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https://x.com/DaveHcontrarian
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Hunter argues we are in the final parabolic stage of a 42-year secular bull market that will culminate in an S&P target of 7500 by year-end or Q1, followed by an 80% bear market and global bust in 2025, driven by Fed easing, falling rates, and a weak dollar that will fuel commodities to historic highs in the subsequent inflation cycle.
- Market has already rallied 68% in S&P and 84% in NASDAQ from Oct 2022 lows, establishing the melt-up foundation
- Falling rates from 4.09% toward 2.5-3% will drive equities higher while the bond market (not Fed) dictates the ultimate direction
- Post-bust inflation cycle with massive money printing will drive gold to $20k, silver to $500, and oil to $500 by early next decade
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People do not understand that commodities move in a jagged, stair-step process with pullbacks along the way; Hunter's bearish oil call is not wrong despite recent bounces—the pattern of lower lows is still in place.
“we're in we're in the bare Market in oil it's been down since 130 and you know in the spring of 2022 when uh Russia went into Ukraine it spiked to one 30 from 85 it's been working its way down ever since so and people don't seem to understand these things all move in in a jagged form you know it's a stairstep process you're G to have moves down and then you get to move back up and people always want you are always asking me are you done with your bear call you know do you think now you finally you got you got this wrong I said I don't get this wrong it's it's what to expected”
The 'wall of worry' created by nervous investors with one foot out the door is a source of fuel that keeps the market moving higher because they fear missing the move.
“we still have an awful lot of people who have one foot out the the door uh they they they see the momentum and they feel like they have to be part of it but they're nervous as hell... I think that wall of worry is a source of fuel to keep this thing going”
The bond market is more reliable than individual Fed officials or the FOMC for determining future rate direction because the bond market aggregates all relevant factors—economic data, inflation, supply/demand, treasury issuance—into a collective market-clearing price.
“I really pay much more attention to the bond market yeah than what the FED does in any given meeting because the FED follows the bond market not not precisely”
Gold is primarily a monetary metal sensitive to dollar strength, world events, and inflation fears, while silver is more cyclical with real industrial demand (solar panels, EV, etc.) and serves as 'poor man's gold' for accessibility reasons.
“gold is obviously more of a monetary medal you know... silver on the other hand has real uh much more real cyclical um exposure to you know uh solar panel markets and EV... silver has that other component which is it is Poor Man's gold”
The stock market, like the bond market, is good at predicting correctly over time when you look back; the market predicted the lack of a recession and that earnings would improve—not perfectly, but through law of large numbers tends to get things roughly right over time, despite having cycles that go one direction and correct back.
“when we're making calls on the stock market it's the stock market is pretty good at you know when you look back you go who would have thought the market would have would have gone up from 3500 to 5900 in two years...the market in its aggregate predicted correctly that we didn't have a recession the economy held together Better Than People expected earnings turned around and have been better”
PE multiples are inverse to interest rates and have been the driver of the 40-year secular bull market; multiples expanded from single digits in the early 1980s (when rates were high double-digit) to 25-30x (when rates approached zero in 2020), and will reverse post-bust as rates rise.
“PE multiples are the inverse of rates you know they move inversely to interest rates so that's really what drilled the last 40 years is we had interest rates go from high double digit in the early 80s down to you know almost you know below 1% in 2020 so you had P multiples go from single digits to 25 or 30 um and that's you know we're gonna have the reverse of that post bust because it's going to be huge inflation cycle”
China's oil demand has been declining due to both structural factors (EV penetration, reduction in heavy industry) and cyclical weakness (economic slowdown related to real estate problems).
“China is a dominant player in the oil markets and just didn't have the demand and that's you know I to my credit I I wasn't focused on China so much but globally I said there's there's a lot more oil in the world versus Supply versus um demand than people are giving uh accountant to”
Silver will outpace gold in bull markets and the gold-to-silver ratio should decline from ~90 currently toward 40, indicating silver's outperformance.
“in a bull market you want to be probably more heavily weighted in silver uh and... the gold silver ratio which was up around 90 you know year ago or whenever um should get down towards 40”
Alternative energy sources like wind and solar cannot replace fossil fuel demand in the near term, and nuclear power must be part of the energy solution despite being controversial.
“I think nuclear has to be part of the answer you know it's I've been pretty vocal in saying which is part of my $500 oil call is it's nice to talk about Alternative Energy but we're nowhere near being able to replace fossil fuels in terms of what we're going to need”
The yen carry trade unwind was not anticipated despite being widely discussed because the reversal happened suddenly in a vacuum of liquidity, forcing immediate margin calls on leveraged positions before others had time to work out of their trades.
“You miss it because you didn't anticipate when it actually happened when the end reversed It reversed in such a violent way because it was in a vacuum that immediately made those carry trades very expensive”
Nuclear technology has progressed to the point where smaller nuclear plants can be deployed quickly; regulations will likely improve under Trump, allowing nuclear deployment on a timely basis, supporting future energy supply.
“the fortunate thing is the technology has progressed to the point where it'll be not the big you know 20year projects but rather the you know the the smaller nuclear plants that they can you know they've got the technology they've got I think the regulation's gonna particularly under Trump is goingon to improve uh TimeWise so that you can actually put those thing in on a timely basis”
Inflation is in very good order right now and moving towards the Fed's target, and deflation is more likely next year than inflation despite the Fed's 50 basis point cut.
“I continue to be I'm I know there's narrative out there that's opposite to this but I continue to believe inflation's in very good order right now moving towards the fed's Target and that's not going to change in fact I think next year we're going to see deflation ultimately”
The Fed is currently behind the curve, not ahead; the Fed is not printing money and is still shrinking the balance sheet; and rates are behind what the yield curve tells them they should be by over 100 basis points.
“I've been saying this I think the fed's behind the curve they're not ahead of the curve they're not they're not printing too they're not printing any money you know they're shrinking the balance sheet still uh and rates are behind um what the yield curve tells them they should be by quite a bit by over 100 basic points”
Recent economic strength is somewhat of a 'facade' with cracks showing underneath, particularly in labor data which is not as strong as headline numbers suggest, setting up conditions for a slowdown into recession or weakness that will be initially misinterpreted as bullish by the market.
“it's gonna be tricky because you know if we're up if we're up on stilts it's you know people aren't stupid out there if they see the signs of things are getting bad it won't be up on stilts but I think initially weaker economy slow because I'm I'm still in the camp that says the recent strength is kind of a facade that basically yes we're getting El lasan and consumer and things but there are cracks showing underneath and the labor isn't as strong as those numbers indicate”
Interest rates (10-year) backing up from 3.60% to 4.09-4.10% was a normal correction within a larger bull market in bonds, not the start of a new bear market in bonds.
“I don't you I'm not going for that hook I really think that's a a correction in a bull market in bonds um”
A stock market drop of 80% (from 7500 to ~1500) during the bust still leaves equities short of previous cycle peaks, meaning a cyclical bull market from the 1500 lows might reach 4500-5000, far below the 7500 melt-up peak but respectable for a cyclical move.
“if the market drops if stock market drops 80% so let's say you know um I used to it was easier math when the S&P my target was 7,000 I'd say you can go down 80% that's 1400 but from 7500 let's say it's 1500 I don't know what it is um you can triple that number and be it 4,500 or 5,000 um and still be way short of that 7500 cycle Peak this year”
Earnings are still in pretty good shape and the economy has defied logic by remaining reasonably strong despite the amount of tightening that was done, likely still producing a 3% GDP growth number.
“I'm seeing clearly the earnings are still in pretty good shape the economies uh defied logic in terms of all the tightening that was done and yet it's still reasonably strong you're probably still going to get a 3% GDP number”
The U.S. is producing significant volumes of oil despite the Biden Administration's policies, and OPEC cannot sustain production cuts indefinitely because they need revenue.
“we're producing a lot of oil in this country in spite of it being in the Biden Administration you know yes Trump would be producing more but we're producing quite a bit”
The S&P 500 is up 68% and the NASDAQ is up 84% from the October 2022 lows, representing a melt-up in the market.
“we're up um the S&P is up 68% and the the NASDAQ 84% I think to the highs um from the October 22 lows”
The melt-up seemed crazy for two years, and people fought Hunter's call until now when it's approaching reality; similarly, the bust will seem impossible until it arrives suddenly, so investors should not expect the bust to be obvious before it happens.
“people just have to remember the the Melt up seemed crazy at the time too and people you know fought it and fought it and fought it until now now people were throwing around the term melt up but you know for two years they really thought I was crazy...the bust you know people want to be able to see it they you know they think now they're starting to question you know isn't it possible you're dead wrong on the bus I yeah certainly possible but I'm my conviction so high that that's where we're headed but don't expect that it's going to be obvious that you know you as a retail investor or even you as an Institutional Investor um not you but anybody um you know that it's if it were obvious we'd be we'd be acting on that now so it it's not going to be obvious for a while yet don't don't use that as the sign that it's we're not going to have one because it'll all of a sudden show up um but I think we've still uh between now and the balance of this year for sure um plenty of room for this thing to run”
The erratic behavior in bond market pricing of Fed futures—jumping from 29% probability of 50bp cut to essentially 0%—is driven by traders reacting to data points without a coherent macro framework, not by fundamental changes in the policy outlook.
“the erratic is due to the the behavior of the Traders I mean they're moving they frankly they don't have a clue you know they're they're reacting to every data point”
Crude oil is in a bear market that will continue toward 60, possibly into the 50s by year-end, before eventually reaching 30 in the bust, based on supply/demand fundamentals rather than geopolitical disruption risk.
“as you know I've been the bear on the street for oil and you know I'm still looking for 60 and I actually think there's a decent chance we see something in the 50s uh before the end of this year”
During the bust, gold will outperform equities (80% bear market decline) while only falling 35-40%, making gold the superior asset if forced to choose between equities and metals during the crisis.
“the biggest time I mean gold Will silver probably get hit much harder than gold in the bus so gold gold will outpace equities during the bust if if if I'm calling for an 80% bare Market in the stock market in the US Stock Market and I say gold could drop back 35 to 40% obviously that's a a much better place to be than equities”
The Fed fund rate was close to 5.5%, the long bond was at 4% or below, and the 10-year was at 3.60%, so when the Fed looked at policy, it was clearly too restrictive regardless of strong jobs numbers, because the policy was restrictive and the economy is not as strong as the jobs numbers suggest.
“the FED fund rate was close to five and a half you know five and three it's five and a half um the the long Bond was down at 4% or below and the 10 year was down at you know 360 so so so when they looked at their policy they said we're clearly too restrictive you know no matter what anybody thinks about the the strong jobs number or not the policy was restrictive”
The Chinese market rally was largely driven by short covering and FOMO rather than fundamental stimulus, similar to the Japanese carry trade unwind, and does not represent a sustainable bull market in Chinese equities.
“what we saw in China was a big part of it was short covering I mean you know people were so it it was in a bigger way akin to um the Japanese carry trade... everybody was betting on you know the the the Yen had been falling for years... and when it happened it happened in the vacuum and went up fast”
Metals and equities will move up together during the melt-up (not down together as conventional wisdom suggests), driven primarily by a weak dollar and falling real interest rates.
“I've been pretty consistently saying for the last year or two that I felt the medals and the equity Market would move up together and I and people would take me a task on my bearish oil call because I go oil and gold always go up together I go no they don't always go up together”
When market participants use the language 'Goldilocks' (earnings rising, rates falling, inflation under control, Fed managed perfectly) this signals proximity to the top of the melt-up.
“when when you hear people saying it's Goldilocks and you've got you know earnings are moving up interest rates are moving down inflation's under control the FED did the right the manage this perfectly those are the pieces of the narrative that I think will tell you you're getting close to the end”
The nervousness in markets causes most people to say there's something out there that doesn't feel good, but Hunter, as a contrarian, has conviction that as long as everybody is nervous, he is fine—this is part of his natural contrarian orientation.
“the nervousness that causes most people to say there's something out there it doesn't feel good is is the same thing that causes me to have conviction and say is as long as everybody's nervous I'm fine so I think part of it is just the natural contrarian in me I don't get Shook Up by the street going you know completely in that direction”
China's stimulus provides a temporary boost to global liquidity by turning on the taps, but Hunter does not view China as initiating a long bull market; rather, China will likely rally along with the rest of the world as the melt-up finishes out the current cycle, but is a minor contributor compared to the structural dynamics driving the melt-up.
“China in its own you know kind of it's own picture I don't I don't see it as a long bull market but I do see it as probably rallying along with the rest of the world as we finish out this this cycle um and I don't you know their liquidity obviously helps Global liquidity the fact that they've turned on the the Taps a bit now helps Global liquidity um but I think this thing basically the seeds were swn for this melt up and China's you know a minor minor help to that”
The next stage of the market will be a parabolic final stage to this 42-year secular bull market, with the S&P targeting 7500 potentially within the next 2.5 months by year-end.
“I think the next stage will be a what I call parabolic final stage to this market so I think we're coming to the end of a 42-year secular bull market thing I've talked about with you many times”
Future energy demand will spike dramatically post-bust due to massive money printing, reshoring of manufacturing, and re-industrialization, creating a supply deficit that oil prices will reflect.
“if you have what I fully ECT which is a a goosing up of the next cycle as we print money like we've never printed before... you know Global bust if we see 20 trillion in in new money in this country... you're you're gonna Goose demand like you've never seen because it's also coinciding with us reshoring and starting to go more industrial again Etc the demand for oil is going to go through the roof”
Housing data will show weakness early next year as recent buyers who 'jumped the gun' on declining rates exhaust demand, inventory builds, and prices slip despite the fact that rates will decline further.
“there won't be more buying power behind that because those that want to buy now are kind of jumping the gun now and soon after this it's going to be you know there's more inventory there's not another wave of buyers and all of a sudden the house prices start slipping I think that will be one of the early signs that you know next year is not going to be what this year was”
Treasury bonds and treasury securities of any maturity will be the best assets during the bust because of government guarantee and the Fed's printing press, making them safe havens despite the eventual long-term bankruptcy of the government.
“if if I'm looking for a 0 10% in the bust and let's say it gets to 250 before the bust that's still a big run up in the treasuries between 250 to zero um and short rates will go below zero probably the long Bond will probably get down to a quarter or a half so you got that will be one asset that will not only not be going down but will be going um up while everything's falling apart”
The Fed is trying to be steady-as-she-goes, not jump around with markets or data, and is looking at trends and the overall picture to ease policy without jumping around in big steps; Hunter expects either a 25bps or 50bps cut at the November meeting, with both possibilities equally valid.
“I think it's going to be um pretty they're they and I think Paul's been saying this for a while they're trying to Be Steady As She Goes...I so I don't know whe it's going to be 25 or 50 I don't think there's gonna be anything outside those two”
A pullback of 3% in the S&P to around 5700 would not be surprising, but this would not signal a reversal and would be short-lived before the real parabolic move upward begins.
“I certainly think there's a setup here where I could make the case that we might see a 3% pullback so you know back down to uh certainly 5700 wouldn't surprise me but I don't think we're setting up for a big reversal here”
Interest rates will fall from current levels (409-410 on 10-year) toward 3.25%, possibly even 3%, and ultimately toward 2.5% on the 10-year before the melt-up is complete.
“I think we're bottoming in the bond market and and Topping in rates here we had a backup from 360 back to you know almost 410 you know 409... I think the next move I think is going to take interest rates down to three and a quarter maybe even three% and ultimately as I've said uh before we before we get through the Melt up we could see two and a half on the 10 year”
China will eventually face a deeper economic bottom in 2025, with both its real estate and equity markets likely to decline further despite the near-term stimulus relief, as the structural problems have not been solved.
“I will say because you know I am looking for a global bus next year there's no doubt in my mind China's going to play a role in that there's no doubt in my mind that China real estate's going to play a role that so I don't think it's over I don't think they're out of the woods”
Gold raised from a previous target of 3000 to a new pre-bust target of 3400, expected in the first quarter, based on technical consolidation and bullish setup.
“I had a $3,000 Target what I call pre-bus Target meaning before next year's Global bust um and probably a first quarter you know probably happened in the first quarter I had a 3,000 Target and when when gold was starting to push up against um that you know it been kind of consolidating in 24500 area um around there I I said I'm raising my target so my new Target is 3,400”
During the bust, the dollar will initially rally to 120 as investors flee to safety, but this will be temporary before resuming the longer-term decline.
“in the guts of the bust the dollar can rally back to 120 you know people are going to flee to safety you know around the world the dollar will still get that flight safety trade”
Economic deterioration data (ISM, retail sales, housing) accelerating to the downside between now and early next year will be the primary signals that the transition from melt-up to bust is underway.
“the numbers to start really accelerating to the downside whether it be you know ISM numbers retail sales um housing because I think homes are kind of getting a last to Rob because those that felt they missed it are getting a reprieve because rates are coming down mortgage rates are coming down”
People asked Hunter if gold and oil always move together, but he disagreed and said they would decouple; his prediction proved correct as metals and equities rallied while oil fell.
“people would take me a task on my bearish oil call because I go oil and gold always go up together I go no they don't always go up together and they're not going to go up together and they obviously hav”
The Fed's 50 basis point cut was driven by Austin Goolsbee's recognition that a quarter point cut wouldn't bring policy in line with what the market and the numbers were telling them needed to happen.
“the Fed was getting criticized for not cutting in in um August or July um so the 50 I don't think they were trying to make up for that but I I do think that really was driven and I had said this way you know well before the meeting that I felt just based on I think Austin gby is probably the guy I list think has a handle on it's better than anybody and he had made it very clear he he said you know a quarter Point's not going to get us anywhere near where we should be in line with you know what the Market's telling us we should be or what the numbers are telling”
The 78 oil high was higher than Hunter would have expected, but the spike was not surprising due to Middle East events; his bear call on oil remains intact and barring major events, oil should work back down.
“so did it go farther sure because of what's going on in in the Middle East um and I would have not been surprised by 75 78 is a little higher than I would have expected but I'm not surprised by it at all because of you know the big the big things going on in the Middle East but I I think barring a big event over there um I think you're you're on your way back down”
Oil hit a low of 65 in September and a high of 78.48 on October 8; that move from 65 to 78 was entirely based on Middle East scare and not supply/demand fundamentals.
“crude oil had a pretty wild move...it hit a low of 65 in September and then it hit a high of 7848 on the 8th of October...that move from 65 to 78 was entirely based on the Middle East and entirely a scare it wasn't based on sply and demand”
Wall Street strategists are beginning to raise their S&P targets, with some now talking about 6000 targets that Hunter had been alone in advocating for two years ago, signaling institutional capitulation to the bull case.
“right now as I say um people are starting to ra you know just looking at Wall Street strategies for example they're starting to raise targets you know you've you've seen a couple 6,000 numbers out there lately I was the only one for two years I mean people thought I was crazy but now you're start as you getting closer to it you're starting to see the numbers raise”
Given that the Yen has backed off for the past two months following the initial carry trade unwind, most traders have now had the chance to exit their positions; those who haven't exited by now likely won't, meaning the majority of the carry trade has been reversed.
“the end the end backed off you know we've had the end back off for the last basically two months um so you know those that had the luxury of time have been able to work out of their trade...the odds are that if you didn't do it in the last two months when you've given been given a second chance um I don't know what you were waiting for so the odds are that the majority of that carry trade's been reversed”
Hunter has been following the Federal Reserve for 50 years and claims high confidence in his ability to analyze and predict Fed policy relative to professional traders and commentators.
“I think it's fair I think I also really resonate with your point just on the the skittishness because that's that's what I've been kind of sensing from things is kind of it feels like everybody's waiting for the shoe to drop... I've been I've been following the FED for 50 years I'll put my ability to read the fed and and understand monetary policy against anybody”
The upcoming election is probably the most important election in modern U.S. history, with stark choices between a capitalistic free market direction versus a New World Order/left-wing agenda that could result in court packing and loss of the constitution.
“we're two weeks out from an election that in my opinion is probably the most important election in this country's history... the choices here are Stark and we either go in a Direction Where We kind of begin to take back and get back to a capitalistic free market economy”
Gold has been hovering near highs around 2712 (the interview date context suggests this is current), with the melt-up in gold driven by weak dollar expectations.
“Gold's been hovering near highs...it's it's h around 2712”
Hunter's fourth-quarter letter is available by subscription; interested parties can DM him on X/Twitter to inquire about subscription details.
“I just put out my my fourth quarter letter last week um and...that is a letter that I send out to subscribers so it's by subscription there's a cost to it if people have interest yeah they can just direct message me on X or Twitter whatever you want to call it and uh um I'll be glad to give details”