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Today on This Week in Mining, Ed Dowd is on the show. A founding partner of Phinance Technologies, Ed provides a deep dive into economic, financial, and geopolitical trends. Dowd critiques current government policies, suggesting that fraudulent data and excessive spending have created unsustainable market conditions. He predicts a significant market correction, emphasizing the need for investors to hold cash to capitalize on future opportunities. He discusses the overvaluation of AI stocks and underscores the role of commodities as indicators of economic health, observing disconnects between market rallies and real economic activity.
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0:00 Intro 2:03 - Are We Seeing a Major Economic Paradigm Shift? 8:18 - Can Trump's Policies Prevent a Financial Crisis? 12:57 - Will Government Fraud Define the Next Recession? 18:12 - Can the U.S. Cut Back on Government Spending? 24:25 - What is Warren Buffett's Market Strategy? 30:55 - Are Current Market Indicators Flashing Red? 36:14 - What’s the Long-Term Outlook for Commodities? 40:50 - Will a New Administration Boost America’s Global Standing? 46:22 - Is a U.S.-China Conflict Over Taiwan Inevitable? 51:02 - Is Nvidia the Bubble That Could Break the Market? 55:32 - Is the Market Missing Key Warning Signs?
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Ed Dow argues that the U.S. economy is fundamentally broken due to unprecedented government fraud and debt monetization, markets are in a speculative bubble driven by passive indexing and a handful of mega-cap stocks, and a major financial correction (50%+ equity drawdown) is imminent despite the post-election rally, making cash positioning and dry powder the prudent strategy.
- Government and central bank fraud has replaced corporate/banking fraud from prior cycles, hidden in fraudulent economic data (payroll, GDP, inflation metrics)
- Three macro indicators (credit spreads, yield curve, S&P volatility) are at extreme historical levels signaling imminent systemic stress, similar to pre-2000 and pre-2008
- Market concentration into 5-7 mega-cap stocks via passive indexing creates a self-reinforcing bubble that will reverse violently; Nvidia (the new Cisco) is funding its own customer base through VC circular financing
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Three hundred million people dying in civil wars in China during the 1800s alongside America's Civil War is a historical parallel showing the scale of internal instability China faces, and Taiwan is an unfinished result of a civil war stalemate.
“in the last what 200 years there's been two very gnarly civil wars in China which we don't talk about a lot in the west but you know around the same time that America was fighting their Civil War China was fighting theirs and you know of six million died in America it was like 20 to 30 million in China is just a crazy conflict um and Taiwan is the result of a civil war stalemate”
The dollar will not die anytime soon despite BRICS dolarization efforts because the world has 15-18 trillion in dollar-denominated debt, and immediate dolarization by BRICS countries would trigger a deflationary implosion; dollar decline will be a slow process over time
“the dollar is not going to die anytime soon it's the world's Reserve currency it's backed by our military might and the dollar is is under threat long term I agree the bricks talking about it is not a good thing but they can't even agree amongst themselves and there's also 15 to 18 trillion in dollar denominated debt that sits in these countries so if they were to dollarize themselves immediately they'd have a deflationary implosion so it's a process over time”
The decision was made after 2009 to fix a debt problem with more debt, creating a fragile system; evidence of the beginning of cracks in the global financial system includes Japan's inability to defend the yen without being blamed for unwinding the yen carry trade.
“basically the decision was made after' 09 to fix a debt problem with more debt and you know if you look at what gold has been doing gold has been rallying in anticipation of this uh coming disaster um...Japan is has a hobsen choice to make they need to either defend their currency or uh be blamed for the uh Yen carry trade unwinding which started to unwind in August but then they did some interventions so we are seeing kind of the be beginnings of the crack in the Global Financial system”
Floating the idea of seizing frozen Russian assets to fund the Ukraine war was disastrous policy that destroyed reserve currency confidence and motivated BRICS responses; it violated the principle of international law by treating sovereign assets as theft.
“when we imposed the sanctions on Russia uh they fell flat but then there was the discussion of stealing the Frozen Russian assets and using that to fund the Ukraine war that was a no no if you want to destroy a reserve currency you start talking about that nonsense so that's why the bricks really started to squawk because you know you you know how can you have international agreements when your partners steal from you you know it's never been done before you know we've had sanctions we've frozen assets but we've never said ah your t- bills are now ours and taken that's theft and that was floated Yellen floated it”
China hit a demographic wall in 2020 (same year as COVID), is experiencing deflation from demographic decline and economic weakness, and is at high risk of creating a Taiwan conflict to distract from internal instability and joblessness.
“China uh is in a very precarious situation they hit a demographic wall in 2020 uh my partner Carlos alria wrote a book called economic Cycles dead in demographics and interestingly enough 2020 was the same year as Co so they hit a demographic wall they're on a decline their economy is a disaster right now they have internal um issues they need to deal with”
The firm predicted a recession in the second half of 2023 that never materialized because the Federal Reserve deployed the bank term funding program to halt bank failures and the government ramped up spending to unprecedented levels in an election year.
“our firm was uh predicting a recession in the second half of 23 never came to fruition uh and there were a couple things done if you remember we had bank failures Silicon Valley Bank and things were getting ugly quick and the Federal Reserve came in and did the bank term funding program and kind of put a plug in the in the Dyke for the time being and then uh going into an election year the government ramped up at spending in likes which we've never seen”
The Federal Reserve came in with the bank term funding program in 2023 after Silicon Valley Bank and other failures to stabilize the banking system temporarily, but this was merely plugging a leak rather than solving structural problems.
“we had bank failures Silicon Valley Bank and things were getting ugly quick and the Federal Reserve came in and did the bank term funding program and kind of put a plug in the in the Dyke for the time being”
Michael Burry (of 'The Big Short' fame) was wrong for two years before being phenomenally right, and his investors almost pulled all their money right before his thesis paid off—a historical warning for investors betting against bubbles.
“you said a few times you feel like a fool today because you know this trade's been carrying over quarter after quarter but eventually right eventually that which cannot go on forever doesn't right and also think about what what happened to Michael Michael bur um you know the of the great short Fame he was wrong for two years before he was phenomenally right yeah and his clients almost pulled all their money right before he got paid”
Technology bubbles are not inherently bad; they create overcapacity and lower prices (as bandwidth became cheap in the 2000s after the telecom bust), which benefits future Web 2.0 companies; the problem is being caught on the wrong side of the unwinding.
“bubbles aren't necessarily a bad thing they create a lot of excitement they create over Supply and then lower pricing It's Magic...all this bandwidth was created and there was an overpricing in bandwidth pricing collapsed a bunch of companies went bankrupt but then that's good thing that created you know um coste effective uh bandwidth for the Web 2.0 companies Facebook Amazon Google”
The U.S. floating the idea of seizing frozen Russian assets to fund the Ukraine war was a catastrophic policy proposal that destroyed confidence in the dollar as a store of value and accelerated BRICS' de-dollarization push.
“when we imposed the sanctions on Russia uh they fell flat but then there was the discussion of stealing the Frozen Russian assets and using that to fund the Ukraine war that was a no no if you want to destroy a reserve currency you start talking about that nonsense so that's why the bricks really started to squawk because you know you you know how can you have international agreements when your partners steal from you you know it's never been done before you know we've had sanctions we've frozen assets but we've never said ah your t- bills are now ours and taken that's theft and that was floated Yellen floated it”
There are now two different realities/perceptions: one based on independent media and alternative viewpoints (which is growing), and one based on mainstream media narratives (which is shrinking); the gap is dangerous because large segments of the population live in fundamentally different information worlds.
“we got these two uh realities these two perceptions the good news is more people are coming around to our perception of reality the bad news is there's still a lot of people who have no clue what's really going on and they are brainwashed and propagandized and they literally live in a different reality than you and I do and it's dangerous to the nation and and to other nations”
The Federal Reserve and government created an economy completely addicted to cheap money through quantitative easing and unprecedented stimulus spending, which will require a severe deleveraging process when this addiction is broken.
“they helped create an economy that was completely addicted to cheap money”
Minus 2% real wage growth going into the 2024 election was the decisive economic indicator; this same metric preceded Trump's 1980 landslide (Reagan) and Clinton's 1992 victory, confirming that Trump's election was already determined by economic fundamentals regardless of polling.
“there was some interesting stats I saw from an economist friend of mine that he keeps his stuff private but he allowed me to talk about it uh it was minus 2% real wage growth going into this election uh the last time that happened in 1980 Ronald Reagan won in a landslide and 1992 when uh Bill Clinton won an uh won the election there were three three candidates at the time but Bill Clinton won and it was the economy stupid”
The Federal Reserve's last two rate cuts (September and most recent) were the most aggressive since 1957, with spreads of 70 and 50 basis points respectively compared to the traditional 120-150 basis point spread, indicating either political pressure to help the Biden/Harris administration or serious underlying systemic problems.
“the FED just cut again this week or last week sorry and uh my friend Tim Wood Cycle cycles.com he's done some analysis and he said these are the two most aggressive rate Cuts since 1957 that's how far the data goes back and what we mean by that is usually the three month T Bill anticipates uh Fed rate Cuts this is kind of a little known um fact the market kind of leads the fed and the spread had traditionally been like 120 to 150 basis points pre 2009 and the spreads been getting narrower but the last two cuts were under 100 basis points we had a 70 basis point spread in the September cut and we had 50 basis points spread in the most recent cut”
The Federal Reserve has allowed equity drawdowns to stop at 50% in both 2000 and 2008 but never allowed them to exceed 50%, since mathematically larger drawdowns become exponentially harder to reflate; the next drawdown will likely be another 50% before Fed intervention.
“they haven't all lowed to draw down more than 50% because in the Great Depression when the draw down was 80% that was a total anything below 50 mathematically gets harder and harder to re-inflate so they stopped the uh in 2000 they stopped it at 50 and in uh 2008 they stopped it at %. so my guess is we probably have at least maybe another 50% draw down”
BRICS is not a unified organization but a collection of countries with opposing ideologies (Russia wants hard break with West, China wants power, India and Brazil want reform) that cannot agree, making unified alternative currency initiatives impractical.
“bricks isn't one organization it's it's a collection and even the core members have very different ideologies some want a hard break with the West maybe that's Russia maybe that's China some just want a bit of Reform maybe that's India that's Brazil but you know they're not aligned”
Nvidia is the largest company by market cap (which is 'insanity' for a cyclical semiconductor stock), and the current AI chip market mirrors the 2000-2002 telecom equipment bubble where Cisco, Juniper, and Lucent sold routers in massive quantities before the entire market collapsed.
“Nvidia is the largest company in the world market cap wise which is insanity because it's a semiconductor stock which is cyclical right now as we speak there's oversupplying AI chips and sure sure as I know how Cycles work when that becomes apparent to the markets Nvidia will be just another bubble stock like Cisco and it'll retrace 80% of its gains over time”
The concept of a 'soft landing' is propaganda promoted by policy makers because it's what they want the public to believe; historically soft landings are extremely rare, with only the S&L crisis (1980s) being close to one.
“it's popular because that's what the policy makers want to want you to believe um and if you if you look up soft apparently someone put out on Twitter or X as it's called now a nice graph that as the number of media usage of the term soft Landing increases the closer you are getting to a recession”
Our firm predicted a recession in the second half of 2023 that never materialized because the Federal Reserve deployed the bank term funding program after Silicon Valley Bank failures, the government ramped up spending at unprecedented levels ahead of the election, and fraudulent payroll numbers masked the real economic deterioration.
“we had bank failures Silicon Valley Bank and things were getting ugly quick and the Federal Reserve came in and did the bank term funding program and kind of put a plug in the Dyke for the time being and then going into an election year the government ramped up at spending in likes which we've never seen and then we saw fraudulent payroll numbers most of 24”
Nvidia is investing in AI startups with the condition that they purchase Nvidia chips using their raised private equity capital, creating a circular financing scheme where Nvidia funds its own customer base; these startups have zero revenues.
“Nvidia to make matters worse has been investing in some of these startups but under the condition that you buy our chips with the private Equity money you raise so we have a bunch of chips sitting around at a bunch of new AI companies that have zero revenues how does that end I'll tell you how it ends badly”
When the market corrects 50%, it takes a 100% gain to recover to break-even; this fundamental math often gets overlooked by investors, which is why Buffett is positioning for 50-80% drawdowns rather than buying at small pullbacks.
“you know I look at it it's it when when when you go down 50% it takes 100% to get back to break even so that's that's the that's the people forget investor math...you know and if so if you go up another 10% from here but then you go down 50% and you were you know hoping to make 10 and then you get on 50 that's not good”
In a margin call environment, everything not bolted to the floor gets sold as investors liquidate positions to cover losses and margin requirements; this explains why equities, gold, and all risk assets fall simultaneously during systemic crises
“in a margin call environment if it's not bolted to the floor it usually gets sold and that's why you see everything crash all at once in a in a flight to cash”
Tariffs are a negotiating tool that Trump understands but won't be effective long-term because countries respond by devaluing their currency, making the net effect of tariffs negligible while strengthening the dollar in the short term.
“tariffs are are a negotiating tool you know he comes in sits down with the country says I'm going to do this and then there's a negotiation right um I mean he's a businessman he's not and uh and if you've noticed uh the dollar is getting stronger because what what happens is countries that are faced with tariffs start to devalue their currency so that the net effect of the Tariff is negligible so that's why tariffs are you know not terribly effective long term because people can devalue their currency Trump knows this but it's a negotiating tool”
The rate of change in inflation (year-over-year rate of change) matters more than absolute inflation levels; absolute inflation was high in 2021-2022 but the rate of change has been declining, which means deflationary forces are building.
“inflation did go up a ton in 21 but the rate of change which is what people look at has been coming down so the rate of year-over-year rate of change so they hiked from zero to 5 and a half% in the fastest rate hiking cycle we've ever seen all of our uh monetary indicators M2 odl however you want to look at it are like well below zero year-over-year growth and that augers for a liquidity event at some point”
No major wars occurred during Trump's first presidency, whereas the world 'seems to be wanting to burn at any minute now' under Biden, demonstrating that Trump's deterrent strength reduced conflict while Biden's weakness increased conflict risk.
“Trump in his four years whether you loved him or hate him there were no major Wars under his watch and now you know the world seems to be wanting to burn at any minute now so hopefully he'll uh negotiate a peace in Ukraine uh get something going in Israel and prevent China from taking over Taiwan and Iran from doing whatever Iran wants to do”
The dollar is not going to die in the foreseeable future despite BRICS concerns because the U.S. military backs it, there are 15-18 trillion in dollar-denominated debt globally that would cause deflationary implosion if countries de-dollarized, and BRICS members can't agree among themselves, making any currency alternative a decades-long process.
“the dollar is not going to die anytime soon it's it's the world's Reserve currency it's backed by our military might and the dollar is is under threat long term I agree the bricks talking about it is not a good thing but they can't even agree amongst themselves and there's also 15 to 18 trillion in dollar denominated debt that sits in these countries so if they were to dollarize themselves immediately they'd have a deflationary implosion so it's a process over time”
Government payroll numbers in 2024 were fraudulent, with 750,000 government jobs created in September alone—the largest single month of government job creation ever—using makeshift positions to artificially inflate employment statistics.
“the payroll number was the largest number of government jobs ever created 750,000 jobs DED out in the month of September and just putting people on the payroll giving them makeshift jobs”
M2 money supply year-over-year growth went below zero for the first time since the Great Depression in November 2022, and with an 18-month lag in Fed policy effects, this predicts a liquidity and bank credit event around May 2024 that the government has tried to paper over.
“in November of 2022 uh um M2 year-over-year growth went uh below zero for the first time since the you know the Great Depression go forward 18 months that was May of this year and I would I would argue with you that the government's done everything they could paper over that and keep this thing afloat”
Warren Buffett is selling Bank of America stock at all-time highs and has accumulated the largest cash pile in the history of Berkshire Hathaway (over $300 billion), which signals he knows something about an impending financial crisis and is positioning for a major market correction.
“Warren Buffett is selling his Bank of America stock faster than you can shake a stick and he's selling it at all-time highs and he knows and and he's he's also accumulated the largest cash pile in the history of his uh his outfit and he owns 4% of the t- bill Market more than the Fed”
Tariffs are a negotiating tool rather than an effective long-term policy because countries facing tariffs simply devalue their currency to offset the tariff's effect; Trump knows this but uses tariffs for leverage.
“tariffs are are a negotiating tool you know he comes in sits down with the country says I'm going to do this and then there's a negotiation right um I mean he's a businessman he's not and uh and if you've noticed uh the dollar is getting stronger because what what happens is countries that are faced with tariffs start to devalue their currency so that the net effect of the Tariff is negligible so that's why tariffs are you know not terribly effective long term because people can devalue their currency Trump knows this but it's a negotiating tool”
The AI bubble is similar to the telecom equipment bubble of 2000-2001, where equipment vendors (Cisco, Juniper, Lucent, Nortel) sold equipment to newly-created telecom startups funded with junk bonds; when junk bond markets wobbled, sales collapsed and caused an implosion across the vendor sector.
“it reminds me of the Telecom equipment bubble you had uh Cisco Juniper Lucent Nell they were selling routers hand over fist and who are they selling the rators to who it wasn't wasn't the normal telecom companies it was the new companies that were created the CX they were all funded with junk bonds once the junk bonds started to wobble there was an implosion in all the sales what's going on in AI there's all these AI companies being funded with private Equity that don't have any revenues no Revenue celx had no revenues as well they were longdistance companies that had zero revenues Windstar uh you you name it a whole host of that went you bust same thing is going to happen here”
The S&P 500 is highly concentrated in a small number of mega-cap stocks (often cited as 20-30% of index value), and most people own this concentration through passive indexing (ETFs) without realizing it; this concentration creates a self-fulfilling prophecy where growth in mega-cap stocks forces passive funds to buy more.
“unfortunately most of the money is passive indexing now so most people own uh you know just Nvidia and a few other stocks they don't know that but that's what they own um I think it's something like 20 to 30% of of the value of the S&P or these stocks or something crazy like that...everybody uh that owns passive indexing which is ETFs and a lot of financial advisers put their people in these passive ETFs they don't know it but they own Nvidia Microsoft Apple Google Facebook couple other stocks that's what they”
Monetary indicators (M2 and others) are deeply negative year-over-year, signaling a liquidity event and bank credit event is coming; there's an 18-month lag in Fed policy effects, so the November 2022 decline in M2 growth should manifest as a credit crunch by May 2024.
“all of our uh monetary indicators M2 odl however you want to look at it are like well below zero year-over-year growth and that augers for a liquidity event at some point and a bank credit event at some point and you got to remember there's an 18-month lag in fed policy so when the FED did what they did in 2020 inflation didn't really start showing up until 18 months later and then it took off and in November of 2022 uh um M2 year-over-year growth went uh below zero for the first time since the you know the Great Depression go forward 18 months that was May of this year”
Warren Buffett sold all his Taiwan Semiconductor Manufacturing Company (TSMC) stock last year because of war risk, even though he missed out on gains from the AI bubble.
“Warren Buffett seems to understand it he sold all his Taiwan semiconductor stock last year now he missed a good run in the stock but again he's not into timing and one of the reasons he mentioned for selling it is war war”
Independent media had significantly more viewership for Trump (142 million YouTube views across podcast appearances) compared to Harris (4 million views), which reflects the shift in media consumption and played a significant role in Trump's election victory.
“YouTube is the biggest podcast platform in the world it's bigger than Spotify it's bigger than bigger than Apple iTunes um Trump generated 142 million views on YouTube on the various podcasts that he was a guest on Harris generated four million views so 142 million to four now that's largely a consequence of trump doing a lot of Independent Media and Harris doing very little”
GDP numbers put out in 2024 don't align with actual economic indicators; all signals from quantitative indicators and mainstream economists show alarming signs despite official statistics
“the GDP numbers they put up don't foot with what we're seeing economically and all the indicators um not just our quantitative indicators but you know mainstream economists are seeing some alarming signs”
Microsoft and Google are the only major companies buying AI chips with actual revenue models, and when they pull back on AI capex spending due to lack of revenue generation, Nvidia's sales will collapse.
“Microsoft and Google are buying AI chips but you know they'll pull back on that capex spending once they don't have a revenue model there's no Revenue model for these this AI yet someone point to me a revenue model”
Trump's unprecedented YouTube viewership advantage (142 million views on podcasts vs Harris's 4 million views) and early use of independent media predicted his victory, mirroring the JFK-Nixon 1960 televised debate advantage that defined the next media cycle.
“YouTube is the biggest podcast platform in the world it's bigger than Spotify it's bigger than bigger than Apple iTunes um Trump generated 142 million views on YouTube on the various podcasts that he was a guest on Harris generated four million views so 142 million to four...you say that uh to understand um you can understand a lot about media Cycles by looking at election Cycles right going back to Nixon and JFK I think was the first televised presidential election and JFK looked like energetic and Youthful and Nixon was kind of tired and sweaty looking and people say that cost him the election because this was the first time people got to see them in person debate each other and that Define The Next Media cycle as well”
Cutting regulations and government red tape is a primary mechanism by which Trump's policies could create 'animal spirits' (business optimism and private sector activity) and mitigate the economic downturn he will inherit.
“so he's he needs to cut regulations cutting regulations and red tape would help tremendously and and create Animal Spirits um they're talking about cutting the government which needs to be done but that's been the only game in town for the economy”
The equity market is in a speculative bubble dominated by a few mega-cap names, similar to 2000 and 2007, where the average S&P 500 stock has not recovered to even 2022 highs despite the post-election rally, indicating a fragile concentration-driven rally that will be devastating when it corrects.
“what I'm seeing in the equity markets is a speculative bubble and the makeup of this happened in um in 2000 and the 07 top you know we had kind of a top a natural top where all stocks participated then we had a correction now we have a rally that's really dominated by a couple names and the average stock in the S&P 500 has not gotten back to even the 2022 highs”
The decision made after 2009 was to fix a debt problem with more debt, and the cracks in the global financial system are now beginning to show, particularly visible in Japan's dilemma of having to choose between defending its currency or being blamed for the yen carry trade unwinding.
“the decision was made after '09 to fix a debt problem with more debt and you know if you look at what gold has been doing gold has been rallying in anticipation of this coming disaster um gold you know gold I think unfortunately in in if we do have a financial Margin Call where everything starts to go down in response to the real numbers gold will get hit but I don't think it'll get hit as bad as it did in the 08 crisis”
Most people in passive index ETFs don't realize they own primarily five mega-cap stocks (Nvidia, Microsoft, Apple, Google, Facebook), creating a concentration risk that will reverse violently when these stocks begin to fall.
“unfortunately most of the money is passive indexing now so most people own uh you know just Nvidia and a few other stocks they don't know that but that's what they own um I think it's something like 20 to 30% of of the value of the S&P or these stocks or something crazy like that”
The Federal Reserve ended the bank term funding program in March 2024, removing liquidity support that banks had been relying on since the SVB crisis, setting the stage for another banking crisis.
“Bank runs last year I mean these were fast and the FED um ended the bank term funding program in March of this year so those loans the banks were getting have been taken away and so it's just it's just a question of uh of of if not when we see a Fed induced recession”
Michael Burry was wrong for two years before the subprime crash vindicated his thesis and made him famous; his clients almost pulled all their money right before he got paid, teaching a lesson about conviction and market timing
“think about what what happened to Michael Michael bur um you know the of the great short Fame he was wrong for two years before he was phenomenally right yeah and his clients almost pulled all their money right before he got paid”
Gold does not perform as well during rate-cutting cycles as it does during rate-hiking cycles, because inflation is the traditional driver of gold demand; however, the current rate-cutting environment follows extreme rate hikes, so the effect is less clear
“gold traditionally um doesn't do as well in a rate uh uh cutting cycle as it does in a rate hiking cycle so this is this is and the reason why it does well in a rate hiking hiking Cycles because there's inflation”
The Fed hiked rates from zero to 5.5% in the fastest rate hiking cycle ever seen; the speed and magnitude of this hike create the conditions for severe deleveraging in the credit system
“he hiked from zero to 5 and a half% in the fastest rate hiking cycle we've ever seen”
When you start having rapid market moves in one direction ('the game once once you start having you know almost going to bend back on itself'), Dow becomes more bearish in price and time, indicating the move is becoming increasingly unsustainable.
“the higher and faster we go the more bearish I become in price and time when you start going like this it's getting you you know the game once once you start having you know almost going to bend back on itself I'm I'm more bearish now than I was two months ago”
Immigration has helped the economy because illegal immigrants were given large amounts of government benefits that they immediately spent, increasing the velocity of money, alongside the Fed's BTFP and government spending as the three pillars holding up the economy.
“immigration is a Dirty Little Secret as well immigration has helped the economy because you've been handing out goodies to these illegal immigrants that helped increase the velocity of money so you had you had the FED come in and stop the bank run you had the unprecedented government spending highing and then you had the illegal immigrants getting basically large amounts of money that they immediately dump into the economy and spend then increase the velocity of money Trump is going to go after those things”
There is currently an oversupply of AI chips despite market concentration, and SMCI (a major Nvidia customer) collapsed 60-70% recently, with Ernst & Young firing them as auditors, signaling problems in the AI chip supply chain.
“right now as we speak there's oversupplying AI chips and sure sure as I know how Cycles work when that becomes apparent to the markets Nvidia will be just another bubble stock like Cisco and it'll retrace 80% of its gains over time you think so yeah Absolut absolutely look smci is that was the number three customer they just didn't they just uh stocks down I don't know like 60 70% uh they didn't file their 10K uh ernston young fired them as Auditors so there's something weird going on in the AI chip market”
When a $100 stock drops 50% to $50, you need a 100% gain to break even, making the asymmetry of losses more painful than equivalent gains—a critical psychological and mathematical fact most investors forget.
“I I'm Happy bu buffets with me it's been painful to be wrong for the last you know 12 months but you know I look I look at it it's it when when when you go down 50% it takes 100% to get back to break even so that's that's the that's the people forget investor math that's a really good point”
18 out of the last 20 recessions were caused by Fed rate hiking cycles that contracted the money supply, creating the conditions for deleveraging and credit crises.
“of the last 20 or so of recessions 18% of them have been due to rate hike Cycles um and what what I mean by that is when you increase the money supply you get increased economic activity then you get overheated prices because money you know inflation is a direct result of money creation so money money so then the FED takes away the punch bowl to begin a rate hiking cycle the money the money supply contracts and then a credit uh cycle begins where you know companies start to go bankrupt and money you know becomes dire to fine and get loans and there's a deleveraging process that occurs”
Nvidia has been investing in AI startups via venture capital under the condition that those startups purchase Nvidia chips with their raised capital, creating a circular financial flow where Nvidia finances its own customer base.
“Nvidia to make matters worse has been investing in some of these startups but under the condition that you buy our chips with the private Equity money you raise so we have a bunch of chips sitting around at a bunch of new AI companies that have zero revenues how does that end I'll tell you how it ends badly”
Cutting government spending in the short term will have an adverse economic effect because government spending has been 'the only thing really holding' the economy up for the last 15 years.
“government spending's been the only thing really holding this up and if you looked at the month of September um I think the uh uh the payroll number was the largest number of government jobs ever created”
China is in a precarious economic and demographic situation: they hit a demographic wall in 2020 (same year as COVID), their economy is in disaster, and they have internal issues requiring domestic focus; this makes them dangerous as they may start conflicts to distract from internal problems.
“China uh is in a very precarious situation they hit a demographic wall in 2020 uh my partner Carlos alria wrote a book called economic Cycles dead in demographics and interestingly enough 2020 was the same year as Co so they hit a demographic wall they're on a decline their economy is a disaster right now they have internal um issues they need to deal with”
Cutting government spending is necessary but will have immediate negative economic impact in the short term because government spending has been 'the only game in town' holding up the economy, so the Band-Aid must be ripped off despite economic pain.
“they're talking about cutting the government which needs to be done but that's been the only game in town for the economy so any you know hacking of the government spending is going to affect the economy in the short term long term it's a great thing but the Band-Aid need needs to be ripped off but government spending's been the only thing really holding this up”
Trump's prior presidency (2017-2021) was defined by the absence of major wars; the current global environment (Ukraine, Middle East, Taiwan tensions) suggests a world destabilized by the Biden administration's foreign policy approach.
“Trump in his four years whether you loved him or hate him there were no major Wars under his watch and now you know the world seems to be wanting to burn at any minute now”
Copper has lost momentum and is signaling weakness, while only precious metals are performing well among commodities, indicating financial crisis concerns rather than healthy economic growth.
“copper is is signaling uh the only the only metals that are Commodities that are doing well are precious metals”
The U.S. dollar has been rallying in recent months because the market correctly anticipated Trump's election; a Trump presidency is good for the dollar because tariffs and more assertive foreign policy strengthen currency demand.
“the dollar has been rallying quite a bit the last couple months I suspect the dollar probably figured out Trump was going to win um because terrorists uh are are are um good for the dollar and and again tariffs are are a negotiating tool”
Nvidia is the current cycle's Cisco; it's a cyclical semiconductor stock with extremely high valuations, and it will retrace 80% of its gains over time as the AI bubble deflates, just as Cisco did after the telecom bubble of 2000-2001.
“there's oversupplying AI chips and sure sure as I know how Cycles work when that becomes apparent to the markets Nvidia will be just another bubble stock like Cisco and it'll retrace 80% of its gains over time you think so yeah Absolut absolutely”
Getting credit is currently difficult for the average person; business loans and bank loans are hard to access; only large corporations are easily getting credit, indicating a credit tightening event is occurring
“if you try to go get get get some credit right now good luck the average Joe can't get any any credit it's hard to get business loans bank loans uh only the big corporations are are getting credit at the moment right”
There is a pattern of fraud in each economic cycle: corporate fraud in the dotcom bubble (1990s), bank fraud in the 2008 financial crisis with fraudulent mortgages still on central bank balance sheets, and now government fraud in 2024, with no prosecutions ever occurring.
“the Central Bank cycle has a fraud element to it it always ends in fraud um and if you looked at the uh the 90s bubble going the dotc bubble that was corporate fraud and then we had a crash we had some rules put in place then in the in the uh 070809 there was massive bank fraud and then the FED stepped in and the government stepped in and what did they do did they prosecute that fraud no there was not one Banker that went to jail and that fraud still resides on the balance sheet of the of the central banks all those Bad Mortgages are still there and so what ended up happening over the last 14 years was unprecedented government spending and quantitative easing and basically kicking the can down the road and I suspect and I already have uh you know good evidence of this with the non-fund pay being revised down 850,000 in August the fraud just moved on to the government the governments of the world and the central banks”
Three major quantitative indicators are currently at extreme levels simultaneously: credit spreads are at historic lows (tightest ever), S&P 500 volatility is at historic lows, and the yield curve is in an extreme state, which historically precedes severe market corrections when the elastic band snaps back.
“we have three indicators right now that are at Major extremes credit spreads uh yield curve and S&P volatility and you know we do longtime series and they are at values that are so off on the um the rubber band that when it's snaps back it's it's it's pretty extreme we've never seen credit spreads this tight S&P volatility this low and with the yield curve doing what it's doing”
The average S&P 500 stock has not recovered to its 2022 highs, while the equity market rally is dominated by just a few mega-cap stocks, mirroring the bubble patterns that occurred at the 2000 dot-com peak and the 2007 financial crisis peak.
“the average stock in the S&P 500 has not gotten back to even the 2022 highs so it's a very it's a it it it for now I look like a fool but when this when this when this does happen it's going to be pretty devastating”
The Federal Reserve and government did not prosecute any bankers for their role in the 2008 financial crisis, and the bad mortgages that caused the crisis still reside on central bank balance sheets today.
“what did they do did they prosecute that fraud no there was not one Banker that went to jail and that fraud still resides on the balance sheet of the of the central banks all those Bad Mortgages are still there”
The Federal Reserve ended the bank term funding program in March 2024, which means banks can no longer access emergency lending facilities, setting up conditions for another banking stress event.
“when you increase the money supply you get increased economic activity then you get overheated prices because money you know inflation is a direct result of money creation so money money so then the FED takes away the punch bowl to begin a rate hiking cycle the money the money supply contracts and then a credit uh cycle begins where you know companies start to go bankrupt and money you know becomes dire to fine and get loans and there's a deleveraging process that occurs and you know one thing we know is there were Bank runs last year I mean these were fast and the FED um ended the bank term funding program in March of this year so those loans the banks were getting have been taken away and so it's just it's just a question of uh of of if not when we see a Fed induced recession”
Super Micro Computer (SMCI) was the number three customer for Nvidia's chips, failed to file their 10-K filing, and had their auditors (Ernst & Young) terminate the relationship; these are red flags that something 'weird' is happening in the AI chip market.
“smci is that was the number three customer they just didn't they just uh stocks down I don't know like 60 70% uh they didn't file their 10K uh ernston young fired them as Auditors so there's something weird going on in the AI chip market”
Of the last 20 recessions, approximately 18% were caused by rate hike cycles where the Federal Reserve contracts the money supply to fight inflation, causing companies to go bankrupt and initiating credit crunches and deleveraging.
“of the last 20 or so of recessions 18% of them have been due to rate hike Cycles um and what what I mean by that is when you increase the money supply you get increased economic activity then you get overheated prices because money you know inflation is a direct result of money creation so money money so then the FED takes away the punch bowl to begin a rate hiking cycle the money the money supply contracts and then a credit uh cycle begins where you know companies start to go bankrupt”
Three macro indicators are at extreme historical levels: credit spreads at record tights, yield curve inverted, and S&P volatility at record lows, all suggesting a highly compressed elastic band about to snap with severe consequences.
“we have three indicators right now that are at Major extremes credit spreads uh yield curve and S&P volatility and you know we do longtime series and they are at values that are so off on the um the rubber band that when it's snaps back it's it's it's pretty extreme we've never seen credit spreads this tight S&P volatility this low and with the yield curve doing what it's doing”
Oil is performing very poorly relative to inflation, and copper has not participated in the equity rally, while only precious metals (gold) are rallying, indicating that commodities broadly signal economic weakness, not strength.
“oil is not doing particularly well and versus uh uh inflation and oil is super cheap super cheap so you have to ask yourself the questions that because of the transition to EVS is it due to economic activity um Lumbers come down quite a bit uh copper is is is signaling uh the only the only metals that are Commodities that are doing well are precious metals so the the crb uh has not really uh participated in this uh supposed economic Financial Market activity”
Warren Buffett is selling Bank of America stock at all-time highs, has accumulated the largest cash pile in his company's history (over $300 billion), and owns 4% of the entire U.S. Treasury bill market—more than the Fed itself—indicating he knows a financial collapse is coming and is positioning for a 50-80% equity drawdown.
“Warren Buffett is selling his Bank of America stock faster than you can shake a stick and he's selling it at all-time highs and he knows and and he's he's also accumulated the largest cash pile in the history of his uh his outfit and he owns 4% of the t- bill Market more than the Fed”
The real economy is already in the tank; business activity is down, home sales are down, and employment is a disaster that will become apparent soon, which is why Trump was elected and will inherit a severe economic downturn.
“the real economy is already in the tank and you know if you want to know why Trump was really elected uh there was some interesting stats I saw from an economist friend of mine that he keeps his stuff private but he allowed me to talk about it uh it was minus 2% real wage growth going into this election the real economy the average person on the street feels it business activ is down home sales are down uh employment will it'll it'll become apparent soon enough that employment is a disaster”
The government created 750,000 new jobs in September, but they were makeshift government jobs, not private sector positions, and this inflated payroll numbers while masking real economic weakness.
“if you looked at the month of September um I think the uh uh the payroll number was the largest number of government jobs ever created 750,000 jobs DED out in the month of September and just putting people on the payroll giving them makeshift jobs”
The average person cannot get credit right now; business loans and bank loans are severely restricted with only large corporations receiving credit, indicating a real credit crunch in the economy despite headline market strength.
“if you try to go get get get some credit right now good luck the average Joe can't get any any credit it's hard to get business loans bank loans uh only the big corporations are are getting credit at the moment right”
The 2000-2002 telecom equipment bubble created routers that nobody needed, companies like Celxion with zero revenue went bust, but the overbuilt bandwidth infrastructure eventually enabled Web 2.0 companies (Facebook, Amazon, Google) to build profitable businesses on cheap infrastructure.
“but then that's good thing that created you know um coste effective uh bandwidth for the Web 2.0 companies Facebook Amazon Google so that I I look for what's going to come out of the AI bubble Rubble the AI companies that have a way of making money off the thing we won't know for three to five years bubbles aren't necessarily a bad thing they create a lot of excitement they create over Supply and then lower pricing It's Magic”
The dotcom boom created a self-reinforcing prophecy where growth stocks became larger index weightings, requiring managers to own more of them, creating a bubble; when it reversed, it became a self-fulfilling prophecy on the way down.
“I used to manage my money against a benchmark okay and my Benchmark was the index growth index there was growth index value index S&P 500 so as a growth investor as these growth stocks became bigger and bigger weightings in your index you had to own more and more and more until when it went the other way it wasn't it wasn't was not happy and it so it becomes a self-fulfilling prophecy then when it flips it's a prophecy on the way down because you own too much”
When rates rise, inflation follows with lag, creating a traditional positive correlation that supports gold; when rates fall in a cutting cycle, gold doesn't perform as well because the rate-cutting cycle precedes deflation, not inflation.
“gold traditionally um doesn't do as well in a rate uh uh cutting cycle as it does in a rate hiking cycle so this is this is and the reason why it does well in a rate hiking hiking Cycles because there's inflation and uh um what what what people don't seem to understand is inflation did go up a ton in 21 but the rate of change which is what people look at has been coming down”
Gold may correct 25% in a financial margin call event (versus 50% in 2008) and then go on to new all-time highs after the correction, making gold a long-term positive despite near-term downside risk.
“gold I think unfortunately in in if we do have a financial Margin Call where everything starts to go down in response to the real numbers gold will get hit but I don't think it'll get hit as bad as it did in the 08 crisis gold went down 50% I think gold has a better chance of only going down 25% and then going in new all-time highs you know after the correction so gold we like gold long term”
When Dow managed a global growth portfolio at BlackRock, a CEO told him 'my job is not to be a doom and gloomer, even if things are getting bad I'm still going to tell you things are great'; this mentality explains why Jerome Powell and other policymakers never warn of coming downturns.
“one of the jobs when I was on Wall Street uh managing uh Black Rock uh Global growth portfolio 14 billion a CEO once said to me look my job is not to be a doom and gloomer even if things are getting bad I'm still going to tell you things are great...take that kind of mentality and you put Jerome Powell as the face of that they're never going to tell you because they don't want to talk they don't want to cause a panic so they're going to put a a a lipstick on a pig no matter what happens”
The Fed may allow a 20-50% initial drawdown to deflate the bubble, then intervene with support measures; the exact response will determine opportunity, so investors must watch the drawdown as it happens to know when to act
“the question is you got to watch the draw down as it occurs and see what the response is and I've said the draw down could be anywhere from 20 to 50% 50 they haven't all lowed to draw down more than 50% because in the Great Depression when the draw down was 80% that was a total anything below 50 mathematically gets harder and harder to re-inflate so they stopped the uh in 2000 they stopped it at 50 and in uh 2008 they stopped it at %”
Trump's core advantage is the ability to come clean on fraudulent economic numbers and frame the correction as inherited from the Biden administration rather than his policies, but this requires his advisers to properly understand the setup and prevent the mainstream media from successfully blaming him for the recession.
“once this starts to manifest I hope to be able to help uh frame that argument whether whether going on podcasts like yours or you know talking to someone in the administration they need to they need to grab hold of the frame and be honest with the American people what's going to happen is the mainstream media will immediately blame Trump we know course um and that we uh and and Trump has an opportunity here to really take the frame of the narrative and run with it”
Oil is currently 'super cheap' relative to historical levels and is not rallying despite the supposed economic strength signaled by equity markets, which indicates either weak underlying economic activity or a transition away from oil demand due to EV adoption.
“oil is not doing particularly well and versus uh uh inflation and oil is super cheap super cheap so you have to ask yourself the questions that because of the transition to EVS is it due to economic activity um Lumbers come down quite a bit uh copper is is is signaling”
Warren Buffett sold all his Taiwan Semiconductor stock last year, citing war as a risk factor; he was not concerned with missing the AI rally but with geopolitical risk to the Taiwan supply chain.
“Warren Buffett seems to understand it he sold all his Taiwan semiconductor stock last year now he missed a good run in the stock but again he's not into timing and one of the reasons he mentioned for selling it is war war...he actually said that when it was risk factors right”
The central banking and government policy cycle always ends in fraud; the 1990s dot-com bubble ended in corporate fraud, the 2008 financial crisis ended in bank fraud, and the current cycle is ending in government-level fraud with manipulated GDP and payroll statistics.
“the Central Bank cycle has a fraud element to it it always ends in fraud um and if you looked at the uh the 90s bubble going the dotc bubble that was corporate fraud and then we had a crash we had some rules put in place then in the in the uh 070809 there was massive bank fraud and then the FED stepped in and the government stepped in and what did they do did they prosecute that fraud no there was not one Banker that went to jail”
The Federal Reserve's two most recent rate cuts (70 basis points in September and 50 basis points in the most recent cut) were the most aggressive cuts since 1957 measured by the spread between Fed rate cuts and the three-month T-Bill, which normally leads Fed action by 120-150 basis points but is now under 100 basis points.
“these are the two most aggressive rate Cuts since 1957 that's how far the data goes back and what we mean by that is usually the three month T Bill anticipates uh Fed rate Cuts this is kind of a little known um fact the market kind of leads the fed and the spread had traditionally been like 120 to 150 basis points pre 2009 and the spreads been getting narrower but the last two cuts were under 100 basis points we had a 70 basis point spread in the September cut and we had 50 basis points spread in the most recent cut”
The impending financial crisis will be 'like the Big Short but on a systemic basis,' where fraud at the government and central bank level is revealed and the system requires a major correction.
“what there's something else that's going on is epic fraud in the government and Central Bank level and when this snaps it's like it's like the big short but on a on a on a systemic basis that's kind of my thesis”
The term 'soft landing' is used frequently by policymakers and media because it's what they want people to believe; the more the term is used in media, the closer the market is to a recession, as demonstrated by correlation analysis on social media.
“it's popular because that's what the policy makers want to want you to believe um and if you if you look up soft apparently someone put out on Twitter or X as it's called now a nice graph that as the number of media usage of the term soft Landing increases the closer you are getting to a recession”
Immigration has helped the economy by providing recipients with government payments that they immediately spend, increasing money velocity; Trump's policies will reduce this boost to velocity and have an adverse short-term economic effect.
“immigration has helped the economy because you've been handing out goodies to these illegal immigrants that helped increase the velocity of money so you had you had the FED come in and stop the bank run you had the unprecedented government spending highing and then you had the illegal immigrants getting basically large amounts of money that they immediately dump into the economy and spend then increase the velocity of money Trump is going to go after those things so I suspect uh that's going to have an an adverse effect on the economy in the short term”
Commodity prices will decline further in a correction scenario, after which central bank response will determine whether a commodity super cycle ensues (from excessive money printing) or other unforeseen problems emerge
“if if we do get the correction that we we're going to get and the economic damage that results from it um Commodities will go even lower and so then we have to see the the the Central Bank response and then that that can be one of two things it could unleash a commodity super cycle because of too much money or there are other problems which I can't foresee”
The coming correction will be 'like the big short but on a systemic basis,' with fraud revelation at government and central bank level triggering the margin call event.
“when this snaps it's like it's like the big short but on a on a on a systemic basis that's kind of my thesis yeah”
A Black Rock CEO told Dow that his job is not to be a doom and gloomer even if things are getting bad; he'll tell you things are great, illustrating the institutional incentive to maintain narrative regardless of conditions.
“one of the jobs when I was on Wall Street uh managing uh Black Rock uh Global growth portfolio 14 billion a CEO once said to me look my job is not to be a doom and gloomer even if things are getting bad I'm still going to tell you things are great”
Ed's recommendation is to have some dry powder (cash allocation) without specifying percentage—it could be 100% cash or 5%—taking a cue from Buffett's positioning to be ready for major corrections without advocating complete market exit.
“people when they ask person I say look have some dry powder do what Warren buff is doing I'm not telling you your you know your allocation decision whether it's 100% or 5% but have some dry powder in cash cash equivalents to take advantage of the opportunities so that that's that I'd be lightening up as we go higher I wouldn't be chasing which is what most you know you know uh behavioral Finance most people are going all in in the last couple weeks unfortunately that's how it works”
In his career spanning multiple market cycles, Ed has never observed a true soft landing—neither in 2000, nor 2008, nor 2020—with the arguable exception of the 1990s S&L crisis which was contained, suggesting soft landings are myth rather than historical pattern.
“I've been doing this a long time I've never seen a soft Landing I you know I didn't see one in 2000 I didn't see one in '08 I didn't see 2020 was an that was a quick one uh but I didn't see I've never SE I in my career I've never seen this soft Landing the the the the one caveat is I think the best soft Landing was the 9s SNL crisis where we had a recession but the uh it wasn't it wasn't as bad as it could have been”
Gold should not be sold during a correction to buy at lower prices because long-term gold holding strategy requires patience and understanding of multi-decade cycles; attempting to time gold's correction within a broader crash creates execution risk and defeats long-term allocation purpose.
“I'm not getting into the sell all your gold to then buy it back down 25% because you know that that's I like a long term I just I just I just know how these things work and gold traditionally um doesn't do as well in a rate uh uh cutting cycle as it does in a rate hiking cycle”
Commodities are truth-tellers because prices are real and reflect actual supply-demand conditions; equity prices can be manipulated or disconnected from reality, but commodity prices reflect physical reality
“price is real price is real yeah price is real Commodities are truth tellers”
The BRICS nations discussion of de-dollarization was driven by the weak Biden administration; Trump's election will soften BRICS' anti-dollar rhetoric because BRICS members don't have cohesive goals and fear Trump's more assertive foreign policy.
“the bricks would never have done what they were doing under Trump having all this open dialogue about getting off the dollar they did it under the the weaked B Biden Administration I suspect the brick conversation kind of goes the the the rhetoric goes softer in my humble opinion”
Strong Chinese leadership is preferable to weak leadership because weak leadership facing internal collapse is more likely to pursue military adventurism as a distraction, whereas strong leadership can maintain control without needing external conflicts.
“so we worry about China quite a bit that China you want CH as crazy as this sounds you want Chinese leadership strong so that they don't buckle under the pressure of having to create a distraction for their people”
The last two significant equity market drawdowns (2000 dot-com crash and 2008 financial crisis) were both 50% from high to low, and the Federal Reserve has never allowed a drawdown larger than 50% since the Great Depression because anything below 50% mathematically requires 100% gains to recover.
“the last two draw Downs in the equity markets that have been significant were both 50% the o0 the 0809 draw down and the 2000 draw down were 50% from high to low on the equity markets...so the question is you got to watch the draw down as it occurs and see what the response is and I've said the draw down could be anywhere from 20 to 50% 50 they haven't all lowed to draw down more than 50% because in the Great Depression when the draw down was 80% that was a total anything below 50% mathematically gets harder and harder to re-inflate so they stopped the uh in 2000 they stopped it at 50 and in uh 2008 they stopped it at %”
Real wage growth was minus 2% going into the 2024 election, which is the same economic condition that preceded Ronald Reagan's 1980 landslide victory and Bill Clinton's 1992 election victory, making Trump's victory economically predetermined.
“it was minus 2% real wage growth going into this election uh the last time that happened in 1980 Ronald Reagan won in a landslide and 1992 when uh Bill Clinton won an uh won the election there were three three candidates at the time but Bill Clinton won and it was the economy stupid as James carille said”
If Harris had won the election, Ed would have been very pessimistic about economic prospects; with Trump, he is less concerned about a near-term downturn but optimistic that Trump's policies might mitigate inherited economic problems
“I'm Optimist look if Harris had got in there I was going to be very un optimistic I'm less concerned about a downturn it's coming if the question is can can Trump and his policies and the animal spirits that he's going to release can it mitigate the economic turd he's inheriting”
Trump could benefit politically and narratively by exposing the government fraud in economic statistics; if he transparently reveals the fraudulent numbers and explains they were established before his administration, he can reframe the inevitable recession as inherited rather than caused by his policies.
“once this starts to manifest I hope to be able to help uh frame that argument whether whether going on podcasts like yours or you know talking to someone in the administration they need to they need to grab hold of the frame and be honest with the American people...Trump has an opportunity here to really take the frame of the narrative and run with it but it's going to take proper framing it's going to take take proper understanding”
BRICS rhetoric about moving away from the dollar intensified under the Biden administration; Trump's return will likely soften this rhetoric because he presents as stronger.
“the bricks would never have done what they were doing under Trump having all this open dialogue about getting off the dollar they did it under the the weaked B Biden Administration I suspect the brick conversation kind of goes the the the rhetoric goes softer in my humble opinion if you want that's what I think”
The response to the next market correction will determine what happens next; if the Fed floods the system with money, it could unleash a commodity super cycle, or if there are other structural problems, the outcome could be different.
“if if we do get the correction that we we're going to get and the economic damage that results from it um Commodities will go even lower and so then we have to see the the the Central Bank response and then that that can be one of two things it could unleash a commodity super cycle because of too much money or there are other problems which I can't foresee”
Ed Dow's hedge fund model has had positive annual returns since 2000 until the last two years, with a -20% drawdown if you had invested two years ago, leading him to conclude that either his economic indicators are now useless or there is systemic fraud at government/central bank level occurring.
“we run a u a model that has history back to 2000 and every year we had a positive year until the last uh two years our draw our draw down is minus 20 if you had invested two years ago you'd be minus 20% we've never had a draw down like this so then the question becomes are our economic fundamental indicators uh now useless or is there something else going on and what there's something else that's going on is epic fraud in the government and Central Bank level”
The Federal Reserve has never achieved a 'soft landing' in Dow's career; he witnessed the 2000 dot-com crash, the 2008 financial crisis, and the 2020 pandemic crash but never a genuine soft landing except arguably the 1980s S&L crisis which was mitigated compared to what it could have been.
“I've been doing this a long time I've never seen a soft Landing I you know I didn't see one in 2000 I didn't see one in '08 I didn't see 2020 was an that was a quick one uh but I didn't see I've never SE I in my career I've never seen this soft Landing the the the one caveat is I think the best soft Landing was the 9s SNL crisis where we had a recession but the uh it wasn't it wasn't as bad as it could have been”
Gold will likely correct 25% in the next financial margin call event (rather than the 50% correction seen in 2008) because it will be sold along with other assets in a flight to cash, but gold should not be sold and re-bought lower; instead it should be accumulated over time as a long-term hedge.
“if we do have a financial Margin Call where everything starts to go down in response to the real numbers gold will get hit but I don't think it'll get hit as bad as it did in the 08 crisis gold went down 50% I think gold has a better chance of only going down 25%”
Gold has been rallying relentlessly and signals that a financial crisis is coming; gold doesn't rally just for the sake of it—it's a warning signal from the market
“gold doesn't go up just for the hell of it sure uh yeah it's it's the rallying Gold's been Relentless...metals are telling you something right now they're telling you that there's there's a financial crisis coming”
Trump said he would end the war in Ukraine in 24 hours during the campaign, but this should be interpreted in the spirit of 'take Trump seriously but not literally' (Peter Thiel's framing); Trump's actual goal is likely to force negotiations, with Russia probably achieving a stronger position at the bargaining table.
“he's come out and said he would end the war in Europe in 24 hours I think you know you hear statements like that on the campaign Trail uh was it Peter teal you should take Trump seriously but not literally so probably not 24 hours but probably a priority is what he's saying”
Dow's hedge fund model has run negative for the last two years (down 20%) despite being positive every year from 2000-2022, suggesting either the economic/fundamental indicators are now useless or something else (epic fraud) is distorting markets.
“we run a u a model that has history back to 2000 and every year we had a positive year until the last uh two years our draw our draw down is minus 20 if you had invested two years ago you'd be minus 20% we've never had a draw down like this so then the question becomes are our economic fundamental indicators uh now useless or is there something else going on and what there's something else that's going on is epic fraud in the government and Central Bank level”
The real economy is already in recession; business activity is down, home sales are down, and employment will soon reveal itself to be in worse condition than official statistics suggest
“the real economy the average person on the street feels it business activ is down home sales are down uh employment will it'll it'll become apparent soon enough that employment is a disaster and going to get worse”
The timing of the correction is uncertain but getting closer; the higher and faster markets go, the more bearish Ed becomes; when market price action starts to bend back on itself, bearish conviction increases
“the timing on this I'm not going to give you a time but it's not it's not it's getting closer the higher and faster we go the more bearish I become in price and time when you start going like this it's getting you you know the game once once you start having you know almost going to bend back on itself I'm I'm more bearish now than I was two months ago”
Giving fired government employees a two-year severance (as Elon Musk reportedly proposed) would ease the transition pain of government job cuts and prevent immediate economic collapse by allowing workers time to move to the private sector.
“I heard Elon float the idea of giving everybody that they fire a two-year Severance uh which that would give them economic wherewithal to transition to the private sector yeah and that way there there'd be less economic pain if there is no severance and people are thrown out of into the street it would cause immediate uh impact on the economy”
Regulation cutting and reducing red tape would create animal spirits and help the economy, but must be done carefully to avoid sharp near-term pain.
“he's he needs to cut regulations cutting regulations and red tape would help tremendously and and create Animal Spirits um they're talking about cutting the government which needs to be done”
Cutting corporate or executive government payroll has to be done carefully with severance packages (Musk's proposed two-year severance idea) to avoid immediate economic collapse from sudden income loss for transitioned workers.
“there needs to be unfortunately a consideration for some of these people that are kicked out into the into the cold streets I heard Elon float the idea of giving everybody that they fire a two-year Severance uh which that would give them economic wherewithal to transition to the private sector yeah and that way there there'd be less economic pain if there is no severance and people are thrown out of into the street it would cause immediate uh impact on the economy”
President Xi told Chinese military to be ready for a successful Taiwan takeover by 2027, which indicates strategic capability goals rather than imminent invasion plans, but puts the world on notice of timeline pressure.
“president G has told his military he wants them ready for a successful takeover of Taiwan in 2027 that's not the same as saying he's going to invade that's just I want you ready that's what he said um but it you know has put the world on notice”
Ed's firm has tracked global health metrics (disabilities, deaths, injuries) since 2021 through their project Humanities Pro, raising concerns about health deterioration that they track but won't discuss publicly due to censorship fears
“we've done on um you know human health so to speak Humanities pro.info Humanities pro.info can I ask you real quick what that's all about I actually projects it we've been tracking the performance of the health of the globe uh disabilities deaths and injuries since uh 2021”
The BRICS summit in Kazan came out 'flat' with fewer hard announcements than expected, likely because member countries anticipated a Trump presidency and pumped the brakes on de-dollarization initiatives.
“the recent brick Summit in Kazan in Russia I felt like came out a bit flat right there was a lot of expectation and and hype based on previous Summits and more countries raising their hand to join and more developments on the brick settlement currency and all of this but not a lot of of hard announcements came out of the in Kazan”
Host has zero exposure to broad equity markets and only invests in early-stage commodity sector companies and 'boring' assets like real estate, gold, and cash based on competitive advantage concentration rather than broad diversification.
“I'm I'm uh I have zero exposure to the broad Equity Market I have um exposure to a handful of like early stage companies it's kind of my wheelhouse mainly the commodity sector so where I have a comp competitive advantage and you know the space you know the space what I do yeah exactly like I I'm I'm in that Arena you know what I mean like I I'm I'm out there uh and outside of that I'm in very boring assets like real estate gold um cash I suppose”
Trump has already signaled he will end the Ukraine war, support Israel without compromise, and prevent China from taking Taiwan and Iran from pursuing regional ambitions—establishing a more assertive but less interventionist foreign policy.
“Trump in his four years whether you loved him or hate him there were no major Wars under his watch and now you know the world seems to be wanting to burn at any minute now so hopefully he'll uh negotiate a peace in Ukraine uh get something going in Israel and prevent China from taking over Taiwan and Iran from doing whatever Iran wants to do”