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

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of higher interest rate regime, companies that control assets are worth more. We're as 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 best selling

author and he is the founder of the bear trap 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 I'd agree 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, etc. Which are these

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 2019, 90 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 got it really climaxed in 2021, like 2021 because we had COVID and we were in this

like 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 do listen market speak. We look at the discount model, 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 a cash flow, one just one billion over 10

years. In a certain deflation regime, that billion dollars is worth a lot more over 10 years.

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 6% 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

hyper scalers 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, etc. 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,

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 bear traps report, we host, we're hosting one

tonight in New York at the Harbor Club. What we do is we get together at a big time.

Stop 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 off for coffee, take them off for dinner, and that's what we do at the bear traps

report. That's we gather intelligence that way. And we started hearing this in like

May, June, July and August. And the key to investing is measuring the life of a narrative.

In other words, when I was a retail broker in the 90s, 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 all

those narratives were, because what Wall Street would do is they would give the ideas to their

institutional clients. And then after they picked over, they eventually make it to retail and

the barons and the Wall Street Journal. And so back then, and you weren't I was just talking about

this, the way the rate of change of information that you've mastered, mastered like the last five,

10 years, monitoring that rate of change of information. If you do that in an ideas dinner

setting or what we we coast a Bloomberg chat with hedge funds, mutual funds and hedge funds.

And we can measure the life of those narratives. So getting back to your point about mag seven.

I'm telling you right now, well, we started to learn in like the spring to summer, was that this

is a testosterone contest where Zuckerberg's challenging Larry, Alison, we were one of the guys

at the dinner was like really close friends with Larry. And if you look at what Larry

Alison just did, he essentially blew up his company, stocks 50% off, because Zuck, it's like

it's like the doctor up and high moment. And they're all going after each other. And so Zuck,

they're literally willing to risk implosion of their company or 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,

you had companies that were incredible cash cows for 20 years. So everybody watching us right now has

got these stocks in their formal case. 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 per look at meta, they had 50 60 70 billion of free cash flow. That's going to get down to five.

Crazy. Oracle had 30 billion positive. And now that we're 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? There's once again, this is the birth of a narrative. So the first stage in 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 per. Now we're in the

second stage. There's three stages of this where Wall, if you look at the mag seven today, 14%

draw down 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,

people are looking at this like a moment with the dot coms or let's just say better example is

the shale revolution where 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 and return on invested capital. And so now we're in a stage where

people are show me, they want to be shown. And that's why this draw down 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 four 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,

you know, 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% draw down on this stuff. 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, I should have bought 10 years

ago. I mean, to me, that's all bullshit. If you're 30 years old, you got a beautiful fiance.

She wants to buy a house. These kids buy these stocks and they buy Bitcoin and they say,

oh, I'm going to hold forever because they see the chart and the book. And it's like such BS

because nobody can weather that 70% draw it out. So Mark Zuckerberg and Jensen at 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 the biggest AI moment history,

Jensen wasn't buying any stock back. These guys were convinced that the meta chips, metaverse chips

and crypto chips were going to have like the future. And then they flipped it, they brilliantly

flipped it in 22, 22 and the 23. I'll give him credit for that. But they blew up investors in

22, like 70% draw. How much do you think of that was they're doing versus just the Fed

height rates at the fastest pace in history? Okay, let's blame that. That's fair. But Zuck,

if you look at what Zuckerberg did brilliantly, he looked at his employee base, fat,

dumb and happy. He cut the fat, similar to what Elon did at Twitter. And so Zuck, to get

himself out of your absolute right, it was the Fed was hiking rates and we essentially went

to a software session. But 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 like dream model. That's why he changed the

company to meta, which is insane because now you should change it to the bottom of my list.

This guy's 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 what happened. 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 a 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,

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 in how to list some 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 years. We're going back to 30.

So you get like the percentage of those companies is going to double. And how much of that is they

grow versus the tech and financial strength? It's fascinating. If you look today, I was looking

this morning at Google versus Chevron. Yes, so Chevron's making new highs. Still a small market

cap. You know what? The best trade in the world right now is for AI and energy is slumberj.

They just did a pact within video. Slumberj is data processing for energy companies that are

exploring and controlling logistics. Slumberj is, I think, I think it could be a triple quadruple

from you can fit 70. I'm pretty sure of this now. You can fit 75 slumberj's 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 their robotics and your space and things like that. How do you look

when you're saying, okay, I want to go into materials and precious metals, etc. 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 bet or this is my bet instead of just saying,

look, give me a basket of precious metals 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. You just say you have an

hour tonight before you go to Ben, just you're looking on Chatchy PT or you're looking at GROC and

you ask GROC to rebuild a ran parts of Israel, the Ukraine, Gaza, and throw an LA there and

Los Angeles with the fires, right? Yeah. Over the next 10 years, how much copper is going to be

needed, right? You're the number is jo and then you take that number and you say, how much is

available in the world? How exactly? What's global production? The numbers are and then you

listen to Elon, right? Let's listen to Elon. Elon saying 10 million robots will be produced in

the next 10 years and he said, he's actually said, I think 40 or 50 million, 10 million robots,

the copper that's needed in that, the silver, silver electricity connectivity, the aluminum

that's needed for the power grid in our trade alerts last year were big buyers of the silver names,

Alcoa, timestamp trade alerts were all in on companies that are supporting the power grid

for artificial intelligence, but also supporting 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 $2 trillion

project and then you just look around the rebuild wars. One of the points that Neil Ferguson makes

beginning my book I'm really proudy, Neil Ferguson the Harvard laureates best-selling author,

he wrote the forward and he's like, I'll never forget 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 aspects. This is actually probably an area where we may

not agree and I enjoy learning it when I disagree with somebody. So in the short term, I think right now

people see the Iran conflict, oil prices spiking, there's a lot of 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, you know, 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,

we're a really helpful neighbor of my ghost writer partners. And that was the big pushback that we

got because in the book, because the second half of the book is all about inflation and hard assets.

Well, we wrote the book in 2021-22 and the pushback, there's a lot of inflation that,

correct? You guys nailed it then. Yeah, 2021 was the disinflation then, 2022 was the

high pick. But the bottom line that's most terrifying, terrifying part of writing the book

is knowing what you're, what you know is coming at us on technology around AI, around

its job to put this placement like you said around robotics, all massive deflationary forces.

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, I was watching

Mark Halpern last night. He's got, I like Mark. He's kind of, I call him middle of the road guy.

He's Republicans and Democrats on his show. And he had a couple of Republicans on there.

And I've voted Republican many times. And these Republicans are just all in on six percent

fiscal deficits, like six percent fiscal deficits. That's a trillion eight as far as the I can see.

And that's a lot of printing and that's a lot of currency debatement and which would lead to

the inflation that you're talking about. Yes. So I don't disagree actually with any of that.

I think that what we don't know is if you talk something like Elon Musk, he keeps talking about

this like supersonic tsunami of AI robotics, et cetera. And he had this great interview with Peter

Diamondis 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? Like, 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 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 I don't know what the answer is. Well, that's what I think that's what

people are speculating about your last question. So to me, there could be two trades.

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 defy

out 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 Bitcoin ratio or Bitcoin gold. Keep it simple. 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 say the chart, we can show the chart, but it's a good time

to lighten up 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 levels. So now think about how low Brent was, right?

Brent was destroyed. And so gold was this ratio of gold versus Brent like two months ago

reached, I mean, parabolic, crazy insane love. That was crashed back down 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,

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 Larry think five years ago were kind of like, and now Jamie still hasn't embraced it

vocally, but he's embraced it with the bank. And we know black, black stone, black rock, excuse me

with Larry, think has embraced it. So that tells me that those large drawdowns that we saw,

those three 70% drawdowns in Bitcoin, because there's only like 30 families that control huge,

you should know these numbers, but supposedly this 30 families control 60% of the

huge number. So what happens is the market goes to want to risk off. This is what happens to pull

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 three 70% drawdowns.

And you've had these families that you go and want to 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 then selling to get selling. It's like now, now if the market, this is like gold,

like wait, like 75, I'm 100 years ago, it's the market matures and it broadens out those drawdowns

should get less significant. So if you think about the three 70% drawdowns for Bitcoin in the last

seven years, gold's biggest drawdown in the last 10 years is about 22%. Maybe we just cross that

again in the last week. But gold's still a much better store of value because it's something

that you can put several million dollars into and you're not going to get those 70% drawdowns.

But I think going forward, Bitcoin is going to be far less volatile and you want to have a combination

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When you start to think about the dollar dominance, so like put Bitcoin in gold for a second,

it does feel like there are certain people who are buying those assets on pure speculation,

especially in Bitcoin in the early days. Now, there's a lot of buying, especially gold.

It doesn't seem to be very speculative in nature. It is central banks who are using as a defensive

tool. They are basically saying, I'm going to get rid of these treasuries, US dollars, etc.

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 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 a very strong response.

The problem is, when you use your muscle, and this is what I call Washington hubris, Republicans

and Democrats, hubris is one of my favorite words because the Lehman Management team, our first

book was about Lehman. It was a New York Times bestseller. I was on the deck of the Titanic and

we're heading toward the iceberg. You called it and said, hey, there's iceberg ahead.

Well, that's one thing, one thing a great mentor. My gal band saw this coming and he was like the

star of the book. He now founded Exodus Point, which is like $8 billion fun. Mike is my amazing

guy, my former boss. But I look at today and I just think that volatility that looking back to

08 and looking back to today and 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 could 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 hitting,

punching a ran 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, hitting Russia upside the head with property

confiscation. So is the natural path globally away from the dollar into hard assets the next 10

years and into things like Bitcoin, I think so. And remember, the dollar ownership got so

crazy out of whack. It was like 60, 70, 68% of global assets were in dollars. It got really extreme.

So the point where we used to call it the dollar wrecking ball. If the dollar rallied 20, 30,

you know, 15%, it caused massive disruptions in the world. And so people got

global community got so long dollars in like 2018, 1920. And now this is dismoved by the White House

with Trump. All these different moves plus Democrats, Republicans, it's hubris. And yeah,

I think the dollar dollar is going to lose control on the downside 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 than 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 there's kind of maybe more panic than there is 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 in the Boaz, Weinstein, I really respect Sabah and Kearing Goodwin,

they've been out there on Twitter educating people about what happened is the financial advisors

of America, the Marylanders of the world, the Morrison. 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 sat in the like in the last month and

a half, they've 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 you know, 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,

they're their financials are okay, we who knows mystery meet. And when I sat down with Charlie

Munger, he said, you know, just, you know, just that the hubris that you see coming in the markets

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, wait, wait, let me get first in line, right? Yeah. And then exactly. And then that

spills over to high yield and credit, like the Greek legendary, like Greek word for credit,

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 it's just like a massive run on the bank.

And in this case, there's a run on all those business development companies and the KKR is 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? Like is the equity or zero?

It's right. Well, now when you say that, you're 100% right around, like if you look at a normal

company, we'll have private credit is sitting above private equity. The good news for private

equity is there is a good chunk of it that is not levered. There's something, something 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

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 credit 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. The US dollar is trash. Treasuries

did the exact opposite. What everyone thought would happen with the conflict.

Where do you go? Is it just literally find hard assets and it's real estate gold Bitcoin 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, Ironhorn, Hall of Fame, or David Greenlight Capital. But I was in Omaha

with Charlie Munger. And I'll never forget. He said, Larry, always be aware of the three Ls.

I said, Charlie, what are the three Ls? Said, liquor, ladies, and leverage.

And then I was laughing. I was like, and he talked just talked about the cycles of like

about, and like he's almost talking about the future around like private credit,

it's just another version of other instances. And then he said, there's only one thing worse than

three Ls. 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 Ls 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. If we get some sort of big

next global financial crisis, essential bank, they dust off the old playbook, they got it,

we're going to go interest rates is zero, we're going to print millions of dollars,

we know we'll destroy the dollar of 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. The Trump tries to do the off ramp.

This time, the off ramp is coming into a private credit crisis. It's coming into a crisis where

oils 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%

in terms of recession probability. By the way, when that happens, I have to remind everyone

because they did 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 at 50%. Is it more likely that? Right. No, your 100%

direction of travel is still important. Yeah. When you're in that little zone,

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, they go all in, they cut rates aggressively. That's why if you buy two here,

if you buy two, you're born here three year, no, three year, three year treasury,

you're getting close to four and a half percent. But if the bond, if interest rates go down,

the bond price 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 into 120, 125%. So that means is when they do the QE lever this time,

the hits of the dollar is worse. That's why 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% of the S&P to maybe 30% of the S&P

of the next five years because of what you just just talked about. What are you concerned about

right now 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?

The job loss thing on AI, people started to talk about, but you could have hundreds of thousands

of job losses later on the year from disruption that comes in from just like it, companies like

Expedia. There's a lot of companies that could really get wiped out. Then I think that central banks,

ownership of different assets, right? So ownership of treasuries, the UK, I think is a big

situation, right? Nigel Farage is probably going to the next prime minister, but they're like a

much dirtier shirt than the United States. So they've already had that list trust moment. All that

means is they've got 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 list trust 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 that potentially would help

to your 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 my wild card. If somebody buys the book,

what are they going to learn? They're going to learn about great mentors, building relationships,

inspiration about, you know, I was started off as a pork chop salesman off a 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. The book is how to listen when market speak and 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. Thank you very much. We'll be good to see you, my friend.