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The 'Unravelling' That Triggers Biggest Market Reset Ever | Peter Grandich — Transcript

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0:00As important as the Middle East is to
0:02the stock market right now to decline,
0:04so is the unraveling of this
0:06enormous AI bubble. Different now is I
0:09think we're worse off than any of those
0:11three periods. You're going to have the
0:12worst decline ever, maybe even worse
0:14than 1929.
0:15>> Oil's back up. Brent crude hit $116, its
0:18highest since April. Uh this comes on
0:21reports that the US and Israel have
0:23drawn up new plans for renewed strikes
0:25on Iran after the midterms, which
0:29are coming up. Peter Grandich is going
0:30to give us an overview of the key risks
0:33and opportunities facing investors today
0:35as we speak towards the end of October.
0:37Peter
0:38is of course a regular guest on the
0:40show, fan favorite, founder of Grandich
0:42& Co. Welcome back to the show, Peter.
0:43Good to see you as always.
0:45>> Same on this end, David. Thank you.
0:48>> Uh this is according to uh the press. We
0:50have reports that there's going to be
0:52new strikes
0:54on Iran. Um
0:56this this comes in as uh tankers have
0:59already been hit uh with a higher
1:01frequency than ever before in the entire
1:03war. But at the same time, there's been
1:06reports that
1:07uh data has shown throughput through the
1:10Strait of Hormuz has now returned to
1:12pre-war levels. In other words, the oil
1:14coming out of the region is now back to
1:16normal. And yet oil is still at all-time
1:18highs, partly due to geopolitical
1:20tensions that we're referencing right
1:21now. How do investors prepare for this?
1:23We don't know what's going to happen, uh
1:25but you know, the Trump administration
1:28is hinting that something bigger is
1:29coming very, very soon. So, either we
1:32ignore that or we get risk off or we do
1:34something else. How are you How are you
1:37How are you reacting to this?
1:38>> Well, first of all, it's very hard
1:40because there are conflicting reports,
1:42and let's not forget
1:44>> Yeah.
1:44>> if you just listen to Trump, this was a
1:46war that was supposed to be won months
1:48ago, and none of this should even be
1:50remotely happening at this time. And yet
1:53here we are almost 8, 9 months into
1:56this, and as you just noted, uh oils are
1:59making almost new highs since this
2:01conflict started, and that has, you
2:04know, real negative ramifications. And
2:06what people have to recognize is people
2:09still have to operate in certain
2:12environments. So, people have adjusted,
2:15and one of the adjustments from all of
2:17this of the higher cost is higher
2:19prices. And uh
2:22I got to believe that
2:24uh
2:25Trump is viewing in a sense that
2:28no matter which way the election turns,
2:30whether the House is overtaken by the
2:32Democrats and also the the Senate or
2:36not, uh he can't leave this the way it's
2:40been.
2:41And uh I presume that would be the
2:43thinking on why they would want to do
2:46further military
2:48uh actions. Whether or not that military
2:50action
2:51uh can be satisfactory to make things
2:54better, I think it's called into
2:56question. I mean, uh you know,
2:58this is a group that was supposed to
3:00have been annihilated. They were
3:01supposed to not have any real
3:03uh any
3:05opportunity to cause harm, and there's
3:07more damage being done from the opposing
3:09side
3:11uh than the so-called victory side. And
3:13so, I I think that's part of the reason
3:15why oil is elevated and will stay
3:17elevated. And I also think it's one of
3:19the reasons now we finally seen people
3:22waking up in equity markets, not just
3:24here, but around the world, realizing
3:26that this thing did not go away. It's
3:28not just a little a bump in the road,
3:30but it's a serious uh
3:32a situation. And for the United States,
3:35could end up being one of its biggest
3:36quagmires ever in its history.
3:39>> What what what do you think What do you
3:40think happens to markets? Right now, Dow
3:42The Dow's tumbling 600 points. The
3:44headlines say it's because of Middle
3:45East tensions rising, higher oil. Uh
3:48meanwhile, the Nasdaq Some Some people
3:49are buying the dip earlier this week.
3:51We'll talk about this later. Uh AI
3:52stocks have been falling because of uh
3:54interesting earnings reports. Uh but
3:56right now the sentiment is shifting more
3:58towards fear than not. I guess the
4:00assumption is that with higher oil
4:01prices comes a more hawkish Fed. Is that
4:04what's happening right now? Are you
4:05looking at higher interest rates still?
4:07>> Uh I would say that's a contributing,
4:09but I believe this is really a spillover
4:12from what something that I spoke about
4:14even the last time which you that I said
4:16come September I felt that we needed to
4:19be in some very strategic bearish
4:21positions because the market up through
4:23then basically throughout the summer was
4:26going sideways to down. It was only a
4:28smaller and smaller group within the S&P
4:31500 that was carrying it. We were seeing
4:34new more uh more new lows and new highs.
4:38We were seeing an increased number of
4:40comp- companies within the S&P 500 that
4:43were going down 10, 20, 30, even 40% or
4:45more from their highs.
4:47>> Yeah.
4:47>> So I think it's a combination of a
4:49market that was already weakening. I
4:51also believe
4:52as important as the Middle East is to
4:54the stock market right now decline, so
4:57is the unraveling of this enormous AI
5:00bubble
5:02uh that and I think historically we'll
5:03go back and long after I'm gone and
5:06people will say that this has been the
5:08biggest bubble ever on in Wall Street
5:11because this was really
5:13one kind of asset being passed around
5:16many trying to show that everybody else
5:18is going to benefit this and I think
5:20that's been unraveled. I think people
5:21concluded that AI is not the win all for
5:25everybody and and anything and it's a
5:27combination of the technology finally
5:29breaking down the stocks as well as
5:31Middle East crisis plus the election.
5:34The election is probably the most
5:35important midterm election certainly
5:38since I've been in this business. And
5:40that's 42 years, David. I I will tell
5:42you that
5:43we go in a lot of different directions
5:45depending on how that election goes and
5:48the way I see it with the Democrats at
5:50least recapturing the house if not the
5:52Senate.
5:54Whatever Trump tries to still do in his
5:56remaining two years, he'll be battling
5:59all sorts of personal and business-like
6:01battles and we may not see any movement
6:04on good legislation out of Washington
6:07and that's not good when you come when a
6:09country has $40 trillion and still
6:11spending two to three to four trillion
6:13more a year than it has.
6:15>> I ask you as a director of the research
6:16department at the NFIB which tracks
6:18small business optimism in small
6:20businesses across America which by the
6:21way contributed like 45% of GDP. Small
6:24businesses are the backbone of American
6:25economy. But anyway, small businesses
6:27are really concerned about the midterms
6:28for like you said legislation
6:30specifically around taxes. But you as an
6:33investor, I mean you're also a small
6:34business I guess. But as you as an
6:35investor, how does the midterm affect
6:37you and others like you?
6:39>> Well, I can address that David because
6:42largest single part of our planning
6:44group business and we're part of a group
6:46that manages almost two billion dollars
6:48so it's not small.
6:49Most of our clients or almost a half of
6:52them are small business owners of some
6:53type throughout the United States not
6:55just where we are here on the East
6:56Coast.
6:57And all of them will tell you to a T
7:01that it's never been harder to be a
7:02small business owner for a lot of
7:04reasons from cost to regulation to legal
7:08situations and all that and we have not
7:10seen
7:12probably in multi-decades really
7:15legislation come out of Washington that
7:17benefits small business owners. It's
7:19been primarily for the [snorts] upper
7:21upper echelon, the big technology
7:23companies, the big corporations. And
7:25small business owners are or at least
7:28for much of my career the backbone to
7:30the American employment situation. So
7:33I think the election can only be more
7:36negative for them and more of a
7:37standstill in Washington
7:40than moving forward and finally tackling
7:42some of the major issues we have before
7:43us.
7:44>> Before we continue with the video, let
7:45me give you a brief current summary of
7:48the situation for gold. Now, the price
7:50of gold has seen a recent pullback with
7:52higher bond yields and interest rate
7:54uncertainty weighing on prices. However,
7:57central bank demand and geopolitical
7:58uncertainty remain supportive
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9:23>> Suppose the Democrats have a clean
9:24sweep,
9:25what can we expect?
9:27>> Now, that opens a door that I began
9:30talking about in the summer. If, for
9:32some reason, they also capture the
9:34Senate, it's my personal opinion, it's
9:36just a thought. It's not
9:39not gospel. I believe Trump won't finish
9:42out his administration. I believe
9:44there'll be so much
9:47paranoia and and just unbelievable
9:50fighting, infighting, that
9:53he will leave and he will leave the way
9:55Biden left by providing a bunch of
9:58pardons to people that they'd be
10:00concerned with face repercussions. We
10:02openly have Democrats on all levels,
10:05federal, state, and local, talking about
10:08how revengeful they plan on being if
10:10they get control politically again. And
10:14I don't see him putting up with that.
10:16He's not a He's not a man that handles
10:17criticism at all and he certainly
10:19doesn't have much patience apparently at
10:21a lot of times. And so I think if
10:23somehow the Senate and the House goes
10:26Democratic, I don't think Trump finishes
10:28out his term and that also has
10:30ramifications and I will tell you this
10:32much, you're not going to hear
10:34geopolitical comments from countries
10:36applauding that, but quietly and behind
10:39closed doors, I think a lot of them
10:41wouldn't mind that happening after how
10:43he went in with this big stick into a
10:45trade war worldwide when he should have
10:47taken an olive branch.
10:48>> I wonder what happens to the Iran war if
10:51we progress towards that kind of
10:52outcome. What happens to the Iran war?
10:54What happens to oil if what you're
10:55saying transpires?
10:58>> Well,
11:00there's still be a Republican in the
11:01House or the commander-in-chief.
11:04But then again, the funding aspect then
11:06becomes into question. I don't think the
11:09Democrats will run to support a
11:11continuing large-scale war of any type
11:15uh
11:16so long as Trump or the Trump
11:17administration's in charge. They've been
11:19clear and adamant about that. And I
11:22think that
11:23that you can count on that as one of the
11:24things that that they would try to stop.
11:27And so this is why also he may be
11:30preparing to do what he can because that
11:33will not take place until the new
11:34administra the new house and Senate
11:37takes order in early January and that
11:39could be why
11:40they're going to try to fit a war into 6
11:42or 7 weeks soon after the election.
11:45>> Mhm.
11:45Uh speaking of oil, President Trump
11:47determined on Thursday that petroleum
11:49production refining
11:50are essential to national defense. He
11:52invoked part of a Cold War Defense
11:54Production Act allowing him to provide
11:56financial incentives for oil-related
11:58activities, pipelines, and storage of
12:00liquid fuels. The surge in costs pose a
12:03risk for Trump in the election as his
12:06fellow Republicans try to maintain
12:07control of both chambers of Congress.
12:09Are you bullish in energy right now?
12:12>> Well
12:12>> And stocks?
12:13>> Well, I'm I'm not bullish at all on the
12:15general equity market. In fact, several
12:17weeks ago I started
12:18>> Energy stocks, I mean. I'm sorry. I I
12:19meant energy stocks.
12:23>> They can still perform well, but I don't
12:25see any under value in this there. I
12:27don't If you haven't participated in
12:29that group by now, it's probably in the
12:31latter stage you're doing this and all.
12:32But one of the things I like to address
12:34on what you just pointed out, David, if
12:35you don't mind is
12:37on one hand as you legitimately reported
12:39there's reports that oil is back to
12:41levels pre-war. Yet, we're continuously
12:44massively drawing down strategic
12:47petroleum reserve. It doesn't make sense
12:50to be doing that if all this oil was
12:53back. That's why I question those
12:54reports and I think it's a whole part of
12:56trying to make this thing look a lot
12:58better than it's really been. And I
13:00think, you know, we're getting to levels
13:02there where we cannot sustain much more
13:04drawdown to the point where it may even
13:06be physically hard to keep drawing
13:08because of the way that that oil is held
13:10in them, but more importantly, it's
13:12questioning the other factor and that is
13:15diesel. People got to realize that
13:18diesel is even more important than the
13:20gasoline price because basically, at
13:22least here in the United States, things
13:24basically move from place to place by
13:26trucking and trucking's highest single
13:29cost is the is the price of diesel. And
13:31then, of course, the the part that's
13:32still not discussed from this Middle
13:34East crisis to the level that I believe
13:37it should be, and I believe we're going
13:38to see more of the effect it had in
13:402027, and that is how this coming food
13:44shortage that's going to be in the world
13:45because of the lack of fertilization
13:47that was able to get out and do the
13:49typical planting and growing and
13:51assisting, you know, feeding animals and
13:53what have you. And there's certain areas
13:55of the world that I think are going to
13:56see dramatic food shortages and all. So,
13:59the Middle East situation is a lot worse
14:03than we've been led to believe by this
14:05current administration for many months.
14:07Now, don't get me wrong, they did a
14:09marvelous job of massaging things and
14:11all to keep the stock market up as much
14:14as it could, but I think even now people
14:16have come to realize with $115, $120
14:20oil, it doesn't matter what you're
14:21telling us, we know there's problems
14:23from that.
14:24>> I've always thought the markets know a
14:25lot more
14:27than we do. You know, the markets know.
14:29The oil market is like you said, it's
14:30still high, you know, despite Kepler
14:32data and Morgan Stanley data telling us
14:34that you know, oil throughput is at
14:36pre-war levels. Then again, I don't
14:38really have any data to disprove that,
14:40but you know, I've heard all sorts of
14:42narratives as to why that is. Perhaps
14:44shipping insurance costs are just so
14:46high that it's reflected in the end
14:48crude price. Perhaps shipping costs have
14:51just become very high overall, and so
14:53that's feeding into the crude oil price
14:56you know, dollars per barrel. I don't
14:58know what the case is. All I know is
15:00that right now oil is still near
15:02all-time highs, and I'm I'm concerned. I
15:05you know, I have a gas car. I don't
15:06drive all that much, but I like many
15:08other people, I have to allocate more
15:10money to gas than I did before. How do
15:12you see consumer sentiment and the
15:14consumer strength continuing if let's
15:16say this continues? Now, on the one
15:18hand, you could argue maybe people have
15:19just adjusted, but on the other hand,
15:22maybe things will get worse. What do you
15:23think?
15:24>> Well, you know, I've been around this
15:26thing for 42 years and I've seen a lot
15:27of elections. And when the polls are
15:29done and they talk to the people that
15:31went in and voted and all the analysis
15:33comes back, there's one thing the
15:35average person tends to vote more about
15:37than anything else, and that's the cost
15:38of their pocketbook. How much things
15:41cost and how things are going in energy
15:43and gasoline and all that is critical.
15:45And
15:46uh
15:47there's been no savings on that end.
15:50People have now have had to pay a lot
15:52more for for several months now. And I
15:54don't think people forget that. And I
15:56think that's part of what they're going
15:57to remember when they vote. While Trump
16:00is not running himself, the way people
16:03will look at it is is where does he come
16:05from? He comes from the Republican side
16:07of the aisle. And therefore, I think a
16:09lot of Republicans
16:11uh have a strong challenge ahead of
16:14themselves in their races, whether for
16:16state governors or Senate or Congress,
16:19to argue that we're better off now than
16:21we were a year or two ago. I think most
16:24Americans, or at least a large
16:25percentage of them, would argue that's
16:27not the case.
16:29>> A couple of developments have happened
16:31in the beginning of since the beginning
16:32of October. I think I had you on in
16:34September, so a few new things have
16:35happened since you were on last on the
16:37show, Peter. First of all, the 10-year
16:39yield has
16:40um has come down from its highs of 5.3%
16:44now down to below 5%. Meanwhile, the
16:47Nasdaq has sold off um as as you're well
16:50aware uh in the same period, while
16:53defensive sectors like consumer staples,
16:55I'll just pull that up here,
16:57uh healthcare has gone up, consumer
16:59staples, utilities have gone up. Um
17:02they've all outperformed the tech sector
17:04since the beginning of October. The
17:06rotation into defensives have already
17:09started, Peter.
17:10Uh what is the market anticipating right
17:13now?
17:14>> Well, the market is anticipating at
17:16least a
17:17correction. I think at the very minimum
17:20we've seen hedge funds become very
17:22short.
17:23This was happening by the way while the
17:25public in the last couple weeks
17:27aggressively went into technology funds.
17:30Professional community was moving out
17:33while the general public was moving in.
17:35Uh
17:36I just think as I stated at when we
17:38started last time when we we spoke that
17:41after our Labor Day here,
17:43uh we needed to be in a much more
17:45defensive position. The stock market was
17:47giving off all sorts of signals that it
17:49basically at the great minimum ran out
17:52of steam. And even more so could
17:55possibly see significant declines. And
17:57Dave, I don't know if you have any type
17:59of chart that you can show, but if you
18:00were able to look at the S&P 500 makeup,
18:04you would find several hundred of them
18:06are down 20% or more from their highs,
18:09which would qualify as a bear market
18:11already. And this is increasing. There's
18:14more of those fitting into the category.
18:17There's more new lows than there are new
18:19highs. These are all things that while
18:22people don't look technically at the
18:24markets the way they used to from 20 or
18:2630 years ago because of all the computer
18:28trading and passive investments and all,
18:31these are still good indicators to
18:33suggest that at the very minimum it's
18:36going to be much more challenging for
18:38the bulls to continue the market moving
18:40up. And once this market stops going up,
18:44then that enters that thing that you've
18:46spoken about and I know you've had
18:48guests talk about it. And that is does
18:50the passive investment flow
18:53slow down, dry up, or turn actually
18:56negative. And that was the last bastion
18:59that the bulls could hold on to. And
19:01that was the passive investing funds
19:03that continue to flow in and keep a
19:05fairly narrow part of the market up. And
19:07boy, in [clears throat] but a market
19:09that a lot of people look at. And that's
19:11probably going to be the the key to
19:13whether it's a simple correction or it
19:15turn into a bear market.
19:17>> This is um
19:19Yeah, I've seen that stat before. This
19:21is a
19:22website that shows a share of stocks up
19:24or down year-to-date. 29% down more than
19:275% and 20% down more than 15%, 7% down
19:30more than 30% year-to-date. Uh at some
19:33point this was even higher.
19:35Um of course there's also a share of
19:36stocks that have been up a lot more than
19:38that. But the breadth has deteriorated.
19:40I've heard that from several people on
19:42the show. Uh Peter, uh the another
19:44another development I would like to
19:45bring to your attention this week.
19:47Several tech stocks have reported
19:48earnings. What we saw from Meta for
19:50example is that while their revenues did
19:52climb, their profitability declined
19:54significantly. Their free cash flow is
19:56negative $3 billion in the last quarter
19:59adjusted for the fact that they've been
20:00investing heavily in data centers even
20:03though their overall cash flow is
20:04positive by the order of $31 billion. Uh
20:07meanwhile CoreWeave, which is a what's
20:09called a neo cloud company. They buy
20:11chips to rent out to companies that need
20:13AI computing. Their their bond yields,
20:16corporate bond yields, unsecured bond
20:18yields have now gone to 15, 16% near in
20:21junk bond territory. The bond market is
20:23sniffing out that these companies may
20:25not even pay back their debt.
20:27Um what have you seen?
20:29Uh and I'll stop here with my with my uh
20:31stats, but what have you noticed based
20:33on your research with what's happening
20:35in the tech sector and their credit
20:37status?
20:38>> Well, you're absolutely right. Again,
20:39it's been something that I and many
20:41others have been speaking about. It
20:42hasn't just been from my mouth, but
20:45the fact that the low end of the
20:47corporate bond market has become
20:49terribly, terribly uh weak. Uh
20:52once you start seeing yields of that
20:55nature, there's a big question of
20:57whether or not they're going to be able
20:59to continue to pay interest let alone
21:01pay back the principal. And they're not
21:03alone in that. There seems to be more
21:04and more of those fitting that criteria.
21:07Now of course, there's been a great
21:08movement by institutions to buy
21:10insurance from that through products
21:12that are offered to kind of hopefully
21:13balance off that if you take a loss in
21:15the bond, the insurance you bought makes
21:17up for it. But, I think a bigger
21:19interesting story, and I don't want to
21:20hop you out from one sector to another,
21:23>> Sure.
21:23>> but over the last couple years, we're
21:25watching big technology companies that
21:28were having dramatic free cash flow uh
21:32go to negative cash flow. And then the
21:34mining industry, after many years had a
21:36lot of negative cash flow, now has
21:39record free cash flow, but no one
21:42stampedes into them the way that they
21:44stampeded into the technologies. It's
21:47one of the other reasons why personally
21:49that I've gone, as you and I speak, by
21:51the end of this day, I'll be fully
21:53invested in them again. But, it's an
21:55interesting dynamic of how the
21:57technologies have shifted, and now I
22:00think that's one of the other reasons
22:02why you've seen a lot of people becoming
22:04bearish or concerned, because without
22:07technology, if you took technology out
22:09of the stock market these last few
22:11years, the market's down a lot. It's
22:14really been the the breadth and the
22:15holding and the the bulls, so to speak,
22:18to the bull market. And with that
22:20rolling over, that's why I said at the
22:22very minimum we're going to face a
22:23significant correction. Now, I'm going
22:25to put out an asterisk to you, and this
22:27only comes from experience. Others with
22:29same experience may not agree with it,
22:32but it's certainly important in my book.
22:34From our Thanksgiving Day to New Year's
22:38Day, I call Wall Street a
22:40say-no-to-Bah-Humbug
22:42zone.
22:43Most people don't want to be bearish,
22:46even if they are, during the holiday
22:48atmosphere. In fact, it's kind of
22:50unpopular while people celebrating and
22:53People tend not in the United States,
22:55David, between Thanksgiving and New
22:57Year's to be more optimistic than any
22:59other period during the year. The
23:01holidays have a lot to do with that.
23:03>> Yeah, that's why there's a Santa Claus
23:04rally, right?
23:05>> Santa Claus rally, all that stuff. So,
23:08it it becomes more difficult, and even
23:10if people are bearish, they say the same
23:12thing for like those of us that going to
23:14lose weight. At January 1st, I'll start
23:16on that. Meanwhile, I'm stuffing
23:18Christmas cookies down my mouth. The
23:20same is in the stock market. People
23:22don't really want to start being bearish
23:25and giving out bad news during that
23:27period. So, if we are to have a serious
23:29correction or the an onslaught of a
23:32a bear market, it needs to start really
23:35showing itself between now and the end
23:37of November. If it doesn't occur by
23:39then, then chances are it probably won't
23:43begin at least until January.
23:45>> Okay, uh switching back to gold mining
23:46stocks as you brought that up. Here's
23:48I'm just using Agnico Eagle as an
23:50example. Uh they're they're a company
23:51that um some of my guests have liked.
23:53Anyway, um Agnico Eagle is Let me just
23:56Let me just put this chart and overlay
23:58this with
23:59the gold price, GLD, right? I I I Let me
24:02offer an explanation as to perhaps why
24:04you know, these stocks aren't popular.
24:06Perhaps because they're still tracking
24:08gold, which is down. Yes, they're
24:09printing free cash flow like never
24:11before, and they're fundamentally
24:13probably very sound companies, but the
24:14market still determines that they follow
24:16the gold price very closely. So, we have
24:18to talk about gold if we're going to
24:19talk about the gold mining sector. Uh
24:22gold is interesting right now because
24:25even though the 10-year has been coming
24:26down, we're not seeing more relief on
24:29gold, which is disappointing for some
24:31gold investors who were hoping that
24:33lower interest rates, eventually if they
24:34do come,
24:36was going to push up gold, and gold's
24:37just gone the other way. What's
24:39happening right now?
24:40>> Well, first of all, David, what
24:42There's two markets, and and again,
24:45maybe I'm a little bit different than
24:46some of your guests, but there's the
24:47paper market, and then there's the
24:49physical market. And of course, this
24:50tracks
24:51the paper market, and the paper market
24:53has been
24:54basically played to the downside since
24:58late August. And and it broke down. It
25:01broke some key technical supports. And
25:04people basically felt, including me,
25:06that we may need to actually touch and
25:08go below 4,000 before we can finally get
25:11a bottom and get the resumption of a
25:13very long-term bull market. And that's
25:15what's playing out right in front of us.
25:18But I also don't think it's going to
25:19happen in a day or two. Even if interest
25:21rates fell some more, we have to go
25:23through You pay for damage. The this
25:27stock the
25:28gold has been damaged technically and
25:30you could argue both in the short term,
25:32even a little bit in the intermediate.
25:35Because if you went to a longer chart,
25:36if you can bring up maybe a 5-year
25:38chart, Dave, I see that you can do that
25:40from the bottom there.
25:41>> Yeah.
25:44>> This is a market that after really
25:47taking off and accelerating, it's had
25:50now two lower highs while still
25:52supported at 4,000.
25:55There's an argument, I certainly am not
25:57supportive of it, but it's a legitimate
25:59argument, that even if we do rally, if
26:03we don't take out that previous high and
26:05get say back to 4,800, eventually we're
26:08going to break this 4,000 and go down to
26:10the last support around 3,400
26:133,500. Now, I don't think that's the
26:14primary or likely outcome, but it's
26:17something people are looking at and
26:19therefore
26:20we're going to need to see some sort of
26:22base built here for at least a few weeks
26:25before people are going to say that this
26:274,000 area has proven again to be
26:29supportive and be willing to ride this
26:33market back up. The good news is we're
26:36getting out of a seasonally weak period
26:38for gold and moving into a stronger
26:41seasonally bullish period for it. But
26:43right now you have to respect the bears.
26:46I'm a Listen, I'm committing
26:49virtually all my investment capital to
26:51this area now. So I'm obviously betting
26:54it's not going to go much below 4,000.
26:57But, you also have to respect the
26:58technical aspect and the technical
27:00aspect now is
27:02gold and silver, even more so, has seen
27:05technical damage that needs to be
27:07repaired before we can expect a major
27:10move back up.
27:12>> Today is a very important day because
27:14today is the day that gold reaches 4,000
27:18once again. And it's only touched 4,000
27:20twice in its life. Basically, end of
27:222025 and then earlier
27:25when it fell from its highs. So, yeah,
27:26you're right. This is a very key level.
27:29Um
27:30you know, if I were to, let's say, ask
27:32you and your and your planning group,
27:34they you know, collectively manage a lot
27:36of money, like you said. They they
27:38they're they're looking at how to how to
27:39how to plan for their retirement. And
27:42you have gold on one hand and you have
27:45bond yields at well, it's under the 10
27:47years under 5%. But, let's suppose we we
27:49wind the clock, you know, a couple weeks
27:51when it was above five 5.3%.
27:54Would that be an attractive enough yield
27:56for you to say, you know what? Maybe
27:57it's time to go back into fixed income,
27:59lock in that 5.3% for 10 years, and
28:02we're good.
28:03>> So,
28:04one of the things that I like about my
28:06team is we we're not all full
28:08agreements. We paint sometimes very
28:11different pictures for our clients to
28:13then take in all of that and conclude
28:15then what they think is best for them.
28:17Our fixed income guy's been of a
28:19different opinion on bonds for me for a
28:21few years now.
28:23My personal opinion was that we were
28:25overdue for a countertrend rally, which
28:27came in almost exactly the day I said
28:30it, and that interest rates, while
28:33can get under a little bit of 5% on the
28:3510-year for a while, I'm in the camp
28:38that interest rates are going up, not so
28:41much because of inflation, not so much
28:43of a because of a war, but the fact that
28:46people around the world are recognizing
28:49it's becoming more and more challenging
28:51for this country to keep borrowing more
28:54than it takes in and eventually will be
28:56challenged to make interest payments on
28:59a timely basis and therefore are going
29:02to require a higher yield of in order
29:05for people to continue giving us their
29:08money and that's why I still believe
29:10that we will see a five and a half six
29:13percent
29:1410 year in 2027. Now
29:17the corporate bonds are a completely
29:19different story. There
29:22I'm very concerned about the groups that
29:25you spoke about.
29:26>> Yes.
29:27>> That that where
29:29not only will it can they miss interest
29:30payments but they'll be maybe 10 20 30
29:33cents on the dollar return back because
29:35that's all they can on their bonds.
29:38But keep this also in mind.
29:40While we were very low in interest rates
29:43four or five years ago
29:45we didn't have much competition in the
29:47world for capital but now we do.
29:50Interest rates and levels of bonds are
29:54lot more comparable to the US now. In
29:57fact, China even though their stock
29:59market has come down, they yields have
30:02dropped dramatically. Their cost of
30:04money's cheaper now than for a lot a lot
30:06of years for them and all and that's
30:08because people are feeling actually
30:10safer to put money there than in the US
30:12Treasury. And and that takes a big step.
30:15I mean I like China for a lot of reasons
30:17but I don't think fixed income when I
30:19think of China. But we here in the
30:21United States have a huge huge problem
30:25that a
30:26a day of reckoning for decades of
30:28mismanagement and fiscal
30:31insanity is coming due and it's coming
30:34due on the fact that we cannot keep
30:36borrowing and then expect to make timely
30:39payments on our interest and the world
30:41is acute to that. They realize that.
30:43That's why there's been so much dramatic
30:45selling by foreign ownership. And if not
30:48for US hedge funds stepping into the
30:50Treasury market and using leverage, by
30:52the way, of buying them, we probably
30:55would have higher interest rates than
30:57they are now. So, the bond market is
30:59much bigger and much more important to
31:03investors than they give it credit. They
31:05focus too much on the stock market and
31:07not enough on the bond market.
31:10>> But if I were to say to you, Peter, look
31:11at this chart of the 10-year, uh 5 years
31:13ago when we had, you know, this headline
31:15CPI in the US at 9.1%,
31:19I was really concerned about hedging
31:20against inflation. I'm still concerned.
31:22Now, headline CPI is not at 9.1%, but
31:25the point is back then the the 10-year
31:27was at what? .5, not not even 1%.
31:30There's no way the 10-year yield is
31:32going to hedge against inflation at the
31:33time. Now, it's much it's a different
31:36story. 5% of the 10-year is much higher
31:39than the reported CPI number. And so,
31:41there's a case to be made where this is
31:43becoming a more attractive inflation
31:44hedge than gold, which has already
31:47climbed by 200% in the last 2 years.
31:50What would you say to me?
31:51>> Well, I would say to you that gold
31:53doesn't have a $40 trillion
31:56uh deficit that that it has to meet uh
31:59that the United States Treasury is going
32:02to have to meet. And there's another
32:04thing important. Remember when we were
32:06down at that half and 1% uh level,
32:10people was all on Wall Street still
32:13putting all sorts of money all the way
32:15up in that increasing yields saying the
32:17bottom is in in bonds, the bottom is in.
32:19So, here's a statistic.
32:21I know it because it was the biggest
32:23call of my life. On January 1st, 2022
32:27to 2 days ago, gold's up 131%.
32:31The 10-year bond, including its give
32:34including in interest it pays, is down
32:379% for that whole time. Now, let me just
32:40tell you this, David,
32:41the gray hair and old hair and you
32:42always like when I joke and say I I'm
32:44I'm from the dinosaur age. I am. I
32:47started in the early 1980s. David, we
32:49didn't even know what a trillion was. I
32:51could not explain to you when I started
32:53as a stock broker how what equals a
32:55trillion cuz nothing was in a trillion.
32:58Now, we have $40 trillion in debt and
33:02we're still running two to three
33:04trillion-dollar yearly deficits. We're
33:07only a few years away now to where
33:10paying the interest is going to be
33:12coming a real challenge. So, I don't
33:14want to lock in my money for 30 years
33:17into something, especially when I can do
33:20a one-year T-bill at 4% or a two-year it
33:24was almost 5%.
33:26To get that extra half or so percent for
33:2828 more years of locking up my money was
33:31not prudent to me and that was probably
33:33the biggest difference of my opinion
33:35versus our fixed-income guy.
33:37>> You know what? Let's talk about the
33:38'80s. That was my next final segment
33:40here. If I were to say to you
33:42to Peter Grandich of the mid-'80s and
33:45say, "Hey, Peter, one day you're going
33:46to get a stock, let's call it Nvidia."
33:49Well, we don't know Nvidia wasn't around
33:50back then. One day you're going to get a
33:52stock worth $4 trillion in market cap.
33:55One day one day that stock is going to
33:57be in the S&P 500 and it's going to be
33:59worth double the entire GDP of Canada.
34:01What would you have said?
34:03>> Not possible.
34:05>> Okay.
34:06>> And that's You're asking me to be honest
34:08and back then and I don't remember we
34:10had limited mindsets at a time compared
34:12to what the expansion was.
34:14>> That's That's a very important answer.
34:16Why at the time would you have not
34:18thought what we see today as possible?
34:21What's different in the last 40 years?
34:23>> I
34:23we viewed countries as a whole,
34:26especially in the Western civilization,
34:28as more
34:30more
34:31reliable than any corporation could have
34:34been. That it was safer, so to speak, to
34:37be in Canada than the US. Listen, if you
34:41want to know a country that made a 180
34:43during my career, it's not so much the
34:44United States, it's Germany. In the
34:47early 1980s, Germany was considered for
34:50its size and all the strongest economic
34:52power in the world. It was the engine
34:54that was driving and the reason that
34:56there was European unification and all
34:58of that.
34:59They can't even get out of their own way
35:02now. That's how bad things have turned
35:03and all. And they're not alone. A lot of
35:05countries in the Western civilization,
35:07we could argue both your and my country
35:09respectively, are not as well off
35:12economically as we were 40 years ago and
35:15all. So, people shifted in and and now
35:18created a corporation that they're
35:20treating like a country. I think that's
35:23a huge mistake. I don't think any public
35:25company, because the public company
35:27doesn't have some of the things a
35:29government can do, including taxation
35:31and things that that that they can't ask
35:34for. And so, when any one thing gets
35:36that big and treated bigger than a
35:38country, I'd be looking to run from it,
35:40not to run into it.
35:42>> When you think back at the root causes
35:45of the 1987 market crash, and there were
35:47many, and you know this much better than
35:49me because I wasn't even alive back
35:51then. I'm reading about this in the
35:52history book. But anyway, what about
35:54today reminds you of '87, if anything?
35:57>> Well, here's what I've been asked
35:58because I have on record I was able to
36:01not what claim to fame was as a
36:03forecaster back then for calling the '87
36:05crash.
36:07I side-stepped the '87, the 2000, and
36:092008. I was out of the market when they
36:12reached
36:13and became really
36:16the only real three bear markets, if you
36:18want to call it that this we've seen in
36:20the last 40 something years.
36:22What's different now is I think we're
36:24worse off than any of those three
36:26periods. and the reason is
36:28the country, at least the US,
36:31was in a position to do something to
36:34eradicate whatever that crisis was
36:36caused by.
36:38Uh I don't believe we are that anymore.
36:40Uh whatever is the cause of the next
36:43crisis, we don't have the ability to
36:45create trillions of dollars on demand
36:47like we even did in COVID anymore. If
36:49the United States suddenly tomorrow for
36:51something happened and we had to come
36:52out with 5 trillion more money, the I
36:55our markets would just crater because
36:56people realize, man, they're done.
36:58There's no way we can even count on
37:00getting the principal back, and they're
37:02going to have a real tough time paying
37:03the interest. So, the difference now is,
37:06I think economically, socially, and
37:07politically, our country is much more
37:10worse off than the previous three big
37:11declines.
37:13>> What what if I said to you, well, Peter,
37:14maybe today there's some
37:16more stringent regulations on leverage
37:19in your trading accounts. We don't We
37:21have circuit breakers now, so you can't
37:22have a 22% crash in the Dow in one day.
37:25You know, things are a little bit safer
37:27today than the '80s. What would you say?
37:29>> Well, you see, what you're saying is
37:30safer in terms of not having a one-day
37:32crash, but still
37:35things will be down as much if not more
37:37percentage. I agree with you. The '87
37:39crash only
37:41happened for that point because we had a
37:43new system of how to bring small orders
37:46into a system, and it was it was used to
37:48as an insurance policy, and it created
37:50momentum in the market that day that
37:52couldn't be overcome. You're right,
37:54there's circuit breakers, but I'll tell
37:56you this much, I don't think it's going
37:58to stop it from a market being down 20%
38:00in 5 days or 20 days. And realistically,
38:03David, realistically, Evan, if we're
38:05real honest, and hopefully your audience
38:06is honest with itself, will it really
38:08matter if we lost 30 or 50% in one day
38:11or 10 days? I think pretty much after
38:14those 10 days, whether it was one or 10,
38:16we're pretty well going to be in the
38:17same boat. We're going to have no oars.
38:19>> Here's what is what I'm wondering after
38:22the dust settles. I remember I was in I
38:23was in university in 2008. It was my
38:25first year and I didn't know anything
38:27about finance. So, we had a we had a
38:28group project the professor asked us,
38:30"Hey, you know, make a fictitious stock
38:32portfolio." And I was like, you know,
38:33I'm 18. What do I What do I buy? This is
38:35right after the Lehman crash. Somebody
38:37in the stock said, "Literally buy
38:38anything right now and you make money."
38:41We all laughed he turned out to be kind
38:42of right.
38:43Um and
38:45if we have another situation where that
38:48happens, I'm not saying it will, but
38:49let's say that happens, will we have a
38:51situation where you buy anything and you
38:53make money or are we going back to 2001
38:56when the Nasdaq didn't recover for 14
38:57years?
38:59>> Well,
39:00so
39:01from 60
39:0367, I think it was, to 1980, the Dow
39:07traded between 700 and 1,000.
39:10In 1980, people were so bearish on Wall
39:12Street that there was a famous Business
39:15Week cover that said equities are dead.
39:18Interest rates went to 20% inflation was
39:20double digit.
39:22Reagan was going to start this nuclear
39:24war with the Soviet Union. Japan was
39:26going to take over the world and not
39:28China.
39:29And the Arabs were going to just keep
39:31holding oil back from us.
39:34A guy that no one knew of came out of
39:36Gainesville, Georgia and predicted the
39:37Dow was going to go to 3,600. His name
39:40was Robert Prechter Jr. And he used
39:42something called, which nobody knew of
39:44then, the Elliott Wave Theory. They
39:46scoffed at him. In fact, we used to have
39:47a famous show called Wall Street Week.
39:50They were literally made fun of this
39:51guy. "Pal, how can the Dow go to 3,600?
39:54It can't get past 1,000."
39:56Well, it went a lot further than that
39:58and all. The perception then was so
40:01bearishly negative. We're 100 we've been
40:05up until the last few days 180°
40:07different than that.
40:09>> Yeah.
40:09>> The very thing you just said is what 2/3
40:12of financial advisors are telling their
40:13clients right now because they've never
40:15been in a bear market. And they're
40:17saying it right. Hey, I learned how to
40:19drive in a one-way street. Mr. and Miss
40:21Investor, if the market goes down a
40:23little, just buy more because we put the
40:24pedal to the metal and we go further
40:26than we were before. They're absolutely
40:28correct. Until that doesn't work
40:30anymore. And major part of that reason
40:33that that has occurred because of
40:35passive investing. And the day passive
40:38investing flips and it's no longer
40:40certainty money flows in, but money
40:42starts coming out of passive
40:44investments, you're going to have the
40:45worst decline ever, maybe even worse
40:47than 1929. I'm not saying it's
40:49happening.
40:50>> Yes.
40:51>> will tell you that if that occurs, even
40:54that mentality you just expressed now of
40:56buying everything won't work because
40:58we're in far worse shape economically,
41:01socially, and politically now than in
41:03any period in this country's history.
41:05>> I'd like to ask you about some of the uh
41:06base metals. Now, you like copper. I
41:08don't know if you still like copper.
41:09It's still about all-time highs. But if
41:11the infrastructure build-out around AI
41:13slows down, doesn't that put pressure on
41:15copper?
41:17>> Copper's need, taking the AI situation
41:21out completely, and
41:22>> Yeah.
41:23>> can get him, interview him, Robert
41:24Friedland, because he describes it the
41:26best.
41:27Without AI,
41:29just normal expectation of growth in the
41:32world, we need six tier one copper
41:36projects to come online between now and
41:382050
41:40in order to meet the expectation of
41:42normal growth.
41:44Right now, we've only had six since the
41:46year 2020. So, the supply and demand
41:49scenario, not just for copper, but for
41:52other metals, too, but for copper, is so
41:54overwhelmingly bullish. Yes, there'll be
41:57corrective phases and down, but this is
42:00a metal that's only going to work higher
42:02over time, in my opinion.
42:05>> Okay. Final question. Look, um you've
42:08made a lot of money in your career.
42:09You've even been up pretty open publicly
42:11about how you've lost a lot of that
42:12money in your career. In 2027, what
42:14would you have done differently?
42:17>> If you mean what would I do for next
42:19year?
42:19>> Sorry. Let Let's say yeah, what would
42:21you like you know, taking the lessons,
42:23if you were still young That was a bad
42:25word badly worded question. If you were
42:27still young again in 2027, knowing what
42:29you know now, what what would you do
42:31differently in today's environment that
42:34you maybe have, you know, done
42:35differently before?
42:36>> Okay, so I think I get what you're
42:38saying. So what
42:39if I could go back in time, I think is
42:41the way to phrase that, knowing what I
42:43know now, what would I have not maybe
42:45done to have not had dealt those losses
42:47that you speak of and that I speak of
42:49openly. Well, part of that part of the
42:52problem working in the financial service
42:53industry, thankfully you've never shown
42:56signs of this so far anyway. You've
42:59never been hubris in your work since the
43:01first day you interviewed me in that
43:02little apartment till today. But in the
43:05financial business,
43:07ego and hubris and pride become a big
43:10part of your daily life. You become
43:13somewhat invincible. In fact, there was
43:15a period of time especially when I would
43:17read all my news clips, was on national
43:19TV every week, speaking all over the
43:21world, reading my own press clips,
43:24that when the market went down and I
43:26thought it should have went up, it's the
43:28market that was wrong, not me. I
43:30suffered what we called back in the '70s
43:33from the Happy Days show, I couldn't say
43:35I was wrong. So, one of the things I
43:38would just tell you is is that I've
43:40learned that I can be wrong and will be
43:43wrong
43:44even though sometimes when people listen
43:46to a financial advisors, you would think
43:48they never lost any money based on how
43:50they speak. I think the other question
43:53that's been asked to me already and
43:55maybe this is also part where you were
43:56trying to get at.
43:58What do you see in 2027 that maybe
44:01people aren't seeing at the moment? And
44:03there I would tell you I think it's
44:05going to be better to focus on capital
44:07preservation than capital appreciation.
44:10It doesn't really matter if the stock
44:12market doesn't go down, but if it
44:14doesn't keep going up, there are a lot
44:16of people living beyond their means.
44:18Seven out of 10 families we see, David,
44:21across a wide spectrum of the United
44:23States, from professionals to people
44:26working for a company punching a clock
44:27to professional athletes, they live at
44:30least one lifestyle above their
44:32finances. And the only way you can do
44:34that is you're spending more than you
44:36make. And that needs to reverse. And so,
44:39when people talk about how bad the
44:41United States is and all, until
44:43Americans start living the right way and
44:45spending less than they make, we're all
44:48going to have problems. So, I would tell
44:49you that one of the things that I think
44:51is most important for people, spend less
44:53than you make, live within your means if
44:56not below your means, and make capital
44:58preservation more important at this
45:00point than capital appreciation.
45:03>> Final question, but how do we know we're
45:05wrong? You know you were wrong in
45:06retrospect, but let's say I really like
45:08a stock. I just I don't know, Apple, for
45:10example. I really like Apple. I believe
45:13in Apple's future. Let's just suppose I
45:15do. The stock's down,
45:17you know, if I really believe in my
45:20thesis, I would double down and buy more
45:23on the dip. Time will tell if I'm right
45:25or wrong. How do I know I'm wrong in the
45:27moment?
45:28>> Well, you time will tell you.
45:31>> Yeah.
45:31>> But in this world, because
45:33here's an interesting statistic that
45:35maybe you should look into and talk to
45:37special guest about. In 1980, the
45:39average stock was held 8.5 years. At the
45:43end of 2025,
45:45the average hold was 6 months.
45:47>> Wow.
45:48>> So, one of the things that's changed
45:50dramatically during the dinosaur age to
45:52now is people are not truly long-term
45:56investors anymore.
45:58And the shorter term you are, there's
46:00more volatility in short terms, and they
46:02tend to make you make emotional
46:04decisions, and some of the worst
46:06decisions in life in general, let alone
46:08in the stock market, are ones that are
46:10based on emotion, not on fundamentals.
46:14>> All right, Peter. Great talk as always.
46:16You've proven time and time again why
46:17you're a fan favorite on the show, so
46:19welcome back. Where do we follow you?
46:22>> Well, mostly on my X page, and but there
46:26is a a website petergrandich.com, and I
46:28am just continually grateful to see how
46:30you're growing your business, and
46:33happily hear now that you may not soon
46:35be the most eligible bachelor in
46:37Vancouver. [snorts]
46:39>> We'll see. And yeah, thank you very much
46:41for your support. It's because of good
46:42guests like you that our show has
46:44continued to grow. We're at 336,000
46:46subscribers, I think.
46:47So, if you haven't subscribed, please do
46:49subscribe. Follow Peter. Links down
46:51below.
46:52And then we'll see Peter next time. Take
46:53care for now.
46:54>> God bless you, my friend.
46:56>> Thank you for watching. Please do like,
46:57subscribe.

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