TABLE OF CONTENTS

1. Market Recap: Steve Hanke on whether Trump tariffs will cause depression

2. EQUITIES: A big selloff may occur in January, says Chris Vermeulen

3. ECONOMY: David Hay and Jeff Dicks on the biggest bubble ever?

4. ECONOMY: $200k Bitcoin and $4k gold in 2025, predicts Lawrence Lepard

5. ECONOMY: Doug Casey on the most dangerous era since WWII

6. BANKING: Chris Whalen on banks’ potential $3 trillion loss

7. CRYPTO: Clem Chambers on whether Bitcoin is near its top

8. CHINA: Keyu Jin explains how China will respond to Trump tariffs

9. What to Watch

MARKET RECAP

Latest News. On Monday, November 25th, President-Elect Donald Trump threatened 25 percent tariffs on Canada and Mexico, until “drugs, in particular fentanyl, and all illegal aliens” stop passing through the northern and southern borders into the U.S.

The market reaction was swift, with the U.S. dollar gaining 1 percent against the Canadian dollar and 2 percent against the Mexican peso. S&P 500 futures fell by 0.3 percent and the U.S. 10-year Treasury rose by four basis points to 4.31 percent on Tuesday, November 26th.

Prime Minister Justin Trudeau of Canada and President Claudia Sheinbaum of Mexico subsequently had phone calls with Trump.

Trudeau said that he had a “good call” with Trump, and his government later committed to spending more on policing the Canadian border. Trump met with Trudeau at Mar-a-Lago on Friday, November 29th.

Sheinbaum, by contrast, said that she would not agree to stop illegal border crossings, and even hinted at retaliatory tariffs if Trump were to impose tariffs on Mexico.

Trump also threatened a 10 percent tariff on China.

Steve Hanke, Professor of Applied Economics at Johns Hopkins University, joined the show to discuss these tariffs and their potential effects on the U.S. economy.

Hanke pointed to the historical example of the Smoot-Hawley Tariffs of the 1930s, which he said had exacerbated The Great Depression.

“The Smoot-Hawley Tariffs did contribute to The Great Depression,” he explained. “The money supply [also] contracted massively between 1929 and 1933. So that was a one-two punch that gave us The Great Depression.”

Hanke said that money supply growth has been contracting recently, which is a leading indicator of a recession. He also predicted that Trump’s tariffs could be more damaging to the economy than Smoot-Hawley, because “the U.S. economy is not as free market and flexible as it used to be.”

The American consumer and the manufacturing sector would also suffer under tariffs, said Hanke.

“A lot of imports to the United States aren’t consumer goods, they’re intermediate inputs,” he said. “You have complicated supply chains, and those will be disrupted and affected.”

He added that tariffs would be ineffective against China, which would simply allow its yuan to weaken.

“If you put a 20 percent tariff on China, then China will say… we’re going to let the yuan depreciate against the U.S. dollar 20 percent,” said Hanke. “The Chinese can do all kinds of things. By the way, they can cut us off from critical materials, and send the U.S. economy into a total tailspin.”

Market Movements

From November 22 to November 29, the following assets experienced dramatic swings in price. Data are up-to-date as of November 29 at 9pm ET (approximate).

1. MicroStrategy Inc. — down 8.2 percent.

2. Hertz — up 22.4 percent.

3. Bath & Body Works — up 18 percent.

4. Natural Gas (Henry Hub) — up 7.7 percent.

5. Solana — down 7.4 percent.

The following major assets experienced the following price movements during the same time interval.

DXY — down 1.6 percent.

Bitcoin — down 2 percent.

Gold — down 2.1 percent.

10-year Treasury yield — down 5.3 percent.

S&P 500 — up 1 percent.

Russell 2000 — up 1.2 percent.

USD/yuan — no significant change.

EQUITIES:
BIG SELLOFF IN JANUARY?
Chris Vermeulen, November 28, 2024

Chris Vermeulen, Chief Market Strategist at TheTechnicalTraders.com, returned to the show to give us his market outlook on stocks, Bitcoin, gold and the U.S. dollar.

Vermeuelen said that the S&P 500 had reached a “psychological level” of 6,000 before retracting. He explained that psychological levels are “typically whole numbers” like 5,000 or 6,000, which make traders feel like they should sell.

However, he remained bullish on equities, predicting a short-term rise of 2 percent in the S&P.

“The market is trying to digest a previous high,” he explained. “I know people are pretty nervous right now that the market is going to roll over, but in the grand scheme of things, I think the stock market is ready to climb.”

However, he cautioned that January would be “pretty ugly” as the market experiences a “much bigger drop” after the optimism following Trump’s inauguration “fizzles out.”

“I think this momentum in this Trump bump in price… I think once all of that fizzles out, I think we could see some big selling,” Vermeulen predicted.

When it came to Bitcoin, Vermeulen predicted that once Bitcoin hits $100k, “we’re going to see some selling,” because this would be a “mental resistance level.”

However, he said that he had recently bought some Bitcoin.

“I like Bitcoin, not as an investment,” he said. “The reason I like it is that it is such a herd mentality trade… I still think it’s going higher.”

Pointing to his chart, Vermeulen said, “this tells us where Bitcoin should go next, which is about 108 to 109 thousand dollars.”

Vermeulen said that gold has hit its measured move target around $2,800 and anticipates a 15-25 percent correction. He plans to add more after a significant correction.

Despite recent fluctuations, he remains bullish on the dollar, viewing it as a safe haven.

“When chaos hits, I think we’re eventually going to see… the DXY up to maybe 130,” he said.

ECONOMY:
BIGGEST BUBBLE EVER?
David Hay and Jeff Dicks, November 30, 2024

David Hay and Jeff Dicks, co-CIOS of Evergreen Gavekal, gave us their outlook for the U.S. economy following the election of Donald Trump.

Dicks said that markets are interpreting Trump’s policies to be inflationary, which has caused bond yields to surge higher.

“The policies that Trump will put through are going to be largely inflationary,” he explained. “So far, that’s been bad for bonds.”

However, Dicks said that bonds “looked fairly oversold,” and that fixed income may benefit from a “relatively strong economy” in the coming years. He pointed to consumer spending, real wages, and GDP as being strong.

“I think it’s almost no question we are having a soft or no landing,” he said. “Q2 GDP is 2.9 [percent], and Q3 GDP looks like it’s coming in at 2.8 [percent]… those who think there’s a recession at hand, I think, are wrong.”

When it comes to the U.S. dollar, Hay said that Trump had sent mixed messages in his campaign on whether he wanted a strong dollar.

“He wants to get the U.S. trade deficit down meaningfully,” he said. “To do that with a rising dollar is really tough, and I actually believe he’d like to see the dollar come down significantly, particularly against the Chinese currency, the renminbi, and also against the Japanese yen.”

Hay was also skeptical about Trump’s proposed DOGE (Department of Government Efficiency), headed by Elon Musk and Vivek Ramaswamy, which was set up to cut $2 trillion in government waste.

“So many of these expenditures are locked in,” said Hay. “Medicare, Social Security, Medicaid — those are tough to cut.”

He explained that even if the Trump admin manages to cut $2 trillion, this would hurt the American economy and could cause “pain” that would be “unacceptable” for most Americans.

ECONOMY:
$200K BITCOIN AND $4K GOLD IN 2025
Lawrence Lepard, November 26, 2024

Lawrence Lepard, Managing Partner of Equity Management Associates, gave us his surprising forecast: Bitcoin will reach $200k and gold will reach $4k in 2025. He also discussed his economic outlook for the U.S.

Lepard warned that rising U.S. debt and deficits are unsustainable. He said that the U.S. is currently running a $2.4 trillion deficit, with no plan to reduce it, and that this is reflected in a weakening bond market.

“The bond market is… in the process of failing,” he said. “The Fed cut interest rates, and yet the 10-year [Treasury yield] has gone up 75 basis points. That’s not supposed to happen, and it tells you that the Fed is probably too loose.”

Lepard predicted that the Fed would use yield curve control and print money to address rising debt levels.

“The Fed and the Treasury are going to have their hands full… in the next six months,” he said.

Saying that the stock market is “overvalued,” even as there are signs that the real economy is faltering, Lepard said that the stock market would face a significant correction.

“We haven’t had a truly prolonged and serious bear market since ‘08,” said Lepard. “I think there is a real day of reckoning coming for stocks.”

To address a crashing stock market, the Fed will “turn on the [money] printer” and loosen monetary policy, said Lepard. This, in turn, could benefit gold and Bitcoin.

“The last time they turned on the printer… Bitcoin went from $10,000 to $50,000, and gold went from $1,365 to $2,070,” he said.

ECONOMY:
WORLD’S MOST DANGEROUS ERA
Doug Casey, November 23, 2024

Doug Casey, Best-selling author of Crisis Investing and Founder of Casey Research, discussed his outlook on the U.S. economy and investing.

Casey said that President-Elect Trump will have to face the most “dangerous” time in history since World War II, given ongoing conflicts in Ukraine and the Middle East, as well as rising tensions with China.

“Before Biden leaves office he may yet start World War III with Russia or may attack Iran, or may provoke the Chinese,” he said. “It’s a dog’s breakfast.”

Given these risks, as well as poor economic data, Casey said that the stock market is over-valued.

“By all conventional metrics, the stock market, which is at all-time-highs… is quite overpriced,” he said. “Meantime, the actual number of employed people is going down. The actual debt in this country is gigantic and growing… what we’re entering upon is something I call the greater depression.”

He pointed to rising credit card debt, auto loans, and student loan debt.

Although Casey was optimistic about President-Elect Trump getting into office, he said that he worries about Trump’s trade policies.

“If Trump puts on tariffs, then trade internationally will collapse,” he predicted. “It’s a potential catastrophe.”

When it comes to investments, Casey was bullish on energy stocks, particularly hydrocarbons and uranium, citing their essential role in industrial economies. He was also optimistic about Bitcoin, viewing it as a superior store of value and a privacy mechanism.

“I’m a Bitcoin bull,” he said. “Lots of governments are going to adopt Bitcoin as a high-tech alternative to gold, and certainly to the U.S. dollar.”

BANKING:
$3 TRILLION IN BANK LOSSES COMING
Chris Whalen, November 27, 2024

Chris Whalen, Chairman of Whalen Global Advisors, joined the show to assess the U.S. banking sector and provide his economic outlook.

Whalen warned that U.S. 10-year Treasury rates have increased in recent months, which could hurt commercial bank balance sheets. In particular, he said that a yield of 5 percent could result in a $3 trillion negative capital position for banks.

“If the 10-year goes to 5 [percent] or higher, the pain from these securities is going to get really tough,” he said. “My fear is that the regulators still aren’t focused on this.”

He warned that if Fannie Mae and Freddie Mac, two mortgage companies which have been under conservatorship since 2008, were to come out of government conservatorship, that this could increase mortgage costs and affect the U.S. financial system.

“Fannie and Freddie, if you want to keep them the way they are, as both an issuer of securities and a guarantor of mortgages, then you have to have sovereign support,” he said. “I think ultimately they won’t come out.”

Whalen said that Moody’s would downgrade Fannie and Freddie if they were to leave conservatorship.

When it comes to banking stability, Whalen said that the Federal Deposit Insurance Corporation (FDIC) had “done a lot of work” to calm panic since the failure of Silicon Valley Bank in 2023.

“I think there is still going to be a tendency to go to larger banks for safety,” he said. “But I think, generally, the public shouldn’t worry about the deposit side.”

CRYPTO:
THE END FOR BITCOIN?
Clem Chambers, November 29, 2024

Clem Chambers, Founder of AnewFn, provided us his outlook for Bitcoin and crypto markets.

Chambers pointed to the recent and dramatic rise in the Bitcoin price. He said that Bitcoin has predictable four-year cycles driven by halving events, in which the reward for mining Bitcoin falls by one half. This, in turn, allowed him to forecast Bitcoin’s price movements.

“The supply halves, and the price doubles,” he said. “The top could be $150k, but I think that’s stretching it.”

He expected Bitcoin to hit $115K-$120K, before correcting, and said that he had already exited his Bitcoin position.

Highlighting his strategy, Chambers said, “If you buy near the bottom and sell near the top, you’ll do very well… we’re now near the top.”

Referring to the relationship between the NASDAQ and Bitcoin, Chambers said that “Fed liquidity” explained the close correlation between the two.

“When they do a twist on the yield curve, it goes into markets,” he said. “It just doesn’t go into equities… it goes into crypto too, because they’re all connected.”

When it comes to altcoins, Chambers said he maintains Ethereum holdings, expecting a short-term rally following Bitcoin’s peak. However, he criticized Ethereum’s frequent changes, such as its protocol change from proof-of-work to proof-of-stake.

“Human beings being in control of cryptos debases them,” he said, adding that Bitcoin does not have this problem because “there ain’t no Satoshi Nakomoto to say I’ve changed my mind.”

Chambers also discussed Solana’s momentum, branding it as “rock and roll” compared to Ethereum’s “jazz.” When it comes to meme coins, Chambers said that their rally meant that the market is near its peak.

CHINA:
CHINA’S RESPONSE TO TARIFFS
Keyu Jin, November 27, 2024

Keyu Jin, a global economics professor and author of The New China Playbook: Beyond Socialism and Capitalism, discussed China’s economy, and Beijing’s response to Trump’s potential tariffs.

Jin said that China would respond to tariffs by strengthening trade alliances globally. She explained that during Trump’s first term in office, “40 percent of the reduction in trade with the U.S… was compensated by more trade with other economies.”

She pointed to how China is working to bolster trade with Europe, especially in the EV sector.

“Trump marks an anti-globalist, anti-multilateralist, isolationist, de-sinicization policy,” she said. “This could potentially push Europe to work with other countries on a grander and broader scale.”

If Trump ends up implementing tariffs on China, Jin said that China would respond, but not with “extreme measures.”

“The weighted average of tariffs is already at 13 percent,” she said. “Half of the goods that China exports to the U.S. are already suffering from pretty high tariffs, so any additional change on these tariffs is actually quite vacuous.”

When it comes to diplomacy, Jin said that China views Trump as more “peace oriented,” given his intent to resolve conflicts in Ukraine and The Middle East. This, in turn, could make Trump easier for Beijing to negotiate with.

“Geopolitically, we might be seeing a slightly different road map compared to the Biden Administration,” she said. “Obviously, we’re talking about the more sensitive areas — The South China Sea, Taiwan, and so forth.”

WHAT TO WATCH

Tuesday, December 3, 2024

• Job Openings — This is the total of all job vacancies, including those for part-time or temporary employment.

Friday, December 6, 2024

• Unemployment Rate — This BLS release shows the percentage of unemployed persons in the U.S. labor force.

TABLE OF CONTENTS

1. Market Recap: Ray McGovern on whether Russia will nuke Ukraine

2. EQUITIES: Ed Yardeni predicts 8,000 on S&P 500 by 2026

3. ECONOMY: This is how a Great Depression could happen, says Peter Grandich

4. CRYPTO: Bitcoin will rally after crashing in January, predicts Ran Neuner

5. CRYPTO: Ben Cowen on the trigger for $100k Bitcoin

6. GOLD: Jeff Christian on when gold will shatter records

7. PUBLIC POLICY: Darrell Bricker on Canada’s immigration crisis

8. What to Watch

MARKET RECAP

Latest News. On Sunday, November 17th, The White House gave Ukraine permission to use U.S.-made long-range missiles to strike Russia, an unprecedented move that risks escalating the Ukraine war.

The Kremlin responded by updating its nuclear doctrine, stating that an attack from a non-nuclear state – like Ukraine – which is backed by a nuclear power will be treated as a joint assault on Russia.

Following this, Ukraine launched American ATACMS (Army Tactical Missile Systems) into Russia, and also used British-made Storm Shadow missiles. The Russian Defence Ministry claimed that it intercepted most of these missiles before they hit their destinations.

Markets responded with an exit out of risk assets. Stocks fell on Tuesday; the Dow Jones opened down 0.8 percent, and the broader S&P lost 0.4 percent. Global bond yields fell.

On Thursday, U.S. and other Western embassies in Kiev announced that they were closing, in preparation for a major Russian assault. That same day, Putin announced that Russia had fired an Intercontinental Ballistic Missile (ICBM) into Ukraine.

Will this latest round of escalation lead to a hot war between the United States and Russia, or is The Kremlin’s threat a bluff?

Joining us to discuss these topics was Ray McGovern, former CIA officer and Director of The National Intelligence Estimates under President Ronald Reagan. McGovern prepared President Reagan’s daily security briefings.

McGovern said that Putin is “winning” in Ukraine, and does not see U.S.-supplied missiles as a game-changer. Rather, he said that The White House’s latest moves were about domestic politics.

“They’re doing this because they want to go out into the Western sunset, right after the administration is over, saying, look, we gave the Ukrainians everything they asked for… and it’s not our fault they [the Ukrainians] are falling apart,” said McGovern. “I think he [Putin] is going to attrit… until a new administration comes in, and then he’s going to be able to deal from a position of strength.”

McGovern characterized the authorization of ATACMS as a “mini coup,” and said it was orchestrated by Secretary of State Antony Blinken and National Security Advisor Jake Sullivan without President Biden's direct involvement or Pentagon consent.

McGovern predicted that ATACMS will not alter the war’s trajectory significantly. Their limited range (190 miles) and the small number of missiles make them ineffective.

“[Putin] has got the upper hand,” said McGovern. “Is he going to allow himself to be provoked by pin-pricks?”

McGovern predicted that Putin will wait until Trump gets into office, and then negotiate an end to the Ukraine conflict.

Market Movements

From November 15 to November 22, the following assets experienced dramatic swings in price. Data are up-to-date as of November 22 at 9pm ET (approximate).

1. MicroStrategy Inc. — up 23.8 percent.

2. Peloton Interactive — up 23.1 percent.

3. Dogecoin — up ~20 percent.

4. Target Corporation — down 17.8 percent.

5. Cocoa — up 6.8 percent.

The following major assets experienced the following price movements during the same time interval.

DXY — up 0.07 percent.

Bitcoin — up 12.6 percent

Gold — up 6 percent.

10-year Treasury yield — down 0.03 percent.

S&P 500 — up 1.7 percent.

Russell 2000 — up 4.5 percent.

USD/yuan — up 0.02 percent.

EQUITIES:
8,000 S&P TARGET BY 2026
Ed Yardeni, November 19, 2024

Ed Yardeni, President of Yardeni Research, returned to the show to provide his outlook on markets, and to extend his previously bullish call.

Yardeni was confident in a continued rally for U.S. equities, due to the resurgence of “animal spirits” under President Donald Trump. He mentioned Trump’s corporate tax reductions, from 21% to 15%, and deregulation as catalysts for market growth.

“We’ve raised our [S&P 500] outlook for the end of this year to 6,100, for next year at 7,000, and the year after that 8,000,” said Yardeni. “Those are actually very consistent with an improvement in our earnings outlook, based on a lower corporate tax rate, deregulation, and continuing strength in the U.S. economy.”

Yardeni addressed the risks from tariffs, comparing the United States’s escalation in the trade war with China to the Smoot-Hawley Tariff Act of 1930, which economists claim worsened the Great Depression.

“If next year we get something like the Smoot-Hawley tariff, then we could get a depression, or we could first get inflation that causes the Fed to tighten, and that causes a recession or something worse,” said Yardeni.

Yet Yardeni dismissed concerns about an imminent recession, saying that Trump is a “dealmaker” who is merely using the threat of tariffs to negotiate with China.

He pointed to strong consumer spending, particularly by Baby Boomers with substantial wealth. He even suggested that a declining savings rate could fuel further economic growth.

“The Baby Boomers have $79 trillion in net worth,” said Yardeni. “They’re retiring and they’re spending that money”

When it came to favoured sectors, Yardeni said he prefers technology and communication services, which together account for 40 percent of the S&P 500. These sectors have been top performers during the current bull market.

He was less enthusiastic about bonds, expecting yields to stabilize between 4 percent and 5 percent.

“I think you’ll earn the coupon, but you’re not going to make much money on the capital side, in capital gains,” he said.

ECONOMY:
WHAT WILL TRIGGER ANOTHER GREAT DEPRESSION?
Peter Grandich, November 18, 2024

Peter Grandich, Founder of Grandich & Co, returned to the show to discuss prospects for the U.S. economy following the Trump election victory.

Grandich was optimistic about Trump’s proposed reforms, including tax cuts and government efficiency measures. He also praised Trump’s stance on ending U.S. involvement in Ukraine and NATO funding imbalances.

“America has always had to fund so much more of the responsibility [for NATO],” said Grandich. “Western Europe has a lot of issues, and quite frankly it’s time for them to spend more of their own money defending their main interests.”

When it came to the U.S. national debt, which recently surpassed $36 trillion, Grandich criticized the lack of fiscal discipline across administrations and was skeptical about Trump’s ability to tackle the deficit.

“It is going to become more and more difficult to service this debt, especially as we continue to grow multi-trillion dollar yearly deficits” he said. “When we start to get to $50 trillion and we only have a 5 percent interest, we’re going to have a yearly interest payment of $2.5 trillion.”

On precious metals, Grandich said that central bank buying and BRICS-related speculation had fueled a gold rally earlier this year. However, he saw limited upside in the near term due to easing central bank demand and the strong U.S. dollar.

“I don’t think gold has much chance to get back to the previous highs of this year until we get to 2025,” said Grandich.

The dollar's strength, driven by rising long-term rates, has further pressured gold prices. Grandich did not expect the dollar to surge significantly higher, but he warned of volatility stemming from potential trade wars and protectionist policies.

Grandich said that rising long-term interest rates could have a more profound impact on the economy than other factors. He said that 25 percent of Americans are using credit cards for basic needs.

“If interest rates don’t go lower and keep going higher, they’re going to have even less to go forward on,” said Grandich.

He predicted that 10-year Treasury yields could exceed 5 percent in the coming quarters, intensifying pressure on both consumers and the broader economy.

CRYPTO:
BITCOIN CRASH BY JANUARY, FOLLOWED BY RALLY
Ran Neuner, November 21, 2024

Ran Neuner, Host of Crypto Banter, joined the show to discuss the state of the crypto markets.

Bitcoin is up over 40 percent in the past month, and Neuner said it has the potential to reach $100,000 in the near term.

“You’ve got this perfect storm of bullish news for Bitcoin,” Neuner explained, pointing to the launch of Bitcoin options, and institutional players like MicroStrategy raising funds to purchase Bitcoin.

However, Neuner predicted a correction by January, characterizing it as part of the market’s natural rhythm.

“In 2016 and 2017, we had five corrections in the run-up, which were all over 30 percent” he said “I’m trying to get my portfolio into 30 percent cash for when the inevitable dip comes.”

He attributed much of Bitcoin’s recent performance to the recent U.S. election.

“We’ve gone from an administration that ran an anti-crypto army… to one that’s running a pro-crypto army,” he said. “It feels like all the puzzle pieces have fallen for the most bullish four years ahead for crypto.”

He mentioned President-elect Trump’s willingness to meet with industry leaders like Coinbase CEO Brian Armstrong, as well as SEC Chair nominees with pro-crypto stances.

Neuner added that while Trump’s proposed Bitcoin strategic reserve is “far-fetched,” it is also “the most exciting thing that I’ve ever heard.”

Although Bitcoin is thriving, Neuner said that altcoins, including Ethereum, have under-performed.

“Bitcoin goes up a lot and alt coins go up a little,” he remarked. “It’s a weird relationship that they have at the beginning of a cycle. It’s nothing to get excited about, or stressed about.”

However, he criticized Ethereum’s lagging performance, citing the rise of competitors like Solana.

“Solana can do everything that you can do on ETH much faster and at a fraction of the cost,” Neuner argued. “I don’t really see any reason to be holding ETH, other than the fact that… Coinbase runs the predominant Layer Two on Ethereum, called the Base chain.”

CRYPTO:
WHEN BITCOIN HITS $100K
Ben Cowen, November 18, 2024

Ben Cowen, founder of Into the Cryptoverse, joined us to share his insights on Bitcoin's current performance, market dominance, and the broader cryptocurrency ecosystem.

Cowen addressed the much-anticipated milestone of Bitcoin reaching $100,000, emphasizing its psychological and market impact.

“It'll make headlines,” he said. “Whenever it hits $100K, there likely will be some form of a selloff.”

Cowen's analysis centered on Bitcoin's market dominance, which he had forecasted to hit 60 percent of the crypto market cap —a prediction that recently materialized.

“Bitcoin dominance spends three years going up and one year going down,” he explained, citing historical patterns. “I don't think it will go all the way back up to [its previous peak of] 73 percent because of the stablecoin market cap.”

He explained that the stablecoin market cap is much higher than it was before, and is likely to remain high.

Cowen compared Bitcoin’s current price movements to historical cycles, noting similarities with 2019. He attributed some of Bitcoin's current resilience to improving global liquidity, despite the Federal Reserve's ongoing quantitative tightening (QT).

Addressing the altcoin market, Cowen pointed out that Ethereum (ETH) and other altcoins have lagged behind Bitcoin during this cycle. Ethereum's performance, Cowen said, hinges on monetary policy.

“[ETH] does outperform Bitcoin in a QE market, with the Fed printing money,” he said. “But in QT markets, it underperforms Bitcoin.”

He also highlighted XRP’s recent 131 percent rally, attributing it to a classic double-bottom formation on its Bitcoin pair.

“The way to be successful in crypto is to value your portfolio in satoshi rather than U.S. dollars” Cowen said. “So every time you take a trade on alt coins, by taking some of those profits back to Bitcoin, it helps to preserve the long-term value.”

GOLD:
GOLD WILL SHATTER RECORDS IN 2025
Jeff Christian, November 23, 2024

Jeff Christian, managing partner of CPM Group, returned to discuss the trajectory of gold, silver, and industrial metals following Donald Trump's re-election.

Gold has fallen by $200 from its highs, a slide that began before the election but intensified afterward. Christian attributes this drop not to “economic euphoria” from Trump's win but rather to profit-taking and broader sell-offs across commodities.

“Gold, silver, aluminum, copper, platinum, palladium, oil, and natural gas all fell sharply starting October 31st,” he explained.

Despite rising inflation expectations, gold prices have not followed suit like they usually do. In particular, 10-year Treasury yields, which track inflation expectations, have not moved inversely with gold prices.

“I don’t know that the 10-year is rising on inflation expectations,” he said. “I think it might be rising on a broader set of economic concerns.”

He pointed to recession risks and fiscal deficits as drivers behind the 10-year’s rise.

Despite their recent correction, Christian said that he has a bullish outlook for precious metals.

“We’re looking for gold prices to average around $2,700 over the next year, with potentially higher prices in 2026,” he said, while adding that “we think that we are within 24 months of a peak in gold prices.”

Silver is expected to track gold, with investment demand playing a critical role in driving prices.

“A record average silver price above $35 an ounce is possible in the next few years,” he projected.

Industrial demand remains a headwind for silver, tied closely to broader economic conditions.

PUBLIC POLICY:
CANADA’S IMMIGRATION CRISIS
Darrell Bricker, November 22, 2024

Darrell Bricker, Global CEO of Ipsos Public Affairs, returned to the show to analyze Canada’s most pressing issues. The discussion covered immigration, housing, healthcare, and the broader economic outlook.

Bricker highlighted growing public concern over immigration, which has become the fastest-rising issue in Canada.

Canada’s population growth rate in 2023 was 3.2 percent, five times higher than the OECD average; more than 90 percent of that was due to immigration.

“People [in Canada] are not happy with what’s happening with immigration,” he said. “Now when people say, ‘why am I having a hard time getting access to healthcare?,’ well immigration is a driver of that, so they feel.”

This has prompted Prime Minister Justin Trudeau to cut permanent immigration levels by 20 percent, alongside reductions in temporary worker and international student programs.

The potential for increased migration from the U.S., following Donald Trump’s election victory, has further intensified the debate. Bricker noted that even a modest influx—10 percent of the estimated 11 million illegal migrants in the U.S.—could strain Canada’s public services.

“Our system is really not capable of dealing with it,” he warned, citing challenges in healthcare, housing, and asylum processing.

The interview also touched on Canada’s ability to manage its long, undefended border with the U.S. amid potential surges in asylum claims. Bricker expressed skepticism about U.S. cooperation under a Trump administration.

“I don’t see that we’re going to get an awful lot of sympathy from Donald Trump on this question, because he just wants them [illegal immigrants] out,” he said.

He predicted that asylum claims would further overload Canada’s immigration system, adding, “You’ll be here for a long time before your case actually gets heard.”

Bricker stressed the need for long-term solutions to Canada’s demographic and economic challenges, saying that immigration is needed in the short- to medium-term to offset Canada’s declining birth rate.

WHAT TO WATCH

Tuesday, November 26, 2024

• New Home Sales — This shows the number of sales of newly-built homes in the previous month.

Wednesday, November 27, 2024

• PCE Index — The Personal Consumption Index (PCE) and Core PCE Index is the Federal Reserve’s preferred measure of the price level.

TABLE OF CONTENTS

1. Market Recap: Sheila Bair on how rising debt can trigger financial crisis

2. EQUITIES: Gareth Soloway on where stocks will reach their top

3. ECONOMY: Peter Schiff forecasts mounting inflation, bank failures

4. BONDS: Interest rates could surge, says Peter Boockvar

5. GOLD: Gary Wagner on whether the gold selloff will intensify

6. What to Watch

MARKET RECAP

Latest News. CPI (Consumer Price Index) Inflation hit 2.6 percent in October on a year-over-year basis, in line with Dow Jones estimates. Core CPI inflation, which excludes food and energy, hit 3.3 percent in October on a 12-month basis.

Stock market futures rose after the news, while Treasury yields dropped.

The CPI inflation reading for September was 2.4 percent, suggesting that inflation is accelerating.

In other news, President-elect Donald Trump’s cabinet is beginning to take shape, with major picks including Marco Rubio as Secretary of State, Peter Hegseth as Secretary of Defense, and Tulsi Gabbard as National Security Director.

A surprise announcement on Thursday was Robert Kennedy Jr.’s appointment as Secretary of Health and Human Services (HHS), which caused pharmaceutical stocks to plummet, given Kennedy’s vaccine-skeptic views.

The new Trump administration will have to oversee a historically high U.S. debt of $36 trillion, with a debt-to-GDP ratio of 120 percent.

Failure to rein in this debt may result in a financial crisis and a loss in investor confidence, according our guest Sheila Bair, former FDIC (Federal Deposit Insurance Corporation) Chair and former Board Chair of Fannie Mae.

Bair said that excessive debt levels could erode investor confidence, leading to higher interest rates and significant economic pain.

“Make no mistake, if we continue on this path, investors will eventually lose confidence in our debt,” said Bair. “The change could be gradual or sudden, but the consequences will be painful no matter the pace.”

She said that the U.S. has long benefited from its status as the world's reserve currency, allowing the U.S. government to easily take on debt, but she warned that this advantage is not guaranteed indefinitely.

“We are the world's reserve currency,” said Bair. “That’s going to keep happening until it doesn’t.”

Addressing potential solutions, Bair called for maintaining moderate interest rates and emphasized that reducing debt relative to GDP is essential to regaining investor confidence.

Turning to the issue of inflation, Bear explained that it is driven by an imbalance between money supply and economic output, using the example of her children's book, Princess Penny and the Money Wizards, to illustrate how money printing causes inflation.

She also said that while low interest rates are politically popular and can temporarily boost borrowing, they often encourage risky financial behavior, asset bubbles, and economic instability.

“It’s a common misperception that low interest rates help the economy,” Bair explained. “The empirical research just isn’t there.”

Market Movements

From November 8 to November 15, the following assets experienced dramatic swings in price. Data are up-to-date as of November 15 at 9pm ET (approximate).

1. MicroStrategy Inc. — up 26 percent.

2. Moderna — down 21.3 percent.

3. Dogecoin — up ~100 percent.

4. Walt Disney Co. — up 16.2 percent.

5. Copper — down 4.9 percent.

The following major assets experienced the following price movements during the same time interval.

DXY — up 1.6 percent.

Bitcoin — up 20.6 percent.

Gold — down 4.6 percent.

10-year Treasury yield — up 3.1 percent.

S&P 500 — down 2.1 percent.

Russell 2000 — down 4 percent.

USD/yuan — up 0.8 percent.

EQUITIES:
THIS IS WHERE STOCKS WILL TOP
Gareth Soloway, November 11, 2024

We invited Gareth Soloway, Chief Market Strategist of VerifiedInvesting.com, to the show to give us his reaction to the recent rally in risk assets follow last week’s election.

Soloway said that while the market's rally was expected due to Trump’s pro-business stance, the scale of the rally was surprising. He had a long-term target range of 6,000 to 6,100 points. This, according to Soloway, corresponds with the 1929 market high before The Great Depression.

“We are back to a trend line that goes back to 1929, almost a hundred years ago,” he said. “Think about what happened after each of these highs—it does make me a little bit concerned.”

When it comes to the economy, Soloway said that he was concerned about Trump’s new tariffs, which could raise the cost of goods and services, hence leading to more inflation. He said that retaliatory tariffs from other countries may worsen this problem.

“Tariffs can increase production in the U.S., but they also mean higher prices, which is inflationary,” said Soloway. “Don’t think that retaliation won’t come, especially with the level of tariffs that are going to be put on.”

He mentioned that while the Federal Reserve might want to cut rates to stimulate the economy, inflationary pressures from tariffs and other economic policies could limit their ability to do so.

“I do think you’re going to have that uptick in inflation over the next year or so, and that’s going to put the screws to the Fed,” he said.

Soloway maintained a cautious yet optimistic view on gold and bonds for 2025. He expected potential pullbacks in equities and Bitcoin, while anticipating that gold could regain its momentum.

ECONOMY:
INFLATION TO SURGE, BANKS WILL FAIL
Peter Schiff, November 12, 2024

Peter Schiff, Chief Market Strategist at Euro Pacific Asset Management, joined the show again to give us his economic outlook following Trump’s election to office.

Schiff said that while official GDP numbers may show growth, the reality is that this growth is inflated and not indicative of true economic health.

He said, “All these numbers are a function of inflation masquerading as growth. The real economy is weak.”

In particular, Schiff said that the U.S. is already experiencing stagflation, even if the Federal Reserve refuses to acknowledge it. He said that the Fed is in a difficult position to respond, given its limited monetary tools like rate cuts and quantitative easing.

Schiff also warned that the current higher interest rate environment, coupled with an increasing national debt, poses severe risks.

"We’re going to have much higher interest rates with much bigger debt," he said, predicting that this combination will push the U.S. towards greater economic instability.

Schiff said that the new Trump administration will not be able to effectively deal with rising debt levels, despite promises of a Department of Government Efficiency to combat wasteful spending.

“When Trump came to office [in his first term]... the annual deficit spending was about $650 billion officially,” said Schiff. “Now it’s well over $2 trillion a year.”

He also expressed concerns about the health of the banking system, emphasizing that banks are in a fragile state due to their exposure to low-yielding debt accumulated during a period of zero interest rates.

“The problem is the economy can't handle those higher rates,” said Schiff, warning about what would happen if Treasury yields rose to 6 percent. “A lot more banks would fail."

Schiff was bullish on gold despite recent declines post-Trump victory, arguing that the current market sentiment is mistaken.

He said, "Gold went up by about 40% during Trump's first term... I think it’s actually going to do a lot better despite what the markets are saying right now."

BONDS:
INTEREST RATES ABOUT TO SURGE
Peter Boockvar, November 10, 2024

We spoke again with Peter Boockvar, CIO of Bleakley Financial Group, about his outlook for various assets under the Trump economy.

Boockvar said that the global bond market could experience an “unwind of an epic bubble.” He predicted that while the Federal Reserve (Fed) may continue to cut short-term rates, “longer-term interest rates across the yield curve are going to stay higher.”

In particular, he forecasted that the 10-year U.S. Treasury yield may re-test the 5 percent level due to worries about U.S. debt and deficits — or international factors, such as tariff battles.

He criticized the Fed for potentially misjudging the market's response to rate cuts, saying, “J. Powell in his press conference...was rather dismissive when someone asked him about this rise in long rates after you cut interest rates.”

Boockvar believed that this attitude could lead the Fed into “another mistake” if it fails to respond adequately to market signals, like the price of gold and the bond market's movements.

“A lot of what Powell tried to do...has sort of backfired and that's why I actually thought he should have done nothing at the November meeting,” said Boockvar.

The rise in the 10-year yield, Boockvar pointed out, was driven by a combination of inflation expectations and supply-demand dynamics in the bond market. This could reflect investors' growing concern over debt and deficit issues, not just in the U.S. but also observed in other sovereign bond markets, such as the U.K. and France.

GOLD:
WILL THE GOLD SELLOFF INTENSIFY?
Gary Wagner, November 13, 2024

Gary Wagner, Editor of TheGoldForecast.com, discussed the current state of the gold market following the election of Donald Trump as the 47th President of the United States.

Wagner said that Trump's win brought certainty to the markets, boosting equities and Bitcoin while causing a $200 decline in gold prices.

“Gold dropped $200 from the all-time record high due to the uncertainty premium being removed after Trump's election win,” say Wagner.

The strong performance of the U.S. dollar post-election also contributed to gold's downturn, as the two assets usually move in opposing directions.

Wagner said that Trump’s foreign policy, which would involve pacifying conflicts in Ukraine and The Middle East, would also put downward pressure on gold prices. He provided a technical analysis of gold's recent movements, identifying that it had likely entered a corrective phase after peaking at $2,800.

“I believe that $2,600, maybe $2,580, is the absolute floor of this current correction,” predicted Wagner, who added that “the fundamentals that propelled gold to $2,800 remain intact, suggesting we could see gold exceed that level after this correction.”

Wagner said that long-term investors would be wise to accumulate gold during this dip, with the expectation that prices could exceed $2,800 in the future. He also offered insights on silver, noting its high beta and recent price fluctuations that mirrored gold's movements.

“For long-term investors with a two- to three-year horizon, this pullback presents an excellent point to accumulate gold,” he said.

WHAT TO WATCH

Tuesday, November 19, 2024

• Housing Starts — This tracks the number of new residential construction projects that have begun.

Thursday, November 21, 2024

• Existing Home Sales — This shows the number of sales of existing homes.

TABLE OF CONTENTS

1. Market Recap: Steve Hanke on Trump’s election — ‘revolt against the elites’

2. EQUITIES: Milton Berg on Trump’s effect on markets

3. EQUITIES: Chris Vermeulen on ‘euphoric’ post-election market rally

4. ECONOMY: Nobel Laureate Simon Johnson on tariffs and hyperinflation

5. ECONOMY: Will interest rates spike after the election? Kathy Jones weighs in

6. ECONOMY: U.S. Senate candidate John Deaton on U.S. debt default

7. POLITICS: Why Trump won, and what it means for the economy — Matt Gertken

8. What to Watch

MARKET RECAP

Latest News. Donald Trump won the U.S. presidential election on Tuesday, November 6th, making him the 47th President of the United States of America.

Risk assets reacted positively, with the Dow Jones up over 1,200 points on Wednesday morning; bank stocks performed particularly well. Bitcoin reached a record high of $75k on the day of the election, and the U.S. dollar index rose 1.65 percent. Treasuries, however, fell in price, and gold prices slid to a three-week low.

In other news, the Federal Reserve cut the Fed Funds Rate by 25 bps, in line with market expectations.

Steve Hanke, Professor of Applied Economics at Johns Hopkins University, had predicted a Trump win, and joined the program to give his outlook for a post-election economy.

Hanke said that the election of Trump represents a “revolt against the elites.” He emphasized that over the last four years, Americans grew frustrated with how Washington D.C. and media elites managed the country, particularly in handling fiscal and monetary policies that seemed to disproportionately benefit the wealthy.

Hanke predicted that Trump would focus on tax cuts rather than reining in government spending.

“Trump will likely focus on tax reductions,” said Hanke. “His attention to controlling the fiscal deficit will likely be lax.”

Hanke also mentioned the idea of Elon Musk heading a proposed “Department of Government Efficiency” under a potential Trump administration.

He drew a parallel to the Grace Commission during the Reagan era, which aimed to identify and cut waste, fraud, and abuse in government spending. He said that while the Grace Commission produced extensive reports, it ultimately did not result in significant policy changes or actions.

When it comes to the Federal Reserve, Hanke criticized the Fed under Chair Jerome Powell, calling it a "complete disaster," especially during its COVID-19 response. He explained how the Fed monetized over 90 percent of the increased deficit by purchasing government bonds, which led to a massive expansion of the money supply and, consequently, inflation.

Finally, when it comes to foreign policy, Hanke said that Trump would struggle to control conflicts like the Israel-Hamas conflict. While he might have some influence on Ukraine, Hanke said that Russia already holds a strong position.

“The winner calls the tune,” said Hanke. “The Russians have won the war [in Ukraine] so far, so they’ll be dictating the terms.”

Market Movements

From November 1 to November 8, the following assets experienced dramatic swings in price. Data are up-to-date as of November 8 at 9pm ET (approximate).

1. Beyond Meat — down 11.8 percent.

2. Palantir Technologies — up 39.3 percent.

3. Coffee (commodity) — up 4.5 percent.

4. Tesla — up 29 percent.

5. Moderna — down 14.3 percent.

DXY — up 0.6 percent.

Bitcoin — up 10.4 percent.

Gold — down 2 percent.

10-year Treasury yield — down 1.2 percent.

S&P 500 — up 4.7 percent.

Russell 2000 — up 8.6 percent.

USD/yuan — up 0.8 percent.

EQUITIES:
MARKETS ENTERING TOPPING PHASE
Milton Berg, November 8, 2024

Milton Berg, Founder of MB Advisors, joined us to discuss his analysis of how Trump’s presidency would affect markets.

Berg said that Trump, known for his frugality and negotiation skills, would focus on austerity and cutting waste, which could suppress market growth in the early years but ultimately be positive for the economy.

Cautioning that the response to Trump’s election could be a “buy the rumour, sell the news,” event, Berg said that markets would rally after the initial optimism following a Trump victory, followed by a potential decline. He also said that Trump would promote austerity.

In particular, Berg predicted that Trump would hire people like Elon Musk and Scott Bessent to trim the size of government. He drew a parallel between Donald Trump and President Ronald Reagan, both of whom he labelled “capitalist” leaders. He said that after Reagan was elected, the market saw a significant rally but ultimately reached a peak following austerity measures.

“Reagan was great for the economy, but in order to do the great things he did, he had to first have some pain for two years,” said Berg.

Berg also addressed the concern that Trump's policies aimed at reducing the debt and government spending could be deflationary.

He said, “The risk is deflationary or disinflationary at this point... paying down debt is bearish for stock markets initially.”

He explained that this is because paying down the debt requires imposing cuts on government spending.

EQUITIES:
TRUMP WINS, ‘EUPHORIC’ MARKET RALLY
Chris Vermeulen, November 6, 2024

We were joined by Chris Vermeulen, Chief Market Strategist at The Technical Traders, to discuss market moves following Donald Trump's victory in the U.S. presidential election.

The financial markets showed a significant reaction. The S&P 500 rose by 2%, the NASDAQ by 2.3%, while gold prices fell by 2.7%. Bitcoin also hit a new all-time high, reaching around $74,500.

Vermuelen said that this was due to Donald Trump being viewed as a pro-business candidate, and that he has prominent business leaders like Elon Musk backing him.

“Trump and Elon Musk, they won together, more-or-less,” said Vermeuelen. “They’re both pro-business, and so we’re seeing small caps skyrocket today, and stocks across the board.”

Despite his short-term bullish outlook, Vermeulen said he is skeptical about a long-term bull market due to underlying economic cycles.

He said, "A one-day rally doesn't change an entire massive economic cycle," indicating that while markets could see further gains, caution is warranted.

Vermeulen said that the current market, even amidst rallies, could be in a late-stage cycle where a reset is looming. This reset would involve a significant correction or decline in asset prices, akin to what was observed during the 2008 financial crisis or the 2000 tech bubble.

“I believe stocks are overdone,” said Vermeulen. “We could have a big market correction or financial reset at any point.”

He said that “we’re many weeks” away from the market “breaking down” into a bearish pattern.

ECONOMY:
WILL TRUMP TARIFFS TRIGGER HYPERINFLATION?
Simon Johnson, November 6, 2024

We welcomed Simon Johnson, 2024 Nobel Prize in Economics laureate and Professor of Entrepreneurship at MIT, to the show.

Johnson won the Nobel Prize alongside his colleagues Daron Acemoglu and James Robinson “for how institutions are formed and affect prosperity.” He is also the former Chief Economist at the International Monetary Fund (IMF).

Johnson said that unrealized losses in U.S. banks are a significant concern, especially given the Silicon Valley Bank crash in 2023. He said that while there's increased awareness, these issues remain problematic.

“The regulators and supervisors are paying a lot more attention than they were before Silicon Valley Bank,” he said.

He added that the rising U.S. debt burden could trigger a financial crisis, in line with similar warnings offered by former FDIC Chair Sheila Bair. However, Johnson said that financial markets and politicians “do not take this issue seriously,” which is a concern.

Johnson also said that “too big to fail” (TBTF) banks pose significant risks to the financial system. He believes that failure is a fundamental part of capitalism, but these major banks are shielded from it in an unprecedented manner through bailouts and other taxpayer-subsidized protections. This, according to Johnson skews incentives toward taking excessive risks, as executives have little personal downside.

Finally, Johnson touched upon Donald Trump’s proposed tariff policies. He said that Trump’s plans for imposing sweeping tariffs among to a "massive tax" on lower-income Americans who rely heavily on imported goods. According to Johnson, such tariffs disproportionately affect low-income consumers, potentially costing them thousands of dollars annually in higher prices.

He also said that Trump’s ideas to replace income taxes with tariffs is unfeasible, calling them a "ludicrous fantasy" that doesn’t add up mathematically.

ECONOMY:
WILL INTEREST RATES SPIKE AFTER ELECTION?
Kathy Jones, November 4, 2024

We were joined by Kathy Jones, Chief Fixed Income Strategist at Charles Schwab, to discuss the economy and its effect on the bond market.

Jones said that while inflation expectations have risen from summer lows, they are stabilizing in the low-to-mid 2 percent range. This reflects a resilient economy that has performed better than anticipated, driven largely by consumer spending.

“The economy’s been much more resilient,” said Jones, “and that means the Fed can’t cut rates as much, and probably inflation doesn’t drift down as much as had been anticipated.”

Jones’s base case includes one more rate cut in 2024, followed by a gradual easing to a 3-3.5 percent terminal rate by the end of 2025. Despite certain categories like insurance and housing keeping inflation from dropping more, a 2-2.5 percent inflation rate would be acceptable for the Federal Reserve, said Jones.

Although unemployment has ticked up slightly from record lows, it remains close to full employment. Jones said that jobless claims are still low, indicating a healthy labor market.

“The labor market still looks healthy,” she said. “We could see it tick up a bit, but we’re not looking for it to really accelerate to the upside or downside.”

Jones’s outlook includes expectations of a “bull steepener” in the yield curve, with longer-term yields rising less than shorter-term ones. The 10-year yield is considered reasonably priced at 4-4.25%. She pointed out that the MOVE index, indicating bond market volatility, has increased due to rising rates and economic uncertainties, including the elections and fiscal policy ambiguity.

ECONOMY:
U.S. DEBT DEFAULT INEVITABLE
John Deaton, November 2, 2024

We welcomed John Deaton, Senate candidate and Managing Partner at Deaton Law Firm, to the show to discuss his views on the economy and cryptocurrencies.

Deaton said that the U.S. is facing multiple crises: immigration, debt, inflation, opioid abuse, and foreign conflicts. He criticizes the current leadership, particularly Elizabeth Warren, who he was running against, for being divisive and ineffective.

He warned that the U.S. is effectively broke, with $36 trillion in national debt, rising credit card and student loan debt, and $3 billion in daily interest payments. He opposed solutions that involve printing more money, as it exacerbates inflation and widens the wealth gap.

“If we continue down this path, we risk turning the United States into another Venezuela or Argentina,” said Deaton.

He proposed the "Government Spending Accountability Act" to require departments to pass audits or face funding freezes. He also advocated for a "single bill approach" to limit excessive and unrelated legislative additions.

“We can't tax enough,” said Deaton, “we can only grow our way out of this.”

Deaton has also been a prominent figure in opposing the SEC's classification of XRP as a security. He said that the government should foster innovation and adopt smart regulatory frameworks for blockchain and crypto, rather than trying to stifle the industry.

“The government overreach and what went down at the SEC by certain bad actors was just outrageous to me,” said Deaton. “When they control your money, they control your entire life.”

He also said that he is opposed to central bank digital currencies, saying that it’s a “hill I’m willing to die on for sure.”

POLITICS:
THE REAL REASON TRUMP WON
Matt Gertken, November 7, 2024

Matt Gertken, Chief Geopolitical Strategist at BCA Research, joined us to discuss the impacts of Donald Trump’s win in the presidential election, and what it could mean for U.S. economic policy and foreign policy.

Gertken said that Trump had won 51% of the popular vote, driven largely by economic concerns such as inflation.

“Inflation was the real driver in this election,” said Gertken, “and that 20 percent increase in price levels over the last three years really motivated a huge opposition.”

He predicted that the Republicans' economic approach would involve substantial tax cuts reminiscent of Trump’s 2017 policies. While this could stimulate the economy in the short term, it could also lead to higher budget deficits and inflationary pressures.

The potential fiscal expansion would put the Federal Reserve (Fed) in a challenging position.

“The Fed has to be a little bit more hawkish, a little more vigilant, and that’s where we then see President Trump get entangled with Chairman Powell once again,” said Gertken.

When it comes to foreign policy, Gertken said that Trump would push for a ceasefire in Ukraine, but would have a harder time de-escalating tensions in the Middle East. He also said that tensions with China would continue.

“Trump's election in 2016 marked a historic shift toward competition with China,” he said, “and that trajectory is going to continue with him back in office.”

WHAT TO WATCH

Wednesday, November 13, 2024

• Consumer Price Index — This measures the level of prices for goods and services that a typical U.S. consumer pays.

Thursday, November 14, 2024

• Producer Price Index — This measures the level of prices for inputs that U.S. producers pay.

Friday, November 15, 2024

• U.S. retail sales — These data show the total receipts of retail stores, reflecting consumer spending.

TABLE OF CONTENTS

1. Market Recap: Keith McCullough on ‘stagflation’ risk

2. ECONOMY: Inflation is inevitable, says Rick Rule

3. ECONOMY: Lyn Alden on investing in 2025 amidst growing deficits

4. COMMODITIES: Mike McGlone sees deflation in commodity markets

5. TECH: Why more liquidity will flow into tech, according to Jordan Nof

6. What to Watch

MARKET RECAP

Latest News. Markets are priming for the U.S. election on Tuesday, November 5th. Bloomberg predicts that gold, the U.S. dollar, and Bitcoin could rise in the event of a Trump win, while the yuan, peso, and 10-year Treasury futures would rise if Harris wins. Betting markets such as Polymarket predict that Trump will win, while major polls show a tight race.

Meanwhile, 10-year Treasury yields have been rising since the FOMC’s last rate decision, with markets pricing in higher inflation in the future. Both the Republican and Democratic parties’ fiscal plans are projected to raise the deficit, which could increase the price of goods and services. The Federal Reserve will meet on Wednesday, November 6th, to decide on whether to further cut rates.

Markets are pricing in a 25 bps cut. The current Fed Funds Rate is in the 475 to 500 bps range.

To discuss these developments, we welcomed to the show Keith McCullough, Founder and CEO of Hedgeye Risk Management, who highlighted the recent tumult in Treasury markets. McCullough singled out the MOVE Index, which proxies for Treasury volatility, and said that its recent rise indicates an increased risk of inflation.

“The MOVE Index going vertical is basically the sign that we’re right, that inflation is already reaccelerating,” said McCullough.

McCullough predicted a shift toward “stagflation,” where growth slows and inflation accelerates. Based on Hedgeye’s analysis, he projected that inflation would stay above the Fed’s 2 percent target, and remain “higher for longer.”

“When you have real growth slowing and inflation sticky and rising...that type of environment plays to hard assets,” he said.

In particular, McCullough said that investing in assets like gold, silver, and other commodities would be beneficial. He cautioned against bonds, leveraged small-cap stocks, or riskier credit options.

When it comes to the U.S. elections, McCullough said that Hedgeye does not base its models on specific election outcomes. He nonetheless observed that Trump had offered tax cuts — possibly even eliminating taxes completely and replacing them with tariffs.

“If you have tax cuts like that or anything that really gets off the back of small business in America...there’s no doubt you could see a lot of growth,” said McCullough.

In contrast, he said that a Harris administration would raise taxes and increase government spending, comparing such policies to “modern monetary theory,” and he said that this could increase inflation further.

Market Movements

From October 25 to November 1, the following assets experienced dramatic swings in price. Data are up-to-date as of October 1 at 9pm ET (approximate).

1. Trump Media & Tech Group (DJT) — down 27.4 percent.

2. JetBlue Airways — down 20.9 percent.

3. Natural Gas (Henry Hub) — up 5.9 percent.

4. Reddit, Inc. — up 38.9 percent.

5. Lumber — up 4.4 percent.

What follows are the price movements of major assets over the past week.

DXY — up 0.06 percent.

Bitcoin — up 2.5 percent.

Gold — no change.

10-year Treasury yield — up 3.7 percent.

S&P 500 — down 0.9 percent.

Russell 2000 — down 0.1 percent.

USD/yuan — no change.

ECONOMY:
INFLATION IS INEVITABLE
Rick Rule, November 1, 2024

We were joined again by Rick Rule, Founder of Rule Investment Media and Co-Founder of Battle Bank, to discuss the economy and what it means for various asset classes.

Rule said that while the U.S.’s recent economic growth had “exceeded” his expectations, it had not benefited all Americans equally.

“Our economy is becoming a sort of winners-take-all economy,” he said. “People who don’t have contestable jobs, people who are wage-takers and not wage-makers… have had a tough time.”

He added that officially reported inflation rates, using measures like CPI, understate the true rate of inflation. He said that CPI excludes taxes, which comprise a major household expense.

“The idea that a cost-of-living index doesn’t include tax makes it farcical on its face,” Rule said.

He added that “inflation is inevitable,” and that a “slowdown in the economy is likely.” In particular, he predicted that no matter which presidential candidate is elected next week, the government will use deficit spending to fund liabilities like Social Security and Medicare. This, in turn, will increase prices for consumers.

The Federal Reserve is unlikely to be able to control inflation in such a case, according to Rule.

Rule maintained that he is bullish on gold, due to inflationary pressures. He also predicted that nuclear power, and thus uranium, will gain acceptance due to the rising energy demands of tech companies, noting a “sea change” in sentiment towards nuclear.

Rule was particularly bullish on energy over the next five years, foreseeing higher prices due to insufficient capital investment by oil and gas companies. This lack of investment, he warned, could reduce production capacity, similar to past declines in countries like Mexico and Venezuela.

“Unless the oil and gas business...returns to their sustaining capital investments, we will surprise ourselves on the supply side,” he said. “I’m extremely bullish on the energy business in the five-year timeframe.”

ECONOMY:
DEBT CHAOS HITS TOP ASSETS
Lyn Alden, October 29, 2024

Lyn Alden, Founder of Lyn Alden Investment Strategy, joined the show again to provide her diagnosis of the state of the economy, and what it means for various assets.

Alden said that fiscal deficits and monetary policy would drive the investment outlook in 2025. Alden pointed to the debt ceiling suspension expiring in January, which would drive fiscal effects equivalent to “quantitative easing.”

“Draining the TGA [Treasury General Account] is pretty good for liquidity,” said Alden, “It’s not the only variable that affects liquidity, but it’s a meaningful one.”

On the U.S. election, Alden said that a Trump win would cause markets to price in the likelihood of tax cuts, while a Harris win would be more complex to assess.

“I don’t just look at what they’re saying,” said Alden, referring to the presidential candidates. “I look at what they’re going to be able to do with a somewhat mixed Congress... it kind of chops off the tails of what they want to do.”

Given the expected rise in liquidity, Allen said that gold, Bitcoin, and the energy sector would experience bullish trends.

“The handful of times where we see Bitcoin break its correlation with liquidity, it's often due to valuation extremes,” said Alden. “I expect liquidity to go up over next year, and I don't see any signs of extreme Bitcoin valuation... that combination generally leads me to be pretty bullish on Bitcoin.”

Alden also said that there had been a “quality rally” in the stock market, meaning that highly profitable, stable companies—such as those within the S&P 500 and NASDAQ—did well. She contrasts this with unprofitable tech or speculative stocks, which may continue to struggle under current conditions.

“This has been a situation where quality really does matter,” said Alden. “It's not just everything going up; it's things that are profitable or that are the best in class of what they do.”

COMMODITIES:
HOW ELECTIONS WILL STRIKE MARKETS
Mike McGlone, October 28, 2024

We welcomed back Mike McGlone, Senior Commodity Strategist at Bloomberg Intelligence, to provide his take for commodities as markets head into the election.

McGlone views deflationary trends as dominant, especially for commodities, which are seeing declines in demand worldwide.

“The trend in commodities is pretty significantly historically deflationary,” he said. “Industrial metals are lagging, and crude oil is down about 20%.”

He pointed to China’s economic slowdown as a key contributing factor, and said that their recent stimulus had made the economy reliant on government intervention.

“China is doing what Japan did 30 years ago,” said McGlone. “Their GDP is stabilizing, but like Japan, they’re now more reliant on intervention. China’s growth has peaked, and this is pulling down global demand.”

He also pointed to excess supply across commodities, technology, and renewable energy as factors in falling commodity prices. He warned that additional tariffs, especially if implemented by a Trump administration, could amplify deflation by disrupting trade further and forcing economies like China and Europe into deeper recessions.

“The U.S. would be less impacted as a net exporter, but tariffs would deepen the deflation in countries dependent on exports,” said McGlone.

However, McGlone was bullish on gold, attributing its record highs to increased geopolitical tensions and central bank buying.

“Gold is up about 50 percent since February 2022, beating everything,” he observed. “The unlimited friendship and the rapidly heating-up global cold war are number one for gold.”

He said that gold might see a pullback if there is political stability under a Harris presidency, or if the United States and China fix their fracturing relationship, easing geopolitical tensions.

TECH:
THIS IS THE TECH SELLOFF TRIGGER
Jordan Nof, October 31, 2024

Jordan Nof, Co-Founder and Managing Partner at Tusk Venture Partners, joined the show to discuss the tech landscape, venture capital trends, and factors that could derail the rally in tech. In general, Nof was optimistic about tech’s outlook.

Nof said that falling rates could improve liquidity by encouraging risk-taking and increasing acquisition activity. However, he said that increased FTC scrutiny has created a barrier to mergers and acquisitions.

“The FTC’s posture, people feel, has put a wet blanket on the market,” he said. “But that drives really important liquidity to venture funds like ours.”

He added that there has been more competition among tech startups for Series A funding, leading venture capital firms to be far more selective.

“The bar for quality is just much, much higher now,” Nof said. “The Series A now is happening at a much larger size, around $20 million at this point...with metrics at that stage looking a lot more like what Series B did five years ago.”

Addressing high valuations of major tech companies like Nvidia, Nof foresaw both risks and long-term growth potential. He said that valuations are high, and predicted that interest rate changes and momentum shifts could trigger corrections.

“The multiples that we're talking about right now are really, really high,” he observed. “Momentum coming out of the market or a rotation out of large-cap names could be enough to see a pullback.”

However, he predicted growth in tech sectors focused on healthcare, fintech, supply chain, and public safety.

WHAT TO WATCH

Tuesday, November 5, 2024

• U.S. Election. Elections for the President of the United States, House of Representatives, and 34 Senate seats will take place.

• Reserve Bank of Australia Monetary Policy Decision: The Reserve Bank’s Board will release its decision on interest rate policy.

Thursday, November 7, 2024

• Federal Open Market Committee Meeting: The FOMC will meet to decide on interest rate policy, in particular the path of the Fed Funds Rate.

• Bank of England Monetary Policy Committee Meeting: The Bank of England’s MPC will decide on interest rate policy.

TABLE OF CONTENTS

1. Market Recap: Steve Hanke on the post-election economic downturn

2. EQUITIES: David Bahnsen on whether a post-election market crash will happen

3. EQUITIES: Markets in final ‘blow-off top,’ says Bill Smead

4. EQUITIES: Ted Oakley on whether 2025 will be the worst year for investors

5. CRYPTO: SEC Commissioner Hester Peirce on SEC’s stalling on Bitcoin ETF

6. What to Watch

MARKET RECAP

Latest News. The International Monetary Fund (IMF) said that global debt is set to reach $100 trillion this year, or 93 percent of world GDP. In its latest Fiscal Monitor report, the IMF warned that “sustained debt buildups can raise the probability of debt distress or broader financial crisis.” The report provided recommendations, such as tax increases, to help governments manage rising debt levels.

In other news, the BRICS countries (Brazil, Russia, India, China, and South Africa) met in Kazan, Russia from October 22nd to October 24th for their annual summit. The meetings concluded with China and India resolving their border disputes, which had led to tensions between the two countries. It was also announced that China and Brazil would release their proposals for an end to the Ukraine conflict.

In the United States, betting markets like Polymarket are suggesting a Trump presidential victory in November, with Donald Trump having a sizeable lead over Kamala Harris.

To discuss these developments, we were joined by Steve Hanke, professor of economics at Johns Hopkins University.

Hanke said that betting markets are usually better at predicting election outcomes than polling data.

“I tend to look at the betting markets… because they are objective and reliable and more accurate than the polling data,” said Hanke. “People are betting real money when they're engaged in those markets.”

Regardless of who is elected president in November, Hanke said that a recession will occur due to Federal Reserve policy. He explained that the Fed has been on a swift tightening cycle, increasing interest rates dramatically in response to high inflation. Yet, Hanke said that the Fed’s rate hikes had been too drastic.

“I think we'll have a recession because of this contraction in the money supply,” said Hanke, who pointed to past data which show that such contractions are associated with recessions.

When it comes to the IMF’s global debt projections, and concerns about a more debt crises, Hanke agreed that the rising debt is unsustainable. However, he criticized the IMF's typical solution.

“The only problem I have with the IMF, you know, their solution is more taxes,” he said. “Mine is less government spending.”

Hanke added that increasing taxes often causes economic slowdowns, and can lead to social unrest.

Finally, Hanke commented on the recent BRICS summit in Kazan, Russia, saying that “They [BRICS] are against sanctions. Well, I'm against sanctions too. It's a form of protectionism; they always backfire. They never work.”

He singled out sanctions on Russia in response to the Ukraine-Russia conflict, saying that diplomacy should be sought to end the war. He also said that the most concrete result from the BRICS Summit was an agreement between India and China to resolve their border conflict.

Market Movements

From October 18 to October 25, the following assets experienced dramatic swings in price. Data are up-to-date as of October 25 at 9pm ET (approximate).

1. Trump Media & Tech Group (DJT) — up 31.7 percent.

2. Newmont Corporation — down 15.4 percent.

3. Tesla — up 22 percent.

4. Cocoa — down 8.3 percent.

5. Coffee — down 5 percent.

DXY — up 0.8 percent.

Bitcoin — down 2.6 percent.

Gold — up 1 percent.

10-year Treasury yield — up 3.4 percent.

S&P 500 — down 0.9 percent.

Russell 2000 — down 1.8 percent.

USD/Yen — up 1.8 percent.

EQUITIES:
POST-ELECTION MARKET CRASH?
David Bahnsen, October 24, 2024

We were joined by David Bahnsen, Managing Partner of The Bahnsen Group, to get his outlook on where markets are headed as the U.S. heads into an election. Bahnsen said that his firm’s investment strategy remains consistent regardless of election outcomes.

“It doesn’t make a difference to us whatsoever,” he explained. “The way in which we invest capital at my firm… does not require the wind to be blowing a certain direction.”

Bahnsen said that any changes that the U.S. President proposes would have to go through Congress, making drastic economic policies unlikely.

However, when it comes to markets, Bahnsen warned that stock valuations are overly high, with P/E ratios well above historic norms.

He predicted that this “bubble” would pop, saying that, “the notion that we have moved the historical mean valuation to 22 times earnings, or in the technology sector 40 times earnings, these are conversations that always precede a bubble bursting.”

Bahnsen said that his dividend growth strategy helps mitigate such risks by focusing on companies with stable cash flows, which tend to exhibit lower volatility.

On economic conditions, Bahnsen predicted a potential “soft landing” for the U.S. economy. He said that while labor markets and corporate profits appear strong, housing activity remains sluggish.

EQUITIES:
MARKETS IN FINAL ‘BLOW-OFF TOP’
Bill Smead, October 22, 2024

Bill Smead, Chairman of Smead Capital Management, was back on the show to provide his market analysis.

Smead said that the current market is in the final stages of a “financial Euphoria” episode, marked by overcapitalization in popular stocks and sectors. He drew historical parallels with past market cycles, such as the radio boom in 1929 and the tech boom of the late 1990s.

“The problem is the Euphoria episode overcapitalizes things and doesn’t do a very good job of sorting out, over 10 years, who the winners and losers are going to be,” he said. “You kill a financial Euphoria episode with a blow-off top.”

Smead said that the overvaluation is not limited to the tech sector but applies broadly to growth stocks. According to Smead, this reflects a market-wide stretch in valuation driven by the belief in perpetual prosperity. He singled out Costco, traditionally seen as a stable investment, which now trades at a much higher valuation multiple than it did historically.

Warning that this market euphoria can lead to a “lost decade,” Smead said that market indices like the S&P 500 could produce negligible or zero returns over a long period. He said that this isn't unprecedented, pointing out similar stagnant periods in the past, such as from 1964 to 1981 and 1999 to 2009.

“It is a very strong historical possibility that the S&P 500 will make nothing in appreciation over the next 10 years,” said Smead.

EQUITIES:
WHY THE WORST YEAR IS COMING FOR INVESTORS
Ted Oakley, October 19, 2024

Ted Oakley, Founder of Oxbow Advisors, said that he is cautious going forward, and that next year could be a perilous one for investors.

“The markets are extremely overpriced,” he said. “People are not thinking about anything they’re buying; they’re just pushing it into the market not worried about a thing.”

In addition, Oakley saw troubling signals in economic data. He noted a divergence between strong consumer spending and growing uncertainty among small businesses, which are struggling with rising costs and inflation. He argues that consumers are borrowing more to sustain their lifestyles, relying heavily on credit.

“People are starting to... borrow more to live and to do the things they want,” he said, adding that consumer debt levels are unsustainable.

The Federal Reserve’s recent actions are another point of concern for Oakley. He said that the Fed has historically mishandled interest rates, often making decisions that lead to unintended consequences.

“They haven’t lowered [rates] fast enough,” said Oakley, “and now I think what they'll have to do... is lower them lower than they think, which is going to create another inflationary spiral.”

With geopolitical uncertainty, including conflicts in Eastern Europe and the Middle East, and an upcoming U.S. presidential election, Oakley saw the potential for heightened market volatility. To mitigate these risks, Oakley said that investors should shift towards tangible investments such as commodities, real estate, and gold, which he said will serve as effective hedges in an inflationary environment.

CRYPTO:
”WE SHOULD HAVE APPROVED” BITCOIN ETF YEARS AGO
Hester Peirce, October 23, 2024

We welcomed Hester Peirce, SEC Commissioner, to the show to discuss crypto regulation, and how the Securities and Exchange Commission (SEC) has handled enforcement actions.

Pierce said that the agency has “fallen down on our duty as a regulator” when it comes to clarifying whether crypto tokens are securities. She emphasized that clarity is crucial for the crypto industry, as it affects how tokens are treated in secondary sales and how platforms handle them.

She said that the “Howey Test”—used to determine if an asset is a security—does not always fit well with crypto.

For Bitcoin, she said, “The key to remember is that what the SEC is trying to get at is...instances where you have information asymmetry.”

Peirce mentioned the delayed approval of a Bitcoin ETF, acknowledging that it took a court decision to force the SEC's hand. She expressed frustration with the pace of regulatory actions, saying, “We should have done this many years ago.”

Commenting on the collapse of crypto platforms like FTX, Pierce addressed concerns of overregulation, saying that while bad actors need to be pursued, the SEC has “taken an approach that is throwing a lot of enforcement resources at the space,” which she did not see as an effective way to regulate. This enforcement-driven strategy, she said, makes it harder for legitimate players to navigate the market and stifles innovation.

WHAT TO WATCH

Tuesday, October 29, 2024

• S&P Case/Shiller Home Price Index: This measures the change in the value of U.S. residential real estate by tracking the price variations of single-family homes over time.

• Job Openings: Reported by the Job Openings and Labor Turnover Survey (JOLTS), this measures the number of available positions employers are actively seeking to fill.

Wednesday, October 30, 2024

• Q3 GDP: This measures the total economic output of the U.S. for the third quarter.

Thursday, October 31, 2024

• Personal Consumption Expenditures (PCE) Index: Rhis measures the average level of prices for goods and services consumed by households in the U.S.

Friday, November 1, 2024

• Unemployment Rate: Reported by the Bureau of Labor Statistics, this measures the portion of unemployed adults in the U.S. labor force.