Is the U.S. Economy on the Edge? ft. @DanielLacalleOfficial
What this covers
🔥 *Get Raoul Pal's free PDF report:* https://rvtv.io/3YOZZUe. U.S. fiscal woes, bitcoin, gold, and Trump’s economic vision…
Daniel Lacalle, chief economist at Tressis, joins Ash Bennington to discuss the fiscal challenges facing America, how Trump will handle things, the potential for a bitcoin-friendly Federal Reserve, and his outlook on gold and commodities.
Follow Daniel's YT channels:
@DanielLacalleOfficial @DanielLacalleInEnglish
Timestamps: 00:00 - Introduction & Like/Subscribe Reminder 00:46 - Welcome Daniel Lacalle: 2024 Economic Overview 02:05 - Global Election Spending & Its Aftermath 03:28 - U.S. Equity Market Trends & Earnings Drivers 05:18 - Weak Manufacturing, Consumer Debt & 2025 Outlook 06:39 - Russell 2000 Recovery & GDP Growth Trends 09:09 - Europe’s Economic Struggles: Germany, France, UK 12:26 - France’s Fiscal Nightmare & Social Discontent 17:46 - Middle-Class Erosion in Europe 21:05 - Capital Market Challenges in the Eurozone 25:09 - Central Planning Failures in Europe 28:51 - ECB Policies & Fiscal Imbalances 35:32 - Risk of a Eurozone Debt Crisis 41:05 - U.S. Fiscal Policy: A Looming Nightmare 48:11 - Solutions for U.S. Deficit Reduction 52:33 - Gold Rally: Central Bank Demand & Supply Issues 55:48 - Commodities Outlook: Trends & Opportunities 58:27 - Key Takeaways: Protecting Against Monetary Destruction 1:00:28 - Bitcoin’s Evolution: From Startup to Reserve Asset 1:03:25 - Closing Remarks & Crypto Gathering Announcement
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Laal argues that global economies face an inevitable debt crisis and monetary destruction stemming from unsustainable fiscal spending, requiring investors to shift away from government bonds and toward equities, commodities, gold, and Bitcoin as hedges against currency debasement.
- Government deficits during periods of strong growth destroy fiscal space and create future inflation and higher taxes rather than supporting recovery
- European structural imbalances and excessive central planning make growth impossible without fundamental policy reform, while the US faces similar but more solvable fiscal challenges
- Traditional 60/40 equity-bond portfolios will fail to generate real returns as sovereign bonds no longer offer protection in an environment of persistent money printing
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The US generated approximately $2 trillion in deficit spending in 2024 while achieving only $1.8-2 trillion in GDP growth, meaning almost zero real growth excluding debt accumulation, which is unsustainable.
“in 2024 if you look at the level of growth we're basically talking about a two trillion deficit with an increase in GDP of about 1.8 or two trillion therefore very little uh real growth uh excluding the accumulation of debt”
GDP growth alone is a misleading metric; real GDI (Gross Domestic Income) is a better measure because it strips out the artificial growth from debt accumulation and government spending, and in the US the productive sector hasn't done badly when examined through real GDI growth, which is showing decent expansion.
“if we strip out the uh growth coming from more debt and more government spending the productive sector hasn't done that badly and what we can see is for example is that real GDI grows domestic income is trailing behind GDP but is also showing a decent level of growth which is positive”
The Euro area is a vendor financing scheme in which Germany finances the irresponsibility of other nations by letting them import more German goods and services, while accumulating dangerous Target2 imbalances that represent what is owed between countries.
“The Euro area is a vendor financing scheme in which Germany is financing the monster irresponsibility of many of the uh Nations uh that join the Euro area by uh letting them uh import more of German goods and services okay so what happens is that there is a giant increase in that imbalance in the Target to imbalance which is what shows the difference between what is owed between one country and the rest”
In 2024, the US deficit was approximately $2 trillion while GDP growth was only $1.8-2 trillion, meaning real growth excluding debt accumulation was essentially zero, combined with weak manufacturing and record credit card debt
“in 2024 if you look at the level of growth we're basically talking about a two trillion deficit with an increase in GDP of about 1.8 or two trillion therefore very little uh real growth uh excluding the accumulation of debt and at the same time weak manufacturing and consumer ending driven by a new record high in credit card debt”
Real GDI (Gross Domestic Income) is growing slower than GDP, indicating that the gap between headline growth and real income growth is widening.
“if we strip out the uh growth coming from more debt and more government spending the productive sector hasn't done that badly and what we can see is for example is that real GDI grows domestic income is trailing behind GDP but is also showing a decent level of growth which is positive”
US equity market strength in 2024 has been driven primarily by liquidity injections through government spending and an effectively dovish Federal Reserve despite hawkish rhetoric, leading to multiple expansion in large-cap and multinational stocks rather than broad-based earnings growth.
“one of the one of the reasons why the US Stock Market is so strong is because there's been such an enormous level of what economists call liquidity injections which ultimately is government spending no uh so government spending and the a Federal Reserve that has been headline hawkish however in reality very very doish has driven uh multiple expansion in the US Stock Market”
In 2010, the European bond crisis was a stock problem of investors selling already-issued bonds from their portfolios, not just a flow problem of deficits, and this stock problem will recur when US deficits are finally constrained.
“the problem that you saw in 2010 that manifested in 2011 was a stock problem is when investors started to sell their European bonds the ones that they had already issued and were already in their books not a problem of it was not just a problem of flow IE deficit financing every year it was a problem of investors saying I don't want to have the bonds that I had already collected in my portfolio of these nations that happens and it's likely to happen again and if the policy of the Federal Reserve now is going to be more Pro more more haish we're going to have probably less rate Cuts than what were initially expected and at the same time the United States government takes finally care of the deficit spending and starts to really cut deficit spending then like in 2010 which manifested in 2011 those enormous imbalances of the Euro area issuers are going to transpire”
The US invests about three times as much capital in private equity, venture capital, technology, and innovation compared to the Euro area in nominal terms, creating a dangerous divergence in productive capacity and innovation.
“if you look at Capital allocation uh if you look at it compared to the United States about uh what what the United States puts uh of uh Capital into investments in private equity in venture capital in technology in innovation in the Euro area it's about a third but it's about a third in nominal terms okay so that's incredibly dangerous because productive uh productive investment is being sidelined”
The Euro area is a vendor financing scheme where Germany finances the irresponsible spending of other Euro members by allowing them to import more German goods and services, creating Target2 imbalances.
“the Euro area is a vendor financing scheme in which Germany is financing the monster irresponsibility of many of the uh Nations uh that join the Euro area by uh letting them uh import more of German goods and services okay so what happens is that there is a giant increase in that imbalance in the Target to imbalance which is what shows the difference between what is owed between one country and the rest”
The claim that Spain and Portugal are growing while Germany stagnates misses the real problem: southern European countries are accumulating debt while their interest expenses become the largest item in budgets, making them vulnerable when yields rise.
“right now people look at Spain and they say hey Spain is growing Portugal is growing Italy is growing so the problem is not in the southern European economies the problem is in Germany because it doesn't grow that is not true Germany it doesn't have a problem in the bond market and certainly doesn't have a problem of solvency what is happening is that everybody's looking at GDP in the southern European economies but it's not looking at debt accumulation in those economies so like in 20 2003 when everybody said that Greece was the motor of growth of the Euro area and Germany was the was the sick man of Europe four years later boom people people look at GDP as if it was the solution to everything without looking at GDP debt accumulation interest expense interest expense is becoming the largest item in the budget in most of the Euro Southern European uh countries”
Healthcare spending improvements through competition and free market options could rapidly improve healthcare expenditure without harming services, as current high US healthcare spending results from lack of competition and cartelization.
“it is ludicrous what the United States SP spends in health care when at the same time you have the the possibility of improving the expenditure very very rapidly through competition and with uh with more level of free market uh free market options for healthare uh providers so all of that may be maybe the solution”
Central banks globally are reducing exposure to Euro and US sovereign debt and increasing gold holdings, as they currently hold only around 4% of reserves in gold despite room to expand significantly.
“central banks all over the world are starting to reduce their uh overexposure to Euro area and US sovereign debt and to balance it with more exposure to Gold they have such little gold it's sometimes in in in the case of most of them it doesn't get to 4% of the of the assets of the central bank”
Real commodity demand trends matter more than geopolitical risk narratives; money growth flows to government spending rather than productive consumption, so manufacturing weakness drives commodity demand weakness.
“what you need is to look at the real trends of money growth and uh the manufacturing sector impact money growth is going mostly as I said before to government spending and to uh and to credit card debt manufacturing continues to be weak therefore the demand side of Commodities is the let's say the element to look at because Supply is going to adjust to the demand side”
Deficit spending is printing money because the Federal Reserve only prints money after the government has already spent and issued more debt; there is no distinction between government spending and monetary creation.
“deficit spending is printing money there is no such thing as the Federal Reserve printing money because they're evil or stupid the only thing that they print is because the government has already spent it and increased uh increased issuance of debt so deficit spending is printing money”
Technology comprises only about 4% of European stock markets, making it almost impossible for European indices to outperform the US, which has enormous tech exposure and drives global growth.
“it's almost impossible for the European market for the stocks uh 600 or the uh individual Nations stock markets to outperform the United States because technology is a very very small proportion of the of the stock market it's about it's about 4% if I'm not wrong and at the same time the stock market is mostly comprised of uh very stable very large very uh boring but no growth or very little growth multiac cap conglomerates”
The Russell 2000 catching up to the S&P 500 is a positive sign because it indicates earnings expectations are improving for smaller domestic-focused companies rather than multiple expansion in large multinational tech stocks.
“the Russell 2000 is starting to catch up and I think that that is a positive because it's basically showing that expectations of earnings in the US economy are actually going faster than what uh has been driving markets which has been fundamentally the impact of very large stocks multinationals with global businesses”
Gold supply is constrained by underinvestment in gold mining, which is a significant problem given rising demand from central banks and geopolitical factors, creating a secondary effect of scarcity that will support gold prices alongside central bank demand.
“demand from Central Bank from central banks which coincides with challenges of Supply because the underinvestment in gold mining is actually a significant problem considering the demand for gold prior to central banks changing their policy”
Central banks around the world are reducing exposure to Euro area and US sovereign debt and balancing with gold, since most hold less than 4% gold in their assets despite very little gold as reserve, creating tremendous room for continued central bank gold accumulation.
“central banks all over the world are starting to reduce their uh overexposure to Euro area and US sovereign debt and to balance it with more exposure to Gold...they have such little gold it's sometimes in in in the case of most of them it doesn't get to 4% of the of the assets of the central bank that there's a tremendous uh level of of of room to continue growing”
Credit card debt in the US has reached new record highs, indicating that consumer spending is being driven by debt accumulation rather than real income growth.
“at the same time weak manufacturing and consumer ending driven by a new record high in credit card debt”
The world economy in 2024 is slightly worse than expected at the beginning of 2024, with 2025 likely to show persistent inflation combined with worse economic growth than expected due to the unwinding of election-year government spending across 70+ nations.
“what we can say about the world economy right now is that it's slightly uh worse than what we expected in uh the beginning of 2024 and that we need to pay a lot of attention in 2025 because a lot of what has been relatively decent about the economy in this year has been coming from a very aggressive level of government spending. 2024 was a year of Elections all over the world more than 70 nations were in the process of Elections”
Germany is in deep recession with an obliterated industrial sector due to extremely high energy costs and weak competitiveness, while the automotive sector has been decimated, putting Germany in a very challenging economic situation.
“Germany is in deep recession then it's a absolutely Dreadful State uh it's been the the industrial sector has been obliterated the energy component of the industry is so is is exceedingly high and therefore competitiveness is weaker the automotive sector has been decimated”
Expanding fiscal policy during a boom (as happened in January 2021) destroys future fiscal space and creates inflation, whereas counter-cyclical spending during recessions may help recovery (though Laal questions the Keynesian premise).
“uh fiscal policy that is expansionary in a period of recession that expansion may help the economy get back on track in a keun way I've never believed it but it doesn't matter that's what governments do because the government has fiscal space however if what the government decides willingly to do is in a huge recovery remember that it was in January 2021 when the Biden Administration arrived in a huge recovery with the economy already booming you decide to massively increase government spending and massively increased deficit spending what ends up happening is that you are destroying the fiscal space of the government for a period of contraction”
Deficit spending reduces future economic growth, real wages, productivity, and increases inflation and taxes, regardless of short-term stimulative effects.
“that deficit spending and that increase in debt means in the future more taxes less real wages less growth and certainly more inflation as well if uh it continues that way so the the path of insanity of the fiscal policy of the United States was predicated on the idea that nothing had happened so far therefore continue and that is hugely negative”
Bringing the US deficit to 2% of GDP would be necessary and sufficient to maintain dollar reserve currency status, reduce inflation, and maintain economic demand.
“just bringing the deficit to 2% uh of GDP would certainly be enough more than enough for uh the dollar to remain the world Reserve currency for inflation to come down for the uh for the entire economy to go back in demand and and it would still be a deficit but it would be at least acceptable in terms of the level of economic growth if it is boosted from the productive side”
Investment relative to GDP is flat or slightly down in most European nations; productive investment and innovation investment are very limited compared to the United States.
“when you look at that investment and you look at productive investment but furthermore Innovation and uh technology investment it's very very limited”
Many US states have cartelized healthcare markets with only one or two providers, leaving Americans with the negatives of single-payer systems (no competition) without the benefits (negotiating power or efficiency).
“in many states you have one maybe two Health Care Providers and that's basically cartelization of healthcare that doesn't so so Americans suffer the negatives of the of of a of a Single Payer system but without the benefits of the of higher competition”
The European middle class is being eroded through taxes and inflation: the middle class cannot thrive due to tax destruction, the poorest cannot rise into the middle class, high earners are leaving the country or stopping investment because it will be taxed away, creating a hollowing-out of the middle.
“inflation is eating away the uh wages of the people that that they produce and that taxes are destroying the ability of the middle class to thrive while the uh poorest are not able to rise to the middle class so the middle class is being eroded through taxes and inflation the so-called high class is basically just leaving the country or stop stopping investment and and not taking any more actions because it's going to be taxed away and the poorest are becoming poorer”
European capital markets are bets entirely on sovereign debt and large companies tied to sovereign bailout potential, with investment plummeting in real terms relative to GDP, and capital allocation to private equity, venture capital, technology, and innovation in the Euro area is about one-third (in nominal terms) of what the United States allocates, making productive investment impossible and creating structural underperformance.
“the entire monetary policy and the entire fiscal policy is driven to continue to bloat government spending...the capital markets is basically one entire bet on the sovereign debt...investment is is is plummeting in real terms...if you look at Capital allocation uh if you look at it compared to the United States about uh what what the United States puts uh of uh Capital into investments in private equity in venture capital in technology in innovation in the Euro area it's about a third but it's about a third in nominal terms”
The Euro area was created as a bull market construct that functioned well during growth but fails when the economy stagnates and inflation appears, which the Euro's creators did not foresee, causing the entire construct to crumble and become closer to Japan's situation of persistent stagnation.
“The Euro area has been created as a bull market construct in which uh as long as the economy is growing it does not matter if the growth is coming fundamentally from government spending and from debt however when the economy starts to stagnate and inflation appears which is something that the Euro did not that the Euro uh creators did not foresee uh then the entire thing crumbles and it becomes closer to Japan”
Fiscal adjustment should be done decisively and quickly (as proven in Argentina under Milei and in other countries), not gradually, because gradual adjustment allows the deep state to obstruct and dilute reforms, and the window is the first 100 days of an administration before a dead ceiling develops politically.
“the key thing here and my recommendation is to do what we have seen in Argentina and we have seen in so many other countries which is to do it decisively and quickly if you do it gradually it's not going to work if you do it gradually it's not going to work...in the first 100 days of of the of the administration because if it doesn't happen in the first 100 days of the administration by June you have a dead sealing problem”
A debt crisis in the Eurozone 'sooner rather than later' is inevitable because 'it's impossible to disguise everything under the ECB umbrella because it manifests in inflation' and 'inflation measured as CPI has been tweaked with as we have seen so many in so many places the calculation of CPA CPI has been tweaked with to show a very a completely different reality than what citizens perceive.'
“there will be we don't know when but there will be a debt crisis in the in the Euro area sooner rather than later because it's it's impossible to disguise everything under the ECB umbrella because it manifests in inflation the Euro the the European Central Bank seemed like the perfect solution to this bull market construct because when it came time to do a quantitative easing program there was very little inflation everything looked good and you and the ECB could disguise the fiscal insolvency”
The transmission mechanism of European monetary policy fails not because of technical limitations but because every time authorities identify problems of excessive regulation, high taxes, and low productivity, they try to solve it with more taxes, more centralized planning, and more regulation, thereby creating the very conditions that block monetary transmission.
“the problem is that you cannot find a one siiz fit sole solution for the for the European economy for a very simple reason because there's no such thing as a one-size fito uh in the Euro area...they feel that there is a frustration because the transmission Challen channel of monetary policy is not working but it's not working because every time that people see that there is a problem of too excessive regulation very high taxes and very low productivity they decide to solve it with more taxes more centralized planning and and therefore uh lower productivity growth”
The Euro crisis will manifest through a stock problem (investors selling existing bond holdings they already own) not just a flow problem (deficits financing), similar to 2010-2011, and if the Federal Reserve becomes more hawkish with fewer rate cuts while the US government finally cuts deficits, the imbalances that are currently hidden will become visible in Euro area bond yields.
“the ECB thinks that it has everything under control because it has the anti fragmentation tool...that is not the case that is not the case because that is dealing with the flow of uh debt not with the stock the problem that you saw in 2010 that manifested in 2011 was a stock problem is when investors started to sell their European bonds the ones that they had already issued and were already in their books...if the policy of the Federal Reserve now is going to be more Pro more more haish we're going to have probably less rate Cuts than what were initially expected and at the same time the United States government takes finally care of the deficit spending and starts to really cut deficit spending then like in 2010 which manifested in 2011 those enormous imbalances of the Euro area issuers are going to transpire”
Investors should focus long-term on the inevitable outcome that governments will create monetary destruction through debt issuance and money printing, so protection requires investing in equities (particularly US disruptive sectors) and independent currencies/money (like Bitcoin) that create value outside government spending systems.
“what I would say to everyone is let's you can almost forget about all of the other elements uh of of valuations etc etc and think long term about what is inevitable is that governments that have created these enormous levels of debt and what's most important all of the debt that will be issued in the future IE those unfunded or already assumed commitments all of that means monetary destruction therefore be on the other side take continue to invest in equities particularly in the United States particularly in disruptive and uh High added value sectors continue to invest in uh independent currencies and uh independent money that allows you to uh benefit from an environment that is not going to be solved through uh government deficits and government spending”
France has the largest government in the OECD relative to the economy with very high taxes and an aggressive social network, yet has delivered three decades of stagnation, unsustainable deficits, elevated debt, and widespread social discontent.
“France has the largest government in the oecd in terms of relative to the economy it has very very high taxes and a very aggressive uh social network and what that has created is three decades of stagnation a completely unsustainable deficit very elevated debt and more importantly social discontent”
The US has a bottom-up approach to the economy where states like Texas don't bail out California and different regions have independent fiscal systems, unlike the EU's top-down approach that asphyxiates small and medium enterprises.
“when you look at the United States everybody understands that you know that Texas doesn't bail out California and that uh you know Michigan doesn't uh bail out Missouri that you have completely different fiscal systems and you have uh you have the a a a a bottom up approach to the economy instead of what we have in the European Union which is a top to bottom approach to the economy which asphyxiates the small and medium Enterprises”
There will be a debt crisis in the Euro area sooner rather than later because it is impossible to disguise everything under the ECB umbrella as inflation manifests and citizens perceive actual purchasing power loss while CPI is adjusted downward.
“I think that is going to there will be we don't know when but there will be a debt crisis in the in the Euro area sooner rather than later because it's it's impossible to it's impossible to disguise everything under the ECB umbrella because it's because it manifests in inflation the Euro the the European Central Bank seemed like the perfect solution to this bull market construct because when it came time to do a quantitative easing program there was very little inflation everything looked good and you and the ECB could disguise the fiscal insolvency or the fiscal challenges of the Euro um issuers but now there's inflation and there's persistent inflation”
In France, an average salary is paying more than 60% of annual wages in combined direct and indirect taxes.
“between indirect and direct taxes uh an average salary is paying more than 60% of the wages and earned in a year in uh in taxes between direct and indirect which are enormous indirect taxes as well”
Bitcoin is a teenager (13+ years old); judging its future is premature when currencies like the US dollar and British pound were irrelevant at age 15.
“what do you mean the future it's in its infancy imagine what people would have said about the US dollar or about the British pound when it was 15 years old that it was nothing that was irrelevant so let's let's look at it let's look at it because it's growing and it's growing stronger”
Deficit spending is literally printing money because it only occurs because the government has already spent beyond revenues and increased debt issuance, so there is no such thing as the Fed 'printing money for evil reasons'—it only prints because government deficits force it to.
“deficit spending is printing money there is no such thing as the Federal Reserve printing money because they're evil or stupid the only thing that they print is because the government has already spent it and increased uh increased issuance of debt so deficit spending is printing money”
Commodities should be traded tactically rather than invested in long-term, as the long-term trend of the Bloomberg Commodity Index is poor relative to equities despite short-term opportunities.
“I think that you need to look at Commodities from the per from a trading perspective not from an investment long-term investment perspective when you see a trend like we saw with copper and and electric vehicles pick it up make some money and get out because the the overall long-term trend of the Bloomberg commodity index and and so many is is actually very very very poor relative to equities”
Bonds will not save investors in the fiscal nightmare scenario because sovereigns won't generate real returns while equities, gold, and independent money offer better inflation hedges.
“we used to hear the the idea that you needed to have a balanced equity and bond portfolio well guess what governments are not going to give you real returns in this fiscal nightmare scenario so bonds are not going to save you Sovereign Bonds in particular in an environment of in which there may be some volatility and some correction and that's where gold plays a huge part in terms of having a balanced portfolio that allows you to generate returns over time”
Germany is in deep recession with its industrial sector obliterated, with energy costs of industry so high that competitiveness is severely weakened, and the automotive sector decimated, putting Germany in a very challenging economic situation that is unlikely to improve.
“Germany is in deep recession then it's a absolutely Dreadful State uh it's been the the industrial sector has been obliterated the energy component of the industry is so is is exceedingly high and therefore competitiveness is weaker the automotive sector has been decimated so Germany is in a very very challenging uh situation”
Manufacturing sector continues to be exceedingly weak globally despite geopolitical risks, which is evidenced by the weakness in commodity prices, making strong economic growth unlikely in 2025 and pointing instead to persistent inflation with worse economic growth than expected.
“the manufacturing sector continues to be exceedingly weak I think that it's pretty obvious in the way in which commodities for example are behaving despite geopolitical risk so we need to be very prudent in general uh about expectations of very strong growth in 2025 I think that the logic would dictate that the process of a persistent inflation with uh worse economic growth than expected”
Asia is growing very strongly while the United States is likely to see a supply-side driven recovery of the private sector, but the Euro area and Latin America are lagging behind the world economic growth average, creating a divergence in regional economic trajectories.
“there's a a very distinctive difference between economies no on the one hand we see Asia that is growing very very strongly and uh the United States which is likely to see a supply side driven recovery of the private sector whilst the Euro area in Latin America seem to be lagging yet again after years of being behind the world economic growth average”
Manufacturing remains exceedingly weak globally, evidenced by commodity weakness despite geopolitical risk, and this weakness will persist into 2025.
“meanwhile the manufacturing sector continues to be exceedingly weak I think that it's pretty obvious in the way in which commodities for example are behaving despite geopolitical risk”
US stock market strength is fundamentally driven by liquidity injections (government spending) combined with a Federal Reserve that is headline hawkish but practically dovish, creating multiple expansion in large multinational stocks rather than broad-based earnings growth, with the Russell 2000 catching up indicating earnings expectations are actually accelerating faster than headline market moves.
“one of the one of the reasons why the US Stock Market is so strong is because there's been such an enormous level of what economists call liquidity injections which ultimately is government spending no uh so government spending and the a Federal Reserve that has been headline hawkish however in reality very very doish has driven uh multiple expansion in the US Stock Market but we're starting to see some positive Trends the Russell 2000 is starting to catch up and I think that that is a positive because it's basically showing that expectations of earnings in the US economy are actually going faster than what uh has been driving markets which has been fundamentally the impact of very large stocks multinationals with global businesses”
Bitcoin has evolved from a startup currency to something that is creating its own liquidity and separating from other cryptocurrencies and risky assets generally, moving from being an asset that moves with everything to becoming a genuine reserve of value and unit of measure.
“Bitcoin is phenomenal...it is going from being a startup currency to to something that is actually uh a contender no and that is creating its own liquid...that is what is most important...it is separating itself from other cryptocurrencies...becoming more a reserve of value unit of measure and me method of generalized mean of payment and at the same time how it is creating its own liquidity and therefore separating itself from being uh an asset that goes up when everything goes up and goes down when everything goes down”
Commodities should be approached from a trading perspective, not a long-term investment perspective, because the overall trend of the Bloomberg commodity index is poor relative to equities, though opportunities exist in trends driven by real money growth and manufacturing demand, not geopolitical risk or conspiracy theories.
“I think that you need to look at Commodities from the per from a trading perspective not from an investment long-term investment perspective when you see a trend like we saw with copper and and electric vehicles pick it up make some money and get out because the the overall long-term trend of the Bloomberg commodity index and and so many is is actually very very very poor relative to equities...what you need is to look at the real trends of money growth uh the manufacturing sector impact money growth is going mostly as I said before to government spending...manufacturing continues to be weak therefore the demand side of Commodities is the let's say the element to look at”
When government deficit spending occurs during a period of economic recovery with 3-4% growth and near-full employment (as in 2024 US), it destroys the government's fiscal space for future contractions and creates inevitable monetary destruction through inflation, higher taxes, and lower real wages in the future, unlike deficit spending during recessions which may be justified on Keynesian grounds.
“if you have uh fiscal policy that is expansionary in a period of recession that expansion may help the economy get back on track in a keun way I've never believed it but it doesn't matter that's what governments do because the government has fiscal space however if what the government decides willingly to do is in a huge recovery remember that it was in January 2021 when the Biden Administration arrived in a huge recovery with the economy already booming you decide to massively increase government spending and massively increased deficit spending what ends up happening is that you are destroying the fiscal space of the government for a period of contraction it cannot take a decisive action or certainly it cannot support because the level of government spending is so bloated that in 2024 government spending in the United States is two trillion higher than it was in uh the 2019 preco period so why is that a problem because that deficit spending and that increase in debt means in the future more taxes less real wages less growth and certainly more inflation as well”
Germany's problems (automotive sector decline, nuclear fleet destruction, high energy prices) were fully political decisions, and many European problems are self-created rather than external, whereas the US has bottom-up federalism where states don't bail each other out, creating fundamentally different incentive structures.
“German problem certainly is yeah the decision to destroy the automotive sector was a political one and uh until they found out that they don't have the the the ability to compete in the electric vehicle Market the decision to destroy the nuclear Fleet and make energy prices saw was completely political so all these things instead of instead of addressing the problem which is way too much Central planning way too much intervention...is is always tried to solve it the opposite way and when you look at the United States everybody understands that you know that Texas doesn't bail out California and that uh you know Michigan doesn't uh bail out Missouri that you have completely different fiscal systems”
Reducing the US deficit to 2% of GDP would be sufficient to maintain the dollar as world reserve currency, reduce inflation, and restore economic demand, while still representing a deficit but one acceptable relative to growth rates.
“just bringing the deficit to 2% uh of GDP would certainly be enough more than enough for uh the the dollar to remain the world Reserve currency for inflation to come down for the uh for the entire economy to go back in demand and and it would still be a deficit but it would be at least acceptable in terms of the level of economic growth”
Healthcare spending improvements can be achieved through competition and free market options rather than government administration, since the US has the highest healthcare costs despite being an internally fragmented market where many states have one or two providers (cartelization) without the efficiency benefits of either single-payer or competitive markets.
“there are many many solutions that have been published in numerous occasions...most of it comes from lack of competition in many states you have one maybe two Health Care Providers and that's basically cartelization of healthcare that doesn't so so Americans suffer the negatives of the of a Single Payer system but without the benefits of the of higher competition...all those things can be can be improved”
Strong economic growth and high productivity growth are impossible with current fiscal and taxation systems globally; systems must be reformed to address public sector imbalances.
“I think that you cannot expect strong economic growth and high productivity growth with the fiscal and the taxation systems that are being globally uh built that we need to address the imbalances that are being created in the public sector”
France has the largest government in the OECD relative to its economy, has very high taxes, and an aggressive social network, which has created three decades of stagnation, completely unsustainable deficits, very elevated debt, and social discontent, proving that Keynesian economic theory's promise of strong growth via large welfare states is not functioning.
“if you think about what we hear all the time in uh the economic debate we tend to hear that uh strong government and uh high taxes are the solution for many economies and the proof of that not happening is France France has the largest government in the oecd in terms of relative to the economy it has very very high taxes and a very aggressive uh social network and what that has created is three decades of stagnation a completely unsustainable deficit very elevated debt and more importantly social discontent”
Eurozone monetary policy proposals like 'a digital identity card that is linked to the digital Euro' will not solve structural problems; instead, 'people will run away from from uh government uh uh surveillance and that's and that's a big big issue.'
“in the case of Leta he is recommending to implement uh uh a digital identity card that is linked to the digital Euro and that will solve all the problems no they won't people will run away from from uh government uh uh surveillance”
Bitcoin is transitioning from a startup currency to a contender by building its own liquidity, decorrelating from other risky assets, and moving from high volatility to lower volatility as an intrinsic value store.
“I think the Bitcoin is is is showing number one that it is going from being a startup currency to to something that is actually uh a contender no and that is creating its own liquid and I think that that is what is most important so it's starting to decorrelate from other risky assets I think that Bitcoin as well moves as you see in these in these charts in these periods in which it consolidates at a certain resistance level to continue going up afterwards”
The problem with European monetary policy transmission is not technical but political: every time policymakers identify excessive regulation, high taxes, and low productivity, they solve it with more taxes and centralized planning, which makes productivity growth worse.
“the problem is that you cannot find a one siiz fit sole solution for the for the European economy for a very simple reason because there's no such thing as a one-size fito uh in the Euro area which you read constantly with the dragy report with the letter report with Miss lag's comments is that they feel that there is a frustration because the transmission Challen channel of monetary policy is not working but it's not working because every time that people see that there is a problem of too excessive regulation very high taxes and very low productivity they decide to solve it with more taxes more centralized planning and and therefore uh lower productivity growth”
France's likely 2025 growth will not exceed 1.5% and at best 1.2%, and only if France sorts out its political problems, since economic growth in France is extremely dependent on stable government, unlike the UK or US which have more independent private sectors.
“for France I think that level of growth for 2025 is is not going to exceed 1.5 1.2% at best and that is if they get together their public uh finances and they sort out all of the political problems and in France political turmoil impacts economic growth very very severely because the economy is hugely dependent on uh on a stable government”
Current focus on southern European growth (Spain, Portugal, Italy, Greece) misses debt accumulation in those economies; debt-to-GDP ratios continue rising and interest expense is becoming the largest budget item in most southern European countries, recreating the 2003 pattern where Greece was called the growth motor but became the crisis case within four years.
“right now people look at Spain and they say hey Spain is growing Portugal is growing Italy is growing so the problem is not in the southern European economies the problem is in Germany...that is not true...everybody's looking at GDP in the southern European economies but it's not looking at debt accumulation in those economies so like in 20 2003 when everybody said that Greece was the motor of growth of the Euro area and Germany was the was the sick man of Europe four years later boom...Interest expense is becoming the largest item in the budget in most of the Euro Southern European uh countries which means that the moment that bond yields really start soaring that is going to be a big problem”
Competitive advantage cannot be gained by having a weak currency; the Euro should be defended as a project but cannot be defended when the objective is to maintain enormous fiscal imbalances of governments, and the ECB's supposed hawkish policy lasted less than 14 months while monetizing the Next Generation EU plan, making the Euro unlikely to strengthen.
“the idea that you're going to gain competitiveness by having a weak currency is ridiculous you the the the Euro should be a very a project that should be defended but it cannot be defended when the objective is to make it uh sub auge to maintain the enormous fiscal imbalances of governments uh and and the idea that that the euro is going to strengthen with an ECB that cannot be hogish has it's it's supposed higher for longer policy lasted less than 14 months it's a joke no it's supposed hawkish policy meant uh monetizing the entire Next Generation EU plan”
Winners will continue to win and losers will continue down the path of stagnation, meaning market mean reversion is unlikely, as US equities particularly in disruptive, high-value-added sectors will outperform while Euro area economies stagnate with persistent inflation.
“I would say that the final thought is very unlikely that we will see any significant uh mean reversion in the market I think that Winners will continue to win and losers are likely to continue down the path of stagnation I think that you cannot expect strong economic growth and high productivity growth with the fiscal and the taxation systems that are being globally uh built”
Germany escaping recession in 2025 may occur with 0.5-0.7% growth, but this will come mostly from government spending effects and base effects of 2024 inflation, not from genuine productive recovery or competitiveness restoration.
“Germany May Escape recession with a growth of 0.5 0.7% in 2025 but it's going to come mostly from government spendings and the uh base effect of uh the inflation the inflation uh of 2024”
The UK is likely entering recession in the second half of 2025 due to the government's latest budget and economic uncertainty surrounding the private sector from higher taxes and increased government spending.
“in terms of the UK I we believe it's going to be entering into a recession in the second half it'll catch up a little bit in the first in the first half of the year but but the the latest budget and the economic uncertainty that is surrounding uh the the private sector with higher taxes and more and more government spending is likely to hurt the economy quite a bit into the second half”
France is likely to see growth not exceeding 1.2-1.5% in 2025 at best, because political instability severely impacts economic growth in France due to the economy being heavily dependent on stable government, unlike the US or UK with more independent private sectors.
“for France I think that level of growth for 2025 is is not going to exceed 1.5 1.2% at best and that is if they get together their public uh finances and they sort out all of the political problems and in France political turmoil impacts economic growth very very severely because the economy is hugely dependent on uh on a stable government no it's not like the UK or the United un states that has a more let's say less less dependent uh economic private economic sector”
Immigration in France receives subsidies but does not participate in economic growth, creating a dependent subclass that is increasingly angry despite receiving entitlements.
“you have an increase in uh immigration that receives those subsidies but doesn't uh participate of economic growth when there is some and certainly feels uh constantly an almost relegated to ghettos and definitely uh becoming a dependent subclass”
Inflation is eating away wages and taxes are destroying the middle class's ability to thrive, while the poorest cannot rise to the middle class, resulting in middle-class erosion through taxes and inflation, high earners leaving the country or reducing investment, and the poorest becoming poorer.
“inflation is eating away the uh wages of the people that that they produce and that taxes are destroying the ability of the middle class to thrive while the uh poorest are not able to rise to the middle class so the middle class is being eroded through taxes and inflation the so-called high class is basically just leaving the country or stop stopping investment”
Lael proposes implementing a digital identity card linked to a digital Euro will not solve Europe's problems; instead, people will flee from government surveillance, creating a bigger issue.
“in the case of Leta he is recommending to implement uh uh a digital identity card that is linked to the digital Euro and that will solve all the problems no they won't people will run away from from uh government uh uh surveillance and that's and that's a big big issue”
The US economy is likely to experience supply-side driven recovery in the private sector in 2025, while Asia grows strongly and the euro area continues to lag.
“there's a a very distinctive difference between economies no on the one hand we see Asia that is growing very very strongly and uh the United States which is likely to see a supply side driven recovery of the private sector whilst the Euro area in Latin America seem to be lagging yet again after years of being behind the world economic growth average”
The 'Magnificent Seven' tech stocks have experienced multiple expansion driven by liquidity rather than earnings growth, and significant earnings downgrades in these names are likely in 2025.
“it's very likely that we will see some significant earnings downgrades in those uh very aggressive multiple expansion names that have driven the S&P b500 and the NASDAQ the tech companies the the the not the Magnificent Seven because they're not seven anymore but the Magnificent four”
Smaller US businesses and companies driving growth within the domestic economy have an opportunity to thrive in 2025 as government spending contracts.
“there is an opportunity for the businesses smaller businesses and the companies that are uh driving their business more within the US economy to start thriving in 2025 as for the rest of the developed economies”
The US may be the only major economy reducing its deficit, while everywhere else policy is 'print and monetize' to hide fiscal imbalances, making gold the hedge against global money printing.
“the second element that I think is very important is that we may be hearing we may be discussing the possibility of the United States reducing its deficit and reducing its tremendous fiscal problem that's not going to happen anywhere else everywhere else the policy is print and monetize print and continue to uh disguise government government imbalances and therefore gold as the counterpart of the enormous uh risk created by money printing is going to in my view continue to strengthen throughout the next year”
European equity markets are fundamentally a bet on sovereign debt because capital allocation and investment are collapsing in real terms due to weak productive investment and government deficits consuming available capital.
“the capital markets is basically one entire bet on the sovereign debt and the the large the large uh companies that are very close to being uh almost similar to sovereign debt as well no so what happens is that there's an erosion in the investment side investment is is is plummeting in real terms because if you look at investment relative to GDP is basically flat or uh slightly down in some Nations”
The idea that a weak Euro gains competitiveness is ridiculous; the Euro is a project that should be defended but cannot be defended when it is subordinated to maintaining enormous government fiscal imbalances.
“the idea that you're going to gain competitiveness by having a weak currency is ridiculous you the the the Euro should be a very a project that should be defended but it cannot be defended when the objective is to make it uh sub auge to maintain the enormous fiscal imbalances of governments”
The Euro was created as a bull market construct in which high government spending and debt accumulation didn't matter during growth, but when stagflation appears with economic stagnation and inflation, the entire construct crumbles.
“the Euro area has been created as a bull market construct in which uh as long as the economy is growing it does not matter if the growth is coming fundamentally from government spending and from debt however when the economy starts to stagnate and inflation appears which is something that the Euro did not that the Euro uh creators did not foresee uh then the entire thing crumbles and it becomes closer to Japan”
In the US, discontented citizens had real wage growth and economic growth to offset the effects of monetary expansion; in the euro area, there is neither growth nor wage growth, amplifying discontent.
“in the United States that same policy led to discontent but with growth and with real wage growth and in the Euro area you don't have any economic growth and you don't have real wage growth uh therefore the ECB is CAU between a rock and a heart place”
The next European crisis will not be a small economy like Greece; it will be France, which is impossible to bail out due to its size (3 trillion dollars, 12 times Greece's economy).
“the problem is that when the Euro Euro area the European commission the uh ECB start forgetting that what they need to do is to really Reign the public finances of governments because if not they're going to enter into a problem by ignoring what is happening in southern European nations in 2014 and now ignoring what is happening in France the problem is not a small economy that I remember I think it was Jim O'Neal that said that China created a Greece every three months doesn't matter it doesn't matter the next problem is going to be France and France is impossible to to bail out”
Young French workers are becoming polarized into two camps: one seeing the economic crisis as a failure of capitalism and becoming pro-socialist, the other turning to right-wing free-market ideology, with insufficient understanding that the state itself created the problems.
“one group of uh young uh students that are approaching their first job or within the first uh job are basically seeing this as a failure of free market and failure of capitalism and are becoming anti capitalist and anti an anti-free market and pro and pro socialist and that's seen for example in the latest elections in France and on the other hand what is happening is that there is a another site that is going to the other side of statism statism sorry which is very right-wing pro- free market Pro uh uh private property but very right-wing so it's being it's very polarizing”
Winners will continue to win and losers will continue to stagnate, with no significant mean reversion expected in markets due to structural divergence between US growth and global stagnation.
“I would say that the final thought is very unlikely that we will see any significant uh mean reversion in the market I think that Winners will continue to win and losers are likely to continue down the path of stagnation”
Fiscal policy should begin from a zero deficit as a starting point rather than from current spending levels, making fiscal discipline the default rather than continuously negotiating from the baseline of past overspending.
“you can almost forget about all of the other elements uh of of valuations etc etc and think long term about what is inevitable is that governments that have created these enormous levels of debt and what's most important all of the debt that will be issued in the future IE those unfunded or already assumed commitments all of that means monetary destruction therefore be on the other side take continue to invest in equities particularly in the United States particularly in disruptive and uh High added value sectors continue to invest in uh independent currencies and uh independent money”
The world economy in 2024 is slightly worse than expected at the beginning of the year because more than 70 nations held elections, causing governments to spend aggressively to gain votes, which bloated GDP figures but will result in a fiscal hangover in 2025 as that stimulus ends.
“2024 was a year of Elections all over the world more than 70 nations were in the process of Elections and as anyone that is watching us or listening to us may imagine 70 countries with elections means a lot of governments spending a lot of money very very quickly to try to gain votes and that means GDP bloated by government spending therefore it is very likely that what we will see in 2025 is sort of The Hangover of that process”
To cut the deficit, policymakers should start by proposing a zero-deficit baseline, then build from there, rather than building from current spending levels. This inverts the framing and creates political space for cuts by making high deficits the baseline that must be justified
“you can almost forget about all of the other elements uh of valuations etc etc and think long term about what is inevitable is that governments that have created these enormous levels of debt... you can cut it to zero put immediately in the administration the the starting point not at what you spend but at what the deficit is and you say this zero deficit and from there you uh you have some some some room but you need to start with the zero deficit not from the this is what we spent in uh fiscal year 2024”
The importance of a Department of Government Efficiency is to make public all the areas of wasteful government spending, since most citizens don't know where cuts can occur (they only see major categories like defense, Medicare, Medicaid, Social Security, and interest), and the model is Argentina's approach of cutting millions and billions of small waste items to quickly reduce the deficit.
“the importance of this department of government efficiency is to make public to the average citizen all of the different areas in which the government is overspending because a lot of people say yeah the government has to reduce spending but I don't know where and when I look it on and when I Google uh government spending it basically all of it goes to interest expenses defense Medicare Medicaid Social Security so where are you going to cut well the reason why it's important is because they are going to come to uh the to the average citizen and say look here we're spending millions that are completely uh unacceptable...the way to really cut has been proven in Argentina by mle...which is to cut a lot of those things that uh so that headline macro analysts basically just just don't care because you basically look at very at trillion figures no so you start cutting million 10 million 11 million 100 million uh pieces of of of of unnecessary spending you're going to immediately reduce the deficit”
An ECB hawkish policy lasting less than 14 months before reverting to dovish stance demonstrates that the Fed's 'higher for longer' commitment is a joke and reveals the impossibility of tightening in response to fiscal problems.
“it's supposed higher for longer policy lasted less than 14 months it's a joke no it's supposed hawkish policy meant uh monetizing the entire Next Generation EU plan therefore it's very I I don't I don't see how you can be bullish the Euro apart from those little spikes that you see short term”
The Department of Government Efficiency is important because it will expose to average citizens the specific areas of government overspending that headline macro analysts ignore, making political action more feasible.
“the importance of this department of government efficiency is to make public to the average citizen all of the different areas in which the government is overspending because a lot of people say yeah the government has to reduce spending but I don't know where and when I look it on and when I Google uh government spending it basically all of it goes to interest expenses defense Medicare Medicaid Social Security so where are you going to cut well the reason why it's important is because they are going to come to uh the to the average citizen and say look here we're spending millions that are completely uh unacceptable”
Bitcoin at current stage is a teenager, not yet mature, so predictions about Bitcoin's future should be cautious since even the US dollar and British pound had a very different character 15 years into their histories, suggesting Bitcoin's maturation trajectory is still unknown.
“Bitcoin is phenomenal...what do you mean the future it's in its infancy imagine what people would have said about the US dollar or about the British pound when it was 15 years old that it was nothing that was irrelevant...let's let's look at it because it's growing and it's growing stronger”
The ECB's 'hawkish' policy was actually dovish because it involved monetizing the entire Next Generation EU plan, contradicting any genuine rate-hiking intent.
“it's supposed hawkish policy meant uh monetizing the entire Next Generation EU plan therefore it's very I I don't I don't see how you can be bullish the Euro apart from those little spikes that you see short term that look to me like short short opportunities”
The euro has drifted down from parity to about $1.05 USD, a trend that will continue as ECB policy remains trapped between hawkish signals and dovish actions.
“and that's what you see when you look at that long-term Euro chart you just see that drift down to where we are now at about a buck five”
Young people in France and Europe are becoming polarized: one group sees the failure of current capitalism and turns pro-socialist and anti-free market, while another group turns pro-free market but very right-wing, and what is missing is understanding that the state itself is the problem causing the failures.
“one group of uh young uh students that are approaching their first job or within the first uh job are basically seeing this as a failure of free market and failure of capitalism and are becoming anti capitalist and anti an anti-free market and pro and pro socialist and that's seen for example in the latest elections in France and on the other hand what is happening is that there is a another site that is going to the other side of statism statism sorry which is very right-wing pro- free market Pro uh uh private property but very right-wing so it's being it's polarizing...what we are not seeing is uh is is people understanding that the problem is being created by the state”
Investors should invest in independent currencies and independent money to protect against government monetary destruction caused by debt accumulation and deficit spending.
“be on the other side take continue to invest in equities particularly in the United States particularly in disruptive and uh High added value sectors continue to invest in uh independent currencies and uh independent money that allows you to uh benefit from an environment that is not going to be solved through uh government deficits and government spending”
The US fiscal situation can be compared to driving 150 miles per hour and accelerating because you haven't crashed yet—a metaphor for how continued deficit spending despite no recession is irrational.
“imagine that you're driving I don't know 150 mil an hour down the highway and you think the following thing I have not killed myself yet let's accelerate the idea that nothing has happened yet and therefore you can continue to drive deficit spending higher for longer is insane”
The French political system offers only a choice between high debt (status quo), higher debt (pro-deficit center-left), or absolutely insane debt (left-wing coalition for more spending), meaning there is no political path to fiscal sustainability.
“in the political uh landscape in France you have basically one big party that wants uh to maintain government spending and maintain the high levels of Taxation you have one big party that wants more spending and lower taxes therefore higher deficits and higher debt and then you have a third uh large Coalition of left-wing parties that want even higher government spending therefore it's basically a choice between high debt higher debt or absolutely insane debt”
The traditional 60/40 equity-bond portfolio is broken because governments will not provide real returns in a fiscal nightmare scenario. Bonds are not going to save investors in an environment of volatility and correction, which is where gold plays a crucial role in maintaining a balanced portfolio that can generate returns over time
“we used to hear the the idea that you needed to have a balanced equity and bond portfolio well guess what governments are not going to give you real returns in this fiscal nightmare scenario so bonds are not going to save you Sovereign Bonds in particular in an environment of in which there may be some volatility and some correction and that's where gold plays a huge part in terms of having a balanced portfolio”
A Greece-sized crisis in 2011 was manageable compared to a France-sized crisis, which would be impossible to bail out. France is roughly 12 times larger than Greece economically (~$3 trillion), making a French debt crisis an existential threat to the eurozone
“France 12 times as large... it's very hard to ring fence that kind of debt if there it were to be a problem”
Deficit reduction must be done decisively and quickly (within the first 100 days of administration) rather than gradually, because gradual approaches fail; if deficit reduction does not occur in the first 100 days, it faces a 'dead ceiling' problem by June and becomes politically impossible.
“my recommendation is to do what we have seen in Argentina and we have seen in so many other countries which is to do it decisively and quickly if you do it gradually it's not going to work...you need to be aggressive and it needs to happen with in the first 100 days of of the of the administration because if it doesn't happen in the first 100 days of the administration by June you have a dead sealing problem”
Argentina's approach of aggressive, decisive budget cuts has been proven to work, and the Trump administration may implement similar rapid cuts in spending inefficiencies in the first 100 days.
“the way to really cut has been proven in Argentina by mle and maybe proven by the department of govern government efficiency in the United States which is to cut a lot of those things that uh so that headline macro analysts basically just just don't care because you basically look at very at trillion figures no so you start cutting million 10 million 11 million 100 million uh pieces of of of of unnecessary spending you're going to immediately reduce the deficit very very quickly”
Germany may escape recession with 0.5–0.7% growth in 2025, but growth will come primarily from government spending and base effects from 2024 inflation, not from productive recovery.
“Germany May Escape recession with a growth of 0.5 0.7% in 2025 but it's going to come mostly from government spendings and the uh base effect of uh the inflation the inflation uh of 2024”
Oil is particularly cautious on a medium-term basis due to weak manufacturing demand, though natural gas and aluminum/copper show seasonal strength in January-June from clean tech and renewables investments.
“I'm I'm particularly cautious on oil uh medium-term I'm more bullish obviously because of the of the seasonality with with uh natural gas but uh and with aluminum and copper you have to take the trends from basically January to J to June that may give you a good trend of growth both in those in those prices coming from electric vehicles coming from Renewables”
The US is likely the only developed economy attempting deficit reduction, while most other governments globally are choosing 'print and monetize' strategies to disguise government imbalances, making the US-Rest of World policy divergence a key driver of future performance differences
“we may be hearing we may be discussing the possibility of the United States reducing its deficit and reducing its tremendous fiscal problem that's not going to happen anywhere else everywhere else the policy is print and monetize print and continue to uh disguise government government imbalances”
Significant earnings downgrades are likely for the large-cap tech companies that have driven S&P 500 and NASDAQ gains in 2024, as government spending moderates and the Russell 2000 (domestic-focused smaller companies) begins to outperform
“it's very likely that we will see some significant earnings downgrades in those uh very aggressive multiple expansion names that have driven the S&P b500 and the NASDAQ the tech companies the the the not the Magnificent Seven because they're not seven anymore but the Magnificent four”
The UK will likely enter recession in the second half of 2025 because 'the latest budget and the economic uncertainty that is surrounding uh the the private sector with higher taxes and more and more government spending is likely to hurt the economy quite a bit into the second half.'
“in terms of the UK I we believe it's going to be entering into a recession in the second half it'll catch up a little bit in the first in the first half of the year but but the the latest budget and the economic uncertainty that is surrounding uh the the private sector with higher taxes and more and more government spending is likely to hurt the economy quite a bit into the second half”
With 'policies that have been announced the government deficit can go down from the current insane level of two trillion to 1 trillion in two years and if at the same time economic growth is accelerated the deficit to GDP can be brought down very quickly' through 'cut spending increase growth and uh and the effect of tariffs if they are implemented.'
“with the policies that have been announced the government deficit can go down from the current insane level of two trillion to 1 trillion in two years and if at the same time economic growth is accelerated the deficit to GDP can be brought down very quickly... what you have is cut spending increase growth and uh and the effect of tariffs if they are implemented”
Laal is cautious on oil medium-term but more bullish on natural gas and specific commodities (aluminum, copper) where trends from January-June show growth from electric vehicles and renewable energy investment displacement from fossil fuels
“I'm I'm particularly cautious on oil uh medium-term I'm more bullish obviously because of the of the seasonality with with uh natural gas but uh and with aluminum and copper you have to take the trends from basically January to J to June that may give you a good trend of growth both in those in those prices coming from electric vehicles coming from Renewables”