Peter Boockvar: Why $60 Oil Is One Of The Cheapest Assets In The World
Summary
Rotation Theme: Guest expects the AI-led market leadership to tire and a baton pass toward Energy, Agriculture, and Consumer Staples in 2026.
Energy Outlook: Bullish on oil and gas with contrarian sentiment setup, constrained non-OPEC+ supply, slowing U.S. shale growth, and demand likely absorbing Venezuela’s longer-term supply.
Oil Prices: Sees $60/bbl as too cheap and favors a move toward the $70s with potential for $80–$100, supporting strong free cash flow for energy equities.
Agriculture/Fertilizers: Positive on fertilizers & agricultural chemicals amid depressed row-crop prices and strengthening potash demand; examples cited include MOS and NTR.
Consumer Staples: Favors defensive, dividend-paying household products and broader staples after a drawdown; examples mentioned include KMB, KVUE, NSRGY, PEP, CAG, KO, and REYN.
Precious Metals: Still constructive on gold (kept core) and more cautious near term on silver after a vertical move; central bank buying and dollar diversification remain key supports.
EM Local Bonds: Bullish on emerging-market local currency bonds for coupon plus currency upside, highlighting Latin America and parts of Asia alongside continued interest in international equities.
Risks & Macro: Key risks include a faltering AI trade and a jump in long rates; expects sticky inflation near ~3% and limited Fed room to cut further.
Transcript
I do think that this industrial metal/precious metal bull market that has been extraordinary particularly over the last month uh is going to broaden out to energy and agg. So I have three favorite groups for 2026 and we're long stocks in each of them. Peter Bookvar, CIO of OnePoint BFG Wealth Partners and also author of the book report, B O C on Substack. It is so great to see you again. Great to welcome you back to the show. Really appreciate you taking the time to join me, Peter. >> Thanks, Julia. I always appreciate getting a chance to talk with you. >> It's always great. and we've gotten to see each other a few times in the city post FOMC. So, I feel like Peter, there's a lot to talk about these days as we are already on our second week into 2026 here. So, let's just start and set the table. The big picture macro view for you today. If you want to do a little retro 25, feel free to throw that in there. But, let's look at the markets. Let's look at the economy from the big picture. um where we are today, where you see things headed, what's on your radar these days, and as you know, Peter, you can take all the time you need to set the table. >> Well, I'll I'll start with markets. To me, the the most interesting thing about 2025 was that the market around the world did really well and for because 2024 it was dominated as we know by seven stocks to the neglect of everything else. But 2025 it lit a fire under everything particularly international markets after many years of underperformance. I mean the the the numbers the performance numbers in dollar terms because markets overseas for US investors were enhanced by the weakness in the dollar. I think the Spanish stock market was up 70%. The Italian stock market was up about 550%. Uh the Hang Sang was up almost 30% after a strong 2024. The NICK had a good year. Cosby in South Korea was off the charts because of Samsung and SKH Highix. And also even towards the back end of 2025, the market started to buy small cap, midcap in the US and value. So everything participated and I do think that that is more than just a one-year thing. I do think that is going to follow through this year. I am becoming more worried though with what I see is the tiredness in the AI tech trade and I do think some bells are ringing. Uh, I think the first bell that rang was after the um I think it was the July quarter where they reported in September where Oracle stock skyrocketed to north of 300 and then people realized that a lot of the exposure of their remaining performance obligations that they talked about that goose the stock was tied to open AI and obviously the stock's come come straight down uh and was hit further after the subsequent quarter release. And in no particular order, we've seen Cororeweave get cut in half. We saw Nvidia report a good quarter. The stock popped that night and then came straight down. Uh I think people are really focusing in on the intense competition that Nvidia is now facing. They're still dominant. Still a 75 or 4% type gross margins. But uh the Google TPU news was a wake-up call that maybe Nvidia doesn't have the same strangle hold over the market. Uh we know they're still struggling to break into China again after losing a lot of market share. We'll have to see to what extent they can sell their H200 trip chip to um to China. Uh we also had the Google Gemini 3 results coming in better than what we saw from OpenAI. So people started to say, "Wow, OpenAI's got some real competition here as well. They've obligated themselves to an extraordinary uh uh uh level of obligations over the ne next eight years and their tentacles reach everywhere. Uh look at Meta reported a phenomenal third quarter and we'll get their numbers in a couple weeks, but the stock traded straight down because people started to focus on the huge amount of capital spending." And just to turn back to Oracle for a second to quantify the level of their capital spending, they raised their capex in their prior quarter from 35 billion to 50 billion for the fiscal year. That is 75% of revenue. So I think that the market is doing two things. It's number one beginning to differentiate who they think is going to win, who they think is going to lose and also acknowledge that this space is becoming intensely competitive and on the competition um perspective is what's happening in China. Uh the models coming out of China uh are impressive. Uh they are more sort of um more applicable in terms of very uh company and sector specific uses as opposed to this broad goal of re reaching artificial general intelligence which maybe allows them to monetize what they're creating in a quicker way than than US companies and hyperscalers here. And also on the the chip side, China's not going to say no to Nvidia's H200 if they didn't think that they were able to compete with what they had themselves. And I think that is the most noteworthy thing here is is that we we incentivized China back in 2018 when uh we almost put down Huawei and ZTE and we lit a fire under their uh technology um um progress and progress in in in EVs and electrification equipment and solar and batteries and and industrial automation and all these other things that Um, for the first time seemingly ever, Silicon Valley companies, hyperscalers have a really serious competitor uh in China. Now, economically, it's it's another uh interesting moment too because of just the the recessions in some parts of the US economy and expansions in others. I say recession because manufacturing has been in a recession now for three years. Lower to middle income consumer spending is sort of at recessionary type levels. the pace of hiring is slowed dramatically. Uh existing home sales are near 30-year lows even though we hope that maybe uh this recent drop in mortgage rates can loosen up the housing market and provide more opportunities. And then on the flip side, we obviously have strength in the data center buildout, but it's only a question of when, not if that buildout slows down. So, I think it's very important for investors in 2026 to focus on the rate of change in terms of that buildout because the buildout is still going to be robust, but if it starts to slow down, that's something to take note. and and also follow too um you know the amount of square footage that's being built here to satisfy and house all these data uh the the these um uh servers and and and all the equipment and cooling and and so on. Uh are we going to need really all this space uh because maybe the computing power becomes stronger but the hardware needed the space needed to house it may get smaller. Uh and and also overall, you know, these companies, these being the big cap tech stocks, they're they're just not the same business model. They're not the same asset light, highly free cash flowing businesses. Uh it's been completely different now and free cash flow is getting eaten up by capex and they're now hugely capital-rich businesses. Uh so I think that that is potentially a major sea change for 2026. Also, we know upper income spending has been very strong. Delta told reminded us again of that when they reported earnings basically saying that their premium cabin is doing much better than their main cabin. Their main cabin is really not seeing any growth but premium is where uh the strength is and then of course anything following uh the huge amount of government spending uh particularly health care that benefits from that uh that remains robust. So really a bifurcated uh economy and we're also seeing that globally look at Europe, Germany and France are struggling to see any economic growth as their industrial base um you know gets um impacted by higher energy costs and certainly the competition from China. But on the other hand you have Spain, you have Greece that's actually seeing decent economic growth and even Italy for its uh uh economy seeing decent growth. And then you look at Asia where there's, you know, pockets of strength in in Southeast Asia. Uh but even Southeast Asia's mixed with Indonesia soft, Vietnam strong, Singapore strong, Thailand mixed. Uh China's seeing strength in manufacturing in terms of this uh this this huge um climb up the value chain ladder that I talked about, but then uh residential real estate is still very challenged. Uh and so it's a really interesting uh uh landscape here. And uh I do think as the year progresses in 2026 um uh it's not going to be as easy as close your eyes and just buy everything. I think that uh uh if we lose this AI tech trade as I think that we're beginning to uh I think that investors are going to need to pass the baton onto other things and it's a very big baton but I do think that um I'm hoping uh because we're positioned for this uh that that baton can be passed uh safely. This episode is brought to you by VANX Rare Earth and Strategic Metals ETF, ticker symbol REMX. Rare Earths are the hidden backbone of modern technology and defense, powering everything from smartphones and electric vehicles to fighter jets and wind turbines. Van Ec recognized this early, launching the rare earth and strategic metals ETF, ticker symbol REMX, 15 years ago, well before supply chain security became a global priority. Today, China dominates the production and refining capacity of rare earths, creating real challenges for global supply chain security as these materials are essential for technological innovation, clean energy, and national security. That's why countries all around the world are racing to build their own supply chains and reduce reliance on China. As this global shift continues, investment in the rare earth ecosystem is growing rapidly. From mining to advanced manufacturing, investors can gain access to this powerful trend through REMX. Visit vanck.com/remx Julia to learn more. Yes. And to that point, Peter, so recapping your thesis is you're seeing that AI mega cap trade start to lose the dominance it's shown in 2026. And as you put it, passing the baton. So it makes me wonder like what sectors are you looking at? Is it energy? Is it financials? Like where do you see the benefit once we see this rotation play out? >> So um I do think that this industrial metal/precious metal bull market that has been extraordinary particularly over the last month uh is going to broaden out to energy and agg. So, I have three favorite groups for 2026 and we're long stocks in each of them. Energy, let's touch upon that for a moment. Uh, the bearish level of energy is pretty extreme. Uh, Goldman Sachs last week had a survey of its clients and it had the second highest level of bearishness just by a smidge relative to April of last year over the last 10 years. uh the CFT the weekly CFTC data looking at uh net spec uh long positions in crude oil is at the lowest level in 15 years. So let's start with that. I think I have a pretty good contrarian contrarian sentiment uh setup here. Uh then also we hear about the glut of oil that's out there. But, you know, the digging that I do, it seems that the glut is really mostly on tankers on the sea because I don't see much of the landbased glut. Take Cushing, Oklahoma, for example, and on my Bloomberg, I see inventory levels at 10ear lows. Um, let's take production. We're all now focused on Venezuela, but we know it's going to be 5 to 10 years before there's any notable increase in production. and at tens of billions of dollars in cost. But oil demand, and I know OPEC is talking their book, but on the day we taped this, they gave us their updated demand numbers. And between their numbers and some that are more pessimistic, some more optimistic, call it demand growing over the next bunch of years, a million to a million and a half barrels. I know it's a widespread but my point is is that any increase in Venezuela demand uh uh I'm sorry supply demand is going to uh quickly absorb that. Uh let's take also uh the OPEC quota increases. Well, it looks like that the actual production increases have lagged the quota increases, which tells me that most of OPEC plus is already running at full capacity and maybe the only real spare capacity is with the Saudis and uh the UAE. Let's take US oil production uh which reached a record high in 2025 about 138 13.8 million barrels uh a day. Most of that now is Shell. And I look at production numbers out of a lot of the shell basins and they seem to be really slowing down to the point where they're all actually rolling over and even possibly in the perian. So I'm looking at the the biggest nonopac plus swing producer in oil production crude production not liquids crude and um production there is slowing down. So I think that that is uh noteworthy. Um, and then also let's look at uh the demand. Getting back to that, uh, we know that we've pushed out the full-on EV demand uh, for transportation. Uh, and looks like hybrids are winning and even people are saying, "I still like my internal combustion engine. I still like my SUV." So, I feel like we're pushing out peak oil demand. Even the I the uh International Energy Agency who's been bearish on oil prices forever uh particularly the demand side thinking that we're going to peak any day in demand. They pushed out their demand forecasts to 2050. So I I take this all this together and I look at the a lot of the oil stocks that are trading at like high singledigit low double digit free cash flow yields. A lot of them paying nice dividends at $60 oil. And then you look at natural gas. the demand drivers are obvious and I think the natural gas prices are going to still be a nice profit maker for these oil companies. So I think that with all the bearishness and then I'll wrap this up with this. It's 2.9% of the S&P 500, the energy sector. So I put this all together and I'm like this to me is a really compelling sector to invest in and we have uh you take a for example and when I look at a I I mostly look at the row crops like corn and soybeans and wheat uh prices have been relatively depressed um but that's the kind of setup that I like uh when I look at the fertilizer stocks for example potach producers phosphate nitrogen so we're long like mosaic and nutrient that happened to be getting a nice pop today and we as we speak because Morgan Stanley upgraded nutrient and raised their target in mosaic because of strong potach demand. So I think that there's another down and out value nice dividend paying sector that's out of favor and if I'm right that the commodity bull market widens out that that's another area that I like. The third area that I think is really compelling and is the probably the le it's not probably it is the least unsexy part of the market and that's consumer stables that have just been destroyed over the past 12 plus months because of slowing volume uh loss of of pricing power uh and still dealing with a lot of commodity price inflation. So deservingly they've gotten hit, but I think they've gotten hit to a point where they provide deep value, very attractive dividend yields, and if the economy does run into any difficulties in 2026, uh these businesses should hold up much better than others. Uh, and I'm talking about names that we own. Kimberly Clark that got hit after it it announced its purchase uh of Ken View, which I actually think is I understand the integration issues, but I think it could actually turn out okay. So, you can get a 5% dividend yield in a low teens multiple. Nestle, Pepsi, Kagra, KO to me, Reynolds Consumer Products that makes garbage bags and tinfoil. Julia, can you name a more boring business than tinfoil and garbage bags? But you can get a 4% dividend yield, low teens multiple, and if the trend continues with low to middle income consumers, um more eating at home than out where you're going to use more garbage bags and more oil. >> So, uh consumer staples I really like as a potential winner, uh where you can buy bond-like dividend yields with equity-like upside. Okay, I have a few questions on the oil side and energy specifically. So, I take it what I'm hearing from you where oil is what like 60 a barrel right now. Where do you see it headed? And what are the impacts on the energy sector? You think 60 is too low? >> I think 60 I think $60 a barrel of oil is one of the cheapest assets in the world. >> Mhm. And I think a more normalized when I say normalized that's a that's a bad word for where it can go. I I do think that a more natural price call it is something in the 70s and if I'm right that on this demand supply uh situation in the coming years I still think that 80 plus to 100 is still a really good possibility a high possibility high probability and you know getting to my point where you can buy oil stocks that are actually providing nice free cash flow yields at $60. Can you can only imagine the money they're going to make at 7580 or >> so you're thinking like the Chevrons of the world again or like what >> Chevron Axon we own BP Shell Canadian Natural Resources uh which is >> that and Suncor basically the Axon Chevron of Canada uh we're along Oxy on the drilling side Noble um that provides offshore rigs and EQT in the natural gas side. So, those are the ways we're playing it, but Chevron, Exxon, you know, we're long through some ETFs, so you can own those, too. I think the whole space is is is really compelling here. >> Okay, let me ask a couple follow on just to um it's so interesting because I have so many guests with so many different views on this channel and I know you're a listener of the show, so I don't know. Did you hear the David Woo episode by any chance? He was just on. >> I I did not listen to Mark, but but you are right that I am a fan and I do listen to all your podcasts. I appreciate that >> because I haven't listened to it yet doesn't mean that I won't. >> Okay. So, I might butcher it, but he kind of made the case that he thinks the Venezuela thing was about oil. And he made a a case that um it's to get the lower energy prices because the midterms are coming up. I'm butchering it, you guys. I know y'all are going to correct me, but do you I guess I want to ask you how you're thinking about Venezuela. And I guess like I mean energy I know is an important component when you look at the basket of what Americans are going to experience when it comes to inflation. Gas prices is probably like one of the ones that we would notice the most. Um besides I guess like what we're buying in the grocery store. But I guess one it's a two-part question. Your thoughts on Venezuela from an investor perspective. I have had people text me oh ask people on your show what do they think Venezuela means from a investor lens? And then I would love to hear I'll ask the next question after that. Just start with Venezuela. >> Well, I I understand the belief that yes, this was all about oil um ahead of the midterms, but at the other hand, there was no way we were going to get oil out of the ground there above and beyond where we are now so quickly. I mean, here we are today. Maduro's gone, but >> his vice president is still president. >> And I heard that the oil there is very sour or something, too. Like >> it's very heavy. It's very sour. It's like very sludgy. You need to put stuff in it like NAFTA to actually loosen it up in order for it to flow through a pipeline. But just as the CEO of Exxon said at the White House, which angered Trump when he said it, that today Venezuela is still uninvestable until we know what the political endgame is. until we know that there's a line of sight to a rule of law, which we still don't know. No one is incrementally raising their investments. So, I don't know if there's enough time between now and November to really alter the price of oil through more drilling in Venezuela. I think the Venezuela situation is much much broader. You've had over the past now 25 years you know Chavez came in I think 1999 2000 and over those many years particularly over the last 5 years you've had growing infiltration of China Russia and Iran into Venezuela you've had Iran helping to make drones you've had Russia growing their presence in the country and you have China that's all over uh not only Venezuelan oil but also a lot of their critical minerals So to me it was about sort of stiff arming China, Russia and Iran and but also creating the possibility of giving us access to not only the resources there including oil. I'm not discounting that, but giving us access and blocking out the others and in sort of this um fight over access to uh these cr critical minerals and also safety too. You know, Venezuela has been is not that far from from Florida. Cuba has been feeding I'm sorry, Venezuela has been feeding Cuba and Cuba obviously right off the coast of Florida. So if we can reverse that presence close to our border to me that's what the really the main motive was uh for what they did >> from the investor lens like how how does it does it change anything for you or I mean just it's kind of a big event the start of the year but just did it change anything for for you from an investor perspective. So from an investor perspective, the only thing that matters right now is the supply potential in terms of where the price of oil goes. So when we heard the news over the weekend, my initial reaction was, okay, well this will be a further drag on oil prices. Um but then you know the enormous amount of advant information information out there and reading that we all do uh you know sort of convinced me that this is maybe will matter over the next 5 to 10 years but it's not going to matter at all over the next 1 2 3 years. And when you're investing in a commodity uh or a commodity stock you don't have visibility past a couple of years uh in terms of what you think supply demand dynamics are. So, okay, go out of Venezuela, create as much, you know, oil out of the ground in years 6 to 10. I'm focused on potential supply constraints relative to consensus just over the next couple years. So, it it hasn't impacted my thought at all. >> So, I guess too, you're thinking about oil about $70 a barrel. We're currently at 60. I guess there's direct and like indirect um >> and that's minimum 70. >> Yeah, minimum 70. There's like direct and indirect um impacts from oil prices, I guess, when you look at like inflation because I'm kind of I want to hear both because you're talking about the purchasing power and be able to buy more of these consumer staples, if you will. But I'm curious like is 70 like okay from like an inflation perspective? Like it'll it's still kind of there's equilibrium there. Like can you explain it to me a bit? I don't really fully understand but I would love to understand. >> It's okay. So, right now we have many conflicting things happening on the inflation front. >> Mhm. >> Uh I know people like to say inflation's going up, it's going down and and and that's their bottom line, >> but there's a lot that goes into it too. >> A lot goes into it. So, let's take services, the service piece of inflation. I do expect further deceleration in services inflation at least in the first half of this year as slower rent growth works its way into services inflation. On the flip side though, I think the goods price deflation that we saw over the last couple years is over. You look at so on the day we're taping this, we had we the November PPI number came out. I wish we got December, but you know, we'll take what we can get with the government shutdown that we had. um core goods prices. So goods prices with PPPIX food and energy was up 3.2% year-over-year. This is before a 5% increase in the CRB raw industrials index. So now tariffs are definitely flowing through um particularly on on certain aspects with furniture for example even though we're about to pull back tariffs on furniture and and other things. We did see that inflation in CPI. So I think goods prices are going to remain elevated and if I'm right that oil prices do sort of join this commodity party uh then yes there's going to be upside risk to inflation. One interesting thing on the food side was a big 7/10 month overmonth increase in both food at home and food away from home in the CPI. So I think there's a lot of these conflicting situations now with with inflation and that's going to create a dilemma for the next Fed share. I say the next Fed chair because I don't think Jay Powell, unless we get a notable increase in the unemployment rate in the three meetings uh uh through uh May when he leaves, I don't think he wants to cut interest rates again. >> Um >> for not just the data purposes, but you know, it's his way of saying to to to Trump. Um and so that whoever replaces him, I think, is going to have an inflation dilemma. Not that I'm expecting a spike in inflation because of the deceleration I'm expecting in services, but inflation that's still remaining sticky around this 3% level. And with the Fed funds rate at 3.6% relative to a 3% inflation rate or even PC call 2 1/2, I don't think there's room left for them to cut too much. And I think the Fed funds futures are really seeing that. They're only pricing in two cuts um this year. And then take this one step further in the back half of 2026. I think services inflation can start rebounding again because the deceleration in rents I think will start to reverse as the huge amount of apartment supply that came online in 2025 and in 2026 gets quickly absorbed because of still affordability issues in housing and the lack of new incremental multif family supply. So inflation volatility I think is here to stay for the next couple years. >> So interesting. All right. On the Fed, Peter, what was your reaction to Sunday night when we learned about the DOJ subpoena that Powell received? What was your reaction? >> I was like, just leave the guy alone already. He's leaving in May. He's already booking his June tea times. just just enough already. Just leave him alone. That was my thought. And um I I don't think anything comes of it. I think that the the blowback on both sides of the aisle uh was was enough of a force to back them off from doing anything. I mean, the guy's not a general contractor and the last time I checked. Uh so I I think this was one bridge too far. And look, >> let's look how the market has spoken. Look at the price of gold, what it's done since. Um, so I I I I think that um I think this will be much to do about nothing because he's leaving soon. Uh I just think that it was just a a necessary uh unnecessary further push back that uh I think is being pushed back against them. Mhm. I guess it also just makes me wonder like well now he's really not good at cut rates at this point. like >> I I I think he's done and and and numbers wise I think he's done because according to the dot plot so let's use that as the consensus the the real neutral rate that they the Fed sees long term I'm sure some members see lower like Steven and some that see higher um what from the hawkish members the real rate long term that they see as a neutral rate is 1%. Well, the Fed funds rate is at 3.6. We just saw a CPI number at three. So, you can actually argue that the Fed now has a lower than a 1% neutral rate. Therefore, they're now more accommodative and no longer neutral. Powell is looking at that and said and saying to himself, why do I need to cut again unless there's a dramatic deceleration further in inflation over the next four plus months through his next three meetings or a spike in the unemployment rate. That's the only way we get another cut from him. If things are steady state as they are, he's done cutting and he will be playing 18 holes in June. Mhm. Um, do you think the cuts were necessary that we have seen so far? >> Um, I think the last cut was not because it took that neutral rate below 1%. I do understand the worries about the labor market. No question. Uh, hiring is slowed dramatically. Um, but I am of the belief that in order to have a healthy labor market, you need low and stable prices. >> We do not have low prices and they're certainly not necessarily um stable. So, uh, again, I understand the worries about the labor market, but focusing on the labor market and less so on inflation, I think, is a mistake that was made in the 1970s. And I think if you can keep your foot on the neck of inflation, get it down to 2%. The labor market will miraculously improve because what is the biggest pain point? What is the politics now? That is the main focus. Affordability. >> Mhm. That is the buzz word. >> So you need to lower inflation first and then good things come of that. not shift your focus to the labor market where you can potentially lose take your your eyeballs off inflation because I can argue that it's the high cost pressures at the business level helped by tariffs unfortunately particularly for small medium-sized businesses and you see that in the ADP data that's the it's the intense cost pressures on small mid-size businesses is why hiring has slowed Yes, AI can have an impact and other reasons, but if it's raw material costs, it's and labor costs and so on, well, let's get control of inflation, and maybe that would help improve the hiring. >> Hey there, I just want to take a quick moment to thank you for watching this video, and I would really love for you to subscribe to this channel if you like this content. Over 70% of our viewers are not yet subscribed and we are on a mission to hit 100,000 subscribers. So, if you could just take a quick moment, hit subscribe. Thank you so much for your support. We appreciate you. And back to the video. I'm going to ask a really dumb question um on inflation too. So, the economy it's quite bifurcated. We know like if you are in that top 10% maybe even upper percentage than that you're doing great. You own these assets you're doing great. Like probably the prices don't really affect you. You don't notice as much as like the everyday American who really notices it. I also wonder like when you've seen all of these companies do well in a higher inflation environment, maybe with the prices, is there is there even an incentive to bring the prices down if like we're doing just fine? you know, or people are still buying stuff. I don't maybe that was a totally idiotic question, but it kind of makes me wonder like why even bring the prices down if you can have that pricing power? >> Yeah, that that's the question. Uh those that have the pricing power certainly they will be loathed to, but those that don't may have no choice but to. But also, a lot of these cost pressures that are still out there, uh it it still remains to be seen to what extent that's going to be passed on. That doesn't mean that inflation's disappeared. It's just for some businesses that don't have pricing power. It's more localized with respect to their profit margin. Um so I guess it's really it depends. You know, like a Walmart and a Costco that pride themselves on everyday low prices, you know, they do everything they can to offset any price increase over to the right with maybe cost decreases to the left and calibrate that based on a certain level of demand. >> But where there's sort of inelastic demand, >> uh, well, then there's pricing power. When there's more elastic demand, you know, some companies are going to lose it. So, it really depends. >> Yeah, probably. Yeah. And also like Walmart has also benefited a bit from that trade down as well from the higher income, too. >> Oh, no question. >> Yeah. Um, so interesting to think about all of these dynamics. All right. I got to bring up gold with you cuz you did mention it. Let's see. Gold. It's 40. It's north of 4,600 right now. Did the gold performance in 2025 surprise you? Um, did it surprise you? So the levels that it is now at doesn't surprise me at all. Maybe the pace at which it's gotten here, maybe it did a bit. Uh I I was I was always of the belief and positioned as such that gold was going to around 5,000 and maybe more. Uh what has surprised me more has been this move in silver. Uh which we've been long, but full disclosure, we've been trimming a bunch of our silver >> like as it's moved to like all-time highs. It's as it's gone totally burn. >> Where is it? Like 89 bucks now or something >> about? Yeah. 89.90. >> Oh, no. It's 92 today. 92. Oh, man. >> Um, so I I I would not be surprised if the silver went higher and we still have some left, but you know, around 100 was always my target and the speed at which and the vertical nature at which it's gotten here tells me that this this trade needs to take a breather. >> Like not sustainable. It's just like everyone rushed in, >> right? No, I I do think we still have higher prices, but uh just from a portfolio management standpoint, uh I had to cut back and I did. Uh still maintaining most of my position in gold, still having some a little bit of silver, platinum as well and but believe but shifting some you know shifting uh money into energy in the a trade as uh as I mentioned earlier in in a catchup. But I do think gold still has more upside. But I still think that the the fundamental under underpinning of central bank buying and dollar diversification still has a lot more legs to it. >> What do you think is the broader story as it relates to gold? Like what do you think it is that's just been driving it? I mean, it's a world that that wants to uh diversify away from US dollars uh to as much to an extent that they can uh not not stopping using the dollar, not not stopping transacting in the dollar, but doing it maybe less so and to the point where gold right now is seemingly the most important reserve asset. and countries that are denominating trade in their local currencies are sometime in some cases settling that trade um in in gold. And um if if the US continues to um for better or for worse upset our trading partners and our friends around the world that would give them more incentive to uh diversify uh their US dollar holdings or if they're going to own uh US dollar holdings uh hedge that's that's one interesting thing about 2025 is that a lot of the foreign buying and ownership of US assets particularly US stocks for the first time in in a in a to levels I've not seen. They've hedged out those positions. They're not just blindly buying US assets on an unhedged basis. >> Interesting. Looking back on 2025, um was there like a big takeaway for you or lesson or anything that stands out that maybe surprised you in 2025? the the the world finally woke up to a whole world of investment opportunities outside of the mag 7 and I think that that is going to be continued in 2026 >> and if we lose that AI tech trade the question will be as I said earlier can we pass the baton on and other parts of the market will be fine or is the presence and dominance of that AI tech trade so big that if it falters is it going to take everything with it. >> Obviously hoping for the former, >> but we'll have to see about the latter. >> Don't want to drop the baton. We've seen some, you know, messy baton passes, I suppose. But yeah, I guess. Okay. Do you think that's the risk then is um if that shifts and some people might freak out. I think um >> that that is a risk because the US economy and the US stock market be well I should say the S&P 500 because of its huge um concentration in those names. We are essentially all in on this. So if it does falter yes I I would get more worried about the macro and I would be more worried about the S&P 500. >> Okay. From as an investor like what are you what do you not want to touch these days or own? I feel like weren't you critical of like the long bond for a while or something maybe if I recall. >> So I I I want to own much less of the MAG7 trade and I do not want to own long duration bonds. To me we are still in a bond a dur longduration bond bear market. Uh I look at what's going on in Japan and it this move higher in interest rates is unbelievable for the JGB market. >> Explain that. Is Japan like the canary in the coal mine? Like what is it about Japan? >> I I I think Japan really matters for global interest rates. If we rewind the clock to 2023, it was Julyish. I think June or July when the Bank of Japan said we're done with yield curve control. That was really that lit the match for a rise in long-term GGB yields. And I do think that it dragged the that was the factor in taking the US tenure to 5%. Obviously, the tenure has backed off while JGB yields continue to go higher. But I think that if you are a long duration holder of US treasuries, you should wake up every morning looking at the JGB market because at some time at some point it's going to matter a lot. Let's look at Europe. The ECB has cut its deposit rate from 4% to 2% 200 basis points and German and French bond yields are at multi-year highs. Look at the UK guilt market now. The the 10-year, the 30-year guilt yields are off their highs, but well above where they were when the Bank of England was cutting interest rates. And look at uh the tenure in the US. Uh call it the summer of 24, so a few months before the Fed's initiation of rate cuts of 50 by 50 basis points. Then when the market started to price that in, we were around 410 420 in the 10 year. Here we are 175 basis points later and we're 410 420 in the 10-year. So I do not want to own long-term sovereign bonds around the world. >> Where I do want to own them more is in emerging markets. So I'm bullish on emerging market local currency bonds where uh I think that a lot of these countries have much better finances to my point that debts and deficits now matter for the developed world but because I think they're they're much stronger in many emerging markets that you have less risk of that and I do think that a lot of the currencies in a lot of these emerging markets are very cheap relative to the dollar. So, you get a nice coupon. It's sovereignty. You're not worried about defaults. And I do think you get uh a currency kicker like we did see in 2025. >> Like which emerging markets? Name some names for us. >> China, Malaysia, Singapore, u which is not really emerging but it qualifies. Uh Mexico, Brazil, a lot of the Latin American countries to me is is very interesting. Chile um uh Indonesia which is dealing with its own economic issues. But I I I do think that the currency there is cheap. So a bunch of these countries in a basket I think is is uh it was up 15 16% in 2025 and I think that uh we could have a another nice year in 2026. >> All right. Before I let you go, two-part question for you um for the remainder of 2026. um what for you is the biggest risk that maybe was is keeping you up at night and what is the one thing that's making you optimistic or hopeful? >> So definitely losing the AI trade and its economic uh input through the data center construction and uh a gappy rise in long-term interest rates that to me would be um dangerous for the broader market. Optimism wise, I do think, as I said earlier, we could get a continuation of of this broadening out if it's not contaminated necessarily by losing the AI trade. I think international markets still remain really interesting and I think the commodity trade uh uh really has further legs and is going to broaden out. >> Peter Bookfar, chief investment officer of 1BFG Wealth Partners. >> I'm mouthful. I'm sorry, Julia. >> And um the author of the book report, which I'm going to link in the show notes for folks to subscribe. Peter, you are prolific when it comes to writing on that book report. Is it every day? >> Every day. Uh but readers should know that when they get something from me, I'm only writing things that I believe is relevant, >> not writing for writing's sake. >> Yeah, I love it. I'm a paid subscriber, so folks, go support Peter and his work. Um, any parting thoughts? Any final word before I let you go? >> No, I I I think I laid it out. I I think it's going to be another interesting year, as every year is. Uh, and and I think that investors really need to be flexible in their thinking. >> I love that. Peter Bookbar, thank you so much for being so generous with your time, all of your knowledge, your wisdom, helping us all learn and get better, and for being a friend of this show. I really, really appreciate you. >> Thanks, Julia. Always appreciate being on
Peter Boockvar: Why $60 Oil Is One Of The Cheapest Assets In The World
Summary
Transcript
I do think that this industrial metal/precious metal bull market that has been extraordinary particularly over the last month uh is going to broaden out to energy and agg. So I have three favorite groups for 2026 and we're long stocks in each of them. Peter Bookvar, CIO of OnePoint BFG Wealth Partners and also author of the book report, B O C on Substack. It is so great to see you again. Great to welcome you back to the show. Really appreciate you taking the time to join me, Peter. >> Thanks, Julia. I always appreciate getting a chance to talk with you. >> It's always great. and we've gotten to see each other a few times in the city post FOMC. So, I feel like Peter, there's a lot to talk about these days as we are already on our second week into 2026 here. So, let's just start and set the table. The big picture macro view for you today. If you want to do a little retro 25, feel free to throw that in there. But, let's look at the markets. Let's look at the economy from the big picture. um where we are today, where you see things headed, what's on your radar these days, and as you know, Peter, you can take all the time you need to set the table. >> Well, I'll I'll start with markets. To me, the the most interesting thing about 2025 was that the market around the world did really well and for because 2024 it was dominated as we know by seven stocks to the neglect of everything else. But 2025 it lit a fire under everything particularly international markets after many years of underperformance. I mean the the the numbers the performance numbers in dollar terms because markets overseas for US investors were enhanced by the weakness in the dollar. I think the Spanish stock market was up 70%. The Italian stock market was up about 550%. Uh the Hang Sang was up almost 30% after a strong 2024. The NICK had a good year. Cosby in South Korea was off the charts because of Samsung and SKH Highix. And also even towards the back end of 2025, the market started to buy small cap, midcap in the US and value. So everything participated and I do think that that is more than just a one-year thing. I do think that is going to follow through this year. I am becoming more worried though with what I see is the tiredness in the AI tech trade and I do think some bells are ringing. Uh, I think the first bell that rang was after the um I think it was the July quarter where they reported in September where Oracle stock skyrocketed to north of 300 and then people realized that a lot of the exposure of their remaining performance obligations that they talked about that goose the stock was tied to open AI and obviously the stock's come come straight down uh and was hit further after the subsequent quarter release. And in no particular order, we've seen Cororeweave get cut in half. We saw Nvidia report a good quarter. The stock popped that night and then came straight down. Uh I think people are really focusing in on the intense competition that Nvidia is now facing. They're still dominant. Still a 75 or 4% type gross margins. But uh the Google TPU news was a wake-up call that maybe Nvidia doesn't have the same strangle hold over the market. Uh we know they're still struggling to break into China again after losing a lot of market share. We'll have to see to what extent they can sell their H200 trip chip to um to China. Uh we also had the Google Gemini 3 results coming in better than what we saw from OpenAI. So people started to say, "Wow, OpenAI's got some real competition here as well. They've obligated themselves to an extraordinary uh uh uh level of obligations over the ne next eight years and their tentacles reach everywhere. Uh look at Meta reported a phenomenal third quarter and we'll get their numbers in a couple weeks, but the stock traded straight down because people started to focus on the huge amount of capital spending." And just to turn back to Oracle for a second to quantify the level of their capital spending, they raised their capex in their prior quarter from 35 billion to 50 billion for the fiscal year. That is 75% of revenue. So I think that the market is doing two things. It's number one beginning to differentiate who they think is going to win, who they think is going to lose and also acknowledge that this space is becoming intensely competitive and on the competition um perspective is what's happening in China. Uh the models coming out of China uh are impressive. Uh they are more sort of um more applicable in terms of very uh company and sector specific uses as opposed to this broad goal of re reaching artificial general intelligence which maybe allows them to monetize what they're creating in a quicker way than than US companies and hyperscalers here. And also on the the chip side, China's not going to say no to Nvidia's H200 if they didn't think that they were able to compete with what they had themselves. And I think that is the most noteworthy thing here is is that we we incentivized China back in 2018 when uh we almost put down Huawei and ZTE and we lit a fire under their uh technology um um progress and progress in in in EVs and electrification equipment and solar and batteries and and industrial automation and all these other things that Um, for the first time seemingly ever, Silicon Valley companies, hyperscalers have a really serious competitor uh in China. Now, economically, it's it's another uh interesting moment too because of just the the recessions in some parts of the US economy and expansions in others. I say recession because manufacturing has been in a recession now for three years. Lower to middle income consumer spending is sort of at recessionary type levels. the pace of hiring is slowed dramatically. Uh existing home sales are near 30-year lows even though we hope that maybe uh this recent drop in mortgage rates can loosen up the housing market and provide more opportunities. And then on the flip side, we obviously have strength in the data center buildout, but it's only a question of when, not if that buildout slows down. So, I think it's very important for investors in 2026 to focus on the rate of change in terms of that buildout because the buildout is still going to be robust, but if it starts to slow down, that's something to take note. and and also follow too um you know the amount of square footage that's being built here to satisfy and house all these data uh the the these um uh servers and and and all the equipment and cooling and and so on. Uh are we going to need really all this space uh because maybe the computing power becomes stronger but the hardware needed the space needed to house it may get smaller. Uh and and also overall, you know, these companies, these being the big cap tech stocks, they're they're just not the same business model. They're not the same asset light, highly free cash flowing businesses. Uh it's been completely different now and free cash flow is getting eaten up by capex and they're now hugely capital-rich businesses. Uh so I think that that is potentially a major sea change for 2026. Also, we know upper income spending has been very strong. Delta told reminded us again of that when they reported earnings basically saying that their premium cabin is doing much better than their main cabin. Their main cabin is really not seeing any growth but premium is where uh the strength is and then of course anything following uh the huge amount of government spending uh particularly health care that benefits from that uh that remains robust. So really a bifurcated uh economy and we're also seeing that globally look at Europe, Germany and France are struggling to see any economic growth as their industrial base um you know gets um impacted by higher energy costs and certainly the competition from China. But on the other hand you have Spain, you have Greece that's actually seeing decent economic growth and even Italy for its uh uh economy seeing decent growth. And then you look at Asia where there's, you know, pockets of strength in in Southeast Asia. Uh but even Southeast Asia's mixed with Indonesia soft, Vietnam strong, Singapore strong, Thailand mixed. Uh China's seeing strength in manufacturing in terms of this uh this this huge um climb up the value chain ladder that I talked about, but then uh residential real estate is still very challenged. Uh and so it's a really interesting uh uh landscape here. And uh I do think as the year progresses in 2026 um uh it's not going to be as easy as close your eyes and just buy everything. I think that uh uh if we lose this AI tech trade as I think that we're beginning to uh I think that investors are going to need to pass the baton onto other things and it's a very big baton but I do think that um I'm hoping uh because we're positioned for this uh that that baton can be passed uh safely. This episode is brought to you by VANX Rare Earth and Strategic Metals ETF, ticker symbol REMX. Rare Earths are the hidden backbone of modern technology and defense, powering everything from smartphones and electric vehicles to fighter jets and wind turbines. Van Ec recognized this early, launching the rare earth and strategic metals ETF, ticker symbol REMX, 15 years ago, well before supply chain security became a global priority. Today, China dominates the production and refining capacity of rare earths, creating real challenges for global supply chain security as these materials are essential for technological innovation, clean energy, and national security. That's why countries all around the world are racing to build their own supply chains and reduce reliance on China. As this global shift continues, investment in the rare earth ecosystem is growing rapidly. From mining to advanced manufacturing, investors can gain access to this powerful trend through REMX. Visit vanck.com/remx Julia to learn more. Yes. And to that point, Peter, so recapping your thesis is you're seeing that AI mega cap trade start to lose the dominance it's shown in 2026. And as you put it, passing the baton. So it makes me wonder like what sectors are you looking at? Is it energy? Is it financials? Like where do you see the benefit once we see this rotation play out? >> So um I do think that this industrial metal/precious metal bull market that has been extraordinary particularly over the last month uh is going to broaden out to energy and agg. So, I have three favorite groups for 2026 and we're long stocks in each of them. Energy, let's touch upon that for a moment. Uh, the bearish level of energy is pretty extreme. Uh, Goldman Sachs last week had a survey of its clients and it had the second highest level of bearishness just by a smidge relative to April of last year over the last 10 years. uh the CFT the weekly CFTC data looking at uh net spec uh long positions in crude oil is at the lowest level in 15 years. So let's start with that. I think I have a pretty good contrarian contrarian sentiment uh setup here. Uh then also we hear about the glut of oil that's out there. But, you know, the digging that I do, it seems that the glut is really mostly on tankers on the sea because I don't see much of the landbased glut. Take Cushing, Oklahoma, for example, and on my Bloomberg, I see inventory levels at 10ear lows. Um, let's take production. We're all now focused on Venezuela, but we know it's going to be 5 to 10 years before there's any notable increase in production. and at tens of billions of dollars in cost. But oil demand, and I know OPEC is talking their book, but on the day we taped this, they gave us their updated demand numbers. And between their numbers and some that are more pessimistic, some more optimistic, call it demand growing over the next bunch of years, a million to a million and a half barrels. I know it's a widespread but my point is is that any increase in Venezuela demand uh uh I'm sorry supply demand is going to uh quickly absorb that. Uh let's take also uh the OPEC quota increases. Well, it looks like that the actual production increases have lagged the quota increases, which tells me that most of OPEC plus is already running at full capacity and maybe the only real spare capacity is with the Saudis and uh the UAE. Let's take US oil production uh which reached a record high in 2025 about 138 13.8 million barrels uh a day. Most of that now is Shell. And I look at production numbers out of a lot of the shell basins and they seem to be really slowing down to the point where they're all actually rolling over and even possibly in the perian. So I'm looking at the the biggest nonopac plus swing producer in oil production crude production not liquids crude and um production there is slowing down. So I think that that is uh noteworthy. Um, and then also let's look at uh the demand. Getting back to that, uh, we know that we've pushed out the full-on EV demand uh, for transportation. Uh, and looks like hybrids are winning and even people are saying, "I still like my internal combustion engine. I still like my SUV." So, I feel like we're pushing out peak oil demand. Even the I the uh International Energy Agency who's been bearish on oil prices forever uh particularly the demand side thinking that we're going to peak any day in demand. They pushed out their demand forecasts to 2050. So I I take this all this together and I look at the a lot of the oil stocks that are trading at like high singledigit low double digit free cash flow yields. A lot of them paying nice dividends at $60 oil. And then you look at natural gas. the demand drivers are obvious and I think the natural gas prices are going to still be a nice profit maker for these oil companies. So I think that with all the bearishness and then I'll wrap this up with this. It's 2.9% of the S&P 500, the energy sector. So I put this all together and I'm like this to me is a really compelling sector to invest in and we have uh you take a for example and when I look at a I I mostly look at the row crops like corn and soybeans and wheat uh prices have been relatively depressed um but that's the kind of setup that I like uh when I look at the fertilizer stocks for example potach producers phosphate nitrogen so we're long like mosaic and nutrient that happened to be getting a nice pop today and we as we speak because Morgan Stanley upgraded nutrient and raised their target in mosaic because of strong potach demand. So I think that there's another down and out value nice dividend paying sector that's out of favor and if I'm right that the commodity bull market widens out that that's another area that I like. The third area that I think is really compelling and is the probably the le it's not probably it is the least unsexy part of the market and that's consumer stables that have just been destroyed over the past 12 plus months because of slowing volume uh loss of of pricing power uh and still dealing with a lot of commodity price inflation. So deservingly they've gotten hit, but I think they've gotten hit to a point where they provide deep value, very attractive dividend yields, and if the economy does run into any difficulties in 2026, uh these businesses should hold up much better than others. Uh, and I'm talking about names that we own. Kimberly Clark that got hit after it it announced its purchase uh of Ken View, which I actually think is I understand the integration issues, but I think it could actually turn out okay. So, you can get a 5% dividend yield in a low teens multiple. Nestle, Pepsi, Kagra, KO to me, Reynolds Consumer Products that makes garbage bags and tinfoil. Julia, can you name a more boring business than tinfoil and garbage bags? But you can get a 4% dividend yield, low teens multiple, and if the trend continues with low to middle income consumers, um more eating at home than out where you're going to use more garbage bags and more oil. >> So, uh consumer staples I really like as a potential winner, uh where you can buy bond-like dividend yields with equity-like upside. Okay, I have a few questions on the oil side and energy specifically. So, I take it what I'm hearing from you where oil is what like 60 a barrel right now. Where do you see it headed? And what are the impacts on the energy sector? You think 60 is too low? >> I think 60 I think $60 a barrel of oil is one of the cheapest assets in the world. >> Mhm. And I think a more normalized when I say normalized that's a that's a bad word for where it can go. I I do think that a more natural price call it is something in the 70s and if I'm right that on this demand supply uh situation in the coming years I still think that 80 plus to 100 is still a really good possibility a high possibility high probability and you know getting to my point where you can buy oil stocks that are actually providing nice free cash flow yields at $60. Can you can only imagine the money they're going to make at 7580 or >> so you're thinking like the Chevrons of the world again or like what >> Chevron Axon we own BP Shell Canadian Natural Resources uh which is >> that and Suncor basically the Axon Chevron of Canada uh we're along Oxy on the drilling side Noble um that provides offshore rigs and EQT in the natural gas side. So, those are the ways we're playing it, but Chevron, Exxon, you know, we're long through some ETFs, so you can own those, too. I think the whole space is is is really compelling here. >> Okay, let me ask a couple follow on just to um it's so interesting because I have so many guests with so many different views on this channel and I know you're a listener of the show, so I don't know. Did you hear the David Woo episode by any chance? He was just on. >> I I did not listen to Mark, but but you are right that I am a fan and I do listen to all your podcasts. I appreciate that >> because I haven't listened to it yet doesn't mean that I won't. >> Okay. So, I might butcher it, but he kind of made the case that he thinks the Venezuela thing was about oil. And he made a a case that um it's to get the lower energy prices because the midterms are coming up. I'm butchering it, you guys. I know y'all are going to correct me, but do you I guess I want to ask you how you're thinking about Venezuela. And I guess like I mean energy I know is an important component when you look at the basket of what Americans are going to experience when it comes to inflation. Gas prices is probably like one of the ones that we would notice the most. Um besides I guess like what we're buying in the grocery store. But I guess one it's a two-part question. Your thoughts on Venezuela from an investor perspective. I have had people text me oh ask people on your show what do they think Venezuela means from a investor lens? And then I would love to hear I'll ask the next question after that. Just start with Venezuela. >> Well, I I understand the belief that yes, this was all about oil um ahead of the midterms, but at the other hand, there was no way we were going to get oil out of the ground there above and beyond where we are now so quickly. I mean, here we are today. Maduro's gone, but >> his vice president is still president. >> And I heard that the oil there is very sour or something, too. Like >> it's very heavy. It's very sour. It's like very sludgy. You need to put stuff in it like NAFTA to actually loosen it up in order for it to flow through a pipeline. But just as the CEO of Exxon said at the White House, which angered Trump when he said it, that today Venezuela is still uninvestable until we know what the political endgame is. until we know that there's a line of sight to a rule of law, which we still don't know. No one is incrementally raising their investments. So, I don't know if there's enough time between now and November to really alter the price of oil through more drilling in Venezuela. I think the Venezuela situation is much much broader. You've had over the past now 25 years you know Chavez came in I think 1999 2000 and over those many years particularly over the last 5 years you've had growing infiltration of China Russia and Iran into Venezuela you've had Iran helping to make drones you've had Russia growing their presence in the country and you have China that's all over uh not only Venezuelan oil but also a lot of their critical minerals So to me it was about sort of stiff arming China, Russia and Iran and but also creating the possibility of giving us access to not only the resources there including oil. I'm not discounting that, but giving us access and blocking out the others and in sort of this um fight over access to uh these cr critical minerals and also safety too. You know, Venezuela has been is not that far from from Florida. Cuba has been feeding I'm sorry, Venezuela has been feeding Cuba and Cuba obviously right off the coast of Florida. So if we can reverse that presence close to our border to me that's what the really the main motive was uh for what they did >> from the investor lens like how how does it does it change anything for you or I mean just it's kind of a big event the start of the year but just did it change anything for for you from an investor perspective. So from an investor perspective, the only thing that matters right now is the supply potential in terms of where the price of oil goes. So when we heard the news over the weekend, my initial reaction was, okay, well this will be a further drag on oil prices. Um but then you know the enormous amount of advant information information out there and reading that we all do uh you know sort of convinced me that this is maybe will matter over the next 5 to 10 years but it's not going to matter at all over the next 1 2 3 years. And when you're investing in a commodity uh or a commodity stock you don't have visibility past a couple of years uh in terms of what you think supply demand dynamics are. So, okay, go out of Venezuela, create as much, you know, oil out of the ground in years 6 to 10. I'm focused on potential supply constraints relative to consensus just over the next couple years. So, it it hasn't impacted my thought at all. >> So, I guess too, you're thinking about oil about $70 a barrel. We're currently at 60. I guess there's direct and like indirect um >> and that's minimum 70. >> Yeah, minimum 70. There's like direct and indirect um impacts from oil prices, I guess, when you look at like inflation because I'm kind of I want to hear both because you're talking about the purchasing power and be able to buy more of these consumer staples, if you will. But I'm curious like is 70 like okay from like an inflation perspective? Like it'll it's still kind of there's equilibrium there. Like can you explain it to me a bit? I don't really fully understand but I would love to understand. >> It's okay. So, right now we have many conflicting things happening on the inflation front. >> Mhm. >> Uh I know people like to say inflation's going up, it's going down and and and that's their bottom line, >> but there's a lot that goes into it too. >> A lot goes into it. So, let's take services, the service piece of inflation. I do expect further deceleration in services inflation at least in the first half of this year as slower rent growth works its way into services inflation. On the flip side though, I think the goods price deflation that we saw over the last couple years is over. You look at so on the day we're taping this, we had we the November PPI number came out. I wish we got December, but you know, we'll take what we can get with the government shutdown that we had. um core goods prices. So goods prices with PPPIX food and energy was up 3.2% year-over-year. This is before a 5% increase in the CRB raw industrials index. So now tariffs are definitely flowing through um particularly on on certain aspects with furniture for example even though we're about to pull back tariffs on furniture and and other things. We did see that inflation in CPI. So I think goods prices are going to remain elevated and if I'm right that oil prices do sort of join this commodity party uh then yes there's going to be upside risk to inflation. One interesting thing on the food side was a big 7/10 month overmonth increase in both food at home and food away from home in the CPI. So I think there's a lot of these conflicting situations now with with inflation and that's going to create a dilemma for the next Fed share. I say the next Fed chair because I don't think Jay Powell, unless we get a notable increase in the unemployment rate in the three meetings uh uh through uh May when he leaves, I don't think he wants to cut interest rates again. >> Um >> for not just the data purposes, but you know, it's his way of saying to to to Trump. Um and so that whoever replaces him, I think, is going to have an inflation dilemma. Not that I'm expecting a spike in inflation because of the deceleration I'm expecting in services, but inflation that's still remaining sticky around this 3% level. And with the Fed funds rate at 3.6% relative to a 3% inflation rate or even PC call 2 1/2, I don't think there's room left for them to cut too much. And I think the Fed funds futures are really seeing that. They're only pricing in two cuts um this year. And then take this one step further in the back half of 2026. I think services inflation can start rebounding again because the deceleration in rents I think will start to reverse as the huge amount of apartment supply that came online in 2025 and in 2026 gets quickly absorbed because of still affordability issues in housing and the lack of new incremental multif family supply. So inflation volatility I think is here to stay for the next couple years. >> So interesting. All right. On the Fed, Peter, what was your reaction to Sunday night when we learned about the DOJ subpoena that Powell received? What was your reaction? >> I was like, just leave the guy alone already. He's leaving in May. He's already booking his June tea times. just just enough already. Just leave him alone. That was my thought. And um I I don't think anything comes of it. I think that the the blowback on both sides of the aisle uh was was enough of a force to back them off from doing anything. I mean, the guy's not a general contractor and the last time I checked. Uh so I I think this was one bridge too far. And look, >> let's look how the market has spoken. Look at the price of gold, what it's done since. Um, so I I I I think that um I think this will be much to do about nothing because he's leaving soon. Uh I just think that it was just a a necessary uh unnecessary further push back that uh I think is being pushed back against them. Mhm. I guess it also just makes me wonder like well now he's really not good at cut rates at this point. like >> I I I think he's done and and and numbers wise I think he's done because according to the dot plot so let's use that as the consensus the the real neutral rate that they the Fed sees long term I'm sure some members see lower like Steven and some that see higher um what from the hawkish members the real rate long term that they see as a neutral rate is 1%. Well, the Fed funds rate is at 3.6. We just saw a CPI number at three. So, you can actually argue that the Fed now has a lower than a 1% neutral rate. Therefore, they're now more accommodative and no longer neutral. Powell is looking at that and said and saying to himself, why do I need to cut again unless there's a dramatic deceleration further in inflation over the next four plus months through his next three meetings or a spike in the unemployment rate. That's the only way we get another cut from him. If things are steady state as they are, he's done cutting and he will be playing 18 holes in June. Mhm. Um, do you think the cuts were necessary that we have seen so far? >> Um, I think the last cut was not because it took that neutral rate below 1%. I do understand the worries about the labor market. No question. Uh, hiring is slowed dramatically. Um, but I am of the belief that in order to have a healthy labor market, you need low and stable prices. >> We do not have low prices and they're certainly not necessarily um stable. So, uh, again, I understand the worries about the labor market, but focusing on the labor market and less so on inflation, I think, is a mistake that was made in the 1970s. And I think if you can keep your foot on the neck of inflation, get it down to 2%. The labor market will miraculously improve because what is the biggest pain point? What is the politics now? That is the main focus. Affordability. >> Mhm. That is the buzz word. >> So you need to lower inflation first and then good things come of that. not shift your focus to the labor market where you can potentially lose take your your eyeballs off inflation because I can argue that it's the high cost pressures at the business level helped by tariffs unfortunately particularly for small medium-sized businesses and you see that in the ADP data that's the it's the intense cost pressures on small mid-size businesses is why hiring has slowed Yes, AI can have an impact and other reasons, but if it's raw material costs, it's and labor costs and so on, well, let's get control of inflation, and maybe that would help improve the hiring. >> Hey there, I just want to take a quick moment to thank you for watching this video, and I would really love for you to subscribe to this channel if you like this content. Over 70% of our viewers are not yet subscribed and we are on a mission to hit 100,000 subscribers. So, if you could just take a quick moment, hit subscribe. Thank you so much for your support. We appreciate you. And back to the video. I'm going to ask a really dumb question um on inflation too. So, the economy it's quite bifurcated. We know like if you are in that top 10% maybe even upper percentage than that you're doing great. You own these assets you're doing great. Like probably the prices don't really affect you. You don't notice as much as like the everyday American who really notices it. I also wonder like when you've seen all of these companies do well in a higher inflation environment, maybe with the prices, is there is there even an incentive to bring the prices down if like we're doing just fine? you know, or people are still buying stuff. I don't maybe that was a totally idiotic question, but it kind of makes me wonder like why even bring the prices down if you can have that pricing power? >> Yeah, that that's the question. Uh those that have the pricing power certainly they will be loathed to, but those that don't may have no choice but to. But also, a lot of these cost pressures that are still out there, uh it it still remains to be seen to what extent that's going to be passed on. That doesn't mean that inflation's disappeared. It's just for some businesses that don't have pricing power. It's more localized with respect to their profit margin. Um so I guess it's really it depends. You know, like a Walmart and a Costco that pride themselves on everyday low prices, you know, they do everything they can to offset any price increase over to the right with maybe cost decreases to the left and calibrate that based on a certain level of demand. >> But where there's sort of inelastic demand, >> uh, well, then there's pricing power. When there's more elastic demand, you know, some companies are going to lose it. So, it really depends. >> Yeah, probably. Yeah. And also like Walmart has also benefited a bit from that trade down as well from the higher income, too. >> Oh, no question. >> Yeah. Um, so interesting to think about all of these dynamics. All right. I got to bring up gold with you cuz you did mention it. Let's see. Gold. It's 40. It's north of 4,600 right now. Did the gold performance in 2025 surprise you? Um, did it surprise you? So the levels that it is now at doesn't surprise me at all. Maybe the pace at which it's gotten here, maybe it did a bit. Uh I I was I was always of the belief and positioned as such that gold was going to around 5,000 and maybe more. Uh what has surprised me more has been this move in silver. Uh which we've been long, but full disclosure, we've been trimming a bunch of our silver >> like as it's moved to like all-time highs. It's as it's gone totally burn. >> Where is it? Like 89 bucks now or something >> about? Yeah. 89.90. >> Oh, no. It's 92 today. 92. Oh, man. >> Um, so I I I would not be surprised if the silver went higher and we still have some left, but you know, around 100 was always my target and the speed at which and the vertical nature at which it's gotten here tells me that this this trade needs to take a breather. >> Like not sustainable. It's just like everyone rushed in, >> right? No, I I do think we still have higher prices, but uh just from a portfolio management standpoint, uh I had to cut back and I did. Uh still maintaining most of my position in gold, still having some a little bit of silver, platinum as well and but believe but shifting some you know shifting uh money into energy in the a trade as uh as I mentioned earlier in in a catchup. But I do think gold still has more upside. But I still think that the the fundamental under underpinning of central bank buying and dollar diversification still has a lot more legs to it. >> What do you think is the broader story as it relates to gold? Like what do you think it is that's just been driving it? I mean, it's a world that that wants to uh diversify away from US dollars uh to as much to an extent that they can uh not not stopping using the dollar, not not stopping transacting in the dollar, but doing it maybe less so and to the point where gold right now is seemingly the most important reserve asset. and countries that are denominating trade in their local currencies are sometime in some cases settling that trade um in in gold. And um if if the US continues to um for better or for worse upset our trading partners and our friends around the world that would give them more incentive to uh diversify uh their US dollar holdings or if they're going to own uh US dollar holdings uh hedge that's that's one interesting thing about 2025 is that a lot of the foreign buying and ownership of US assets particularly US stocks for the first time in in a in a to levels I've not seen. They've hedged out those positions. They're not just blindly buying US assets on an unhedged basis. >> Interesting. Looking back on 2025, um was there like a big takeaway for you or lesson or anything that stands out that maybe surprised you in 2025? the the the world finally woke up to a whole world of investment opportunities outside of the mag 7 and I think that that is going to be continued in 2026 >> and if we lose that AI tech trade the question will be as I said earlier can we pass the baton on and other parts of the market will be fine or is the presence and dominance of that AI tech trade so big that if it falters is it going to take everything with it. >> Obviously hoping for the former, >> but we'll have to see about the latter. >> Don't want to drop the baton. We've seen some, you know, messy baton passes, I suppose. But yeah, I guess. Okay. Do you think that's the risk then is um if that shifts and some people might freak out. I think um >> that that is a risk because the US economy and the US stock market be well I should say the S&P 500 because of its huge um concentration in those names. We are essentially all in on this. So if it does falter yes I I would get more worried about the macro and I would be more worried about the S&P 500. >> Okay. From as an investor like what are you what do you not want to touch these days or own? I feel like weren't you critical of like the long bond for a while or something maybe if I recall. >> So I I I want to own much less of the MAG7 trade and I do not want to own long duration bonds. To me we are still in a bond a dur longduration bond bear market. Uh I look at what's going on in Japan and it this move higher in interest rates is unbelievable for the JGB market. >> Explain that. Is Japan like the canary in the coal mine? Like what is it about Japan? >> I I I think Japan really matters for global interest rates. If we rewind the clock to 2023, it was Julyish. I think June or July when the Bank of Japan said we're done with yield curve control. That was really that lit the match for a rise in long-term GGB yields. And I do think that it dragged the that was the factor in taking the US tenure to 5%. Obviously, the tenure has backed off while JGB yields continue to go higher. But I think that if you are a long duration holder of US treasuries, you should wake up every morning looking at the JGB market because at some time at some point it's going to matter a lot. Let's look at Europe. The ECB has cut its deposit rate from 4% to 2% 200 basis points and German and French bond yields are at multi-year highs. Look at the UK guilt market now. The the 10-year, the 30-year guilt yields are off their highs, but well above where they were when the Bank of England was cutting interest rates. And look at uh the tenure in the US. Uh call it the summer of 24, so a few months before the Fed's initiation of rate cuts of 50 by 50 basis points. Then when the market started to price that in, we were around 410 420 in the 10 year. Here we are 175 basis points later and we're 410 420 in the 10-year. So I do not want to own long-term sovereign bonds around the world. >> Where I do want to own them more is in emerging markets. So I'm bullish on emerging market local currency bonds where uh I think that a lot of these countries have much better finances to my point that debts and deficits now matter for the developed world but because I think they're they're much stronger in many emerging markets that you have less risk of that and I do think that a lot of the currencies in a lot of these emerging markets are very cheap relative to the dollar. So, you get a nice coupon. It's sovereignty. You're not worried about defaults. And I do think you get uh a currency kicker like we did see in 2025. >> Like which emerging markets? Name some names for us. >> China, Malaysia, Singapore, u which is not really emerging but it qualifies. Uh Mexico, Brazil, a lot of the Latin American countries to me is is very interesting. Chile um uh Indonesia which is dealing with its own economic issues. But I I I do think that the currency there is cheap. So a bunch of these countries in a basket I think is is uh it was up 15 16% in 2025 and I think that uh we could have a another nice year in 2026. >> All right. Before I let you go, two-part question for you um for the remainder of 2026. um what for you is the biggest risk that maybe was is keeping you up at night and what is the one thing that's making you optimistic or hopeful? >> So definitely losing the AI trade and its economic uh input through the data center construction and uh a gappy rise in long-term interest rates that to me would be um dangerous for the broader market. Optimism wise, I do think, as I said earlier, we could get a continuation of of this broadening out if it's not contaminated necessarily by losing the AI trade. I think international markets still remain really interesting and I think the commodity trade uh uh really has further legs and is going to broaden out. >> Peter Bookfar, chief investment officer of 1BFG Wealth Partners. >> I'm mouthful. I'm sorry, Julia. >> And um the author of the book report, which I'm going to link in the show notes for folks to subscribe. Peter, you are prolific when it comes to writing on that book report. Is it every day? >> Every day. Uh but readers should know that when they get something from me, I'm only writing things that I believe is relevant, >> not writing for writing's sake. >> Yeah, I love it. I'm a paid subscriber, so folks, go support Peter and his work. Um, any parting thoughts? Any final word before I let you go? >> No, I I I think I laid it out. I I think it's going to be another interesting year, as every year is. Uh, and and I think that investors really need to be flexible in their thinking. >> I love that. Peter Bookbar, thank you so much for being so generous with your time, all of your knowledge, your wisdom, helping us all learn and get better, and for being a friend of this show. I really, really appreciate you. >> Thanks, Julia. Always appreciate being on