A Global Economic Reset—Is It Already Happening? (Uncut) 01-31-2025

A Global Economic Reset—Is It Already Happening? | Simon Hunt

The structure of the global economy is changing. The question is, does it change peacefully or will it end in war? Well, welcome to Speak Up. I am your host, Anthony Scaramucci.

On today’s episode, I am joined by Simon Hunt. Simon is the founder of Simon Hunt Strategic Services and his work focuses on key drivers of the global economy, including China’s evolving economic role, industrial metals markets, and the energy transition. He’s widely recognized for his expertise on the Chinese economy, also geopolitics and all things related to energy.

And so it has to have been a busy week for you thus far, Simon. Tell us where we are right now. What do you think of what’s going on in the AI space related to China? What do you think is going on between the United States and China? And what should we be worried about, sir, or happy about? Well, I don’t know where to start with all those questions you’ve thrown at me.

First of all, I’m not an expert on A1. So the only comment that I would make is that don’t think that China is the bottom of the pile in technology and semiconductors. They are extremely clever and hardworking.

And what we’ve seen, what we saw yesterday, I think, is only just the start. So I won’t go any further on that subject. Where are we in the big picture, I think, is the most important question.

And a lot of that revolves around geonomics, i.e. the interface between geopolitics and economics. There’s no question that the global economy, the structure of the global economy is changing. The question is, does it change peacefully, or will it end in war? So my bottom line, and we can explore it further, is that over the next couple of years, we will have brief periods of rising tensions, which will unsettle financial markets.

They’ll be relatively brief, but that by the time we get into in or around 2028, there is a large risk that the growing tension between the West, led by America, and the BRICS group of nations will actually break out into war. Because should the BRICS group of nations solidify into a working entity, that group risks taking America off its hegemonic pedestal. So in a few brief comments, that’s where we see, what does this mean for financial markets? I think that over the coming six odd months, reality will dawn that America’s economy is not as robust as it is being made out to be, and that with some short-term escalation in geopolitics, we will see a big correction in global equity markets led by America, and possibly it started yesterday, where we would see in round numbers 20% coming off, shall we say, the S&P, and 40% in the FAANGs.

What brings us out will be the release of Trump’s animal spirits in the form of tax cuts, deregulation, etc., accompanied by monetary stimuli in amongst global central banks, as well as fiscal policies outside America. That will lead us into two odd years of strong recovery in business activity in equity markets, but accompanied by rising inflation, to an extent that we will probably see a repeat of what was experienced in the 1970s and early 1980s, and that that situation is already tracking very well. So what does that mean? It means that US CPI hits around 13%.

What does that do to long-term bond yields? And what does that then do to America and the global economy? Voila, monsieur. Well, I mean, you said a lot, so I want to break it down with you. Let’s start with Trump for a second.

Trump’s return to power, good or bad for America, or both? Me, I would say medium-term good. Short-term causes friction. You’re making a major change.

When you have a major change, you always have conflict. But he’s setting the path for America to be on the right road, and that is good for America, and hopefully for the world. But that also depends on how he negotiates with other countries.

Yeah, so let’s go into that. The Chinese government and Trump. Now, from appearances, it feels hostile, but under the surface, I feel like that they want to cut a deal with each other.

Do I have that read right? You have that correct. So what do you think happens? I mean, let’s start with the obvious, which is that if Trump entered into a bad relationship with China by imposing serious tariffs and sanctions, China has the ability to retaliate. Look at the long list of critical materials, let alone manufactured goods, that China could stop sending to America.

If that happened, America’s industrial, military machinery would grind to a halt and much of the country’s manufacturing system. Then look at the other side. Musk has his Gigafactory in Shanghai.

He’s very close to Premier Li. Is he then going to be the intermediary between the two presidents? And he doesn’t want to see serious sanctions being imposed on China because his Gigafactory accounts for half of his EV global sales. So, from Trump’s point of view, maybe he would like to establish a dual relationship that makes China and America the two powerhouses of the world.

But to do that, he has to break the relationship between Russia and China, and between China and Iran and India, etc. My take is that those relationships are almost inviolate. And I think the attempt to split the BRICS group of nations will fail.

The principal reason why they’ve gone on too long, what would be the principal reason why that potential attempt to breach that would fail? Why would it fail? Simply because because the relationship, particularly between China and Russia, is so strong. Because both countries know that if one fails, the other is the direct target by America. They have gone a long way into starting the establishment of an alternative system to the one that America has dominated since 1946, and which has created wars across the world.

And the BRICS group, which is growing with partnerships being formed, are absolutely determined not to be so dominated in the future. Thanks so much for watching our discussion here on Wealthion. If you would like help with your wealth efforts, please head over to wealthion.com for free portfolio review.

Yeah, so let’s talk about that. I want to get your reaction to this. When I arrived in London as a student in the mid 80s, Ronald Reagan was just inaugurated to his second term.

Margaret Thatcher was the prime minister. And America had a generally, in my mind, at least as a student, I felt like Americans were well thought of. I felt like there was a good belief that America was a force for good on the world stage, particularly in terms of rejecting Soviet-style communists.

Where do you think we are 40 years later, sir? You are right in saying that that period was probably the peak in America’s ascendancy. The leaders knew how to work together. They respected each other.

Russia was moving out from being a communist country towards being a more capitalist society where deals could be made. And what we saw was large investments going into Russia from Europe, especially from Germany. And it was the start of globalization.

It was in that period or soon after that I started traveling around China. And I can remember clearly in the early mid 1990s, the word had gone down into factories that we would be joining WTO. And you better get your machinery up to date.

So all of a sudden, instead of going around a factory and being shown where not to go, there became a complete open book. What can you do, Mr. Hunt, to help us? So that was the period when the world did work together. But then we went into the awful patch for false reasons, starting wars in the Middle East.

And then the final straw was freezing Russia’s 300 odd billion dollars of assets. And that woke the rest of the world up. We better do something.

So it’s not been a sudden change. It’s been an evolutionary one. And I mean, we weaponized, I mean, after 9-11, we more or less weaponized the dollar.

We applied sanctions. No question about it. Yeah.

Okay. So how do you invest in this landscape, sir? And then we’re going to open up the outside questions. How would you invest in this landscape? You’re bullish near term? No, I’m bearish near term.

Bearish near term. Okay. As I started by saying, I think over the next six to nine months, we’re going to have big corrections in equity markets.

That will probably lead to falls in 10-year treasuries, having first reached about 5%, probably falling to 3%, 3.5%, which would be exactly what the new Treasury Secretary would want to see, because he’s got a lot of refinancing to do. And then, as I mentioned, we will start the emergence of what I call the last hurrah, a big bull market in equities, base metals, et cetera, commodities that will last into 2027. But as I said, accompanied by rising inflation, which will lead to bond yields 10% plus, with US inflation 13%, global inflation 15%.

And that brings a collapse in global business and equity markets. So what would you buy? Would you focus on commodities then? What would you buy? Because obviously cash is inflating, so it’s devaluing. So where would you put your money? I would still be holding cash.

As I’ve said, I would not be advising that you buy into this current dip. It’s got further to fall. But if we’re going to have 10-ish percent inflation, what would you be looking for? Yeah, hold on.

That’s not until 2027. We’re in 2025 now. I see.

Okay. Okay. So you’re saying inflation won’t start to accelerate for the next 24 months.

I say that by the end of this year, early next year, that’s when inflation will start rising sharply. One of the drivers of inflation are going to be food prices due to two weather cycles that will start either end this year or early next. One is the Beaufort cold water cycle, which is a bunch of cold water is trapped around Greenland.

It starts getting released into the Atlantic. That brings your ocean temperatures down. And the second is the 89-year Beaufort cycle, which 89 years ago created the US Midwest dustbowl.

So we’re going to have external shocks that are going to create food shortages in many parts of the world and soaring food prices. Okay. Let’s take some outside questions.

You’ve been very generous with your time. Thank you, sir. I’m enjoying our conversation.

Let’s go to the outside. So what are your current views on the outlook for gold? This is Ethan from the United Kingdom. Good question.

The simple answer is buy all the dips and hold. Why do I say that? There’s increasing evidence that central banks are diversifying out of dollars and euros, et cetera, and buying physical gold. The big driver, in my view, is what’s going on in China.

China’s citizens and institutions own something around 25,000 tons of gold, which has been bought directly off the Shanghai Gold Exchange, which began operating in 2002. It would not surprise me if one day, don’t ask me when, maybe quite soon, China announces that its currency is supported by the gold which its citizens own, and they will state a number. On top of that, China’s various ministries, in addition to the PBOC, have something around another 25,000 tons, all of which has been imported since the stats go back to the early 1950s.

Whatever the PLA imports is never reported in customs data. I had a friend who did a lot of business in China, a big, big company, mega company. He told me one day that he had to know a lot of different people at senior levels in China, one of which was a senior general who invited him down to headquarters for drinks at four o’clock in the afternoon.

He said after a couple of hours, the general tapped him on the shoulder and said, let’s go for a walk. They went to a large warehouse and they’re stacked from floor to ceiling with bars of gold, just to confirm the statistics that you can actually piece together. So, continuing with that theme, Russia holds much more gold than they announce.

It’s held in the company, I’ve forgotten the name, which sits over the central bank. So, Russia’s real gold reserves are north of 12,000 tons. Okay.

Let’s go to the next question. What’s one geopolitical trend that most people aren’t paying attention to, but will have a major impact in the next decade? This is Alex from Colorado. Ah, good question.

Which geopolitical trend are people not focusing on? We know the Russia’s war with NATO, so we know or we think we know what the consequences of that will be. We know that the West is very anti-Iran and there is a risk that President Trump will try and instigate regime change in the country. Ah, we know what Israel has been doing in Gaza, West Bank, Lebanon and Syria.

I think perhaps the one that is not being focused on enough that could upset the apple cart is what’s going on in Syria, because you have a government run by a bunch of thugs, HTS, supported by Turkey, America and Israel. Turkey has got his own ambitions, which is to recreate the Ottoman Empire that existed in the Middle East and North Africa. If they pursue that ambition, it puts Turkey at loggerheads, not only with Israel, but with America.

Where does that lead us? Turkey is a member of NATO. I think what I’m starting to think about is, go back to when Assad fell. Iran and Russia, quite deliberately, did not support Assad in the final months, because they told him what was going to happen and they allowed it to happen.

Before Assad fell, the Syrian Army’s crack brigade, commanded by Assad’s brother, shifted into Iraq, where they are biding their time. It’s quite likely that the HTS government will fail. At that moment, this is my speculation, but I think there’s some signs that it could happen, that Iran, Russia, supported by Turkey, will retake Syria.

Okay, that’s a good one, because a lot of people are not focused on that. Let’s go to another question. Do you think we’ll see a ceasefire between Russia and the Ukraine in the next six months? This is Emma from the US and from New York.

Good question. I think it could happen a different way around, which is that Trump will stop all funding and arms shipments into Ukraine. That means the collapse of Ukraine’s military.

It means then that Putin will control all of Ukraine, not just the eastern part, but the western part too. It’s at that stage, then you have a de facto ceasefire, because Ukraine has capitulated. What it also means is that NATO has been defeated, because NATO has been the full partner of Ukraine.

Is that not what Trump actually wants? Because what is he doing? He’s building up Fortress America. So, that’s the easy part. The difficult part.

So, to answer your question, yes, there will be de facto ceasefire, but there is one winner, which is Russia. Then the difficult part starts, is negotiating the future. Putin’s terms are probably unacceptable to Trump.

So, how much can Trump give without offending the anti-Russian hawks? So, anything can happen then. Okay. Let’s take our last question, and I really appreciate you being here, Simon.

Brilliant stuff. It’s our last question. What’s the one commodity you think will be most important over the next decade? Wow.

That’s James from Texas. James from Texas. James, wow.

The one the most critical. Well, what does the world really depend on for human society and industry to operate its energy? So, I come back, since you’re in Texas, it’s oil. I think it’s well said.

I think it’s going to be oil for a long time, I think, Simon, right? I agree with that. It’s all very well to say to the world that I’m going to give you cheap oil, 45 odd dollars. Well, what’s the cost price of new Permian Basin production? What is the cost price? What does Saudi Arabia need? Not 45, but 85.

Yeah, no, of course. Yeah, but you don’t want to make it too expensive because then it creeps into everybody’s prices and it slows down, right? There’s another, there’s another, Saudi Arabia, if you get oil prices down below 60 for any length of time, are they not going to be selling US treasuries to finance their deficits? Well said. Well, you’ve been very generous with your time.

I appreciate it. I hope I get the opportunity to invite you back. Simon Hunt, who is the head of Simon Hunt Strategic Services, and I’ll be buying gold after this.

As soon as we end this podcast and this show, I’ll be out there buying gold, sir. One last point, if anybody wants to contact me, Simon-Hunt.com. Perfect. Simon-Hunt.com. Thank you so much for joining us.

Have a great evening. Thank you very much. Thanks for having me on.

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