Knock-On Effects Could Make This Worse Than The Dot-Com Bust | David Rosenberg

0:00When you need to build up your team to handle the growing chaos at work, use Indeed Sponsored Jobs. It gives your job post the boost it needs to be seen and helps reach people with the right skills, certifications, and more. Spend less time searching and more time actually interviewing candidates who check all your boxes. Listeners of this show will get a $75 sponsor job credit at Indeed.com slash podcast. That's Indeed.com slash podcast, terms and conditions apply. Need a hiring hero? This is a job for Indeed Sponsored Jobs. Chronic Migraine, 15 or more headache days a month, each lasting four hours or more, can make me feel like a spectator in my own life. Botox, on a botch-alignum toxin A, prevents headaches and adults with chronic migraine. It's not for those with 14 or fewer headache days a month. It's the number one prescribed branded chronic migraine preventive treatment. Prescription Botox is injected by your doctor. Effects of Botox may spread hours to weeks after injection causing serious symptoms. Alerture doctor right away is difficulty swallowing, speaking, breathing, eye problems or muscle weakness can be signs of a life-threatening condition.

1:00Patients with these conditions before injection are at highest risk. Side effects may include allergic reactions, neck and injection site pain, fatigue and headache. Alertive reactions can include rash, welts, asthma symptoms, and dizziness. Don't receive Botox if there's a skin infection. Tell your doctor your medical history, muscle or nerve conditions, including ALS Lugeric's disease, myasthenia-gravis, or Lambert Eaton syndrome, and medications, including botch-alignum toxins, as these may increase the risk of serious side effects. Why wait? Ask your doctor, visit BotoxCronicMigraine.com or call 1-800-44 Botox to learn more. My big concern is that there's going to be all sorts of knock-on effects that could make this actually worse than what we saw in the early 2000s. Because outside of health care and consumer staples, all these other sectors are correlated with that one trade. So where are you going to hide? Welcome to Thoughtful Money. I'm Thoughtful Money Founder in your host.

2:02Welcome you for a very exciting discussion with one of the best highly respected economists and award-winning market researchers. I'm talking, of course, about David Rosenberg. David has been really at the top of the list since his days in Merrill Lynch, but that's obviously continued on in his firm Rosenberg Research that he's been running for many, many years. We're going to talk with David about his overall macro and market outlook, because it's been a while since he's been on the channel. But then he's also going to tell us about a new fund that he is launching. I'll leave all the details of that to David. David, thanks so much for joining us today. Great to be back on with you, Adam. All right. So I asked my audience for which questions they'd like to hear you most address. And of course, I got hundreds. So I'll try to sift the best of them. But if we can, let's just start. It's a question I haven't actually asked on this channel in a while. But since it's been a while since you've been on David and so much has changed in the first half of this year, what's your general assessment right now of the economy and the

3:08financial markets? Okay. Well, as far as the economy is concerned, I have a completely different view than what Kevin Morche dished out to us at Jackson Hole last week. I don't see the economy as being resilient or solid or healthy. I am seeing that we are in the midst of what I would term growth turned down that, you know, we have moved out of what was once a 3% growth economy to something closer to two. And now I believe that once we get the third quarter numbers, we're going to have a four quarter trailing trend and real GDP of one and a half percent. Now that's not a recession. But I could tell you that when I started in the business in the mid 1980s as a desk economist

4:10on a trading floor, when you got to a one handle on GDP growth, people would be asking me what comes next or we're heading into recession. So growth is slowing. I don't see the case for re-exceleration, especially because a lot of the fiscal props behind the economy are now in the rear view mirror. And when I'm taking a look at the breadth, you know, it's interesting that Kevin Worsh likes to talk about the breadth of inflation and the percent that's above 3%. But when you take a look at the growth of real GDP and you strip it out, it's really a two pronged sources support. There's more fragility beneath the veneer that I think is commonly believed. You have the AI data center construction boom and that's providing about half the growth

5:13in the economy. And then the other half is the equity wealth effect on spending, especially at the high end. And you can see that in the precipitous decline in the past year and the personal savings rate. If consumer spending in real terms had actually matched what disposable income has done, there would be no growth in consumer spending in the past year. But because of the fact that people feel wealthier and are spending money not against income but against their 401Ks, consumer spending is growing a bit above 2%. But it would be zero if people were just compelled to spend against their incomes. And I think that's worth noting because it talks to the quality of whatever growth we have in the economy. Bottom line is that absent the equity wealth effect on spending, especially in the high end, and absent this AI spending boom, which has actually sapped a lot of vitality out

6:18of the rest of the economy. I think that in his Jackson Hole, Warsh mentioned the AI boom eight times. And he mentioned housing just once as if housing doesn't matter or the rest of the economy doesn't matter. But the other half of business spending that is not tech related is actually flat year of year, even as tech spending in real terms is up 16%. Well, just mention that because in my professional life, it's 40 years, I don't remember a time when I've seen so many extremes and imbalances and divergences, not just in the data, but also in the markets. So I've been talked about that before. It's still an extremely concentrated stock market. There's no doubt that corporate earnings have been robust. Again, I would talk to the quality of those earnings because what's coming out of AI,

7:20there's so much cross ownership and circular financing. And a lot of the growth in those earnings are actually coming from market to market stock market gains from one company to the next. Even if you strip that out, earnings roll is still double digits. I'm not going to quibble about that. But I think that the biggest hand wind for the equity market is going to be what the bond market is doing. The fact that the interest of gone up means that your discounted cash flows in terms of future expectations should be adjusted lower. And so while you could argue that the SB 500 is still not far off record highs, it has started to splutter. And all the technical strategies aren't talking about good breadth anymore. The breadth indicators have started to fade away. So I think the stock market is going to face several hurdles. And it's not just the elevated oil price, but also the fact that real interest rates have

8:25taken on a big head of steam here. And there is a time-worn correlation between real interest rates and the fair value P multiple. So yes, earnings are holding in. The question for the stock market is that with this re-rating of real interest rates, how far does that compress the multiple? Because basis point for basis point, the move in the P multiple was far more powerful for equity valuations than earnings growth. So that's going to be the big question. And the real rate in the bond market ultimately hits the P multiple with the lag. But that's going to be the big challenge for the equity market, filling expectations of the S&P moving to 8,000 or higher by the end of the year. All right, David. Well, interview done. You answered all the questions that I had coming in. Now, that was a wonderful overview. And you've given me a lot to pull on here. Why don't I start with the current AI boom that's going on here?

9:30You flag two things. And I think we're really important. One, it really does seem to be the access that is most driving what's happening in the markets right now, but also highly influential to economic growth too. And so presumably if something happens that starts to basically either reduce confidence in AI earnings going forward or just the cat that's spending starts slowing down, those seem to be two factors that can really hit both the financial markets and the economy at the same time. So first off, let me get your reaction to that. Well, let's say Mugs game to sit here and talk about how earnings are going to disappoint in the broad AI and hyperscaler area because all these companies have continued to impress

10:33and beat their estimates. All right. But you talked about the quality of those estimates. Well, that's good as folks think. That's 100% true. And look, the reality is that if you notice, and you look, for example, at the MEC 7, it's just been a rollercoaster ride. They've done almost nothing over the past six months. So that might be starting to get priced in. And while credit spreads have remained tight, the dichotomy is that credit default swaps have been rising for many of these firms. And of course, especially for Oracle, which had been the poster child for this. The one thing I would guide people to is what is the one non-tech stock that has become the feeder and leading indicator because they're selling so much of their equipment into

11:37the data construction boom has been caterpillar. Caterpillar has become a surrogate. And I would say a leading indicator. And its stock is down more than 25% over the past few months. So what's that telling us? I just posed that as a question. The reality is just as we said, with the internet, and they call it a .com bubble in the late 1990s, but it was really a broad technology and telecom bubble. And it was real. And it was a game changer in all our lives in terms of future productivity growth and so on and so forth. But nobody wanted to call it a bubble back then. In the late 1990s, if you called it a tech bubble, you reviewed as a lulletite. And I lived through that. But now we don't mind calling it.

12:37People call it a .com bubble after the fact. Just like I wasn't allowed to call it a housing bubble when I was at Merrill back in 06 and 07, but I was allowed to call it a mania. But you see, bubble was too harsh to turn. But we don't know. Everybody talks about the housing bubble in that last cycle that ultimately triggered the great recession. So once again, if you call this a bubble, you know, your view to as a relic and you know what we're talking about. But the bubble is not really in the technology. This is a genera AI. It is a game changer. The bubble is in our behavior and the extreme emotions of fear and greed. So that's where the bubble is. The bubble is in how we are valuing this new technology in the future. Like if you want to back out at this stage with the hundreds of billions turning into trillions

13:39of capital investment in this area and you do the math for you to actually generate a decent future return, revenues are going to have to balloon. 50% a year for the next half decade, which I think is going to be extremely difficult to do. So there's a lot of just a lot of price stand from where I sit right now. And that's really where the bubble is. The bubble is not in the technology. That's real. The bubble is in how expectations become just a little too excessive. I would just maybe take the little out and say too excessive. So you go back to that period of the internet and a lot of these companies that had their share prices whacked 60-80% and you can include Cisco and Microsoft. Amazon was down by 95%.

14:40Yeah, those companies had business models. They were still intact. But yet the markets are not the economy. Their first question was about GDP in the markets. The SBA 500 is not GDP. Because I said before, what really moves is the market multiple. The market multiple is a degree of abulliance and enthusiasm and confidence that investors have over the future. And I think that when you go back, actually almost a year now on October 14th of 2025, Jamie Diamond actually said for the record that we have entered into a stock market bubble. But he went on to say that in bubbles, you can still have another 20% upside. And he's right when you look at this historical data, it doesn't mean the game is over. It just means that you're in extra innings.

15:42But that's important for people to know in terms of the stock market is that we're not in the third inning, we're not in the sixth inning, we're not even in the ninth inning, we're in extra innings, which means that we are on for a time. And since he made that comment, which was basically almost 11 months ago, I think the S&P is up 16-17%. So tip of the hat. But it does mean that in this ballgame of extra innings, we're probably getting even more stretch right now. That's my view. But if I'm going to be in the stock market, which I am, I would be thematic, idea-driven, I'd be mindful of the beta and the sharp ratio and the degree of cyclicality, better safe than sorry at this stage of the cycle, especially when you have a cape multiple of around 40. You know, we have a situation where the equity risk premium is negative. Looking at 2.5% earnings yield against a 3% real yield in long bond, when the ERP goes negative, it's the stock markets we have telling you that equities are no longer as an asset

16:45class, a risky asset class. It's now in the bucket of riskless asset classes. I'm not going to throw heavy markets, which is legendary work on modern portfolio theory into the waste paper basket just yet. But that's just, you know, my big concern is really where expectations are, you know, when everybody is all in on the stock market, you're taking a look at household balance sheets from the fifth floor funds. I mean, 73% of the household financial asset mixes and equities. Yeah. And I believe that's higher the older the cohort is, which is crazy. Well, yeah, well, you know, in say in my cohort, well, my cohort is, it's never been the size over 60%. And my cohort, you should be de-risking, but that's not happening. Nobody has rebalanced in this bull market. Nobody has rebalanced. Nobody's taken profits. Nobody has diversified. Diversification has become a dirty 15 letter word.

17:47Sentiment, you look at marketing sentiment that around 78, never been that high. You look at portfolio manager cash ratios or down to almost 1%. Never been that low. And when I talk about the extremists, the imbalances, we didn't even see this back in the late 1990s. And the one thing I'll just say is that, you know, when people talk about the technical analysts that have been talking about the market broadening out, but that's because almost every sector of the S&B 500 has become correlated with the AI trade. And we've talked about Caterpillar before. Who was talking about old economy industrials during, you know, the technology wave of the late 1990s, late 1990s, the only sectors correlated with technology were media and telecom. Today, when you look at the S&B 500 and you look at the correlations during this AI boom, and I say that started in the fall of 2022, only two sectors are not correlated with this trade and self-care and staples. And dust shrills are highly correlated, financials are highly correlated, consumer discretionary

18:50is highly correlated, utilities are highly correlated. So when people talk about that the breadth is improving in the stock market, I say we'll hold on. It's really everything is converging on one trade, which is gender of AI. And it goes to show that if this thing does reverse, it's going to have much broader impacts on the stock market than even what happened when we had the tech meltdown back in the early 2000s. Right. So we'll hop up by a second, but I just got to imagine that this makes you nervous. Right. As a guy who saw the pain that the dot comable caused in those sectors to think about something that could be much more widespread in terms of a correction, I got to imagine kind of kind of makes you nervous. But also to, you know, nothing's noble for certain about the future, but you talked about how interest rates are going to bring down higher interest rates with a lag or going to bring down the general market PE ratio. But when it comes to these AI stocks, I'm just curious, we could potentially have a situation

19:54where the E starts to come down there, and exestimates start to come down because of this quality of earnings that you were talking about, right? Maybe analysts begin to realize, hey, there's a little bit of, you know, deceptive. It's trickle to finance it. Yeah. There's just trickery in here and we get to put some discount on that. And then if to your point about, you know, corporate America is basically going to have to make revenues at 50% a year, incrementally new revenues of AI, 50% a year for the next half decade or so. We're not seeing that materialize yet. Maybe it'll materialize, but if it doesn't, they're going to start bringing down the PE as well. So in your gut feeling, one hold you to this. How worried if it all are you of a, of a, um, 2027, where both the E come down and the PE come down? Yeah, both the earnings estimates come down and the multiple compresses.

20:56And I think there's a very good chance that's going to happen. I would have no problem formulating that as a base case. I'm only nervous. I'm not nervous for myself and I'm not nervous for you, but I'm nervous for all the people out there. And when you consider that over half the market now, it is in, is an index investing at passive investing. Most people don't even know what they own, but they own the S and P 500. They own the, uh, the only the most concentrated S and P 500 of all time. And that's what I mean that they're not diversified at all. They're just buying, they was just buying the market, they're buying the S and P 500. And, um, and we know in 40% more concentrated in tech stock and in 10 stocks and eight of those 10 stocks are in one trade. You know, the, the, the correlations in people's portfolio is incredible.

21:58My big concern is that there's going to be elsewhere. It's a knock on effects that could make this actually worse than what we saw in the early 2000s because everything outside of healthcare and consumer staples, all these other sectors are correlated with that one trade. So where are you going to hide? Well, I guess you'll hide in healthcare and consumer staples. You're probably getting now that you have a, a real yield at the long end of the curve of 3% of course, nobody wants duration right now. Uh, but you have roughly 2 and a half percent real yield in the tenure. Uh, I'd say that's a source of comfort. But bonds will be a place to hide. Bonds are tremendously under owned. You know, and I mentioned before that 73% of the household financial asset mix are in stocks, only 7% are in bonds. And you know as well as I do that bonds are just a detested asset class right now. Uh, and, um, not been a good place to be.

22:59Uh, but then again, you know, bonds weren't a good place to be through 2023 and then all of a sudden by October November of that year, the run up and yield stopped, uh, stopped at 5% on the 10 year note. And then by the end of the year, it was down to almost 4%. The Serbs sign famously said, if anything can't last forever, it won't. And this run up and bond yields, I think, has offered people a refuge. Um, but it takes a lot of resolve and discipline, uh, to part your ways with all these stocks that have worked so well the past few years. Um, I always advise that people should rebalance, uh, and, um, be mindful of the degree of risk and reciprocality of their portfolio, especially because the economy is slowing down. Um, that falls on deaf ears. Uh, but I don't know if that's going to continue. I mean, there are places to invest money. I would suggest not buying the SPX, however, there's always thematics and ideas and themes

24:02you can run with. I think there's probably fewer now than there were a few years ago. Um, there are fewer places to hide, but there are places to hide. Um, but nobody's doing that right now. You look at the latest data, nobody's doing that. Everybody is all in all the same time and everybody believes that they can time the exit once it's, once, uh, Jamie Diamond proves to be right that it's 20%, um, market advance that you get in the extra innings. Um, everybody thinks they'll be able to time the exit. Um, but nobody can ever do that effectively. And then you've got a situation, which is enough. It's also going to come down to liquidity, uh, because portfolio manager cash ratios are down almost 1%. What happens if you start getting a redemption cycle and then they're forced to sell. So, uh, I'm not going to say, I mean, I'm not nervous because I'm aware of what's going on, uh, and I'm positioned for it. Uh, I'm more worried about the people that aren't. And especially the, the baby boomers, um, that are also, um, out of balance in terms of

25:05what their portfolio mix should look like. When you need to build up your team to handle the growing chaos at work, use indeed sponsor jobs. It gives your job posts the boost it needs to be seen and helps reach people with the right skills, certifications and more, spend less time searching and more time actually interviewing candidates who check all your boxes. Members of this show will get a $75 sponsor job credit at indeed.com slash podcast. That's indeed.com slash podcast terms and conditions apply. Need a hiring hero? This is a job for indeed sponsor jobs. Chronic Migraine 15 or more headache days a month each lasting four hours or more can make me feel like a spectator in my own life. Botox, on a botch alignum toxin A prevents headaches and adults with chronic migraine. It's not for those with 14 or fewer headache days a month. That's the number one prescribed branded chronic migraine preventive treatment. Prescription Botox is injected by your doctor. Effects of Botox may spread hours to weeks after injection causing serious symptoms. Alerture doctor right away is difficulty swallowing, speaking, breathing, eye problems or muscle

26:05weakness can be signs of a life threatening condition. Patients with these conditions before injection are at highest risk. Side effects may include allergic reactions, neck and injection site pain, fatigue and headache. Alerture reactions can include rash, welts, asthma symptoms and dizziness. Don't receive Botox if there's a skin infection. Online your doctor, your medical history, muscle or nerve conditions, including ALS, Lugeric's disease, myasthenia, gravis or Lambert Eaton syndrome and medications, including botch alignum toxins as these may increase the risk of serious side effects. Why wait? Ask your doctor, visit Botox Chronic Migraine.com or call 1-800-444 Botox to learn more. Yeah, me neither. I get one. Give him the time. It's too high risk exposure right now, right? Well, you know, that's the pick of the python, you know, 80 million people and they're all in. All right, everybody is all in across the AIDS spectrum and that also has me worried because time is not on their side. Right. You know, I would tell my 30 year old son, you know, you could just buy, like, you know, you could buy the index or you could buy the global MSCI and just close your eyes.

27:09If you look at the long term, it's in chart, you know, just, you know, not everybody can write out at 20 to 30% bear market. The older you get, time's on your side to claw that back. And then what happens, of course, people have retired early because of their stock of wealth. But what happens when that stock of wealth because it moves in cycles, people think people think that people because we didn't get the recession, they were supposed to get in 2022 and 2023 and the feds tightening and hurting the yield curve and the yield curve version didn't work. That's because we had a massive positive shock coming out of COVID, which was this $2 trillion in stimulus checks. That's the big advantage. That was the energizer bunny that kept on giving. And that's, that's in the rearview mirror right now. But people believe that because we didn't get the recession that was supposed to get that the business cycle has been repealed, I hear that all the time.

28:11And people believe that with a negative ERP, depending on how you measure it, that it makes perfect sense that equities would be viewed as being a riskless asset class. Because how long has it been since we've had a real bear market? Well, you got to go back practically to the great financial crisis. Nobody believes that's going to happen again. So that's when I talk about the bubble. The bubble is in, as it always is, it's in psychology. And it's the psychology that drives the multiple. I do think there's another element here, which we're seeing. We've seen every bubble in the past, which is the excess capacity, the over investment. And we're seeing that right now. Now the investment is so huge that it's not funded off corporate balance sheets anymore and cash flow streams has been funded out of leverage and being funded out of these companies going to the debt market in, in long dated maturities and multiple currencies. That's one of the reasons why real rates have backed up is because now you've got the

29:11corporate sector competing with the government sector for funds. But you see, that has not gone effects. You would say, well, you know, all this leverage and the borrowing is going into AI spending, which is great for the economy. But it's driving interest rates up, which is horrible for the more credit sensitive sectors of the economy. Nobody talks about housing. How is any of this good for the housing sector? And the housing sector has powerful multiplier impacts. The housing sector was what got us into that mess back in 2007, 2008, 2009. Nobody talks about the housing market kept morseling about the housing market. But how does this bond induced run up and mortgage rates play into a sector that's already been dilapidated? But nobody talks about that. And the people say, well, it's such a tiny share of the economy. Yes, but it has very powerful multiplier impacts throughout the economy. As we saw, as we saw in real time, back in 2008, 2009. So you're asking me about what's on my worry list? Well, I'm not a worry list.

30:12It's just an observation that I tend to focus on things that people ignore. And not only is this spending and borrowing craze related to AI, sapping vitality over the rest of the corporate sector, which again, nobody talks about. You know, Kevin Moore-Shagged didn't talk about the fact, yes, AI is in a boom. But guess what? The rest of the corporate spending is flat year-rear. I tell that to people that I have to show them the data to prove it. But I am. And then when you look at the beige book that just came out from the Fed, the commentary on the housing market is not good. It is not good. And that historically has been a leading indicator for the economy. And that is an antidote to what's happening with AI. But that's been one of the changes. You know, people talk about this back up in rates and it's been hit the 40 trillion debt. And it's all about deficits and debts. But I mean, we knew about the deficit and debts back in late February, you know, when

31:12the 10 year note yield was below 4%. So you had a lot of people that like to fit the narrative into the price action. There's several reasons why nominal yields are backed up. But a lot of it is the new chapter in the AI spending craze, which is now it is being leveraged. That's when you start talking about this, not just being a bubble in enthusiasm, but also a bubble in the investment part of this. But it's because it's being financed in the debt markets. That's something that's relatively new compared to where we were four or five months ago. And one of the reasons why rates have been backing up, remember rates backing up, we're going to have knock on effects and other parts of the economy. We're seeing the early signs of that already. So many questions. So one of the questions I was going to ask you was what are the main factors in your

32:13mind that are driving up interest rates? You've already just mentioned a couple. You mentioned the crowning out of government debt by all this new AI corporate debt. So then you mentioned some of the speculation that's going on. Are there any other major factors driving up long term interest rates that we should talk about here? Maybe high oil prices, anything else? No, it's not. If it was high oil prices, you'd be seeing the tip break evens, the market-based inflation expectations driving up the normal yields. That's not been a factor. You can argue that real rates of our star has gone up because of this sudden burst of boring activity from the hyperscalers. But the elephant in the room is the fed.

33:15Elephant in the room is the fed. You know that two thirds of the backup in 10-year treasury yields in the past several months have happened on three days. I'll tell you the three days. June 17th, July 29th and August 28th. What are those three dates having common? Those are the three days where Kevin Morsh opened his mouth. So two thirds of the backup in yields happened on three days. And I think that what has really changed since the summer is we have a new fed chairman. We had Powell who was neutral to say dovish. And then we had Worsh taking over and who we thought that was going to play ball with Trump and that he was dovish. And of course, he talked about back then, which he doesn't talk about now is the Dallas

34:17Feds trimming PCE deflator, which is running at 2.3%. And he was not just talking about AI, but also the productivity benefits that are going to be an inflation crusher. He doesn't talk about that aspect of it anymore. He's turned hawkish. And now you have three dissenters who wanted to raise rates at the July meeting. So I mean, if you're going to go in the past several months and price in two rate cuts and then go price in two rate hikes, what do you think the 10 years going to do? Yeah, that's worth probably about 60 basis points on the 10 year note. We're up about 80 basis points. So three quarters of the increase has actually come from the reset of fed expectations. Because the cost of carry is probably the most influential determinant of yields out to curve. So when we were below 4% back in February on the 10 year note.

35:24So the debt wasn't 40 trillion. It was 39 trillion. I mean, really is that the story? That's the story people like to tell. The market was priced for fed easing and our price for fed tightening. And at this Jackson hole, he added more fuel to that fire. So most of this increases come from the fed rhetoric. Now we'll see what happens. We'll get a non-front payroll number. We'll get another CPI number, although he's already said, but amazingly, that he wasn't impressed with the last few inflation reports, which were actually pretty benign. And the bond market rallied on those PC deflator and CPI numbers that were benign because they believed that the fed was going to like those numbers. And now basically Powell says, well, no, we actually were looking through them. So that's been the big surprise for the bond market has been the ton, the shifting

36:26tone of the fed. And not just that you have three dissenters, but that you had the new fed chairman come out and deliberately sound hawkish. It doesn't mean that a rate hike on the 17th is baked in the cake. It doesn't mean it's baked in the cake. But he had the opportunity to either reinforce those expectations or dampen them and he chose to reinforce them. And that's the story behind the bond market sell off. When you need to build up your team to handle the growing chaos at work, use Indeed Sponsored Jobs. It gives your job post the boost it needs to be seen and helps reach people with the right skills, certifications, and more. Spend less time searching and more time actually interviewing candidates who check all your boxes. Listeners of this show will get a $75 sponsor job credit at ande.com slash podcast. That's indeed.com slash podcast terms and conditions apply. Need a hiring hero? This is a job for Indeed Sponsored Jobs. Botox Mygrain 15 or more headache days a month, each lasting four hours or more, can make

37:29me feel like a spectator in my own life. Botox On a botchalineum toxin A prevents headaches and adults with chronic migraine. It's not for those with 14 or fewer headache days a month. It's the number one prescribed branded chronic migraine preventive treatment. Prescription Botox is injected by your doctor. Effects of Botox may spread hours to weeks after injection causing serious symptoms. Alerture doctor right away is difficulty swallowing, speaking, breathing, eye problems or muscle weakness can be signs of a life threatening condition. Patients with these conditions before injection are at highest risk. Side effects may include allergic reactions, neck and injection site pain, fatigue and headache. Alerture reactions can include rash, welts, asthma symptoms and dizziness. Don't receive Botox if there's a skin infection. Tell your doctor your medical history, muscle or nerve conditions, including ALS Lugeric's disease, Myasthenia Gravis or Lambert Eaton Syndrome, and medications, including botchalineum toxins, as these may increase the risk of serious side effects. Why wait? Dr. Visit Botox Chronic Migraine.com or call 1-800-44 Botox to learn more. So Worsh has also said that he's trying to change the Fed so that it's not so interventionary

38:36and is distorting the market signal. He's trying to let the market signal purify and use that as a very important indicator to resulting Fed action, which you can interpret as, hey, we're going to be a lot less ready to ride to the rescue when markets start getting heartburn here. A, do you think that's a good thing? B, do you think that's also part of the dyspepsia that the current bond market has? Because they're fearing they don't have their, you know, swift rescuer running into the fray going forward? Well, I actually don't have a problem with changing the Fed's communication. I think that too many Fed officials speak and to me that's a distraction.

39:37But then again, I don't think that Powell, sorry, Worsh has any control over what a Fed bank president is going to be doing on CNBC or doing on a panel, but I do think that the Fed over communicates. I think the dog plots, I agree with them, have overstayed their welcome. But if you're going to reduce your communications, which I'm fine with, you've got to be clear. That's why he bungled, you know, that late July meeting. He basically, I mean, other people thought he was soft on inflation. He just basically kept on saying we're going to get to 2% target, but didn't explain how that's going to happen or how that's going to happen with the Fed raising rates. He didn't want to say anything. He didn't answer the questions from the press gallery. Then at the last, then at Jackson Hole, I found again, he talked a lot. Like for somebody who doesn't want to give guidance, and that's what he started off talking

40:39about, you know, but he gave guidance. But what sort of guidance you're giving? Like basically, you're just going to blanket statement that over half of the components of the PC deflator are running over 3% year-of-year. But he doesn't explain why that's a meaningful statistic. He just sort of says it throws it out there, almost say, you know, this is a hawk as statistic, but doesn't explain. He didn't tell us why that's important. Why is it important, you know, that over half the components? Does it really matter if the bag of peanuts is going up more than 3% at the same time that new and used cars are going down? You're going to treat all these components the same when they have different weightings. So you know, you're sophisticated investor and you're looking at what's the, he introduces this statistic, doesn't explain what it's meaning is and seems to just throw it out there

41:41as a reason to sound hawkish. So it's how what are you communicating? But like basically it's, I still find them very confusing and when you're confused, you're not going to be opting to buy duration, okay? He talks about his preferred economic indicator is, you know, is is is is private final sales, which he says in real terms is running at 3% and he's not looking at GDP. So what's he telling us that he's going to strip out the government sector, he's going to strip out inventory investment and most importantly, he is going to strip out the foreign trade sector. So I'm trying to explain to you like why this makes no sense because you can't have your cake and eat it too because most of the AI spending boom requires imports of inputs from abroad.

42:41So how can you exclude imports? Part of that trade from that calculation, which is what this favorite economic indicator does. So he's going to include AI, but not include the fact that much of this is important. And that leaves me scratching my head like basically that does not instill confidence that he really knows what's going on with the economy. And the fact that he said that he's focused on commodity markets for inflation, which has actually a very weak spillover to final consumer inflation. You don't go to the you don't go to the supermarket and buy a bag of wheat and you don't go to the home improvement store and say, you know, where do you keep your pound of copper? It's a elevated commodity prices, which does have an impact on inflation, but it's people don't realize we're a service sector economy. The impact on final inflation is actually rather muted, but labor costs, nothing is more

43:46important than that. And he said actually he doesn't believe wages are reliable indicator of inflation. And I'm there thinking like, okay, he's basically taking economics 101 and turning it upside down. So, you know, you talk about communication. I do believe the dot plots, I agree with them on the dot plots, I agree with them on the forecast. We live with that for decades before Bernanke brought them in in 2011. But if you're going to be curbing your communications, you got, you know, words matter. You've got to be able to say something that's cogent and coherent. I'll tell you who did that with the 11 or you didn't love them, the my stroll, the serial bubble blower, I don't care. I thought that actually Greenspan was a very great communicator. And back in those days, you didn't have fat speak like you do right now.

44:48He didn't have the dot plots. I don't want to go back to that era. But although you had to study Greenspan very hard and, you know, he used a lot of terminology that you need at the Soros. But if you read, if you go back and read the history of his testimonies and his speeches, they were deep. And he didn't really, you know, I mean, did he offer guidance? The markets don't need to have their handheld. The more, worse seems to think that the markets need their handheld, they don't need their handheld. They need to know what you're thinking. You got it, you know, as a head of the central bank, you got to say what it is you're thinking, okay? And you don't have to go into what we're going to do with the next meeting. And he didn't do that. He didn't actually say this is what we're going to do with the next meeting. But he did give guidance. I just think that a lot of the things that he's discussing from an economic standpoint,

45:52keeping in mind that he's not an economist, didn't make any sense to me. You know, at least when Powell came up with this, remember the before Powell, we didn't have the Powell Supercore inflation measure. Remember Supercore? Supercore. People still look at it. Well, why did he bring that up? He brought that up basically during that period when wages were accelerating, we're getting a wage price spiral. It was during that inflation bulge. And he wanted to gauge what the pressures were in the labor market. He actually tied the Supercore to the mismatch between supply and demand in the leisure hospitality industry and sickle those services. And I always thought, well, that's a very elegant way of taking one metric out of the inflation data and mapping it out to what your concern is, which is the labor supply demand mismatch. Okay. I don't know. I mean, you tell me what's elegant about the share of prices over half of the prices are going up more than 3%.

46:53I would have rather than maybe if people would have said that we've done analysis on this, this is a terrific indicator of future inflation. This is, well, but he didn't say that. And actually, it's not a reliable indicator of future inflation, but he throws it out there. So my only, I guess, the only thing I'll say is that if you're going to be communicating and you don't want to sell the farm and give anything away, if you're going to talk about what's on your mind, if you have it, make sense, have it make sense. I just didn't find that a lot of what he said made economic sense. I frankly, I can't, I know I watched Bloomberg TV, I watched CNBC and everybody just gave him a pass on this. But as an economist, most of what he said didn't make any sense to me. And so I think that's one of the reasons is that we still have a very, I think there's a lot of confusion, a lot of confusion. People think that he's, people think actually, look at what Fed futures did.

47:55We went from pricing in what, like 30% of odds of a rate I can in the middle of the month to like 60%. They doubled. Well, they, so he's not going to give guidance at him. But yeah, whatever he's, whatever was he said, managed to double expectations of the moving rates higher in mid September. So now people think that he's boxed in. I'm not so sure. You can see that that they don't raise rates and he might not be able to sway. You know, don't forget, he's got to get with him. He's got to get seven votes, right? I don't think that even with the three de centers, he's got those seven votes. Let's say they don't raise rates. People think he's bought himself and you see, he's got himself in a bit of a hot water because people think he's got to raise rates now. And he didn't say he was going to, but you see, it was his communication. That's what he chose to talk about that caused markets to price in 60% chance that they will. Now, if he doesn't, he's going to get accused of being soft on inflation and he, he,

48:56he, he boxed himself in and that's going to further affect his credibility. Okay. I don't think they're going to raise rates. But the fact that he, what he chose to talk about caused the markets to price that in. And then if he doesn't raise rates, it's going to create even more confusion. So I think he's been actually pretty, he's getting his feet wet. But I think as, you know, for somebody who's so bent on communication, his style in terms of what he chooses to talk about, I think that needs, that needs work. Okay. I'd so love to keep pulling on the string for you, but I'm looking at the time here. We're going to about 12 minutes left. Can we flip to lightning round for a few questions here? Yeah. Yeah. Okay. Great. So it's just sticking on bonds real quickly. So, you know, you have been favoring bonds for the past couple of years. You mentioned some of the reasons why maybe the bond market didn't, didn't react a way

50:02that you thought it was going to because of some of the past interventions and stuff in COVID. Sounds like from what you said earlier, you're, you're, you know, giving increasingly confident and correct me if that's the wrong term to use, that bonds are going to start having their day in the sun and that interest rates interest rates, sorry, bond yields and bond yield expectations are going to start coming down. What do you think the primary drivers for that will be? A reset of Fed expectations the other way. Okay. I said before that most of the thrown up in yields has come down to the shift in Fed expectations. Yeah. We don't have to complicate it. I don't think the Fed is going to be raising rates. I think that lead to a bull's steeper. I think that I'm not going to talk so much about the best intervention, but just remember on November the 4th, we're going to get the Treasury funding announcement and they're probably going to do a different form of operation twist on the issuance side and move more

51:04towards the front end of the curve and bills and away from the longer end of the curve. And just remember the last time they did that was in the November 2023 Treasury funding announcement where they did the exact same thing. And the next thing, the 10 year node in the matter of three months is down to 100 basis points. So I don't think that the best interest intervention in terms of buybacks is the big deal. I think he was trying to hope that just the announcement itself would show people that they're onto it and that they want to cap this thing. No, the big deal is going to be exact. Go take a look what happened in early November of it was right around the time that 10 year Treasury yield speak to 5%. And look at what happened to the Treasury funding. That's going to be a very big deal. Nobody talks about it. You know what people talk about? They talk about the fact that this buyback operation ends November the 4th and everybody says, well, the midterms are November the 3rd. So this is all political. No. We could have, and so I'll tell you right now, in the lead up to November the 4th, I'll

52:07probably be buying more bonds. Because I think the Treasury funding is what nobody is talking about. But that's going to I think have a very powerful impact. The fact has a big impact what it wants to in terms of being a buyer of bonds and people tend to forget that the Treasury has a very big impact because it is the issue of bonds and it can choose. And they have the flexibility because right now the average maturity on outstanding federal debt is 60 months. Right now it's 60 months and historically it's been 71 months. So they have the latitude to pull a really big surprise, positive surprise for the bond market. Nobody's talking about it. I have been in my daily's by the way. But I think that'll be a very important event. And it's going to happen around the time I think that people will reset the Fed to not raise rates. And that'll be a very big deal. I'm not going to say we're going to go back to pricing in two. So I'm not saying the 10 year goes back to where it wasn't February below 4%. But do I think we can get a 50 basis point rally in the 10 year note from where we are

53:07today? Absolutely. Okay. So you like duration here then? Well, you know, I'm put it this way. And in my model portfolio, we have 10 year notes and we have two year notes. I don't have the long bond. But like I said, a 3% really yield is a real comfy cushion. So I'm thinking about it. Okay. All right. So. All right. Let me get the media sandwich and a few other questions. I want to squeak in. So from a portfolio allocation standpoint. Talk about bonds. We talked about healthcare and consumer staples not being correlated to the AI trade. As you look forward towards the end of this year and going into 2027, what do you like and what do you really want to avoid?

54:08Well, I want to avoid, I am avoiding financials. I'm avoiding consumer discretionary. I am not participating in this AI trade. I think that you want to have a really global footprint in your portfolio. So in so far and I do own equities by the way, this big, bad bear. I am in the equity market. But where in the equity market am I? So exposure to parts of Asia. I happen to like Japan quite a bit. I happen to like Europe quite a bit. I like Europe a lot because they have fiscal tailwinds. Now that the fiscal shenanigans are over in the United States and we're going to be getting gridlock after November 3rd, that's going to be a source of economic growth that is in the review mirror. But it's staring us in the face in Europe. Valuations are much better. Equity risk premium is much better. And they have economic tailwinds in Europe right now. Take a look at the city group economic surprise index in Europe.

55:13It's like a four year high. And in the US, it's bordering on a six month low. And so Europe looks very good to me. And by the way, it's a very well diversified index. You just buy the European index. It doesn't have a lot of AI exposure. It's very well balanced. And so that's a market. That's a region that I like. I don't believe in zero. I don't believe in 100. Everything's shade of gray. There's no black and white. I'm not zero percent equities. I don't want people to get the wrong idea. It's where you want to be invested globally. And I could tell you something else that's on our radar screen right now is Brazil, which is having a very good year. And emerging markets. This is not your fathers or grandfather's emerging markets. So we are a long emerging market equities. We're being very mindful about not having too much exposure to Taiwan and Korea because they're part and parcel of this whole AI trade. But Japan looks good to us. India looks good to us. Brazil looks good to us. We like the emerging markets. And in the advanced markets, we like Europe.

56:14So there you go. You can put money to work. But I am not long the S&P 500. But within the S&P 500, what are the things that I like? I like hard assets. So I said before, I'm a disinflationist. And it didn't mean to dismiss the commodity market comment from Kevin Morse because I'm bullish on commodities. I do think there's inflation in commodities. I get more nervous if I saw inflation in the services because that's the bigger chunk of the CPI and the PC deflator. So I'm a disinflationist in services. But I'm a bull on commodities. So we have oil. We have pipelines. We have energy infrastructure. We have rare earth space metals. This is all in the Rosy model portfolio, which is on our website. So a good chunk of this portfolio in terms of equity exposure is in the commodity sector. And you'll say, well, you're telling us to mind the cyclicality. No, this is actually, this is not, this is as far as there's anything buying hold.

57:17It is the base material space. This is not a trade. This is not a trade. And we don't have consumer staples because we think that they will be hit by the fact that food prices are going up globally, but we do have a lot of exposure to health care. OK. So, but you go on the website, check out the Rosy model portfolio and you'll see what I'm talking about. And I'd say that whatever you're doing, as I'm doing, be mindful of the beta. And my portfolio is a .4 beta to the S&P.7 to the 6040. And a 1.1 sharp ratio. So I like it with position. Now, if, and I have hedges in there, if things go bad in the stock market, there's enough because I have fixed income in there as well. And I don't expect that if we get a big drawdown in the US or a big drawdown in the AI trade that is necessary and have a huge impact on health care, which has no correlation.

58:17I think the base metals trade or the, I should say, the commodity trade is going to be with us for several years to come. And look at the future supply demand curves. We're going to be in deficit in the basic material sector, probably speaking for some time to come. Now, that should be bullish for Canada as well. The problem with Canada, if you're going to the Canadian market is that there's as much a concentration in financials as there is in technology in the US. When you need to build up your team to handle the growing chaos at work, use Indeed Sponsored Jobs. It gives your job post the boost it needs to be seen and helps reach people with the right skills, certifications, and more. Spend less time searching and more time actually interviewing candidates who check all your boxes. Listeners of this show will get a $75 sponsor job credit at andd.com slash podcast. That's indeed.com slash podcast, terms and conditions apply. Need a hiring hero? This is a job for Indeed Sponsored Jobs. Chronic Migraine, 15 or more headache days a month, each lasting four hours or more, can make me feel like a spectator in my own life.

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1:00:20research in. So one of the questions that readers were asking me to ask you is, when was the last time you were bullish, Dave? Sounds like you're quite bullish on commodities, fixed income, some of these markets outside of the US. So you're not a total bear. You've got some bullish horns and a few... It's very interesting because when you focus on things that other people don't focus on, like you focus on tail risks, you try in your career to keep people out of trouble and to be responsible and investing and not to do it blindly. Your view is a bear. No, I'm actually an ideas guy. In the Rosemondle portfolio, at Rosemond Research, we put our ideas and themes from our research and we express it in a portfolio which is a bunch of ETFs.

1:01:20Right now, actually, when you look at it, it's 55% equities. I guess because it's not in the S&P 500, which is all people focus on, then you must be who does a bear. Now, I choose to express whatever bullishness I have in the stock market in other parts of the world. I have a global hat. I have 2300 clients in 40 countries and our research mirrors that diversity. And so does our investment philosophy? So yes, yes, you're right. With a negative ERP and a massively concentrated stock market, I am not really heavily involved in the United States. Should I apologize for that? But the call me a bear. When was the last time I was bullish? I've had this portfolio for three and a half years and it's up 60%. I have an owned one AI stock and it's a low to medium risk portfolio. It's up 60%. And it's not correlated with GDP and it's not correlated with the S&P 500.

1:02:24It's 100% correlated with our themes and ideas and the research coming out of me and my firm. So I push back gently against that one last time you were bullish because I go back three and a half years when I started this portfolio, I had to be bullish on something because how was really up 60%? I was bullish on Asia. I was bullish on aerospace defense. I was bullish on gold and silver and the miners. I was bullish on healthcare. I don't know. Does that make me bearish because I wasn't involved in the speculative AI trade? Really? Because I didn't own Bitcoin. I must be a bear. I mean, come on. All right, well, look, this is great transition to the last question, which is you have a new publicly traded fund coming out. What can you tell folks about that? Well, what I can say is that I've teamed up with a ETF provider.

1:03:26They're the portfolio manager on the fund, Corton Capital, CORTON. You can go to their website. And the Rosie model portfolio was not a fund. It was a Rosie model portfolio with a single unit holder called David Rosenberg. But I showcased it on the website so that people could see that this radical permabere can actually make you money. And so what's happened is that I've teamed up with Corton Capital. It's really, it's their fund, although the ticker is ROSY. And they'll be managing the fund. They're the portfolio manager. Keep in mind all this time, I was doing this myself. Now I get to team up with portfolio managers. It's going to add us so much more heft. And what they're going to be doing is they're going to be taking my research and expressing it in this new ETF. And there's going to be a Canadian dollar version, a US dollar version.

1:04:27It's going to be listed on September the 9th. The ticker is going to be ROSY. And it will be listed initially on the TSX. And so taking this whole philosophy of David Rosenberg putting his money where his mouth is to a new and higher level. This is actually, I never entertained the notion that I would ever be doing something like this. But my own clients were telling me, you know, why don't you just get your ROSY model portfolio and and list it. But I'm not a portfolio manager. I'm not registered. But I found a registrant that I've teamed up with. And my economic research and ideas are going to be the principle formation as to how they're going to be constructing this new ETF. OK, well, I think the ticker is spot on. And it's going to launch September 9th. If people want to learn more about it in the interim, is there a place they can go?

1:05:34Yeah, I think if they want to go to the Rosenberg research website, there will be a landing page that will then direct you to Cortón Capital. Or you can just Google Cortón Capital, the rent Toronto. These are really smart guys. I've got an old them in the past year. I mean, I interviewed dozens of ETF providers. But basically, you know, they are going to rent the brain of me and my team. They really think that the research, they've been following me for years. My research is investable. They love the Rosenberg model portfolio. And what I get from them is I get their platform. They're the ones that will be responsible for the client service, the compliance. They because they are registered, they are portfolio managers. So I get to basically be connected to their platform and they get to be connected in a very special way to my brain trust. It would be a great symbiotic relationship. They'll be a landing page on our website that will take you then because they're going to be doing the client service.

1:06:40Okay, because it's really their fund. And you could just say that the fund is really predicated on our research. And they're going to have access to me that nobody else does. But they're going to be the ones handling the client service aspect of it. So you can either go on their website. And they have client service people there and portfolio managers. They'll be the ones that you want to talk to in terms of setting it and in and up. And and we'll have a. On our website, we'll have a way that will redirect people to to their website because that's really how it's going to go. Okay, great. So sounds like folks, you know, either go to Dave's website and get redirected there or just go to Corton Capital's website. And you know, I'll do focuses. I'll have links in the description below this video. So you can just get there with one click. David, fantastic discussion as always. Again, thank you for being so generous as to what how you're sort of general portfolio allocation is breaking down right now.

1:07:46I've been kind of questions. We didn't get a chance to get to. So we'll just have to get to them the next time you come on the channel. Let's make it a lot sooner. Sounds good to me. All right. Well, now's the time in the channel. We're bringing the lead partners from New Harbor Financial, one of the endorsed financial advisory firms by Thoughtful Money. As usual, I'm joined by senior partners Mike Preston and John Lodra. Gentlemen, thank you for joining us this week. And I'm sure you'll want to say about what. What Dave Rosenberg just said there. I'm guessing there's going to be a fair amount of commonalities between his approach and yours. But let's see, let's start with you, John. What were some of your key takeaways? Hi, Adam. Great to be with you and always, always great to hear Rosie's comments. He's one of the fairly few voices that Mike and I have listened to throughout our career. He's been around for a long time. He's had a, you know, illustrious career. I think any objective observer would say. So we really appreciate his viewpoints. I'm very glad he was given the opportunity to make the very valid point that he,

1:08:50I think unfairly has been labeled a permabare because seems like anytime anybody takes a realist view of markets and where we are in the cycle of things, they get labeled a permabare. And I'm very glad that he was able to not only talk about that, but demonstrate, you know, very, very pointedly that he's not out of the markets. He's selective and in certain areas of the markets that is in all just about AI. So I'm really glad to hear that. You know, we're, we're here at New Harbor, are not macro economists. So that's why we value the, the, the points of folks like Rosie, you know, we're obviously investment technicians and tacticians on behalf of our clients who are real people who have saved a lot of money and need that money to be there for them. They don't get to do over. So we don't have that too deep in, you know, we don't have a particular kind of body of research of our own. That's on the macro at economic. I want to call out a couple of things that Rosie talked about, certainly as it relates. Obviously, we've made the point as you have many times at him

1:09:51that the markets in the economy are not one and the same. They're two different beasts. You know, you can have a great economy, a bad market and vice versa. So we were, we were very much keenly aware of that and the work we do for our clients. You know, he described the market being in extra endings. We absolutely agree with that. You know, we are by any measure of valuations or sentiment or participation. We are in late innings of histories, any guide and like Rosie pointed out, that doesn't mean things stop here. In fact, we're, we're nearly about as invested as he is. He's talked, he's mentioned that he's about 55% in equities right now. We're about 50 and we'll get into our portfolio and our take on markets a bit later. But, you know, we have a lot of common overlap with what he, he's in. You know, we've been heavily invested, relatively speaking. You know, certainly we're not S, you know, S&P 500 investors. We're, we're global investors as well. And we've had a very notable allocation to non-US equities, including emerging markets many of the ones he talked about.

1:10:52We've had a heavy focus on real assets, which he has as well. We, we'll talk about commodities and precious metals a bit later. Point being, there's been plenty of areas that have been very proper places to be without being heavily in the AI trade or the S&P 500. Talked about the bond market. You know, I think that's one area that look, we're not, we have, we have not been bond bulls. We're still not bond bulls. But there is a degree of a detestment in, in, in the bond market that we have rarely have ever seen in our careers anyways. And, you know, that, that is notable. And Rosie talked about that. You know, the bonds aren't, aren't a place to be absolutely avoided. Obviously, be careful about bonds right here and now. Right now, our, we have about 32% of our portfolio and what you might call fixed income. But to be clear, we're very short dated. The average duration, excuse the technical term or duration.

1:11:54It's a more useful term than maturity when you're talking about fixed income investments. The average duration of our fixed income portfolio right now is five years. We're, we're shorter duration than even the, you know, aggregate bond index. Even though we do have about a seven and a half percent position in longer term treasuries, the overall allocation, which is very heavily weighted towards treasury bills and short into the curve, including some non-US, non-dollar denominator foreign bonds, is again, about five, five years. So we're, we're by no means bond bulls, but we don't think it deserves nearly the a version that we're seeing every day in the conversations we're having with clients. And, you know, it's amazing how, how negative the sentiment is towards bonds at a time on the sentiment towards the stock market almost has never been more rosy. And let me see what else I want to talk about here. I like that. Was that a deliberate play on words? Yeah, exactly. I was just kind of a comment about that. Mine's well throw rosy and other bone there, but too bad he couldn't get his ticker symbol

1:12:56to have what five letters there to his full name. But you know, I talked about the Fed messaging being really confusing. Yeah, we agree. It's great. Just today, I think one of the Fed governors Waller came out and said that he'd be in favor of sit and tighten rates. It's like, you know, it's a circus show. I think, I think, you know, more tried to come in here and say a new sheriff in town. We're going to do away with, you know, messaging for guidance. We're going to let the market tell us. And then what happens? The Treasury Secretary comes out and basically says, we don't want the market to give a signal. We're going to go and do Treasury buy back. So it's a charade that, you know, obviously we got to cut through the market ultimately. What kind of tell us what to do there? But obviously, there's been pressure and yields, I think, in large part because of that. But those are some big, big picture of things. Obviously, we can die much deeper, but those are some big picture of things I want to call out. All right. Great. Mike, I'm going to toss over to you. Anything you would add to John's list there? Some of the key insights you took away from that discussion with David?

1:13:58I think you covered, you guys covered almost everything that's on my list here. You know, there was this just, I know you guys touched on this, but you know, Rosenberg said that the bubble really is an emotion, fear and greed and expectations have become really excessive. And there's the Cape P ratio, the cyclically adjusted P ratio is indeed up at 40. Now what's surprising to all of us and to David too, I think, is how long it can stay up there. He's really been there for almost 15 years, not the whole time up there, but every time it's come off a little bit in valuations, the market has been rescued right back. And that's caused the biggest inflation and assets, I think that we've seen in our lives. You know, and so he mentioned a couple of names, there are a couple of numbers that I thought were surprising. 73% of household assets are in stocks. I don't know, but that's probably an all-time high. That strikes me as a lot. Three quarters of all household assets are in stocks. Mentiment to sky high, no matter which way you look at it, cash balances of mutual fund

1:14:59managers are at all-time lows. But all of these things have been this way for years. That's the problem. People like David get labeled a permanent bear, maybe even people like us. But so we're all playing this game the best we can. The best way we know how to play the game is to have a reduced equity allocation. Know where we are in the game. We're in the late innings as you guys were talking about. Know how we're going to react if we get some downside surprises. We have levels that tell us that we're wrong. We have levels that will actually have us reducing stock exposure versus saying never, never sell or even worse by the dip this time. So we know where we are in the story, and we think that David does, too, the way that he's talking. Hey, Mike, can I put you on the spot here for a sec? Sure. I'm going to share this chart. Hopefully you can see it. I know you've seen this chart before. But this goes to your kind of late innings and Rosenberg's bubbles are really bubbles in emotions.

1:16:00So where would you put us on this chart right here? Well, this is a hard one because I thought years ago leading up into COVID that we were in the greed part. And what I found out is we got a little pullback like we did during COVID. Not that that was a little pullback. It was a 32% or so pullback in the S&P in the span of 17 days. But you can have multiple iterations of this. I believe, and there's no way to prove this mathematically, but I just, I believe based on my experience, our experience that we're in the very, very late part of this somewhere between greed and delusion. Personally, I think, I think that we have full-blown greed going on right now. That's why households are at such a high level, 73% money, mutual fund managers are all time lows. The cape is at 40. And that's with margin sky high. Margents have been higher in the last 15 years than ever before. Long-term margins, profit margins on the S&P are like 8%.

1:17:02Maybe. But we've been trending around or sitting around 11 or 12% for the last decade plus because of all of this deficit spending by the government. So what happens if margins revert back to 8% to God forbid 6%. So I think we're probably in that greed spot. If I had to guess, and we always do have to guess, not that we're trading from this perspective too much, but I think that we're still going to get a blow off top somewhere above 8500 in a short period of time on the S&P, which would bring us straight into delusion and maybe even new paradigm. Now, I wouldn't tell people to trade or try to trade that because it's going to be dangerous, even now, but this bubble is so big that I believe we have to have that. I believe we have to have an even more vertical move out of here to get into those last two stages. And the last point is those last two stages could last a month. We're not talking about years when things change, they can change quickly. When you need to build up your team to handle the growing chaos at work, use Indeed Sponsored

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1:19:04headache. Alerture reactions can include rash, welts, asthma symptoms and dizziness. Don't receive Botox if there's a skin infection. Tell your doctor your medical history, muscle or nerve conditions, including ALS Lugeric's disease, myasthenia-gravis or Lambert Eaton syndrome, and medications, including botulinum toxins, as these may increase the risk of serious side effects. Why wait? Ask your doctor, visit Botox Chronic Migraine.com or call 1-800-44 Botox to learn more. All right. I appreciate you, Killer Comin' thing, that without knowing that it was coming. All right. I might have interrupted you. Do you have any more of your points you wanted to add here? I don't think so. I think we can stop there and I'm sure we'll want to talk about some updates we meet in the portfolio on our take on markets and metals. Yeah, absolutely. So John, maybe I'll kick it back to you real quick, right before we turn the camera on here. You were telling me about a step that you guys just made. Do you want to share that with the audience?

1:20:05Yeah, sure. Adam, Rosie talked about technical analyst and we use technical work in a big part of what we do as well. And technical work to get through the jargon is just, you know, it's not fundamentally based. It's looking at price action, momentum, things like that. The market is telling us what is, not what should be, right? That's a simple take on what technical analysis is. And we have a pretty broad, multifaceted technical dashboard that we look at. And Rosie talked about even technical analysts now are talking about some erosion and breath. Much of the last couple of months, Adam, we were talking with you about our indicators, you know, very strongly. In fact, you know, stronger than we've seen in recent years, in concert showing a widening of breath, you know, widening across market capitalizations, you know, small caps we're starting to pick up momentum. And many years of not, you know, kind of broadening out across sectors, you know, certain sectors that have been laggards for a long time started to participate in things like financials and healthcare. Rosie talked about healthcare.

1:21:06That's one sector that has been quite relative strength, you know, positive in the last handful of months. And we've got exposure there as well. So we've seen this broadening out and that was very, in a vacuum, very healthy despite this backdrop of crazy valuations and, you know, over over bullish sentiment. But we have seen a notable reduct, you know, weakening in that, in that those battery indicators, nothing that screams like fire alarm. But enough that we felt that it was prudent to, and so much so subtle that we didn't want to reduce our equity exposure. We're still 50% in total. We'll talk a little bit about the sectors we have. But we did add some hedges, some, some insurance protection, if you will. We have a video, what are called put options. We bought some put options on the S&P 500 index. You know, our, again, our equity allocation right now in our core tactical model is 50%. We bought put options that, that if the S&P drops below 7200, and I'll pull up a chart here just to kind of give you a picture of that.

1:22:07Let me pull that up. So this is a chart of the S&P 500, the daily chart, you can see we're right around 7700. This dotted line is at 7200. If the S&P dropped, be dropped, be below 7200, those put options will kick in and take effectively about 20% equity exposure off the table. Equity is measured by the S&P 500. So a modest but notable adding up some defense here. That insurance protection, it's all relative depending on where you set this, this strike price that I speak and how far you go out. The ones we put on go out through October, mid October, and at the portfolio level that cost our clients, it's time we established two days ago we did this. It was about 12 basis points of cost at the portfolio level. So really almost negligible from a cost standpoint at a portfolio level. And one reason for the chiefness, relative, chiefness of those hedges is that the volatility

1:23:11index, what VIXX is one way to measure this, is at very low levels. If I zoom out here and look at a long term, we're down around 15. This is all else being equal. One of the biggest indicators or drivers of the cost of option protection is the implied volatility of the market. And with it being in relatively low levels, that kind of insurance is kind of cheap, if you will. Now, we'll be just as prone to take those hedges off if we see a reversal in some of our indicators. But for now, we're very comfortable with having some of these hedges in place. I'll just pause there Adam, see if that bites questions. Yeah, so not so much questions, but I just want to reiterate for folks. One of the things that thoughtful money advises investors is to always be focused on risk management. And it's a very important part about building and protecting your wealth over time.

1:24:14And it's something that a lot of regular investors aren't really well educated in. And this is one of the reasons why we have these financial advisors come on the channel here to kind of show you what they do. And especially when there's a change in their outlook, how they're sort of hedging that change. And the new harbor, you guys are extremely well experienced in using a lot of tools this way, but certainly options. So one, I just want to underscore folks, you know, if risk management hasn't been at the forefront of your mind and your portfolio of late, you really should bump it up there. But John, you said something else too, which is that right now, the ability to purchase downside hedges is really, really affordable. So, you know, again, I always think people should always have some sort of protection on in their portfolios at pretty much all times. But given kind of the extremes that we're at that first David talked about and then Mike

1:25:17talked about with the chart there, it seems almost criminally negligent to me to not have some sort of measures that you're taking to protect against downside risk because it's at the extremes where the risk levels become their highest. So, you're not saying, I'm saying all this, John, but I just want to, again, know for folks here. It's a very good time to put on downside hedges and of course you have to know how to do them well. But one, because of the stretch nature of things, but two, as you said, the one that you just put on, it almost cost your clients nothing. Yeah. I mean, I think Rosie shared some genuine concern for folks that are, you know, he talked about the pervasiveness of index-based investing. That's nothing new. We all know that's been a trend that has increased over the years. But we likewise have concerns for folks. We get the privilege of seeing a lot of folks' investment positioning that aren't clients

1:26:18of ours. Some common things we see is a very over-weighted, just passive allocation in which in hindsight is done great, right? Even sitting through things like the COVID sell off and what not. And as Rosie points out, we'll point out, we really haven't had a real bear market since 0809. That's the truth. I mean, and we have little doubt there'll be another one. And they always come by surprise because people get diluted into thinking they're not going to come. So we share a concern. And, you know, a lot of folks we see don't have any allocations outside the US. You know, we have, as we mentioned, and Rosie mentioned, we have an allocation, pretty notable allocation to non-US docs, which technically are very much, in fact, they're in the top technical spot in our kind of ranking system relative to even US docs. But fundamentally, they're much better valuations. And Rosie talked about some of the demographics and fiscal tailwinds in Europe and things like that. I mean, there's a lot of reasons we can get into.

1:27:19But I share it. We share a similar concern of folks that have gotten complacent and are passively invested and have are all in. Highest level of household balance sheets in the cyclical right now. There will be a time where that won't feel so good. And we think we're in very late extended innings like Rosie has said. And we'll think history is pretty, pretty, pretty emphatic about the markers are in place for that to be the case. It doesn't mean it's today or tomorrow, it could be months or whatever. But I just caution folks that have done very well, just sitting and setting it for a guide. Just give yourself a reality check because the worst thing here is to not have the proper expectation as to what likely comes from here. And history can give you plenty of insight there if you just study it. Great. And I will make a quick pitch here. You know, if this is something you're listening to and saying sounds good, I just don't really know how to do this. Then talk to your financial advisor.

1:28:20They should be able to help you through this. And if you don't, if they, if the some reason they can't or you don't have a financial advisor right now, just reach out and talk to one of the ones that's helpful money endorses. I'll tell you how to do that later on. But it only takes you a couple of seconds to set up a consultation with them. And then you can just sit down with them and tell them what your personal situation is and what type of risk you'd like to protect against. And they can come up with a proposal for you. All right, Mike, heading back to you. Two questions, I guess. One, anything notable about the markets that you guys are watching, particularly closely right now. And yes, give us an update on what's happening with the precious metals because they've had kind of a bumpy ride over the past two weeks. Yeah, David talked about the market broadening out a couple months ago and then maybe kind of fading or fizzling out a little bit or the S&P sputtering. It's a little bit of that going on. John talked about our own technical indicators weakening not to a large extent, but they certainly

1:29:24rolled over a little bit. And so that that had us put on the S&P put that he just talked about just in case we get that downside crash. Essentially, we're worried about the tail risk. David talked about tail risk and having to manage that his whole career. It's been tough to do that because tail risk hasn't mattered. It just hasn't really rared its ugly head, but it's something that we're watching. But at the same time, we only had a 3% pullback on the S&P and looking at the market right now, it's up about 40 points quite strong and we're only maybe 1% or 2% off the all-time highs right now. So it's hard to get too concerned. And in fact, if we go through those all-time highs, we'll probably squeeze even higher. So that's why the puts make a lot of sense because they didn't cost very much. And if we squeeze higher from here, we're not going to lose much by putting that insurance on. And so the breadth is starting to fade a little bit, but it's still there to some extent, small mid-caps of end, weak this week, but healthcare remains strong.

1:30:28Technology is still a little bit of a lagger, but it's still hovering right around its 50-day moving average on the NASDAQ. So it's kind of a mixed market, almost a little bit of a boring market. And maybe that's because we're in the final week before Labor Day. Normally this week is really slow and volumes dry up. So I don't know. It's, I hate to say I don't know, but I don't know what's going to happen next week or the week after. Again, if I had to guess, I think we squeeze higher and we break out of this range. And so here we are saying that we likely squeeze higher, even though our indicators are slightly negative. And we put on this insurance and spent the money because we're almost hoping that's insurance that we don't need and that we squeeze higher. We can make some more gains in our portfolio for our clients. So mixed bag, let's talk next week. My bet is we probably go higher. In terms of gold and silver, can we talk, can we turn to that now, Adam? Yeah, absolutely. Let's bring up a number of different things. Silver first, like usual. The number of good things happening in gold and silver land and in the miners themselves.

1:31:33So here's silver, which has been a brutal pullback from the January 20th, January 29th. Hi. And we've been watching this purple line all along for a move through there and it hasn't. It didn't back in February, back in May. We had this fake out. And then there was this brutal third leg down. And as we've talked about here, three legs down is usually all you get in a counter trend move. And we broke out of this downtrend back in the beginning of August and look what happened with SLV. This is ETF SLV by the way. And I'm putting it up here because spot silver isn't available on my charting platform. But this is about $6 under spot. So right now with SLV at 60, spot is right around 66. I think the next level of resistance is up here at 67 maybe on SLV, which is around 73 spot. A little surprised about this big reversal when on the Jackson Hole announcement where the expectations of a rate, a rate hike went from something like 30% to 60% as David Rosenberg

1:32:38just talked about. That's a pretty big pullback. We went from 64 to 57. That's a $7 pullback almost in spot in three days. But still, I think that pullbacks likely over, we bounced off the 50 day moving average. And I believe we're going higher. Gold looks similar. I think that level of resistance here is up right around this blue line. We did touch it. We came back to the 50 day moving average. I believe golden silver are basically tracing out these big bases that are going to ultimately result to new highs. I think it shows even better on the miners. There's a number of miners came right back to new highs and they're building cup with handle formations. So take a look at, for instance, Eldorado Gold. Eldorado went from 50 to 25. Again, a brutal pullback. 50% and look at this cup formation. And then this is what I would say is a handle. Now watch for Eldorado to break through 50 and that'll be a cup and handle breakout.

1:33:41I could put up any number of mining stocks here. Wheaton Precious Metals, giant base handle. What else can I show you? Newmont. The only miner in the S&P 500 actually did make a new high the other day and pulled back and created a handle. So again, all these cup and handle found formations for Franco Novada, same thing, GDX, the index itself, same thing. Big cup handle, a handle a little lower here. Watch for a breakthrough of 106 or so on GDX and that would mean the cup and handle breakout would be complete. That would be the trigger. And just a five second disclaimer, we do need to say that none of these particular tickers are recommendations talked to us about your specific situation. I'm just showing them to give you an idea of what we're looking at and how to track these things. The silver majors SIL look similar a little bit of a flatter cup and handle. Syljay, the junior's similar.

1:34:43But just take a look at any of the big majors, they're all going to look like what I just showed you going back to AEM, this cup handle. Watch for this handle to be broken out to the upside, going back to GDX. That's the trigger point in my opinion, 106 or so on GDX. So I'll pause there. Well, well, no, you're giving a lot of heart to precious metals investors here that may be the beatings here and the correction that we've experienced since the blow off spike earlier this year. Maybe the beatings might be ending here. Yeah, it's never easy. You don't get to make big money in a bull market easily. You never can sit comfortably. This big pullback was painful for a lot of people. But if we break out of these cup and handle formations, the target prices would be much higher, maybe even double recent highs on the minors. So again, not a guarantee. Be careful, take your own wrist tolerance into heart. Talk to us for some specific advice if you'd like.

1:35:44But I don't think the move is over and golden silver in the minors. I think we just saw a brutal pullback in the context of a big bull move that probably will double from here. All right. Well, thanks so much for that. Mike, we had to start wrapping it up now. The last point, Mike, you were talking about how the week before Labor Day is really kind of a seasonal doldrum for the markets. And it's because probably the maximum number of people until, say, like Christmas are off on vacation. So a lot of our people watching this channel are the same. They're trying to squeeze the last of summer in and enjoy the time they can with their family. I just want to note to you guys can piggyback on this anyway you like that the end of the year always moves faster than you think it's going to. Right. You come back from summer where you've gotten to decompress and whatnot and then Labor

1:36:46Day happens and you have a big barbecue, play a little whiff of ball. And then all of a sudden things just come fast and furious after that. And before you know it, the end of the year is here. And for people who kind of get compromised by this, you know, there's always kind of an end of your scramble and comes with some regret too of steps I wished I had taken earlier in the year to position myself for what it was. I thought was most likely to happen going into the end of the year. So what I'm saying folks is is, you know, actually these kind of slow times are great for kind of doing your prepping and your wargaming for the rest of the year. Reposition in your portfolio, rebalancing, taking some profits where you've got really big gains. But if you have been listening to what Dave Rosenberg was saying and echoed in large part by the new harbor guys here, you know, there's definitely some valid concerns out there that the end of this year could at a minimum be rocky.

1:37:48And at more than a minimum, you know, could be, you know, there could be some sort of, you know, material correction possible and all this. I'm not calling for it. I'm just saying that the risk factors are there. So if your portfolio is still pretty much just allocated right now for the status quo continuing, you know, AI keep trying to continue to drive everything and volatility staying low as John was showing and stuff like that. Now really is a good time to either yourself if you're a do it yourself investor or sit down with your financial advisors and I guarantee they'd much rather work with you now than in December when you're in a panic and there's a lot less they can do towards the end of the year. Just sit down and say, Hey, look, these are some of the concerns I have. Should I be making any changes to my portfolio right now in response to those? It's the kind of thing you'll definitely thank yourself for doing at the end of the year her versus sitting down and versus not doing it now.

1:38:50And then again, kind of getting caught by how fast time moves afterwards. Guys, anything you want to say about that before we wrap up? Dayport now here football is here in so is draftings. The draft games sports app is now live in all 50 states from Texas to California to Florida. In this September, draft games is giving customers the opportunity to get boosted every football game day. Every game day all my long draft games customers can get a profit boost on select football games. New draft games customers sign up with code Spotify, spend five bucks and get 200 in total awards within 21 days includes all markets. That's code Spotify in partnership with draft games. The crown is yours. Event trading offered by draft games predictions a CFTC registered futures commission merchant trading involves risk of loss. Market availability varies eligibility restrictions apply $50 and non withdrawable predictions dollars issued every seven days via click to claim for 21 days predictions dollars expire in one year. One football boost per customer maximum trade limits and restrictions apply tokens expire at the end of the final select game each day when offer nationwide based on sports

1:39:50book predictions and or free to play sports contest availability varies by state turns at dkng.co slash offer. Yeah, I think it's really on point Adam. I'll add in the whole tax element to I mean, fortunately we got the we all have this reality of tax planning that that is bestowed upon us by the by the authorities and you know, likewise, there's a lot of a forethought that that can it should be done between now and the end of the year. Things like Roth conversions, folks that are charitable in kind and they've got required distributions from their IRAs. One of the best ways to give the charities is using your least in part your RMD because you can give to that charity and not report it as income that you would otherwise have to report as income if you take it yourself. There's a whole multitude of things. You want to be mindful about all the there's countless other, you know, kind of minefields you want to look for things like Irma, which I won't get into, but understand that there's a Medicare surcharge that shows up two years later if you don't plan properly and it's

1:40:54not the end of the world, but just being mindful about it is part of the equation. So yeah, real important stuff, not just from a portfolio market risk, but also just tax planning and things like that. Okay, so like I said, if you are a DIY investor, just sharpen your pencil and do some work on it now. If you're not, talk to your financial advisor. If you've got a good one who is well versed in all the things that John just mentioned, great, you know, don't mess with success. But if you don't have one or you'd like a second opinion from one that meets all of thoughtful money's qualifications for a good professional financial advisor, consider talking to one of those firms you see with me on this channel weekend and weekend. Perhaps you'd like to talk to John and Mike and their team over at New Harbor. So to do all that, just fill out the very short form at thoughtfulmoney.com. Only takes you a couple of seconds to fill out the form. These consultations are totally free. There's no commitments involved. It's just a service these firms offer to help as many investors like you as possible.

1:41:57If you enjoyed having David Rosenberg on here, I'd like to see him come back on the channel soon. Let us know that by hitting the like button and then clicking on the subscribe button below. What was that little bell icon right next to it? And last parting point, we are still offering our lowest early bird price discount for the upcoming thoughtful money fall online conference. The faculty is amazing and it keeps getting better almost every day. But we've just about flushed out the full crew of faculty. So that conference is going to take place on Saturday, October 17th. Don't worry if you can't watch live that day because everybody who registers is going to be sent replay videos of the event immediately afterwards. I'm talking the same night. You know, a lot of events like those take weeks to send you the replay videos. We try to get it to you in just a matter of hours. Let's see what else. Also to sign up for the conference, learn more about it. Just go to thoughtfulmoney.com slash conference. All the details are there.

1:42:57And a quick reminder that if you are a premium subscriber to the thoughtful money newsletter, which is our sub stack, you'll get a you've been sent to code or will be sent to code if you send up now that instructs you in how to get an additional $50 off of that lower that lowest early bird price that I was talking about earlier. So if you're doing already subscribe to the newsletter, just go to thoughtfulmoney.com slash newsletter. You can only cost 19 bucks a month and to save 50 bucks if you want to just sign up for a month and pocket the difference, right? 50 minus 19. You've got 31 bucks a profit right there. I'm totally happy if you do that. So John and Mike, great week, great commentary guys. I kind of have the sense that things are going to start getting kind of interesting once we get through Labor Day when everybody's back and we have the looming date of the mid-year elections in front of us. I think it could get pretty spicy between now and then. I do too.

1:43:57It's good to talk with you this week Adam. We look forward to the next week. Thanks as always Adam. Always fun. It's always interesting in our line of work. Just degrees of interesting and certainly is right now. All right. Well, great guys. Well, thanks for soaring through me with today. Today's interview too. We might again not to it earlier, but we're recording this pretty early East Coast time, which is pretty darn early my time out here in Pacific Coast. And I'm in the process of moving this week, which is always a joy, said through Gritted Teeth. So anyways, if I look a little extra disheveled today, that's the reason why. But gentlemen, I hope you guys have a great weekend. I'm going to go off and move a bunch boxes. Hopefully you prioritize moving your set there at them. That's probably first and foremost on your list. Yeah, it's one of the great things about this set is it is built to be mobile. So hopefully viewers shouldn't notice any change even though next week I'll be in a different location.

1:44:58Great. All right. Well, gentlemen, thanks so much for joining us and everything and we'll see you next week. See you soon. See you Adam. Thanks. All right. And everybody else. Thanks so much for watching. Timberland Pro knows that NASCAR starts long before the green flag waves because behind every race are the doers. The people who show up to the track early and stay long after the race ends. And that's who Timberland Pro was built for. Durable, comfortable and professional. These boots perform as hard as you do on the job and off it. Real work, real people, real craft. Visit TimberlandPro.com and discover products that help workers perform at their best.