The Investor's Dilemma: Ride The Bubble Or Seek Safety? | Peter St Onge
Summary
AI Trend/Bubble: Guest sees an AI-driven market bubble with capabilities compounding rapidly, likely to persist until liquidity tightens, and advocates riding the trend while monitoring macro signals.
Hedges: Gold & Bitcoin: He actively hedges bubble risk and currency debasement with gold and bitcoin, citing long-term fiscal excess and central bank easing bias.
US Reshoring: Expects large foreign investment and import substitution to boost US growth (e.g., TSMC fabs), with 2026 a key year for tailwinds.
Key Companies: AI leadership and infrastructure cited via Nvidia (NVDA) and Tesla (TSLA, robotics push), plus Taiwan Semiconductor (TSM) for onshoring capacity.
Market Outlook: Near-term economy seen mid-cycle and supported by liquidity; long-term outlook clouded by fiscal deterioration and potential inflation resurgence.
AI Correction Risk: An AI bust alone likely equates to a mild 2001-style recession; foreign investment and policy could buffer downside, while Fed stance remains pivotal.
Next Waves: Robotics to follow AI, then Longevity in early 2030s; biotech opportunity is real but early, volatile, and often private-market dominated.
Labor & Society: Policies and AI likely benefit blue-collar incomes relative to white-collar, potentially stoking social tensions as job mix shifts.
Transcript
zooming out. So, you go to war with the army you have and you know, do we live in a in a Ponzi financial system where everything is, you know, gamed and jked and full of predators preying on the the guys who don't have insider information? Yes, all of that is absolutely true. However, this is the world we live in and so you make the best of it. So, you know, I would without a doubt prefer that we just uh get rid of the Fed tomorrow. markets would crash, the financial system would completely implode because it's, you know, 10 to1 21 leverage. Good riddance should have happened in 2008. Uh but having said the odds of that happening the next year are very low. And so in the meantime, I play the AI bubble and I hedge with with gold and bitcoin. Welcome to thoughtful money. I'm its founder and your host, Adam Tagert. Suddenly, signs of systemic stress are cropping up all around us. In the public debt markets, credit spreads are on the rise after years of dormcancy. In the private credit markets, defaults and counterparty risk concerns have moved to the forefront. Volatility has returned to the stock market as doubts of AI spending sustainability mount. And worldwide, suspicions of fiat currency debasement are going mainstream. So, where is all this headed? to discuss. We're fortunate to welcome macro, market, and monetary analyst Peter St. An to the program. Peter, thanks so much for joining us today. >> Thank you for having me on, Adam. >> Hey, Peter. So, um, we got to meet in person the other week at the New Orleans Investment Conference and, um, you were on, I think, a number of panels there. Um, but I I I definitely got to sit and watch you on one. Um, was very impressed with how you handled yourself and we got to talking in the green room and said, "Hey, let's get you on Thoughtful Money." So, thank you for making this happen so quickly. >> Yeah, thank you for getting me on. I've been interested in coming on for a long time. I've been following the show for a long time and love, uh, you know, the way you approach things and break them down. So, yeah, excited. >> Oh, all right. Well, thanks. All right. Well, look, then why don't we just roll up our sleeves and get into it. So, um, would like to talk to you kind of about all the themes that I just mentioned there in the intro. But before we get specific, um, since it's your first time on the channel, let me hit you with my general starter question, which is, what's your current assessment of the economy and financial markets? >> So, it's always scary to give a big picture because you are implicitly valuing things, right? You're implicitly predicting, let's say, that stocks will go up or something like that. So it it you know I think this is why a lot of commentators sort of try to dodge the point and they try to stick with the small things so that they never have to describe the entire elephant. But having said I am broadly optimistic about the economy. I think we're in midcycle. I do not think we're in late cycle. Uh the liquidity indicators the M2 GDP uh is on fire. just you know when you look at the macro it's popular I think for a lot of commenters to sort of say that the sky is always falling but if you look at the big numbers I think right now we're actually in a pretty good spot near-term so talking the next two or four years now of course longterm we're a complete disaster we're train going off a cliff because of the fiscal collapse but I think near-term we're doing pretty well and I think the biggest stories on that uh are really three things so one of them is that the Fed is no longer afraid of inflation the way they were after the Biden inflation they created. So they're, you know, cutting, they just ended QT, or rather that's going to end in 12 days from now. Uh so that's going to be a burst of relative liquidity uh coming to the market. Number two is one of Trump's negotiating goals uh in his trade deals has been to bring foreign investment into the country. Mhm. >> And you know he he talks numbers like 78 trillion. Uh who knows if it'll get that big but you know if you look country by country. So like Japan is supposed to put a trillion in. Europe is supposed to like I think a trillion and a half. Every country is supposed to put these huge numbers in. >> Saudi Arabia just just yesterday upped it to a trillion. Yeah. >> Yeah. Exactly. Right. You add those up and they're they're they're really enormous numbers. So to put that in perspective, in a normal year, all of the investment in the entire economy, and keep in mind, the US is one quarter of world GDP, right? And all of the investment in a typical year is about 4 trillion. So if you're literally doubling that over the next, you know, coming year or two, that is just a tremendous amount uh of investment coming in. And a lot of that, you know, some of it they're putting it into American energy uh assets that are, you know, relatively uh cheap. uh a lot of it is coming in for import substitutions. So, you know, this is very similar to what happened in the 1980s where Japanese uh car companies, they were threatened by Reagan's trade sanctions and so they moved production to the US and so now Honda is one of the most American cars. I think like Honda content is literally higher than it is for for GM. So, anyway, we're seeing something like that where you have, you know, companies like Taiwan Semiconductor. Uh you have these companies that are coming in building factories here. So that production is happening in the US. So that's under the tariff umbrella. Uh so when you put those you put the Fed together with the investment and then on top of that you have this just tremendous growth in AI, you know? So AI capabilities are growing something like 10x per year, right? And that's that's a shocking scale, right? If you look back to the the computer revolution, the internet revolution, you were talking something like one and a half times per year. That was Moore's law. AI capabilities are going up 10x. And you know, Elon's floating uh AGI, artificial general intelligence. Uh he's, you know, pushing very hard on Tesla now for robots. That was part of his big pay package uh the other week where I think he got a he gets a $1 trillion payday uh if he hits all these goals. But some of those goals goals involved mass market of robots. Of course, those robots have AI brains. So they can they can do brain surgery. They can fix the stuff in your house. They can fold your laundry. They can walk your dog. So when you put these together, right, you put the technology, the Fed, and this tsunami of investment coming to the US, I think we've got a very, very good growth story over the next couple of years. Now, the concern is that every single one, well, most of those things also make inflation go up, right? So that is the big question. And of course, if inflation starts taking off again, then the Fed is at this point probably going to be uh on a hair trigger. And so, you know, broadly speaking, every point that rates are hiked costs about a million jobs. Every trillion of investment creates about a trillion uh about 1 million jobs. So, I think that, you know, if inflation starts coming back later this year or uh sometime in 2026, then we could sort of see a tugof-war between those two factors. But at the moment, GDP is growing at 4%. A lot of the apparent job weakness that the mainstream media loves, a lot of that is deportations or federal layoffs, both of which are spectacular for the country in terms of wealth, even though they might show up as, you know, lower GDP or jobs. So, I think we're actually in a pretty good spot. >> Okay. Um, so that's the economy and I do want to I do want to scratch at some of those things. Um, how about the markets? >> Yeah, markets are catastrophic. for the past two weeks. I think it was the first day of the New Orleans Investment Conference that they collapsed. Up until then, they had had a an amazing year. I think the S&P was up 18% or something uh in the first what 10 months of the year. I think what's happened over the past couple of weeks is mainly that the government shutdown uh and job slowing had markets expecting that there was a Fed put that the Fed would jump in, they would parachute in and spray trillions of dollars and everything that moved. Uh I think that that's really what was kind of boosting markets during the shutdown because it was strange, right? Like we saw markets go up almost immediately when the shutdown began. And whatever you feel about the federal government, you know, I think it should be 10 times smaller. Uh but that's kind of a strange movement from financial markets. Normally financial markets don't like anything interesting to happen. They just want they just want boring. They don't want any headlines. Uh and that was a pretty big headline. And I think that specifically what was happening was that markets internalize expectations that the Fed would would jump in and as always overshoot any kind of crisis. They would overliquidate. And once the um government reopened, well, first you had uh POW saying that you know the rate cuts in December were not a foregone conclusion. That started hitting uh liquidity expectations and then once the government actually reopened it confirmed it. uh and you know since then the Fed has turned fairly uh bearish uh talking the the expectations for rate cuts I think are coming down and certainly there's no more expectations of some kind of emergency pump uh going in unless the federal government manages to discover a new crisis. So I think that that's the main thing and the evidence for that is that everything went down right bitcoin went down AI went down broad market went down gold went down right so that to me suggests that it's liquidity driven uh this is not cycle driven now since then one by one those different sectors are starting to pop back up so yesterday we had really good movements in silver and gold uh the past I think two out of the past three days AI have been strong uh so I think that you people are sort of sorting through all the dead corpses and seeing which ones uh are still alive. Um so you know that's starting to come back but that that initial movement where everything went down I think suggests that this was more about the Fed. >> Okay. All right. Um so uh state of the markets though. So um going forward from here do you feel they're fairly valued? Do you have overvaluation concerns which are general? >> Yeah, there right if you look in historical context they're clearly overvalued. I think there's no question that we're in a bubble uh in um certain assets specifically AI. AI is just completely dominated. Um you and I were both around in the do era and AI I think is is substantially more uh hyped even the com. And you know, one of the things I mentioned at the New Orleans conference was that the trick is it's one thing to say it's a bubble, but bubbles last a long time. Like the average bubble lasts about 5 or 6 years, and they don't tend to end until liquidity cuts off. They do not end on valuation. There is no uh correlation between the length of a bubble and how high it gets. And so the question at this point is, are we in an AI bubble? I think absolutely. If you look at AI valuations compared to the rest of the market, if you look at it versus historical, you know, comparable technologies of which, you know, we've had 500 years of stock markets digesting new technologies. You had diving bells in the 1600s and these were really exciting because we would we would rediscover all the shipwrecks through the ages and this would Okay, so I mean, you know, bubbles are a very very old thing. Uh we've had thousands and thousands of them and you know, there's a pattern to them. uh they don't pop from size, they pump from broader uh market conditions. So until we see that, I think that the most likely well at any rate, the the question is is the AI bubble, you know, is it going to pop today? Is it going to double again and then pop? Is it going to go up 8x and pop? Well, if it goes up 8x and pops, then it's going to end up at a value substantially higher than today, right? So if you look back at do for example, people were complaining about Amazon being a bubble. So I first bought Yahoo in 1996 and everybody told me it was, you know, I was a complete idiot. Obviously the internet was a bubble. That was 1996, right? And then Yahoo went up whatever 150 times. Did it fall? Yes, it fell to like 50 times, right? But that is fundamentally the question. Uh I broadly speaking, when I see something like when I first hear something as a bubble, I want to buy it. that just in instinctively I want to buy it. I'm not a contrarian. I want to be in it. And then the question is at that point then you've got to watch the broader liquidity, the broader macro indicators because that's what's going to do the bubble in. It has nothing to do with the companies itself. You know, if Nvidia went up uh you know double from here, uh I don't think it would raise the likelihood of AI being a bubble. Uh it's the it's the broader liquidity. >> Okay. Um well, we'll talk about liquidity in just a little bit here. So, let me let me make sure I heard you right and then ask a few questions. Um, so seems like you're relatively sanguin on the economy in in the near to midterm. Near to midterm being next two to four years, I think you mentioned. Um, and you've got, I think, you said it's a disaster in the long term and I'm sure that has to do with our debt levels and a whole bunch of other things we can get into if you like. Um, from a market standpoint, I don't know. I'm going to I'm going to put you I guess as a question mark, which is, hey, we're we're in a bubble. We just don't know where we are in it at this point. And so until we start seeing until and unless we start seeing signs that the the bubble is really starting to implode upon itself, >> it's probably game on in the near term. >> Um, fair? >> Yep. Yep. Absolutely. And you know, given given the Fed ending QT, uh given all that flood of foreign investment coming in, I mean, everything points to to liquidity being very strong in 2026. So that argues for the bubble to keep going. >> Okay. Um and so let me ask this question. you've kind of already answered it a bit, but uh I've asked it a lot and um recently and I think you know seems like we're we're thinking somewhat similarly which is regardless of what you think of of President Trump and the new administration um it has implement it has pursued an aggress it has aggressively pursued a set of economic policies designed to goose the economy goose economic growth and that's everything from the provisions in the one big beautiful bill to the deregulation to the uh bringing foreign investment uh into the country and all the things that you mentioned. Um so one of the questions that I've been asking is is when do you expect those to start providing tailwinds to the US economy? They take a while to you know >> to actually build up momentum so that you can actually see the impact of them. Sounds like you think we'll be seeing those tailwinds in 2026, probably increasingly as the year goes on. True. >> Yeah. Yep. Uh yeah, I think that's accurate. Uh a lot of it, you know, so foreign investment, for example, if it's really 8 trillion, that's going to take a really really long time to digest. Uh you know, you have to negotiate the terms, you have to find the site, you have to do the blueprints, you got to do the construction, you got the permits, you got environmentalists all over the place. Uh so you know a lot of those a lot of the investment probably is not really going to kick in until maybe even after his term is over. Uh but I think that a lot of these things you know Fed cuts tend to have a lag of about 12 to 18 months. Uh it hasn't really cut substantially uh yet. But at any rate some of the previous cuts uh should start coming in. Uh and you know the foreign investment the deregulatory I think has not been as exciting as most of us hoped. But I think you know if you sort of stand out uh to get perspective the so the federal government has been a crap show for a very long time and somehow the economy keeps growing right point being that you don't need the government to be perfect you just need to be not as bad as it used to be and if that's the case right if you can just if you can either get rid of some regulation or uh if you can just slow the pace of new regulation then you can see that start to reflect in uh in job creation. So, you know, regulation compared to what we hoped for is not very impressive so far. Uh, regulation compared to what was happening a year or two ago, I think, is a huge difference. And so, you know, we should start to see green shoots come in there, I think, during 2026. Uh, the question for Trump, well, really the question for Washington is that the the sort of biggest game for them right now is what happens in the midterms, right? So, whoever wins the midterm elections, if Republicans win it, then we're more or less going to keep going like we are, uh, possibly with a bigger lead so that, you know, they're not held hostage as much special interests. Uh, if Democrats win it, then more or less Trump grinds to a halt. At that point, all he's got left is executive orders. Uh, so, you know, that's kind of the big question is, is that growth going to kick in in time uh to swing the midterms? And then if the midterms don't swing or rather if Democrats end up winning the midterms uh you know does that change expectations for economic growth and regulation for the following two years that sort of thing is going to be start that will start uh to be reflected in markets starting in you know June whenever markets start to get confident about predicting the outcome for the midterms. Current on the midterms I think it's about 75% Democrats winning. Uh that's because historically for the past 125 years the out party wins 90% of the time. So that's not particularly surprising. Uh but that also means that markets have probably internalized that already. Uh so if if you know growth comes earlier, uh if there's some nice surprises on inflation, uh if he can keep it um under wraps, if some of these affordability things that Trump is pushing actually get through, uh then that could actually boost markets that already expect the Democrat win next year. >> Okay. The 75% um expectation Democrats win, is that uh that they take the House? Um >> the House. >> Okay. So it would be a divided Congress, not necessarily a fully Democratic Congress. >> Yeah. Odds on the Senate are roughly 75% the other direction. So the Republicans almost certainly hold on to them. And that's because the number of seats in play, a very small number of seats in play. And >> there's a lot more uh red states with Democrat senators than there are blue states with Republican senators. Um, and so the uh, you know, these things sort of even out over time and Democrats or Republicans have a three- seat advantage. So, it's very unlikely that they lose the Senate, but if you lose the House, then you can't start new, you know, bills. No, it's and I think it's pretty clear that one of the reasons why the Trump administration had their sort of flood the zone strategy coming high out of the gates was because look, we're not sure we're going to get the midterms in our favor and so let's get as much of this stuff out beforehand. >> Yep. Exactly. >> Yeah. Okay. So, um All right. So, so you again if I'm taking good notes, you believe that um we'll see tailwinds to the economy from all these ad administration policies kind of increase as we go into 2026. Um you also referenced the the um you know remarkable acceleration in um rolling out of of new capabilities for AI. Um, you know, one of the really big question marks for AI right now is, okay, we're spending all of this money, right? Y >> and um I mean I I one man's opinion but I think everyone's sort of looking at this like the dot era like hey we we believe this will be a real deal like.com was now the big question is just over what timeline is this new prosperity this incremental prosperity going to be realized right and we are not we are not seeing a ton of um short-term results where people are saying hey we spent a lot on AI and man look what happened to our incremental profit profitability or look at what happened to our incremental revenues, right? Um do you believe we will start seeing that across 2026? Is that why you mentioned that there? >> I'm not sure about that. Um you know this is some something that we faced precisely during as well where early on if you you know you can go back and look at news articles from the mid90s and they were just uniformly skeptical about the internet. Uh they were saying, you know, CEOs are just doing this because it's the fashionable thing. You got to have a website. Everybody's losing money on the internet. >> Brochure wear. Yeah. Remember that? >> Yeah. Exactly. Yeah. Uh customers don't want to buy on the internet because they can't see you. They can't trust you. I mean, you know, and I suspect if you went back and tallied up the early internet projects, I think Microsoft what they found that something like 5% of AI projects pay off or something. I suspect early internet is probably the same deal. uh you know and also the buildout was very similar right you had this circular financing uh where companies would lend each other the money to buy their products uh I worked for a telecoms company way back then and we did that uh >> lots of vendor financing lots of sketchy vendor financing in that sector >> absolutely yep yeah so I think that on a lot of metrics AI looks I mean it's really kind of a repeat of dot um the question is where are we in it right so if you time.com from let's say the Netscape IPO which I think was 1994 and then if you time AI from chat GPT coming out which was late 22 then you know by that logic we're what in like late 1997 so we got another 1998 1999 to go which you'll recall were exciting times if you own.com stocks so that's the question uh maybe it's accelerated this time you know or maybe there are other elements uh happening in the macro economy where it's going to go faster are slower, but fundamentally I think that the the internet and the AI story are almost identical. The question is just where are we in that story? >> Okay. Yeah. So obviously that's the gazillion dollar question here is what what inning are we are here in this race and it's unknowable, right? I mean that's what happens with bubbles if indeed we are in one. Um all right. So let me let me let me ask you this. So, so um uh I I get your logic for why you think the economy, you know, could continue to improve from here for the next couple years. Um let's let's start with AI for a second. Um the there are a lot of um it's been interesting how quickly recently concerns about AI have been multiplying, the the AI trade, if you will. um you know, are are these companies too overvalued? Um what's going on with these circular financing deals? We had the Michael Bur um uh you know, raising the the the concerns of um hey, there there's some really sketchy accounting practices going on here with how they account for the depreciation of their their chips and stuff like that. Um so all of a sudden you're getting, you know, a lot more people kind of trying to poke holes and saying, I I'm not really sure what's going on here. um the the day we're talking, the world is waiting with baited breath to hear the Nvidia uh outcome. And to be honest, I I made this comment earlier today. I don't I can't really think of a time where the where the entire like market future has hung on a single co company the way that it might be doing right now with Nvidia. Um, and you you don't have to agree with that that comment, but where I'm going with this is is um let's say let's just assume for a moment that the correction in the AI stock complex happens in the near future, next quarter or two, right? Can we survive that without having such a tremendous negative wealth effect that the economy can the economy actually avoid going into a pronounced slowdown if not a recession? Um, and I know when you said, "Look, you know, the economy could do well for the next four years." I I know you didn't mean it's just going to do better every single day and there'll be no wiggles along the way, but, you know, if we do, if the bloom does come off the AI stock rose, um, can we avoid a really material um, economic shock wave from that? >> Yeah. So, the comparable to that would be the 2001 recession. And we actually I guess we had three things that happened at the same time and so it's hard to disentangle those. One of them was the dotcom crash. Uh the other one was the Enron and Worldcon scandals. Y >> and you know so that's had an impact on uh on risk and on valuations. And of course we had 911. And so all of those more or less hit around the same time. Uh even so 2001 was a fairly shallow recession in the grand scheme. It was nowhere near 2008. right? >> It was closer to 1991. And so if if we just have an AI implosion and nothing else uh and but then if in the meantime you know all these investments are flowing in then if you know we will get an outcome where either it's I think a very mild recession or uh it could actually bump off just reduce growth. You might have a couple quarters where you have growth at half a percent or 1%. uh basically European levels. Uh but you know we might actually avoid a recession on that. Now there is an outside factor has nothing to do with any of these uh which is that you know we have sort of some external factors that are going into reducing GDP growth. Anyway, I mentioned earlier the deportations and the um cuts to federal spending cuts to federal workers anyway. federal spending is it's much reduced in its growth rate versus Biden, but of course, federal spending never ever goes down. Uh but anyway, those those reductions reduce the apparent GDP growth rate. I would argue that they're kind of fake in the sense that, you know, when people say GDP goes down, they're thinking that's a bad thing because we're poorer, but those two things actually make us richer. Uh but any rate so you know if taking it in the >> in the spirit of the question which is that if AI were to implode would we start getting poorer? Uh I think that's 50/50. Uh but taking in the sort of technical question would we enter a technical recession where GDP was negative for two quarters? I think that's much more likely but a lot of is simply the deportations and laying off federal workers when you deport somebody. So the example I like to use is uh let's say that you annexed Canada tomorrow. Trump's dream comes true. So Canada has something like 25 million workers. Now if you annexed Canada, if you brandished your military and said you are now a state, you would not have 25 million extra workers standing in line at a soup kitchen. Okay? Everybody in Canada already has a job. They already do stuff for each other. Similarly, when you bring a migrant into the country, you don't have an extra worker, right? Because they create as much labor demand as as as labor supply they bring, right? So, in other words, they come to the country, they work, and then they go to the dentist, they go to McDonald's, they rent a house, you know, they get a haircut, okay? They consume services, and the vast majority of what they earn is spent domestically. It's not sent back to Guatemala. So the point being that when you are exporting workers or what I think it's about 2 million so far that have left when you're sending those people out that shows up as reduced GDP. It also shows up as fewer jobs. You have 2 million fewer people getting haircuts or going to Kentucky Fried Chicken, right? So this is going to ripple across the economy. It's going to make GDP uh uh appear smaller. Well, it will actually be smaller be fewer people in the country. It's the reverse. It's it's it's less consumption in a 70% consumption-driven economy. Yeah. >> Bingo. Exactly. Right. So you you know that's kind of the trick here is that are we talking about a technical recession where we have two quarters of negative growth like we had in what 2023 uh or are we talking you know sort of the spirit of it where the people are poor uh you know people are desperate unemployment goes to 7% people are standing in soup kitchens that I think is much less likely if all we get is an AI implosion and the reason being that flood of foreign investment uh would compensate for it. Now, if the Supreme Court decides that the tariffs are illegal, you know, Trump's probably going to try to do it in other ways, but that could then endanger that alleged $8 trillion of foreign investment. And at that point, yes, we the ro odds would dramatically rise um that an AI implosion would take the rest of economy into a recession, which would I think be on a scale of 2001, not 2008. >> Okay. All right. Appreciate that answer. And um you know, I'm not making the argument necessarily it's going to happen in the next quarter or two. Wouldn't shock me if it did by any stretch, but point is is it's just unknowable, right? Um all right. And so the um again trying to see through your lens here, economy doing, you know, pretty well and and in and prospects to get better. Um, we have this term, the K-shaped economy, which I'm sure you're familiar with. Um, when you say the economy is doing pretty well. Um, you know, out of, you know, 10 people, you'd probably get two or three agreeing with you and, you know, seven or eight disagreeing with you right now. Um, because it's that top half of the K that's doing great. Um, especially those that own the assets. Um, and it's a lot of the bottom half of the K that is increasingly struggling here. Um, do you expect the the the prospects of the bottom half of the K to get better as you know the developments that you're expecting uh roll out and uh presumably you all this new investment creates new jobs? Um, you know, maybe maybe it's a different type of job than than had been you know we've been a very service driven economy. we we've outsourced our manufacturing. Presumably these this capital coming in is going to help you know increase the shared manufacturing jobs. Um so are you are you sanguin as well for the the shape of the economy going forward or do you think it's becoming more of a economy of halves versus the haveotss? >> Yeah. Well, I think you're absolutely right. Um it's pretty much three economies, right? You've got whatever 20% at the top, let's call it a quarter who are doing fantastic. The Fed's been pumping their bags for 50 years. Uh you've got 25% at the bottom who are miserable and are barely holding on and you got the half in the middle who are squeezed. What's interesting is that since co the top uh the percent of consumption uh from the top I think it's 20% of Americans went from 45% to 49%. So in other words, the middle class lost about five points there. the percent of consumption by the bottom 20% also increased. So the bottom gained about 2%. And the reason is because there was this orgy of welfare benefits that were pushed out the door during COVID. They they greenstamped everything. Uh SNAP benefits for example since CO they went up 70%. The number of poor people in America did not go up by 70%. It did not double in 5 years. So the middle class has been nibbled really by by both sides. Having said I think you know if we look at what I think are the three big economic stories of the coming year all of them relatively benefit uh bluecollars uh lower income. Now that's not to say you know the rich will keep getting richer because you've got a Fed right like you know when we were talking about what's happening with the economy right now. So the Fed dominates everything and the Fed makes sure that no rich guy goes home hungry. Uh so you know it's entirely possible that all those trends will continue getting worse, but I think that they'll get worse at a slower pace than they have in the past. And the reason is that Trump's policies broadly speaking are aimed at blue collars. The tariffs are not trying to help white collars, right? Those are they're punishing white collars is almost the intention. Uh they're trying to bring back manufacturing jobs for blueco collars. Deportations, same deal, right? Deportations actually hurt rich people who can't get cheap nannies and lawnmowers. They are fantastic if you're if you're low income. So, you know, you're living out in Nebraska. Uh you don't work at the meat packing factory because it pays $8 an hour and it's backbreaking. But if it's paying $23 an hour, now you do. Uh and then the final one is is AI where I think that maybe one of the surprises of AI has been that it appears to be hitting white collar jobs. So relatively routine white collar jobs is not hitting blue collar jobs. Now there there may come a time when robots uh you know bring that uh job change to blue collars but first of all that's going to be delayed right uh robots are a relatively slow you know probably seven or 10 years delayed. Secondly, robots will never replace jobs the way that AI will because AI is software, meaning that the incremental unit is free. They'll charge money for it, but it's free to produce. It's like a Google search, >> right? Whereas a robot, it's going to be a long time uh before robots are free. And so the the job replacement uh I think is going to be overwhelmingly among uh white collars. The most of the you know human wants are unlimited. So an exact equal amount of jobs uh will will flow in. It'll take time. There'll be you know pain in between. Uh but ultimately those those AI or those uh those white collar office jobs will become service jobs where you know relatively poor people uh will enjoy services at a pace that rich people do today. So they'll hire nannies. Uh, I mean even today like you know if you look back a hundred years and and you told people that the poorest people in America get their nails done, get hair extensions, that's crazy, right? Poor people can't afford that. And yet here we are. Uh so you know that'll all take time. But fundamentally all three of those factors uh the deportations, the foreign investment coming in and the AI, all of those hit white collars harder than blue collars. Which I think is interesting. There was this uh fun study uh from I think 1991 and it looked at the Finnish civil war. So this was around 1918 when the Bolsheviks were taking over Russia and a couple of um Finnish uh professors did a study where they looked at the the class of Finnish students compared to their fathers. And what they found is that anybody born rich who was now lower status, those were the communists. Okay? Anybody born poor or rich who was still either rich or had become successful. Okay, those people were all the conservatives. Point being that the the sort of nucleus of the revolution of the you know Manny push in the Democrat party and so on. These are very specifically the kind of people we're talking here, which are these white collars who had $80,000 jobs doing some kind of office work or, you know, some some skilled labor that is now replaced by AI and now, you know, they got to go be a wait a waitress or something. Those people will get angry. So, I think that these these protests we're seeing, the anti-Trump, the a lot of this stuff fundamentally is um sort of anxiety about losing their status. And I think that that will absolutely continue. So, I think relative to the past 5 or 10 years, I think the next 5 or 10 years are going to be relatively good for blue collars, going be very bad for white collars, and that's going to create a lot of white collar angst. >> All right. Um, I'm trying to resist digging further down on that with you, but um, let me put it aside just for one second here. So, um, so you know, something that you think is is a key part of the equation here that's going to keep things stable and, uh, you know, keep things supported is liquidity. Um, we are going to have a new Fed chair uh in the not too distant future here. Um, what do you expect of liquidity under, you know, a new Trump replacement of Pal? Now, again, it's ironic that Trump is so frustrated with Pal because Trump's the one who put Pal in the chair in the first place, but do you think that we're going to get somebody who's going to be a lot more dovish and a lot more quick to let the spigots to open the spigots going forward? Yeah, it's tricky because when they're auditioning for the job, you know, given that Trump has been pretty forthright about his preferences, you know, they all claim to be extremely uh easy money Fed shares and you never actually know until you put them in there that that was the case with um with PAL, for example. So, but still taking them at their word, looking at their past statements, uh the front runners have generally been uh relatively hard money guys, but they've also been extremely loyal to Trump uh even before, you know, there was a horse race going on for the Fed. Uh so, it's it's 50/50 whether they're going to be as uh easy as Trump hopes or if he'll turn on them and then call them low IQ uh like he does pow. Um but yeah, so I mean, you know, either way, I think that if you look at the trajectory that the Fed's on now, constitutionally, the Fed wants easy money. It always wants easy money. Uh that's why central banks are created. Uh the only reason why it's been relatively tight is because the Biden inflation was such a spectacular face plant by the Fed that, you know, it it was bad enough that it threatens their independence, right? That's the kind of thing that gets congressional hearings going and gets Congress to agree with presidents. So, they had to keep their nose clean. It kind of scared them straight. Uh but the memory is now fading. Inflation for the past year has been around 2 and a half%. Uh at that point, the people they're not angry enough to get congressional hearings since the Fed reverts to its natural form, which is inflationary. So whether or not the new guy, you know, if the new guy is is has drunk the sort of Trump Kool-Aid and is truly easy money, if he tries to jack um rates down, if he tries to do QE, that I think is going to be absolutely spectacular for markets, uh which will then crash afterwards. Uh if on the other hand the guy comes in he's more or less pow I still think that's positive for markets because the Fed is trying to ease uh because sort of as the headlines recede in the distance from Biden inflation. >> Okay. So you know the Fed has certainly been you know uh an interventionary force and usually uh way more often than not in the side of easing than tightening. Um but to your point, they they've been constrained um due to inflation over the past couple of years. Um and while they're, you know, they're becoming more doubbish, um there there's still a lot more they could be doing >> relative to what they did historically and they're doing now. And and what really seemed to carry the torch in the US, but a lot of other countries, too, but certainly in the US has been the fiscal spending, right? it just went ballistic during co and has not really moderated much. Um now with the with the big beautiful bill the promise there was okay look um we're going to spend a lot at the beginning of the big beautiful bill but then we're going to get all this discipline and these benefits down the road. Uh where do you see fiscal discipline sorry fiscal spending going? you know, will will will we actually bring it down as a percentage of GDP or is this all just, you know, the the sweet songs that that politicians promise but never deliver? >> Yeah, I think it's going to keep going uh keep getting worse. Uh you know, there's no sort of natural predator for spending in Washington. Uh there's no balanced budget amendment. There's no gold standard. there's there's no real consequence in the near term. And you know, elections happen on on two-year cycles. There's very few politicians in Washington who are thinking 10 years out, essentially nobody. Uh so if it's not happening in the next 10 years, then it doesn't exist. And then meanwhile, of course, the benefits of increasing spending are massive. All of your donors like it, your voters like it, everybody likes it, the markets like it, you get the benefits to the politician in the immediate term are are massive. >> That's exactly it. Yeah. >> Right. And then you combine that with there's this great book called Crisis and Leviathon by Bob Higgs uh where he talks about every time that something bad happens the government grows and it never ever goes back. It's a ratchet, right? So, if you look at every war, you know, you had the Civil War, you had World War I, two, the Great Depression, uh, COVID. Every single one of these things expands the government. It does not go back. Generally, you give back like maybe a third. At best, you give back a half. Uh, but we never go back to the old to the old one. And so, my concern is the next we're eventually going to have a recession. You know, we can debate whether it's going to be two two years or six years, but we're going to have one because that's how the Fed structures things. it it it creates business cycles. So unless we're getting rid of the Fed next Tuesday, we will have a recession at some point. My concern is that when you look at what happened during COVID, not only did I mean government just expanded just astoundingly. Uh also in 2008, right, if you compare those two to previous recessions, uh it's gotten a lot faster. The numbers have gotten a lot bigger, many, many more trillions. What specifically scared me during COVID, I was living in Canada at the time and we had the these uh it was basically universal basic income, you know, so all of us got laid off, me included, and instead of getting your uh you know, standard unemployment benefits, you got this uh it's called the the CB. So you got this monthly payment. I think it was 2,000 Canadian. Now, that was very decent amount of money if you're a bluecollar, for example. That was part of the reason why the shutdowns were so popular uh in Canada specifically. But they tried here. The closest we came was the PPP. Uh but the left abs there were other countries where they also pushed UBIS during uh COVID. My concern is that the left that is absolutely what the left wants. Uh they're primed for it uh during CO. They kind of flex their muscles. They pass it in some countries, not in this one. Uh but I think that the left is laser focused on getting a UBI in there because that is the ultimate bread for the circus. That's the vote buying machine. Uh that's really what the entire welfare state is about is buying votes. If you can if you can have a UBI in there, that's, you know, that's vote buying on steroids. Trump, if you look at him with the with the dividends, I'm not sure he would necessarily fight it, uh to be honest. So that that's I think my biggest concern. If we start getting into UBI territory, uh we go from this sort of leisurely decadesl long uh collapse into something that I think goes a lot faster. >> Okay. So, I'm working my way towards monetary debasement. Um, but, uh, let me ask you this, Peter. Um, just asking for your gut opinion here. Is UBI an inevitability? Meaning, at some point, you know, Trump will be out of office. Uh, you know, at some at some point in the future, there will be a a more liberal administration. Seems like from what you've said, you think they would want to get the UBI playbook uh going at some point. Yeah, I think it's about 80% odds and the problem is that once you put in it's very very hard to get rid of. Uh, you know, we we sort of have a UBI called social security and there is zero prospect of getting rid of that. Um, so you know, they only have to get lucky once. Once it's in there, it stays. >> Okay. So 80% of profit, but I love the fact that you're willing to just give me these numbers. >> I'm an economist. >> Yeah. Um, okay. So uh well look um you expect liquidity to remain flush. Uh you expect the fiscal government to really never contain itself contain its spending. Um, and so the, you know, even though we will have some growth, some incremental growth in here, you feel, um, I gota imagine the long-term trend of a lot of this stuff makes you think that the purchasing power of the currency is one of the more easy predictions to make in terms of it >> continuing to get to base going forward. You're nodding as I'm saying this. >> Yeah. And, you know, similar to AI, like the question is what inning are we in? uh and what inning the markets think we're in. >> Right? So if you look at gold since 1970, there have been periods where gold has collapsed in half uh because the government turned out to be not as irresponsible as people expected. Now there was never a period where the dollar was actually you know gaining value on a sustained basis, right? >> Uh but you know there were changes in expectations of um how bad how bad it's going to get and how quickly. So you know without a doubt uh it could slow again. Uh I know again speaking from Canada there was this strange period in the 1990s. Actually here in the US there was as well where we actually had budget uh surpluses where you know Clinton and Gingrich got together and and uh you know made the unicorn sing. Uh but of course that went away very quickly. >> Yeah. For I think it was two years. Uh and then and you know and then Bush needed money for wars and 2001 happened and and it all went away. So, right, there's there's definitely a chance that we could grow fiscal sanity for a minute or two. The key in the 1990s, I think part of it was the.com boom. So, about half of that surplus was just capital gains taxes. The other half was that uh Gingrich and Clinton despised each other. Could not agree on anything. Uh which is beautiful. You know, every time I hear the word bipartisan, uh I fear I reach for my wallet. So, you know, I think it's very very healthy that the two parties hate each other. um they call each other the f-word. Uh I think this is really good for you know kind of the fiscal picture going forward. But having said I mean it's not going to improve. That is to say it might slow a little bit because of that because of dysfunction in Washington. >> Okay. Um well look part of why I ask that question because it seems to be the natural uh progression of of what you've laid out so far in terms of your outlook but also um I know that you um are a contributor to the Mises Institute um and uh that's very much a sound money organization and so um and having read your X feed um uh it seems pretty clear correct me if I'm wrong but it seems pretty clear that them you know while you're you don't you're not calling for an immediate end to the AI bubble you feel the markets are distorted and uh you are seeking potential shelter hedge whatever both market risk and currency risk in assets like gold and bitcoin so am I am I characterizing you correctly >> yeah I mean generally um what I what I personally do is I like to chase the bubbles and then I have a big fat chunk of hedge uh which is generally gold and because I'm addicted to risk uh some Bitcoin thrown in there. Um but right the idea is that you're you're you're sort of covering all the bases. Um, and you know, zooming out. So, you go to war with the army you have and you know, do we live in a in a Ponzi financial system where everything is, you know, gamed and jked and full of predators preying on the the guys who don't have insider information? Yes, all of that is absolutely true. However, this is the world we live in and so you make the best of it. So, you know, I would without a doubt prefer that we just uh get rid of the Fed tomorrow. markets would crash, the financial system would completely implode because it's, you know, 10 to121 leverage. Good ridden should have happened in 2008. Uh but having said, the odds of that happening the next year are very low. And so in the meantime, I play the AI bubble that I hedge with with gold and bitcoin. >> Okay. Um uh so the question I've been leading up to and maybe you just gave your full answer to it, but I'll ask it just in case there's more elements to it. um you know, okay, you've given us your whole outlook here. What investment themes emerge from having this type of outlook? And it sounds like, you know, what you just said is well, hey, look, you know, if there's a trend in play, play it until it doesn't end anymore. >> But, you know, um have some backup uh you know, backups in your portfolio in case the trend reversal catches you by surprise. So, is that pretty much how you're doing it? It's it's play the AI game. Why that's driving everything pretty much in the market and then having these riskoff ass well gold's a riskoff asset. Bitcoin I think people really disagree. >> Right. >> Y put it that way. >> Yeah. Bitcoin's like gold and had a baby and so it's got some elements to it that are related to the basement and then it's got other ones that are definitely uh risk off. Um but yeah, you know, I think follow the trend. Uh often a new better trend comes along, right? So, you know, if you were playing the trend five years ago, then I don't know what was hot 5 years ago. I don't know, uranium was hot for a minute. Uh okay. So, you could play that for a little while, but like you always want to keep an eye out. Is there some better trend to jump onto? Uh there's lots of stuff that's coming after AI. So, robots are going to hit. I think longevity is going to hit probably in the early 2030s. uh typically a you know if it's a real sort of worldchanging technology that's going to dominate the headlines for something like five years. Uh so broadly speaking my plan anyway is ride AI for a while at some time at at some point robots get sexier. Um we also you know we haven't even seen the application insanity in AI yet right so currently we're seeing these ridiculous multiples on the guys who are building the picks and shovels. We haven't even gotten to the stupid, you know, some college kid comes up with, you know, whatever, like a fart joke AI and then it's worth a billion dollars. We haven't hit that stage yet. And this is part of what makes me think that the AI thing is not done yet. You know, makes me think that we're closer to 1997 or 8 in the com boom than we are uh to 2000. But anyway, right. So, sort of trend by trend. In the meantime, watch the macro, watch the liquidity. as the liquidity um risks get higher, then you want to raise your hedge into uh specifically something like gold. Uh I, you know, watch uh simple moving averages uh and you know, when your trigger hits, go to gold, turn off the Bloomberg, relax for a year or two, and then uh see see how low it gets. >> Okay. And I do want to note for folks, I think you might have given passing mention to it, but as I understand your personal history as an investor, um, you really shoved a lot of chips on the table, um, into the dot stocks during the, you know, early to mid innings of the dot boom. Um, so you're you're what you're talking about now here with with the AI stocks is in many ways sort of practicing what you've been preaching, right? >> Yeah. It's consistent with your your previous uh behavior. We'll put it that way. >> It is. Yeah. I've been doing this for 30 years. So, in the dot I wiped out because I said, "Okay, like I got the whole Warren Buffett thing and I was like, you know what? I'm just going to buy and hold it because the internet's real and so I'm I'm just going to not look at it." And I literally moved to an island in Thailand with no internet connection. >> You quote unquote retired early, right? >> Yes, I did. Uh at 25. and uh Thailand seemed like a good place to do it for a variety of reasons. Uh and then and and then I came in and looked at the stocks and they had all fallen like 90%. Which is what made me go back and get the PhD cuz I thought okay well buying a trend is really easy because this is all the newspapers and everybody's complaining about the bubble. The question is when the heck do you get out? >> Mhm. >> And that for me is where the macro comes in. That's where you want to know what's happening to GDP, inflation, what's the Fed doing? Uh what's happening to liquidity? What are the tens and twos? What's high yield? So, all of those things, those are giving you indicators when to get out because getting in is easy. Getting out is the tricky part. >> Okay. I'm curious, um, right now as you're playing this, um, I mean, the AI stocks have done extraordinarily well. >> Um, are you slicing off some gains this time, like realizing some of this stuff on the way up? You're not. Okay. You're you're >> and first I mean I should I always say to people what we're talking about here is not personal financial advice but certainly you're not giving personal financial advice here. You're just explaining what you Peter Sange potential risk junkie uh do. >> I have a tattoo of a bull on my shoulder. I would not advise for everybody to do what I do. Uh I love the risk. Um I love the thriller game. But to answer the question, I'm not taking out anything off the table. And the reason is because when you look at that first week of movement where even gold got shellacked that told me that this is 100% Fed. This has nothing to do uh with fundamentals you know it's got nothing to do with broader uh liquidity. This is simply the removal of a Fed put that got put in there because of the uh government shutdown. So I think it's I think it's transitory. Now having said I could be 100% wrong. There's an old saying the market will do whatever embarrasses the greatest number of people. So, it is it would be absolutely hilarious if this is the end and then everything implodes 30% tomorrow. Uh, and then we can come back on and have a drink about it. But at any rate, uh, but I'm not taking anything off the table for this. I think this is just an itty bitty move and it's it's completely Fed driven. >> Okay. All right. Well, look, as we start to wrap up here, um, it's been very interesting conversation. I'm so glad, like I said, we made this happen. Thanks so much for coming on and being so specific and giving such quick specific answers. When I ask for a probability, you give me a percentage. It's wonderful. Um, is there anything else that is, you know, really burning brightly on your radar right now that you think is germanine to this conversation that I just haven't thought to ask you about yet? >> I think Oh, yeah. I started to talk about it uh when we were talking about the waves. So, you have the AI, the robots, and the next thing after that I think is longevity. And longevity is something that I'm absolutely fascinated about. I think that there's going to be a ton of uh investment going into that. I think that AI is going to be a huge part of that in things like drug discovery. Uh so I I'm that's that's kind of you know when we talk about riding the trend in terms of like what's the next trend over the horizon that's what I'm excited about it. You have to be very careful. You can't play it too early, right? Biotech, you know, it'll go up 1500 texts and then it'll it'll it'll go to zero and they almost all go to zero. So you can't play it too early. Uh but for me that's really the fascinating thing coming over the horizon. >> Okay. And I I was just about to ask so is is the biotech sector sort of primarily where you think you're going to see the the opportunities to take advantage of that? >> That's a fascinating question is whether the opportunities are going to happen in biotech uh or are they going to happen you know with with the picks and axes. Again we also have a funny world where companies don't tend to go public nearly as early as they used to. And so if you're looking in longevity for example, a lot of the really cool projects, they are private. Uh not only they private, they tend to be funded by billionaires. And so they're not even necessarily seeking uh additional capital. So you know, things like Calico, I think Bezos has his. Uh Sam Alman's got his uh you know, it's like in the old days of yacht, now you have a longevity startup. So a lot of these aren't necessarily investable early on. They're investable on a personal level because the net present value of additional years of life is worth far more than your portfolio. But in terms of investment play, that's going to be the question. Does the value go to the sort of biotech analogs? Does it go to, you know, Nvidia? Uh or is this something that's uh just going to be captured um like largely AI was? You know, if you look at at at at the large language models, some of them are embedded in much bigger companies where they were already trillion dollar companies and so it didn't have that much impact. But largely speaking, uh there's no way for a retail investor to play Clawude or Open AI or any of these. >> Yeah. So, let me ask you this then. Um and then we'll wrap up. Um this kind of goes back to the K-shaped economy. And if I heard you right, I think you think, okay, you know what? um the bluecollar folks might might on a relative basis do a little bit better over the next couple years um as these policies designed to help mainstream start kicking in and as AI starts eroding, you know, white collar jobs and stuff like that. >> But at a very high level, right, we have a a system where more and more of the spoils are concentrating in fewer and fewer pockets going forward. And you just gave a really great example, right? And and I I've heard this from from people in private equity where they're like, "Yeah, in the past once you had to raise a certain amount of capital, you could only do that in the public markets." Like, you don't have to now. You can fund a company like SpaceX fully privately, right? And who wants to become a private company if you don't have to with all the regulations and restrictions and liabilities and all that stuff, right? So um it does seem that like you know to your point like the better and better opportunities are being kept away from the masses and you know increasingly those public markets are getting funded by the guys with super deep pockets. So it's not even like a lot of people in the private market. It's just a small number of people with really deep pockets. So how concerned are you just in terms of the trajectory of of uh of society? And I think with your 80% probability we're going to go to UBI, I can't imagine that you're a big fan of that, but correct me if I'm wrong. Do do you bear a weight of concern of where society is headed here? >> Yeah, I mean, so the reason it happened is uh overregulation, right? You had Sarbox in 2001. uh you had a a raft of anti-competitive regulation um in 2008 that basically the banks got their bailouts and in return we gave them protection from uh competition which is pretty perverse. Uh and so that's largely shut out uh retail investors so that a lot of these exciting things, you know, the rich get richer, right? The uh really massive gains to a lot of this stuff um doesn't go to the plebs. Now, that did happen in crypto and I think that's part of the reason why there's this sort of pirate, you know, revolutionary ethos like in Bitcoin. Uh the rich guys did not make the big money in Bitcoin. You know, you look at uh people like Roger Ver, you know, these were these were outsiders. These were people who kind of wanted to smash the system. Uh so you know it is possible. Um it's even possible in crypto. >> Sorry, can I challenge that in crypto just a little bit though? I mean if you look at the ownership of like Bitcoin, >> you know, it's weighted way disproportionately into a few, you know, really big holders, right? And a lot of those are rich people that once Bitcoin started taking off, they said, I should own some of this, right? And so >> yeah, >> it doesn't really seem to have sort of democratized uh you know prosperity. It it just seems to be yet another market that is >> largely lopsided now to the the deep pocketed. Yes, some some regular people made some money along there, but just like people like you made money early in the dot who weren't rich, but at the end of the day, you know, it's not like it changed the prospects for society. >> Oh yeah, for sure. I mean, you know, Bitcoin is much more democratic than say OpenAI shares. Uh, but right, without a doubt, there were a lot of smart guys who got in later. So, you know, depending where we take the snapshot, like we take the snapshot at 2015, they're almost all ancap, you know, revolutionary. >> Absolutely. >> Y exactly. And and you know, when you fast forward to today, you know, they're uh what I think was it Novagrats who bought all the seized Bitcoin. So, you know, rich guys who came in uh along the way have have um have gotten a big share of it. Uh but still, you know, Bitcoin or crypto in general is sort of an archetypal market where you you're not shutting out the plebs. Anybody could play it uh from day one. And it would be great if regular financial markets got like that as well. Uh that would require, you know, more or less getting rid of the SEC, just going back to a fraudon, uh sort of the pre-regulatory rule where you could do whatever you wanted, but if you actually defrauded somebody, then you would be liable for that. uh that's not in the cards unless you know unless the government collapses and they only have money to pay the army that's not going to happen anytime soon. And so unfortunately I think that it's going to continue where a lot of the proceeds of these exciting market or new technologies are going to go to the rich on investment sense. But you can also sort of step back and ask for example. So if you think of the ways that the internet makes your life better, right? So almost everybody spends almost all of their waking hours in some form or another on the internet uh deriving all kinds of utility and benefit and happiness. And the percent of that that was actually captured by investors might be 1%. You know, uh, and I mean this is true across technologies, right? So, you know, if if you're able to, let's say your doctor has you on six prescription drugs and then you can go to chat GPT and you can say, "Hey, does this make sense?" And then they can say, "Well, what are your symptoms?" And then you can drop that, you realize that your doctor's an idiot. Well, that's enormously valuable, but that is not captured by anybody. is it's a very small amount of it actually captured by chat GPT. So point being that yes in terms of you know the rich getting richer uh you know the fact that plebs are shut out of financial markets I think absolutely makes that worse. However, I think that is swamped by a factor of 50 by the fact that new technologies in and to themselves are democratizing because the greedy capitalists come out with Google and they want to sell it to everybody. And the way to sell it to everybody is to make it free and then figure out some way to make money on the back end. The end result is that they're trying hard to make all this stuff, whether it's robots or AI, they're trying to make it as close to free as possible because they're greedy because they want to make a little bit on free. But the end result is that the benefit for regular people, I think over the next, you know, five or 10 years is going to be absolutely astronomical. It's going to be very, very good. >> Okay. And and look, I'm not trying to um, you know, be a doomer here. Um, looking at the long trend, it's sort of like your thing about hair extensions and and fake nails, right, for the the low end of society. Um, yeah, those are those are luxuries that that weren't available in previous generations. Are they ones that really make us better off, right? Or is it is it sort of a modern sort of bread and circuses that just keep us docile and and in this world where more and more, you know, uh concentrate in the rich and we're even at the point where the retail housing market is one where we, you know, record levels of unaffordability. You know, is is the progression here that we just get, you know, kind of a ready player one society, right? We're like we we get more and more things that that superficially distract us from the worries of the immediate moment, but you know, we're a renter nation and all the meaningful work is being done by robots owned by these rich people and we're really kind of just unnecessary eaters that are just uh you know they want to keep distracted. >> Yeah. And that's a much deeper question and I think it's really important people forget that you know when we talk about GDP and per capita income and things like this you know if you look at happiness studies those are a very very small amount of happiness uh if you think you know anybody listening you know the average American has something like four or five careers so there will have been a point where you were poor when you were young there may have been a point where you were poor in between when you think about your happiness it's for me it's it's not that big of a you know, uh if you're poor and you have a goal and you have hope, okay, uh that pretty much does it. Um you don't actually need anything beyond that. The important stuff, the other 80% of happiness, that's things like family, friends, you know, feeling like uh your life has meaning, your life has purpose, whether that's a relationship with a higher being or not. Uh and those things I think across the board are catastrophically imploding. Uh I spent about 10 years living in Asia in Japan and Taiwan and the the the contrast with the west is is just incredible. Uh I moved directly uh from Taiwan back to Canada and it's a big difference just you know nobody's married. Uh families are dysfunctional, kids hate their parents. We we saw that during co where it was kind of a running joke that you know oh my god now I have to spend time with my kids. >> Uh who are these people? Who are these strangers who live in my house? And you know it's a standard trope on TV that you know the kids roll their eyes whenever dad says something like this is not the state of nature. This is not how it's supposed to be, right? Parents and kids are supposed to be each other's best friends in the sense of you're on the same team. You love each other unconditionally. Everybody knows that you're there for each other. So, you know, in in my family, for example, uh my wife stopped working. She made a lot more money than I did. She's a lot smarter than I am. Uh but anyway, she quit and she, you know, went to be a homemaker. Uh there's a lot of people now who are saying, you know, if you if you drop the second income and, you know, you look at, you know, $4,000 uh uh house payments in somewhere like Washington DC, uh drop the second income, go out and live in Tennessee, uh do something meaningful. Uh now, a lot of that, you know, of course, the internet enables, uh but you know, some people go out and homestead, they have little farms. My wife dreams of a chicken farm. I think that's a ton more work than people expect. Uh but anyway, yes, I think a lot of people are waking up to it and it's an important conversation to have just kind of fundamentally like why why is our society so unhealthy? Um when I see a problem, my first assumption is what did the government break this time? Uh so, you know, I think part of it has to do with public schools that operate like day prisons. Uh I think that the government in many ways has sort of cucked uh the American male, especially for the lower class where you know they don't need men. U they don't need provider men. So, if you don't need provider man, you may as well get the hair extensions, go to the club, and get knocked up by somebody who's uh, you know, six foot five, right? Uh, because they're not going to provide either way. Uh, I think that a lot of these things can be traced to, um, policy, specific policy errors that could be fixed. Unfortunately, I've been talking about them for 50 years. You know, the the idea that the welfare state causes dysfunction, is actually uh, destroying families. This has been widely discussed certainly since the 1960s uh and it's not changing anytime soon. Fortunately, individuals are discovering it and they're kind of finding their own lifeboat. So there it's another parallel uh with Bitcoin that Bitcoin is not yet fixing the financial system, but what it is is providing uh a lifeboat for individual people to save themselves and save the people around them. >> All right. Wow, Peter, I I feel like I I stuck my stick in the ground at the end of our conversation here and hit a gusher. Um I I would actually would love to really um opine at much greater length on on this topic that we ended here, but we we we I got to sadly wrap it up here uh in the here and now. Um again, thank you for such an honest uh direct and very specific answer to that question. Um uh as we wrap things up here, most important question for folks that have enjoyed this conversation, maybe this is their first time listening to you, where can they go to follow you and your work? >> Uh I make daily videos. are about three and a half minutes. Uh, and I post them on uh, Twitter or Xprof. And then I also put them up on YouTube and I do weekly articles over on Substack, which is also Prof. >> All right. Fantastic. When I edit this, Peter, I will put up the um, your your um, Props handle on the screen so folks know where to go. I'll also have the link there to your Substack. Um, folks, the links will be in the description below the video, too, if you want to get there with one click. Um, Peter, uh, I've really enjoyed this. Thanks so much for coming on and yeah, if you don't mind, next time you come on, let's reserve a fair amount of time to dig into that societal topic. >> Awesome. Yep. Looking forward. Thank you, Adam. >> All right. Well, folks, now's the time on the channel where we bring the partners from New Harbor Financial, one of the endorsed financial advisory firms by Thoughtful Money. I'm joined as usual by lead partners there, John Lodra and Mike Preston. Gentlemen, great to see you. U, John, uh, let's start with you. I'm curious to hear some of your uh top takeaways from the discussion there with um with Peter. Some things I think you're going to agree with, some things I think you might disagree with. Um and uh there's been a bunch happening in the markets, so we'll get to that shortly, too. >> Yeah. Thank you, Adam. Great to be with you and uh nice to hear Peter's uh perspectives. I I think you said it was your first time having him on. That's great. Um we've we've come across his writings quite frequently and in his work, so appreciate you get to hear him live there. uh and and be able to comment here. Yeah, I mean um we we we certainly do see some things different and it really it really I think stems from in no small part what our what our mandate is. Um viewers probably know by now that we uh we're financial adviserss to real people and people that um you maybe have a different objective than the massive investors at large. Um, you know, Peter described his his personal um leanings to, and I I know he said this tongue and cheek, but chase bubbles, chasing the a AI bubble, addicted to risk. Um, these are all things that I know he he means tongue and cheek, but that's uh categorically not the way that we see and and approach markets on behalf of our clients. Um, our clients by and large are folks that um are in or nearing retirement and and their biggest risk candidly in this latestage bubble cycle that Peter himself also agrees we're in doesn't mean it ends right now. Um, biggest risk in in these kinds of environments for most folks in in our client seats is unwittingly suffering ultimately a big decline even if it comes after having chased the bubble. And that's usually what happens in major bubbles. they they go longer uh than valuations would suggest they should. Uh but when they resolve um every time in history it's been very painful and usually it's not worth the chasing uh in terms of what it means to the the real financial security of of real people that are looking to fund a retirement. So so we see things quite different. You know he talked about the economy and markets in separate breaths which we often will remind folks the economy is not the market and markets aren't the economy. He talked he he he described his take on the uh economy as uh somewhat optimistic. You know, he thinks we're midcycle, not late cycle. And he pointed to three main factors. Um one is the Feds, you know, maybe becoming less concerned about inflation. I think that's debatable. And even within the Fed uh you know uh board seats themselves, there's quite a debate going on about uh you know, where policy should go. uh he talked about the the Trump's administration's goal to attract foreign investment and there's been some high-profile, you know, kind of headlines in that regard. And then the growth in AI is all kind of, you know, being supportive of this economic cycle. You know, I think we could probably take another side on a lot of those. It's not a black and white uh view. Um but what I would u absolutely point out is regardless of where we are in the market cycle, the the financial market cycle often times is is different than the economic cycle. And um you can have great businesses, great um you know, world changing trends like the internet for example, that that became everything and more than what folks thought it would be. Uh yet it didn't stop the tech bubble from happening. The point being is that the markets had um you know priced in a frivolity and a and a an optimism that was way beyond even the reality of of a great worldchanging uh you know paradigm. So so we are clearly in our view in a very late stage cycle of of the markets. I would I would um you know we he Peter did talk about the recent risk off of a lot of things together gold, Bitcoin, stock market, things like that and he he kind of you know co you know kind of pointed to that as as being indicative of a liquidity um issue and and the Fed's um you know I guess more um dovish tilt lately lately maybe being a nod to that. Um there's actually very good, you know, evidence that it's not so much a liquidity issue, but but maybe uh you know, signs of a real credit issue. There are some real um concerning credit um things coming on the radar here. We've talked uh you know, a couple months ago we talked about first brands and um you know, for example, lenders to subprime auto uh borrowers. Um more recently, we've seen um a lot of headline troubles in private credit markets. uh just today a company called Blue Owl um which is a private asset manager and they get into all kinds of and it's an interesting company because it's not only private credit but uh they have specific focus in technology lending build out of the AI infrastructure and that stock and and and the funds that that manage have been that company manages have been really under pressure a lot of pressure in fact just today they scrapped plans to merge two funds to to to try to solve a liquidity issue in their funds and they called it off because the stock got got punished. Uh you know that's that's uh these are things that are starting to I think really spooked markets and I think certainly have the Federal Reserve spooked. Um and you look at all the main you know big uh private asset managers, folks like Blackstone and Apollo and Carile and Brookfield Asset Management. These stocks have gotten hammered pretty good of late. Uh and and these are signs of of something other than just concerns about liquidity. some real um you know fracturing in in in kind of the credit markets which a lot of times stock market bubbles end with the credit crisis you know from the fringes out um we can't you know we can't uh avoid talking about Bitcoin and what that has done in recent it's been dropping like a lead balloon so to speak um you know peaked back in October I think at 126,000 thereabouts and just today it got back down below 90,000 and you know it's it's really emblematic I think of a of a riskoff kind of moment. Um and you know related to that the shares of micro strategy which in in you know Michael Sail uh Michael Sailor's company have have plummeted um there's there's just lots of signs of of risk off and we're starting to see it in our broad market indicators. So you know I'll pause there. We got a lot we can dig into there but um you know those are some big picture big picture takeaways. We definitely are less sanguine about the economic cycle and as it relates to where we are in the financial market cycle. >> Okay. I I think you would agree though with the question that I asked Peter, which is um if the market were to suffer a substantial correction that would likely have a big knock on effect on the economy, maybe one, you know, potentially as large as as triggering a recession. Would you agree with that? Yeah, not only to agree with it, but that's what happens in history. Um, and they're kind of interrelated. Recessions don't get called until after the fact usually, but the evidence starts to to to but yeah, the absolutely that I think the, you know, psychology of of economy is is largely driven by the financialized economy, the financial market. So, I totally agree with that. >> Okay. I I want to get back to the credit the private credit in just a second. Mike, I want to come to you for a second. Um because um while I was interviewing Peter um and and you guys were listening to the interview um the Nvidia's results came out and we we've had this sort of riskoff downdraft in markets recently. Uh tell us what happened in Nvidia and maybe maybe that might actually change the short-term trajectory here. >> So we'll see. Adam, I'm going to bring up a chart a minute-byminut chart of Nvidia and what it's doing after hours. They just reported just a few minutes ago and I know this video will come out a little bit later, but the stock is trading up. They beat expectations by about 4% is what the headline number says. Margins look pretty good. Sales, I think, were a little bit better than expected. We're right around 19250. Let's go to a daily chart. You can see that a couple weeks ago, Nvidia broke out here 195, went to new highs, and then just kind of pulled back like the whole market uh the whole market pulled back in the last couple weeks, and it feels worse than it really is. The S&P 500 is off around 5%. The NASDAQ or the the QQQ is down around 7.1%. So, a relatively mild pullback though, it's felt a little bit worse because a lot of the the momentum names have really been getting pretty smashed, particularly in the AI space. And so, everyone, >> sorry to interrupt, but because the market is so reliant on them now, as those stocks go, kind of everything goes. >> Absolutely. As those stocks go, everything goes. And so, everyone's looking at Nvidia. It's the most important company in the world right now. Uh so if we hold this trading up at around 19250 195 if that can base and start to break out to new highs then we could start to see some of the other names come up. You know Palanteer has been hit pretty hard. That's that's down on the other side of its Ballinger band. But if you just take a look at the QQQ you can see that it's been on a a few week pullback 7.1%. Not a big deal overall but >> and for folks that don't know that ticket that ticker that's basically tracking the NASDAQ. Yeah, that's the NASDAQ 100 essentially. So, um it's been a pretty mild pullback and looks like pro if this holds with Nvidia, Nvidia will probably drag the market up. Whether that will cause the market to come out of its base and go to new highs, we don't know. But it's a good first start for the bulls, let's put it that way, because there's been a lot of fear uh as we talked about in AI and Bitcoin and things like that. and and fear can build a wall to worry, a wall of worry and it can re uh fill the engines or or the gas tank so that uh so we could power higher. We'll see. >> Okay. And so I mentioned that look, you know, we'll when this video goes live tomorrow, folks will know a little bit more because they'll have had the Nvidia earnings call and really with stocks these days, it's less what your performance for the quarter was and it's much more about the guidance that you're giving the street. So, we'll see if the street likes uh likes as much the the guidance that Nvidia gives. But yeah, I asked that just because, you know, we're approaching the end of the year. There's the proverbial Santa Claus rally. I've had a number of technicians on this channel, you know, over the past couple months saying, "Hey, we think we could see some weakness in October and andor November, but we would we would use that as a buy the dip uh opportunity to then ride the Santa Claus rally into the end of the year." Is that what's going to happen from here? We don't know, but uh an Nvidia beat would be kind of just what the market needed at this moment uh to try to reverse its near-term fortunes where it had been drifting down like you were saying there, Mike. Yeah, and I'm watching Nvidia here. It's trading up above 194, almost 195. I don't know if the the the earnings call has started yet or not, but it could literally be the catalyst. And there's a lot of worry that's been built up over the last couple couple weeks. Now, we would not be ones to say that you should go all in here betting on a Santa Claus rally, but it wouldn't surprise me to see a squeeze higher Santa Claus rally and maybe even a further blowoff top. It's we've been talking about that as a possibility. We're not trading from that perspective. We're still only at about 45% equities in our model. And we even have an index put um down below just in case we're wrong and we get a crash here. But uh because valuations are obscene, we've been talking about that for a long time. Mhm. >> But still, this is exactly what you'd want to see to potentially start something. It maybe Bitcoin rebounds from these levels. Bitcoin's off almost 30% in just a handful of weeks. Uh it's it it is indicative of risk off like John just talked about, but if that were to stabilize and bounce along with an Nvidia beat and maybe the NASDAQ and the S&P turning up off of their moving averages, they're just below the 50-day moving average right now. If they were to recapture that and close above there, we could easily see a squeeze higher because there's still a lot of FOMO or fear of missing out in this in this market. And it's because it's been going on for so so long. And everyone knows that the Fed wants to bail out every single dip. And and as uh Peter was talking about, you know, every every small dip or emergency has been met with bigger and bigger expansion or larger expansion in government and Fed response and the market knows that. So, it's hard to break that cycle until, in my mind, you get some kind of blowoff and then ultimate crash, which is what I think is going to happen. I know Peter thinks that for the next two to four years, we're going to be okay in the market. I think we would take the other side of that. I think >> just be clear, he said two to four years be okay in the economy. He didn't necessarily say the markets, but >> Right. Okay. Well, we we all know that those normally go relatively handinand. Um, I think that really short term the market might be okay, but I wouldn't bet on it being okay throughout 2026. >> Okay. All right. Well, look, we'll know a lot more by the end of next week in terms of whether there's a a return to the risk on trade from here. Um, but I I just want to flag this for folks because, you know, I I I have heard a growing chorus of people saying online, okay, this this might be it. This might be where everything, you know, starts to really tip over here. And um who knows, you know, we'll we'll watch and see. But um you know, if if you are looking to commit a lot of capital to playing the downside here, you know, be be very cautious, especially with this this apparently positive um Nvidia results here. Um all right. Um John, I wanted to come back to you real quick just to talk about private credit because that does seem to be something that we're hearing more and more about and and there was um you were talking about blueow. Um, so, uh, I I have a chart. I'll try to pull it up if I can. But it it it >> it it shows that, um, >> uh, let's see here. I'll pull it up here. Uh, yeah. Um, that, uh, while the S&P, you know, has, uh, has powered higher over the year, um, the stocks of the private credit funds, um, have actually really been suffering since summertime. Um and uh blue so the S&P is the green line here. Blue Owl, the company you mentioned is the red line here. Um you can see that that that something's going on there, right? That that the people that are have been following this industry are beginning to see some signs of real concerns and and and we've heard from a number of different um uh private equity companies of late. you know, they've had some private uh some some uh companies that they had lent to that have gone belly up basically, right? With this the first brands or the uh was it the the recent one Renovo I think um where I think Black Rockck had it on its its books um I don't know as recently as a month or so ago at 100 cents on the dollar then it went to zero cents on the dollar. So, you know, you're starting to see some some concerning defaults in that space. Um, uh, but, uh, you know, uh, anyways, you know, so, so increasingly, you know, the the investors are starting to put their money where their mouth is here. And of course, that's raising all sorts of questions about um, uh, counterparty risk and and just the the health of the sector, right? um which is hey this has been a a lending uh ecosystem that has really grown dramatically over the past five plus years. Uh but it's not regulated, right? We don't really have any transparency in there. We're just hoping these people have been making good loans, right? And we're starting to see well their track record's not perfect. So, of course, the question is, how much less perfect does it get from here as we learn more? And as lenders start getting more and more um worried about the private credit market, um well, they're going to be less likely to lend and that'll slow the economy, but they might be less likely to lend to each other. And and and when that starts to happen, when lenders start to um distrust each other, that's when the credit market kind of starts to slows down or maybe even freezes up. And that's when you get really big problems. And I'm not saying that we're there uh by any stretch at this point. I'm just saying we're starting to see signs that this this space that had a lot of probably overconfidence in it, people are really starting to to, you know, get get nervous and jittery. And John, I know you're nodding. I know you probably want to say something, but real quick, let me just share one last thing, which is I think I told you guys about a month or two ago that I'd seen that PayPal um who had they've they've built their own buy now pay later service so that you can, you know, you can make your payments through PayPal on a buy now pay later basis. But they sold their book of buy now pay later loans, right? And I remarked at the time that was probably a pretty good sense that they said, "Hey, look, we're making these loans. We know that these things are going to eventually blow up at some point, right?" Um, well, what company did they sell them to? Well, uh, they sold them to, uh, let me show it here, to Blue, who you were just talking about, John. Right. So, you know, Blue Ale has had this uh apparently sort of voracious appetite for private credit um looking like maybe all across the spectrum of borrowers. Um maybe it's not a huge surprise that uh that they're starting to get into more and more trouble here. >> Yeah, it's exactly right, Adam. And it's not just the the problem with this kind of stuff if it if it is deeper and broader than it it appears that we're already seeing in in the headlines, and I think there's a good chance that it is. It's what are the spillover effects? And I'm going to I'm going to reshare a a picture that I shared last week in our video with you just to um re-emphasize this. This is a um so let's talk about the insurance industry. Um you know many insurance companies to match their liabilities. You think about what insurance companies do. They they basically have to pay out insurance claims or or guaranteed uh benefits to to insured parties, right? And traditionally they would use Treasury bonds as the vehicle to do that. Now, when interest rates got depressed really low, um the insurance industry basically went out to the private credit market where they could find higher yields and, you know, be able to match those liabilities. And it's all well and good until it's not. And this is a a chart that was put together by Moody's and a couple other folks. And it basically shows the the uh tremendous amount of um private credit instruments within insurance companies uh you know uh uh balance sheets basically. And just as concerning, I think, is the rise in kind of privately rated um securities. and UBS's chair uh was I think three three or four weeks ago talking about they're starting to see this kind of like um gamesmanship in in credit ratings just like we saw in the housing bust the subprime housing bust where you know in effect you know the the insinuation is that the issuers are are are paying to play or or the uh you know kind of the rating agencies are are are getting paid to play and you know rate softball rate these issuances and it's it's just a this kind of stew of stuff and and a lot of the these these loans, these private credit loans are were were issued with uh no or very light financial covenants that are traditionally the ways that bond investors protect themselves. So, it's a it's a tricky thing and it's I think we're going to see more of this and we're it's I think the market has a way of snipping this out. Even if you look at broadly just more f publicly traded financial stocks, we're starting to see some stresses there. We actually own a sector ETF in financials. It's not in danger zone yet, but we're watching this here because um and I'll share a chart of this. Um this is ticker symbol XLF. It's an ETF that holds financial stocks. This is uh this is a daily chart of that. We've seen a pretty dramatic pulloff here. You know, we're we're we slice right down through, you know, we've been trading pretty consistently below the 50-day moving average. Uh we're down right around the 200 day. This is a very important level to keep here. It's not, you know, you zoom out, it's not it's not uh big big uh damage yet, but this has the potential to roll over and and be a harbinger of of other things to come. So, we're watching things like that very very closely because they oftentimes are the canary in the coal mine speaking to a a broader broader issue. And just if I could just for a moment, I'll just share a glance at some of our our indicators. You know, we agree with Peter that, you know, bubbles don't end on valuations, they end on other things. and and we look for that as as the market tells us or can tell us clues as to when that is is likely to happen or is happening before our eyes. And this is just a a simple dashboard of some of our indicators. We look at a bunch of different breath indicators. For example, this is just a a subset of those. We can look at it across different indices. So we got things like bullish percents, percent of stocks uh above uh positive trend lines and then participation indicators above different duration moving averages. And we've seen a a broad-based and consistent erosion of all these things across all these markets. Even though the indices themselves haven't really seen a whole bunch of damage, we've seen the the S&P 500, for example, if we go to that, um it traded, if I go to a daily chart here, uh we're we're trading now below the 50-day moving average. We'll see if if it's if it stays below there, it starts to turn down. That would be uh you know another checkbox in in the you know time to get a little bit more concerned uh you know category. So we're watching things very closely. A lot of sectors a lot of charts are at really important u you know u tow holds and if they don't hold here it it may signal a a broader riskoff moment. >> All right. And I'm going to guess that that's going to make what happens in the next 48 hours of Nvidia really super important here, which is um as you just said, there's a there's a there's a lot of indices, a lot of assets, uh sectors that are kind of at at um potent, you know, like breakdown thresholds, right? They haven't broken trend yet, but they're close, right? And if Nvidia uh is enough to save all this then great okay I mean that that tells you okay then the direction of the market probably for the rest of the year is more likely to be up than not and it's maybe you know risk back on comes into the market but if it's not if if it if it if Nvidia no matter what happens with that sock specifically if it's not enough to reverse these trends and you start getting a breakdown despite Nvidia delivering the best results that it And I'm going to guess that speaks really loudly to your level of concerns of what would happen next. >> It does, Adam. And and um you know, we everybody focuses on the headlines, the technology headlines and the S&P, what's the S&P doing? But there's a lot of stuff going on beneath the surface. And if if I can indulge, I just share one more chart here to give you a flavor for what we see here. So this is just a simple way that we rank different different sectors and you know, different scores. I won't get into the multiaceted ways these scores are built but you know higher is better. You you see right at the top are some of the areas we've talked about for some time as as being you know areas that we have uh exposure precious metals utilities um technology. Um and what we can do here is we can look at the the change in these scores uh over the last six months. And you know this has been more recent than than than later. But what you have seen here is there's been big gainers here in things like healthcare, biotech, precious metals, commodities, basic materials, energy. And some of the areas that have lost ground, you can see here they've actually lost ground. Financials, um uh technologies down kind of midpack here. there there is a not so subtle shift that's been playing out under the surface here that uh at the very least speaks to tactical rotation opportunities but it also could very well speak to you know a more durable changing of the guard as relates to you know what this market has been built on. >> Okay. Um really interesting chart there by the way John maybe next time we can go a little bit more into kind of um if if the torch is getting passed um in 20 as we enter 2026 which sectors you think might might benefit the most from that. But real quick um Mike let me come to you just give a quick update on the precious metals. Um I think the question on most people's brains right now who follow the precious metals is is hey they've hung in there which is good. Um but they've kind of been trapped in this range and today is even a really good example where you know they were up big but then they kind of drifted down throughout the day. They still closed up right you know silver's still above the 50 bucks an ounce u threshold and and gold is still above 4,000 but you know they haven't quite been able to get back up to their highs either. So from a technical perspective, is is this positive like oh this is it's it's relative strength and it's it's uh you know maybe consolidating and getting ready for another move higher or is it hey these things are are trying to get back to their old highs but they're failing and and and that could be a sense a sign of of um you know decreasing momentum. Hey, Adam, at the risk of being too overly positive, you know, I think this is exactly what you'd want to see in gold and silver and in the miners if you're a long-term bull, there's there's no doubt a month ago that the trade got really hot. You know, we were talking about that, talking about it with clients, telling people to sell a little bit on the way up just to loosen up psychologically. you know, um, gold bugs, so to speak, oftentimes put way too much in gold and silver, never sell anything, have it their whole life, and it's really hard to loosen your grip on that thinking. And so, selling on the way up makes sense. And if you did, it made what came after a little bit easier. So, I'm going to show a chart of the daily chart of gold. And you can see about a month ago on October 20th, we hit a high up here. That was around $4,400 an ounce. This happens to be ticker symbol GLD, which is, you know, the shape of the curve is the same. But then we for about a month now, we've been consolidating sideways. We never hit this 50-day moving average, which is the green line. So, we were walking up along the two standard deviation Ballinger bands. And we came in, we never hit the 50-day. We've been consolidating sideways. And just a couple days ago, it looked like we were going to very quickly break out to new highs, especially on silver. I'll show you that here. It looks very similar, but we should be kind of glad that it didn't, I think. Uh because it's it it actually builds a lot more energy and power. If it goes up, if it comes down, if it goes up and it comes down, it's building or energy or coiling. And if we break higher here, it's going to be a powerful move. Silver 2 stayed above its 50-day moving average, and we're just above $50 an ounce on silver, which is huge. Now, the silver miners are lagging a little bit. Let me show you SIL, which is the silver majors. It's floating right around the 50-day moving average, and SLIG, which is the juniors, right around the 50-day moving average. I drew this downtrend line thinking it was trying to break out of here, and now it's come back to the 50. Silver at 50 bucks an ounce has got to be huge for these guys. You know, I'm not an analyst or an expert about the financials, but it seems like maybe the market's not sure that silver is going to stay up here or gold is going to stay up here because the miners, um, let me show you some of the miners. They've performed fantastically, but they too are consolidating sideways. There's the gold miners. I showed the silver miners a minute ago. And if gold and silver can stay where they're at and break higher, I can only think that these miners are going to go quite a bit higher. Uh, as we've said a few times before that a big bull market. Here's a monthly chart of GDX. Really broke out around 40 or so. It doubled up to 80 >> and now it's consolidating sideways. Wouldn't be surprised over the next year or intermediate period of time to see that double again long term. But what we need is for gold and silver to stay up here and for the market to be convinced that it's going to stay up here. So I'll stop sharing a chart, but a few more comments. Silver itself is on a massive triple top. Now maybe it doesn't matter because it's been so long, but the Hunt brothers cornering the market in 1980 drove silver to 50 and then it just kind of consolidated for decades. Then it hit 50 again in 2011. Came all the way back down to into the teens and here we are at 50 again. So 1980, 2011, 2025, 45 years. And the other times, if you look at charts, you see that silver collapse relatively quickly. I know it's pretty early, but a month into this correction, we haven't collapsed. We're sitting around 50. And so imagine if it can can base sideways and break higher from there. It'll be a massive triple top. And like the triple top we talked about at silver a few months ago back at 35, triple tops don't normally hold. They're normally broken. And so I think the miners have quite a bit more to go. Probably more percentage-wise than silver and gold. Silver sitting here at 50. Wouldn't be surprised to see maybe 70 in the next year based on the charts. Gold at 4,000. Maybe maybe five 5,000. These are guesses based on the charts. And uh so so take that with a grain of salt, but that would imply around what 25% up for gold and maybe 40% or so up for silver and much more for the miners. As always, position sizing makes sense. Don't go all in. Talk to us if you want some advice about your particular situation. But uh it I don't see any real reason to be concerned, nor do I think people should get overzealous here. A lot of our clients got a little bit over their skis and you know we're we're wanting a little bit too much too fast. So you keep your expectations moderate, your position sizing moderate and just sit back and let it work. The last thing I I guess I'd say is looking at some screens like momentum names. There's a lot of gold names on on momentum screens. They have persisted. They persisted for months and they're not falling off. You know those we've seen some tech rotate out of those screens. We've seen biotech come in, but consistently throughout the last few months or more miners have been there and probably will stay there. >> Adam, Adam, if I can just add a a little context to some of Mike's strong comments on gold miners and this is a a piece that we uh we dove in in our investment committee here in the office yesterday and uh want to give some props to Vanek. I know you have Yan Vanek on your program periodically. This is their lead gold an analyst, Emma Kasanova. And I urge, you know, invite folks to go to their website to read this public available piece, but it's their October 25 commentary on gold. And I just want to call out a couple charts. So, it's fair to ask, hey, this big move in gold miners, does it mean they're overvalued? This chart is their Vanex work in this regard. It shows that the gold miners, even though they're at the higher end of their five-year range, which is this this gray bar, the blue dot is the current dot on a enterprise value Ibida metric, they're far lower valued, lesser valued, more more undervalued, if you will, compared to the S&P and the MAG 7. And same with the price to cash flow. And the cash flow is key for these um because uh it really comes down to the cost of the production. as the price of gold goes up um these companies have very high operating leverage and and um their cost of production doesn't go up you know sub you know one by one with the with the price of gold and this chart I think is really important it shows for example these are the gold production as a as a as a percent at different um all in sustaining cost of production so the way to read this chart is 70% of the gold miners have sustaining cost of production production uh of about what is it about 1,700 or or lower. Uh with gold prices at $4,000, if they're producing at 1,700, that's a boatload of free cash flow. Even here, you have 95% or so with uh sustaining cost of production, just a little over 2500. That's still almost at $1,500 per ounce margin, right? So that's a really compelling picture as to why, you know, these stocks probably have a lot of further run to go even if in a riskoff moment they they get thrown out with the bath bath water. There's some really good good numbers we we we found in that research and just wanted to highlight it for your review. >> Yeah. No, I really appreciate it. Those are great charts. I'm glad you showed them. Um and it just shows um especially those ratios just how hated this industry was that even though it's it's this year delivered just blockbuster results, you know, Wall Street is still looking at it like okay, you know, I guess we'll put a little bit more money your way. Um so yeah, a lot of potential um room to run further to the upside uh if indeed the the metal prices hang in there, Mike, as you said. And that's that's that's the key thing here. But it's nice to see that technically you're as as optimistic as as it seems like you are given given what the technicals are telling you. All right, Jen, so we got to start wrapping it up here real quick. Um I'll let whoever wants to take this one answer it. Um so, you know, end of the year is coming up. Um you as Mike said, look, if you've got questions about um how to invest uh in the precious metals miners and whatnot, you know, call New Harbor. They can give you they can they can they can listen to your situation and give you customized guidance. Um, but as you guys have said in some of the recent videos we've done, uh, another good reason to to give your financial advisor a call, uh, now is for the end of the year, the things that have to be done by the end of the year, right? Like, uh, tax lost harvesting and, um, charitable giving, uh, required minimum distributions, that type of stuff. Um, okay. above and beyond the market related stuff like you know um is this a good time to buy X or sell X or whatever. Um what are some of the other things that you guys discuss with customers? I mean there's there's the whole financial life part of it like what the what the money is for beyond just hey what might the stock market do next month. Um, so I I know you guys talk to your clientele on on a whole spectrum of different topics, but like what are some of the other major things that you guys spend your time talking with customers about beyond just where to put the next incremental dollar in their portfolio into? Yeah, Adam, really, if I could boil it down to this, it's it's really about taking away the fear of the future, you know, which sounds like a tall order, and it is, but at least as it relates to money and financial matters, it's all about reducing anxiety, taking away the fear of the future, convincing people that they have enough. This is very, very difficult to do because we as humans are just wired to always want more. And it doesn't even necessarily have to be blamed on greed. It could be blamed on survival instinct, you know, because if you give a squirrel a chance, they're probably going to, you know, keep storing acorns until, you know, wherever they're storing them bursts. >> They'll die with a tree full of acorns. Yeah. >> Yeah. It's just natural. You don't know what tomorrow bit brings. You don't know how long you're going to live. You don't know what how many acorns there's going to be available. So, it's about taking away the fear of the future. And I think the only way to do that is really one of the ways to do that anyway is to talk to someone like us that has now, believe it or not, uh, 25 plus years of experience, John and I have, which is amazing. We're getting old quickly. Life goes by fast. But one of the benefits of that is that we have the experience. We've been through a lot of things over the years personally and professionally, and we've been exposed to thousands of clients and situations. And we know, we just know in our um in our being if somebody is going to be okay or not based on a quick look at their situation and what we think about the future. We've got a lot of confidence in our ability if we're managing money for the for the person that we're talking to of not losing the money over this market cycle. And we think this is going to be a climactic high-risk market cycle. And so we can look at the other things like their guaranteed sources of income and, you know, make some adjustments if needed, but give them some real security about I'm going to be okay. Letting go of that fear and anxiety is extremely hard. And I I hate to say that we're therapists because we're not licensed therapists like your like your wife is, Adam, but we end up being financial therapists a lot of times, you know, and so we're good at it. We like doing it. And I think we do a lot of good when we talk to people. So that's what it's all about. The end of the year is the three things that you said. Charitable giving, gain loss, required minimum distributions, and maybe a fourth thing, Roth conversion discussions. But the bigger picture is, am I going to be okay through this market cycle no matter what happens? Can I let go and stop worrying? And can I spend more? And a lot of times we're telling people to spend more because that's what life's all about. If you have a huge pile of gold and you know you have got more than 50% of gold and silver like some people we talked to sell 10% right here even though I think they're going higher you know use that to do some work on the house go for a bunch of vacations or whatever or one big vacation whatever floats your boat so to speak but it's really all about psychology it really is you know that's a great that's a great great answer Mike and and right there in the end I think you got to kind of what I was sort of envisioning which is you know When I go to events, people come up to me and and one of the things they often express is like, "Oh, it's just so great to have somebody to talk to about money. I don't really have anybody in my life to talk to about money." And so, we tend to wrestle with these decisions uh around our money, you know, alone. And it feels um isolating and overwhelming for a lot of people. And and yes, a big pervasive question is is well, how much should I be putting away and what should I put this money in? But then to your point, Mike, it's like, yeah, but that's those are all steps towards something. What are you doing it all for? What's the why? Right? And so to be able to talk with somebody about, okay, well, look, uh, you know, we're thinking of doing a remodel. Like, how much can we realistically afford to spend on it right now? Should we be doing that given our current, you know, income situation? Uh, I want to help my kid out. Uh, or, you know, my parents need some help. Uh, I'd like to give X, but is that wise? you know, how how much do I have to to to be generous this year? That type of stuff. I just kind of all the basic blocking and tackling of how to use money to enrich your life going forward. You're you're nodding as I'm saying all this, Mike, but but this is sort of what you guys do a lot of beyond just the okay, here's what I'm going to put the next check you gave me towards in your portfolio. >> Yeah. And I don't want to overstep our importance. I mean, it's not like we're um you know, gurus or anything. There's a lot of people that are better at psychology than we are. But in this unique niche, this space where it comes to fear of money or not having enough or not being able to let go of that anxiety, we are uniquely positioned to help. And that's what feels good about this job a lot of times and we can do that. >> All right. Great. Well, this is one of the great things about the um the consultations which I'll mention in just a second, but you know, if folks have some questions that that they're really wrestling with right now, even if they're not clients of yours, they can call and have a conversation about it. John, anything else you want to add to Mike's answer before we wrap this up? >> No, I think Mike really hit the nail on the head. We We have all kinds of, you know, nuts and bolts we walk through. In fact, we're getting ready to send out a year-end uh checklist email to our clients. All the kinds of, you know, nitty-gritty things we can and should be covering with them. But it really gets back to what what Mike just talked about. It's about, you know, filling those uh voids of fear and and stress and clients out uh lives and minds with with, you know, some just open discussion as it relates to their situation. >> All right. Okay, folks. Well, um first off, if you enjoyed having Peter Sange on the program, would like to see him come back on, please let us know that by hitting the like button, then clicking on the subscribe button below, as well as that little bell icon right next to it. um if you would like to get some help from a good professional financial advisor in terms of you know whether it's um ways to invest that maybe might take advantage of some of the opportunities or challenges that Peter mentioned um or whether it's more the nuts and bolts of what I was just talking about with John and Mike here about just like hey I've got some big questions in my life about what to do with my money uh and you'd like to get some professional um advice uh about that um then if you don't already have a good adviser who's playing that role for you, consider talking to one of the financial adviserss that Thoughtful Money endorses. These are the firms you see with me in this channel week in and week out. Perhaps you'd like to talk to even John and Mike themselves there at New Harbor. So, to set up one of those discussions, just fill out the very short form at thoughtfulmoney.com. Only takes you a couple seconds to fill out the form. These discussions are totally free. Uh there's no commitments uh expected or involved. Uh it's just a service these firms offer to help as many people as they can. John and Mike. Um, great discussion this time around. Um, looks like the next week will be an important one, uh, in terms of whether we're back to risk off on or whether things fall more into risk off. Um, but no matter what happens next week, look forward to making sense of it with you guys. And I really wish both of you the absolute best of Thanksgivings next week with your families. >> Oh, thanks so much, Adam. Always great to be with you and uh to you as well and of course to all your viewers. Uh, it's a great time of year to be thankful for so much we all have in our lives, even if we forget it sometimes. >> Thanks for watching everybody. We really appreciate it. And thank you, Adam, for the opportunity to be here every week. We'll see you next week. >> All right. Thanks so much, Mike and John. Everybody else, thanks so much for watching.
The Investor's Dilemma: Ride The Bubble Or Seek Safety? | Peter St Onge
Summary
Transcript
zooming out. So, you go to war with the army you have and you know, do we live in a in a Ponzi financial system where everything is, you know, gamed and jked and full of predators preying on the the guys who don't have insider information? Yes, all of that is absolutely true. However, this is the world we live in and so you make the best of it. So, you know, I would without a doubt prefer that we just uh get rid of the Fed tomorrow. markets would crash, the financial system would completely implode because it's, you know, 10 to1 21 leverage. Good riddance should have happened in 2008. Uh but having said the odds of that happening the next year are very low. And so in the meantime, I play the AI bubble and I hedge with with gold and bitcoin. Welcome to thoughtful money. I'm its founder and your host, Adam Tagert. Suddenly, signs of systemic stress are cropping up all around us. In the public debt markets, credit spreads are on the rise after years of dormcancy. In the private credit markets, defaults and counterparty risk concerns have moved to the forefront. Volatility has returned to the stock market as doubts of AI spending sustainability mount. And worldwide, suspicions of fiat currency debasement are going mainstream. So, where is all this headed? to discuss. We're fortunate to welcome macro, market, and monetary analyst Peter St. An to the program. Peter, thanks so much for joining us today. >> Thank you for having me on, Adam. >> Hey, Peter. So, um, we got to meet in person the other week at the New Orleans Investment Conference and, um, you were on, I think, a number of panels there. Um, but I I I definitely got to sit and watch you on one. Um, was very impressed with how you handled yourself and we got to talking in the green room and said, "Hey, let's get you on Thoughtful Money." So, thank you for making this happen so quickly. >> Yeah, thank you for getting me on. I've been interested in coming on for a long time. I've been following the show for a long time and love, uh, you know, the way you approach things and break them down. So, yeah, excited. >> Oh, all right. Well, thanks. All right. Well, look, then why don't we just roll up our sleeves and get into it. So, um, would like to talk to you kind of about all the themes that I just mentioned there in the intro. But before we get specific, um, since it's your first time on the channel, let me hit you with my general starter question, which is, what's your current assessment of the economy and financial markets? >> So, it's always scary to give a big picture because you are implicitly valuing things, right? You're implicitly predicting, let's say, that stocks will go up or something like that. So it it you know I think this is why a lot of commentators sort of try to dodge the point and they try to stick with the small things so that they never have to describe the entire elephant. But having said I am broadly optimistic about the economy. I think we're in midcycle. I do not think we're in late cycle. Uh the liquidity indicators the M2 GDP uh is on fire. just you know when you look at the macro it's popular I think for a lot of commenters to sort of say that the sky is always falling but if you look at the big numbers I think right now we're actually in a pretty good spot near-term so talking the next two or four years now of course longterm we're a complete disaster we're train going off a cliff because of the fiscal collapse but I think near-term we're doing pretty well and I think the biggest stories on that uh are really three things so one of them is that the Fed is no longer afraid of inflation the way they were after the Biden inflation they created. So they're, you know, cutting, they just ended QT, or rather that's going to end in 12 days from now. Uh so that's going to be a burst of relative liquidity uh coming to the market. Number two is one of Trump's negotiating goals uh in his trade deals has been to bring foreign investment into the country. Mhm. >> And you know he he talks numbers like 78 trillion. Uh who knows if it'll get that big but you know if you look country by country. So like Japan is supposed to put a trillion in. Europe is supposed to like I think a trillion and a half. Every country is supposed to put these huge numbers in. >> Saudi Arabia just just yesterday upped it to a trillion. Yeah. >> Yeah. Exactly. Right. You add those up and they're they're they're really enormous numbers. So to put that in perspective, in a normal year, all of the investment in the entire economy, and keep in mind, the US is one quarter of world GDP, right? And all of the investment in a typical year is about 4 trillion. So if you're literally doubling that over the next, you know, coming year or two, that is just a tremendous amount uh of investment coming in. And a lot of that, you know, some of it they're putting it into American energy uh assets that are, you know, relatively uh cheap. uh a lot of it is coming in for import substitutions. So, you know, this is very similar to what happened in the 1980s where Japanese uh car companies, they were threatened by Reagan's trade sanctions and so they moved production to the US and so now Honda is one of the most American cars. I think like Honda content is literally higher than it is for for GM. So, anyway, we're seeing something like that where you have, you know, companies like Taiwan Semiconductor. Uh you have these companies that are coming in building factories here. So that production is happening in the US. So that's under the tariff umbrella. Uh so when you put those you put the Fed together with the investment and then on top of that you have this just tremendous growth in AI, you know? So AI capabilities are growing something like 10x per year, right? And that's that's a shocking scale, right? If you look back to the the computer revolution, the internet revolution, you were talking something like one and a half times per year. That was Moore's law. AI capabilities are going up 10x. And you know, Elon's floating uh AGI, artificial general intelligence. Uh he's, you know, pushing very hard on Tesla now for robots. That was part of his big pay package uh the other week where I think he got a he gets a $1 trillion payday uh if he hits all these goals. But some of those goals goals involved mass market of robots. Of course, those robots have AI brains. So they can they can do brain surgery. They can fix the stuff in your house. They can fold your laundry. They can walk your dog. So when you put these together, right, you put the technology, the Fed, and this tsunami of investment coming to the US, I think we've got a very, very good growth story over the next couple of years. Now, the concern is that every single one, well, most of those things also make inflation go up, right? So that is the big question. And of course, if inflation starts taking off again, then the Fed is at this point probably going to be uh on a hair trigger. And so, you know, broadly speaking, every point that rates are hiked costs about a million jobs. Every trillion of investment creates about a trillion uh about 1 million jobs. So, I think that, you know, if inflation starts coming back later this year or uh sometime in 2026, then we could sort of see a tugof-war between those two factors. But at the moment, GDP is growing at 4%. A lot of the apparent job weakness that the mainstream media loves, a lot of that is deportations or federal layoffs, both of which are spectacular for the country in terms of wealth, even though they might show up as, you know, lower GDP or jobs. So, I think we're actually in a pretty good spot. >> Okay. Um, so that's the economy and I do want to I do want to scratch at some of those things. Um, how about the markets? >> Yeah, markets are catastrophic. for the past two weeks. I think it was the first day of the New Orleans Investment Conference that they collapsed. Up until then, they had had a an amazing year. I think the S&P was up 18% or something uh in the first what 10 months of the year. I think what's happened over the past couple of weeks is mainly that the government shutdown uh and job slowing had markets expecting that there was a Fed put that the Fed would jump in, they would parachute in and spray trillions of dollars and everything that moved. Uh I think that that's really what was kind of boosting markets during the shutdown because it was strange, right? Like we saw markets go up almost immediately when the shutdown began. And whatever you feel about the federal government, you know, I think it should be 10 times smaller. Uh but that's kind of a strange movement from financial markets. Normally financial markets don't like anything interesting to happen. They just want they just want boring. They don't want any headlines. Uh and that was a pretty big headline. And I think that specifically what was happening was that markets internalize expectations that the Fed would would jump in and as always overshoot any kind of crisis. They would overliquidate. And once the um government reopened, well, first you had uh POW saying that you know the rate cuts in December were not a foregone conclusion. That started hitting uh liquidity expectations and then once the government actually reopened it confirmed it. uh and you know since then the Fed has turned fairly uh bearish uh talking the the expectations for rate cuts I think are coming down and certainly there's no more expectations of some kind of emergency pump uh going in unless the federal government manages to discover a new crisis. So I think that that's the main thing and the evidence for that is that everything went down right bitcoin went down AI went down broad market went down gold went down right so that to me suggests that it's liquidity driven uh this is not cycle driven now since then one by one those different sectors are starting to pop back up so yesterday we had really good movements in silver and gold uh the past I think two out of the past three days AI have been strong uh so I think that you people are sort of sorting through all the dead corpses and seeing which ones uh are still alive. Um so you know that's starting to come back but that that initial movement where everything went down I think suggests that this was more about the Fed. >> Okay. All right. Um so uh state of the markets though. So um going forward from here do you feel they're fairly valued? Do you have overvaluation concerns which are general? >> Yeah, there right if you look in historical context they're clearly overvalued. I think there's no question that we're in a bubble uh in um certain assets specifically AI. AI is just completely dominated. Um you and I were both around in the do era and AI I think is is substantially more uh hyped even the com. And you know, one of the things I mentioned at the New Orleans conference was that the trick is it's one thing to say it's a bubble, but bubbles last a long time. Like the average bubble lasts about 5 or 6 years, and they don't tend to end until liquidity cuts off. They do not end on valuation. There is no uh correlation between the length of a bubble and how high it gets. And so the question at this point is, are we in an AI bubble? I think absolutely. If you look at AI valuations compared to the rest of the market, if you look at it versus historical, you know, comparable technologies of which, you know, we've had 500 years of stock markets digesting new technologies. You had diving bells in the 1600s and these were really exciting because we would we would rediscover all the shipwrecks through the ages and this would Okay, so I mean, you know, bubbles are a very very old thing. Uh we've had thousands and thousands of them and you know, there's a pattern to them. uh they don't pop from size, they pump from broader uh market conditions. So until we see that, I think that the most likely well at any rate, the the question is is the AI bubble, you know, is it going to pop today? Is it going to double again and then pop? Is it going to go up 8x and pop? Well, if it goes up 8x and pops, then it's going to end up at a value substantially higher than today, right? So if you look back at do for example, people were complaining about Amazon being a bubble. So I first bought Yahoo in 1996 and everybody told me it was, you know, I was a complete idiot. Obviously the internet was a bubble. That was 1996, right? And then Yahoo went up whatever 150 times. Did it fall? Yes, it fell to like 50 times, right? But that is fundamentally the question. Uh I broadly speaking, when I see something like when I first hear something as a bubble, I want to buy it. that just in instinctively I want to buy it. I'm not a contrarian. I want to be in it. And then the question is at that point then you've got to watch the broader liquidity, the broader macro indicators because that's what's going to do the bubble in. It has nothing to do with the companies itself. You know, if Nvidia went up uh you know double from here, uh I don't think it would raise the likelihood of AI being a bubble. Uh it's the it's the broader liquidity. >> Okay. Um well, we'll talk about liquidity in just a little bit here. So, let me let me make sure I heard you right and then ask a few questions. Um, so seems like you're relatively sanguin on the economy in in the near to midterm. Near to midterm being next two to four years, I think you mentioned. Um, and you've got, I think, you said it's a disaster in the long term and I'm sure that has to do with our debt levels and a whole bunch of other things we can get into if you like. Um, from a market standpoint, I don't know. I'm going to I'm going to put you I guess as a question mark, which is, hey, we're we're in a bubble. We just don't know where we are in it at this point. And so until we start seeing until and unless we start seeing signs that the the bubble is really starting to implode upon itself, >> it's probably game on in the near term. >> Um, fair? >> Yep. Yep. Absolutely. And you know, given given the Fed ending QT, uh given all that flood of foreign investment coming in, I mean, everything points to to liquidity being very strong in 2026. So that argues for the bubble to keep going. >> Okay. Um and so let me ask this question. you've kind of already answered it a bit, but uh I've asked it a lot and um recently and I think you know seems like we're we're thinking somewhat similarly which is regardless of what you think of of President Trump and the new administration um it has implement it has pursued an aggress it has aggressively pursued a set of economic policies designed to goose the economy goose economic growth and that's everything from the provisions in the one big beautiful bill to the deregulation to the uh bringing foreign investment uh into the country and all the things that you mentioned. Um so one of the questions that I've been asking is is when do you expect those to start providing tailwinds to the US economy? They take a while to you know >> to actually build up momentum so that you can actually see the impact of them. Sounds like you think we'll be seeing those tailwinds in 2026, probably increasingly as the year goes on. True. >> Yeah. Yep. Uh yeah, I think that's accurate. Uh a lot of it, you know, so foreign investment, for example, if it's really 8 trillion, that's going to take a really really long time to digest. Uh you know, you have to negotiate the terms, you have to find the site, you have to do the blueprints, you got to do the construction, you got the permits, you got environmentalists all over the place. Uh so you know a lot of those a lot of the investment probably is not really going to kick in until maybe even after his term is over. Uh but I think that a lot of these things you know Fed cuts tend to have a lag of about 12 to 18 months. Uh it hasn't really cut substantially uh yet. But at any rate some of the previous cuts uh should start coming in. Uh and you know the foreign investment the deregulatory I think has not been as exciting as most of us hoped. But I think you know if you sort of stand out uh to get perspective the so the federal government has been a crap show for a very long time and somehow the economy keeps growing right point being that you don't need the government to be perfect you just need to be not as bad as it used to be and if that's the case right if you can just if you can either get rid of some regulation or uh if you can just slow the pace of new regulation then you can see that start to reflect in uh in job creation. So, you know, regulation compared to what we hoped for is not very impressive so far. Uh, regulation compared to what was happening a year or two ago, I think, is a huge difference. And so, you know, we should start to see green shoots come in there, I think, during 2026. Uh, the question for Trump, well, really the question for Washington is that the the sort of biggest game for them right now is what happens in the midterms, right? So, whoever wins the midterm elections, if Republicans win it, then we're more or less going to keep going like we are, uh, possibly with a bigger lead so that, you know, they're not held hostage as much special interests. Uh, if Democrats win it, then more or less Trump grinds to a halt. At that point, all he's got left is executive orders. Uh, so, you know, that's kind of the big question is, is that growth going to kick in in time uh to swing the midterms? And then if the midterms don't swing or rather if Democrats end up winning the midterms uh you know does that change expectations for economic growth and regulation for the following two years that sort of thing is going to be start that will start uh to be reflected in markets starting in you know June whenever markets start to get confident about predicting the outcome for the midterms. Current on the midterms I think it's about 75% Democrats winning. Uh that's because historically for the past 125 years the out party wins 90% of the time. So that's not particularly surprising. Uh but that also means that markets have probably internalized that already. Uh so if if you know growth comes earlier, uh if there's some nice surprises on inflation, uh if he can keep it um under wraps, if some of these affordability things that Trump is pushing actually get through, uh then that could actually boost markets that already expect the Democrat win next year. >> Okay. The 75% um expectation Democrats win, is that uh that they take the House? Um >> the House. >> Okay. So it would be a divided Congress, not necessarily a fully Democratic Congress. >> Yeah. Odds on the Senate are roughly 75% the other direction. So the Republicans almost certainly hold on to them. And that's because the number of seats in play, a very small number of seats in play. And >> there's a lot more uh red states with Democrat senators than there are blue states with Republican senators. Um, and so the uh, you know, these things sort of even out over time and Democrats or Republicans have a three- seat advantage. So, it's very unlikely that they lose the Senate, but if you lose the House, then you can't start new, you know, bills. No, it's and I think it's pretty clear that one of the reasons why the Trump administration had their sort of flood the zone strategy coming high out of the gates was because look, we're not sure we're going to get the midterms in our favor and so let's get as much of this stuff out beforehand. >> Yep. Exactly. >> Yeah. Okay. So, um All right. So, so you again if I'm taking good notes, you believe that um we'll see tailwinds to the economy from all these ad administration policies kind of increase as we go into 2026. Um you also referenced the the um you know remarkable acceleration in um rolling out of of new capabilities for AI. Um, you know, one of the really big question marks for AI right now is, okay, we're spending all of this money, right? Y >> and um I mean I I one man's opinion but I think everyone's sort of looking at this like the dot era like hey we we believe this will be a real deal like.com was now the big question is just over what timeline is this new prosperity this incremental prosperity going to be realized right and we are not we are not seeing a ton of um short-term results where people are saying hey we spent a lot on AI and man look what happened to our incremental profit profitability or look at what happened to our incremental revenues, right? Um do you believe we will start seeing that across 2026? Is that why you mentioned that there? >> I'm not sure about that. Um you know this is some something that we faced precisely during as well where early on if you you know you can go back and look at news articles from the mid90s and they were just uniformly skeptical about the internet. Uh they were saying, you know, CEOs are just doing this because it's the fashionable thing. You got to have a website. Everybody's losing money on the internet. >> Brochure wear. Yeah. Remember that? >> Yeah. Exactly. Yeah. Uh customers don't want to buy on the internet because they can't see you. They can't trust you. I mean, you know, and I suspect if you went back and tallied up the early internet projects, I think Microsoft what they found that something like 5% of AI projects pay off or something. I suspect early internet is probably the same deal. uh you know and also the buildout was very similar right you had this circular financing uh where companies would lend each other the money to buy their products uh I worked for a telecoms company way back then and we did that uh >> lots of vendor financing lots of sketchy vendor financing in that sector >> absolutely yep yeah so I think that on a lot of metrics AI looks I mean it's really kind of a repeat of dot um the question is where are we in it right so if you time.com from let's say the Netscape IPO which I think was 1994 and then if you time AI from chat GPT coming out which was late 22 then you know by that logic we're what in like late 1997 so we got another 1998 1999 to go which you'll recall were exciting times if you own.com stocks so that's the question uh maybe it's accelerated this time you know or maybe there are other elements uh happening in the macro economy where it's going to go faster are slower, but fundamentally I think that the the internet and the AI story are almost identical. The question is just where are we in that story? >> Okay. Yeah. So obviously that's the gazillion dollar question here is what what inning are we are here in this race and it's unknowable, right? I mean that's what happens with bubbles if indeed we are in one. Um all right. So let me let me let me ask you this. So, so um uh I I get your logic for why you think the economy, you know, could continue to improve from here for the next couple years. Um let's let's start with AI for a second. Um the there are a lot of um it's been interesting how quickly recently concerns about AI have been multiplying, the the AI trade, if you will. um you know, are are these companies too overvalued? Um what's going on with these circular financing deals? We had the Michael Bur um uh you know, raising the the the concerns of um hey, there there's some really sketchy accounting practices going on here with how they account for the depreciation of their their chips and stuff like that. Um so all of a sudden you're getting, you know, a lot more people kind of trying to poke holes and saying, I I'm not really sure what's going on here. um the the day we're talking, the world is waiting with baited breath to hear the Nvidia uh outcome. And to be honest, I I made this comment earlier today. I don't I can't really think of a time where the where the entire like market future has hung on a single co company the way that it might be doing right now with Nvidia. Um, and you you don't have to agree with that that comment, but where I'm going with this is is um let's say let's just assume for a moment that the correction in the AI stock complex happens in the near future, next quarter or two, right? Can we survive that without having such a tremendous negative wealth effect that the economy can the economy actually avoid going into a pronounced slowdown if not a recession? Um, and I know when you said, "Look, you know, the economy could do well for the next four years." I I know you didn't mean it's just going to do better every single day and there'll be no wiggles along the way, but, you know, if we do, if the bloom does come off the AI stock rose, um, can we avoid a really material um, economic shock wave from that? >> Yeah. So, the comparable to that would be the 2001 recession. And we actually I guess we had three things that happened at the same time and so it's hard to disentangle those. One of them was the dotcom crash. Uh the other one was the Enron and Worldcon scandals. Y >> and you know so that's had an impact on uh on risk and on valuations. And of course we had 911. And so all of those more or less hit around the same time. Uh even so 2001 was a fairly shallow recession in the grand scheme. It was nowhere near 2008. right? >> It was closer to 1991. And so if if we just have an AI implosion and nothing else uh and but then if in the meantime you know all these investments are flowing in then if you know we will get an outcome where either it's I think a very mild recession or uh it could actually bump off just reduce growth. You might have a couple quarters where you have growth at half a percent or 1%. uh basically European levels. Uh but you know we might actually avoid a recession on that. Now there is an outside factor has nothing to do with any of these uh which is that you know we have sort of some external factors that are going into reducing GDP growth. Anyway, I mentioned earlier the deportations and the um cuts to federal spending cuts to federal workers anyway. federal spending is it's much reduced in its growth rate versus Biden, but of course, federal spending never ever goes down. Uh but anyway, those those reductions reduce the apparent GDP growth rate. I would argue that they're kind of fake in the sense that, you know, when people say GDP goes down, they're thinking that's a bad thing because we're poorer, but those two things actually make us richer. Uh but any rate so you know if taking it in the >> in the spirit of the question which is that if AI were to implode would we start getting poorer? Uh I think that's 50/50. Uh but taking in the sort of technical question would we enter a technical recession where GDP was negative for two quarters? I think that's much more likely but a lot of is simply the deportations and laying off federal workers when you deport somebody. So the example I like to use is uh let's say that you annexed Canada tomorrow. Trump's dream comes true. So Canada has something like 25 million workers. Now if you annexed Canada, if you brandished your military and said you are now a state, you would not have 25 million extra workers standing in line at a soup kitchen. Okay? Everybody in Canada already has a job. They already do stuff for each other. Similarly, when you bring a migrant into the country, you don't have an extra worker, right? Because they create as much labor demand as as as labor supply they bring, right? So, in other words, they come to the country, they work, and then they go to the dentist, they go to McDonald's, they rent a house, you know, they get a haircut, okay? They consume services, and the vast majority of what they earn is spent domestically. It's not sent back to Guatemala. So the point being that when you are exporting workers or what I think it's about 2 million so far that have left when you're sending those people out that shows up as reduced GDP. It also shows up as fewer jobs. You have 2 million fewer people getting haircuts or going to Kentucky Fried Chicken, right? So this is going to ripple across the economy. It's going to make GDP uh uh appear smaller. Well, it will actually be smaller be fewer people in the country. It's the reverse. It's it's it's less consumption in a 70% consumption-driven economy. Yeah. >> Bingo. Exactly. Right. So you you know that's kind of the trick here is that are we talking about a technical recession where we have two quarters of negative growth like we had in what 2023 uh or are we talking you know sort of the spirit of it where the people are poor uh you know people are desperate unemployment goes to 7% people are standing in soup kitchens that I think is much less likely if all we get is an AI implosion and the reason being that flood of foreign investment uh would compensate for it. Now, if the Supreme Court decides that the tariffs are illegal, you know, Trump's probably going to try to do it in other ways, but that could then endanger that alleged $8 trillion of foreign investment. And at that point, yes, we the ro odds would dramatically rise um that an AI implosion would take the rest of economy into a recession, which would I think be on a scale of 2001, not 2008. >> Okay. All right. Appreciate that answer. And um you know, I'm not making the argument necessarily it's going to happen in the next quarter or two. Wouldn't shock me if it did by any stretch, but point is is it's just unknowable, right? Um all right. And so the um again trying to see through your lens here, economy doing, you know, pretty well and and in and prospects to get better. Um, we have this term, the K-shaped economy, which I'm sure you're familiar with. Um, when you say the economy is doing pretty well. Um, you know, out of, you know, 10 people, you'd probably get two or three agreeing with you and, you know, seven or eight disagreeing with you right now. Um, because it's that top half of the K that's doing great. Um, especially those that own the assets. Um, and it's a lot of the bottom half of the K that is increasingly struggling here. Um, do you expect the the the prospects of the bottom half of the K to get better as you know the developments that you're expecting uh roll out and uh presumably you all this new investment creates new jobs? Um, you know, maybe maybe it's a different type of job than than had been you know we've been a very service driven economy. we we've outsourced our manufacturing. Presumably these this capital coming in is going to help you know increase the shared manufacturing jobs. Um so are you are you sanguin as well for the the shape of the economy going forward or do you think it's becoming more of a economy of halves versus the haveotss? >> Yeah. Well, I think you're absolutely right. Um it's pretty much three economies, right? You've got whatever 20% at the top, let's call it a quarter who are doing fantastic. The Fed's been pumping their bags for 50 years. Uh you've got 25% at the bottom who are miserable and are barely holding on and you got the half in the middle who are squeezed. What's interesting is that since co the top uh the percent of consumption uh from the top I think it's 20% of Americans went from 45% to 49%. So in other words, the middle class lost about five points there. the percent of consumption by the bottom 20% also increased. So the bottom gained about 2%. And the reason is because there was this orgy of welfare benefits that were pushed out the door during COVID. They they greenstamped everything. Uh SNAP benefits for example since CO they went up 70%. The number of poor people in America did not go up by 70%. It did not double in 5 years. So the middle class has been nibbled really by by both sides. Having said I think you know if we look at what I think are the three big economic stories of the coming year all of them relatively benefit uh bluecollars uh lower income. Now that's not to say you know the rich will keep getting richer because you've got a Fed right like you know when we were talking about what's happening with the economy right now. So the Fed dominates everything and the Fed makes sure that no rich guy goes home hungry. Uh so you know it's entirely possible that all those trends will continue getting worse, but I think that they'll get worse at a slower pace than they have in the past. And the reason is that Trump's policies broadly speaking are aimed at blue collars. The tariffs are not trying to help white collars, right? Those are they're punishing white collars is almost the intention. Uh they're trying to bring back manufacturing jobs for blueco collars. Deportations, same deal, right? Deportations actually hurt rich people who can't get cheap nannies and lawnmowers. They are fantastic if you're if you're low income. So, you know, you're living out in Nebraska. Uh you don't work at the meat packing factory because it pays $8 an hour and it's backbreaking. But if it's paying $23 an hour, now you do. Uh and then the final one is is AI where I think that maybe one of the surprises of AI has been that it appears to be hitting white collar jobs. So relatively routine white collar jobs is not hitting blue collar jobs. Now there there may come a time when robots uh you know bring that uh job change to blue collars but first of all that's going to be delayed right uh robots are a relatively slow you know probably seven or 10 years delayed. Secondly, robots will never replace jobs the way that AI will because AI is software, meaning that the incremental unit is free. They'll charge money for it, but it's free to produce. It's like a Google search, >> right? Whereas a robot, it's going to be a long time uh before robots are free. And so the the job replacement uh I think is going to be overwhelmingly among uh white collars. The most of the you know human wants are unlimited. So an exact equal amount of jobs uh will will flow in. It'll take time. There'll be you know pain in between. Uh but ultimately those those AI or those uh those white collar office jobs will become service jobs where you know relatively poor people uh will enjoy services at a pace that rich people do today. So they'll hire nannies. Uh, I mean even today like you know if you look back a hundred years and and you told people that the poorest people in America get their nails done, get hair extensions, that's crazy, right? Poor people can't afford that. And yet here we are. Uh so you know that'll all take time. But fundamentally all three of those factors uh the deportations, the foreign investment coming in and the AI, all of those hit white collars harder than blue collars. Which I think is interesting. There was this uh fun study uh from I think 1991 and it looked at the Finnish civil war. So this was around 1918 when the Bolsheviks were taking over Russia and a couple of um Finnish uh professors did a study where they looked at the the class of Finnish students compared to their fathers. And what they found is that anybody born rich who was now lower status, those were the communists. Okay? Anybody born poor or rich who was still either rich or had become successful. Okay, those people were all the conservatives. Point being that the the sort of nucleus of the revolution of the you know Manny push in the Democrat party and so on. These are very specifically the kind of people we're talking here, which are these white collars who had $80,000 jobs doing some kind of office work or, you know, some some skilled labor that is now replaced by AI and now, you know, they got to go be a wait a waitress or something. Those people will get angry. So, I think that these these protests we're seeing, the anti-Trump, the a lot of this stuff fundamentally is um sort of anxiety about losing their status. And I think that that will absolutely continue. So, I think relative to the past 5 or 10 years, I think the next 5 or 10 years are going to be relatively good for blue collars, going be very bad for white collars, and that's going to create a lot of white collar angst. >> All right. Um, I'm trying to resist digging further down on that with you, but um, let me put it aside just for one second here. So, um, so you know, something that you think is is a key part of the equation here that's going to keep things stable and, uh, you know, keep things supported is liquidity. Um, we are going to have a new Fed chair uh in the not too distant future here. Um, what do you expect of liquidity under, you know, a new Trump replacement of Pal? Now, again, it's ironic that Trump is so frustrated with Pal because Trump's the one who put Pal in the chair in the first place, but do you think that we're going to get somebody who's going to be a lot more dovish and a lot more quick to let the spigots to open the spigots going forward? Yeah, it's tricky because when they're auditioning for the job, you know, given that Trump has been pretty forthright about his preferences, you know, they all claim to be extremely uh easy money Fed shares and you never actually know until you put them in there that that was the case with um with PAL, for example. So, but still taking them at their word, looking at their past statements, uh the front runners have generally been uh relatively hard money guys, but they've also been extremely loyal to Trump uh even before, you know, there was a horse race going on for the Fed. Uh so, it's it's 50/50 whether they're going to be as uh easy as Trump hopes or if he'll turn on them and then call them low IQ uh like he does pow. Um but yeah, so I mean, you know, either way, I think that if you look at the trajectory that the Fed's on now, constitutionally, the Fed wants easy money. It always wants easy money. Uh that's why central banks are created. Uh the only reason why it's been relatively tight is because the Biden inflation was such a spectacular face plant by the Fed that, you know, it it was bad enough that it threatens their independence, right? That's the kind of thing that gets congressional hearings going and gets Congress to agree with presidents. So, they had to keep their nose clean. It kind of scared them straight. Uh but the memory is now fading. Inflation for the past year has been around 2 and a half%. Uh at that point, the people they're not angry enough to get congressional hearings since the Fed reverts to its natural form, which is inflationary. So whether or not the new guy, you know, if the new guy is is has drunk the sort of Trump Kool-Aid and is truly easy money, if he tries to jack um rates down, if he tries to do QE, that I think is going to be absolutely spectacular for markets, uh which will then crash afterwards. Uh if on the other hand the guy comes in he's more or less pow I still think that's positive for markets because the Fed is trying to ease uh because sort of as the headlines recede in the distance from Biden inflation. >> Okay. So you know the Fed has certainly been you know uh an interventionary force and usually uh way more often than not in the side of easing than tightening. Um but to your point, they they've been constrained um due to inflation over the past couple of years. Um and while they're, you know, they're becoming more doubbish, um there there's still a lot more they could be doing >> relative to what they did historically and they're doing now. And and what really seemed to carry the torch in the US, but a lot of other countries, too, but certainly in the US has been the fiscal spending, right? it just went ballistic during co and has not really moderated much. Um now with the with the big beautiful bill the promise there was okay look um we're going to spend a lot at the beginning of the big beautiful bill but then we're going to get all this discipline and these benefits down the road. Uh where do you see fiscal discipline sorry fiscal spending going? you know, will will will we actually bring it down as a percentage of GDP or is this all just, you know, the the sweet songs that that politicians promise but never deliver? >> Yeah, I think it's going to keep going uh keep getting worse. Uh you know, there's no sort of natural predator for spending in Washington. Uh there's no balanced budget amendment. There's no gold standard. there's there's no real consequence in the near term. And you know, elections happen on on two-year cycles. There's very few politicians in Washington who are thinking 10 years out, essentially nobody. Uh so if it's not happening in the next 10 years, then it doesn't exist. And then meanwhile, of course, the benefits of increasing spending are massive. All of your donors like it, your voters like it, everybody likes it, the markets like it, you get the benefits to the politician in the immediate term are are massive. >> That's exactly it. Yeah. >> Right. And then you combine that with there's this great book called Crisis and Leviathon by Bob Higgs uh where he talks about every time that something bad happens the government grows and it never ever goes back. It's a ratchet, right? So, if you look at every war, you know, you had the Civil War, you had World War I, two, the Great Depression, uh, COVID. Every single one of these things expands the government. It does not go back. Generally, you give back like maybe a third. At best, you give back a half. Uh, but we never go back to the old to the old one. And so, my concern is the next we're eventually going to have a recession. You know, we can debate whether it's going to be two two years or six years, but we're going to have one because that's how the Fed structures things. it it it creates business cycles. So unless we're getting rid of the Fed next Tuesday, we will have a recession at some point. My concern is that when you look at what happened during COVID, not only did I mean government just expanded just astoundingly. Uh also in 2008, right, if you compare those two to previous recessions, uh it's gotten a lot faster. The numbers have gotten a lot bigger, many, many more trillions. What specifically scared me during COVID, I was living in Canada at the time and we had the these uh it was basically universal basic income, you know, so all of us got laid off, me included, and instead of getting your uh you know, standard unemployment benefits, you got this uh it's called the the CB. So you got this monthly payment. I think it was 2,000 Canadian. Now, that was very decent amount of money if you're a bluecollar, for example. That was part of the reason why the shutdowns were so popular uh in Canada specifically. But they tried here. The closest we came was the PPP. Uh but the left abs there were other countries where they also pushed UBIS during uh COVID. My concern is that the left that is absolutely what the left wants. Uh they're primed for it uh during CO. They kind of flex their muscles. They pass it in some countries, not in this one. Uh but I think that the left is laser focused on getting a UBI in there because that is the ultimate bread for the circus. That's the vote buying machine. Uh that's really what the entire welfare state is about is buying votes. If you can if you can have a UBI in there, that's, you know, that's vote buying on steroids. Trump, if you look at him with the with the dividends, I'm not sure he would necessarily fight it, uh to be honest. So that that's I think my biggest concern. If we start getting into UBI territory, uh we go from this sort of leisurely decadesl long uh collapse into something that I think goes a lot faster. >> Okay. So, I'm working my way towards monetary debasement. Um, but, uh, let me ask you this, Peter. Um, just asking for your gut opinion here. Is UBI an inevitability? Meaning, at some point, you know, Trump will be out of office. Uh, you know, at some at some point in the future, there will be a a more liberal administration. Seems like from what you've said, you think they would want to get the UBI playbook uh going at some point. Yeah, I think it's about 80% odds and the problem is that once you put in it's very very hard to get rid of. Uh, you know, we we sort of have a UBI called social security and there is zero prospect of getting rid of that. Um, so you know, they only have to get lucky once. Once it's in there, it stays. >> Okay. So 80% of profit, but I love the fact that you're willing to just give me these numbers. >> I'm an economist. >> Yeah. Um, okay. So uh well look um you expect liquidity to remain flush. Uh you expect the fiscal government to really never contain itself contain its spending. Um, and so the, you know, even though we will have some growth, some incremental growth in here, you feel, um, I gota imagine the long-term trend of a lot of this stuff makes you think that the purchasing power of the currency is one of the more easy predictions to make in terms of it >> continuing to get to base going forward. You're nodding as I'm saying this. >> Yeah. And, you know, similar to AI, like the question is what inning are we in? uh and what inning the markets think we're in. >> Right? So if you look at gold since 1970, there have been periods where gold has collapsed in half uh because the government turned out to be not as irresponsible as people expected. Now there was never a period where the dollar was actually you know gaining value on a sustained basis, right? >> Uh but you know there were changes in expectations of um how bad how bad it's going to get and how quickly. So you know without a doubt uh it could slow again. Uh I know again speaking from Canada there was this strange period in the 1990s. Actually here in the US there was as well where we actually had budget uh surpluses where you know Clinton and Gingrich got together and and uh you know made the unicorn sing. Uh but of course that went away very quickly. >> Yeah. For I think it was two years. Uh and then and you know and then Bush needed money for wars and 2001 happened and and it all went away. So, right, there's there's definitely a chance that we could grow fiscal sanity for a minute or two. The key in the 1990s, I think part of it was the.com boom. So, about half of that surplus was just capital gains taxes. The other half was that uh Gingrich and Clinton despised each other. Could not agree on anything. Uh which is beautiful. You know, every time I hear the word bipartisan, uh I fear I reach for my wallet. So, you know, I think it's very very healthy that the two parties hate each other. um they call each other the f-word. Uh I think this is really good for you know kind of the fiscal picture going forward. But having said I mean it's not going to improve. That is to say it might slow a little bit because of that because of dysfunction in Washington. >> Okay. Um well look part of why I ask that question because it seems to be the natural uh progression of of what you've laid out so far in terms of your outlook but also um I know that you um are a contributor to the Mises Institute um and uh that's very much a sound money organization and so um and having read your X feed um uh it seems pretty clear correct me if I'm wrong but it seems pretty clear that them you know while you're you don't you're not calling for an immediate end to the AI bubble you feel the markets are distorted and uh you are seeking potential shelter hedge whatever both market risk and currency risk in assets like gold and bitcoin so am I am I characterizing you correctly >> yeah I mean generally um what I what I personally do is I like to chase the bubbles and then I have a big fat chunk of hedge uh which is generally gold and because I'm addicted to risk uh some Bitcoin thrown in there. Um but right the idea is that you're you're you're sort of covering all the bases. Um, and you know, zooming out. So, you go to war with the army you have and you know, do we live in a in a Ponzi financial system where everything is, you know, gamed and jked and full of predators preying on the the guys who don't have insider information? Yes, all of that is absolutely true. However, this is the world we live in and so you make the best of it. So, you know, I would without a doubt prefer that we just uh get rid of the Fed tomorrow. markets would crash, the financial system would completely implode because it's, you know, 10 to121 leverage. Good ridden should have happened in 2008. Uh but having said, the odds of that happening the next year are very low. And so in the meantime, I play the AI bubble that I hedge with with gold and bitcoin. >> Okay. Um uh so the question I've been leading up to and maybe you just gave your full answer to it, but I'll ask it just in case there's more elements to it. um you know, okay, you've given us your whole outlook here. What investment themes emerge from having this type of outlook? And it sounds like, you know, what you just said is well, hey, look, you know, if there's a trend in play, play it until it doesn't end anymore. >> But, you know, um have some backup uh you know, backups in your portfolio in case the trend reversal catches you by surprise. So, is that pretty much how you're doing it? It's it's play the AI game. Why that's driving everything pretty much in the market and then having these riskoff ass well gold's a riskoff asset. Bitcoin I think people really disagree. >> Right. >> Y put it that way. >> Yeah. Bitcoin's like gold and had a baby and so it's got some elements to it that are related to the basement and then it's got other ones that are definitely uh risk off. Um but yeah, you know, I think follow the trend. Uh often a new better trend comes along, right? So, you know, if you were playing the trend five years ago, then I don't know what was hot 5 years ago. I don't know, uranium was hot for a minute. Uh okay. So, you could play that for a little while, but like you always want to keep an eye out. Is there some better trend to jump onto? Uh there's lots of stuff that's coming after AI. So, robots are going to hit. I think longevity is going to hit probably in the early 2030s. uh typically a you know if it's a real sort of worldchanging technology that's going to dominate the headlines for something like five years. Uh so broadly speaking my plan anyway is ride AI for a while at some time at at some point robots get sexier. Um we also you know we haven't even seen the application insanity in AI yet right so currently we're seeing these ridiculous multiples on the guys who are building the picks and shovels. We haven't even gotten to the stupid, you know, some college kid comes up with, you know, whatever, like a fart joke AI and then it's worth a billion dollars. We haven't hit that stage yet. And this is part of what makes me think that the AI thing is not done yet. You know, makes me think that we're closer to 1997 or 8 in the com boom than we are uh to 2000. But anyway, right. So, sort of trend by trend. In the meantime, watch the macro, watch the liquidity. as the liquidity um risks get higher, then you want to raise your hedge into uh specifically something like gold. Uh I, you know, watch uh simple moving averages uh and you know, when your trigger hits, go to gold, turn off the Bloomberg, relax for a year or two, and then uh see see how low it gets. >> Okay. And I do want to note for folks, I think you might have given passing mention to it, but as I understand your personal history as an investor, um, you really shoved a lot of chips on the table, um, into the dot stocks during the, you know, early to mid innings of the dot boom. Um, so you're you're what you're talking about now here with with the AI stocks is in many ways sort of practicing what you've been preaching, right? >> Yeah. It's consistent with your your previous uh behavior. We'll put it that way. >> It is. Yeah. I've been doing this for 30 years. So, in the dot I wiped out because I said, "Okay, like I got the whole Warren Buffett thing and I was like, you know what? I'm just going to buy and hold it because the internet's real and so I'm I'm just going to not look at it." And I literally moved to an island in Thailand with no internet connection. >> You quote unquote retired early, right? >> Yes, I did. Uh at 25. and uh Thailand seemed like a good place to do it for a variety of reasons. Uh and then and and then I came in and looked at the stocks and they had all fallen like 90%. Which is what made me go back and get the PhD cuz I thought okay well buying a trend is really easy because this is all the newspapers and everybody's complaining about the bubble. The question is when the heck do you get out? >> Mhm. >> And that for me is where the macro comes in. That's where you want to know what's happening to GDP, inflation, what's the Fed doing? Uh what's happening to liquidity? What are the tens and twos? What's high yield? So, all of those things, those are giving you indicators when to get out because getting in is easy. Getting out is the tricky part. >> Okay. I'm curious, um, right now as you're playing this, um, I mean, the AI stocks have done extraordinarily well. >> Um, are you slicing off some gains this time, like realizing some of this stuff on the way up? You're not. Okay. You're you're >> and first I mean I should I always say to people what we're talking about here is not personal financial advice but certainly you're not giving personal financial advice here. You're just explaining what you Peter Sange potential risk junkie uh do. >> I have a tattoo of a bull on my shoulder. I would not advise for everybody to do what I do. Uh I love the risk. Um I love the thriller game. But to answer the question, I'm not taking out anything off the table. And the reason is because when you look at that first week of movement where even gold got shellacked that told me that this is 100% Fed. This has nothing to do uh with fundamentals you know it's got nothing to do with broader uh liquidity. This is simply the removal of a Fed put that got put in there because of the uh government shutdown. So I think it's I think it's transitory. Now having said I could be 100% wrong. There's an old saying the market will do whatever embarrasses the greatest number of people. So, it is it would be absolutely hilarious if this is the end and then everything implodes 30% tomorrow. Uh, and then we can come back on and have a drink about it. But at any rate, uh, but I'm not taking anything off the table for this. I think this is just an itty bitty move and it's it's completely Fed driven. >> Okay. All right. Well, look, as we start to wrap up here, um, it's been very interesting conversation. I'm so glad, like I said, we made this happen. Thanks so much for coming on and being so specific and giving such quick specific answers. When I ask for a probability, you give me a percentage. It's wonderful. Um, is there anything else that is, you know, really burning brightly on your radar right now that you think is germanine to this conversation that I just haven't thought to ask you about yet? >> I think Oh, yeah. I started to talk about it uh when we were talking about the waves. So, you have the AI, the robots, and the next thing after that I think is longevity. And longevity is something that I'm absolutely fascinated about. I think that there's going to be a ton of uh investment going into that. I think that AI is going to be a huge part of that in things like drug discovery. Uh so I I'm that's that's kind of you know when we talk about riding the trend in terms of like what's the next trend over the horizon that's what I'm excited about it. You have to be very careful. You can't play it too early, right? Biotech, you know, it'll go up 1500 texts and then it'll it'll it'll go to zero and they almost all go to zero. So you can't play it too early. Uh but for me that's really the fascinating thing coming over the horizon. >> Okay. And I I was just about to ask so is is the biotech sector sort of primarily where you think you're going to see the the opportunities to take advantage of that? >> That's a fascinating question is whether the opportunities are going to happen in biotech uh or are they going to happen you know with with the picks and axes. Again we also have a funny world where companies don't tend to go public nearly as early as they used to. And so if you're looking in longevity for example, a lot of the really cool projects, they are private. Uh not only they private, they tend to be funded by billionaires. And so they're not even necessarily seeking uh additional capital. So you know, things like Calico, I think Bezos has his. Uh Sam Alman's got his uh you know, it's like in the old days of yacht, now you have a longevity startup. So a lot of these aren't necessarily investable early on. They're investable on a personal level because the net present value of additional years of life is worth far more than your portfolio. But in terms of investment play, that's going to be the question. Does the value go to the sort of biotech analogs? Does it go to, you know, Nvidia? Uh or is this something that's uh just going to be captured um like largely AI was? You know, if you look at at at at the large language models, some of them are embedded in much bigger companies where they were already trillion dollar companies and so it didn't have that much impact. But largely speaking, uh there's no way for a retail investor to play Clawude or Open AI or any of these. >> Yeah. So, let me ask you this then. Um and then we'll wrap up. Um this kind of goes back to the K-shaped economy. And if I heard you right, I think you think, okay, you know what? um the bluecollar folks might might on a relative basis do a little bit better over the next couple years um as these policies designed to help mainstream start kicking in and as AI starts eroding, you know, white collar jobs and stuff like that. >> But at a very high level, right, we have a a system where more and more of the spoils are concentrating in fewer and fewer pockets going forward. And you just gave a really great example, right? And and I I've heard this from from people in private equity where they're like, "Yeah, in the past once you had to raise a certain amount of capital, you could only do that in the public markets." Like, you don't have to now. You can fund a company like SpaceX fully privately, right? And who wants to become a private company if you don't have to with all the regulations and restrictions and liabilities and all that stuff, right? So um it does seem that like you know to your point like the better and better opportunities are being kept away from the masses and you know increasingly those public markets are getting funded by the guys with super deep pockets. So it's not even like a lot of people in the private market. It's just a small number of people with really deep pockets. So how concerned are you just in terms of the trajectory of of uh of society? And I think with your 80% probability we're going to go to UBI, I can't imagine that you're a big fan of that, but correct me if I'm wrong. Do do you bear a weight of concern of where society is headed here? >> Yeah, I mean, so the reason it happened is uh overregulation, right? You had Sarbox in 2001. uh you had a a raft of anti-competitive regulation um in 2008 that basically the banks got their bailouts and in return we gave them protection from uh competition which is pretty perverse. Uh and so that's largely shut out uh retail investors so that a lot of these exciting things, you know, the rich get richer, right? The uh really massive gains to a lot of this stuff um doesn't go to the plebs. Now, that did happen in crypto and I think that's part of the reason why there's this sort of pirate, you know, revolutionary ethos like in Bitcoin. Uh the rich guys did not make the big money in Bitcoin. You know, you look at uh people like Roger Ver, you know, these were these were outsiders. These were people who kind of wanted to smash the system. Uh so you know it is possible. Um it's even possible in crypto. >> Sorry, can I challenge that in crypto just a little bit though? I mean if you look at the ownership of like Bitcoin, >> you know, it's weighted way disproportionately into a few, you know, really big holders, right? And a lot of those are rich people that once Bitcoin started taking off, they said, I should own some of this, right? And so >> yeah, >> it doesn't really seem to have sort of democratized uh you know prosperity. It it just seems to be yet another market that is >> largely lopsided now to the the deep pocketed. Yes, some some regular people made some money along there, but just like people like you made money early in the dot who weren't rich, but at the end of the day, you know, it's not like it changed the prospects for society. >> Oh yeah, for sure. I mean, you know, Bitcoin is much more democratic than say OpenAI shares. Uh, but right, without a doubt, there were a lot of smart guys who got in later. So, you know, depending where we take the snapshot, like we take the snapshot at 2015, they're almost all ancap, you know, revolutionary. >> Absolutely. >> Y exactly. And and you know, when you fast forward to today, you know, they're uh what I think was it Novagrats who bought all the seized Bitcoin. So, you know, rich guys who came in uh along the way have have um have gotten a big share of it. Uh but still, you know, Bitcoin or crypto in general is sort of an archetypal market where you you're not shutting out the plebs. Anybody could play it uh from day one. And it would be great if regular financial markets got like that as well. Uh that would require, you know, more or less getting rid of the SEC, just going back to a fraudon, uh sort of the pre-regulatory rule where you could do whatever you wanted, but if you actually defrauded somebody, then you would be liable for that. uh that's not in the cards unless you know unless the government collapses and they only have money to pay the army that's not going to happen anytime soon. And so unfortunately I think that it's going to continue where a lot of the proceeds of these exciting market or new technologies are going to go to the rich on investment sense. But you can also sort of step back and ask for example. So if you think of the ways that the internet makes your life better, right? So almost everybody spends almost all of their waking hours in some form or another on the internet uh deriving all kinds of utility and benefit and happiness. And the percent of that that was actually captured by investors might be 1%. You know, uh, and I mean this is true across technologies, right? So, you know, if if you're able to, let's say your doctor has you on six prescription drugs and then you can go to chat GPT and you can say, "Hey, does this make sense?" And then they can say, "Well, what are your symptoms?" And then you can drop that, you realize that your doctor's an idiot. Well, that's enormously valuable, but that is not captured by anybody. is it's a very small amount of it actually captured by chat GPT. So point being that yes in terms of you know the rich getting richer uh you know the fact that plebs are shut out of financial markets I think absolutely makes that worse. However, I think that is swamped by a factor of 50 by the fact that new technologies in and to themselves are democratizing because the greedy capitalists come out with Google and they want to sell it to everybody. And the way to sell it to everybody is to make it free and then figure out some way to make money on the back end. The end result is that they're trying hard to make all this stuff, whether it's robots or AI, they're trying to make it as close to free as possible because they're greedy because they want to make a little bit on free. But the end result is that the benefit for regular people, I think over the next, you know, five or 10 years is going to be absolutely astronomical. It's going to be very, very good. >> Okay. And and look, I'm not trying to um, you know, be a doomer here. Um, looking at the long trend, it's sort of like your thing about hair extensions and and fake nails, right, for the the low end of society. Um, yeah, those are those are luxuries that that weren't available in previous generations. Are they ones that really make us better off, right? Or is it is it sort of a modern sort of bread and circuses that just keep us docile and and in this world where more and more, you know, uh concentrate in the rich and we're even at the point where the retail housing market is one where we, you know, record levels of unaffordability. You know, is is the progression here that we just get, you know, kind of a ready player one society, right? We're like we we get more and more things that that superficially distract us from the worries of the immediate moment, but you know, we're a renter nation and all the meaningful work is being done by robots owned by these rich people and we're really kind of just unnecessary eaters that are just uh you know they want to keep distracted. >> Yeah. And that's a much deeper question and I think it's really important people forget that you know when we talk about GDP and per capita income and things like this you know if you look at happiness studies those are a very very small amount of happiness uh if you think you know anybody listening you know the average American has something like four or five careers so there will have been a point where you were poor when you were young there may have been a point where you were poor in between when you think about your happiness it's for me it's it's not that big of a you know, uh if you're poor and you have a goal and you have hope, okay, uh that pretty much does it. Um you don't actually need anything beyond that. The important stuff, the other 80% of happiness, that's things like family, friends, you know, feeling like uh your life has meaning, your life has purpose, whether that's a relationship with a higher being or not. Uh and those things I think across the board are catastrophically imploding. Uh I spent about 10 years living in Asia in Japan and Taiwan and the the the contrast with the west is is just incredible. Uh I moved directly uh from Taiwan back to Canada and it's a big difference just you know nobody's married. Uh families are dysfunctional, kids hate their parents. We we saw that during co where it was kind of a running joke that you know oh my god now I have to spend time with my kids. >> Uh who are these people? Who are these strangers who live in my house? And you know it's a standard trope on TV that you know the kids roll their eyes whenever dad says something like this is not the state of nature. This is not how it's supposed to be, right? Parents and kids are supposed to be each other's best friends in the sense of you're on the same team. You love each other unconditionally. Everybody knows that you're there for each other. So, you know, in in my family, for example, uh my wife stopped working. She made a lot more money than I did. She's a lot smarter than I am. Uh but anyway, she quit and she, you know, went to be a homemaker. Uh there's a lot of people now who are saying, you know, if you if you drop the second income and, you know, you look at, you know, $4,000 uh uh house payments in somewhere like Washington DC, uh drop the second income, go out and live in Tennessee, uh do something meaningful. Uh now, a lot of that, you know, of course, the internet enables, uh but you know, some people go out and homestead, they have little farms. My wife dreams of a chicken farm. I think that's a ton more work than people expect. Uh but anyway, yes, I think a lot of people are waking up to it and it's an important conversation to have just kind of fundamentally like why why is our society so unhealthy? Um when I see a problem, my first assumption is what did the government break this time? Uh so, you know, I think part of it has to do with public schools that operate like day prisons. Uh I think that the government in many ways has sort of cucked uh the American male, especially for the lower class where you know they don't need men. U they don't need provider men. So, if you don't need provider man, you may as well get the hair extensions, go to the club, and get knocked up by somebody who's uh, you know, six foot five, right? Uh, because they're not going to provide either way. Uh, I think that a lot of these things can be traced to, um, policy, specific policy errors that could be fixed. Unfortunately, I've been talking about them for 50 years. You know, the the idea that the welfare state causes dysfunction, is actually uh, destroying families. This has been widely discussed certainly since the 1960s uh and it's not changing anytime soon. Fortunately, individuals are discovering it and they're kind of finding their own lifeboat. So there it's another parallel uh with Bitcoin that Bitcoin is not yet fixing the financial system, but what it is is providing uh a lifeboat for individual people to save themselves and save the people around them. >> All right. Wow, Peter, I I feel like I I stuck my stick in the ground at the end of our conversation here and hit a gusher. Um I I would actually would love to really um opine at much greater length on on this topic that we ended here, but we we we I got to sadly wrap it up here uh in the here and now. Um again, thank you for such an honest uh direct and very specific answer to that question. Um uh as we wrap things up here, most important question for folks that have enjoyed this conversation, maybe this is their first time listening to you, where can they go to follow you and your work? >> Uh I make daily videos. are about three and a half minutes. Uh, and I post them on uh, Twitter or Xprof. And then I also put them up on YouTube and I do weekly articles over on Substack, which is also Prof. >> All right. Fantastic. When I edit this, Peter, I will put up the um, your your um, Props handle on the screen so folks know where to go. I'll also have the link there to your Substack. Um, folks, the links will be in the description below the video, too, if you want to get there with one click. Um, Peter, uh, I've really enjoyed this. Thanks so much for coming on and yeah, if you don't mind, next time you come on, let's reserve a fair amount of time to dig into that societal topic. >> Awesome. Yep. Looking forward. Thank you, Adam. >> All right. Well, folks, now's the time on the channel where we bring the partners from New Harbor Financial, one of the endorsed financial advisory firms by Thoughtful Money. I'm joined as usual by lead partners there, John Lodra and Mike Preston. Gentlemen, great to see you. U, John, uh, let's start with you. I'm curious to hear some of your uh top takeaways from the discussion there with um with Peter. Some things I think you're going to agree with, some things I think you might disagree with. Um and uh there's been a bunch happening in the markets, so we'll get to that shortly, too. >> Yeah. Thank you, Adam. Great to be with you and uh nice to hear Peter's uh perspectives. I I think you said it was your first time having him on. That's great. Um we've we've come across his writings quite frequently and in his work, so appreciate you get to hear him live there. uh and and be able to comment here. Yeah, I mean um we we we certainly do see some things different and it really it really I think stems from in no small part what our what our mandate is. Um viewers probably know by now that we uh we're financial adviserss to real people and people that um you maybe have a different objective than the massive investors at large. Um, you know, Peter described his his personal um leanings to, and I I know he said this tongue and cheek, but chase bubbles, chasing the a AI bubble, addicted to risk. Um, these are all things that I know he he means tongue and cheek, but that's uh categorically not the way that we see and and approach markets on behalf of our clients. Um, our clients by and large are folks that um are in or nearing retirement and and their biggest risk candidly in this latestage bubble cycle that Peter himself also agrees we're in doesn't mean it ends right now. Um, biggest risk in in these kinds of environments for most folks in in our client seats is unwittingly suffering ultimately a big decline even if it comes after having chased the bubble. And that's usually what happens in major bubbles. they they go longer uh than valuations would suggest they should. Uh but when they resolve um every time in history it's been very painful and usually it's not worth the chasing uh in terms of what it means to the the real financial security of of real people that are looking to fund a retirement. So so we see things quite different. You know he talked about the economy and markets in separate breaths which we often will remind folks the economy is not the market and markets aren't the economy. He talked he he he described his take on the uh economy as uh somewhat optimistic. You know, he thinks we're midcycle, not late cycle. And he pointed to three main factors. Um one is the Feds, you know, maybe becoming less concerned about inflation. I think that's debatable. And even within the Fed uh you know uh board seats themselves, there's quite a debate going on about uh you know, where policy should go. uh he talked about the the Trump's administration's goal to attract foreign investment and there's been some high-profile, you know, kind of headlines in that regard. And then the growth in AI is all kind of, you know, being supportive of this economic cycle. You know, I think we could probably take another side on a lot of those. It's not a black and white uh view. Um but what I would u absolutely point out is regardless of where we are in the market cycle, the the financial market cycle often times is is different than the economic cycle. And um you can have great businesses, great um you know, world changing trends like the internet for example, that that became everything and more than what folks thought it would be. Uh yet it didn't stop the tech bubble from happening. The point being is that the markets had um you know priced in a frivolity and a and a an optimism that was way beyond even the reality of of a great worldchanging uh you know paradigm. So so we are clearly in our view in a very late stage cycle of of the markets. I would I would um you know we he Peter did talk about the recent risk off of a lot of things together gold, Bitcoin, stock market, things like that and he he kind of you know co you know kind of pointed to that as as being indicative of a liquidity um issue and and the Fed's um you know I guess more um dovish tilt lately lately maybe being a nod to that. Um there's actually very good, you know, evidence that it's not so much a liquidity issue, but but maybe uh you know, signs of a real credit issue. There are some real um concerning credit um things coming on the radar here. We've talked uh you know, a couple months ago we talked about first brands and um you know, for example, lenders to subprime auto uh borrowers. Um more recently, we've seen um a lot of headline troubles in private credit markets. uh just today a company called Blue Owl um which is a private asset manager and they get into all kinds of and it's an interesting company because it's not only private credit but uh they have specific focus in technology lending build out of the AI infrastructure and that stock and and and the funds that that manage have been that company manages have been really under pressure a lot of pressure in fact just today they scrapped plans to merge two funds to to to try to solve a liquidity issue in their funds and they called it off because the stock got got punished. Uh you know that's that's uh these are things that are starting to I think really spooked markets and I think certainly have the Federal Reserve spooked. Um and you look at all the main you know big uh private asset managers, folks like Blackstone and Apollo and Carile and Brookfield Asset Management. These stocks have gotten hammered pretty good of late. Uh and and these are signs of of something other than just concerns about liquidity. some real um you know fracturing in in in kind of the credit markets which a lot of times stock market bubbles end with the credit crisis you know from the fringes out um we can't you know we can't uh avoid talking about Bitcoin and what that has done in recent it's been dropping like a lead balloon so to speak um you know peaked back in October I think at 126,000 thereabouts and just today it got back down below 90,000 and you know it's it's really emblematic I think of a of a riskoff kind of moment. Um and you know related to that the shares of micro strategy which in in you know Michael Sail uh Michael Sailor's company have have plummeted um there's there's just lots of signs of of risk off and we're starting to see it in our broad market indicators. So you know I'll pause there. We got a lot we can dig into there but um you know those are some big picture big picture takeaways. We definitely are less sanguine about the economic cycle and as it relates to where we are in the financial market cycle. >> Okay. I I think you would agree though with the question that I asked Peter, which is um if the market were to suffer a substantial correction that would likely have a big knock on effect on the economy, maybe one, you know, potentially as large as as triggering a recession. Would you agree with that? Yeah, not only to agree with it, but that's what happens in history. Um, and they're kind of interrelated. Recessions don't get called until after the fact usually, but the evidence starts to to to but yeah, the absolutely that I think the, you know, psychology of of economy is is largely driven by the financialized economy, the financial market. So, I totally agree with that. >> Okay. I I want to get back to the credit the private credit in just a second. Mike, I want to come to you for a second. Um because um while I was interviewing Peter um and and you guys were listening to the interview um the Nvidia's results came out and we we've had this sort of riskoff downdraft in markets recently. Uh tell us what happened in Nvidia and maybe maybe that might actually change the short-term trajectory here. >> So we'll see. Adam, I'm going to bring up a chart a minute-byminut chart of Nvidia and what it's doing after hours. They just reported just a few minutes ago and I know this video will come out a little bit later, but the stock is trading up. They beat expectations by about 4% is what the headline number says. Margins look pretty good. Sales, I think, were a little bit better than expected. We're right around 19250. Let's go to a daily chart. You can see that a couple weeks ago, Nvidia broke out here 195, went to new highs, and then just kind of pulled back like the whole market uh the whole market pulled back in the last couple weeks, and it feels worse than it really is. The S&P 500 is off around 5%. The NASDAQ or the the QQQ is down around 7.1%. So, a relatively mild pullback though, it's felt a little bit worse because a lot of the the momentum names have really been getting pretty smashed, particularly in the AI space. And so, everyone, >> sorry to interrupt, but because the market is so reliant on them now, as those stocks go, kind of everything goes. >> Absolutely. As those stocks go, everything goes. And so, everyone's looking at Nvidia. It's the most important company in the world right now. Uh so if we hold this trading up at around 19250 195 if that can base and start to break out to new highs then we could start to see some of the other names come up. You know Palanteer has been hit pretty hard. That's that's down on the other side of its Ballinger band. But if you just take a look at the QQQ you can see that it's been on a a few week pullback 7.1%. Not a big deal overall but >> and for folks that don't know that ticket that ticker that's basically tracking the NASDAQ. Yeah, that's the NASDAQ 100 essentially. So, um it's been a pretty mild pullback and looks like pro if this holds with Nvidia, Nvidia will probably drag the market up. Whether that will cause the market to come out of its base and go to new highs, we don't know. But it's a good first start for the bulls, let's put it that way, because there's been a lot of fear uh as we talked about in AI and Bitcoin and things like that. and and fear can build a wall to worry, a wall of worry and it can re uh fill the engines or or the gas tank so that uh so we could power higher. We'll see. >> Okay. And so I mentioned that look, you know, we'll when this video goes live tomorrow, folks will know a little bit more because they'll have had the Nvidia earnings call and really with stocks these days, it's less what your performance for the quarter was and it's much more about the guidance that you're giving the street. So, we'll see if the street likes uh likes as much the the guidance that Nvidia gives. But yeah, I asked that just because, you know, we're approaching the end of the year. There's the proverbial Santa Claus rally. I've had a number of technicians on this channel, you know, over the past couple months saying, "Hey, we think we could see some weakness in October and andor November, but we would we would use that as a buy the dip uh opportunity to then ride the Santa Claus rally into the end of the year." Is that what's going to happen from here? We don't know, but uh an Nvidia beat would be kind of just what the market needed at this moment uh to try to reverse its near-term fortunes where it had been drifting down like you were saying there, Mike. Yeah, and I'm watching Nvidia here. It's trading up above 194, almost 195. I don't know if the the the earnings call has started yet or not, but it could literally be the catalyst. And there's a lot of worry that's been built up over the last couple couple weeks. Now, we would not be ones to say that you should go all in here betting on a Santa Claus rally, but it wouldn't surprise me to see a squeeze higher Santa Claus rally and maybe even a further blowoff top. It's we've been talking about that as a possibility. We're not trading from that perspective. We're still only at about 45% equities in our model. And we even have an index put um down below just in case we're wrong and we get a crash here. But uh because valuations are obscene, we've been talking about that for a long time. Mhm. >> But still, this is exactly what you'd want to see to potentially start something. It maybe Bitcoin rebounds from these levels. Bitcoin's off almost 30% in just a handful of weeks. Uh it's it it is indicative of risk off like John just talked about, but if that were to stabilize and bounce along with an Nvidia beat and maybe the NASDAQ and the S&P turning up off of their moving averages, they're just below the 50-day moving average right now. If they were to recapture that and close above there, we could easily see a squeeze higher because there's still a lot of FOMO or fear of missing out in this in this market. And it's because it's been going on for so so long. And everyone knows that the Fed wants to bail out every single dip. And and as uh Peter was talking about, you know, every every small dip or emergency has been met with bigger and bigger expansion or larger expansion in government and Fed response and the market knows that. So, it's hard to break that cycle until, in my mind, you get some kind of blowoff and then ultimate crash, which is what I think is going to happen. I know Peter thinks that for the next two to four years, we're going to be okay in the market. I think we would take the other side of that. I think >> just be clear, he said two to four years be okay in the economy. He didn't necessarily say the markets, but >> Right. Okay. Well, we we all know that those normally go relatively handinand. Um, I think that really short term the market might be okay, but I wouldn't bet on it being okay throughout 2026. >> Okay. All right. Well, look, we'll know a lot more by the end of next week in terms of whether there's a a return to the risk on trade from here. Um, but I I just want to flag this for folks because, you know, I I I have heard a growing chorus of people saying online, okay, this this might be it. This might be where everything, you know, starts to really tip over here. And um who knows, you know, we'll we'll watch and see. But um you know, if if you are looking to commit a lot of capital to playing the downside here, you know, be be very cautious, especially with this this apparently positive um Nvidia results here. Um all right. Um John, I wanted to come back to you real quick just to talk about private credit because that does seem to be something that we're hearing more and more about and and there was um you were talking about blueow. Um, so, uh, I I have a chart. I'll try to pull it up if I can. But it it it >> it it shows that, um, >> uh, let's see here. I'll pull it up here. Uh, yeah. Um, that, uh, while the S&P, you know, has, uh, has powered higher over the year, um, the stocks of the private credit funds, um, have actually really been suffering since summertime. Um and uh blue so the S&P is the green line here. Blue Owl, the company you mentioned is the red line here. Um you can see that that that something's going on there, right? That that the people that are have been following this industry are beginning to see some signs of real concerns and and and we've heard from a number of different um uh private equity companies of late. you know, they've had some private uh some some uh companies that they had lent to that have gone belly up basically, right? With this the first brands or the uh was it the the recent one Renovo I think um where I think Black Rockck had it on its its books um I don't know as recently as a month or so ago at 100 cents on the dollar then it went to zero cents on the dollar. So, you know, you're starting to see some some concerning defaults in that space. Um, uh, but, uh, you know, uh, anyways, you know, so, so increasingly, you know, the the investors are starting to put their money where their mouth is here. And of course, that's raising all sorts of questions about um, uh, counterparty risk and and just the the health of the sector, right? um which is hey this has been a a lending uh ecosystem that has really grown dramatically over the past five plus years. Uh but it's not regulated, right? We don't really have any transparency in there. We're just hoping these people have been making good loans, right? And we're starting to see well their track record's not perfect. So, of course, the question is, how much less perfect does it get from here as we learn more? And as lenders start getting more and more um worried about the private credit market, um well, they're going to be less likely to lend and that'll slow the economy, but they might be less likely to lend to each other. And and and when that starts to happen, when lenders start to um distrust each other, that's when the credit market kind of starts to slows down or maybe even freezes up. And that's when you get really big problems. And I'm not saying that we're there uh by any stretch at this point. I'm just saying we're starting to see signs that this this space that had a lot of probably overconfidence in it, people are really starting to to, you know, get get nervous and jittery. And John, I know you're nodding. I know you probably want to say something, but real quick, let me just share one last thing, which is I think I told you guys about a month or two ago that I'd seen that PayPal um who had they've they've built their own buy now pay later service so that you can, you know, you can make your payments through PayPal on a buy now pay later basis. But they sold their book of buy now pay later loans, right? And I remarked at the time that was probably a pretty good sense that they said, "Hey, look, we're making these loans. We know that these things are going to eventually blow up at some point, right?" Um, well, what company did they sell them to? Well, uh, they sold them to, uh, let me show it here, to Blue, who you were just talking about, John. Right. So, you know, Blue Ale has had this uh apparently sort of voracious appetite for private credit um looking like maybe all across the spectrum of borrowers. Um maybe it's not a huge surprise that uh that they're starting to get into more and more trouble here. >> Yeah, it's exactly right, Adam. And it's not just the the problem with this kind of stuff if it if it is deeper and broader than it it appears that we're already seeing in in the headlines, and I think there's a good chance that it is. It's what are the spillover effects? And I'm going to I'm going to reshare a a picture that I shared last week in our video with you just to um re-emphasize this. This is a um so let's talk about the insurance industry. Um you know many insurance companies to match their liabilities. You think about what insurance companies do. They they basically have to pay out insurance claims or or guaranteed uh benefits to to insured parties, right? And traditionally they would use Treasury bonds as the vehicle to do that. Now, when interest rates got depressed really low, um the insurance industry basically went out to the private credit market where they could find higher yields and, you know, be able to match those liabilities. And it's all well and good until it's not. And this is a a chart that was put together by Moody's and a couple other folks. And it basically shows the the uh tremendous amount of um private credit instruments within insurance companies uh you know uh uh balance sheets basically. And just as concerning, I think, is the rise in kind of privately rated um securities. and UBS's chair uh was I think three three or four weeks ago talking about they're starting to see this kind of like um gamesmanship in in credit ratings just like we saw in the housing bust the subprime housing bust where you know in effect you know the the insinuation is that the issuers are are are paying to play or or the uh you know kind of the rating agencies are are are getting paid to play and you know rate softball rate these issuances and it's it's just a this kind of stew of stuff and and a lot of the these these loans, these private credit loans are were were issued with uh no or very light financial covenants that are traditionally the ways that bond investors protect themselves. So, it's a it's a tricky thing and it's I think we're going to see more of this and we're it's I think the market has a way of snipping this out. Even if you look at broadly just more f publicly traded financial stocks, we're starting to see some stresses there. We actually own a sector ETF in financials. It's not in danger zone yet, but we're watching this here because um and I'll share a chart of this. Um this is ticker symbol XLF. It's an ETF that holds financial stocks. This is uh this is a daily chart of that. We've seen a pretty dramatic pulloff here. You know, we're we're we slice right down through, you know, we've been trading pretty consistently below the 50-day moving average. Uh we're down right around the 200 day. This is a very important level to keep here. It's not, you know, you zoom out, it's not it's not uh big big uh damage yet, but this has the potential to roll over and and be a harbinger of of other things to come. So, we're watching things like that very very closely because they oftentimes are the canary in the coal mine speaking to a a broader broader issue. And just if I could just for a moment, I'll just share a glance at some of our our indicators. You know, we agree with Peter that, you know, bubbles don't end on valuations, they end on other things. and and we look for that as as the market tells us or can tell us clues as to when that is is likely to happen or is happening before our eyes. And this is just a a simple dashboard of some of our indicators. We look at a bunch of different breath indicators. For example, this is just a a subset of those. We can look at it across different indices. So we got things like bullish percents, percent of stocks uh above uh positive trend lines and then participation indicators above different duration moving averages. And we've seen a a broad-based and consistent erosion of all these things across all these markets. Even though the indices themselves haven't really seen a whole bunch of damage, we've seen the the S&P 500, for example, if we go to that, um it traded, if I go to a daily chart here, uh we're we're trading now below the 50-day moving average. We'll see if if it's if it stays below there, it starts to turn down. That would be uh you know another checkbox in in the you know time to get a little bit more concerned uh you know category. So we're watching things very closely. A lot of sectors a lot of charts are at really important u you know u tow holds and if they don't hold here it it may signal a a broader riskoff moment. >> All right. And I'm going to guess that that's going to make what happens in the next 48 hours of Nvidia really super important here, which is um as you just said, there's a there's a there's a lot of indices, a lot of assets, uh sectors that are kind of at at um potent, you know, like breakdown thresholds, right? They haven't broken trend yet, but they're close, right? And if Nvidia uh is enough to save all this then great okay I mean that that tells you okay then the direction of the market probably for the rest of the year is more likely to be up than not and it's maybe you know risk back on comes into the market but if it's not if if it if it if Nvidia no matter what happens with that sock specifically if it's not enough to reverse these trends and you start getting a breakdown despite Nvidia delivering the best results that it And I'm going to guess that speaks really loudly to your level of concerns of what would happen next. >> It does, Adam. And and um you know, we everybody focuses on the headlines, the technology headlines and the S&P, what's the S&P doing? But there's a lot of stuff going on beneath the surface. And if if I can indulge, I just share one more chart here to give you a flavor for what we see here. So this is just a simple way that we rank different different sectors and you know, different scores. I won't get into the multiaceted ways these scores are built but you know higher is better. You you see right at the top are some of the areas we've talked about for some time as as being you know areas that we have uh exposure precious metals utilities um technology. Um and what we can do here is we can look at the the change in these scores uh over the last six months. And you know this has been more recent than than than later. But what you have seen here is there's been big gainers here in things like healthcare, biotech, precious metals, commodities, basic materials, energy. And some of the areas that have lost ground, you can see here they've actually lost ground. Financials, um uh technologies down kind of midpack here. there there is a not so subtle shift that's been playing out under the surface here that uh at the very least speaks to tactical rotation opportunities but it also could very well speak to you know a more durable changing of the guard as relates to you know what this market has been built on. >> Okay. Um really interesting chart there by the way John maybe next time we can go a little bit more into kind of um if if the torch is getting passed um in 20 as we enter 2026 which sectors you think might might benefit the most from that. But real quick um Mike let me come to you just give a quick update on the precious metals. Um I think the question on most people's brains right now who follow the precious metals is is hey they've hung in there which is good. Um but they've kind of been trapped in this range and today is even a really good example where you know they were up big but then they kind of drifted down throughout the day. They still closed up right you know silver's still above the 50 bucks an ounce u threshold and and gold is still above 4,000 but you know they haven't quite been able to get back up to their highs either. So from a technical perspective, is is this positive like oh this is it's it's relative strength and it's it's uh you know maybe consolidating and getting ready for another move higher or is it hey these things are are trying to get back to their old highs but they're failing and and and that could be a sense a sign of of um you know decreasing momentum. Hey, Adam, at the risk of being too overly positive, you know, I think this is exactly what you'd want to see in gold and silver and in the miners if you're a long-term bull, there's there's no doubt a month ago that the trade got really hot. You know, we were talking about that, talking about it with clients, telling people to sell a little bit on the way up just to loosen up psychologically. you know, um, gold bugs, so to speak, oftentimes put way too much in gold and silver, never sell anything, have it their whole life, and it's really hard to loosen your grip on that thinking. And so, selling on the way up makes sense. And if you did, it made what came after a little bit easier. So, I'm going to show a chart of the daily chart of gold. And you can see about a month ago on October 20th, we hit a high up here. That was around $4,400 an ounce. This happens to be ticker symbol GLD, which is, you know, the shape of the curve is the same. But then we for about a month now, we've been consolidating sideways. We never hit this 50-day moving average, which is the green line. So, we were walking up along the two standard deviation Ballinger bands. And we came in, we never hit the 50-day. We've been consolidating sideways. And just a couple days ago, it looked like we were going to very quickly break out to new highs, especially on silver. I'll show you that here. It looks very similar, but we should be kind of glad that it didn't, I think. Uh because it's it it actually builds a lot more energy and power. If it goes up, if it comes down, if it goes up and it comes down, it's building or energy or coiling. And if we break higher here, it's going to be a powerful move. Silver 2 stayed above its 50-day moving average, and we're just above $50 an ounce on silver, which is huge. Now, the silver miners are lagging a little bit. Let me show you SIL, which is the silver majors. It's floating right around the 50-day moving average, and SLIG, which is the juniors, right around the 50-day moving average. I drew this downtrend line thinking it was trying to break out of here, and now it's come back to the 50. Silver at 50 bucks an ounce has got to be huge for these guys. You know, I'm not an analyst or an expert about the financials, but it seems like maybe the market's not sure that silver is going to stay up here or gold is going to stay up here because the miners, um, let me show you some of the miners. They've performed fantastically, but they too are consolidating sideways. There's the gold miners. I showed the silver miners a minute ago. And if gold and silver can stay where they're at and break higher, I can only think that these miners are going to go quite a bit higher. Uh, as we've said a few times before that a big bull market. Here's a monthly chart of GDX. Really broke out around 40 or so. It doubled up to 80 >> and now it's consolidating sideways. Wouldn't be surprised over the next year or intermediate period of time to see that double again long term. But what we need is for gold and silver to stay up here and for the market to be convinced that it's going to stay up here. So I'll stop sharing a chart, but a few more comments. Silver itself is on a massive triple top. Now maybe it doesn't matter because it's been so long, but the Hunt brothers cornering the market in 1980 drove silver to 50 and then it just kind of consolidated for decades. Then it hit 50 again in 2011. Came all the way back down to into the teens and here we are at 50 again. So 1980, 2011, 2025, 45 years. And the other times, if you look at charts, you see that silver collapse relatively quickly. I know it's pretty early, but a month into this correction, we haven't collapsed. We're sitting around 50. And so imagine if it can can base sideways and break higher from there. It'll be a massive triple top. And like the triple top we talked about at silver a few months ago back at 35, triple tops don't normally hold. They're normally broken. And so I think the miners have quite a bit more to go. Probably more percentage-wise than silver and gold. Silver sitting here at 50. Wouldn't be surprised to see maybe 70 in the next year based on the charts. Gold at 4,000. Maybe maybe five 5,000. These are guesses based on the charts. And uh so so take that with a grain of salt, but that would imply around what 25% up for gold and maybe 40% or so up for silver and much more for the miners. As always, position sizing makes sense. Don't go all in. Talk to us if you want some advice about your particular situation. But uh it I don't see any real reason to be concerned, nor do I think people should get overzealous here. A lot of our clients got a little bit over their skis and you know we're we're wanting a little bit too much too fast. So you keep your expectations moderate, your position sizing moderate and just sit back and let it work. The last thing I I guess I'd say is looking at some screens like momentum names. There's a lot of gold names on on momentum screens. They have persisted. They persisted for months and they're not falling off. You know those we've seen some tech rotate out of those screens. We've seen biotech come in, but consistently throughout the last few months or more miners have been there and probably will stay there. >> Adam, Adam, if I can just add a a little context to some of Mike's strong comments on gold miners and this is a a piece that we uh we dove in in our investment committee here in the office yesterday and uh want to give some props to Vanek. I know you have Yan Vanek on your program periodically. This is their lead gold an analyst, Emma Kasanova. And I urge, you know, invite folks to go to their website to read this public available piece, but it's their October 25 commentary on gold. And I just want to call out a couple charts. So, it's fair to ask, hey, this big move in gold miners, does it mean they're overvalued? This chart is their Vanex work in this regard. It shows that the gold miners, even though they're at the higher end of their five-year range, which is this this gray bar, the blue dot is the current dot on a enterprise value Ibida metric, they're far lower valued, lesser valued, more more undervalued, if you will, compared to the S&P and the MAG 7. And same with the price to cash flow. And the cash flow is key for these um because uh it really comes down to the cost of the production. as the price of gold goes up um these companies have very high operating leverage and and um their cost of production doesn't go up you know sub you know one by one with the with the price of gold and this chart I think is really important it shows for example these are the gold production as a as a as a percent at different um all in sustaining cost of production so the way to read this chart is 70% of the gold miners have sustaining cost of production production uh of about what is it about 1,700 or or lower. Uh with gold prices at $4,000, if they're producing at 1,700, that's a boatload of free cash flow. Even here, you have 95% or so with uh sustaining cost of production, just a little over 2500. That's still almost at $1,500 per ounce margin, right? So that's a really compelling picture as to why, you know, these stocks probably have a lot of further run to go even if in a riskoff moment they they get thrown out with the bath bath water. There's some really good good numbers we we we found in that research and just wanted to highlight it for your review. >> Yeah. No, I really appreciate it. Those are great charts. I'm glad you showed them. Um and it just shows um especially those ratios just how hated this industry was that even though it's it's this year delivered just blockbuster results, you know, Wall Street is still looking at it like okay, you know, I guess we'll put a little bit more money your way. Um so yeah, a lot of potential um room to run further to the upside uh if indeed the the metal prices hang in there, Mike, as you said. And that's that's that's the key thing here. But it's nice to see that technically you're as as optimistic as as it seems like you are given given what the technicals are telling you. All right, Jen, so we got to start wrapping it up here real quick. Um I'll let whoever wants to take this one answer it. Um so, you know, end of the year is coming up. Um you as Mike said, look, if you've got questions about um how to invest uh in the precious metals miners and whatnot, you know, call New Harbor. They can give you they can they can they can listen to your situation and give you customized guidance. Um, but as you guys have said in some of the recent videos we've done, uh, another good reason to to give your financial advisor a call, uh, now is for the end of the year, the things that have to be done by the end of the year, right? Like, uh, tax lost harvesting and, um, charitable giving, uh, required minimum distributions, that type of stuff. Um, okay. above and beyond the market related stuff like you know um is this a good time to buy X or sell X or whatever. Um what are some of the other things that you guys discuss with customers? I mean there's there's the whole financial life part of it like what the what the money is for beyond just hey what might the stock market do next month. Um, so I I know you guys talk to your clientele on on a whole spectrum of different topics, but like what are some of the other major things that you guys spend your time talking with customers about beyond just where to put the next incremental dollar in their portfolio into? Yeah, Adam, really, if I could boil it down to this, it's it's really about taking away the fear of the future, you know, which sounds like a tall order, and it is, but at least as it relates to money and financial matters, it's all about reducing anxiety, taking away the fear of the future, convincing people that they have enough. This is very, very difficult to do because we as humans are just wired to always want more. And it doesn't even necessarily have to be blamed on greed. It could be blamed on survival instinct, you know, because if you give a squirrel a chance, they're probably going to, you know, keep storing acorns until, you know, wherever they're storing them bursts. >> They'll die with a tree full of acorns. Yeah. >> Yeah. It's just natural. You don't know what tomorrow bit brings. You don't know how long you're going to live. You don't know what how many acorns there's going to be available. So, it's about taking away the fear of the future. And I think the only way to do that is really one of the ways to do that anyway is to talk to someone like us that has now, believe it or not, uh, 25 plus years of experience, John and I have, which is amazing. We're getting old quickly. Life goes by fast. But one of the benefits of that is that we have the experience. We've been through a lot of things over the years personally and professionally, and we've been exposed to thousands of clients and situations. And we know, we just know in our um in our being if somebody is going to be okay or not based on a quick look at their situation and what we think about the future. We've got a lot of confidence in our ability if we're managing money for the for the person that we're talking to of not losing the money over this market cycle. And we think this is going to be a climactic high-risk market cycle. And so we can look at the other things like their guaranteed sources of income and, you know, make some adjustments if needed, but give them some real security about I'm going to be okay. Letting go of that fear and anxiety is extremely hard. And I I hate to say that we're therapists because we're not licensed therapists like your like your wife is, Adam, but we end up being financial therapists a lot of times, you know, and so we're good at it. We like doing it. And I think we do a lot of good when we talk to people. So that's what it's all about. The end of the year is the three things that you said. Charitable giving, gain loss, required minimum distributions, and maybe a fourth thing, Roth conversion discussions. But the bigger picture is, am I going to be okay through this market cycle no matter what happens? Can I let go and stop worrying? And can I spend more? And a lot of times we're telling people to spend more because that's what life's all about. If you have a huge pile of gold and you know you have got more than 50% of gold and silver like some people we talked to sell 10% right here even though I think they're going higher you know use that to do some work on the house go for a bunch of vacations or whatever or one big vacation whatever floats your boat so to speak but it's really all about psychology it really is you know that's a great that's a great great answer Mike and and right there in the end I think you got to kind of what I was sort of envisioning which is you know When I go to events, people come up to me and and one of the things they often express is like, "Oh, it's just so great to have somebody to talk to about money. I don't really have anybody in my life to talk to about money." And so, we tend to wrestle with these decisions uh around our money, you know, alone. And it feels um isolating and overwhelming for a lot of people. And and yes, a big pervasive question is is well, how much should I be putting away and what should I put this money in? But then to your point, Mike, it's like, yeah, but that's those are all steps towards something. What are you doing it all for? What's the why? Right? And so to be able to talk with somebody about, okay, well, look, uh, you know, we're thinking of doing a remodel. Like, how much can we realistically afford to spend on it right now? Should we be doing that given our current, you know, income situation? Uh, I want to help my kid out. Uh, or, you know, my parents need some help. Uh, I'd like to give X, but is that wise? you know, how how much do I have to to to be generous this year? That type of stuff. I just kind of all the basic blocking and tackling of how to use money to enrich your life going forward. You're you're nodding as I'm saying all this, Mike, but but this is sort of what you guys do a lot of beyond just the okay, here's what I'm going to put the next check you gave me towards in your portfolio. >> Yeah. And I don't want to overstep our importance. I mean, it's not like we're um you know, gurus or anything. There's a lot of people that are better at psychology than we are. But in this unique niche, this space where it comes to fear of money or not having enough or not being able to let go of that anxiety, we are uniquely positioned to help. And that's what feels good about this job a lot of times and we can do that. >> All right. Great. Well, this is one of the great things about the um the consultations which I'll mention in just a second, but you know, if folks have some questions that that they're really wrestling with right now, even if they're not clients of yours, they can call and have a conversation about it. John, anything else you want to add to Mike's answer before we wrap this up? >> No, I think Mike really hit the nail on the head. We We have all kinds of, you know, nuts and bolts we walk through. In fact, we're getting ready to send out a year-end uh checklist email to our clients. All the kinds of, you know, nitty-gritty things we can and should be covering with them. But it really gets back to what what Mike just talked about. It's about, you know, filling those uh voids of fear and and stress and clients out uh lives and minds with with, you know, some just open discussion as it relates to their situation. >> All right. Okay, folks. Well, um first off, if you enjoyed having Peter Sange on the program, would like to see him come back on, please let us know that by hitting the like button, then clicking on the subscribe button below, as well as that little bell icon right next to it. um if you would like to get some help from a good professional financial advisor in terms of you know whether it's um ways to invest that maybe might take advantage of some of the opportunities or challenges that Peter mentioned um or whether it's more the nuts and bolts of what I was just talking about with John and Mike here about just like hey I've got some big questions in my life about what to do with my money uh and you'd like to get some professional um advice uh about that um then if you don't already have a good adviser who's playing that role for you, consider talking to one of the financial adviserss that Thoughtful Money endorses. These are the firms you see with me in this channel week in and week out. Perhaps you'd like to talk to even John and Mike themselves there at New Harbor. So, to set up one of those discussions, just fill out the very short form at thoughtfulmoney.com. Only takes you a couple seconds to fill out the form. These discussions are totally free. Uh there's no commitments uh expected or involved. Uh it's just a service these firms offer to help as many people as they can. John and Mike. Um, great discussion this time around. Um, looks like the next week will be an important one, uh, in terms of whether we're back to risk off on or whether things fall more into risk off. Um, but no matter what happens next week, look forward to making sense of it with you guys. And I really wish both of you the absolute best of Thanksgivings next week with your families. >> Oh, thanks so much, Adam. Always great to be with you and uh to you as well and of course to all your viewers. Uh, it's a great time of year to be thankful for so much we all have in our lives, even if we forget it sometimes. >> Thanks for watching everybody. We really appreciate it. And thank you, Adam, for the opportunity to be here every week. We'll see you next week. >> All right. Thanks so much, Mike and John. Everybody else, thanks so much for watching.