The Pomp Podcast - Bitcoin, Gold & Energy: The Next Massive Wealth Shift | Larry McDonald

Episode Date: March 30, 2026

Larry McDonald is a New York Times bestselling author and founder of the Bear Traps Report. In this conversation, we discuss his view that markets are shifting from financial assets to hard assets, why inflation and global conflict are driving this change, and how investors should think about bitcoin, energy, and materials. We also explore risks in private credit and what the next cycle could look like for global markets.======================Need liquidity without selling your crypto? Take out a Figure Crypto-Backed Loan (https://figuremarkets.co/pomp), allowing you to borrow against your BTC, ETH, or SOL with 12-month terms, 8.91% interest rates, and no prepayment penalties. Or check out Democratized Prime (https://figuremarkets.co/pomp) and earn ~8.5% APY on real world assets, paid hourly. Unlock your crypto’s potential today at Figure! https://figuremarkets.co/pomp ======================Arch Public is an agentic trading platform that automates the buying and selling of your preferred crypto strategies. Sign up today at https://www.archpublic.com and start your automated trading strategy for free. No catch. No hidden fees. Just smarter trading.======================0:00 - Intro1:02 - The great rotation to hard assets thesis5:22 - AI spending surge & tech cash burn risks8:16 - How to invest in this market shift16:39 - Do we get higher or lower inflation?20:17 - Dollar dominance & bitcoin vs gold29:55 - Private credit cracks & liquidity issues explained35:23 - Where investors should allocate capital now39:55 – Biggest risks in markets right now

So the bottom line for everybody watching us right now, in that kind of higher interest rate regime, companies that control assets are worth more, whereas software companies and companies that control intellectual property, the Netflix of the world, all the software companies, in that new inflation regime, those companies are worth less. What's going on, guys? Today, we've got a very special treat. I've got Larry McDonald. He's a New York Times bestselling author, and he is the founder of the Bear Traps Report. In this conversation, he is going to walk through his view of what's happening in financial markets and various assets, and I think it is going to be eye-opening for all of you. We touch on why he

thinks that we're going from a software and financialized world to something that needs many more hard assets in your portfolio. He recently just put Bitcoin into their portfolio for the first time, and he explains why. We talk about dollar dominance, the competition between deflation and inflation moving forward, what's going on on the geopolitical stage, and then we even get into some of the lessons that he's learned from some of the great investors throughout history. This conversation, again, made me think more critically about my portfolio and what's going on in markets. And I think it'll do the same thing for you. Here's my conversation with Larry McDonald. All right, Larry, I thought a great place to start the conversation is you've

been talking a lot about this great rotation from kind of financial assets to hard assets, things around the energy infrastructure, et cetera. What's your thesis as to why people should be considering this? Well, if you think about the last like 50, 60 years, especially the last 20, we were in a certain deflation regime from 1990 to 2020. And so what that does over time is in Wall Street models for when you value companies, if deflation is very certain, and it really climaxed in 2021, like 2021 because we hit COVID, and we were in this deflationary spiral, and then the Fed and Treasury went all in to get us out with massive fiscal. But in that deflationary regime, if you look at that, we talk about this in the book, How to Listen to Market Speak, we look at the discount model, right? DCF, discounted cash flows. All that means is if rates are zero with low inflation, certain companies like software are tremendously more valuable.

So imagine if you have a billion dollars of cash flow, right? just $1 billion over 10 years in a certain deflation regime, that billion dollars is worth a lot more over 10 years, right? Now, say you have another billion dollars in a certain inflation regime. It's worth less. Worth less over time. So what happens is when you go into a new regime like this with a multipolar world, global conflicts, big deficit spending, I mean, we're supposed to do a trillion dollars i'm trillion dollars on defense and now trump wants more right so that's six percent fiscal deficits versus three the past 50 years on average so the bottom line for everybody watching us right now in that kind of higher interest rate regime

companies that control assets are worth more whereas software companies and companies that control intellectual property, the Netflix of the world, all the software companies in that new inflation regime, those companies are worth less. So one of the things that I think we've seen from these like hyperscalers is they previously may have considered software companies, but now they're going very hard and investing a lot of CapEx into actually owning physical assets, data centers, compute, et cetera. Are they doing that because they understand this from like a financialization standpoint, Or is that more so maybe from an investor's perspective, you now have to question, you know, is Facebook a software company or do they own hard assets?

Anthony, I was in San Francisco in July. We hosted an elite family office, CIO dinner. We do this around the country. So the Beartrap support, we host, we're hosting one tonight in New York at the Harvard Club. What we do is we get together. That's big time. It's not me. to me that's what the whole book's about it's getting great mentors in a room and learning

right learning like anybody watching us right now younger you want to get your best mentors take them out for coffee take them out for dinner and that's what we do at the bear trap support that's we we gather intelligence that way and we started hearing this in like may june july in August. And the key to investing is measuring the life of a narrative. In other words, when I was a retail broker in the nineties, I was on Cape Cod and every narrative that came out of the wall street journal or wall street research, I couldn't tell how old those narratives were because what wall street would do is they would give the ideas to their institutional clients and then after they're picked over they eventually make it to retail and the barons and

the wall street journal and so back then and you and i were just talking about this the way the rate of change of information that you've mastered mastered like the last five ten years monitoring that rate of change of information if you do that in an ideas dinner setting or um what we we host the Bloomberg chat with hedge funds, mutual funds, and pension funds. And we can measure the life of those narratives. So getting back to your point about MAG7, I'm telling you right now, what we started to learn in the spring to summer was that this is a testosterone contest where Zuckerberg's challenging Larry Ellison. And one of the guys at the dinner was really close friends larry and if you look at what larry ellison just did he essentially blew up his company

stocks 50 off because zuck it's like it's like the dr oppenheimer moment and they're all going after each other and so zuck they're literally willing to risk implosion of their company right for the potential to be a major part of this like agi 100 everybody wants to be first at the agi master and so what happened was is you had companies that were incredible cash cows for 20 years. So everybody watching us right now has got these stocks in their 401ks. And these companies have just flipped their business model to being cash cows to capital intensive businesses, cash burning businesses. If you look at the cash, look at Meta, they had 60, 70 billion of free cashflow. That's going to get down to five. Oracle had 30 billion positive. And now that

were probably 10 to 15 negative, right? So cash burning machines now trying to build that bomb first. How do you know if it's worth it or not in the end? Like if we get the benefit of hindsight later, what will you look at to say this was worth it? Once again, this is the birth of a narrative. So the first stage of the narrative was the big investors buy them. So that's why people were chasing Oracle, they were chasing Microsoft. And that was in the phase where Wall Street was not intimidated by the cash burn. Now we're in the second stage. And there's three stages. It's where, if you look at the MAG-7 today, 14% drawdown in a bull market, right? Now you can say, and the S&P is only down five, right? You look at Google, 17% off new low

yesterday so the companies that are burning the cash uh people are looking at this like a uh a moment with the dot coms or let's just say a better example is um the shale revolution where it's it's called malfeasance around like you're just malinvestment in other words there's such a race of the testosterone to spend the money there's not a lot of thought behind it around return on invested capital. And so now we're in a stage where people are show me, you know, they want to be shown. And that's why this drawdown in the mag seven probably lasts right now. The NASDAQ 100 was worth 34 trillion, maybe six months ago. Now we're talking about 30 trillion. So 4 trillion is left and gone into energy. Now, I don't get the sense that you're

buying Facebook stock because you think that they are now all of a sudden like this capital intensive, kind of hard asset business. So what do you see as attractive in the market when you think about this rotation from financialized assets to hard assets? Okay. Zuckerberg is amazing, right? This guy destroyed investors in 2022, 70% drawdown on his stock. It's like Jensen. These guys blow up investors all the time. Now, if you buy and hold these stocks, it's a lot like bitcoin it's easy to say on a bitcoin chart or a meta stock chart or especially nvidia is very similar it's easier to look at the long-term chart and say wow you know i i should have bought 10 years ago i mean to me that's all bullshit if you're if you're 30 years old you've got a beautiful

fiancee she wants to buy a house these kids buy these stocks and they buy bitcoin and they say oh i'm gonna hold forever because they see the chart in the book you know and it's like such bs because nobody can weather that 70 percent drawdown so mark zuckerberg and jensen and so facebook and meta told us in 2022 that the metaverse chips and the ai chips i'm sorry i'm sorry and the crypto chips were the future so right before right before the biggest ai boom in history jensen wasn't buying any any stock back these guys were convinced that uh that meta chips metaverse chips and crypto chips were going to have like be the future and then they flipped it they brilliantly flipped it in 22 22 into 23 i'll give them credit for that but they blew up

investors in 22 like 70 percent drop how much do you think of that was they're doing versus just the fed height rates is the fastest pace in history okay let's blame that's fair but zuck if you look at what zuckerberg did brilliantly um he looked at his employee base fat dumb and happy he cut the fat uh similar to what uh elon did at twitter and uh so zuck to get himself out you're absolutely right it was it was the fed was hiking rates and we're we we essentially went to a soft recession but it was it was really the company was just massively over-invested in the metaverse. Imagine having division after division and working group after working group after working group focused on the metaverse. That

was his dream model. That's why he changed the company to Meta, which is insane because now you should change it to... So the bottom line is this guy is just an amazing guy because he's blown up his business a few times and people still have incredible faith in him. So when you look at, maybe let's take a Tesla, right? They got a lot of hard assets. They've got AI injected into it. I think that from my perspective, I've looked at a company like that and said, I know it's going to be super volatile. I know that there's going to be mass controversy and debate over this. It reminds me a lot of Bitcoin in the early days. I bought some stock and I said, but I'm going to hold this regardless of what happens. It could go down 80%. I sized it

correctly, just like this is a thing where if this guy can pull off owning the humanoid robot market, that's worth a lot more than it's worth today, right? Well, that's the key is sizing the trade, right? Yeah. But do you look at a business like that as like the hard assets or are you thinking more like go buy energy infrastructure and lithium and copper and, you know, and what people would consider, you know, kind of the old school, more infrastructure, blue collar type businesses yeah it's real hard asset company so so when we went into this 1968 to 81 regime which we talked about in the book it was the multipolar world so global conflicts middle east um we're coming out of a war in vietnam where uncle sam and the great society very similar today like

massive fiscal spending on the war and the great society, big social spending. And so in that period from 68 to 81, by the end of it all, technology stocks became less than 6% of the S&P and materials, industrials, and energy were 49% of the S&P 500 composition. Now, in the book, we make this point, you know, how to list on markets fee, but we're not going back to 49, but are we going back to, you know, are we going back to, right now we're about 14 for those groups, industrials, materials, and energy, probably 12 to 14 in the last couple of years. We're going back to 30.

So you think it's like the percentage of those companies is going to double and how much of that is they grow versus the tech and financial shrink? It's fascinating. If you look today, I was looking this morning at Google versus Chevron. So Chevron's making new highs, still a small market cap. You know what? The best trade in the world right now for AI and energy is Schlumberger. They just did a pact with NVIDIA.

Schlumberger's data processing for energy companies that are exploring and controlling logistics. Schlumberger is, I think, it could be a triple, quadruple. You can fit 70, I'm pretty sure of this number. You can fit 75 Schlumbergers, SLB, which is the dark horse, unknown AI company. You can fit 75 of these in NVIDIA. When you think about the precious metals and all this stuff, a lot of people talk about gold and silver, but copper, lithium, some of these other ones seem to be much more kind

of speculative, but needed for a lot of the robotics and space and things like that. How do you look when you're saying, okay, I want to go into materials and precious metals, et cetera. Are you just buying a basket and it's more about, I want exposure or are you kind of single name picking and saying, Hey, you know, actually copper is my bed or, you know, or this is my bet instead of just saying, look, give me a basket of the precious metals or or other materials well one of the things that's interesting for people watching us right now and you and i can do this tonight uh you just say you have an hour tonight before you go to ben just

you're looking on um chat gpt or you're looking at grok and you ask grok to rebuild iran parts of israel the ukraine gaza and throw in la there los angeles with the fires right over the next 10 years, how much copper is going to be needed, right? The number is, and then you take that number and then you say- How much is available in the world? Exactly.

What's global production? The numbers are, and then you listen to Elon, right? Let's listen to Elon. Elon's saying 10 million robots will be produced in the next 10 years. And he's actually said, I think 40 or 50 million. 10 million robots the copper that's needed in that the silver um the silver electricity connectivity the aluminum that's needed for the power grid in our trade alerts last year we're

big buyers of the silver names alcoa timestamp trade alerts we're all in on companies that are supporting the power grid for artificial intelligence but also supporting um the con the copper side and so you just think of all the copper for robotics all the copper for the rebuild of the power grid which is a two trillion dollar project um and then you just look around the rebuild wars one of the points that neil ferguson makes in the beginning of my book i'm really proud he neil ferguson the harvard laureate best-selling author he wrote the forward and he's like i'll never forget we're at the we're at the harvard club a couple of years ago and he's like larry wars are so inflationary because it's the rebuild over the next 10 years and the demand

for those strategic let's talk about this because this is actually an area where we may not agree and i enjoy learning it when uh when i disagree somebody so in the short term i think right now people see the iran conflict oil prices spiking there's a lot of like short-term inflationary pressures that are happening i would argue over the medium to long term there's this massive deflationary force that's swallowing the US economy. You get tariffs, you get deportations, you get AI and robotics, right? And those are all pretty deflationary. What I don't know is who wins that battle in the short term. So put aside for a second, the next, I don't know, three to six months, two years, three years from now, are you more convinced that we get

higher inflation or we get lower inflation over kind of that medium couple of years? Okay. When I was writing the book, we sat down with Random House. We did the proposal. Patrick Robinson and James were really helpful. They were my ghostwriter partners. And that was the big pushback that we got in the book because the second half of the book was all about inflation and hard assets. And we wrote the book in 2021, 22. And the pushback- And there's a lot of inflation then. Right. Yeah. You guys nailed it then. Yeah, 2021 was the disinflation, then 2022 was the high pick. But the bottom line, the most terrifying part of writing the book is knowing what you know is coming at us on technology, around AI, around job displacement, like you said, around robotics, all massive deflationary forces. um i just think at the end of the day there's nothing in the world that can offset the fiscal

and monetary gross disgusting irresponsibility i mean both republicans and democrats uh i was watching mark halpern last night he's gonna i like mark he's a kind of i call him middle of the road guy he's republicans and democrats on his show and he had a couple republicans on there and uh and i've i've voted republican many times and these republicans are just all in on six percent fiscal deficits like six percent fiscal deficits true that's a trillion eight as far as the eye can see and that's a lot of printing and that's a lot of currency debasement and uh which would lead to the inflation you're talking yes yeah so what's um i don't disagree actually with any of that um i think that what we don't know is if you talk to somebody like an elon musk he

keeps talking about this like supersonic tsunami of AI robotics, et cetera. And he had this great interview with Peter Diamandis on the Moonshots podcast. And what he talked about was the government will not be able to print enough money. Actually, we'll be begging the government to print more money because the deflationary force is so big. Now, I think that's the question, right? Is that right or not? And I think it's very well defined in terms of if it is not this massive deflationary force that would you know warrant the supersonic tsunami description and kind of his viewpoint yeah of course it's going to be inflationary right like they're going to print money they're going to run this deficit the x factor in the equation is how deflationary is

ai and robotics and how quickly does it happen right and um right i don't know what the answer is well that's what right but i think that's what people are speculating back to your last question so to me there could be two trades like we're in this what we talk about in the book is the 2020 to 2030 regime is more certain inflation. And then somewhere around 28, 29, 30, you could get that- Some change. Big time. Yeah. Let's talk about dollar dominance. I think there's two different vectors here that are interesting. One is obviously all of the geopolitical things that have happened. We sanctioned the hell out of Russia. We went after the oligarchs.

I think China has really decided, hey, we are going to just defiat ourselves and really pour into gold. Iran obviously has a huge part of this. But the second vector is you guys recently selected Bitcoin for the portfolio for the first time. And so I'm assuming that this stuff is all kind of related. But how do you just think about like dollar dominance in the modern environment? Well, first thing I do is as a team, we look at the Bitcoin, gold to Bitcoin ratio or Bitcoin to gold. To keep it simple. uh that was like in the high 30s and whenever and this is just five years of data but whenever it's

hit 13 14 15 you want to and i can say i can send you the chart we can show the chart but it's a good time to lighten up on on gold and buy some bitcoin so that's what we did because we were massively long gold and silver and then also the brent gold to brent ratio right that reached literally two standard deviations above the covid level so now think about think about how low brent was right brent was destroyed and so gold was this ratio of of gold versus brent like two months ago reached i mean parabolic crazy insane love now it's crashed back down because because brent's up and gold's down so yeah we look for those types of relationships and then at the end of the day uh bitcoin has become i think the fact that the biggest point is

the fact that it made its way into the etf model and it made its way into a more broad like the fact that jamie diamond was kind of jamie and uh larry fink five years ago were kind of like and now we could jamie still hasn't embraced it vocally but he's embraced it within the bank and we know what black uh black stone black rock excuse me with with larry fink has embraced it so that tells me that those large drawdowns that we saw those 370 drawdowns in bitcoin because there's only like 30 families that control huge you should know these numbers but supposedly there's 30 families control 60 of the huge number so what happens is the market goes you want to risk off this is what happens to all these poor young kids right they don't get it like

you're long you're long a high beta asset that moves triple what the market moves on the downside that's why you had the 370 drawdowns and you've had these families that you go into a risk off regime one family has a liquidity problem they need to sell a lot of bitcoin in a short period of time. And that's what causes these. And then selling begets selling. Now, if the market, this is like gold, like 75, 100 years ago. As the market matures and broadens out, those drawdowns should get less significant. So if you think about the 370% drawdowns for Bitcoin in the last seven years gold's biggest drawdown the last 10 years is about 22 percent maybe we just crossed that again in the last week but gold's still a much better store of value because

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trading your crypto your exchange your profits arch public go to archpublic.com and tell them i sent you when you start to think about the dollar dominance so like put bitcoin and gold aside for a second um it does feel like there are certain people who are buying those assets on pure speculation right especially in bitcoin uh in the early days um now there's a lot of buying especially gold that doesn't seem to be very like speculative in nature it is central banks who are using it as a defensive tool, right? They are basically saying, I'm going to get rid of these treasuries, US dollars, et cetera. Do we have a problem? Should we be concerned about the US dollar as the global reserve currency? I mean, we talk about this in the book where

the last 10 years, Republicans and Democrats have taken a billy club and hit many different countries over the head now the russia example is a good one because russia ukraine tragedy russia deserved um a very strong response the problem is when you use your muscle this is what i call washington hubris republicans and democrats hubris is one of my favorite words because the lehman the lehman management team our first book was about lehman it was a new york times bestseller and it's about i was on the deck of the titanic and we're heading toward the iceberg and like you called it and said hey there's iceberg ahead well i that's one thing one thing great mentors mike gelban saw this coming and he was like the star of of the book uh he now

founded exodus point which is like an eight billion dollar fund mike is my amazing guy my former boss but you know i look at today and i just think you know that that volatility that um looking back to 08 and looking back to today and you know looking at the potential for some type of large event is high now and so you want to have your assets not so much in what we call financial assets so there's two things you can have your assets and financial assets, which are bonds and stocks. Those are just paper certificates. We think that there's a big dollar moment where dollar debasement is so prevalent around

the world, country after country. Now we're punching Iran upside the head. We're going after Greenland. We obviously went into Venezuela. Both Republicans and Democrats have had this hubris around kind of disrespecting global trading partners and global partners of all kinds uh hitting russia upside the head with property confiscation so is the natural path globally away from the dollar into hard assets uh the next 10 years and it's things like bitcoin i think so with the and remember the dollar ownership got so

crazy out of whack it was like 60 70 68 percent of global assets were in dollars right like it got really extreme to the point where we used to call it the dollar wrecking ball like if the dollar rallied 20 30 you know 15 it caused like massive disruptions in the world and so people got global community got so long dollars in like 2018 19 20 and now uh this move by the white house with Trump, all these different moves, plus Democrats, Republicans, it's hubris. And yeah, and I think the dollar dollar is going to lose control on the downside of the next 10 years. As all of this is happening, one area where there are stress and cracks is private credit. And I think that there's the headlines, which are driving more concerns and leading to the

redemptions and then the gating and there's kind of like a whole psychology to it. But the underlying asset, are you worried about it? Do you think that there's real issues there? Or is this more of a psychological you know kind of phenomenon and and there's uh kind of maybe more panic than there is a real concern okay so it's not as big as the subprime mess but because the size yeah the size well so what happened is um boaz weinstein i really respect saba and uh kieran goodwin um They've been out there on Twitter educating people about what happened is the financial advisors of America, the Merrill Lynch's of the world, they, the private credit community went into these guys offering luscious, gorgeous financial incentives for the branch managers, for the management teams. to really shoehorn their financial advisors. Like if you're a financial advisor in LA,

and we were out there last summer, and the guy said in like in the last month and a half, there'd been 12 different wholesalers from the private credit group that are coming in and trying to jam this garbage down the throats of financial advisors. But in order, Anthony, in order to get the financial advisors

and high net worth individuals. And I don't want to say dumb money, but in every cycle, there's early money and late money into an asset class. And so they needed that last stage of liquidity to provide exit liquidity for some of the early investors. And they promised these financial advisors and their clients quarterly liquidity

on an asset that is disgustingly illiquid because imagine a private credit portfolio this is like a basket of like 150 200 companies that are all around the united states they're not publicly traded uh their their financials are okay we who knows mystery meat and um when i sat down with Charlie Munger, he said, you know, just, you know, just that the hubris that you see coming into markets and in bull markets that can really get out of hand. So the bottom line with private credit is this quarterly liquidity is creating these gates. All that means for people watching us right now is because they promised this group of people quarterly liquidity, the gates are typically 5%. And what we've seen across like seven different private credit players,

the demand for the liquidity is like 10, 15%. So people want 15% of the people want the money back, but they're only giving 5% per quarter. And that's where it creates more of a run. And that's- Because people see that and then say, hey, wait, wait, wait, let me get first in line, right? Yeah, exactly. And then that spills over to high yield. And credit, the legendary Greek word for credit, krete, is about trusts. And what's amazing about Lehman and the financial crisis in my first book is that the trust, when it breaks, it waterfalls because there's just a massive run on the bank. In this case, there's a run on all those business development companies and the KKRs, the private credit and the private equity companies that went all in on this space. And now that's spilling over to the banks. Like look at the financials this year.

The financials are underperforming the S&P by the most since almost Lehman. When you think about private credit having these cracks, let's say that there are real concerns there and the marks are wrong and kind of all the things that are alleged are true. Does that mean private equity also has issue? Because if private credit sitting at the top of the stack has the issue, what about the guys underneath? Is the equity worth zero? It's right. Well, now when you say that, you're 100% right around.

If you look at a normal company will have private credit sitting above private equity. The good news for private equity is there is a good chunk of it that is not levered. There's some chunk of it. This is where somebody has to do the math. So in other words, let's just say you have a trillion dollars of private equity. I'd say at least 40% of that, those companies are pretty levered, maybe 60%. There'll be some slug of that that's not really levered. So yeah, on the 60% of that just trillion dollar slice, 65%, yeah, there's private credits

above, and it's just going to cram down the value of private equity. And that's why you're seeing KKR, Blackstone, all these companies are down like 40, 50, 60% on the equity side. As I watch this all play out, it then brings me back to, okay, if you're an investor and you're watching a transition from financials or financialized type of software, et cetera, to hard assets, private credit has cracks. uh the u.s dollar is trash um treasuries uh did the exact opposite what everyone thought would happen with the conflict um where do you go right like is it just literally find hard assets and it's you know real estate gold bitcoin and and those types of assets well when i sat down so i sat down with some great people in the book i sat down with david tepper um einhorn hall of Famer, David, Greenlight Capital.

But I was in Omaha with Charlie Munger. And I'll never forget. He said, Larry, always beware of the three L's. I said, Charlie, what are the three L's? He said, liquor, ladies, and leverage. And then I was laughing. And he just talked about the cycles of like about. And he was almost talking about the future around private credit.

It's just another version of other instances. And then he said, there's only one thing worse than three L's. It's the three M's. I said, Charlie, what are the three M's? He said, mark to market, mark to model, and mark to myth. And the point is that those three L's and those three M's go back 50, 60, 70 years. and history just repeats. It's just a different flavor every time.

Can we get prolonged recessions in the United States? Like one of my theories has always been for now a couple of years, we've pretty much outlawed these things, right? If we get some sort of big next global financial crisis, the central bank, you know, they dust off the old playbook. They got it.

We're going to go interest rates to zero. We're going to print trillions of dollars. We know we'll destroy the dollar over the long run, but I promise guys, be careful. You know, the stock market will be back to all time highs before the end of the year. Agree with that or no? Well, I would say right now, if you think about trade, two-year treasuries have gone

this vicious sell-off. So interest rates are up on two-year treasuries, bond prices are down, and I'm seeing some of the most sophisticated institutional clients buying twos here because of this private credit situation. So Trump tries to do the off-ramp. um this time the off-ramp is coming into a private credit crisis it's coming into a crisis where oil's made this big move crunch the consumer and then ai is disrupting lots of jobs so that's like you said that brings on recession risk goldman just went from like 10 15 to 30 percent

in terms of recession probability uh when by the way when that happens i have to remind everyone because they did, you know, a bunch of these guys, the prediction markets are up, et cetera. Even if you're at 30 or 40%, it still means that there's a higher probability that we don't get the recession, right? It's only after 50%. Is it more likely than not? Right. No, you're 100% right. But the direction of travel is still important. Yeah. When you're in that little zone, yeah, there's a zone there that you're talking about, you're 100% right. But I think that the street is caught off guard on the private credit thing.

And so the bottom line is, yeah, the next recession, they go all in, they cut rates aggressively. That's why if you buy twos here, if you buy a two-year bond here, a three-year, no, a three-year treasury, you're getting close to four and a half percent. But if the bond, if interest rates go down, the bond prices could go up. So you can actually make 10% in short-term treasuries now, if we go into a hard landing. So that's one thing I'm seeing people do. But then to your point is the next time we go in, the debt to GDP is when Lehman went down, debt to GDP was 75%, 80%, right?

Now we're going in at 120%, 125%. So what that means is when they do the QE lever this time, the hits of the dollar is worse. That's why I think we're coming into this golden age of hard assets or companies that control assets. your energy sector your industrials your materials are probably going to go from 12 to 14 percent of the s&p to maybe 30 percent of the s&p of the next five years because of what you just just talked about what are you concerned about right now um in financial markets and maybe other people are not thinking about is there anything that you're like hey this is a huge red flag to me but i don't hear people talking about it um you know the the job loss thing on ai people are starting to talk

about but like you could you could have like hundreds of thousands of job losses later on the year from disruption that comes in from just look at companies like expedia there's a lot of companies that could really get wiped out um then i think that central banks ownership of different assets right so ownership of treasuries uh the uk i think is a big situation right uh nigel farage is probably giving the next prime minister but they're like a much dirtier shirt than the united states so they've already had that liz trust moment all that means is they're kind of they've got this the situation with natural gas and lng in europe is much worse so it's causing much more inflation.

So the UK could have like a real sovereign crisis because they're going into recession, they're really levered. The central bank wants to hike rates. The last time that happened was the Liz Truss moment where the natural tendency of central banks is when the inflation spikes because of say energy, they try to hike rates to slow down things.

And when you do that, when you're really that levered, you could have a run on like a UK situation where people really panic out of the government bonds of say the United Kingdom. And that potentially would help two-year treasuries because people would run into twos for the short term that would help the dollar a little bit for the short term. But that's probably on my wildcard. If somebody buys the book, what are they going to learn? They're going to learn about great mentors, building relationships, inspiration about, But, you know, I started off as a pork chop salesman off of Cape Cod. I mean, I'm no brainiac.

I just work really hard at building relationships, building great mentors. The book, it's a little bit more complex than my first book. The first book anybody could read. This book has very entertaining parts of it, but also some complex parts. but people are just going to learn like 30 years of investing secrets that I've gathered from all the great mentors. Well, I hope people go and pick it up. Um, the book is a how to listen when markets speak. And, uh, your first one was excellent. So I'm assuming this one is good too. Thank you. I'm sorry about the book plugs, but I tell my wife, Hey, if you're not plugging,

then no one's going to buy it as a former Lehman trader over Sunday brunch. Say, honey, if we sell a million books, we'll break even on our Lehman stock. All right. Thank you very much. We'll do this again. All right. Good to see you, my friend.