The Economy Is Near Stall Speed (Guest: Peter Berezin)

Summary

• Market Outlook: Guest argues the U.S. economy is near stall speed with a meaningful recession risk, and current equity valuations are not pricing that scenario.
• Valuations & Tech: Information Technology’s dominance explains some multiple expansion, but AI profits may be harder to capture due to commoditization, high capex, and weak network effects.
• AI Sector: While transformative, AI’s economics resemble capital-intensive, low-moat industries, challenging the long-run profit narrative for many players.
• Gold: Bullish secular view driven by central-bank buying, geopolitics, and the case for gold’s value to rise alongside global wealth amid large U.S. deficits.
• Dollar View: The guest expects a secular bear market in the U.S. dollar; temporary countertrend strength could occur in a recession, but longer-term trend is weaker.
• International Equities: Prefers non-U.S. equities over time as regions pursue reforms and reduce reliance on the U.S., though fiscal space varies across Europe.
• Profit Margins: U.S. forward profit margins are at records and likely mean-revert; analysts’ consistent margin expansion assumptions pose downside risk to earnings.
• Labor & Cycle: The Beveridge curve has moved to a point where further declines in job openings may raise unemployment, increasing recession odds over inflation risks.

Transcript

Hit it. It's Friday, July 4th, 2025, episode 267. I'm Patrick Szna. And I'm Kevin Mure. This week, we have the great pleasure to welcome Peter Barrison from BCA Research to the podcast. We have a terrific discussion about why he feels the economy is near stall speed and how he has gone from one of the most bullish analysts a few years ago to one of the more bearish today. It's a fascinating discussion you don't want to miss. All right. And we might uh have a beer or two here. Kev, you know what? I I don't want to ask Daniel to uh describe it. Danny Danny, are you having a beer? Is it something more interesting than what I'm drinking? That's corona. Oh, yeah. See, like we we we really dropped the ball here, Kev, because we used to have all these interesting beers and now like it's it's we're getting summer lazy and uh all I've got is a Superbach from uh like the the local grocery store. It's like I don't even want to talk about it. All right, Patrick word. It's summer lazy. Yeah, there you go. It is. It's everyone's a little bit of summer lazy. All right, Kev, give us uh some disclaimers here, buddy. Nothing in this podcast should be viewed as investment advice. Listeners should consult an investment professional before making any top uh decisions regarding topics mentioned on the show. Side effects of too much huddle may include the tariff tantrum disorder. I'm a nervous about that one. Yeah. The forward guidance fatigue. That one's actually very important right now. And then finally, the margin compression anxiety syndrome. Ouch. Ouch. All right, let's get the guest on. It's our great pleasure to welcome to the show Peter Barrison. He is the chief global strategist at BCA. Peter, thanks for joining us. It's my pleasure. I've been looking forward to this for a long time. I get to meet a fellow Canadian that is as bearish as me. That's right. So, before we talk about your market calls, let's get to know you a little bit more. Um tell us like did you did you grow up always wanting to be in the markets and uh how did you get you know stumble upon this career? Yeah that's interesting. Um you know I started my career at the international monetary fund where I wasn't really involved in the markets. I was doing a lot of economic research, you know, negotiating deals with various countries but not really market related. But it was kind of the early 2000s and I was very much interested in the stock market. I was actively trading stocks. In fact, I had a blog back then which I believe still exists. If you go to blogs stockcoach.blogspot.com blogspot.com for Google stock coach uh still there and I would trade micro caps and I got really interested in financial markets and I got interested in trading investing and so an opportunity presented itself in 2007 for me to go to Goldman Sachs I went there for three years really loved it learned a lot but then another opportunity to go back to Canada in 2010 and I took that opportunity and I've been at BCA research ever since living in Montreal. Did you um uh you mentioned you were at the IMF. Can I ask what your background was at school? Like how did you come upon that job? Well, I got a PhD in a Oh, you did? Okay. You're Yeah. And that's the usual way that someone gets a job there. I mean, it was quite quite quite the uh experience to all of a sudden be in this sort of uh very very interesting role flying around uh the world meeting all sorts of important government leaders. I enjoyed it. I learned a lot and it was one of those uh foundational things for me. Um and and did you go to school in the US or Canada or a little bit of both? Uh I I did did my master's at the London School of Economics and I came back to Toronto to do my PhD there. Okay. And uh was Mohammed Alarian was he also at the IMF if I got that wrong? Did you guys overlap? We didn't overlap but he was he he certainly was there. Okay. So you're the same kind of career path there and stuff. Okay. So you go to Goldman Sachs. That must be quite the difference. moving from this uh bureaucratic you know organization at the to or at least a government quasi government organization to this very entrepreneurial very you know uh just fantastic organization Goldman Sachs what was can you tell us a little bit about your experiences there and uh it it was also coincided with a a tough time in the markets it I I I I joined April 2007 So it was quite interesting to actually, you know, spend time on the trading floor during the uh crisis. And I think right now there's kind of this perception that like everyone at Goldman knew what was going on. No one had a clue. People were just completely uh uh puzzled by everything that was happening. Or I remember uh uh somebody one of the analysts made a call to buy uh I think Leman uh just before they went bankrupt. And I and I bought uh on the Friday. And I remember like driving my car on on the freeway and just seeing a notification that they went bankrupt after I just bought the stock like 24 hours earlier and I wasn't paying attention. I was kind of speeding up. I was going down an incline and then I got pulled over for speeding. I lose money on. I got a speeding ticket on top of that. So, was a police officer didn't let you off? You didn't tell them that, you know, him or her that you were speeding because you were trying to, you know, make up for your losses and they didn't care. I think telling a police officer that you work at Goldman and you should get off for a particular job that isn't going to help you very much. You're right there. Okay. So, you're there. Um, and and it sounds like are you on the re the stock research side like or are you in the macro side? New York or London? Yeah. No, I was in New York. I was in New York. Okay. the macro side working with uh Yan Hatius and Dominic Wilson. Oh, okay. Terrific. And that's must have been quite an experience. So then you're there for a few years and then you get a chance to come back home to Canada BCA the the fabled institution that's been around is am I right that it's the longest running macro shop in the world? It must be. I mean it was formed in 1949, right? Um you know and back back then the the bank credit analyst which is sort of the flagship publication of the firm was one of the only uh publications that uh addressed kind of macroeconomic issues from a financial and investing uh lens. Of course, you know, back then people didn't even have access to data, right? So, if you wanted to see what was happening to the money supply or credit growth, like every week you'd wait for this publication to come in and there it was. Uh things are much different now, but we've been around for a long time. Sure. Right. Uh, you know, Marco Papich is I'm lucky to count him as a friend and he told us one time the story about the library at the BCA and how he how much he learned by going and and just sitting in the library and reading old old versions and and just doing it. He said it's one of the best libraries in the world for uh financial, you know, publications or information. Yeah. Up until recently, we actually had a librarian who kept track of all of these things. Now everything sort of moved digital now but uh but yeah it was we we have like this vast reservoir of uh data over a million data sets many of which are proprietary and that ends up being a key uh input into our research process. Okay. All right. So, let's talk a little bit about markets. And um one of the things that I love about you is that I go pull up my I go on the Bloomberg, I type in S&P index go, and I type in ANR, which is the analyst uh I guess what does the N stand for? Recommendations. And then you sort it by target price, and you're the most bearish out there. And I was just watching a video the other day of a podcast of, you know, that you were on, and they said you're the most bearish. And folks hear your target and I don't know what it is now, but on the Bloomberg it's still showing 4450 and they it sounds so preposterous. It sounds so low. And I always tell people it's actually not that hard to get there. All you need to do is, you know, put a 10% earnings, you know, um, like slowdown. Let's not even call it a recession, and then go back to the multiple that we were at in the 2015 to 2020 period, which seems pretty reasonable given that interest rates are much higher today than they were then, and you get to your your number really easily. Is that the kind of Have I got the logic right of of why you're there? Yeah, I mean my earnings uh forecast for the S&P for 2025 is 250, which is also the lowest on the street. Now, we started the year I think at around 270. We're down to around 261, 262 now. Uh you know, if current trends prevail, we could be down to 250 even in the absence of a recession. And then you say, okay, well, you know, what sort of P multiple would you attach to those earnings if we do get the sort of recessionary slowdown that I expect? I'll say, well, let's say you attach 18 times multiple to those earnings, which is actually really generous because in a typical recession, the P multiple falls into the teens. If it's a mild recession to the single digits, if it's a deep recession, but let's just say 18 just for the sake of it. Well, 18 times times 250 is 400 4,500. So, it's very easy to envision the market getting down to that level even even in a very mild uh recessionary slowdown. I don't think we'll get there if we get a soft landing. So, my my target is predicated on a recession. I see that as a 60% probability. Uh but if we get one, the market's not at all priced for that outcome. Okay, let's talk a little bit about um this bump that we've had in the multiples because I think it's interesting. I I had a discussion earlier with some guys on my desk and and there were is a young guy there and he's trying to tell me that this time is different and that the stock market deserves this multiple because the large tech and all yada yada yada AI and it's transformational and you know I my push back to him was it's always different. There's always a reason for it. And yet we as humans seem to do this cycle over and over again in terms of assuming this permanently high plateau which is what Fiser talked about that in the in the 30s and the the 20s I mean right before it crashed. um what what's what do you think is driving the earnings multiple expansion and what do you think absent um a recession or a slowdown might change that multiple that's applied on US stocks? Yeah, I mean I think there's some truth to the claim that uh the growth of tech within the indices does help explain and perhaps even justify a higher P ratio. But if you look at kind of the Magnificent 7 versus the other 493, the Magnificent 7 trade at around 21 29 times uh forward earnings. The other 493 trade at 19 and a half times forward earnings, which is lower, but you know, the average between 2015 and 2019 for the 493 other companies was 16. So we're at 19 and a half now. we were at 16 in environment where there was you know no no recession we had the tax cuts you know for a good span of that period and still the average P multiple was substantially lower for those non- tech stocks now as far as the magnificent seven stocks and other tech stocks are concerned a lot depends on whether you believe that AI will be the great creator of profits in the way that tech has uh been able to benefit from uh from other uh major technologies. I'm not sure if if it will be. I think the the thing about uh AI is that right now a lot of these models are very similar. Uh they use the same kind of neural net transformer architectures. Uh they use the same training sets basically just the corpus of the internet. So they're kind of commoditized already. Now maybe there will be uh a winner that emerges, but we don't know which one. So you're going to lose money uh on some of these companies if you invest in them. Uh or there might just be a case where it ends up being a lot like you know like like like browsers on the internet uh or other technologies that just sort of become commoditized. People use them, they benefit from them, but they never make any money. I think with AI it's actually going to be quite difficult to make money because you don't have kind of these network effects that you have with like social media where people use a platform because everybody else uses it. With AI, if I use chat GPT doesn't make your experience any better. In fact, it makes it worse uh because you know my question slows everything down for others. And that's because unlike say you know you know Facebook or Instagram where adding users is costless with AI actually costs money to add users. You need more data centers, more chips, more electricity. So, in many respects, AI actually looks a lot like airlines. You got to commoditize product. You got high capex, high depreciation rates. That's not a recipe for investment success. Well, that was the famous line that uh what did uh Warren Buffett said? If he could go back in time, he could save investors a lot of money by uh sabotaging the Wright brothers with in terms of their the first airplane because it's cost investors so much money. One of the things that I think is interesting is that you mentioned that the um the amount of capital required. Wasn't that the old bullish, you know, scenario or the the bullish case for these tech stocks was that they were so light on capital and now we've gone and turned their biggest strength into one of their biggest weakness. Yeah. Exactly. Exactly. And so you got companies like Google that are spending billions and billions of dollars on capex not to create a monopoly position. Google already has a monopoly position. It's try it's to to try to defend its existing monopoly position maybe successfully maybe unsuccessfully but yeah a lot of this capex is sort of defensive uh cap cap capex uh and unless it generates sort of monopoly uh profits you know the old Peter Teal line competition is for losers like the way you make money in the stock market uh is by having a huge mode around yourself unless your technology lends itself to that you're not going to make a lot of money right now. One of the things that you mentioned is that the P expansion is a result of AI and and maybe in this last kind of 24 25 rally that that's been the case but if we remember back to the postcoid rally we had what we went into the COVID with S&P trading roughly 18 times forward earnings dipped a little and then coming out of it we had this situation where we traded up to 22 24 times forward earnings. I'm wondering one of the things that I contend is that fiscal really changed the ball game. We It was a It was a dramatic change of the macro environment. And in the old days when I or when I first started telling people the the line about the government's deficit is the private sector's credit, there was a lot of push back. Now I feel like that's been accepted and it's almost a reason to buy stocks is to go out and buy it because of the big deficits. I would love your opinion about how that's evolved, whether you agree with that and whether you think investors have gone from pushing back on that to now accepting it almost too much, which is where I lie. Yeah. I mean, the situation is a little bit different now than in 200 uh and 20. Uh you know, back then we had huge budget deficits. So people were getting all these stimulus checks, some of which they used to splurge on electronics, but some of which they used to uh you know play play in the stock market and that helped to drive stocks higher. But the thing is back then those large budget deficits didn't put a lot of pressure on uh on on bond yields uh because you still had slack in the economy. The Fed didn't have to raise rates. now have got big budget deficits and fairly high bond yields and so it's a different environment uh now and you know remember remember TINA ever there is no alternative right people don't talk about TINA anymore because bond yields are not close to zero so if you look at the equity risk premiums or the earnings yield on stocks versus the bond yields stocks don't look particularly attractive in fact they look less attractive than they did in uh in in in 2020 21 because yields are so much higher. Now, one of the things about the equity risk premium that I I came across this great study from Ruffer and they showed the equity risk premium and they charted that against the one-year forward earnings, sorry, the forward S&P returns uh meaning like they plotted the equity risk premium and then what the S&P returned over the next year and that relationship was just random. There was almost nothing there. Yeah, but then when you plotted the equity risk premium over the forward 10-year S&P return, it it did a great job of explaining it. And so one of the things that I always counsel people when they start talking about those things is that yes, it doesn't matter over the short run valuation, but over the long run valuation is almost all that matters. Do you do you feel similarly and do you worry about like a a five 10 year period when the S&P is going to dramatically underperform other assets? Yeah, and I think that's true across every asset class that in the in the long term valuations tend to supersede uh every other uh consideration. Now, now of course you know you do you do need earnings growth, right? So European stocks, Chinese stocks have kind of looked cheap relative to US stocks for a long time and they haven't really had strong earnings growth. I mean there's some enthusiasm now around Europe, but let's see whether that actually translates into meaningfully stronger earnings. Uh so yes, you could have justified being really bullish on US stocks uh based on the fact that earnings growth has been so strong despite the fact that P multiples have been elevated. But looking out, you better be sure that earnings growth will not only be strong but will be super strong just because valuations now are more stretched than they were uh five or 10 uh years ago. And I'm skeptical that US companies will be able to deliver the sort of earnings growth that would be required to justify these uh multiples because profit margins now are record high. If you look at forward profit margins, so you know forward earnings divided by forward sales estimates, they're at record high levels. Uh uh they're they're substantially higher even where they were in 2019. So this isn't some sort of longer term trend. Even cyclally profit margins are extremely elevated. So if we get any sort of a meaningful economic slowdown, you're going to see pretty dramatic cuts to earnings estimates, I suspect. So you're So you're not just saying like that the Nvidia isn't um over like overtaking the index and making because it's such a profitable area and it has such a large market cap that when you're looking at the index as the whole those forward margins might be elevated because of Nvidia. But you're saying even the cyclical companies like the the regular ones like or or maybe let's take the median company is the median trading company trading at elevated forward uh you know record profit margins. Yeah. I mean you can look at margins across sectors and what you find is that yes they're super high in it but they're generally high everywhere else too perhaps with the exception of energy and healthcare. So margins are high now in the US and you know I believe in capitalism. Uh capitalism requires competition. Uh I don't think that these profit margins will uh persist indefinitely and maybe they don't come down very quickly unless we have a recession but they're not going to continue to grow. And the thing is when you look at earnings estimates they're always like you know 10% growth whereas sales growth is expected to be like four or 5%. So implicitly analysts are always expecting the margins will get higher and higher and higher. There's no kind of law in economics that says that this should be the case. If anything, it's quite the opposite. Yeah. Well, I was going to say, isn't that a feature of capitalism that margins should actually be mean reverting and go back to closer to zero in a perfect competition world? Yeah. So uh so now we have more monopoly and that's one reason why margins are higher and maybe we'll continue to move in towards a direction where monopoly power gets greater and greater and greater but politically there's going to be push back to that at some point. So I think as investors we can't count on it. And and what do you um what do you think is driving the investors belief in these forward margins? Like do you think that there's something that's changed or is this just a part of the cycle? Like I I would love just kind of your bigger picture view of how you've how we've gotten here. What were the driving forces that got us to this point where the market was so is so optimistic about um the expectations? Well, I mean the reality is that for many many years, uh, capital share of income has been growing. Uh, wage growth has not kept up with productivity. Um, and as a consequence, you've had sort of rising income inequality, which has led to more political populism as one of the outcomes. Now, debatable whether the person at the White House now is really going to do much about that. uh but certainly he he talks the talk uh and he and he does so because it's politically uh sensible to do so because there is a lot of annoyance about the fact that uh so many people especially in the working class have been left behind. So my my guess is that we can't assume that there's going to be kind of this secular increase in corporate profitability at some point. uh we're going to see profits come down and when that happens it's going to be a huge shock and a very very unwelcome surprise for for investors. So is it almost your argument that it's a it's um a function of globalism and and to your point if Trump is successful in doing what he says he wants to do isn't that actually bad for the stock market over the long run? Well, I mean, in terms of the trade deficit, for example, like I think a lot of people believe that the trade deficit um you know, we they can put it to zero and we can have stocks stay at these elevated levels. And I contend that I don't think it can be done. I'm just going to can I just quote something I I grabbed for that you said on another podcast. You said if the US has high unemployment, then a trade deficit would be problematic, but it doesn't. So if you reduce the trade deficit in a full employment economy, all you're going to do is shift workers from high productivity sectors of the economy to low productivity sectors. Yeah. Right. Could you explain to people what you mean there and what you think the implications are if Donald Trump were successful or or any um politician were successful in in reducing the trade deficit? Yeah. I I like to joke that uh Donald Trump's view of trade is based on critical trade theory. Kind of this idea that if you're running a trade deficit with another country, it must be because they're discriminating against you. There's no possible other explanation. The reality is that the US has large trade deficits because foreigners often prefer to buy US assets rather than US goods and services because they see the US as an attractive place to invest or at least they used to see the US as an attractive place to invest. Uh now is that a problem? Uh oh, it's only a problem if you have unemployment because then you want foreigners to be buying more goods and services and generating demand in the pro in the process. We don't have high unemployment uh at the moment. And so if you take steps to reduce the trade deficit, all you're going to do is end up shifting workers who are now working in relatively high wage, high productivity sectors to lower wage, lower productivity sectors where most of the production is currently done abroad. That's not going to result in higher GDP. In fact, quite the opposite. by bringing down productivity, it's going to result in lower GDP with no increase in employment because you already have something close to full employment right now. So, I think this strategy is not particularly sensible. Uh now, if foreigners were sort of eating the cost tariffs, then okay. But we're actually not seeing that. like if like every month the US publishes import price indices uh which are calculated prior to the imposition of tariffs uh with the exception of a few areas like Japanese autos that's more sort of specific to that particular industry Japanese automakers never lower prices when the yen weakened so they've got big fat profit margins and so now we're sort of absorbing the cost of tariffs but outside of those few areas uh what we're seeing is that US uh importers are absorbing those tariffs in the form of lower profit margins. So sort of question of what's going to happen to corporate profitability. Uh I think the reason they haven't passed on those tariffs to consumers yet is because they're hoping the tariffs go away and they don't want to lose market uh share and they certainly don't want to invite a nasty tweet uh or or social so true social post whatever you call it these days from from Donald Trump. But at some point they're going to have to pass on those tariffs to consumers or at least try to pass on those tariffs to consumers and that's going to potentially slow the economy. So don't we either get inflation or lower margins or some combination of both? I think it's going to be some combination of both. You're going to have uh lower margins and you're going to have higher inflation. And by the way, like we have kind of market instruments that kind of give you a sense of where inflation is going right now as we speak. the 12 month CPI swap. So that's sort of a market gauge of where investors think inflation will be in 12 months. It's sitting at around 3.1%. The inflation rate in May was 2.4%. So the market is saying that inflation is going to rise by 7 percentage points. Now, it's not huge, but at a time when real incomes are not growing as quickly as they were before, having this additional inflation is only going to make things worse. Not only that, in the days following the liberation uh liberation day, is that what he called it? Uh that swap had actually almost gotten to four. It traded 390 and it is and so the real question is, is that even correct? It might might it be a little lower? But one of the things that I find interesting about that is if you look at the two-year swap and then you do the one year one year forward, they assume a year from now inflation will be back at 2 and a.5%. Do you think that that will be the case or do you worry that we are sewing the seeds for a much stickier inflation that will be higher than folks expect going forward? I mean, I I was very worried about inflation in 2021 because the labor market was so tight. I'm much less worried about inflation now. I think a there's less ability for companies to uh pass on uh higher costs to consumer. Um and two, um I I I I sus I suspect that uh underlying wage growth is going to slow and that will help to uh sort of keep inflation in check. I'm more worried about recession risk than I am about inflation risk in other words. Okay, got it. Uh so you think the market's almost correct in assuming that one year, one year forward inflation goes back lower because of the of the recession risk. So, one of the things that you recently wrote about is the um beverage curve. Could you explain to people what it is and why you think that it supports your view that um worrying about the downside is more uh something that should be more at the forefront of your mind than the upside risk of inflation. Yeah. So, so back in 2022 and 2023, I was one of the most optimistic strategists. And not only was I arguing that the US would avoid recession, but I was arguing that it would experience this immaculate disinflation where inflation would fall with very little cost to growth. And the basis for that view, which was sort of considered outlandish at that time because everyone was saying that of course we're going to have a recession. The Fed is raising rates in order to kill inflation. But my view was that wait a second, we've got long-term inflation expectations where which are still reasonably well anchored even if inflation has gone up. And what that means is that we could actually get a deni a benign disinflation. And the way it works, it's actually quite simple. If you think about like a labor supply curve, you know, up until you get to full employment, it's pretty flat. You can keep on adding workers without really having to offer them higher wages. Once you get to full employment, that changes. Once you get to full employment, everyone who wants a job has a job. So, the labor supply curve becomes like a vertical line. You can't expand employment if already everyone who wants to work is working. So, what happens at that point is that labor demand goes up. All you get is just higher wage growth. But the opposite is also true. When you're on that steep side of the supply curve and labor demand declines, all that happens is that wage growth goes down, job openings go down, and you can get this very, very benign disinflation. That's what I predicted in 2023. The problem now is that we've gone all the way down to that kind of kink in the uh labor supply curve, meaning that if labor demand continues to fall, it's not going to be falling along the steep portion. is going to be falling along the uh uh shallower portion. And that's kind of what the beverage curve is capturing. It's capturing the relationship between job openings on the one hand and the unemployment rate on the other hand. We've had this phase for a few years where labor demand was just bringing down job openings, right? And during that period, people who lost their job, they could just walk across the street and find new work. It wasn't a problem. Unfortunately, now job openings have fallen to such a low level that if they were to fall any further, you wouldn't be able to walk across the street to find new work. You'd be unemployed. You'd be spending less because you have less income. Your friends and family would see that you're struggling. They would be saving more for precautionary reasons and you can very easily get a recession. In other words, that insulation around the labor market that made me optimistic on growth in 2022, 2023, that's gone. That's a great explanation. Um, let's talk a little bit about Oh, actually before we go on to the dollar, let's talk a little bit about today's unemployment report. Um, it ended up being at least on the surface stronger than uh in terms of payrolls, higher than expected. Was that all just kind of a seasonality problem with the the the winter being a little uh a little harsher in a lot of places in the US? So what happened was state um uh state labor ended up going a little bit longer or do you think that this was actually a sign that you know no the US economy keeps chucking along and uh there's no real worries there? Well, I mean it was a stronger report than I had expected. So I don't like to sort of nit nitpick these reports and say, "Oh, this was not good. This was uh uh good." Okay, it was a it was it was an okay report. That being said, uh let me nitpick a little bit about the data. Um if if you look at what drove payroll growth in June, uh it was kind of uh state and local government hiring and also kind of government adjacent hiring in the education and uh and uh uh healthcare areas. Usually in June there's a big decline in teacher employment because the summer is starting and so on a nonseasonally adjusted basis there was a huge fall uh this month. However the fall was less than what you normally see and so on a seasonally adjusted basis employment in that sector went up. Does that make sense? probably not because if you look at the ADP numbers, they also have a category for uh for teachers and healthcare workers. Their number for for June as well shows a decline in employment. Uh and so I suspect that there's this just a lot of noise in the data. It's going to be revised away. And by the way, this is sort of a pattern now for for payrolls. uh we get a month's report and then a couple months later we find out that the true number was actually lower. And that is going to cons continue by the way because we're going to get these benchmark revisions uh uh for uh 2024 and uh f first half of 2025 uh data. We know from the census quarter, there's this quarterly census of employment wages which the Bureau of Labor Statistics uses to benchmark payrolls. Last year, uh we know from the census data that payrolls overstated by around 75,000 per month. So that bias probably continued into this year, which means just a simple language, when all is said and done, we're going to discover that probably employment growth this year was quite a bit weaker than has been officially published. And not only that, doesn't um in terms of at turning points, doesn't this often be the case that the the first round data, the one that you receive at first is is often then later adjusted and to be in reality much lower. Like I remember in ' 07 if you go back and you look at it even though the payrolls were declining there was dramatic like it was like 200,000 they were missing by in terms of when they actually went and counted. So could it be a situation where we're watching something that is inherently too slow and that maybe we should be paying more attention to the weekly unemployment numbers. Yeah, potentially. I mean there there was this big gap between what was initially reported and what was subsequently reported during the great recession in prior recessions. You didn't see that to the same extent. So it's not clear whether that was specific to that episode or whether it's something more generic. If it's something more generic than the fact that we are seeing these negative revisions does say that probably the economy is weaker than has been officially reported. So yes, we should look at uh other data. We should look at initial claims, continuing claims. They're deteriorating but not dramatically. So, so I think probably you can say the labor market is softening but it's not collapsing. Uh sim similar with with job openings. The real time measures especially from the private sector such as those from Indeed and link up they're deteriorating. Uh and that kind of suggests that the labor market is softening but it hasn't fallen off a cliff uh yet. The risk of course is that these things begin to feed on themselves and then things begin to escalate quite quickly. Now as as an economist strategist you obviously look at the totality of the data and you get a picture from all that. But if if I were to say to you you could only have one economic series to to watch over the next year. Would it be labor and which specific labor or would it be something else? like what would you watch to get your best clue of where you think that the market and the economy is headed? Yeah, I mean it's hard to choose one. I mean I think initial claims are reasonably valuable series to look at. Typically when you enter a recession you do see claims go up. Now it's not a perfect series uh because typically firms stop hiring before they start firing. So by the time they start firing, you're probably already into a recession. But nevertheless, it's going to give you some confirmation that we're in a recession. The data right now is telling us that we're not in a recession yet. Doesn't preclude the possibility that we will be in a couple of months, but we're not there uh yet. Now, now having said that, if you look at some of the spending data, it has weakened quite a bit. So for example if one looks at personal consumption expenditures so this is just basically US consumer spending 70% of the economy it's a very important uh series real PCE so inflation adjusted consumer spending is actually slightly lower now than it was in December now maybe that was because the Q4 numbers were really strong we're off a high base who knows but we really haven't had much spending growth on the consumer side so far this year Likewise, if you look at construction spending, that's been quite weak. Uh, and only getting weaker, by the way, if you look at building permits and housing starts. Even home prices now are falling. So, I would say that on the whole, the economy looks like it's near stall speed. It hasn't entered a recession yet, but the risk of a downturn is still there. Okay. Um uh one of the things I mentioned before I got on this little side track was the dollar. We've fallen a long way. Um is this just a slight re uh adjustment of foreigners of the dollar assets they own in terms of increasing their hedge ratio or is it the start of a secular bare market in the dollar that uh might have further def to fall. So this is again where those questions around valuations are very very uh useful. If you take the value of the dollar index and you compare that to its so-called purchasing power parody exchange rate. So this is the exchange rate that equalizes the price of a basket of goods and services across countries. It's sort of like the Big Mac index but for all prices, right? The dollar going into this year was very expensive based on PPP. And it's amazing if you look at kind of the dollar's valuation relative to PPP and subsequent 10-year returns, the two lines overlap very very closely. A bit like what you said earlier around taking kind of the the P ratio and looking at the subsequent 10-year return, get a very high correlation. It's the same with the dollar. So the dollar entered this year very very expensive and then you had liberation day and foreigners were like wait a second do I really want to hold that many dollars with uh with with the US uh acting the way it is and then you had the uh fiscal uh process that led to the one big beautiful act which is probably going to result in budget deficits of 7% maybe 80% because a lot of these spending cuts probably will never happen and foreigners again are saying well you know do I really want to own bonds if uh US debt is set to continue to rise as share of GDP for as far as the eye can see. So that reduced demand for US bonds and that in turn reduced demand for US dollars and so the value of the dollar declined. So do you think that explains how we got here? Does it continue? And what are the risks? Like, you know, we've gone from really overpriced in terms of a PPP basis to probably moderately overpriced now. Markets often go from overpriced to underpriced and don't stop in the middle very often at fair value. Are we on the way to underpriced or and and how long would that take? And does that worry you or is that not something that you're that's on your radar and you're not that concerned about? I don't think we're going to have a dollar collapse. Uh but I think the dollar will weaken over time. And so we're talking about next few years or or so. I mean, similar to what happened between 200 uh and one and 2008, the dollar was kind of in a secular bare market. So I think we've entered another secular bare market. Now, you know, historically, the dollar tends to be somewhat counteryclical. So if we do enter a recession, maybe the dollar temporarily uh stabilizes, perhaps even strengthens, but I think that will sort of be uh uh just a pause and a longer term weakening dollar trend. Does it worry you in that, you know, you mentioned how the dollar is counteryclical and it's um like that's the dollar smile in terms of how when things are really good in the US it rises and when things are really bad it also rises because credit is destroyed and people pay back their dollars that they borrowed in. Um, one of the things that we had that was interesting in the post-liberation day tradings was a period when both or actually all three the US dollar, US stock market and US bond market all went down together which was a very unusual not very often seen hasn't been seen in decades. Do you think that that was something that just you know Trump being Trump did some crazy stuff some people got nervous. not that much to worry about. Market's going to fix itself up. Or do you think that that was potentially a sign of a regime change in terms of those correlations that we've counted on in terms of the negative correlation in terms of like risk off dollar up has that gone away or and is that a worry for you? I think it's still a worry. I mean it was driven by the fact that the market at that time thought that Trump really had become unhinged when it comes to tariffs. I mean subsequent to that it seems as though the market has disciplined him and he sort of walked back some of the uh tariff uh hikes and the market has gotten a little bit more comfortable at least the stock market has gotten more comfortable with uh trade policy. The dollar is still you know trying to find a bottom. Uh but yeah, it was quite an interesting episode. Kind of reminded me of my IMF days. It's very em like behavior to see. That's true. That's what some of my buddies are saying. The US has become an EM. And uh I actually joke and say some of the my the Brazil and the guys that have been trading EM for a long time have they've been getting a lot of things right because it actually has become more em like in the market reactions to things. Yeah. And I think, you know, there's like I think what's important in and I don't really know the answer to this question uh like whether this is sort of just sort of Trump related stuff or whether this is really kind of a trend that the US is on. Kind of reminds me of uh of uh Thomas Freriedman's famous quote during the first Gulf War. He asked is Iraq the way it is because of Saddam Hussein or Saddam Hussein the way he is because of Iraq. ask kind of the same question about the US like is the US now with all these crazy tariffs just because of Trump or is Trump just sort of emblematic of where we're going in terms of uh political populism? I don't know the answer to that question. That's a great question. The answer is very important. It it is all right. Um in terms of when you go you must go travel a lot or at least talk to clients from all over the world. I'd love to know what they're thinking and and what the questions that they're asking. Is it surprising you? And just any sort of color in terms of your interactions with with clients and and especially non US clients. That's what I'm most interested in. Yeah, I think there's sort of a bit of a difference between US and non US. I think in the US the general view is that everything was fine until liberation day. Then Trump went crazy with the tariffs. Then he kind of pulled back. Uh and so now we don't have to really worry too much about tariffs anymore. Rather we're going to have these uh beautiful stimulus uh uh policies um and everything will be fine. I'm kind of skeptical. I don't think Trump has fully walked back the tariffs and I don't think everything was fine even before liberation day. Uh so there are risks to the economy and the stock market outside of the US. Uh people are just sort of bewildered by what's uh going on. Uh they thought that the US was an ally and just to see how they're being treated. They don't they don't say it in public but but they say it in in private. There's just a lot of anger towards the US. uh these these days, which is why I'm very skeptical we're actually going to get any sort of meaningful trade deals from like the EU, uh even Japan. Um they they politically can't look as though they're just giving in to Trump that easily, especially the EU. I mean, EU is a big trading block. It's not as though the US has nearly as much power over the EU as uh Trump believes. So I I suspect that these problems will continue to persist. Uh but the good thing and this is sort of more investment relevant is that other countries are kind of looking at themselves and saying okay you know we can't be as reliant on the US as we were before either for growth or for the military protection. We got to do more of more of these things ourselves. So here in Canada of course we've seen a real push to dismantle interprovincial trade barriers. say why in the world would there be trade barriers between Quebec and Ontario? Well, there are u and now we're sort of bringing them down. We're seeing some of that in Europe as well. And that's going to be one of the positive developments from the trade war that it's going to force more reform outside of the US as countries look to become more economically resilient. Um, Peter, since you're uh, PhD and you're much smarter than me at this, I I read stuff about the interprovincial trade barriers, the dismantling of that in Canada is has been contributing as much as 1% to GDP. And I just think to myself, I can't believe like, yeah, okay, I can't buy French um, like I can't buy your your dairy or whatever, and I can't get um Okonagan wines, but is it really 1%? like is do do you buy those numbers that it that it was impeding our economy as much as they say it was? I guess it depends on whether we're talking about 1% on GDP growth or 1% on the level of GDP. I think in terms of level of GDP the numbers are generally higher like around 5% or so maybe up to 10%. But if you kind of ask like how long would it take to get the full benefit in terms of higher productivity, it's not going to be one year, it might be 10 years. And so you will get faster growth of around 1% per year during that transition phase. So it is you you believe it is that that that um stifling. So Oh, you do? Okay. there there there's a lot of uh vested interests that uh want these restrictions to remain in in place. And so what you need is sort of kind of a collective action mover that says okay everybody's going to give up these uh little thiefs that they have for their own province and then everybody will be better better off collectively. Um I was in uh London recently and I was shocked at the uh how should I say this? I was shocked at in terms of when I talked to folks about uh Europe, how how determined they are on the same way that we are determined to do these things and how the attitude has changed and like even Germany taking off the debt break and and you know doing things that was previously unheard of. All of a sudden these things seemed a lot more plausible or even probable. And does this make you bullish on the rest of the world like versus the US? Like, so are you looking at this going, the US is overpriced, everyone else is cheap, this is kind of a no-brainer to to, you know, invest outside the US? I mean, in general, I do favor non US stocks, but I'm also kind of realistic about what can and will be achieved. So, in the case of Europe, Germany can do more stimulus. Of course, they've got the fiscal space to do so. But France, Italy, Spain, Belgium, UK, they all have government debt to GDP ratios of above 100%. So they're limited in what they can do. In fact, France is looking to reduce its budget deficit rather than increase it because it's already quite uh high. Um, so you know, I think the the risk for Europe is that we get something that looks a bit like what happened in the early 1990s where Germany was also doing a lot of stimulus associated with reunification that pushed up bond yields because the currencies were all pegged at that time. Bond yields in Germany go up, they go up everywhere else. That actually made life miserable for a lot of other countries including the UK which at that time had a exchange rate that was pegged to the uh Deutsch market and of course that's where Soros and Bessent made a lot of money. So there's kind of this risk for the other countries that are not able to do a lot of stimulus themselves. So your argument is is or not your argument the thing that you're s suggesting is that if the if Germany does too much not too much but if does what they say they're the only ones with real room rates go up across the board and actually these other countries start feeling the pain from rates. Yeah. I mean it's sort of a kind of standard economic theory that if you have a system of fixed exchange rates in the your area you know you have the same exchange rate uh that you need to have sort of coordinated fiscal policy uh for things to uh make sense because if you have one country that's doing a lot of stimulus another country's doing austerity you're going to have a situation where the country with the stimulus gets overheated and the other country ends up cooling down too much. It's not an optimal situation. Doesn't that just mean that we should be buying Germany and forgetting about the other ones? Yeah. Though I mean the German stock market is not as levered to German growth as it is to global growth. And the problem in Germany uh is that German companies are increasingly finding it difficult to compete with Chinese uh companies because their export mix overlaps quite a bit and it's becoming increasingly overlapping as uh China kind of moves up the value chain and ends up competing in those areas that German companies once dominated. tell me your opinion on China and where they stand and what the challenges are facing them and if there's any investment opportunities there. Yeah, I I mean China looks a lot like it's on the same path as Japan. Uh it's got kind of deeprooted deflationary pressures now. Producer prices have been falling pretty relentlessly. Home prices are falling now. uh housing construction is declining dramatically. In fact, it's already declined a lot. Housing starts are down 70% from their uh peak. And the problem is that China historically has been very reliant on housing and exports as uh sources of growth and demand. Exports are being challenged by the trade war. Exports to the US are down 35%. It hasn't actually hurt China yet because China has been able to reor reorient these exports to other countries. Like Chinese exports to Canada up are up 20%. To the EU, they're up 12% year-over-year. But, you know, that's not sustainable. That's not sustainable. I think China's export sector is going to slow. The housing market will continue to slow just because of the demographics. Like, China's population is now shrinking. There's already probably 20 million uh vacant apartments in China. just no demand for this uh property. So they have to do more kind of consumerfocused stimulus and they're doing some of that now but it's very kind of begrudgingly done. There's just kind of this ideological roadblock. It's kind of funny for a communist party officially communist party they kind of act in a very Germanic Austrian way when it comes to uh uh stimulus at least does. Yes. It's because before Xi they they they were more than happy to to save the world in the GFC doing too much stimulus. I think that is my understanding I listen I I rely on my buddy Louis Vincent Gap for most of this but my understanding is Xi's kind of always viewed the corruption that kind of was created as the result of that huge stimulus done in in the mid 2000s to save the global economy as part of the problem. And that's why he's been so reluctant to repeat it. Yeah, they've never been that keen on consumer focused stimulus. So during the GFC they did stimulus that was focused on the real estate market and that was fine just because China was still urbanizing very rapidly. There was a lot of demand for housing. So it worked. Then you kind of started to get into excess capacity issues of housing and they started doing manufacturing focused stimulus, infrastructure focused stimulus and that worked for a while but then you ran into excess capacity in manufacturing and in infrastructure and now what do you do? The only thing you can really do is consumer focused stimulus and you're right ni is just very uh averse to to to that. He sees that kind of consumer focused stimul stimulus as the providence of the decadent west and he doesn't want China to be doing it. Um so I've asked you a lot of questions Peter. Um if you were to be put yourself in my shoes like what did I miss? What question should I have asked Peter that I have missed? That's a good question. Um, I mean, I think, you know, we didn't talk very much about uh commodities and gold, okay, things like that. Uh, you know, I'm actually still quite bullish on gold. Uh, I I think that we're in the midst of a secular bull market in gold. And yes, the price of gold is high. But if you look at the value of gold in relation to the value of all other assets, it's actually much lower now than it was in the early 1980s when gold prices were similarly high in real uh terms because global wealth has grown so much over that period. And I think you can make a case that the value of gold should sort of increase in line with overall wealth. If that's the benchmark, then gold prices still have quite a bit of upside. Um, is part of your bull market or the bull forecast on gold um the result of the Russia like situation in 2022 when they invaded Ukraine and they were zeroed on their FX reserves and the fact is that central banks have been driving it like or is that not as important to you? You're more interested in this idea that it just should represent a certain percentage of the world's wealth. Well, I think that I think yeah I mean It's both. Uh the fact is that we do have tailwinds from geopolitics. Like if you look at Chinese holdings of gold, uh the PBOC's holdings have gone from like 1% of uh assets to 5% but I think you can easily go to uh 10% and that's true for other central banks as well. And realistically, like we talked about the US fiscal situation a little bit earlier, uh if you were on a course in the US to 8% of GDP budget deficits in a full employment economy, yeah, nonwart time, nonwart time, nonrecession, crazy absolutely crazy. And uh so what's the alternative? I mean, Bitcoin is an alternative, I suppose, but gold is also a good alternative. Are are you amazed that folks have accepted this 8% or 7% whatever the number is so easily because I am. I'm just flabbergasted that we've gone and like let's remember it wasn't that long ago that Scott Besson was telling us the 333 and everyone on Wall Street was telling me how they're going to cut and they're going to go to 3%. And then just overnight he's like no no we're not going to cut. We're going to actually do this and it's going to be 7%. But don't worry the growth all going to come on the other side. It is madness. Yeah. And and there seems to be sort of a bipartisan consensus not to really do much to rein in the uh uh deficit. Uh the Republicans can't fathom the idea of raising taxes and the Democrats can fathom the idea of cutting uh spending at least not on social programs. So I think we know that this is not sustainable. uh we don't know when uh when things get so tough that hard choices will have to be made and certainly talking about the US fiscal situation does resemble a little bit that story about the boy who cried wolf people have been talking about it for years but of course in that story the kid did get eaten at the end right we just don't know when that'll happen well this is what kind of makes me mad I I hear Steve Iman from the big short talking about that and he says like you know 20 years ago if you had taken me aside and asked me about the deficit um I would you know I would I would have told you that there's nothing to be worried about in the next 20 years we've had like this terrific experience in the US and I kind of called on that because I'm I'm thinking to myself 20 years ago you probably would have been worried about the deficit it's only now and it's kind of like everyone's accepted that now we don't need to worry about the deficit and it's almost like this acceptance that we don't need to worry about the deficit is almost what's going to create the environment and the necessary preconditions to have the problem. Exactly. Anyways, one question for you on this in terms of it. Is it the bond market that that like Bill Fleenstein once said they will continue deficit spending until the bond markets takes away the keys? Um is is that the what's going to stop it? And what does that look like? Yeah. So, I think it will be the bond market. The question is whether it's done in the midst of a crisis or whether it's sort of more of a slow pressure that eventually leads to political change and I think most people think well it would require a crisis maybe maybe but you know there are alternatives and Canada actually presents an alternative like we think of what happened to Canada in the early 1990s we had very high uh deficits uh inflation was rising we had a failed auctions and then do we have failed auctions? I didn't know that part of it. Yeah. Yeah. There were auctions that went very poorly. Let's put it that way. Uh and so what happened? We actually had kind of proactive fiscal tightening. We had the GST and the budget deficit got lower. We never had a crisis. We did have a recession. The recession in the early 1990s was a very very painful recession, much worse than what the US experienced. uh but we never had a formal crisis in the way that Greece or Italy right did. So, so you know there is a possibility that cooler heads prevail but there's also a possibility that we actually do get a outright crisis. Bond yields go up and then all of a sudden people are calling their wealth manager and saying why do you own bonds? Are are you stupid? Don't you realize how big the deficit is? Get me out. And that sort of just feeds on itself. That's also a real risk. Um, and to in terms of Canada though, it was lucky. We're a small nation and we were able to basically let it all be the dollar. Like the Canadian dollar went way down so we could steal growth from other folks. The trouble about the US is they're they're the world's reserve currency. You can't steal growth from everyone else. It's going to be disaster. Okay. Um, let's finish it off with a question. One of the things I'm going to steal an old one that I used to use and this is actually from the Oshanessy podcast and he liked to end this um podcast with asking the uh interviewer e if there was something some a period in their life where someone did something extraordinarily kind for them in their career that they remember and if they were comfortable sharing it in terms of someone that was important to you that did something and I'm springing this on you so I'm going to keep talking to give you a little bit of time to think about something, but uh something very kind like a a a point in your career when you were developed. Is there somebody a story that you wouldn't mind sharing? That's a good question. Uh my my first recollection was a teacher that I had in high school, Mr. Schllecta, I think. Okay. He was the history teacher. Uh, and you know, I wasn't I was a good student in high school, but you know, I you know, as a teenage boy, I wasn't that studious. Um, and he always kind of focused on thinking about the big picture, the big ideas. Like, don't tell me facts. This happened on such a date. I don't care about that. I don't care about history facts. Tell me the concept. Tell me the idea. think through the uh uh the the the the history rather than just memorizing a bunch of facts. That actually had a real important effect on me, not just when it comes to the history class, but even things like math. I was never particularly interested in math because I was just trying to memorize the equations. And then I started thinking to myself, you know, I'm going to understand the concepts, right? And when I did that, all of a sudden, things got so much more interesting to me and I started doing a lot better in my classes than I had before. And that kind of allowed me to kind of pursue a good education and get a good job at the IMF and Goldman. So, I'm I'm very I never thanked him. I don't know if he's still alive, but uh in retrospect, that had a big effect on me. Well, and we'll thank all the teachers out there that are doing wonderful things. And uh that's a great story because it just goes to show you how a very small thing can make a big difference in a person's life. And that's a great story. So thank you for sharing it. Before we leave, let's give you a chance to talk about your firm. Uh I mentioned BCA as being one of the just the uh you know bedrocks of of macroeconomics. And now you got Macro Papich is come. Marco Papage. Macro Papich. We're going to have to call him that from now on. Macro Papich. Marco's come back to your shop. Um why don't you tell people a little bit more about it, where um who it's for, where they can reach out to get uh information and like how they can go about contacting you guys. Yeah, I mean BCA research is the world's largest uh provider of independent macro research. I stress the word independent. Uh we're not a broker, we're not an investment bank. Uh we only do macro research. And sometimes we'll be right, sometimes we'll be wrong, but it's always honest. It's always uh uh aim to be as objective as uh possible because we don't have any conflicts of uh uh in interest. I'm the firm's uh chief global strategist. Uh Matt Girkin does geopolitics. Marco also kind of does geo macro synthesizing macroeconomics and political uh developments. But we have people that are focused on bonds, on FX, on US uh sectors. Um, and so we all talk to each other, we communicate with another, we collaborate with each other. And as a result, I think we can do research that's really good and really valuable. And I think we estimate that something close to like 85% of the world's top financial companies are BCA clients. clients getting a research for a long time and and they enjoy it. Well, there we go. The last 15 you're holding out. Give uh the folks at BCA a call and uh get more of this terrific stuff. So, uh Peter, it was a pleasure getting to know you. Um are you you're in Montreal, right? That's right. Montreal. So, um is you going to go off to Meog and are you in Eastern Townships or northern the Laurentian kind of guy? Yeah, I have some places around, but some places. Okay. Well, well, it'll be remain a mystery which one either whether you're Eastern Township or Northern uh Laurentian. I I am a big fan of your your town. It's terrific. I I want to thank you so much for coming on. It's been a real pleasure getting to know you and I really appreciate your time. Thank you so much. All right, Patrick, what do you got for us for Talking Charts? Listen, let's just start off talking about the jobs numbers that came out here on Thursday. Uh and well, first of all, Wednesday the ADP non-farm employment change came out and it was the first negative print minus 33,000 that we saw in years. I have the chart up here and uh and so this number has been weakening and it had a lot of anxiety built up that uh this was going to be the month that the jobs numbers were going to break. And um and so uh when we look at the uh non-farm employment change uh last month it was 144,000 the forecasted uh average expectation was 111,000. Everyone was expecting this number to be a miss and to decline and it came in in line with last uh last month 147,000. So it just wasn't the decline that everyone was expecting. And then the unemployment rate which they expected uh to rise from 4.2 to 4.3% came in at 4.1%. Uh and so the market simply uh did not get the bearish confirmation that somehow the economy was weakening at least not from these jobs numbers. What did you take away from this? Well looking at kind of the headline numbers you're absolutely correct that the market took it as this is a positive number. I was intrigued by actually Jeff Rosenberg I think from Black Rockck. He was on Bloomberg right afterwards and he highlighted the fact that although we had uh a beat in terms of total farm pay non-farm payrolls, a lot of it was in the government sector and not it wasn't government the the federal government but on the statewide level. And so we saw this uptick there. And he just wondered if it was seasonally adjusting problems and that it wasn't as strong as the economy uh might indicate and that the if we look at the private sector job jobs which actually came in below expectations that that's actually a more uh clear sign of what's happening in the labor market. I don't know. Lots of things going on Patrick. We have also the fact that we have um with the crackdown on immigration in the US all sorts of just weird undercurrens. I think the data is difficult to get your hands around and what's really happening on the ground. There you go. So, um I want to go to this next chart which is uh I like I started getting hooked here on uh checking out uh poly markets ever since we were using it for uh looking at the odds of uh the presidential victories and uh so they have on poly markets and the betting markets the odds of a US recession in 2025 and during that um liberation day show the odds were over 60% uh that we were going into a recession. recession in 2025 and this thing has just since then been nosediving and this jobs number had a drop uh from like 26% now down to like 20% chance of a recession. So at least from a betting markets perspective uh the the odds of a recession this year are being pulled right out of this market. Uh do you think that uh everyone is being too um optimistic here or is this uh reflective of the fact that simply there is only a half six more months left in the year? They're just the o the the odds that you know that the ugly side rears its head may now be just pushed forward into 2026. What's your take? Well, I think Patrick the market is correct in in realizing that the US economy is stronger than everyone expects. it's not rolling over in terms of the the imminent doom that people were talking about with the tariffs and uh the uncertainty created from that. And in fact, you might argue that once we get through this period where the US finally just assigns everyone their uh tariff number and we get the big beautiful bill, whether you want to call it that or not, whatever the bill put through, a lot of uh the uh what should we call it? Uncertainty regarding the economy might dissipate and we we could see a situation where the economy strengthens into the fall. Um I don't know. Oh, that's not my base case, but I could understand that argument. The reality is though that it's we everyone the Fed keeps saying it and I think we all need to be data dependent that you don't know what's happening. There's a lot of uncertainty out there and until you see signs either way, then there's no point in worrying about it too much. When when the econ when the economy rolls over, it'll roll over. Until then, you know, the death, you know, what's that line about the the reports about my death are premature. That's basically the recession of uh 2025. There you go. I like that. All right. Well, let's talk some charts. uh because when everyone was expecting this jobs numbers to to come in weak when they didn't get it, the stock market got just uh that extra gas in the tank for one more push and we're up 50 S&P points. Uh now above 6,300 on this S&P. Uh, you know, one of my big things was I was anticipating uh those previous highs to at least act like overhead resistance for a brief period of time, but this market ripped like a hot knife through butter uh right through that previous high and it's been relentlessly rising. Now you have talked about and Charlie as well about uh flows particularly driven by vault targeting funds coming into play over the course of this month. But this is I think only exacerbating uh the fact that now everyone's on a chase. everyone uh you know was being somewhat defensively positioned and uh the the feel of of uh getting into this market while it's ripping it really feels like uh right now everyone's just uh going all in on this you think so like you think people are like I'm not sure I agree as much I I people are feeling the pain and they are no doubt giving up on their negative postures But I I don't get this sense especially maybe it you know it's the difference between retail and institutions because I don't get this sense that the institutions are climbing all back aboard and that they're expecting the market to rip. They are aware that it's going without them and they are rightfully putting risk back on but I don't feel like that they're optimistic about the future. Actually I think that's more of a retail thing. Well, I guess you're right. the it would be a retail thing to to those people that were basically expecting this to turn negative have no choice but to uh well and and listen I actually don't want to you know slam retail in any way because first of all I think they got it more right than the institutions did they were and there's this great chart from Bank of America that shows what happened during this last liberation day selloff and it was very clear that the institutions were the ones selling and that retail bought and retail just continues to buy and buy and buy and I guess they are more euphoric. I will say that they uh amount of speculation you're seeing in some crazy little crappy names like the spaxs are back. I see Tom Le's, you know, Ethereum holding company is trading like some ungodly number. So, it really does feel frothy that way. But I I don't want to slag retail because they've been right and and institutions have been wrong, right? You know, here we are alltime highs and was the correct bet to to sell into that liberation day panic or was it to buy and they bought and they were great and here we are. from a measured move perspective uh just by looking at rules of symmetry that this having an upside towards 64 to 6600 at this point uh is the uh is a natural measured move and so uh at this stage this thing tacking on an extra 5% isn't out of line. The part that um is um actually very interesting was just how short-term overbought we are. Now, you could use things like uh an RSI indicator or something to indicate overbought and oversold conditions, but I always look at the distance from a a 50-day moving average as a a benchmark of kind of how extended any short-term move in the market is. The fact is is that the S&P rarely trades 300 S&P points above its 50-day moving average. uh like for instance during bull markets like this, it usually follows a steady rise which is usually 100 to 200 S&P points above its 50-day moving average during moves. And usually when the distance gets uh too far away from that moving average, usually it's when a market correction tends to ensue. We're now 300 points above more than 300 points above the 50-day moving average, which is uh not frequently seen. And and this is where while the market is got a very positive momentum, the question is is that is it due for uh just a pause? And that's not a bare call. It's not uh a short uh opportunity, but rather simply at some point uh every rally gets checked and there's a little bit of profit taking that kicks in. Are we going to see a period where this thing can spend a week back filling? Maybe it's going to be wrapped around that July 9th um kind of uh trade deal deadline. Uh and maybe that could trigger some sort of short-term profit taking. What's your thought there? Well, I I actually don't think that July 9th's going to be a big deal. I don't think the market cares as much about um trade deals as it used to. I think it's assumed that we're going to get some sort of m some countries will do deals, some won't. We're going to end up, you know, somewhere between 10 and 20%. I think the market's accepted that. What I think will be more interesting, Patrick, is the earnings going forward, right? and what those come in at and do they end up surprising or causing any sort of uh dislocations, but having, you know, you mentioned Charlie McGilligan and his V control and I recently came up with a with a study that I did with uh with um my my new buddy Macro Manvir um and it was it was a new model that was basically looking at that V control fund and and really trying to measure on a day-to-day basis the future flows if we continue to be this sort of um subdued uh realized volatility environment. And one of the things that became very clear to me was we still have another month of that that fund those funds that strategies those strategies continuing to bid for the market. And this was a very unique period because the volatility from the liberation day was so violent on the downside but also the upside Patrick and that's an important part that we need to realize. Usually what happens is you get some bad news in the market. Market goes down it becomes more volatile and then things kind of settle down at a new level and as it becomes less volatile the realized numbers start declining. they realize volatility numbers start declining and then the V control funds start buying back into the market in this case because the snapback was so large that this entire period was so such a pronounced still high V uh period correct and usually you don't get as much of a high V period on the on the on the rally or at least not as long as that rally was and therefore the vault control funds really took their time and weren't able to get into the market until now or in the last few weeks or maybe a month, but that bid is there and and it's going to be tough. And if we have a sim summer situation where it's just kind of quiet, I think that they're going to play uh a bigger role than folks think. And even this past week when everyone has been confused about the grind higher, I've been saying no, the vault control funds are there. That's what's going to happen. I while I fully respect it and I've even talked about the V control funds because you inspired me to kind of uh explore that. I don't think that you can conclude though that every single day will be green for the entire month just because there the point I'm making at all is that we could we could easily have one of these three four day uh uh give backs on the market that ends up being 150 S&P points and then it goes back up and the V funds throughout that whole period are doing their buying but the uh they may actually allow the the sell-off to be far less because they're they're bidding throughout that period. And so while the sell-off could have been a 300.5% correction, it might only end up being 150 points because of the additional buying supplied by these uh V control funds uh buffers that downside. But I still think that downside um uh corrections are still going to be there because it's just a natural eb and flow movement of the markets. Yeah, I want to move on. One second before you finish there. Can I just make a quick comment cuz I completely agree with that analysis. That is a great way of looking at it. And that's one of the things that people get frustrated on. They'll say like we'll get a a sell off and they'll say but you said the ball control funds were buying and the reality is they were buying but they cushioned it. And that is your point and I agree with you 100% there. That's a great way of you know articulating it. But my point is the sell-offs won't be that deep. Well, not just that though. This is my my point that I kind of wanted to emphasize. Absent anything else occurring, let's just imagine that it without vault control funds, we would have had just a regular summer market where it just goes sideways for a month. That is, I think, going to be looking more like what we've experienced in the last week, which is a grind. And that's where I'm differing a little. If we don't get bad news and if we just get something where in the past we would have gone sideways, it's going to grind higher. So just like you say, ball control funds will cushion a negative market. I would argue also vault control funds are going to make a neutral market a positive one, a slight positive one with a grind higher. There you go. So, I uh I want to um go a little off course because normally we'd go currencies and commodities and all these different things. I want to uh go a little bit deeper because I thought something really interesting happened uh in um the markets on July 1st. So, uh at the uh end of a quarter comes usually the fund rebalancings, right? Quarterly rebalancings. And so watching um at the uh at these kind of key uh quarters what happens uh is always interesting. And so what we saw happened on July 1st uh was uh in this case this is the momentum uh overvalue ratio. And what we first of all can see is momentum and all these AI stocks and everything where what led the market higher off of that April low. like we just had this kind of group of stocks, all these momentum names really driving that advance. And what we had here for the first time in a while, uh the even on an upday like today, you have a scenario where uh momentum is underperforming value uh on that. And that was particularly interesting because there were these extraordinary breakouts that were happening on a whole array of sectors that were left for dead. I'm just going to pick on for instance uh ITB like the homebuilders. The homebuilders have been in this vicious like uh halfyear bare market even longer like a 9-month bare market decline. They started basing and they started the month with this nice big breakout candle uh uh breaking it out of a a twomonth range. Right? Then you see like this happening on healthcare names. I'm just going to pick on Fizer as an example in the healthcare but you have suddenly this big breakout candle in many of these healthc care names like uh or let's say biogen the biotechs which were left behind had breakouts all in there. It was interesting, but there was a whole bunch of activity happening where a lot of these beaten down sectors, health care, consumer staples, um uh these um uh homebuilders, all of these sectors suddenly all uh upticked on this. And now one day doesn't make a new trend. And I don't want to already like say that this is therefore a guarantee but wouldn't it be interesting is that like for instance there was a huge amount of articles written not huge amount a few of within you know the circles of of uh of the kind of more institutional side talking about the breadth of this market being so incredibly narrow right like that that this this breath was very narrow very few leadership what if then story for the summer is sector rotation. What if uh what if we see that uh that the market breath widens the S&P may not actually have too much momentum on the upside still upwards but it's happening because the breath of the market is widening. all these sectors that were left behind suddenly start uh being bid and we see rotation out of some and profit taking being uh occurring on some of these areas where people have made a very large amount of money in the last quarter. Uh what what's your uh thinking on that thesis? I think it's hilarious because I didn't we used to argue about this like a year ago, two years ago. We argued about it for the last five years, dude. Yeah. We always you always were you were whenever I would try to say they would become the other ones and and listen you've been right because the reality is it's just gotten narrower and narrower and anybody that's like tried to go out and buy anything but mag 7 or the nifty50 or oh by the way did you see um the K240? No. The Ku Fantastic 40. Google it. You're going to like those names. They're they're really high quality, you know, very cheap names. Um, so I I I guess I would say Patrick that maybe you're correct in that could that be the market deciding or or wondering if the economy is going to be stronger than everyone expects and could this be a function but why why would it be defensive sectors though like well I think what actually happened you've highlighted a few things but if you look at it from a factor point of view yes value went up, momentum went down, but it was also looked like it was a big reach for the 12-month losers. It was the stocks that have been down the most. Yes. Well, that's a lot of the ones I'm highlighting here, right? Right. Well, and but I mean, that is still distributing into the uh wider breath. But would would um that not be a a defensive play? Like if you're up 30% on a stock in the last um uh two months, three months, and this thing is trading at 52- week highs, isn't there a a certain degree of defensiveness by reallocating to a high value stock that's beaten down at 12 month lows? Uh you kind of force yourself to keep the profits while staying invested. It's uh it's kind of a way of rejigging your the payoff profile of your portfolio. Yeah. Uh to me, the real question was was that the uh a function of one big huge whale coming out and rebalancing their portfolio or is that what the market as a whole wanted to do? No. I I would I I what I would say is a it's a combination of both in a sense that it starts with a whale and then all the technical signals start flashing buy signals on all these things and then the retail follow the the follow the leader retail I think it's going to be momentum because the momentum will change right like cuz the reality is momentum will change I don't know though Patrick it just felt like a one day affair the next day was less pronounced announced like today, you know, or Thursday. I I feel like it could fade. I'm not as sure as you are that it's the start. No, there's not sure. So, I always say to my members, one day does not make a new trend. Uh and and therefore, there's no way that I want to just based on one or two days of price action conclude that this is fact. But it is something you need to pay attention to because if it develops into a trend, many of these stocks that have been 50, 60, 70% off of their highs, if they engage into new bull trends, the upside in my mind is far greater than chasing the next incremental high on some of these mags that have already had huge runs. Uh, and so like like for instance, just using Biogen as an example, if all Biogen did, and just because I had it up here, did a 50% retracement of its loss and made a run to 175 on the upside, uh, that would be a trough to peak rally of 57%. 57% from uh from trough to peak. Yeah, you're not going to get that in Nvidia again for you're not going to get 57% in Nvidia. The point is that that watch it exactly like just because we both agreed it's videos but but the point being is that a lot of these beaten down names actually have in some degree some alpha like because just the they've been so beaten down that even if they just recover half of their losses the percentage gain potential there is far exceeds uh the next incremental gain on Microsoft Um and and so this is why I think it's going to be really interesting to see. But know what also is interesting about this is that uh this spilled over into the resource space uh and a lot of the resource stocks that were left for dead uh all suddenly upticked. Um let's just take iron ore. Iron ore was an absolutely hated space. Uh nobody wanted to touch it with a 10-ft pole. And let's just start with the big boy BHP Bilitin. Uh but like look at the way BHP gaps higher here. Like turning off of that low. Look at the way Valet um ripped up to a fresh high. Look at the way um what's it called? Rio upticked. And this is just a one example uh of of that. Like uh for instance, look at lithium plays like uh uh a a um uh it's ABL, right? Uh what's Albamaro? ALB. Yeah, there you go. Uh but look at the way it off of its lows upticked. Uh look at the way Alcoa upticked off off of that trade range. Suddenly uh you have uh the part of the because like uranium's been super hot, gold has been super hot. uh there's a whole series of these kind of niche little pockets that have been huge bull markets and then there's all these commodity stocks that were literally left for dead and suddenly it feels like uh there are waking up at least there's a few upticks here to find out whether or not something bigger is happening like just taking a broader uh uh commodity basket like the DJP right uh the DJP um is Sorry, the Bloomberg commodity index, it obviously got hammered when oil uh when oil got hit after the um Iran deescalation. But let takes but then it's upticking. But then take GNR, which is the uh global natural resource ETF, which is a broad basket of uh of resource names. Look at the way it broke out to a fresh new high. That chart actually looks good all of a sudden. What is that one? GNR. Yeah, like Guns and Roses. GNR. Like a I don't know this. What is this? This is a It's It's just a a a big broad diversified natural resource ETF. So, it's just and they own the They own the companies, right? Yeah. Yeah. Yeah. Individual companies. So, it's just a diversified way. It has a shitty options chain, but you know what? It's just a good way of kind of gauging what the entire space of of resource stocks are doing. because it trades. Oh, it's got a whole bunch of non US names in there. Yeah. Oh, that's great. Right. But the point the point is I had no idea. But look at the way No worries. But look at the way it upticked, right? Like it actually looks like a breakout, like a full-on like there's a there's a commodity bull market going. Anyway, the point is is that that com there's this whole sector of commodities that was left for dead and quiet and maybe, just maybe, they're waking up. Uh, and welcome to the jungle, baby. Couldn't resist. None nonetheless, that that was thing. And and it's uh it'll be really interesting to see whether or not and and even like take something like energy. Let's use the XOP, right? like um energy is hated, oil is hated, but yet you know it's getting above its 50-day higher highs, higher lows. Every single pullback uh holds the Fibonacci zones. Are we quietly seeing money being allocated into the beaten down energy space? Um it's uh it's uh certainly interesting. You're a wise man, Charlie Brown. I like it. There you go. Okay. What do you got else for you? What other wisdom what other pearls of wisdom do you have to share with us? Well, uh what's interesting here like gold bounced off its 50-day moving average? Let's just kind of go through a bunch of these broader commodities, but the bounce hasn't really had any gusto behind it here. Uh to me, gold needs to clear 3,400 now with a with a with with a proper breakout on the upside in order to really solidify a resumption in bull trend, you know, and at that stage, uh this thing, you know, proceeding to do like another measured move up to 3600 or something like that would be entirely reasonable, but it really needs to follow through off of this. if it doesn't uh you know is has the shortterm run in gold finished? I don't want to make that call yet. I want to give the bulls the benefit of the doubt that um that this retest of the 50-day and that retracement zone is a buy on dip. We're going to watch to see whether this follows through. But I'll tell you right now, if a week passes and this thing hasn't cleared 3,400, it'll make me nervous. Uh I I don't want to see Patrick nervous. You do not want to see me nervous. It's so so so No, but uh the uh but it is it'll be interesting. By the way, the one um other uh alternative asset like that that is breaking out is Bitcoin. Oh god. Uh oh, I know. Okay. I old side like I'm a no coiner too, Gibb, but I mean let's just do some technical chart talking. All right. Uh the point here is is that it zigzagged uh in a very classic um flagging formation and we're literally trading into these major highs. And all I'm observing here is is that if Bitcoin manages to make a 52- week high here, the measured moves are all the way to 120 to 130 on the upside. uh and uh and it's going to be very interesting to see whether uh whether crypto uh is is the back coming back to life here for a bull breakout. Uh certainly uh this is a very key overhead resistance level that uh needs to be watched. The other one going back to precious metals, silver, silver is behaving way better than gold. And what you can observe here is that uh this little sideways consolidation uh didn't have anywhere near the depth of pullback that gold did in terms of just relative uh to the to the magnitude of its prior rise. And here, silver is attempting uh a breakout to a fresh new high. If it does, it's go it's targeting 3940 bucks on the upside. The interesting part can and it's a thought that I'm trying to reconcile in my head and you can kind of pine in on it. Can silver run without gold? Yes. Yes. Okay. Like I like it without silver. It's true. It's true. Silver silver's chart looks better than gold. Well, there you go. Switching to silver, poke, folks. Yeah. Yeah. The guru has spoken. You have you have no comments on any of this. Well, the last one was Bitcoin. You know me. I'm not going to say anything about that. Get myself into trouble. Silver, I I don't know. The trouble about a lot of these things, Patrick, is it's it's summer. A lot of people are gone. I'm nervous about things like some of these quotes are going to get jerked around. I don't know. I don't know. I guess my gut tells me what if it's the opposite. What if that low volume is what allows them to run it, right? Well, listen, my gut is that the commodities are to be bought. You know me, I'm I believe that the global economy is stronger than most people expect and that's why these commodities are starting to go and therefore you're you're singing my tune like you know you're talking about oil being better bid, you're talking about copper, silver, whatever. I like them all. I think that they're all going to do well and that the global economy, the rest of the world has woken up and has started to spend and therefore I think that the story is that a lot of things are going to go up. So let's let's jump to oil because uh obviously when we recorded last time uh we were in the midst of a pretty significant escalation and oil had that massive short squeeze to the upside. I mean, you talked about, right? And by the way, I reach I realized I Why? Cuz I congratulated you on that trade. Why? I took profits at the top. Good for you, man. Good for you. When I The moment I said congratulations, by the way, for folks who don't know, the worst thing you can do to a trader is to congratulate them on a trade before they sold. Yeah. Because you have to like So on our desk, if you congratulate someone, you're like, "Oh, you know, you dick." And then we have to take it off because you know that that that's the moment it's gonna turn. And it was exactly this. It's the greatest disrespect you could show another trader. Yeah. Never congratulate them. Sorry. I take that back. No, you you can only congratulate them after they've sold. Okay. Well, I was smart. I didn't know your position. No, but but sold it. I because my original thesis was it was going to be a short squeeze and I was looking for something into the mid70s and so when I got it I had to act. Good for you. Um but also the asymmetry of it was was kind of actually I remember you telling us that. Yeah, I remember you saying right like and so but now this is an interesting moment because if you're buying down here at 64 65 66 to me the the asymmetry now is back in your favor. Why in the situation where it's very clear that um the situation between Iran and Israel, let's just call it the Middle East, the Middle Eastern situation is not really deescalating. Even though they've um we haven't seen a huge escalation, there isn't a um uh I don't think suddenly things get better there. And so there has to be some premium put into oil uh based on the unfolding circumstances. Uh and the second thing is is that like so so when the with the economy being where it is and that premium having to somewhat be in there, is this a scenario where we could see oil drop back down here to its previous lows down at 55? Well, listen, anything can happen, but to me, I don't assign a high probability to this. I think that the likelihood that we re reggo retest 55 is just not something I want to give more than an outlier chance of happening. And so at the same time, oil spent uh a better part of like six, seven months in a very distinct trade range between 67 and 78 bucks, a $10 range that defined a prolonged period of time. Is it more realistic that oil re-enters the trade range as it had from September through March uh versus that of uh the lows where it was at uh a couple months ago? And so to me, now that we've gotten the dip, the asymmetry is back. Like right now being long that uh on the idea that oil can uh regain into this trade range uh will allow energy stocks to to be bid and uh and things to start turning up. This is I think that this is a great time to be on long energy again. Patrick, man, just the pearls of wisdom just keep coming from you, buddy. Love it. Okay, you're making I'm not making fun of you. I have no I have no comments. I can't add anything to that. That's great analysis. My only question is what happens on the other podcast. You guys talking about oil yet or is it still uranium? Oh, uranium is still talked about. Good. So, you know what? You're going to be okay. Oil's going higher until we go and that's the major focus. There you go. Well, I mean that's now that's always a a bull market peak and so that would be like a year from now or two years from now. Like let's go back to time. Yeah. Yeah. Yeah. That's not a a week in and week out or month in month out thing. That's that's a a much more cyclical thing. Uh we'll talk actually let's talk you rain in a second. But um uh you figured you don't talk about it enough on the other podcast. You got to bring it in here. Yeah, absolutely. Uh but uh what I actually let's let's talk about uh the the fact that like I I'm I'm starting to sour on uh just the relentless rise that these things have. I have uh traded camo for 20 years. Yeah. And I have seen the boom bust cycles the stock goes through and there is nothing that has dynamically really changed between April to June here. A couple little headlines but this really is investor euphoria and chasing momentum. And to me, uh, these things re mean revert. And well, it doesn't have to go all the way back to its lows, but at some point a 10 to $20 pullback on Camo is par for the course. Now I know why you wanted to talk about uranium here. You're not allowed to talk about it negatively on the other show. Okay, so that's fine. Let's talk about uranium. You're looking for a correction. I not a correction. I'm saying that to me the asymmetry of pressing uranium long is bad because like for instance the risk of a pullback could easily be a $10 to $15 pullback and so the question is is there more than $10 to $15 further upside on Kamico from here while I while Camo can easily go to 80 and it's still in a bull trend it's still a primary thing I'm not calling that today is the day when uranium uh is going to peak and turn, but it's about the fact that you have a diminished payoff profile uh in continuing to press this trade. And so to me uh I I if I was in kind of put it in a context, I would say I would be underweight these uranium names here. There you go. Last time you told us that crude collapsed. I also like the little play on words when you said you're getting sour on them. The energy traders would like that. Well done. Oh my god. All right. But uh but you know what the interesting part though be for me Kev is that could we see a scenario where uranium stocks correct but the U308 continues to do fine like uh where where for sure because the U308 was again it U308 went down or at least the spot U308 went down while the stocks were going up. So, we could very easily get that that relationship flipping back and you have Kamo and the rest of them going down and then meanwhile the the spud sput or whatever they call it. N rising. I I feel that uh if you're going to be loaded up on uranium owning the spud is better at this point than continue to chase the equities. Okay, that's that's uh that's kind of my uh spidey senses thinking of what's going on. By the way, copper had a great run. I think that it's going to uh stall out at its previous highs. Uh it doesn't mean that I think it's bearish or that it's going to start a new downtrend, but uh I you know, a number of these different measured moves all measure out to its previous high and we're basically also running um up toward there. The interesting part is I'm not so sure that that's going to impact commod uh copper stocks as much, but at least if you're trading the actual future. Uh expecting overhead resistance, I think is a is a good base case to be expecting that. But like a lot of the copper stocks, I'm going to use the COPEX, which is the copper um ETF. I mean, it's it's running. It's going to start running into some previous highs. It's been a really good run up until now. Um, but uh, you know, it's hard to to say that this is a good entry for for new copper plays, at least on the short term. Like at some point, uh, there'll be a buy on dip opportunity that will probably emerge here that probably is is going to be a little bit better. Okay. What else you got for us? I You know what? Okay, let's ch Let's change streams. Let's get let's walk away from commodities for a little bit and I want to briefly talk about healthcare and then we'll we'll start wrapping things up. I want to so I want to talk the XLV for a second. uh just the health care basket as an aggregate, but more or less the healthc care's peaked a couple months before the elections as everyone realized that um Robert Kennedy was going to come in with the MA stuff and more or less that a lot of these pharmaceutical stocks were going to be in the crosshairs of a lot of these politicians as as are going and it pretty much spurred on what has been almost a one-year strong bare decline in healthc care stocks that have more or less um shaved off as a broad basket, you know, 25 30% off of their highs uh on there. And the question that I have is that it's not that they're not going to continue to press their uh you know like uh their their agenda on that, but at what point have these stocks fully priced in the worst case scenarios? Like in the end, the um the American political system is still a swamp uh that involves a huge amounts of lobbyists and special interest groups. remember for the haters to send it to Patrick Sesna after but listen like in the end these pharmaceuticals have a very large amount of money and a of deep pockets and the odds are that almost any legislation that gets pushed through is going to be a little less harsh than the worst case scenarios that a lot of people are pricing in. Can we just agree on this? Sure. Although I might argue that this administration is completely different and is beholden to different lobbyists and until the big beautiful bill. I thought they were going to be all dodgy and uh and you know like you fell for that. You thought they were going to balance the budgets. Of course you did. You're a bond bull. No, but the point is is that if they if they flip-flopped on that, why why the hell can't they flip-flop on healthcare? Why is it freaking different? I I'm not arguing. I'm just saying I think it's more volatile the outcome. That's all I'm saying. But I'm not Has it been priced in? I don't know. So you know that better than me. You watch these things better than saying like when you're like let's go back to Merc, right? Like Merc basically goes from 130 bucks down 7. Let's just call it a having. Like Merc goes through a having. Fizer goes through a havinging. Biogen goes through a having. By the way, if we were in Bitcoin, having would be a good thing. Well, this is a good thing if long as you weren't the bag holder on the having. Long as you're buying after the having, then you're then then it's very much in line. Yeah. Right. But uh but the point here is that it feels like that uh the everyone that was going to sell or had to sell has already sold and um and at some point uh you know these things like every presidential cycle has them attack drug prices and if you go back to previous times that the same thing has happened. There's an a spectacular bull phase that happens in these uh pharmaceuticals and periods that follow afterwards. All I'm just asking is this the moment where we start seeing these things bottom where where we've like you know even like let's say take the IBB or the biotechs they've been generally crawling higher you know uh we're starting to see uh you know that the this entire healthc care space um is quietly um calming down starting to behave a little bit starting uptick a little bit and everyone still hates it. Everyone's still scared shitless. And that to me is usually a really great buying opportunity. You know, I I I know this one guy I did a podcast with uh that used to love buying that everyone hates. Do you do you know that guy? Don't know him. He sounds like a real jerk, though. Absolutely. No, but but you know what? No, no, listen. I'm with you. The the reality is I and actually when you said that comment about every presidential cycle has the the moment where they're going to go after these drug companies or the bio the medical companies. Not all of them but often do. And I remember actually you I can't remember who said it was one of the big strategists said this is going to happen. It happens every time and then you buy them. And so I'm with you Patrick. I like I don't know anything about this about this sector. I don't trade it, but I must say you piqu my interest. I'm going to go start to learn something about it. All right. Well, the if you learned something about it, then share with me. All right, buddy. Yeah. Listen, I've got nothing else. I think that this was enough. Really? You're not going to talk to us about the dollar? It's in a downtrend, by the way. What's with the haircut you got? It's looking good, buddy. Looking very fancy. The side things like you look like uh little Mr. Tea action going there. I like it. You're looking good. Listen, I have opposite Mr. T action going on the side and then nothing on the top. I got opposite Mr. T. There you go. So, you got the real Mr. T, which you can still do. I can't do that. Okay. So, you want to call it a day? I'll just call it a day. Okay. Listen, um, thanks for tuning in, everyone. Um, Patrick, if people want to learn more about your terrific service and all these great calls that you have, where can they reach you? You can uh find me at bigpicturetrading.com. Kevin, not only that, go check out his YouTube page um page because Dan's telling me that you got him working on nothing but YouTubetubes all day. Yeah. And I saw I saw you got to like it's coming up on my feed. I actually subscribe to you so I get the updates. There is a lot of content there. And less cigar smoking, more market calls. I'm liking it. [Music] I'm going to I'm going to pull a cigar out the next time. Just in studio. This one for Kev. This one's for Kev. Oh, and by the way, a big shout out to the 61 crew. New Lows. And you know who you are. Love you guys. You know I'm just kidding you all. But uh basically all of London owns the 2061s and there was a new low in that bond. So, we have to uh call them out every time there's a new lows. Remember, um you know, you can not pay taxes two different ways. One of them is by buying a bond that uh has a capital gain, and the other is by not having any capital gains. [Music] Okay. You can ask me where they can find me, Patrick, and finish this nightmare off. Kev, where can they find that amazing newsletter? By the way, all all of you need to subscribe and read his V piece. It was really, really well. Oh, thank you very much. And that one, big shout out to Me Manvir. He was terrific. Uh it was a great uh one of the great uh you know, friends that I've picked up along the way in my time in London. It was terrific to work with someone and be able to really figure it out so closely. Uh they can go to the macroourist.com. Uh listen, bare market, bull market. We're happy to spend some time together on this crazy ride. Now, stick around for the after show. Are we going to even rate beers? Yeah. No, I can't rate this like that. I I've we I've drank Superbach on this show like uh like seven times. And so like if I rate it and I rate it differently than the prior times then Yeah. Well, people know there's no consistency on this. There's no consistency. Like you just make sure will be like yes, you're absolutely correct. There is no consistency. That's it. That's it. How about you? Have you ever rated a Corona? Uh, I have rated a Corona before. I think it's okay. I think it's a it's a cool, refreshing, hot summer's day laga. Yeah. So, so Danny Boy made it uh his way all the way back up to uh the the island. He's back in He's back in England. He left Portugal, but not not for long, I hope. Oh, absolutely not. No, I'm as soon as I can leave, I will leave. We're going to transplant. I'm going to take a spot in England since I had so much fun there and enjoyed everyone. So, you know, enjoyed my time. I tell you what, you can just take my spot and then I won't go to Canada. I'll just go back to Portugal. You can just come here. You're not coming to Canada. You don't like the cold. I'm good. I don't I don't think I have enough money to live in Canada anyway. So, well, listen, it's cheaper than London. Not as cheap as Portugal. London's definitely cheaper than London. Yeah, that's why I chose the cheapest place in Europe to live. So, yeah. But, you know, like London's kind of like divorce. You know why it's so expensive? Cuz it's worth it. [Music] Absolutely not. Okay. Well, listen. Um, do we want to chat? Big shout out to our American listeners. Happy uh 4th of July. Yeah, please try not to light anything on fire with your fireworks or do anything of the sort. I'm not really sure what they This is not They're not deep frying turkeys or anything, but they do love doing fireworks, so that's probably a, you know, a little bit of a fire hazard there. You're such a concerned dad. Like, hey, just guys, take it easy. like uh like Patrick will be like, "You know what? yeah. Let's go. Let's go." Patrick's like that. Guys, you ever seen that Russian dudes that they they um one time they they they got um they literally maybe it's Ukrainians now that I think about it. I thought it was Russian in time, but they put fireworks on a drone and then they sent their friends off running and then they were firing from the drone at their friends and they put the Credence C uh the CCR tune over it like you know the one that's in all the Vietnam movies. It's like a great clip and you know what? I couldn't find it the other day. If anyone has that clip or knows like a link, please share it in the in the uh YouTube uh uh comments cuz I'd love to get it back. It's a terrific like 30 seconds of video. It's awesome and they're crazy. That's something what Patrick would do. Absolutely. Are you doing anything for their the You take the day off tomorrow. So, you doing something for your uh I was just telling Pat I mean I was just telling Daniel that I'm going to go to Gonquin Park. Do a little Canadana. I'm uh I'm doing the the new European thing for me, which is uh you get in a get in a car and go on a road trip. I'm going to I'm going I'm going to punch it all the way to Italy. Really? Yeah. Honestly, are you driving in Italy? Absolutely. It's ridiculous. Uh I'm just uh I'm going to go to uh Portoino. Patrick, we talked about this. What? You're trying to be a man of the people and like last time it's Ferraris and now it's Portoino. You should have said you were going to like some like you should have made something up. Not going to hang out with George Clooney or whatever it is like you know. Well, I'm surprised you weren't at the Bezos wedding. Yeah. Yeah. Yeah. Yeah. Yeah. I didn't get the invite. You know, I I would have gone. I really would have. It's uh You could have just said you got the invite, but you lost. What do you give as a gift for getting invited? No, they didn't want gifts. They said that there's no gifts allowed. Well, you know why, don't you? Because everybody's just going to get it off Amazon. So, what do you like, can you imagine trying to get someone a gift like that? I had some like something a situation obviously not that level, but I had a situation like that and I don't want to say too much because uh that person I don't know they would listen. But anyways, long and short of it is I think you have to kind of make something as corny as that sounds. You have to really think about it. You have to you have to go this person can get whatever they want. You have to spend time and effort on it in terms of your hard like that's what you're that's what you're giving. So you have to think about it. It has to be something really thoughtful and instead of just like you know a yacht. Yeah. A yacht. They can buy themselves a yacht. I already have that one. That's what Jeff would say. I think I can. Okay. Well, anyways, happy 4th of July. Patrick drives safe. Um, Daniel, have a great time in London. Enjoy yourself on the uh portaging trip there. No, are you getting on the canoe? No, I'm not doing I'm going with the wife and she's not a big fan of that. Actually, it was a last minute thing. I just cuz she she doesn't like tents and uh I found a little tiny little cabin. I was like, "Okay, I'm going to take it." I grabbed it. Nice. Nice. That's Yeah. So, it'll be it'll be fun. All right. Okay, everyone. Take care. Have a great time. All right. Happy 4th of July everyone. Bye-bye. Cheers.