Title: Larry McDonald: SpaceX Could Crash the Market — Why He's Buying Commodities Instead Show: In the Money with Amber Kanwar Guest: Larry McDonald (Bear Traps Report) Date: 2026-JUN-18 URL: https://youtu.be/Loc3MIVxoUk Length: 66:17 Note: Verbal fillers (um/uh/"you know" as interjection/false-starts) removed; wording otherwise verbatim. All (mm:ss) timestamp lines preserved. Auto-transcript name garbles corrected to: Strait of Hormuz, Bessent, Warsh, Agnico Eagle, NexGen, Tourmaline, Antero/Range, Anthropic, Claude, Kimi, Milei, Vale, SRUUF, First Quantum.
00:00 The forward earnings on Nvidia are completely baloney. In some ways, SpaceX could create a credit crisis. Your risk reward is much better than uranium. Larry McDonald is back and he's doubling down on the commodity trade, gold, copper, energy, and he tells us why he's staying away from tech. You can't make money on a stock when 50 Wall Street sheep analysts have a buy on it.
00:26 The former Lehman trader and bestselling author gives us his most actionable insights. Copper stocks, aluminum. Do pipelines fit into your thesis? The CNBCs of the world will not cover these type of stories. You get a beautiful free cash flow, beautiful dividend. You like when people call you a bear or a perma bear.
00:44 When would you be done with commodities? It's like that dumb and dumber. So you're saying there's a chance. When you choose a Raymond James advisor, you're getting more than independent financial management. You're getting access to complete financial guidance under one roof, from tax and estate planning to trust services for generational wealth and strategies for life's key milestones like buying a home, funding your children's education, or preparing for retirement.
01:15 They bring it together in one financial plan. What also makes Raymond James Advisors unique is their complete independence. With no proprietary product to promote, you will benefit from personalized services, all backed by the strength and resources of Raymond James, a powerhouse with $100 billion in assets and over 520 advisors nationwide.
01:37 Discover how Raymond James can help you live a life well-planned. Visit RaymondJames.ca. The content provided in this podcast is for informational purposes only and does not constitute financial investment or professional advice. The views expressed by the host and the guests are their own and do not necessarily reflect the opinions of any organization or company.
02:01 The host and guests may maintain positions in any securities discussed on the podcast. Always consult with a qualified financial advisor or professional before making any investment decisions. Hey, everyone. Welcome to a brand new episode of In the Money with Amber Kanwar. On this episode, we've got Larry McDonald, and he is feisty as ever.
02:19 We talked a lot about getting into the cage match and going head to head on a number of stocks. Obviously, he loves those hard assets. He loves commodities. And I pushed him, at least I thought I did, on like, why are we buying Meta at 17 times or NVIDIA at 23 times? We're not exactly in this high exuberance cycle for the large cap. So naturally, he disagreed with me, but we had some fun with it.
02:46 So I can't wait for you to listen to this episode and make sure you listen all the way through because it's not till the very end that he gives me his price target for gold. And it might surprise you. So that's a little tease to get you all the way through the episode, but it's just kind of action-packed and really insight-driven. Every single asset class, copper, gold, energy, aluminum.
03:08 Really interesting to kind of hear his perspective on everything and why he's not swayed by some of the hype around SpaceX and said that could ultimately be the market's undoing. That's just his opinion. That's what makes a market. Two sides of it. You guys know I'm a glass-half-full type.
03:25 Larry's been accused of being a glass half empty guy, which I also asked him about. It's funny, Jillian, we've been asking these so-called perma bears what they think of being perma bears. They don't like it. And he gives us his reason why he doesn't like it. So before we get into the episode, I also want to remind everybody we're going to the Stampede July 8th. We are going to be filming a live episode.
03:51 Well, it's live taped, but still, we'll be running it through with an audience. And we want you to be part of that audience. If you're going to be at the Calgary Stampede July 8th, if you're going to be awake enough in the morning, if the previous night didn't destroy you. We want to see you at the Stampede. All you have to do is email us, stampede at inthemoneypod.com.
04:13 That's stampede at inthemoneypod.com. We've got the CEO of Enbridge, Greg Ebel, will be our guest. And recently, he's been very vocal about this country, Canada, having extraordinary resources but not moving fast enough, saying that we're losing the race when it comes to attracting capital. That was a couple of months ago. There's been some changes since then.
04:38 We're going to get his view, and we want you in the room. Stampede at InTheMoneyPod.com if you want to be part of our audience. I can't wait to meet you. I hope that you can join us. Let's get into today's episode. Larry McDonald, thank you so much for joining us on the podcast again. Thank you, Amber. I love to be back in Toronto.
05:02 It's so good to have you in person. You're right. The last time I spoke with you was in September and we had to do it virtually. You're in town taking meetings and I want to hear about that. But I love having you during this time. You were on in September. You were talking about, you love hard assets.
05:20 You love commodities. You think that's the real AI trade. And I'm talking to you, what is it, day four of the SpaceX IPO, up 50%. It's now worth more than Amazon. Kind of like a crazy time to be talking. You're always on about exuberance. You don't like exuberance and you're laser focused on where to find it. So hard assets are working, but then there's still this exuberance in the market.
05:50 Talk to me about that. Well, there's a line in our book, J.P. Morgan, 1907. This was right after the panic of 1907. He said, there's nothing in this world which will so violently distort a man's judgment more than the sight of his neighbor getting rich, right? And that's what's happening is people are long some of these crazy tech stocks. And it's a tale of two cities.
06:24 The big stocks are actually, Nvidia's unchanged since October, Microsoft's unchanged for two years. They're real dogs. Like Meta is unchanged for almost two years. Tesla's unchanged since 2021. So there's a lot of dogs, as Gordon Gekko says in Wall Street, dog with fleas.
06:44 But there's a lot of tech stocks that are really carrying the boat. And the parabolic nature of it is a situation where you take all the cash flow of these big tech stocks and you're decimating that free cash flow and you're sending it to all these other companies like the Microns of the world, the Western Digitals.
07:03 And it's creating really a massive distortion of the market. I want you to tell me why NVIDIA basically being flat, Microsoft basically being flat, Meta being down is not a screaming buy. These are stocks where the fundamentals are very strong.
07:25 They make up such a huge portion of the earnings growth that we're seeing in the S&P 500. And a lot of cases, they're cheap. You like cheap stocks. There's no exuberance there. Tell me why I shouldn't be going all in on those stocks that exactly are just flat, and they're doing spectacularly. Right. And with the Google situation, with Buffett coming in, there's value. The only thing, I completely agree around looking for value but I think what happened in 2021-22 is we had the inflation shock and the nasdaq 100
08:08 in late 2021 was worth about 20 trillion. We had the inflation shock and what that does is it kind of increases rate hike potential or assumption of rate hikes and by the end of 21 and 22 which is a year later the nasdaq 100 lost about 35 percent because of that fear of rate hikes and we had an economic slowdown because of all that inflation.
08:28 Here, we've had a fiscal spending in Washington of $1.9, $1.8 trillion. We have $2, $3, $4 trillion going into artificial intelligence capital expenditures. That's fueling inflation. Look at Caterpillar, look at the price of copper, look at the price of aluminum, sulfuric acid.
08:54 And then we have the Strait of Hormuz being closed for 110 days and Trump trying to do these deals and claiming he has a deal over and over and over again. I really sympathize with the White House because they're doing deals with like one or two factions in Iran. And then Israel and Bibi Netanyahu or the Iran conservatives on the other side, the hawks, they're just disrupting these deals.
09:19 And that's why the strait's been closed. So the bottom line is, why is this important for people watching us right now? The probability that we have a pretty nasty inflation shock later in the year, the summer driving season with the World Cup, all you have to do is drive around Toronto and all around, the games are in Vancouver, they're in the United States, they're in Philadelphia.
09:40 People are taking the private jets. And so you've got the summer driving season. You've got a lot of key supply chain disruptions that all around the world and like it's just that sulfuric acid situation that are going to create this like inflation bounce through the year and that's going to move money probably from growth stocks over toward value stocks.
10:05 That only, again, I'm going to push you on this because that really, that happens because the growth stocks are expensive. Right. Those growth stocks, you could argue, are now value stocks. Okay. I mean, you can't say that about NVIDIA. You can say that about Google in respect. Yeah. And you can say Seth Klarman, the most famous value investor.
10:27 You can't say that about NVIDIA, 23 times earnings? Oh, the forward earnings on NVIDIA are complete baloney. Tell me why. Because they're concentrated with a handful of companies. Think of the forward earnings of Microsoft. Those earnings, or Google, they have like millions of counterparties that give them that revenue.
10:46 The counterparties to NVIDIA are a handful of companies that are dependent on that. So let's make your point. Seth Klarman owns, his biggest position is Amazon. Seth Klarman is one, we talk about him in our book, How to Listen When Markets Speak, value investor. My favorite value investor all time is David Einhorn, Charlie Munger. We sat down with Charlie Munger in the book, and Seth. And so, yeah, you're, that's why you're so good with the show and you create a great debate because how can I possibly make the case that
11:21 there isn't value in something when probably one of the most famous value investors in the world, Seth Klarman, Baupost, owns Amazon. Which is actually more expensive than like Meta at 17 times. Right. I just want, I'm seeing if I can get you to bend a little. Well, here's the one thing. Let's just look at the NASDAQ 100. There's 40, 41 trillion in the NASDAQ 100.
11:48 At the end of 21, 22, there was 12 trillion. So we went from 20 trillion in early 21. When the inflation shock came, the NASDAQ 100 went down to 12 trillion in value. That's all the stocks in the NASDAQ 100. There's a lot of tech stocks in there. So we went from 20 trillion to 12. Now we are at 40, 40, 41. And a lot of that is the microns and these other tech stocks that have kind of taken over.
12:12 And what do you think about semis quickly? Oh, semis are the most, it's a commodity, right? So what happens in a commodity cycle, higher prices always in commodities destroy high prices because they incentivize massive creativity and production, right? But this is the thing about the CapEx cycle of the big tech stocks, where if you take the bankers at their word on the SpaceX IPO, SpaceX is going to have over the next five years, 1.4 trillion of revenue over five years. And then if you do a Google search or do a grok,
12:45 I like the grok a lot, or a Claude, and you say, okay, where is this 1.3 trillion of revenue for SpaceX going to come from? And lo and behold, it's the Mag 7. So there's something going on in the market that once in a while you have this disconnect with Wall Street analysts. So on one hand, they're saying that SpaceX, you can justify a $2 trillion valuation because over the next five years, they're going to have 1.3 trillion of revenue.
13:16 But if that's the case, then that revenue is going to raid the cash flow of the big tech stocks, and they're already committed to $5 trillion of on-Earth data center spending, right? So Elon's creating a railroad, right? One of the biggest parts of SpaceX is a whole bunch of moving parts in there. Twitter is in there, X and the whole thing.
13:38 There's a lot of nice businesses in there. But the railroad to space to create the data centers, the space data centers, that's a big part of it. And this is what's weird. So if Elon is really successful with SpaceX, that cashflow is going to be stolen or taken out of the big tech companies. That's going to disrupt the on-Earth data centers, which also have NIMBY risk, which not in my backyard.
14:05 Kevin O'Leary has been very vocal on this. And guess what? There's 800 billion of off-balance sheet financing for the on Earth data centers. So in some ways, SpaceX could create a credit crisis in the United States. I think that's so important. The word credit crisis, I don't know how it ends, but like all things, and you know this with Lehman Brothers and every collapse, the music can keep playing for a long time as long as the money is flowing. Yes.
14:38 And really, what's going to cause this, cause a collapse, it's obvious. It's a funding collapse. For some reason, the funding window closes. People don't have money for SpaceX. They don't have money for Alphabet's equity raise. They don't have money for Applied Digital's raise. Right now, they have the money.
14:58 Do you think about that as the key risk? Do you think about what the catalyst could be for that funding window to somehow close? Yes. I mean, that's been the real hallmark moment of every big cycle, is the Time Warner AOL deal or the RJR Nabisco deal. And it's a point where hubris, what happens in a bull market in capitalism, is the hubris and the incentive to invest and the incentive to do deals is so crazy.
15:25 And that word hubris we talked about in my first book, the Lehman management team, the hubris was off the charts. And they would make decisions that were really crazy if you look back historically. And that's what capitalism, I love capitalism, but booms create that hubris and that decision making.
15:42 But the point we make in the book is that it's not so much about being bearish or bullish. If you think of just copper, right? The biggest copper, copper is going to be, Elon's talking about 100 million robots over the next 10 years, right? Think of, just do a Claude search, how much copper is in those 100 million robots.
16:04 You got to rebuild the Ukraine. You've got to rebuild Iran. You've got to rebuild Gaza, right? You've got to rebuild the U.S. power grid for all these data centers, right? You need the copper. Do a Grok search or a Claude search on how much copper is in 1,000 data centers. Then when you look, so we sat down with Adrian Day in our book, I think one of the best mining minds in the world.
16:30 And he points out that the best copper mines on planet earth have been suppressed by regulation, by environmental rules. And so the biggest mine in Europe is coming on in Poland. And guess what? It's not going to be up and running until 2035, 36, 37, maybe 2040. There's a mine. And that's aluminum metals.
16:53 Right. Yes. We're going to have the CEO on in a few weeks, so stay tuned. Tell them that's one of the best properties in the world, right? Okay. But the other properties like First Quantum, right? This mine in Panama, it's a dream. The copper is close to the surface of the earth, so it takes less capex, and you can get it into the ocean in five minutes with Panama.
17:14 They shut it down. Environmental rules. So what's happened is we have an earth, a planet earth that is so offsides right now. The capex for the data centers, all this spending on the power grid for the data centers and all this — wars are inflationary because you have to rebuild right? You're going to have to rebuild much of Iran. Yeah. And so what that does is it creates this huge demand for copper at the same time we've suppressed the supply and that's
17:42 why I think get out of these tech stocks. And you should own the First Quantums. You should own the BHPs, the Rio Tintos. So you're still all in on copper stocks? Copper stocks, any stocks like aluminum or Alcoa. We've lightened it a little bit. We've had it for three years. But aluminum is going to be a bedrock of the data centers, right, and of the power grid rebuild.
18:04 We need a $2 trillion rebuild of the U.S. power grid. It's like a 75-year-old man trying to basically lift weights, right? By putting on the data centers on it. And that's what nobody's talking about. All these disconnects. Okay, so you do have an AI trade. Do you like when people call you a bear or a perma-bear? Do you feel like that is...
18:24 I mean, and I'm happy that it's the most wrong, insulting thing because we've been long the hard assets for years, and not just the gold miners, but the copper names, the uranium names, right? So we're just bullish on other things. I think another risk, and I haven't got a chance to talk about it with anybody.
18:48 So I'd love to know what you're talking about, because you also talk with hundreds of big money portfolio managers every day in the Bear Traps report. It's like kind of a lovely collection of what people are saying. And I think the U.S.
19:08 told Anthropic that their latest innovation, you can't export it, right? So they're not controlling Claude. So they're not controlling products anymore. They're saying, I'm controlling your software. There's export controls on it. And they basically had to shut it down. And I wonder if there's a risk that AI becomes so powerful, like mythos, for example, they're not letting it out. It's very select.
19:31 Does AI become so powerful that the U.S. has to choose between like nationalizing it or risking its dominance as a country? If you nationalize, the whole thing implodes. Is that a risk or am I just kind of creating an insane fantasy? I'm glad you mentioned this because I'm not some financial genius.
19:54 I was a pork chop salesman on Cape Cod, right? I just work hard at building great mentors, doing the ideas dinners around the world. We're going to do one tonight here in Toronto. And really getting people, brilliant minds, to trust me with their ideas. And the one theme that I've been hearing, and I think this is really important, when you do the ideas dinners and we run the Bloomberg chat, it's like a live ideas dinner during the day with the chat on Bloomberg and with Discord. And so when I see three brilliant
20:26 portfolio managers that don't know each other, and they're all starting to talk about the same thing, I think what's happening is the White House knows, and the David Sacks of the world knows, and Shamath and that whole team, they know we're being ripped off by the Chinese on national security. You could steal some of this invaluable code where our companies are spending billions of dollars. And you can feed that into a piranha.
20:56 Imagine a piranha pool in China, open source. Kimi, for example. You can feed the tech. All of a sudden, you're ripping off all of our national, it's not just national security, but it's also CapEx. You feed into open source and then all of a sudden, the value of that collapses. And so yeah, I think there's a war of security that's going to happen with AI because the Chinese are famous for stealing, right? They've been, for the last hundred years, they've stolen a lot of different technologies, right?
21:31 And that's one of the reasons why they've actually excelled in things like electric vehicles, right? So they're trying to do the same thing with AI. And I think that's why Washington's so nervous. And is that one of your risks when you're looking at this sector? Oh, to me, that would be a massive credit crisis.
21:47 If we woke up one day, it was like we had the deep seek moment last year. Now, it was a little storm and people took it serious. And then all of a sudden, it wasn't so serious, right? But we probably have a couple. It's going to be like the private credit situation. We had a storm in October that created a big down drop.
22:06 And then there was some relief, a relief rally. And then some of these, but it's the same thing. The deep seek moment, there's going to be one more of those, which is a threat once again to big tech, because people are going to say, oh, you just invested $4 trillion in capital expenditures and you're being ripped off by the Chinese. Your way to play it is copper.
22:28 And it's kind of easy to talk about right now because copper's still doing well. I think a lot of people who think hard assets, they also think gold. They also think oil. And I would love to get your two cents on that. Gold sold off after the war, and it hasn't really recovered now that an end appears to be in sight. Why is that and what's your outlook going forward? Okay, so for investors watching us right now, one of the trends and themes we see through our lives with finance is that you can have a theme that catches really hot. Like last year, central banks are buying gold, right?
23:07 And currency debasement, money printing in Europe, money printing in the United States. This brought a lot of tourists into gold. You picture the heavy set guy with the Hawaiian shirt and the camera getting off the bus. And the tourists, it's like a poker game. You have strong hands in a game and weak hands. Strong hands are real investors, real money.
23:34 Weak hands are kind of fast money and people that are just in for a trade. When you have the war in Iran that comes off of this big, big move of tourists that came in, that is such a threat to central banks selling gold. So when you have the war in Iran, oil prices went up. It's a double barrel hammer on the gold miners because cost of diesel is going up and you have all these tourists that were in the gold miners, and all of a sudden we might have rate hikes, right? We might have to, you've got potential inflation.
24:12 When the front end of that yield curve goes up, that one-year T-bill, the one-year T-bill is the biggest threat to gold miners, gold and gold miners. Because if you go from 3% in a one-year T-bill to four, there's a lot of people that would sell gold, right? And then we were supposed to have three rate cuts and then going to hikes.
24:33 And then we had all these central banks around Turkey dumping, right? There's a lot of emerging market countries that don't have any energy source, right? So what happens is when energy prices go up, rent goes up like 120, $130, all of a sudden you're an emerging market country, you have to sell your gold for national security because you need to stabilize your population.
24:56 All this happened at the same time. So it created a big flush. And one of the things David Einhorn talks about in our book is free cash flow. So you take a company like Agnico Eagle. This is one of the best ideas. The most impressive management team in all of global mining by far. If you've been on the calls, if you talk to them, the CEO has like literally seven lieutenants that are just as smart as he is.
25:21 Incredible management team. They're buying back 2 billion of stock, the stock's down 40, and they're producing free cash flow of six to seven billion a year. And that's what David taught me, and a lot of like David Einhorn, David Tepper. You want that free cash flow. You want companies that are doing buybacks. But the stock's already down 40 and the stock market's all near all-time highs.
25:45 To me, that's a beautiful risk-reward situation. And remember, in the 80s, there were a lot more companies in the metal space that were in the S&P 500. Right now, we have one gold miner in the S&P 500. Newmont. Newmont. Isn't that crazy? You got to come to Canada. Yeah. Or Australia. I mean, we're going to have, over the next five years, Or Australia.
26:06 I mean, we're going to have over the next five years, seven, 10 years, we're going to have this big transition where the S&P 500's composition goes from 50% tech to maybe 30% tech and hard asset companies like the BHPs, like the Rio Tintos, like the Alcoas, like the Agnico Eagles, they become a bigger part of the S&P. I mean, it's going the opposite.
26:28 It's not doing that. If anything, tech is eating more and more of the S&P 500. Right. And that's a perfect segue to the next idea that I'm hearing at the dinners. So we do these cage matches. Oh, I love it. These are absolutely hilarious. Yeah. So at the Bear Traps Report, we get a bull and a bear in a room in a Zoom and they fight to the death.
26:46 It's absolutely hilarious. And you learn so much. That's mosaic research. We're not like writing a report in Westchester as some sell side bank analyst with his own personal biases. We're sitting down with billionaire families that are, the great thing about family offices is they're really deep in certain sectors.
27:11 We've got family offices that are really deep in the uranium space. They help us gather intelligence, right? They're right on the front lines. But in the medical field, we've sat down with three or four families, billionaire father and son. They're in artificial intelligence healthcare.
27:34 So everyone right now is in the chips, right? The microns and the semis, which is a commodity, which is going to absolutely crash and burn. But nobody's, look at intuitive surgical. It's down like 20%. Beautiful business, but guess what? It missed. It missed a few quarters. It missed a few quarters, but they have the data. So in other words, what the smart money is doing is they're looking at what companies have great data.
27:57 And so think of robotics and surgeries over the next 10 years, and you've seen these movies, these science fiction movies where you're going to have robotic surgeons that are guided by physicians and surgeons, but that can be doing surgeries around the world with that data that's coming from the intuitive surgical system.
28:19 You've given away two of your pro picks, but so I'm going to stop you there so that we can talk more about it in the ProPicks segment. But I love this kind of, I love actually talking about healthcare too, because I feel like everybody hates healthcare right now. And that's where you can make a... Well, the last line on that is healthcare was eight, 17% of the S&P.
28:38 And now? Now, eight. Yeah. And that's because, to your point, they're making room for the AI IPOs. I want to talk about oil quickly. What's the level? Where does it level out? Oil right here is a screaming buy. I think your downside is maybe 70. Your upside is 150. You still think it'll go that high? You get a summer driving season.
29:07 You have AI capex of trillion plus dollars, over this 18 months, another 4 trillion coming. You have a Strait of Hormuz closed for all those days, the 100 days. And then you have the World Cup and the shoulder season where the summer driving season with the refiners right now, they have to buy a lot of oil to refine it for the summer for the next eight weeks.
29:32 So the probability that the White House miscalculated on how long they can really play with Iran. Now they do have in their back pocket, the production coming out of Venezuela. There's no question. And there is some weakness in China demand. I get that. But if you listen to the Jeff Curries of the world, the Eric Nuttalls, these guys, I think they're right.
29:55 You took too much supply off the market. The demand comes from the summer driving season and all this CapEx and all this data centers. And then that gets you a big bounce in oil in the second, third quarter of this year. Favorite way to play it? Well, I love some of the Canadian, like the Tourmalines of the world, because one of the clients made this point at my dinner and it was like, I love that light bulb moment, and he said, imagine the United States military, they attack Iran, they wound all the natural gas production in the Middle East.
30:35 Think what they just did. They just handed a huge fat check to U.S. natural gas and oil producers and Canadian natural gas and oil producers. Because Tourmaline's been in the toilet. And I can say that because I'm a shareholder. I'm waiting for it to do something.
30:52 But think about the planet Earth, right? Yeah. Say you're a natural gas buyer in some part of the world. You were buying from the Middle East. Now you've been wounded. You probably got fired, some of these people, right? Because they didn't foresee. So now they want safe jurisdictional risk. That's where the Tourmalines come in.
31:11 That's where the Anteros in the United States, AR, the Range Resources. That to me is the best AI play out there. And it's a play on the war. Before we get into the mailbag, there's two sectors. Actually, it's one sector, but on both sides of the border. Because of your Lehman background, I know you look at the financials as well. And U.S. banks, the U.S. Bank Index, record high. TSX Bank Index, record high.
31:39 Valuations in Canada are elevated compared to historical norms. What does that tell you? What's the market signal when bank stocks are doing so well? Maybe it makes sense because we're in a bull market and they're the ones clipping their coupons off of all of these financings.
31:57 Do you feel comfortable with where bank stocks are right now? It's really a tale of two cities there too, because what's happened is the deregulation side is helping a lot. So Trump and the new Fed, the new Fed is going to be far more forgiving on the regulatory side.
32:19 And that has people buying banks. That's been going on for a long time, like a year and a half. JP Morgan's trading at its highest price to book ever. I don't like that. The last 20, 30 years, it averaged maybe 1.2 times book and it's like 2.3 times book. You don't really make money in financials buying that.
32:35 But then you look at Capital One, which is the biggest subprime lender. And you talk about the K-shaped economy and you talk about automobile defaults and credit card delinquencies, Capital One, I think, was like 25% off, right? So the banks, there's two things going on. There's this whole deregulatory side, and then there's like a lot of wounded financials that are exposed to the K-shaped economy.
33:00 And then you have the private credit risk that's coming where the exposure to, say, the insurance companies, we're seeing a lot of institutional investors short the insurance companies because they're long so many nasty private credit portfolios coming at us. If inflation spikes, it creates higher interest rate risk for the banks, it creates more pressure on private credit and the financials will get smoked. And they've already survived, though, a couple of blips, and many have written and said the private credit issues, they're not systemic. It's not a 2008 situation.
33:47 They aren't systemic, but they are enough. There's a lot of off-balance sheet debt that's $800 billion that's funding this artificial intelligence boom. And there's a lot of private credit loans and software, for example. So you could say it's not systemic because everyone's looking at software, right? And that's why if you look at the HYG, which is the high yield portfolio relative to loans, the divergence is the biggest ever.
34:17 Think about that. So it's a chart. So the HYG is the junk bonds, but the loan portfolio, the leverage loans, are exposed to software, and they're like really getting hammered. So there's all these divergences in the market. Triple Cs, for example. If the financials are really a safe, safe place right now, triple Cs have been making new highs in yield.
34:41 Yeah, and when yield goes higher, it means price is going down. Price is going down. It's just one-on-one. So there's some things that make, like this K-shaped economy. Look at Home Depot. Home Depot stock's like off 27%. Housing, housing's interest rates. It just can't move. Yeah. But it's restaurants, like the restaurants index versus the S&P is the biggest divergence ever. So let's not pretend that — I think what's happening is we're in an industrial boom, like it's two economies. You have this massive capex industrial boom that looks really good when you look at the paper or you look at on the internet and you see this, wow, the economy is booming, but then when you look at the restaurants or you look
35:19 at the retailers or look at triple c's, look at Home Depot, there's all these — look at Capital One, credit card defaults. There's all these divergences. I think that brings us nicely. By the time this episode comes out, Kevin Warsh will have already made his first rate decision as Fed chair and he'll have held his first press conference. So I don't know what he's going to do to the markets, but we know he has a very different view of communicating with the markets. He doesn't think he needs to do it.
35:39 Depending on what that does to volatility, he might have to have a change of tune. And he was selected basically to cut rates and the market is still pricing in rate hikes. Right.
36:06 What is the setup for the Fed? How much of a risk is the Fed to the bull market right now? Well, to me, the Fed's setup for hard assets is so bullish because essentially what they're doing is, so before the war, the plan of action, and I've heard this, once again, if I hear this from three or four asset managers that I highly respect, it's like a golf club or a tennis club.
36:31 If you know someone for 10 or 15 years at the golf club or the tennis club, you know who can hit the shots. And so when three people I know that hit these certain shots well are saying the same thing, this is so clever what they've done. And it's so bullish for hard assets because it's financial repression. And so what they're doing is we have a lot of treasuries that have to be sold, 10 trillion right this year of bond sales. There's two tricks up their sleeve. One, they're pointing a gun at the banks. Jamie Dimon. They're saying, you got to buy more
37:02 treasuries, or if not, all this deregulation that we promised you, we're going to take it away and we're going to regulate you. And so if you look at the reserves that the Fed from the banks, all that means is, so when you're a bank, you can put money in treasuries or you can hold it at the Fed. About $300 billion from just J.P. Morgan went from Fed reserves into treasuries.
37:27 And so what they're doing, and we write about this in our Washington Pressure Points, it's one of our new notes, is that they're forcing the banks to buy more treasuries. And it's about a trillion bucks potentially over like 18 months to three years. That suppresses interest rates relative to where they should be with inflation.
37:45 That demand. That's bullish. That's really bullish. Hard assets. Because once you start doing that, then it's a long story about real rates. But then there's this stablecoin angle, right? Is it okay to go there now? Yeah, I would love it. So Warsh and Bessent, they're like a tag team wrestle team. This is the Treasury Secretary.
38:11 Right, and the Treasury Secretary and the Fed, they're going to be working together. They're best buddies. They're best buddies with Stan Druckenmiller. They've known each other for years. They both were hedge fund guys. If you think of the Yellen Fed, a lot of the clients around the world, they call the Yellen Treasury, they call that the faculty lounge.
38:32 And so there was a real separation between the Fed and the Treasury during the Yellen Powell years. Now, because we have done $2 trillion deficits for like six years, remember, the fiscal and monetary response to Lehman Brothers was $3.5 to $4 trillion from 2008 to 2012. QE, Operation Twist. The fiscal and monetary response to COVID, the regional bank crisis, Biden juicing spending to try to win the election, Trump juicing spending.
39:07 That adds up to $11 trillion dollars. Goodness. So there's a lot of bonds they have to sell. Guess what? You got stablecoins now. The size of the stablecoin market over the last five years has gone 75 billion and maybe 300 billion. They buy true T-bills. And if you look at the Apollo data today...
39:25 That's what makes them stable, is they are backed by T-bills. They're backed by T-bills and gold. And so what's happening is, if you look at the T-bill issuance that's funding the United States spending, it's exploding higher. Apollo's out with a really good chart today you can share with people. It's going to be our note tomorrow. So the T-bill ownership is going up. Stablecoins are supporting those T-bill sales, right? And now the next five years we think stablecoins are probably going to have maybe half of another 200 billion. We
40:00 have the Clarity Act, right? So always keep an eye on Washington. You have the Clarity Act and the Bitcoin Act. Trump desperately wants this legislation passed because... So is the bottom line here, then stablecoins become natural... Buyers of T-bills. And price insensitive ones, because they just, as stablecoins grow in adoption, they need to buy state, they need to buy treasuries.
40:22 Right. And so you basically are creating two buyers of treasuries. You're forcing the banks to buy treasuries and you've got this and you're funding spending on the front end of the yield curve by having stablecoins buy more treasuries, right? That's why they want the Clarity Act and the Bitcoin Act passed. And so at the end of the day, this is financial repression. In other words, the only way out, the only way, Amber, the only way out of a full —
40:47 let's not forget, a $40 trillion debt hole. There's only one way out. There's two ways, default or debt jubilee, which we talk about in the book, it's in the Bible, or you suppress interest rates below the rate of inflation with a bag of tricks. Bessent and Warsh are two seasoned financial geniuses, right? This is their plan. It's really bullish commodities, really bullish hard assets.
41:12 Okay, let's find out how to play that. We've got a couple of questions in the mailbag. The traditional 60-40 portfolio, 60% stocks and 40% bonds, has been a cornerstone of investing for decades. But it relies on one key idea, that stocks and bonds offset each other. And in today's market, that hasn't always held up. And it isn't always about performance.
41:39 It's about managing volatility. That's where the Hamilton Enhanced Mixed Asset Allocation ETF, ticker MIX, comes in. Think of it as an evolution of 60-40. It combines 60% equities, 20% bonds, and 20% gold. Gold acts as a third layer of diversification, which has historically been a safe haven during market stress and inflation hedge, and less correlated to bonds and stocks.
42:04 So instead of relying on two asset classes, you now have three. When you backtest the mixed asset index back to 2004, you get similar returns to the S&P 500. And when you add leverage, modest leverage, 25%, the index has historically outperformed.
42:25 And importantly, the index's volatility has been lower with this 60-20-20 approach, even after modest leverage. And the index's drawdowns during market sell-offs has been less. An example is during the financial crisis. The S&P 500 fell 55% peak to trough. The mixed asset index only fell 27%. And even with leverage, it only fell 33%. So you get historically shallower declines, smoother returns, and typically faster recoveries.
42:52 And that can matter because investing is not just about returns. It's about whether you can stay invested long enough to achieve them. Mix is designed to seek long-term growth with a more balanced and more manageable investing experience. A modern mix of stocks, bonds and gold built for today's market. For more information visit hamiltonetfs.com or visit the link in the show notes. Our first question in the mailbag is actually about emerging markets. You mentioned that the U.S., currently the S&P 500, is not a great way to buy hard assets. We've talked about Canada. We've got a lot more of that within our index.
43:46 Do you have a preferred emerging market play, this question coming from Arnie, for those looking to diversify outside of developed markets? Okay. So we have a capitulation model that's like kind of like, is this a category one hurricane, a category two, category five, which would be the most damaging. Indonesia has gone through a category five hurricane with the moving oil. Once again, countries, and then you put political risk with the moving oil. The capitulation score we have there is like one of the highest. And typically when you buy that type of capitulation score, there's an ETF, I think it's EIDO or IEDO. That's Indonesia ETF, I think is a screaming buy.
44:18 I think it's a record low. Yeah. For a one, two year trade. We saw this with Argentina, saw this, we played, we bought Argentina before, around that election, we did really well with that. We had a similar capitulation there, but it wasn't nowhere near as bad. But yeah, you want to own, the bottom line is when you go into a regime where it's going to be more permanent weak dollar relative to the debt, relative to the federal spending. You believe that the dollar doesn't rally from here?
44:45 No, there will be beautiful counter-trend rallies, but you're in a long-term... It's not going to... In my lifetime, we're not going to lose our current reserve currency status. But are we slowly moving toward a UK situation? And so that means you need to own emerging markets relative to having too much exposure to AI and technology.
45:07 So Indonesia sounds like a riskier play, kind of a reversion play. Is there something like more stable, safer that you think has more structural legs underneath it? Well, this Brazil election, I love commodity producing countries in a commodity boom.
45:29 And I love the Vales and some of the oil names in Brazil. But what happened is the Bolsonaro family is like the Trump family. Dynastic, yeah. And there's a lot of media journalists that don't like them, and they've created a lot of controversy. And so what happens is, and I've seen this, we saw this with Dilma Rousseff.
45:50 Dilma was a former president of Brazil. And what happens in the world is the establishment candidates get, before the election, the establishment candidates get embellished. You saw this with Milei in Argentina. Like the market was, nobody was expecting this guy because he's like a Trump, right? So the journalist community and there's a lot of complacency.
46:11 And so what they do is they take the establishment candidates like Lula and they kind of pump them up. And then at the end of the day, you have a surprise win from say a Bolsonaro, which is a more market friendly candidate, and then you have a big boom in stocks.
46:33 So right now, Brazil equities have been kind of depressed a little bit because of this. Lula's a socialist, right? Yeah. And so he's viewed as another term with Lula is not viewed as great for Brazilian equities. You don't think it's going to happen? No. You think there'll be change? It'll be a market-friendly solution. We've been hearing that on the podcast, Look at Brazil.
46:49 We have a question. So all this talk, actually, we hear a lot about hard assets and gold and infrastructure plays. But pipelines, I feel like they're not on the list of fun things to talk about. They're the OG hard assets. Do pipelines fit into your thesis? This is another just mind blower. And so this is why programs like this and people like you are so, we're blessed.
47:18 Like the CNBCs of the world, right? Will not cover these type of stories. The producers are pushing AI agenda. They're pushing all kinds of crypto the last five years. This pipeline story across the United States, you can buy Energy Transfer.
47:40 It's been one of the most incredible investments the last three or four years. You get a beautiful free cash flow, beautiful dividend. All around the country, the United States, the tentacles of those pipelines that are going to be needed to move the natural gas into places near the data centers. This is like an AI trade that no one's even talking about. And so Energy Transfer, ET, we own it in our core portfolio. We buy it.
48:03 12 times, 7% dividend yield. And think about the last five years. If you owned it the last five years, you got your 7% plus maybe 30% appreciation. And I see that same path the next five years. When people think about safety, and we've got a question on this, you might think about alcohol, Diageo, you might think consumer staples, right? People talk about when recession, people start drinking more, whatever.
48:31 It seems like we're structurally not drinking more. We've got a question from Chris about, do you like Diageo? Is it still a topic and wonder what you're thinking there as well as what you see in consumer staples like General Mills, ConAgra, and KHC, which is Kraft Heinz. Right.
48:54 So when I sat down with Charlie Munger in Omaha, this is Buffett's like right-hand man for years. He's just passed away in recent years. There's a famous line. He said, Larry, never ever tell anyone your problems. 90% of the people really don't care. The other 10% are glad you have them, right? And he was so funny because he's talking about things like Diageo, where if you can buy a world-class brand that is below its 200-week moving average, that has Johnnie Walker, Guinness, Smirnoff, and we're at a two, three-year period where people are already discounting the value
49:35 because the young generation is not drinking as much alcohol. So all the bearish trends are well-known. You've got good value. You've got a Hall of Fame brand. You've got a stock that's absolute, like on a big capitulation score. It's like Nike. It's been absolutely washed out. But Nike's been a dog. I followed that and I was like, God, it was just a value trap.
49:59 Why isn't Diageo a value trap because I know that's a real trend, I'm not drinking, my friends are not drinking, and the generation behind me is not drinking, right? But it's more than that. So what's happening now is that a lot of quants are going long high momentum, so semiconductors, hardware, and they're short low momentum, so they're short staples, the short things like the Diageo. And so the perception of being a value trap is — you can look at it, well, it does look like a value trap, but it's also the
50:35 victim of this game that's going on the market and we're coming into quarter end month end on June 30th. And we see, and I'm hearing this in the ideas dinners, where this whole high momentum, low momentum, they're long high momentum, they're short low momentum. And so it's like a bunch of quants suppressing the value.
50:55 And that's what makes it look like a value trap, underperformance. But the probability that this rebalances, especially with an inflation bounce, which would weaken the consumer. Staples do really well if you have any kind of consumer weaknesses. And we— Not this time. Okay, so— But that's because of the high momentum, low momentum.
51:13 Okay, you think like even, you don't think it's like, so take Kraft Heinz, take General Mills, take Campbell's, is like another structural change that just like everybody's on Ozempic and nobody eats these kind of packaged foods anymore? I hear you, and what happens in all bear markets is they come up with these — Wall Street comes up with these reasons to hate uranium stocks at the lows, right? Oh, Fukushima. Every single time there's value or an opportunity, the consensus of all the research
51:48 and all the reports gets really bared up. And I hear you, but I just don't think that you should — consumer staples, which are right now, if you look at the S&P versus staples, it's the most offsides we've ever seen. And if you come into an economy that weakens a little bit because of that moving gas prices, and we're already seeing that with Capital One and Home Depot, the staple, and then now you've got the quarter end month end on June 30th, the probability that that seesaw kind of goes back the other way for six months
52:26 is very high, I think. Speaking of disconnects, we got a question about, you emphasize a 30-30, 30-10 asset allocation style, with some of that bucket being commodities and hard assets. What are the biggest mispricings and asymmetries you see right now in energy, copper, uranium, gold miners, or any other specific sector? Can you call that one? Well, we have a national security problem with uranium in the United States that Trump has already addressed. Are we going to build a uranium reserve? Probably, yeah, in the next year or two.
53:03 So there's a demand aspect there. Then on the other side, we're building all these data centers. We need another five gigawatts of nuclear power in the United States. In Europe, around the world, you've got countries that are flipping from bearish to bullish on nuclear power. But then above all, when you talk to the big players in the uranium space, we did a call, we did a private call, one of those cage matches with one of the big families that has boots on the ground. You know what they said? This disconnect between the demand that's going to come from artificial intelligence for power, and this is very similar to the copper story.
53:50 The thing about Cameco and NexGen and a lot of these Canadian assets is the companies, they're a little bit like Elon Musk. He's like, oh, we have autonomous vehicles and they'll be all over the streets and high market share by 2026. Sure, that happened in Austin, Texas. You can say that.
54:11 But for the most part, a lot of management teams embellish when the production is going to come. And so this NexGen property in Saskatchewan is, I think, a mess. And it's not going to come online on time. So there you have a supply problem. The Cameco production problems, if you look at the weather, if you look at environmental rules around Canada, even with Carney, who's a lot more friendly than Trudeau, it's still just like you just don't have the production relative to the demand for the next five years.
54:42 Does that mean you'd rather own uranium than the producers? Right. Right now, I'd much rather own SRUUF. So we lightened up our Cameco. We've owned it for five years. Yeah. We've lightened up on Cameco, lightened up on NexGen, and we bought...
54:56 The Sprott. Yeah. Sam, Robert, Uncle, Uncle Frank. SRUUF. Sprott Physical Uranium Trust. So I think, yeah, your downside in uranium, I think it's 20%, 25%, but your upside is 200%, 300%. I think for Canadian investors, that ticker is U-U on the TSX for anybody looking for that. See, that's where you're...
55:20 That's great. I'm more looking at the U.S. tickers. Let's take a look at your pro picks. You already gave some, but I'm going to make you embellish on them. And then we always check up. We want to know, how did you do the last time? So let's get into that. Pro Picks is brought to you by ATB Financial.
55:43 With over $100 billion in assets, ATB Financial is powering possibilities for more than 843,000 financial services clients. ATB Cormark Capital Markets is a leading North American investment firm providing holistic corporate and capital markets advice and full-service financial solutions. Visit atb.com slash in the money for more information. Okay. My report card? Yeah, this is your report card. You were on September 9th, 2025. Short NVIDIA. Oh, okay. Which? Guess what? It's down 3% since October. Since October. That's a fact. Since September, it's up 22%. But A, you stand by that.
56:29 B, do you still recommend shorting NVIDIA? Are you happy with that trade? It's the dumbest trade in the history of humanity. Shorting it or going long? Being long. It's just, it's a crowded revenue stream. This is our cage match, right? Because I don't even own NVIDIA, but I'm like, come on. Peter Lynch, I'm sorry. He's my favorite of all time. He said, Larry, he didn't say to me personally because I never really met him.
56:51 But he said, the one trading theme or the one investment I want to run away from at the fastest speed is the hottest stock in the hottest sector. You can't make money on a stock when 50 Wall Street sheep analysts have a buy on it. And the risk reward is really poor.
57:16 I mean, it's almost, what is it, $4.5 trillion? And so it has to go to $8 trillion to double. I mean, for you to be long, okay, for NVIDIA to double, uranium prices have to triple. And your risk reward is much better in uranium. Okay, I will buy that. The second one was you like natural gas.
57:42 So there was like names like Long Run, Ontario, which are up a little bit, but the ETF, the First Trust Natural Gas ETF, up 22% over that time. Still like it? I like it a lot. Yeah. It's a very under-loved part of the S&P 500. Coal. You liked coal, and that worked out well. Up 27%. It went up 20%, but Core Natural Resources went up 50%, and now it's up 20%.
58:03 I think it was up much more. Oh, yes. Core was much better. I was just looking at the coal ETF, which is up 30. Still love it. Power for AI. Once again, everyone's in the chips. No one's in the power. What would get you to trim? When would you be done with commodities? Oh, if we somehow went into a strong dollar regime where the federal deficit went from 1.
58:34 9 trillion to like 500 billion and the economy was stabilized, even though you cut spending and we walked away from all this currency debasement, yeah, I would have to be more bearish on commodities. Okay. It's like that dumb and dumber. So you're saying there's a chance. It would have to be more bearish on commodities. Okay, it's like that dumb and dumber. So you're saying there's a chance.
58:47 It's a very low chance, but you could do it. Okay, so you brought three new ideas to us. Agnico Eagle, you've talked about, you've said best management team out there, especially in gold. We did get a question from Nugget Capital Partners. I'll be curious if it applies to Agnico. But talking about the massive insider selling at Canadian gold miners and whether that concerns you, where are the dividends? Where's the buybacks? Where's the alignment? Contrast that with the energy sector, right? Right.
59:12 The problem with Canadian, and it's not just Canada, but it's all around the world. It's in uranium. It's in silver, gold. When you have junior miners, right, they need financing. And unfortunately, there's some really bad management teams in all of mining, whether it be uranium or gold, silver, and they typically will do financing that is very dilutive sometimes.
59:41 And they'll raise money through secondary offerings, and they don't really manage the capital well. And that's what's called the junior miners, right? Now, not all the junior miners are bad, but I think what people like that gentleman are talking about is, yeah, it's frustrating because if you own the wrong miners that have bad management teams, they're not buying back stock, they're diluting shareholders, but it's the total opposite at Agnico or Barrick or Newmont.
1:00:08 Agnico's buying back two billion of stock. They're not diluting shareholders. And so when you look at the miners, a lot of people look at these juniors because you can make like 10 times your money on the right one, but the other five out of 10 could go to zero because you have bad management teams that are constantly issuing stock.
1:00:31 So that's why you're sticking with quality on Agnico. Okay, you talked about this Intuitive Surgical as being like another way to play the AI trade. And I think that's like a cage match stock, right? It is trading, if not a 52-week low, definitely more. Let me just pull it up on the chart. It's not cheap, but the growth...
1:00:54 Like a two-year low. Yeah, but if you talk to value investors, they won't say it's cheap. Like I've talked to some... No, it's not cheap. It's not cheap, but relative to the free cash flow growth and the next 10 years with robotics and the data that they have. That's the bottom line theme I'm getting from our ideas dinners is you want to own companies that have priceless moats and data. It could, because that's what artificial intelligence is going to harness, that data, and make it more profitable.
1:01:28 Schlumberger is your third idea. Okay, so I'm nervous about this one because you cage-matched me, but because it's been in our core portfolio, we love it for the next five years. It's gone up a lot. I mean, the oil service names are destroying the NASDAQ. I mean, every producer on CNN or CNBC or Fox, they want to talk about tech stocks and chips.
1:01:55 Meanwhile, these oil service names, you need great intelligence to get the oil out of Venezuela, right? You need offshore drilling. And that's what the Trump administration is going to go all in on this the next two years. Yeah, Schlumberger is up 40% almost in 2026, and the Nasdaq's up 13. Right. And it's not dented.
1:02:17 I mean, it has come off a little bit, but it's not dented by the retreat, the huge retreat in oil price. So oil's down 30% from the April peak. Schlumberger is, as I said just recently, a little bit of weakness. How is it that Schlumberger, what's different about its business that it doesn't move with the energy price? What kind of insulation are you getting? See, that tells you that once again, this $41 trillion in the Nasdaq 100, there's less than $3 trillion in oil and gas stocks, right? So $41 trillion in the NASDAQ 100,
1:02:49 less than $3 trillion in oil and gas stocks. So the slightest amount of money that moves out of here is going to really support oil and gas. But then you look at the ocean floor and all these oil reserves around the world and the data that they have and artificial — this is like a sleepy, sexy AI play because of their data.
1:03:13 They're like the Google of oil services. It's a wonderful company. If you look at the free cashflow, if you look at the management team, I still call it Slumber J, even though they changed the name. Oh, to SLB? Yeah. No, you got to go old school. Yeah, but this is one of these trades. I know it's a good five-year winner in my heart of hearts.
1:03:34 You're buying it relatively near the 200-week moving average, which is like, that means you're at the beginning of, I think, of a bull market. But yeah, it's moved a lot. Okay, well, we'll check in on it. Yeah, you'll kill me on it. The report card. Okay, so Agnico, Intuitive Surgical, SLB, the former Schlumberger.
1:03:53 And make sure the uranium names are in there. Yes, okay, we'll make sure we get that in there. I didn't actually get a gold price target. Do you do price targets? Yeah. Yeah, so that's my whole point about the tourists getting off the bus. So we want to be moved from $5,300 to $4,200, something like that.
1:04:13 Over the next two years, the next 18 months, I think $6,500 is in the cards. Oh my goodness. You've got too much currency debasement, too much not just political risk globally, but central banks around the world that still are going to be buying gold. You've got this whole unwind that we just went through that's going away.
1:04:36 And all the problems, like I said, those problems in Washington are just not going away in terms of, if we run into, this is where gold does really well. If you run into a period where economic growth slows down a little bit because of that move in energy prices, and then inflation's still sticky, then what it does to real rates, it drives money into gold like we had in the 70s and 80s, and gold will dramatically outperform the S&P.
1:05:08 And right now the gold miners are dramatically outperforming. Do you know there's a chart that we put on X this morning? It's gold miners versus Apple. You look at this chart. It's like, I think it's a 10, 15 year chart. Gold miners are destroying Apple, which is one of the best performing Mag7 stocks.
1:05:29 And talk about oxygen, which takes up more oxygen on the airwaves. Larry, it's been an absolute pleasure. Thank you so much for joining us and sharing your insights. That's Larry McDonald joining us. Don't miss our next episode. We've got Brian Carney. We're talking fixed income. He's with Moore Investment Management.
1:05:45 If you've got big picture questions, questions about what's going on in the credit market, there's a lot happening right now. You can email us questions at inthemoneypod.com or find us anywhere on social media at inthemoneypod. And we'll see you on the next episode.