealthon Network, we're going to drop a link in the description and you can also go to wealthon.comfree. Thanks so much for watching everyone. We'll see you again soon.