0:00 - Introduction0:40 - End of a 38 year bull market4:30 - Election and stimulus package8:05 - Bust vs. Depression10:20 - Deflationary bust implications.15:00 - Treasury cash and Fed holding back20:25 - Potential for a banking crisis22:35 - Real estate and mortgages29:40 - Metals and miners outlook32:00 - Dollar weakness vs. gold strength35:40 - Oil outlook40:25 - Metals ETF's predictions42:10 - Aggregating data and making predictions
Tom welcomes back experienced investment professional David Hunter of Contrarian Macro Advisors.
David discusses the origins of the current secular bull market and how we are now nearing the end stages. Markets move from excess to excess, and in the last stages, they can go parabolic. He expects a deflationary bust and a new debt liquidation cycle to begin in the first half of 2021.
The economy needs a stimulus package, and the soon to be announced GDP numbers will likely show an unprecedented annualized 30% decline. Congress doesn't share the same level of urgency as many Americans who no longer have jobs. Parts of the economy, like housing and technology, are doing well, but other sectors like the hospitality industry, have been hit hard. The damage to many small businesses has been massive and unprecedented.
David uses the term "bust" to differentiate from a recession or depression. What is coming will be more dramatic than 2008-2009 but won't be drawn out like a recession. US Banks are reasonably healthy, but European, Asian, and Canadian banks will be more affected.
The coming deflationary downturn will be widespread and catch most people by surprise. Prices will be hit across the board, but the declines won't be long-lasting due to the amount of injected liquidity. He expects the Fed's balance shee t to balloon above twenty trillion by the end of next year. The government's initial reaction will likely be too slow, and it will take a couple of years to get back to positive inflation.
Inflation will begin to take off around 2025 to 2026 when the economy overheats due to the excess money creation. We will then enter a period worse than the 1970s as double-digit inflation kicks in, which will take most people by surprise.
He discusses the outlook for the housing markets and mortgage rates over the next couple of years, along with some targets for oil, gold, silver, GDX, GDXJ, SIL, and SILJ.
For the remainder of the year, the dollar will remain under pressure, but next year there will likely be a flight to safety, which will bid the dollar higher, possibly much higher.