Larry McDonald Predictions

[3:41] there's a gentleman in the chat who was pounding the table bull on the financials like last two years. um he was long a lot of the XLF names and um and he made his clients about a billion dollars during the subprime crisis, but he's been a raging bull and now he's turned much more bearish. Bearish on Bank America, bearish on Goldman, uh bearish on the financials as a whole.

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[6:39] The the MAG 7 uh ETF is underperforming the gold miners, underperforming the copper names, underperforming the coal names. It's just a really pathetic. market like literally the year to date it's up like four or 5%.

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[27:46] with all of that negativity on duration, for the first time, I'm seeing some people in the chat um and at the dinners starting to tip the put the really just start to buy duration... I think that you you want to start at least thinking about buying long-term bonds. uh the TLT ETF.

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[31:32] I would say 80 to 90% price dent because the sentiment on bonds in positioning, if you look at CFTC data, if you look at any kind of survey days, bulls versus bears, I mean it is I I'm just blown away... The bearish sentiment on bonds is in extreme places and you got to be very careful being a bond bear with with that kind of sentiment being that negative

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[34:07] the Ival ETFs are very very interesting ETF right now because it's been hammered. But if the curve steepens, so if the Fed cuts, if the curve, so here's the two years, the 10 year, if the curve goes like this, the eyeball ETF could be a, you know, 15 20% total return if you get a good steepening like that.

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[27:35] if we do get a breakout that that's something that that I don't think people are are expecting... you could get a situation where interest rates go up and it brings forward recession risk... that's the supernova effect... You go from a supernova sun to a really a burnout and a recession comes in fast because of hot inflation because of high interest rates

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[35:55] you can buy one-year um puts on say Bank of America for very cheap... you're at record price to book right now on JP Morgan on Bank of America absolutely record price to book and uh banks banks have been priced for you know Everyone knows the bullcase

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[38:36] we're still long. We're long slumber... The oil service stocks... The coal names, I'm just looking at the coal names are up. This is our big trade a year ago on the show. Our coal is up 32% over the last year. The copper names up 82% over the last year. So, you know, you and the and the gold miners up over the last year 50%.

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[37:46] the data center financing thing that you know you could really have a a lot of bad loans out there on the data center financing side because there's whenever you see people that are falling all over each over each other to to lend to any group, you know, bad and we saw this with private credit. Um that's why the default started to spike

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[6:27] we're really coming toward a wall where at some point the uh the crazy investing is going to is going to stop or slow down. And uh that's probably in the next couple of months.

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[8:24] if you want to look at the trade for the next six nine months, it's really that stagflation trade, that slower economy, midterm elections, the fiscal you're you're really going to see a fiscal uh control put in Washington. In other words, less deficit spending, slower growth, sticky inflation, and and that's a really good recipe for um Agneo Eagle, AEM equity, GDX, and the gold miners. It's pounding the table by down here.

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[11:21] you could see some of the trades like healthcare names like the the sectors that do well if Democrats win are starting to outperform. And so just look at look at look at healthcare versus the semiconductors since the quarter end month end that that June 30th. Um healthcare is really starting to dramatically outperform.

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[33:27] I think gold's within the next couple years, gold is going to be 6,500 and uh that that's a great riskreward right here.

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[30:24] the gold miners could like triple from here and they would still own if the gold miners triple from here right now all the gold miners combined gold and silver are worth I think 700 billion dollars right so if they triple you Oh, they're not not even half the size of Nvidia

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[36:32] that's why we have like a I think a guaranteed credit crisis in the next year, year and a half, two years.

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[41:24] in the end, the Fed's going to be forced into some type of yield curve control just like the Bank of Japan where the you can have you can force the banks to buy more treasuries, but the Fed's going to have to come in and buy more treasuries some point in the next year and a half, two years.

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[24:54] I think is going to guarantee us a huge inflation bounce in the third, fourth quarter

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[0:03] The Ford earnings on Nvidia are complete baloney... Because because they're concentrated with a handful of companies, you know, think of like the forward earnings of Microsoft. that those earnings um or Google, they have like millions of counterparties that give them that revenue. The the counterparties to to Nvidia are like a handful of companies that are dependent on that.

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[26:06] I mean, it's going the opposite. It's it's not doing that. If anything, tech is eating more and more of the S&P 500... we're going to have over the next 5 years, 7 10 years, we're going to have this big transition where the S&P 500's composition goes from 50% tech to maybe 30% tech. And hard asset companies like the BHPs, like the Rio Tintos, like the Alcoas, like the the Agniko Eagles, they become a bigger part of these.

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[28:50] Oh, oil right here is a screaming buy. I think the your downside is maybe 70, your upside's 150. Um... that gets you like a big bounce in oil in the third, second, third quarter of this year.

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[9:25] the probability that we have a pretty nasty inflation shock later in the year, the summer driving season with a World Cup... you've got the summer driving season. You've got a lot of key supply chain disruptions that all around the world and like it's just that sulfuric acid situation that are going to create this like inflation bounce through the year and that's going to move money probably from growth stocks over toward value stocks.

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[27:29] everyone right now is in the chips, right? The microns and the semis, which is a commodity which is going to absolutely crash and burn.

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[25:23] They're buying back 2 billion of stock. The stock's down 40%. And they're producing free cash flow of six to seven billion a year... To me, that's a beautiful riskreward situation.

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[27:37] Nobody's Look at Intuitive Surgical. It's down like 20%. Um, beautiful business, but guess what? It missed a few quarters. They missed a few quarter, but they have the data... what the smart money is doing is they're looking at what companies have great data.

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[30:35] Think of what they just did. They just handed a huge fat check to US natural gas and oil producers and Canadian natural gas and oil oil producers... Say you're a natural gas buyer in some part of the world. You were buying from the Middle East. Now you've been wounded... So now they want safe jurisdictional risk. That's where the termines come in. That's where the anteros in the United States AR the range resources... that to me is the best AI play out there and it's a play on the war.

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[36:09] the Fed setup for hard assets is so bullish because essentially what they're doing is... they're forcing the banks to buy more treasuries and it's about a trillion bucks potentially over like 18 months to 3 years that suppresses interest rates relative to where they where they should be with inflation. That's bullish and that's really bullish uh hard assets

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[17:53] Copper stocks, any stocks like aluminum or Alcoa. We've lightened it a little bit. We've had it for 3 years, but aluminum is going to be a bedrock of the data centers... get out of these tech stocks and you should own the First Quantums should own the BHPs, the Rio Tintos.

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[7:36] natural gas in the next five years you're going to have a real great bull market.

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[33:08] the dollar just in this. You're going to have counter trend rallies, but you're just in a massive secular decline.

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[19:38] Yeah, I think the market overall is going lower, but there are places in the market that are that are outperforming dramatically.

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[10:40] this year a real bounce and and a slowdown. So that's real stagflation

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[14:40] then all of a sudden recession risk rises sharply this year and the Fed's going to have to cut.

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[10:23] the ability for oil to globally to come down is going to be very sticky because of all of the damage that Iran has caused across the entire ecosystem and the the and the and the supply chains of energy. So in other words really sticky inflation

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[16:18] industrials, materials, and energy, those those three groups in in the 1968 to81 period, they were like 50% of the S&P's composition. 50-0. In recent years, they got to like 10, maybe even a little bit lower, 9%. Only 9% of the S&P was in industrials, energy, and materials. And now that's maybe up toward 13. Are we going back to 50? No, but we're going back to like 2025

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[4:46] I think we can get a 20 to 30% draw down in the gold miners from the highs because of those diesel costs which are up 70% off the December lows

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[8:37] We're going to go from three K uh three cuts expected to zero and maybe even hikes coming in later in the year as inflation really bounces

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[23:02] Nvidia a year ago, a year, a year from today probably is down 50%. Because everyone's in the same crowded, stupid trade

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[28:50] by 1981 49% of the S&P 500's composition was in materials industrials and energy 49%. We're right now maybe 14. We're nowhere near I Are we going back to 49? No. But are we going at 25 30? Yes.

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[34:27] next 30 days, um, Trump's going to try to bring out the fire hose, but you still have a lot of problems in the Middle East around like normalization. So, getting long the VIX, the VIX getting long volatility

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