Navigate The Markets Last Leg Up Before The BIG CRASH | David Hunter

for joining us. Yeah, thanks Mark, thanks for having me on. Yeah. So, um, I've been following you. I've been following a lot of your commentary, interacting with you a little bit, um, and that's why I'm excited to talk to you today. But for those that don't know who you are, they're not kind of familiar. Why do you just give us a little bit of that that background, that forty years on Wall Street and kind of what you're doing now? Okay sure, um, yeah,

But my career is kind of split in half. I spent the first half of my career UM on the buy side. UH started in banks and then moved to UH tech Strong, where I ran their equity pension funds. UM had top percentile numbers there for five years running back in the early the mid eighties. UM got recruited out of there and went to Fidelity, not on the mutual fund side, but on the pension side and ran US money within global portfolios for a lot of foreign accounts for them Rolls Royce and a lot of UK

accounts and UH some Australian and Japanese accounts. So UM spent a few years there and then was recruited by UM I T. T. Hartford to come in and and begin an active equity effort. They had gotten out of equities several years before and realized that they needed to get back in. So I was brought in there to

kind of rebuild an equity department. UH and did that for a few years UM and that was in the late eighties to early nineties UM and then was a chief investment officer on of a billion dollars firm on Medicine Avenue, New York back in the mid nineties. UH. Second half of my career was really as a sell side strategist and that's still what I do today. Okay, great, so lots of experience, lots of big, big experience, pension

pension fund institutional type experience. I love that. Now, Um, as I kind of said, as I kind of introduced you as the contrarian, I think, uh, a lot of people who are kind of paying attention, they kind of you know, they understand the old bye when there's blood in the streets and whatnot. It's a lot harder to do in theory than it is than just to recite some cliche or some some quote. But um, you really

seem to be the contrarian. Um, and and you seem to hold that against whatever the mainstream is is telling us. Give me a reason why that is or how you look at the market like that. Sure, Um, yeah, there's I mean, it's it's popular today. Everybody loves to claim their contrarian But as you say, um, you know, for most people, uh, they aren't really committed to a contrary

and strategy. If it goes against them, they quickly shift gears. Um. I started this business in seventy three, and you know, I think probably within the first couple of years really start seeing how um, you know, a crowd can be very wrong. Obviously in Theft fifty was kind of the extreme of crowds. Back in the nine event four. So I learned very early on my career, um that uh, you know, being contrary could pay dividends. Um. I read

David Dreaman's book at that time that was um countrary investment. Uh. I can't remember the psychologist market, I think of what it was. He did many reiterations after that that changed the naime to countrary investment strategies and things like that. But um, he was kind of a well known contrarian and and his book was great. It really taught me how important psychology was to the stock market. And I was already there, but this kind of reinforced it. Uh,

great read. People should go on Amazon. He's passed away by these his books are still out there. Uh. When people ask me what what books did you read? I go a lot. I'll see if they etcetera. So you know a lot of readings over the years. Um, but I usually either feature his book or a book by Charles Ellis called um uh what is it called The Loser's Game and talks about how the market is a loser's game for most people. And it's again another contrarian

type approach to things. So so those kind of um set me up uh, and we're at big influences early in my career. UM. And I think by nature I'm one of those that doesn't have to be with the crowd. I've observed over my forty seven years on Wall Street that the vast majority of people really don't like being away from the crowd. They can try, but but it's hard when things really go against you, uh to stick

with that. And as I say, I'm not a nat Jurek countrarian, there are times when I think it pays to be with the consensus, kind of in that middle meat part of the move. A lot of times I sound just like everybody else, but it's at the extremes, both the bullish extreme and the barrish extreme, where um, you know, if you're with the crowd, you're you're gonna

get slaughtered at some point. Yeah, definitely now for everybody listening. UM. As I said in the intro, um, David is not shy about putting out kind of what he sees, kind of what he predicts, even giving levels um and so UM. At the end, I definitely want to have him go over what these levels are for the SMP index, is gold, etcetera. Gonna go over those numbers, but before we get so make sure you stick around to the end because that's

what we're gonna get to you. But I want to kind of dig into what your thought processes so we can learn how you're looking at the market and maybe what we can take from that. So I'm just curious. Um, you know the difference of being the contrarian um or investing with the trend. Right, so people are told, you know, don't catch a falling knife, wait til a trend gets developed, things like that. So is it different like trend investing versus contrarian investing? Oh for sure. I am very much

kind of a hybrid um. And I don't you know, there's nobody out there probably that doesn't like I do, or quite like I do. I've just developed over the years of style. Um And as I tell people, because people on Twitter, as you see, will say, how you know, I want to learn from you. I want to learn how do you do it? I go, there's no real methodology to what do I do? So I'm gont those feels. Some of it is, as I say, kind of my

shorthand as I look at fundamentals, I look at technicals. Um, I do macro analysis and rely a lot on forty seven years of macro background. Um, and look at sentiment, uh, and then put it all together and you know, come up with my conclusions and um. There are times when I'm out of favor, and you know I was, you know, I was bullish on gold. Um, you know, three or four or five years ago because we had come down from twenty eleven and I thought, you know, in seen,

you were beginning to start the next leg. Well, it's had a nice run sixteen, and then it spent the next few years consolidating that run. So I, you know, there are times when I'm out of favor and out of favor for a while, and you know you hear it. But but generally I try not to get stuck in. Ah. I was a value manager as a money manager, and I learned the hard way over time. You know, buying deep value and saying well, you know it will pay

off eventually eventually can can really hurt a career. So yeah, so I try hard to look at trends and um, not get stuck in just because of it's cheap, it it looks good. Yeah. You know they say that being early is the same as being wrong in a lot of cases, right right, Yeah, it's kind of a cliche, and there are time when I, certainly, as a contrary, will argue against that. I mean, I'm not somebody really

worries about market timing per se. But obviously the closure you can get the turning points, um, the better and the more you're you're going to be seen as as accurate. So yeah, now you've you you're you're definitely a macro guy. You look at the big picture, um, as you've already said, trends and fundamentals and things like that. So do you I'm guessing you do. But do you look at like do you think that the big picture, the macro picture. I guess the long term picture is a lot easier

and a lot more accurate than the short term picture. Yeah, that's a good question because so many people think the shorter the time frame, the closer you can be to being accurate. And all my career because I was a value manager, uh and through them all my macro as a bye side and cell side person. Um, I find you stretch it out and I can be pretty accurate.

You know, it doesn't mean I'm going to be accurate timing wise, but I can give you, you know, and I get I get pushed back, or I get people kind of jumping wanting to jump over one cycle to the next, and I'm you know, I've created the monster because I'll talk about things that might be out seven or eight years and I have to kind of bring them back in and say, let's get through this cycle. People were worry about the next one. But but yeah, I think longer term is is it's an easier call

from a big perspective standpoint. Sure, So, um, a lot of people don't know what that means. What is short term, what's medium term, what's long term? And I guess everybody probably has different definitions. So, um, running your funds, the pension funds, etcetera that you're in before and now probably your own investments, Um, what is your typical investment time frame or horizon that you're really looking at now? I mean, do you look at it as you're looking a couple

of years? Yeah? I have my core portfolios tend to be somewhere between a year and five years. So depending on the situation, sometimes it will be shorter or will be on the short end of that one to five year. But I'm not afraid to tell people. You know, in certain cycles, buy it and you may be holding this thing for the next five seventy eight years. And that's kind of what I see coming in the next cycle.

I have, as you know, one of the more bearished scenarios out there for one, but I probably think most bearished. But but I tell people the difference between me and the super bear, you know, the woman Doomers is I do believe there's a recovery cycle that follows this bust, and in that recovery cycle that will be the balance of the decade. Um. I think, Yeah, I don't want to get ahead of myself, but I think the medals will probably be what the dot com stocks were to

the nineties. So, you know, getting in in two and holding ton or eight maybe maybe the way to go the trade of the decade maybe. Um. Yeah, So I definitely want to get into that. But like I said, we'll kind of get into that at the end. We'll make sure people stick around for that. But really when so, so you're looking at like one year, I mean, obviously now we're talking six eight months or whatever, but a year, um, But I like that. But so that gives me a

good idea on the timeframe. But what type of indicators are you looking at? Um? What are the main things that you're watching. I mean you're a macro guy, so like FED policy, interest rates, I mean what are you looking at? Yeah, I think uh, FED policy certainly is a big one for me. Um, And again I do it a little differently than most. Um. Something that served me well over the many decades is I am more

of a money guy than an interest rate guy. I think the vast majority of the street thinks it's interest rates that drives the economy. And in you know, in a micro from a micro standpoint, that's true, lower rates, you know, encourages increases, lending, etcetera. But it's really from a from a FED standpoint, it's a quantity of money, not the price of money that I pay most attention to.

And so um, you know that that certainly in March got me to be much more bullish than anybody else and saying, you know, I've been probably the most critical person of J Powell for the last year, but he's finally getting up to speed, and you know, since then has been so so quantity of money is a big one for me. Um. I you know, a big picture charts will What I always say is, you know, if the macro and the technicals and the fundamentals all jive, it's like the three legged stool. I feel, you know,

I feel my convictions go and can go up. If I only have two of three of those, then my conviction is going to be a little less. And if I only have one of the three, I'm probably not gonna be there yet. And what were those three again? Um, typically fundamentals, which can be macro fundamentals, um, the technicals, um, and then um uh. FED policy now, Um, it's interesting the FED policy. You talk about the money? Quantity of money? Is that kind of like Stanley Druckon Miller. I think

he talks about that quite a bit. Um, kind of like a little somewhat in line with his school of thought. Um, yeah, I don't follow stand that much, so I'm not sure. I think I was way ahead of him, way earlier than him, in terms of looking the money and how

I read FED policy. I've been doing that since something three, So yeah, so I'm curious about that specifically because yeah, seventy three is a long time and uh, really that's that's seventy one s seventy three was really the change of the whole you know, money cycle, the whole world really, right, we got off the gold standard, and all of a sudden we've exploded with this uh, money creation, debt creation,

whatever you want to call it. So since seventy three was really that turning point, and you've been in this since then, So I'm curious. I mean, I guess you've been using that this whole time. Um, have you really changed the way that you look at it because the FED has changed it drastically? Or what is? What? What? What? I look a lot of economic and market cycles which tend to go together. So um, so you know, basically you've had five cycles since since I came into the business.

You know, the seventies were one, the eighties were another, more or less, um, the nineties another one, uh, the two thousand's and then the two thousand tens, and and in each one the FED helped kind of prime the pump and provide the liquidity that helped drive the cycle. And then things got overheated. The FED took the punch bowl away, and that was a signal where you were starting to pay attention to whether you know, the markets

were topping out. UM. What's changed is obviously the degree to which the FED is involved and the magnitude of the change in the money supply. So UM. And I think that is because and one other thing I kind of overlay on my macro is that I believe UM supercycles exists that are basically I defined it as the period between one depression and the next nine thirties was

last depression. I think we've been in a supercycle ever since. UM. And you know, as you go through the supercycle, everything kind of was two higher highs and and so debt particularly took off in the last three decades, but it was building before that, and now we're at the kind of the end of that game. I think there's one more leg beyond this one. UM. That's another thing where I different. Most people kind of think we're at the peak in debt. I said, no, you're probably gonna see

where we're at twur and fifty trilling globally. Now, I wouldn't be surprised c. Three before the end of this decade. Most of that will come in response to the next year's bust, but they will probably expand beyond that. So UM. So it's you know, I just think we're you move in these cycles, whether supercycle or or the smaller cycles, you move from the bottom left to the top right, and as you get uh you know, closer to the top right, things go parabolic or certainly get steeper in

the slope. Yeah. Um, Harry Dent talks a lot about cycles. He's somebody that we've had on the show. Um, and I'll follow it for a long time as well. I think he's calling it like a ninety year cycle that we're in right now. Um. Yeah, I'm not people want you know, they hear me talk cycles, and most of mine are really talking about the economic cycle and the market cycle that goes along with that. Uh, supercycles a little bit bigger stories than that. But I'm not in

the time cycles. I'm not one of those guys that we're in your cycle or we're in the you know, the cycle is going to kick in over this cycle. I don't mean those kind of time cycles. Okay, good, thanks for clarifying that. Um, I was gonna just say, uh, he is you said that. Your your call, which we'll get into at the end of the drop, is maybe one of the most bearish and Harry Harry might also join you in that very very various camp. But, UM,

I'm curious. So you're looking at the money supply, obviously, the FED policy things like that. Um, you said the fundamentals, So when you're talking about the fundamentals, are you talking about the economy, Because it seems like today, more than ever, especially obviously since the pandemic happened, the economy is completely irrelevant anymore at this point. Yeah, I would probably disagree with that in that very much disagree, But but I

get the confusion right now. Well, I'm asking a question. Yeah, yeah, okay, sure, Um, well, I certainly disagree with the concept the I think I understand the confusion of people looking and you know, the market seems totally separated from what's going on on the ground. You know, the economy is really in trouble, and and yet we're at all time highs in the stock market.

Part of that is, and again this is kind of my looking at at cycles, but there's a six to nine month lag to when the Fed um puts the money in the system to when you get your results. I think the street over and over and over cycle to cycle. You know, the generations of investors since I joined expects that to be almost media and it's partly because of their focus on interest rates. They think, okay, they lowered rates, they cut rates. Therefore, in the next

quarter we're going to see the results. Most of the results are six and nine months out, so you know, we we saw the big infusion of money in March and April and June. Um, I think most of the expansion is really six months from them. So you're talking about we're just entering that period where the market, where

the economy gets start getting stronger. So I mean, it's not all that so it is fairly immediate, but there's an other things, other factors like we shut down the economy, that we opened up the economy, so so there are other factors that can shorten some of that. But I do think people don't understand that part of what the market is doing is looking past the trought and understanding that all this money that's being created, which is beyond anything we've ever seen in history, is going to lead

to stronger expect stronger results that we expect. Yeah, so, um, it does seem that they're looking at the money side more because on the economy side, you know, I don't actually know what the latest numbers are. I haven't looked, but whatever, tens of millions of people are still unemployed. Uh. You know, some reports say of those jobs might never come back. Obviously with the stimulus programs that we have, a lot of people may choose to never come back

because because of the stimulus and whatnot. Um. And so you know, from an economy standpoint, I mean my stores in my area are still operating at capacity, right, so, uh, travel is never coming back or whatever, so uh the account and and then then we have obviously the real estate thing with the pent up foreclosures forbearances, etcetera. So I don't know just from the economy standpoint. Um, yeah, it is very difficult to get back to that or why I were at that all time high. I get

what you're saying. Where it's like the market's like a discounting mechanism, so it's it's basically projecting where we'll be in the future. The marketing economy work on different time frames, right, Um, But it seems like everybody's really looking at the FED is going to backstop the market, right the FED has committed to do whatever infinity uh by bonds, probably buying

equities et cetera. And it seems so do you give more weight to that now, like you kind of understand this balance or you still think the economy is doing good or going to do good in the future that you know, the broad picture that I painted about, you know, when the money gets infused and when it results, that's you know, the world isn't perfect and that's not how

it always works exactly. And then you add in the complications time of we actually shut down the economy and we are impacting a lot of small businesses and as you say, you know a lot of restaurants, a lot of um, consumer oriented businesses may not make it and are still shut down. So so you've got to kind of balance what is going on in the real world with what normally happened with you know, FED policy versus

when it kicks in. UM. And I think so they kind of, um, you know, influence each other or overlay with each other. Um. What I would say is that's why, um, it's it's a difficult thing. I talked about a global deflationary bust in and people start questioning me on the bus or refer to my call of the bust, and I'll go, um, yeah, but we really the bus started in March. Um, so it's yes, we're gonna have a rebound in between, but it's all one bust. It's not

two bus. It's not like we have a bust in you know, the second quarter, and then we're you know, we're gonna have this short recovery and then we're gonna have another bus. I said, it's all one bust because a lot of the things leading to that bust are those shutting businesses aren't going to come back right now. Are are the fact that airline traffic is not going to be there. Even even if the economy gets stronger in the next few months, you're not getting anywhere near

back to what is a normal I his period. So so it is you know, there are kind of various forces in this that aren't all in sync. Yeah, yeah, you know, I know kind of what you were saying. People ask you what books you read, and you're like, well, I've read a lot of books. But really a lot of this is just doing it over a long period of time. And the brain is so amazing, right, it gets so much information and it just starts putting pictures

together for you. So, uh, there's a lot of information to digest and and you've been doing a long time, and so it just paint paints a perfect picture in here. Well that's exactly right. People think they can if I give them the few books that were the big influencers, that they'll be able to do what I do. And I go, I'm not saying this from an ego standpoint, but you know, fourty seven years of cumulative knowledge isn't

something you find in a book. And I you know, there's certainly people that entered the business when I did that weren't successful or you know, don't have the same views I have, uh, successful or otherwise. Um, it's everybody different. And I one the one thing I tell people is, you know, younger people that say, well, how did you get to where you're at? Or you know your knowledge base and stuff? I said, well, one big thing it's important is learned from your mistakes. We all made will

make mistakes in this business. It's a humbling business. And the difference between good investors and bad is the bad investors will repeat those mistakes cycle to cycle, or you know, over and over, whereas good investors make that mistake once and say fool me. Once you're not can fool me again. Yeah. My dad always told me when I was a kid growing up, He said, once is an accident, twice as stupid.

Don't do this anything overly. So so let's uh we'll transition to start looking at some of your kind of forecasts and uh and calls for the future. Um, the big debate that everybody started, we'll start with the big stuff and then we'll kind of work our way down into more granular. But the big debate is inflation or deflation.

And uh, I think you know, we talked about the FED since seventy three printing this giant uh money bubble, right whatever, three trillion dollars of debt and it seems like you know, we've seen, you know, through each correction it's trying to de leverage and then the FED pumps it back up and then de leverage and pump back up. Um. So I guess the the inflation deflation is is the debt going to implode and deflate faster than the Fed

can pump it back up? Uh? What do you see or I'm guessing maybe you kind of see it doing something like this. Yeah, it's uh, you know, there's there are people out there as you know, as Peter Schiff or some of the others that I called true that field. We're at the end of the cycle, the supercycle, or

whatever they want to call it, the debt cycle. And you know they're they're thinking, we're imploding now or in the process of imploding now, and who knows where we are after this, and it's gonna be a long time before we come out of it. Um. I believe there's another cycle before we get to that. So I think we've been in disinflation since, um, the early eighties. You know, we peeked out in inflation in the early eighties and

it's been a ratching down of inflation over many cycles. UM. And what happens is the FED then ten FED and and policymakers tend to overshoot, so they are so worried about what they're in now that they can go too far. So amazingly, and I've said this for many years. Um. You know, inflation reached obviously twenty nine, amazingly, that was forty years ago, and we're still were about inflation, even though inflation has come down from twenty to almost zero,

so that that was a very traumatic period. And you know, you weren't there. Obviously you're younger than I am, but a lot of people in the business today never you know, unless you were there. It's really hard to understand how um traumatic that was. We went from you know, middling inflation five inflation in five years. But is a is a lot of that because of the way CPI has changed.

I mean obviously home prices, gasoline prices, milk and steak prices, education, healthcare for sure have all skyro and the money supply is all skyrocketed since the eighties. So even though the CPI with the FED looks at his inflation is down, the reality as most people see inflation or no, yeah, I would say no. I mean yes, for sure, there's you know, there's elements of the economy that see inflation go a lot here, so that you get that argument.

A lot of yes, the indexes say we're disinflating or we're moving towards zero inflation, but people's real pocketbooks to know that that's not the case. Um. But overall, I don't think it's so much manipulation of indexes or anything like the inflation index or anything like that. I really do think it's global. Um. We we got such access capacity in a response to don't forget, we'd be just

a little history. In the late seventies or early eighties, we went through a huge boom of expanding heavy industry capacity. I mean, you know, steal steel, autos, paper mills, etcetera. All everybody got caught up in that inflation cycle and commodities were going crazy, energy was going crazy, and you had this huge build up of capacity and then all of a sudden um because inflation was running away and

economy was very overheated. It took a you know, Paul Volker to come in and say and frankly, it was that problem of most people are Keynesians and look at interest rates, not money. G William Miller was FED chairman, and he's sitting there going, I'm in the late seventies and he's going, I'm taking I'm raising rates, so I'm tightening. But he was raising rates at much lower rates, at much lower levels than they would have been if he

had left them alone. But he was pouring money and to keep rates from going too far up or too fast. As a result, he was pouring fuel on the fire, the inflation fire, and we went from five percent inflation to twenty percent inflation in a few years UM. And that was all part of the commodity boom, etcetera. When Volker came in and said, Okay, I'm no longer worrying about targeting rates. I'm gonna let rates go where they

have to. We're take tightening the money spy down. That was, you know, the first step towards a monitorist approach, saying money is important, money is what's causing this. And they really have off and on with Vulca and then Greenspan uh and and some extent bernanke Um. That continued to be the process. And so wheneverything's got out of hand, they brought you know, they kind of brought it back in again. So I think it was a ratcheting down

of inflation because they did understand money creates inflation. UM. Now now they've gone so far that I think next year is deflation. And and when we get that again, the gloom and dumers think it's, you know, we're down for the count. I argue, and I've been arguing this for five years because I've been talking about about coming

um that and probably longer than that. But um that in a bus we will see money, and I've been saying for a few years it will probably you'll see the FED balance you grow the twenty trillion, maybe even thirty trillion. And it's because in that global bus, the FED has unlimited ability to print because they don't have to worry about inflation. There's you know, there's a six or nine month lag to the economy. There's a two

or three year lag to inflation. So that's where I disagree with a lot of people on the street today, economis, etcetera. Who are we're in about inflation nowity? You know the money that the money that we're creating now is going to lead to hyper inflation down the road, but you're two or three years away from them, maybe longer because next year is deflationary bus. Um okay, so so um

yeah that that makes sense. So then if I'm following that line of thought, or I should say to recap basically, what you're saying is, um, we're going to see a where we've been in deflation. We're going to see a big deflationary move because of the bus coming sometime next year. But the reaction of the FED, which is then to just jump in and print unlimited as you said trillion. Then, so we have a deep continue deflation is sharp drop in deflation. But then the reaction till printing then pushes

us into inflation or hyperinflation. Just to just to correct a little bit. Um, we're in disinflation still until you get into negative inflation. Um, it's disinflation. Is it's inflation growing at ever lower rate. So we're still above zero, so it's disinflation. Um. We go into deflation next year because the economy goes into a double dip. You know that we had the first um dip March through June or whenever, March through May. UM. And I think next year is a much bigger step down in the economy.

And we're so close to zero on inflation even if we get an uptick in the next six months that um, you're gonna easily go through zero. And I I actually think you could see three to five deflation. That's a big number everything. I would say the vast majority of people that I think they understand deflation today think of deflation in terms of what Japan experienced. You know, several years ago, you know, their economy still was close to zero or above UM. You know, deflation was maybe slightly

below zero. I'm talking about something we haven't seen since the thirties, you know, three to five negative inflation, an economy where you're gonna have, you know, down double digits in GDP. So we saw you know, the kind of the precursor of that March or March to eight March and April. But I think we'll see it for much of the next year. And and people go, what if, well, the fence printing money, why would you know your you believe money is going to keep you afloat. I think

two things. One, as has been said a lot by others, Um, the Fed can take care of liquidity in the short run. Insolvency is a different story. And I think by the time we get to next year, there's a lot of companies that just can't hold on um. And there's you see me on Twitter say this a lot um. Markets and economies don't. It's not a linear relationship. Things don't go in a straight line. So you're gonna have a

period where policy is not gonna be linear either. I think if we if we're looking at a blow off in this stock market, you get some uptick inflation and next three months, three or four months, oil goes from forty to fifty UM. Grain prices go you know, sharply, sharply higher as they are. Um, I think you're gonna see the FED pause. They've already paused basically in the

last several weeks. I think you'll see them pause. And I think that pause in a period when we're so fragile, it doesn't take much to send this thing or straight down. And so I think every every time they've paused in the past, we've seen what's happened. So I'm not talking about it, and I'm not talking about market. I mean the economy. The economy just deeds needs that liquidity just

to stay afloat. The problem is that liquidity. It's it's uh, it's more like giving heroin to a junkie, right, So it's like they just need more and more and more. It doesn't solve the problem. It just keeps them going. I mean, companies that are already struggling with too much debt, giving them more debt isn't necessarily going to help. It's very tough one. As I say a lot, or I say once in a while, UM, I'm you know, I certainly talk about um. Whether I think should be done.

But most of the time I'm focused on what's going to happen, whether I agree with what they're doing or not. So I'd like to say I'm forecasting and not moralizing. You know. I think in particularly in today's world, the Austrians have become a cult almost on the street or on Twitter, and you know, they want to spend all their time attacking, you know, the FED or the central banks, or criticizing everything being done. And I go, if you want to follow, you know, if you want to go

back on the gold standard today, start right now. Um. And if you want to, you know, ratchet money down to what you think it should be, which is close to zero, we'll all be living in cage of unemployment. The Fed and the Treasury are doing what they have to do. It doesn't mean it's going to end well. I have the most dire forecast for the thirties and

forties or certainly theties. You know, I think we're gonna see a depression many fold bigger than the Great Depression, many many We could have eight percent unemployment, we could have a totalitarian system replace what we have. But that's one cycle from now, not now. And uh. And if they want. If they did what the Austrians proposed today, we'd have it now. Well, I am, I'm both So I'm definitely in the Austrian coult as you call it. I wouldn't call it that, but I do believe in

Austrian colt and I do. But I do agree with what you're saying. I mean, obviously to go back to that strict system today would cause massive problems. I think the bigger argument is if we would have stuck with that system all along, we never would have created the problem in the first place. That I'm not moralizing, right,

That's a whole another conversation. I always say, we don't invest in the market as we want it to be, or as we think it should be, but rather as it is, which which is exactly what you're saying, right exactly. Um so, um, let's get back into this kind of forecast. So, um, this bounce as you're conn and so if we look at you know, the Great Depression crash or even the two you know, the dot com crash, you typically see this whatever drop retrace and then it's kind of like

a technical a t a kind of bounce. Um, is that kind of what you're seeing this bounce and then the second wave down kind of like what we've seen in other market cycles and the economy. Uh, in terms of the market, I mean you're saying early next year a potential drop. Yeah obviously, Yeah. I think my view is um And you know, I could have easily because I had I was calling for a global bust um prior to the virus and UM, so I could have

easily in March. I have looked at what happened, and I called for a ten percent direction market when it was thirty on the SMP. And so when we got down under three thousand, I'm going, I got my ten percent. I'm I'm bullish again. We're going, We're going when I had a melt up call then so so that last drop, you know, the thirty four percent dropped, the last of that dropped. I was wrong. I I didn't missed it too. Um. You know, I pulled away when I realized that I

was wrong. But but um, but I could have easily when we were down thirty four percent said this is the beginning of the bust or the beginning of the bear market, and where you know we're heading for a thousand on SMP. UM I didn't for whatever reason. I stepped back, looked at all my work, and I said, sentiment in particular was so negative at that time. It was basically back to where we were, um in you know,

the bottom of two thousand nine. And I just said, now this is it's a little bit of an overshoot from the trend. You know that you can't draw out the trend line and overshot it. But I think it overshot it for just a few days. And I said, no, I think this is a fake out. I still believe we're going to see the melt up, and so so I think we're in that, you know, in spite of march,

and the march was obviously driven by a virus. Um in spite of all that, I think we're in what I call melt up for blow off stage that will take us into a parabolic I have used two as

the secular market bottom. Uh and I you know, I said I couldn't go back to seventy four, but UM use a T two because I think that was the beginning of the disinflation, the peak inflation in the beginning of disinflation cycle, and most of what's driven the secular bowl market has been interest rates going from f to zero,

so you know, inflation going from to zero. So um so, I really think two is kind of the beginning of this market, and we're in the last spinning of of that secular bowl market, and in that last stenning, I expect this to see a parabolic un like any we've seen. So that gets and that that parabolic is after the

bust of next year. No, no, no, the parabolic is now so then uh so now so then some sometimes and I for everybody listening, timing is the most the most difficult thing, and really trying to time it, I think is a fool's Errand um so I like to look at probabilities and we look at levels, and we

just watched the market unfold. So I'm not trying to stick you to any of this, but kind of what you're seeing is a continued rise this uh meltop I call blow off top whatever um where maybe we see equities rally um another leading up maybe sometime in the next six eight months and then the next big drop down. Is that kind of what you're seeing. Yeah, my numbers um are SMP forty two. And I'll be the first one to say good overshoot that. I'm pretty comfortable. Usually

when I give targets, those targets are minimum targets. There there what I think the target will be. But they're also kind of I'm saying, if anything, it will overshoot them. So sp I think we could be there. UM. It's funny because I had way back in March that use those numbers and said you couldn't even see it by labor day. So then I get people three months four months later going well, you predicted labor day. I said, no,

you're missing a keyword. I say, could, which is really what I really mean is, um, it's possible we could see it as early as labor day. UM. But you know, whether it's the end of this quarter, whether it's in October, I think it will be pre election. Um that we see the top are pretty close to the top. So I'm expecting those numbers to be seen in the next month or two UM. And as that, I think you can get the fifteen thousand uh, DAL thirty six thousand UM.

So those and those all fall pretty much in that type. Move from here um and and I think that will be parabolic obviously if we do that in the next two months. You can envision it's basically straight up UM. And and then I expect whether it begins before the election, probably after the election, uh you know, whether it's late this year or early next. I expect the role over.

As you know, tops can can full around at the top for a little while, so it doesn't mean you get a top tick and then the next step is a big step down. It might full around for weeks. But either way, I have no idea. Either way, I expect most of the first half of next year to be a bear market UM, and I'm calling for again.

Potentially it could be sixty percent. It could be, but I think there's a real possibility of an eighty percent bear market in the smp UM, and obviously that that will look seed the I think we had a sixty plus percent bear market in two thousand eight nine UM. But that makes sense where I think we're the secular peak. UM. What gets confusing is, as I you know I mentioned to you earlier, I'm not in that camp that says

this is the end. There's another recovery cycle. But this is, in my opinion, the secular top in the stock market. So you can have a cyclical bull market from say twenty late through six or seven or eight UM and not get anywhere near the highs that we reached this year. So let's say we hit SMP you know you can,

and then you go eight percent down. You can have a run from a thousand on SMP or on the SMP back to three thousand or thirty four hundred, and you're still way short of where you got this this time. So so there'll be a cyclical bull market to follow this. But secular, I think is peaking the cycle, got it UM now that and and that secular peak after this UM after is at like another six eight year cycle. Yeah, I think, because it's probably gonna be uh you know.

And and one thing that I've learned over many years, as I could write the book on this UM is that leadership and I'm not unique to other people understand this, but but I feel strongly about this. Leadership changes each cycle, or different leadership each cycle. So, you know, seventies were energy and commodities, the eighties were the consumer growth stocks, the you know, the food and beverage and drugs, etcetera. UM. The nineties was obviously teching couple goods. Two thousand's was

finance and housing. Um, two thousand tens has been the social media and other tech you know area. Um, I think the next cycle is going to be very much mirroring the seventies. It's gonna be commodities and industrial stocks again. So so it will be What happens is those leaders of the previous cycle face all kinds of distribution. So every time they lift their head after that eight percent drop, you know there's a different Another level of people would

say I'm taking my money out. You know, I got my costs back, or I'm I'm you know I waited to get this far. I'm gonna take it and run. So you know, so you have distribution all the way through the next cycle and maybe two cycles sometimes. Yeah. So, UM, I want to jump into the confident and saying there's not gonna be a winner, right, So um jumping into

the UH. As you said, we had the different cycles of different types of assets that cycled back in the seventies and now again you think the commodity, the commodities, the medals and hard assets things like that. Um. So I know you've put out several signals on gold and silver. I think you're calling forty five dollar silver UM. Is that leading up into this uh in in in with this market parabolic run and then also crashing or do you think there's a way that gold UM continues to

do well even through a crash. Yeah. Up until UM probably the last several months, I was in the camp that felt that UM, gold and silver would would get hit pretty much. Gold probably less than the market, but silver could be hit as hard as the market. So I had calls of you know, UM gold falling well

below a thousand and silver falling to single digits again. UM. I now am of the opinion that UM silver probably gets the thirty five and then corrects back to the mid twenties UM, so far less than the market gold gets to, whether it's hundreds of minimum, UM probably corrects back to, say eighteen hundred. So I don't think you'll see anywhere near the damage in those that you'll see in the broader market, and actually they'll be defensive areas UM. You can maybe even before I would say you know,

we're heading for a deflationary bust. Everything going down except maybe treasuries and the dollar. UM. Now i'd say, you know, the pressure medals probably they're going down, but they're not going to go down nearly what the market is, so they've become a defensive holding. Yeah, and and my my view, the next cycle, what you know about is is a big one. So um, you know, I think gold can get to ten thousand plus and silver three hundred dollars plus um. So so you know, do you really want

to get cute with these? You know, if you're a trader, certainly you can. If you're an investor, you can hold these through the through the bus I think, yeah, I love that, you know, um in two in two thousand eight, as you said that equities fell about six, gold only fell about so it fell, but it was a much better place to be losing. Of course, the response to the crash, which was massive money printing, caused gold to

shoot right up. And of course you're saying the exact same thing and this cycle that the response will be instead of what was in two thousand and eight it was about a trillion. Now you're talking twenty to thirty trillion. So look at the magnitude of what that can do, which is obviously I'm guessing why you're getting too that ten absolute and it's a you know, it's a global bus. Um, we're gonna get hard, but other other parts of the world,

like Europe, probably get even harder. Every central bank is gonna be putting money out there as fast as they can. So, so gold on worldwide basis gonna cut a bit. Now be me being in that Austrian coult or really you know, believing in in in sound money, gold bitcoin as well. Um. I think that on top of that, we also see the sentiment changing, so I think we have less and less confidence in the fiat currencies, and so that will only add extra fuel to the fire of what gold

is doing. I think I agree with that. I think you you're gonna here for many years. Um, the does or to go back on a gold standard, and probably we're we're closer to that today in terms of a mindset than ever before or certainly in the last many decades. Um. The only problem is it just it's not it's not practical. It can't happen because the minute we stop the pring press, we've got you know, hundreds of trillions dollars of debt

you know, coming right back at us. So so I don't see how that happens until after a total collapse, and then I think it could happen. Yeah, I mean a total collapse where all the currencies collapse, people lose complete trust and currencies and the only way to restore trust, because everything has to be revolving around trust, So the only way to restore trust would be to go back to at least some sort of a fractional reserve or gold system or something like that. Um, all right, UM,

I'm curious what are your thoughts on bitcoin. I do not follow bitcoin, and I I I'm skeptical. Uh, and I fully admit that it could be a huge, huge winner. UM, I just don't. I don't think we know enough yet to know how it haven't been battle tested. Isn't that? It isn't that what gives you the asymmetric upside, because it doesn't you know, information is not not not out there,

it's not. But but right now you've got so many particularly fast players in it, a lot of retail but certainly a lot of um guys that didn't necessarily do a great job as hedge fund managers. You know, guys

that I had big followings but then blew up. And then you're talking about but we don't have to name any names, and and so I just think it's easy to kind of and and certainly it fits a narrative that UM people are very distrustful of the central banks and the governments, and so it fits a narrative that this goes out side of that. And UM, I just I really want to see how it comes through the bus before I'm gonna UM say yeah, this is a long,

long lived UM alternative to gold. For example, what about what about people like Paul Tutor Jones, you know, one percent portfolio allocation wishing now he would put two percent allocation towards it, But I mean one percent portfolio allocation just to UM sort of kind of set that portfolio better. Yeah. I I operate on you know, the reason as you see me on Twitter, some people think is ego or

you know, stubbornness or whatever. I'm a conviction guy. If if I have you know, fourty seven years of stuff that can help me have conviction, I'll stand by something that I say, and where everyone else is folding, I can't have conviction bitcoin, So it just doesn't. I'd much rather be in gold and silver because I have complete conviction that you know, I commit shit on short term moves, but I know where it's going, got it? Got it? Okay, makes sense and I agree with that. Um, I always

tell people the same thing. It's all about the conviction. Like I can't tell you the exact allocation or percentage or whatever, like you need to know how you feel about it. So you got your just gotta fit your you know your risk um parameters. You know, if if you're a guy that you knows gets nervous and can't sleep on on something, don't go there. Yeah exactly. Now I know we've gone long. I want to wrap it

up here. I'd just like to ask kind of maybe one more question that we'll kind of wrap it up with. But um, obviously you've given us, uh some pretty uh you know, pretty good calls and when we have levels here, you've kind of given us time frames, etcetera. So how do you how how are you personally or how would how would how do you see playing this out? So? Um, do you stay long in the market to ride, let the winners run long and then you just set trailing

stops to capture profit when the market draw? Are you trying to time the market? Like? How how do you play this? And well, yeah, I really stay away from any kind of UM trading talk because for two reasons, One, I'm not a trader, but two I have to walk a really careful line as a strategist. I'm not a registered investment advisor. UM, and people get mixed up between what's advice and what's you know, As long as I

stay talking my macro, I'm fine. Uh. And And also, UM, you know, you really have so many different people out there with different risks UM. You know, some a risk of ourse something or not. People have different financial situations. So I really hesitate even if I could providing any kind of blanket advice. What I will say is I do think um that next year is a year where kepital preservation is going to be supreme. Uh. And as I said before, I think the dollar and you know,

I'm a bear on the dollar short term. I'm looking for five on the dollar here on d X y UM. But I think the dollar will will be one of only two things. The US treasuries and the dollar will be two things that will buck the downside in the bust. UM. I think we'll see the ten year down to zero uh next year early next year. UM. And I think the dollar could go as high as one forty so UM, so the you know, those are places where you can hide, um,

when you deem it time to preserve capital. You just I would also say one last thing, and that is that And I could be wrong, but I suspect if anything, um, this this bear market is going to be faster than two thousand eight nine, um, just because of all the derivative exposure and leverage in the system. Those things speed things up and make them exacerbate them. So so I'm thinking this thing you could see three or four or five thousand point down down, do you know? I don't know.

I just think, um, it's gonna happen very fast when it happens. Yeah, I can appreciate that answer, and uh yeah, you definitely definitely can be giving advice to people. It's such a big broad subject. But um, for those listening, let me try and decipher that just a little bit. Um. You know he talked you You talked about a very sharp and severe drop, but then of course another huge

cycle up. So for those that have a very long time preference, UM, you could just hold through that as you talked about with the gold cycle, probably might be a good way to do that, for sure. In the medals, right, but you know, nobody wants to sit through draw down or draw down or whatever that is. So follow the trends, look at your levels. I like to manage risk, so locations, position sizes, and of course stop losses. Um. I'd recommend that for anybody. Of course, everybody has to figure out

what their own risk management is. Um. But but look to those tools, because yeah, nobody wants to sit through an apercent draw down. And as as David is saying, the dollar is going to be strong, so it might not be a bad place to hide out. UM. Okay did I did I side for that? Okay, yeah, that was fine, And yeah, I think most people know. But you know, you drop, you have to double to get

your money back, so that's right. That really become costly, and especially if this is a secular top um for those that are in indexes, you may never see the levels again that you see in the next month or two. Yeah, I think we'll see a change in the investing market and index the way index funds are used. So that's a good point. Um. Great, well, that is so much good information, David. I know we went long. I really appreciate you sticking around and given us so much good information.

Anything else that you need to add or want to add, UM, I will just echo what you just said. I think indexes have You know, in a disinflationary environment, indexes thrive because it's all about POSI P multiple expansion in an environment where I'm describing wen talk bunds. But in an environment where I'm describing and its going from zero to fifteen or twenty again, I think it could reverse the entire disinflation cycle. UM. Over the next decade. UM, you're

gonna have the reverse, which means multiple contraction. That is not an environment for index funds. So you know, we've been lucky in this cycle because people could just throw their money in index fund and probably I'll perform most active managers in the environment I see coming after this bus, I think it's gonna be quite the opposite. Great. What a great note to end on, UM, David. I appreciate you so much for taking this time with us, UM, for everybody listening. I am going to make sure to

link in the show notes. UM. You do a quarterly newsletter, UM, so if anybody wants to get more information from you, I'll have a link to that as well. Of course, as you've already said, we've talked about, you're very active on twitter UM. I would highly recommend to follow David again. I'll link to his twitter um down below in the description as well anywhere else that they should follow. No, that's good, that's perfect. Okay, So that's it. So again, David,

thank you so much. Okay, thanks Mark, really enjoying