Contrarian macro strategist David Hunter delivers his boldest outlook yet: a final parabolic melt-up in stocks during 2025, capping a 43-year secular bull market, followed by what he calls the biggest deflationary bust since 1929.
In this must-watch interview with James Connor, Hunter predicts the S&P 500 surging to 8000 and the Dow to 55,000 before an 80 % collapse wipes out trillions.
Key points he explains:
- Why the Fed is already behind the curve and will soon panic-cut rates
- How bearish institutional positioning could fuel the melt-up
- Signs we may already be in a recession
- Why the coming global bust could dwarf 2008
- How a $20 trillion Fed balance-sheet expansion could spark hyperinflation later in the 2030s
- Why the next bull market should favor commodities, oil, and precious metals over tech
Also discussed: his targets of $ 20,000 gold, $500 silver, $500 oil, and why traditional index investing may be “dead money” for a generation.
Follow David on X/Twitter: https://x.com/DaveHcontrarian
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Hard Assets Alliance – The Best Way to Invest in Gold and Silver: https://www.hardassetsalliance.com/?aff=WTH
David Hunter 0:01
I’m calling for an 80% peak to trough, decline in the economy, in the stock market. Once we peak 80% we haven’t seen anything like that since 29
James Connor 0:15
David, thank you very much for joining us today. How are things in New Hampshire?
David Hunter 0:19
Hi, Jim, thanks for having me. They’re pretty good, although spring is slow in coming, or summer is slow in coming. We’re in the low 50s right now, and normally we’d be 20 degrees higher. So we’re we’re actually waiting for summer, but it’ll come. I’m sure.
James Connor 0:38
Yeah, summer will be here before you know it. So I love that part of the country. I’ve been to Mount Washington a couple of times, such a beautiful area, but I yet to climb it because the weather never cooperates. And it’s amazing how fast the weather can change, even in the middle of summer.
David Hunter 0:54
Yeah, it’s it’s known for that we can have weather so different up there. I’m two hours south of there, and you can have winter weather there and have 80 degree weather down here. So it definitely a place where you never know what you can find when you climb it.
James Connor 1:10
So David, I want to talk about the markets now, and we’re living through some remarkable times, and like most investors, I’m trying to figure it all out and make sense of it so I can allocate my capital accordingly, and at sometimes, like I feel like we’re going through a financial hurricane. There’s so many cross currents and a lot of volatility. So I’m hoping you can provide me with some insights on how I should navigate these times. And I want to lay the groundwork first, and I want to start with the S, P. It peaked in February at 6100 it bottomed at 4800 in April. So it pulled back 20% 22% give or taken. Now here we are back to 5900 or 6000 so it’s ripped 25% I wish I bought it, but I didn’t. So I want to start right here. Should we be buying this rally, or should we be selling into it? Yeah,
David Hunter 2:02
so as a strategist, I don’t make recommendations or provide advice. But what I will say is, at the bottom of this correction, at 4800 while everybody was lowering estimates and lowering targets, I came in and raised my target from 7500 on the SP, I was already high on the street, I think, and raised it to 8000 raised my NASDAQ target from 25,000 27,000 sediment had just gotten so bearish. People were saying the top is in, etc. And I continue to say we’re in a final melt up, final leg of a 43 year, soon to be 43 year secular bull market. So I think you’ve got a still, a good ways to go before we top. I do think we’ll top this year, and could top as soon as this summer, but we’re not there yet.
James Connor 2:59
I’m sorry you said your previous target was 7500 on the s, p,
David Hunter 3:03
yeah, I had a target of 7500 I think that I put in that in last September or last summer. I can’t remember exactly. I had raised it from 7000 back at the beginning of 24 so, so I’m Yeah, I’m just, uh, still saying this thing has plenty of legs ahead.
James Connor 3:25
And to go from, let’s just use round numbers, but to go from 6000 to 7500 or to 8000 that’s a significant move from here. What’s going to be the catalyst? Because when I look at the economy, especially the last the q1 GDP numbers that we saw a few weeks ago, it was negative. And then you look at a lot of the earnings of reported q1 numbers, some of them were okay, a lot of them were not so good. What’s going to be the catalyst to take it higher? Yeah, of
David Hunter 3:55
course, you’ve got plenty of uncertainty out there due to the tariffs. And you know what’s going to come of that, and what that’s, you know the impact we’re going to have on the economy as a result of the tariffs or the threatened tariffs. So there’s, there’s plenty of uncertainty out there, and that’s, I’m a contrarian, and contrarians are very much driven by behavioral economics or sentiment, and at this point, sentiment is still very negative. It was, it was extremely negative back, you know, a month ago, little over a month ago, and now is, although we’re seeing the retail side getting more bullish, the institutions are still fighting this thing. So, so there’s what I call a big wall of worry decline. That’s very important in my work. At the same time, I think you’re going to have, in spite of all the worries right now, I think you’re going to have sharply lower interest rates as we go through the balance of this year. I think you’re ultimately going to have the Fed come in and ease. Is, I don’t worry about consensus view of whether the Fed’s going to ease or whether rates are going up or down. My my contrarian views are oftentimes at odds with the consensus. So I am actually calling for a recession. I I’ve said many times in recent times, we’re either in recession now or we’re darn close. We’re heading for one. So that may sound kind of contradictory to my forecast, but I think weaker economy actually causes sharply lower rates and greater odds that the Fed’s going to have to come in here and come in not with one cut or two cuts, but a lot more ease ahead. So that’s that’s a big part of it. You know, again, because, because institutions are positioned either defensively or bearishly, you’re going to have to see them adjust as as the tape moves up. And again, with with how I approach things. So much of the street react. Street and retail investor both reacts to the tape. So when it was going down, they get more bearish. When it’s going up, they get more bullish. I tend to reverse that and get more bullish as it’s going down, and more more bearish or or cautious as it goes up. I think you’re going to see in the next several months, uh, an all in mentality out there. You’re going to see a very different viewpoint than we have right now, right now.
James Connor 6:29
So I would agree it does sound your your thesis does sound contradictory, because you’re you’re calling for all time highs on the s, p, but yet you’re also calling for a slowdown in the economy and a possible recession, and in order for the S, P to go higher, for companies to go higher, they got to have higher revenues. They have to have higher earnings. That that’s basically built on consumer spending, right? So the way I look at it right now, I don’t see the consumer they’re spending money. They there’s a lot of uncertainty. You’ve already touched on that earlier. So I guess, how do you reconcile the s, p, going higher, but at the same time, you said the economy is going lower, and it could be possibly in a recession right now?
David Hunter 7:13
Yeah, two things. One, the discount counting nature of the market’s very important, so a lot of that’s already discounted. The reason we went down to 4800 was the fears of of all of the of what you just discussed. And secondly, markets look out six to nine months. And so I actually have a more bearish viewpoint out there than anybody, on the economy, on the financial system, I’m calling for a global bust, probably starting as early as late this year, or certainly early next year. So that again, makes it even more contradictory what I’m saying. But I think the narrative that’s going to drive this last leg into the top is going to be this idea that as the Fed comes on board and has to play catch up in terms of ease, as they see that the economy is worse than expected. The narrative on the street is going to be rates are falling and falling quite dramatically. The Fed is the wind is on our backs. The Fed is easing, and they will look over the trough of those weaker earnings that currently are being discounted. So I think you’ll see not that that narrative will prove true ultimately, because I think we are moving towards something even worse, but that narrative, I think, will drive this last leg.
James Connor 8:38
So you’re suggesting the Fed is way behind the curve.
David Hunter 8:41
I am. I’ve been saying that for a while, that although I can’t fault Powell, I’ve been very, you know, when everybody’s attacking him, I tend to come in and support him, or defend him, and say, you know, up till now, how can you, how can you fault him when he’s brought inflation down from 9% to basically two and a half percent. He’s done that without, up until now, causing a recession, and he’s been right to kind of drag his feet, if you look at current situation, my problem is going forward. I think we’re going to see the Fed is behind the curve as usual, because of the leads and lags, they give lip service to leads and lags, but basically they run policy looking at data that is by nature, backward looking. So I think you know, even though they they understand there are leads and lags, they never get this thing right. They are always late to the party.
James Connor 9:37
And so we have another Fed meeting coming up in June is that when they’re going to start cutting?
David Hunter 9:42
I think that’s when they should. I actually said they should have been cutting in May, but as I say, I can’t, I can’t predict whether a committee like that will do but I can say they should be cutting in June. Yeah,
James Connor 9:56
you’re right about Powell, he’s really taking taking it on the. Chin. He’s got the president attacking him on an ongoing basis, and the guy just can’t win. I’m sure I just counting the seconds until his term is up. Yeah,
David Hunter 10:09
I think you know more sober voices of Scott Besson and maybe the Commerce Secretary both caught Trump’s ear and said basically stopped, you know, you’re, you’re making it harder for Powell to cut, and you’re, you know, you’re causing nervousness in the market. So fortunately, because it doesn’t always happen this way, but they, they did get Trump’s ear and he did listen. So it’s never a good thing to openly criticize the Fed. You know, you want them to be as independent as possible, but, but on the other hand, Trump, Trump has a right to be somewhat upset, because I think whether it’s politics or they’re just slow to understand what’s coming, Paul is wrong at this point. I think,
James Connor 10:59
yeah. Well, not only did he criticize him, he he actually threatened to fire, yeah,
David Hunter 11:05
yeah. I think, I think Powell is probably in his his place until, you know, a year from now. But I don’t think he’s, he’s there for any longer than that. So
James Connor 11:17
Okay, let’s talk about the economy now, because you said that you think we’re heading toward a recession if we’re not already in one, and you said you expect a severe global correction in the coming months, possibly as soon as year end. Maybe you can dive into that a little more deeper. How severe will it get, and what’s going to be the catalyst to really drive it? Sure. You know,
David Hunter 11:41
we have a, what I call Have and Have Not economy. You know, you’ve had the the higher income groups have have kept this thing afloat, while half the economy, half the population, is struggling just to put food on the table. And, you know, meet their monthly budget. And it’s, it’s worsened throughout this, this last several years, since the pandemic, I think we’re still okay in terms of, you know, holding things together. So it’ll look like a soft landing for the next several months. But I think we are moving towards a hard landing, because ultimately, you’re already seeing signs that that that higher end of the, you know, the the better end of the economy, is starting to slow down as well. And we’re seeing in lots of the soft numbers, you know, consumer confidence. We’re seeing it in delinquencies, etc, the signs of what we see before we enter a recession or as we go into a recession. So those things cause me to be concerned that that’s what’s happening. As I say, this cycle, we are going in with more leverage than we’ve ever had before. You know, 2008 nine, we obviously had the highest leverage at that time, and look what it did. We’re way beyond that in terms of global debt, in terms of derivatives. And I consider leverage on the financial system is debt. We’re talking about 323, $30 trillion of global debt. I realize a lot of it is sovereign, but it’s global debt, and we’ve got derivatives many, many fold what it was, you know, 15 years ago. So we’re going into this cycle far more leveraged than even the 2008 nine cycle. And what we learned, what I learned in business school, anyway, is that leverage works both ways. On the way up, it can really enhance returns. On the way down, it can really slam you. And I think that’s that’s the biggest thing is it can turn a recession, a normal recession, into something far worse, and that’s what I think is likely. Now, on top of leverage, we don’t focus on this much. People don’t talk about it much, but the pandemic really did add fragility to the system. I mean, we never before saw money printed like it was. You know, we had 5 trillion in terms of the Fed’s balance sheet being expanded. You know, in in 2008 going into the the financial crisis, the great financial the great recession, we had a balance sheet, fed balance sheet of 875 billion. After the pandemic, we were up to 9 trillion. I mean, that’s, that’s just a phenomenal expansion and and obviously we saw similar around the world. So, so we are obviously in a place is very different than ever before in terms of risk. And I just think, if this thing follows the script I’m calling for you’re you’re just going to see this thing unwind very quickly, so you have what I call excessive leverage unlike ever before. Are combined with fragility in the system caused by the pandemic, not just the money printing and the debt, but, you know, small businesses are struggling to get by because they can’t find people to work. I mean, things changed a lot, and they have not really come back around yet. So under the surface, I think there’s more fragility than maybe this statistics show you’ve got, you know, companies are leveraged up trying to try to manage through this, and then you’ve got, you know, what you’ve got in Europe, what you’ve got China, obviously, is very imbalanced. Japan now, with their rates exploding upward after following that Zork policy forever, and, you know, thinking they could hold things down. Well, that’s that’s starting to the rates are breaking out. That’s going to be a problem. I think not immediately, but I think they will be one of the the significant stories in the bust. So it’s a global bust. I define a global bust again, I think it’s mostly next year. I define a global bust as something greater than a recession, greater than even the great recession, but that happens at the speed of a recession. So it’s not a depression. It doesn’t last for a decade. It lasts maybe the same, you know, 12 to 18 months that a recession typically might last. But it’s, it’s, you know, comes with a big banking crisis globally, financial crisis globally and and a pretty hard landing in the economy. So
James Connor 16:39
a few points I want to touch on or peel back one you talked about this economy, which includes people who have money and people who don’t. I would agree 100% I think we saw a lot of that with q1 numbers. And some of the companies that stood out to me were McDonald’s, for example, their same store sales were down, I think, three or 4% throughout the US. And I always say, like, if people can’t afford a $5 meal deal, then you’re really starting to hurt we also saw Walmart come on with their numbers recently. They said the tariffs are having a big impact on their margins, and they said prices are going to be going up in the next quarter, and it’s going to be interesting to see what happens there, because the President also threatened the CEO of Walmart about raising prices. But once again, they’re like the deepest or steepest discounter in the US, the largest retailer in the world. Their margins are skinny as it is, and if people aren’t shopping at Walmart, you know people are hurting. We’ve seen numerous airlines come out, Delta American Southwest, all said that they’ve slashed guidance for the coming year because of this uncertainty that we were seeing. So you got to wonder what’s going to happen with tourism throughout the US and also throughout the world, if we have all this uncertainty. Now, the other thing I would just throw and this is purely anecdotal, but I have two kids that are in university, thankfully, they both both have internships. This for this summer, but many of their their fellow students, don’t, and I’ve heard numbers as high as 30, 40% of their class does not have internships. And once again, this all comes back to what’s happening within the broader economy and the uncertainty associated with tariffs. So it might be starting to happen. Oh, I should also mention too we also have, as you know, in southern Ontario, very strong automotive industry, and GM just announced a couple of weeks ago, they’re laying off 1000 people at one of their plants. And of course, there’s a lot of ancillary jobs associated with that one plant that feed into it, so there’s going to be, I think we’re starting to see some economic pain already. Thoughts, yeah,
David Hunter 18:56
I think, I think that’s all accurate, and that’s why I say we could be in recession already. But keep in mind, that is not new news to the street. I mean, that is basically what we know already, and this is where the market is. What I think you’re going to have as we move through the summer is some of some of the negatives move away, or at least lesson. And again, I think what you just described is why I expect the Fed. They don’t know it yet. They’re still, if you, I think they’re being very sincere. And is what I’ve always said about Paul. I think he tells you what he’s thinking, doesn’t mean he’s right, but you, I think he’s transparent, and I think they’re underestimating how fast this thing can unwind, but does? The market will respond when the Fed responds, and I think we’ll respond before that, because I think the bond market will lead the Fed. So as usual, rates will fall whether the Fed does. It or not, rates are going to be falling because the economy is showing signs of getting, you know, getting worse. And I think also, as as some of these deals come in on tariffs, some of that uncertainty goes away, and again, that’s a lot of what’s hit the market in the last month, or a lot of, certainly, the discussion out there is all about uncertainty. You know, they’re worried that companies aren’t providing forward guidance. They’re worried about, you know, these worst case tariff situations, etc. And I think, as that clears up, that’s one, that’s one piece of what’s going to drive this last leg, and then, you know, another piece will be the Fed ease
James Connor 20:45
and David, one of the big pullback, or one of the big fallouts from any economic pullback or recession or depression, is unemployment. And currently, the unemployment rate in the US is hovering around 4% 4.1 4.2% we really haven’t seen a big uptick in it. I will, I will say, though, in Canada, we’re, I think nationally, at 6.9% I reside in Toronto and the province of Ontario, our unemployment rate, believe it or not, it’s 7.5% that’s at a 10 year high. Where do you see the unemployment rate going in the US?
David Hunter 21:19
If I’m right about a bus next year, you could see double digit unemployment, and nobody on the street is looking for that. That’s why I say I have both the most bullish forecast on the street, but also the most bearish out there. I’m not talking out both sides of my mouth. I just think one comes before the other, but I do think there’s again, it’s why I fall Powell. That why they’re they’re going to be late, is they’re using one of the most laggard indicators to decide about what should be done going forward to, you know, try to head off, to be ahead of the curve. You can’t do that. You know, Labor’s labor is going to be the last thing to give, particularly in the US now, because, you know, there’s been a labor shortage, the companies are trying to hold on to their workers longer. That will change as things worsen. At some point it will cross over to they’ll they’ll react, as they always do, and say, We got to cut costs. We got to lay off people. So I think that’s coming. I just don’t think it’s coming quickly. You know, it’s not going to be the next few months, but I I do think labor is, you know, the unemployment rates definitely going to be going up and probably going up sharply more next year than this year. But you know, it’s going up probably the second half of this year.
James Connor 22:39
So excluding, excluding the pandemic, the last double digit unemployment rate was in 2009 it was at 10% do you think we go above 10%
David Hunter 22:52
I think we could only because I’m, you know, I’m calling for something worse than 2008 nine. But I’m not sure, because, again, labor has not been, you know, we’ve, we’ve had a tight labor all through this cycle. I think we went into 2008 nine, with a, you know, kind of a more abundant labor. So, so I’m not sure it’ll get above 10. I just think it’s a possibility, just because a bust is going to be something we have not seen in this country for many, many decades. And
James Connor 23:25
as we both know, the one thing governments do is they do whatever they can to stay in power, and that might mean printing trillions of dollars. And we saw that during the pandemic, and when Trump first came to power in 2016 the federal debt was at 20 trillion. Now we’re at 37 trillion. Why can’t they just continue on this path like why wouldn’t the government just keep kicking this can down the road and just print more money? Just keep saving the system?
David Hunter 23:53
I’m on the record as saying, and I’ve said it many, many times in the last few years, the easiest part of my forecast is how the Fed will respond, how the policy makers will respond. I’m saying the possibility is there, and I think very good likelihood that what it’s going to take to turn the bust around, you’re going to see the Fed expand the balance sheet by 20 trillion. So they expanded by 5 trillion in the pandemic. So it got to nine. I would not be surprised to see 30 trillion, as in terms of the Fed’s balance sheet by the time we get through the bust. And you know, the government, everybody’s worried about the deficit now and government debt, you’ll have not, not necessarily matching 20 trillion, but you could have certainly half of that 20 trillion in terms of new debt. You know, use, use 2020, as an example, not for the same reasons necessarily, but they, they came out with all kinds of government programs because they had closed the economy down and had to turn things around. And. You know, they’d support the bond market. They had support, you know, they came out with all the loans, et cetera. You’re going to see something like that on steroids, I think, in response to the bust. So as I say, I’m not endorsing this. I’m saying this is inevitable, that if we get the bust, the easiest prediction I can make is that you’re going to get this kind of a response because, as you say, when faced with a choice of either future inflation, future concerns down the road, or the free falling system now, they’ll deal with the free falling system now and do whatever they have to do to stop it. Why? Why do we because I’m calling for an 80% peak to trough, decline in the economy, in the stock market, once we peak 80% we haven’t seen anything like that since 29 so, you know, that’s a big statement, but why do we get that in spite of the Fed, you know, turning on the printing press, because to, because of 2008 nine, basically, basically, because the Fed in 2008 nine, obviously went to, you know, levels we’ve never seen before. And we, you know, we printed 3.7 or 8 trillion in new money in the next decade after that, you know, QE, one, two and three, then we had the 5 trillion in the pandemic. So what is Paul said? Paul said, we’re not going to do that again. You know, he’s, he’s very adamant that we’re, we’re not going to, first of all, we’re not going to backstop the market. We’re not here. There’s no fed put and secondly, we’re not going to follow, as you know, a policy like that one, because that one was so criticized and caused so many problems. He’s adamant that he won’t do that again. And I believe him. In his mind, he thinks he will not go back to 00, interest rate policy, back to printing money like that. That’s easy to say, until you’re faced with what he does not realize is coming. When he’s faced with it, you’ll see it on steroids. But that means his initial response to that will be gradual. It will be slow. You know when, when the system’s probably calm for three or 4 trillion, he’ll be doing less than a trillion, and then when, when that doesn’t work, and the systems call for even more than three or 4 trillion, he’ll he’ll do another trillion. So he’s going to be it’s not just the Fed turns on the spigot. It’s does the Fed turn on the spigot to a right size? It takes time to get that right size that will stabilize things. I’m guessing that’ll take many months, and in the process of waiting for that to get there, because nobody, number one, he’s in a mindset that says, I don’t want to do that again. And number two, you’re facing something we haven’t faced in 90 years, in terms of the magnitude of the decline. The combination of those two things means it’s going to take time for them to figure it out, and in that time that they’re not figuring it out, things could free fall.
James Connor 28:12
And what sort of contraction Are you looking for in terms of GDP? I
David Hunter 28:17
don’t know, but it could certainly you could see a quarter that’s approaching high double digit, you know, certainly 789, percent, somewhere in there for a couple quarters would not surprise me. Yeah, I’m not so worried about exactly what it is. I just know it’s going to be large.
James Connor 28:34
And in 1932 you, because you’ve touched on a couple of times you compared this pullback that we might be seeing in the coming year, similar to what we saw during the Great Depression, but in 1932 the GDP pulled back 12.9% do you see that happening?
David Hunter 28:52
Anything’s possible again. I think keep in mind, it’s the global bust. I think there are places that are in worse shape than we are. I think Europe’s going to get hit very hard. I think China’s going to get hit very hard. Japan’s going to get hit very hard. Canada is going to get hit very hard. There are just excesses and imbalances throughout the globe that have not been dealt with for cycle to cycle to cycle for so long. You know, part of my part of my thesis is that we’re in the final decade of a super cycle. I define a super cycle as that long cycle between two depressions. 1930s was last depression. I think the 2030s is the next one. So even though I’m calling for this dire forecast next year, it’s not a depression. So you see, and I differ from, you know, the Peter shifts of the world, the the Austrian School, that thinks we’re at that reset now that this is the final, the end of the super cycle, or the end of whatever they want to call it, and that we’re going down for the count. I My, my argument is. Is that as long as you have the printing press, you can kick the can down the road. I think the time when you run out of the printing press is going to be the mid 2030s because by then, because of the response to this bust, you’re going to have a hyperinflationary cycle that could take inflation to 25% in the US and and by, you know, by the early to mid 2030s and so at that point, long before we get to 25% probably by the time we get to, you know, 12 or 15% or before the Fed’s going to be out of the game this, the printing press will have been shut down for the balance of that cycle. Once you lose the printing press, you have no you have no answer for an unwinding system. And so I think, unlike the Austrians, who think we’re at the end of that period, now, I think we have one more kick the can down the road cycle. It’ll be a shorter cycle. It’ll be an inflation cycle. It’ll be a commodity cycle, or driven by commodities and inflation, but it will be, you know, a recovery cycle. You can’t, you can’t print $20 trillion and and proportionately similar around the world, and not have a recovery. You’re going to have a big recovery, but it’s going to come with a very rapid run up in inflation,
James Connor 31:22
I could not handle that type of inflation. I can’t even handle the inflation we’ve seen in the last five years is killing me. I
David Hunter 31:30
not only, not only can you not handle it. Think, think of what our treasury is going to have to do if they can’t, if they can’t serve as debt at 5% how are they going to service that? Because rates will track inflation, we’ll be back to that 15% long bond. I was in the business back in the early 80s running money. You know, we had 15% long bond, 15% 10 year. I think this time around, we’re probably going to see it somewhere closer to 20, certainly up in the high teens. There’s no way you solve that equation. And T bills will be over 20. There’s no way when that’s not only going to be 37 treasury, you know, our debt is not going to be 37 our government debt, it’s going to be, you know, higher than that by a lot, and we’re going to have to service it at, you know, high double digit rates. There is no equation in the world that can solve that. And so that’s why I, you know, ultimately, I think we’ll see a collapse in the 20, you know, mid 2030s you know, basically, again, this is the end of a super cycle. You’ve, you’ve, you start out slow, coming out of depression. And each successive cycle you have more excesses, more imbalances. It requires more response, which leads to an even more excessive next cycle, and that’s just ratcheted up through 90 years. And ultimately you come to that point of no return, where you have no answers.
James Connor 32:58
Yeah, it’s amazing what governments and the damage governments can do. Like, just in the last five years, where I live in Toronto, the cost of every good service and asset has gone up 3040, 50% I’m paying, you know what? I’m paying for a haircut now I’m paying 50 bucks. Like, Oh, $50.05 years ago, that was 25 bucks and and I don’t have anything special. It’s not like I, you know, get anything special. But that’s that’s pretty well the same with everything. You know, when I go shopping for groceries, doesn’t matter if it’s Walmart or Costco, wherever it is, like everything I’m paying for is up 3040, 50% the cost of gas. I’m curious, what are you paying for a gallon of gas in New Hampshire? Yeah,
David Hunter 33:44
I’m, I’m paying down around 250 Believe it or not. But you know, a member of BJs, which is one of the, you know, the Costco tech outfits. And so you get, you know, and with the, you know, with the credit card, you get 15 cents off gallon. So their, their price without that is, I think, three, you know, 365, or 367, or 267. I mean, and around the state, it is basically between the 260s and two, 280s so, you know, gas has come down, I would say to Canadians, I mean, you guys got to witness our real estate bubble in 2008 and and what it did to our banks. And our banks were highly leveraged. As you know, your banks were in great shape going into 2008 nine instead of learning from our mistakes, they’ve doubled down and done what we did, and now they’re the ones in trouble. You know, I think their banking system is your banking system is in trouble. And you know, the policies of Trudeau have been disastrous for Canada. And instead of recognizing that and go. The other way, they doubled down and elect Carney. I mean, I just, I don’t understand voters.
James Connor 35:06
Oh, I know. It doesn’t matter where you go in the world, the electorate is so stupid, right? Like, don’t even get me started about Canadian politics. We’ll be here for another hour. What I can say is the Canadian economy is in some serious trouble, and if the US goes into recession, look out. Canada is going into depression. Like I said, the unemployment rate where I am is 7.5% that’s a 10 year high. So things are all when it comes to real estate, I don’t know when the last time you were in Toronto was, but we have condos here like you’ve never seen there’s an actual index statement. It’s called the crane index. It just measures or monitors the number of high rise cranes throughout various cities in North America. Canada or Toronto has the most number of cranes than anywhere else in North America. And so where I’m going with this is that the number of condos that have been built here in the last 10 or 15 years. It’s just insane. I
David Hunter 36:04
call it rinse and repeat. I mean, we we do these stupid things that at the end of every cycle, it’s like, instead of learning from our past mistakes, it just becomes human nature that you go from fear to greed, and greed then goes to excesses that they have to be corrected. And when they get corrected, you start all over again. I mean, it just it and and when you put that in a longer cycle, it does that to, you know, on steroids.
James Connor 36:34
And I just want to touch on one more point before I move on. But you were talking about the price of gas, where you are? 250 a gallon. I’m paying the 135 Canadian a liter, which is the equivalent of 375 a gallon. So even though we’ve had a big pullback in oil and also a reduction in our taxes here, we’re still paying super prices, especially compared to the states like our states that are close to us, like New York and Michigan. I
David Hunter 37:01
would think if, if Canada wised up and listened to maybe the the leaders over in Alberta and places like that, you wouldn’t be facing what you’re facing right now. You know, because you have plenty, you have plenty of resources, and actually, to put a positive note on it post bust, because it will be such a big commodity cycle. Yeah, I’m looking for oil to go to $30 you know, WTI, go to $30 in the bust. I was, I was the lone bear out there when, when oil was 130 you know, after the Ukraine invasion. I was a lone bear that said it’ll go back to 85 and then when it got down under 85 or got down under 100 I put out a target of low 60s. So we’ve hit that, you know, we hit that and went through it. I think we’ll see 30 in, in the bust, but I do think in the post bust period, because of all that money, etc, and for other reasons too, I think we’re going to see $500 oil by the time we get to the early 2030s so I know I’m not saying 2030 but in you know, 2030 123, somewhere in there we could see $500 barrel oil. Canada will will be one of the winners next cycle, but they’re going to have to go through a lot of pain. I think this cycle. No,
James Connor 38:25
as you said, Canada is an economic superpower or resource superpower. We have so many resources here. It’s insane. We just need the proper government to absolutely move them all forward. Now I want to ask you about the S P, because you said your target on the S P is 8000 you see it at the top. You think it can pull back 80% which would be 1600 that’s a significant pullback.
Unknown Speaker 38:51
Sure is
James Connor 38:53
that would cause a lot of like people would be wiped out, in terms of your your your retirement savings be gone? Yeah, no,
David Hunter 39:01
we’re going to see things again. 2008, nine. We saw things that we never thought we’d see, right? I mean, it was scary. It was a true It was the biggest financial crisis in history, really, particularly the magnitude of it, because of the greater leverage this time and because of the what’s happened this cycle. I mean, look, look where the S and P is gone from, you know, where, where it was, you know, in, in the bottom, in 2009 I think the S and P was 666, I think it was down there. And we’ve gone from there to one. To what looks like 8000 the number, and I think I may be conservative at 8000 so it’s had, it’s had a huge run. Obviously the Tech has has had an even bigger run. And everything is levered up. We have to. Derivatives playing a big role in everything we, we have, you know, we, we not only have the, you know, the options we’ve had for a while, we now have daily options that get played, that, you know, it’s a casino out there, and again, that leverage helps fuel things on the upside. But once it rolls over, there’s going to be things coming down so fast because of leverage, and so I’m It sounds crazy to talk an 80% decline, like I said. We haven’t seen anything like that in the post world war two period, but I think that’s where we’re at. And does it doesn’t mean it’ll be 80% do? I know it’ll be 80 instead of 70, or, you know, something like that, no, but I think that’s in the ballpark of where we’re, where we’re going to go.
James Connor 40:45
You are. So right when you talk about the level of speculation, it’s like what we’re seeing now, I thought 1999 and 2000 was bad, but this is like 10 times that. Like when you look at the last five years and we saw the ICOs, nfts, the metaverse cryptocurrencies, not just like one or two of them, but 1000s of them. The meme stocks, AI, it’s just bubble after bubble after bubble.
David Hunter 41:10
And think about fixed income. When I was back in, you know, the earlier time in my career, I was, you know, heading up active equities at ITT Hartford and their life company was loaded with bond derivatives. I mean, that was how they managed. They were doing very well. They didn’t have a big real estate portfolio, so it saved them back at that time. This was back in the late 80s, early 90s. You know, when, when somebody got hit in the real estate bubble, but, but, you know, I learned the language of iOS and POS and residuals and and even though I wasn’t managing the fixed side, it was really an amazing thing to see what Wall Street had created. You could take a treasury bond and cut it up into these other pieces. And one, one company, one money manager might want the interest only for their objectives. Another one might want the principal only for the appreciation. And then somebody else might gamble on the residual that if, if, if certain assumptions worked out, they made a lot of money. If assumptions didn’t work out, they lost a lot of money, or they didn’t make any money. It was just amazing to see, you know, what Wall Street was capable of, and that was 30 plus years ago, and we’ve done so much more financial craft, witchcraft. Since then, it all adds to greater risks when things come tumbling down.
James Connor 42:48
Well, I didn’t even touch on sports betting, but like, that’s out of control. Now, I can’t remember. I read recently how many states allow sports betting now, I think it’s like in the 30s. It’s quite extensive through Canada also. And then, of course, you got short, dated options. So once again, like this, speculation is we’ve never seen anything like this before. Yeah, it’s rampant. Okay, so you’re bullish on the S, P and the Nasdaq in the short term, and a proxy for risk on trade is Bitcoin. What are your views on Bitcoin? It’s been relatively well. Even during this pullback, I
David Hunter 43:23
have consistently said I don’t follow Bitcoin. I don’t follow crypto. So I don’t have any opinion that anybody should listen to. I I certainly have opinions on it, but what I have basically said is I want to see how it holds up in the bust. I don’t consider it macro significant. At this point, it’s significant to those that hold it. You know, I understand the attraction of holding something that’s outside the, you know, the policymakers ability to manipulate. I get all that, but it’s not big enough, or answers any, any particular macro problem right now. It certainly could, could be a big winner down the road. So my lack of of following isn’t to say that I’m I expect it to go to zero. I don’t know what it’s going to do. I think there is risk in it, a great risk in it, not doing what all these people think it will do. I am bothered by the the speculation, the level you know, most of its attraction, I use the term tape. I’m an old guy that came into this business when there was still a ticker tape. So I use the term tape. But mostly attraction is people buying it, because the tapes going up right? Because the momentum is positive when it’s negative, people get more negative on that. That bothers me. And then you start seeing the leveraging of it, you know, Michael Saylor and other people, you know, it just it. It. It doesn’t strike me as something that you can just trust right now, let’s see how it holds up in the global bust, and then maybe it’ll, you know, it’s kind of has to prove itself through a tough cycle before I’m even beginning to look at
James Connor 45:14
it. And what are your thoughts on gold? It’s done very well here in the past year. Yeah,
David Hunter 45:19
I’m a huge gold bull have been, you know, through thick and thin. You know, had had to deal with several years ago, people being disappointed with gold, but I’ve, I’ve stayed pretty much bullish through through all of that, gold and silver, both, Silver has been a tougher hold through that, but I have a 4000 target on gold. I raised it. I had a 3000 target that I raised maybe last summer to 3400 and then raised it to 4000 in my last letter back in April. And I think, you know, I could raise it again, but I think 4000 a pretty good bet right now. My silver target is 75 that’s a got a long, lot longer to go. I think you are going to begin as of, pretty much right now, begin to finally see that Gold Silver ratio start to favor silver, you know, start to roll over this last leg up, surprised me a little bit, but I still think you’re ultimately going to see silver far outperform gold going going forward through the balance of this year. But that doesn’t mean gold’s not going to perform, because gold’s going to perform
James Connor 46:37
very well as well. Well that we touched on pretty well. Everything there. I think the only thing we didn’t talk about was wheat. Let me just summarize a few of the points you made. Okay, because there’s a lot of key points here I want to touch on. So going into year end, you’re still very bullish on the S P and the Nasdaq. Your target on the S P is 8000 so that’s 30% give or take. You think gold’s going to continue to go 4000 bucks by year end? Is that right? Yes. Bitcoin, you’re undecided as to what’s going to happen there. Oil. You think oil is going to continue to be under pressure here, and as we go into 2026 it’s going to come under pressure with this pullback we’d see in the economy. Your target on oil ultimately, is $30 a barrel. What else? Okay, so it sounds like 2026 is just going to be a bloodbath. Do I have that right?
David Hunter 47:36
Yeah, I think, like I said, we could be in an economic recession well before 26 but I think it will ultimately morph into a bust, whether that happens, you know, in the fourth quarter, sometime late in the fourth quarter, or whether it gets pushed into 26 I don’t know. I mean, you can’t, you know, a bust is something that comes out, you know, comes comes on fast, and you can’t really predict that precisely. But I do think most of 26 or all of 26 is pretty much a very rough period. Stock market could bottom sometime in the latter half of 26 and start looking over the trough, so you could see that 1600 type level, you know, sometime in third or fourth quarter, next year may not. I mean, it may take longer than that. It’s not going to go straight from peak to trough. You’re going to have probably a couple bear market rallies of substance. So you could go down 40 or 50% in the first step down, and then rally halfway back, over a couple months because of Fed east, or what have you, you know, can’t it look like they were doing something, but it wasn’t enough. And then, then another leg down to lower lows, and maybe even a third like they, know, another rally and a third leg down, so that could play out over, you know, I say eight to 10 months. It might even take as much as a year once, once we top out and, and, I would say, just importantly to note, not only do I have a target of 8000 for the S and P, I’ve got a 55,000 target on Dow, a 27,000 target on the NASDAQ, and a the one that’s kind of controversial is A 3300 target on the Russell. I think the Russell has been held back partly because of the Fed’s restrictiveness. It’s more of a domestic index. And I think you will see as the Fed comes in, whether that’s June or later, that that will really get the Russell going. But the Russell is starting to show a little more life, and I think we’ll do that going forward. And
James Connor 49:45
David, if there was one flaw in your thesis on on what you’re expecting to happen in the coming year, what would it be? So if you and I are talking in one year from now, and the S P is, let’s just say, hanging around the same level it is right now, maybe. Be a little bit lower,
David Hunter 50:00
yeah, I would say, if there is a likelihood that I missed something, I could miss the bust. I mean, that’s a, that’s a, you know, call that is really out there in terms of, not just relative to consensus, but relative to what we see right now, right? It takes certain things to happen. I’m betting that the leverage will will take a normal recession, something much worse. But it’s possible you could have something less than a bust, and if you have something less than a bust, you’re going to have less, less of a reaction to it. It’s not going to require anything close to 20 trillion and therefore it changes, certainly changes the trajectory of what comes after. Because what comes after I’m talking about, you know, inflation going on. I’m actually calling this bust, a deflationary bust. I think we will, in the bust, see negative inflation. So then, if I’m calling for a negative inflation, and then 25% inflation by, say, 2032, you know, you’re talking about a huge run up in inflation in, you know, six, seven years. If we don’t get that bust, that trajectory is going to be slower, you know, and it stretches, probably allows that cycle to stretch a little longer. But I’m pretty the part I’m not worried about, or I have the most confidence in, is, believe or not, is the run to 8000 I think I may prove conservative with my 8000 number. And
James Connor 51:34
that’s what happened by year end. Yeah,
David Hunter 51:36
I actually, you know people, I keep saying I don’t have a precise time on it so, but I have been out there and said it could happen by the end of the summer. So people then hold me to that and say, well, it didn’t have money. Yeah, by the end of the year. I’m pretty confident, but I’m also saying, given that it’s probably going to go parabolic, you could cover that ground in three to six months.
James Connor 51:59
So I got one more question for you before I let you go. If inflation takes off like you said, it’s going to during the 2030s What am I going to be paying for my haircut then?
David Hunter 52:11
Yeah, well, I’ll talk about some other commodities, because I think natural gas, which is has been on the floor through this whole cycle because of the mass amounts that they found and the supply, I would not be surprised. See natural gas at $50 I would not be surprised see copper, which I use, the futures number I’m calling for $6 pre bust. So this year, I would not be surprised. Surprised see that down to one or $2 in the bus, and then up to 20 or $25 in the next move. So, you know, just looking at those kind of things, and what I said about oil, obviously, gasoline will go through the roof. I would guess, you know, the one thing a haircut. I don’t know, maybe it’ll be if you’re paying, if you’re paying 50 now, you’re certainly going to be paying north of 100 I don’t know how much north, but I would think the thing that I think people do not understand is that real estate is not an inflation hedge. So whereas a lot of commodities are going to go through the roof and it will be inflation hedges, I think gold’s going to 20,000 I think silver is going to 500 when oil goes to 500 but home prices, I think drop, could drop as much as 30 to 40% in the bust, and I don’t think they’re going to be inflation hedges in the next cycle. Why? Because mortgage rates are going to be high, double digit. How in the heck are we going to see, you know, people afford a mortgage payment if they’ve got a 15% mortgage, you know? So, so the inverse of rising mortgage rate is a falling home price, right? So there’ll be periods coming out of the bus with all that money created, you’ll, you’ll have some bounces in real estate. But I believe real estate probably more so in Canada than here, even, because you guys have had such a big run. But I believe real estate is peaking. Has peaked as we you know, at least in this country, it’s already peaked. We could have a bounce as rates come down this summer, but I don’t think you’re gonna get past the peak, and I think the peak of this cycle probably stands for decades to come. So real estate is not an inflation edge, by the way. We didn’t really touch on my rate forecast. I believe the 10 year can fall to as low as two and a half 3% during the during this final melt up, so during the next three to six months, while everybody else worrying about 5% I’m saying no, it’s going the other way, and I believe it will keep going. You know, it may back up a little bit somewhere in there, but I think ultimately, in the bust, you’re going. To see a 0% 10 year and negative short rates.
James Connor 55:03
So in essence, you’re telling me, I’m never going to be able to retire like Warren Buffett when I’m 95 I’m
David Hunter 55:13
telling you, there are some great opportunities if you manage your money right. That’s what I’m telling you. It’s, it’s, it’s spicy out there. I mean, it’s going to be very tricky to get it right, and I can promise you, if you go along with the consensus, you’re not going to have that advantage. But if people understand what’s coming and play their cards right, not only you know, because it’s 8000 if, if 8000 is the top, the next cycle is going to come in way below that we are. We are finishing a 43 year secular bull market, which means higher highs each cycle. That’s coming to an end, and we’ll have lower highs going forward. And ultimately, if I’m right about a collapse of the finance, global financial system in the mid 2030s, you know, these things are going to the floor so, but that people hear that, and they get nervous, and I go, you’re going to have such a tremendous opportunity in in a different leadership coming out of the bust. If, if oil goes from 30 to 500 there’s going to be plenty of producers that are going to make you plenty of money. What you won’t make money in, or won’t, won’t, certainly outperform in, is an S and P Index Fund. If rates are going up from zero to something close to 20% in the next cycle, pe multiples are going back to single digits. And so you’re not gonna, you know, there’ll be, there’ll be opportunities in tech. Will, you know, we’re entering a world of AI and stuff. There’ll be some big winners in tech. But generally it will not be growth stocks in the next cycle. This cycle was growth stocks. Next cycle will be commodities, stocks and commodities. So it doesn’t mean that the bust is the beginning of the end, or it is maybe the beginning, but there’s another big money making opportunity. As long as you’re in the right areas, the guys that will be punished are the guys that won, starting in the mid 80s, when we went to the it’s not, it’s not timing the market, time in the market, and they started pushing index funds, those people that listen to that and bought an S and P Index Fund in 1985 have made out like bandits and have far outperformed most hedge fund managers or most Most professional money managers over that time. Right going forward, though, if you say, I’m going to stay with that mantra and buy and hold, you’re going to get slaughtered in the bust, and you’re going to be in the laggard groups going forward, after the bust. So it’s going to be important to understand the change. The change is coming, because it can be a whole different financial world out there going forward,
James Connor 58:04
all very good points, and you’re right. There’s always opportunities in the financial markets. That’s what I love about them. And I want to thank you very much for spending time with us today, David and sharing your thoughts on what’s going to transpire in the coming months. If somebody would like to learn more about you and about the services that you offer. Where can they go? Sure,
David Hunter 58:21
my, I’m on, I’m on X or Twitter. Every day, I have people, and I’ve had many of late saying, Where have you been? I haven’t seen you. And that’s after, you know, particularly a month ago, you know, during the free fall I had, I was replying probably 100 times a day during that week, because people needed their hands held. They were scared to death. And of course, I was the big bull on the street, so they thought I was, you know, I was getting hit left and right, telling me I was dead wrong, you know. But I had probably 100 replies a day at that time, and I had people coming in saying, I haven’t seen you posted months? Where have you been? And I go, there’s something wrong here. You are not seeing my replies. What you’re set up to see is only my original posts. Most of my communication is with replies to people, answering questions and responding to people’s comments. I view it as kind of my my role as an educator of a kind of a contrarian thought out there, and that’s how I communicate. So if people are not seeing me, it’s because they’ve got to, and I’ve just recently learned what what it takes you’ve got to go to my profile page, if you’re following me, and click on that bell on the profile page and then say, Follow all comments, not just, you know, certain ones. So for people who want to follow me, that’s how to do it. Like I said, I’m on there every day, not always with 100 replies, but I’m usually communicating something every day. And I also put out a quarterly investment. Letter. You know, I have 51 years of experience doing this. I was money manager for half my career and a macro strategist for half of it, and I started writing this contrarian macro letter. It’s basically called contrarian investment advisors. Name of the letter. Started writing it in the year. 2000 was for institutions. I was, you know, on a institutional trading floor, and I, in the last five years, I’ve started offering to retail. So it’s available at a price annual subscription. If people have any interest in it, they can direct message me on x and I’ll send them details, yeah,
James Connor 1:00:46
and we’ll have all the links below in the show notes. David, once again, thank you. Great discussion. Yeah,
Unknown Speaker 1:00:51
thanks, Jim. It’s been a pleasure.
