The Global Financial Reset Has Quietly BEGUN (Uncut) 04-09-2025

The Global Financial Reset Has Quietly BEGUN (And You’re NOT Supposed to Notice) | Chris Macintosh

You have old alliances that no longer work, and they break down, and new alliances that get built. And so this is what we’re watching, is this just transpiring? So I think the tariffs are actually just, they’re a part of this broad process. If you sort of go up to a 40,000 foot view, and you say, like, what’s happening? You know, when we’re in the ground looking at you, we’re going, what the hell? Why are you doing this? It doesn’t make sense.

When you take that 40,000 foot view, and you look at this from a long-term perspective, and over hundreds of years, it makes perfect sense. It’s exactly what the kind of thing that happens in these periods of time, where you have a change, essentially, of the world order. So we’re seeing that being restructured.

You’re watching Capital Cosmos. My name is Danny, and today’s guests are my good friends over at Capitalist Exploits. It’s Chris McIntosh and Brad McFadden.

Gents, thanks for coming on the show again. Danny, pleasure to be here, as per usual. Thanks.

It’s good to be here, man. Yeah, for sure. Capitalist Exploits is my favorite newsletter, guys.

So I have a special $1,000 discount that we have for our Capital Cosmos viewers. A link to that is down below. That’s Chris and Brad’s newsletters, newsletter, I should say.

And yeah, we’ll be looking at some interesting charts in this episode. Clearly, we have the market crash that’s been ongoing now for a few days. It is April 8th at the time of this recording, evening here in the eastern United States, and the markets have closed down again.

But Chris and Brad have some interesting charts that paints a much more fascinating discussion. It seems like we’re in a great capital rotation event, and we’ll get into that in just a bit. But guys, where do you want to kick things off? We are seeing this reaction to the Trump tariffs, at least in the markets.

And we saw another day where the MNAZIC is down over 2%, another red day that is. And now you have this 104% tariff slapped onto China. Where do you guys want to start? What’s the big story here? Chris, Brad, I’ll let either one of you guys kick things off here.

I mean, here’s a couple of… We’re sitting in Australia and New Zealand going, what on earth is going on over there? We had great hope for Mr. Trump and… We should have voted Kamala in, Danny. I think she would be much better than this. Oh my gosh.

Half of my viewers just tuned out just hearing that. 99% of my viewers, actually. I don’t know.

Anyway, it’s all very bizarre. It’s just, you can’t make this stuff up, Danny. Seriously, it’s just… Anyway, it is what it is.

Yeah. Chris, what do you make of this stock market crash? Is it a crash really? Or are we due… Is there more fear than is justified? There’s a couple of things. Firstly, and we’ve been talking about this for years now, is a global bifurcation.

And it’s basically a war which is fought on many fronts. So wars can be fought on financial fronts, on trade fronts, and they don’t necessarily need to go kinetic. And certainly we’ve been in a financial war for some years already.

And that’s a challenge, essentially, to the US hegemony and the US dollar. And we’ve seen that challenge come from the BRICS nations in particular, led by China and Russia and India and a bunch of other players. But by and large, there’s a challenge for supremacy.

And in these periods of time where you have this bifurcation and a challenge, you have old alliances that no longer work, and they break down, and new alliances that get built. And so this is what we’re watching. Is this just transpiring? So I think the tariffs are actually just… They’re a part of this broad process.

If you go up to a 40,000-foot view and you say, what’s happening? When we’re in the ground looking at you, we’re going, what the hell? Why are you doing this? It doesn’t make sense. When you take that 40,000-foot view and you look at this from a long-term perspective, over hundreds of years, it makes perfect sense. It’s exactly the kind of thing that happens in these periods of time where you have a change, essentially, of the world order.

So we’re seeing that being restructured. Trump coming out attempting to actually strong-arm countries into staying with the US or into getting a more dominant position with them. Really, what he’s doing at the moment, from what I can tell, is he’s throwing out these hand grenades, and then he sort of negotiates.

And that’s his strategy. He comes up with these bombastic, extreme sorts of rhetoric. Canada, we’re taking you.

Panama, we’re taking you. And then, of course, he’ll sit down and negotiate. And he doesn’t take them in the end.

It’s just a renegotiation of trade and maybe some military bases or whatever the case is, depending on what his outcome, his desired outcome is. But the point is that this is a restructuring. Now, while that’s transpiring, you have other things transpiring around the world too, which are in concert with that, but in opposition to it.

So while he’s hitting China, for example, with 100% tariffs, and we pointed this out the other day, we were just talking about it offline, China’s no longer in a subservient position to the extent that it was 20, 30 years ago. And so it can and is realigning its own trade and its agreements with its counterparties. And so we just pointed out, for example, global shipping.

So in terms of the manufacturing of ships, and hence ownership of global shipping, China accounts for over 51% of that globally. And the US accounts for 0.1%. Okay, so the thing about a trade war, a trade war is about moving goods. Okay, fine.

The US can say we’re going to hit you with 100% tariffs. China could say that’s fine in terms of trade between China and the US. But all of the goods which are being traded external to China and the US, in other words, where the US is trading with Britain or European Union or Argentina or anything else, those goods are being typically now moved on Chinese ships.

So China has this capability to say, well, that’s fine, go for it. But there’s just a new price to the shipping routes. And so they have the flexibility to actually exert influence globally.

And it’s not just about shipping, it’s all manufacturing. And so this is just this period of time where we believe you’re going through a restructuring of trade, it’s always chaotic, it’s always volatile. And to expect anything other is basically futile.

And so from our perspective, you need to decide, are you going to be a trader? Are you going to try and trade this chaos? And there are some people who are adept at that. Or are you a long term investor as we are? And you need to step back, look at the fall from the 40,000 foot view and say, what’s going on? What are the major trends unfolding? And where historically does capital rotate to? And in what jurisdictions? And that’s largely the work that we’re doing. So we put together a bunch of slides, which we’ll run through for viewers to highlight the anomalies within the markets.

But it’s just important to understand that from that macro viewpoint, where we’re at, we’re going to have these, these, I guess, readjustments of trade. It’s a global bifurcation. And it’s not just, of course, in trade, it’s also in finance, right? It’s in monetary use of monetary units.

All of these things are interconnected. It’s banking. Banking is still largely dominated by Western interests through the SWIFT system.

But those are also being challenged. You know, China’s come out with a proposal or they’re looking to replace Euroclear and they’ll have their own clearing system. It’s not random, is what I’m saying.

There’s a reason why we’re seeing that. I don’t know if you want to share your screen, Brad. Just really quick, Chris.

I mean, is there a scenario, given what you’ve laid out, is there a scenario where Donald Trump comes out ahead in this trade war with China? Given the fact that China does seem to have the cards. I mean, no pun intended. Look, if I look at China’s strategy thus far, it’s been very much one whereby they’re acting like water, right? When you come at them and you punch them, they don’t punch back.

What they will do is they will move and they will have a counter move that’s almost completely opposite. They’re strategic about it. They’ve been very, very careful not to get involved in any conflict, in any kinetic conflict, while at the same time, they’re definitely involved in conflict, whether it be sending fentanyl across the US borders in retaliation for the century of humiliation that they endured, especially against the British, who basically did the same thing with the opium wars.

And there’s long histories and long memories involved. But the point is, they have the ability to challenge it, but I don’t anticipate they’re going to challenge it on a military basis. I think for all listeners, one of the most important books that anyone could read at the moment is Sun Tzu’s The Art of War.

And if you look at Chinese strategy, it is literally to a T, that book and the lessons in that book. It’s a fascinating read, and it makes understanding China so much more easy to understand. So in short, I don’t anticipate the Chinese are going to look to doing anything that will put them at risk of going into a conflict, into a kinetic conflict.

If they are pushed, of course, like anyone else, they will. And Russia, for example, was pushed into that. So that’s possible.

But I think from the US side of things, they’re attempting, they don’t want a conflict with China, not a kinetic conflict. They’re going to try and bully them and exert pressure on China’s trade partners. And that’s where the conflict is going to lie.

I don’t think it’s going to be directed as much as with China, as much as it will be with their trade partners. And so that’s where there’s an acceleration and a race towards that. But I think largely, the West has already lost that battle.

If you look across all of Africa, pretty much, trade deals that have been done, ports that are owned, airports, railways, you name it, the Chinese own most of that. But here we are. So I think it’s a period of chaos and a period of restructuring.

I think the US is largely going to go sort of north-south in terms of geopolitically. And what I mean by that is they will focus on Latin America, South America, Canada, even up to Greenland, paying less attention to, say, Southeast Asia. You had under Obama, there was the pivot towards Asia, which basically didn’t really work out particularly well.

And I think that’s largely been abandoned. I’m not seeing a whole lot of the US administration looking at trade with, say, Indonesia or Thailand or any of those regions. Or even with their, quote-unquote, allies like Australia, which have just slept with the tariff as well.

So I think they’re going to try and consolidate Latin and South America. And they’ll probably succeed in that. Can you see the New York Times article, Danny? Yep.

Okay. So, all right. I think at these points, you’ve got to sort of stand back and say, what am I as an investor? Am I an investor or am I a trader? So once you generally see these sort of headlines, the majority of the downsides probably already happened at least over the short term.

But as I said, you’ve got to remind yourself whether you’re a long-term investor, you’re investing in businesses, or you’re taking macro views, or you’re a short-term trader, speculator. I think that the tendency here is you’re caught up in speculation, short-termism, when things like that happen. And one thing looking back over all my experience, and this is going back to the start of this year, you think just sort of reliving experiences, et cetera.

It’s like things you would have done, you wouldn’t have done. And if you find value, this just comes from experience. I’ve started sort of investing professionally in the mid-1990s.

If you find value, buy it and hold it. If you can find lots of value across the board, then I must say across the board in different geographies, different sectors, there’s no reason why you shouldn’t be fully valued, fully invested. If you can’t find value or limited value, then you’re going to have a pile of cash.

And it’s as simple as that. So, all right. Now, it does appear there’s so much uncertainty at the moment.

It’s like, oh my God, there’s no way out. Look, what’s happening between the US and China. I think the US has come out now with 105% tariffs on Chinese goods.

It’s like, seriously? I mean, anyway, whatever. It does go back to, we go back to the Corona. And strangely enough, it’s almost like five years, somewhat to the day, with the Corona thing.

And this is an article from the Sydney Morning Herald. And it came out on the 16th of March, which is about the height of, almost the height of the sell-off. Aussie prepares for 50,000 to 150,000 coronavirus deaths.

That’s huge. That gives you an idea of the uncertainty that was out there then. And it’s very, very similar to right now.

There’s so much uncertainty. But as time goes by, life goes on, the future never turns out as bad as it seems when everyone is talking about the end of the world as we know it. There we are.

Okay, so that’s, now, this is the VIX, and people go, oh, well, the rise of the VIX. It’s a pretty rough and ready, and it’s actually really quite a good still measure of the level of fear in the market. Now, it stands about 45 now.

Another 5% downside in the S&P, which we could have, could have a bit more. Who knows? This thing would be at 55. And that’s more or less near enough at the peak of where it was in 2020.

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And make sure to tell them Danny sent you. And of course, the only other time it was higher was in 2008. And then actually prior to that, 87.

But it’s at higher levels now than what it was in the great tech-wrecked bear market of the late 90s, early 2000s. So a lot of the fear has already been priced into markets. Okay.

So here’s where we started getting into some interesting stuff, we think. Maybe we should go out more and get a life. So this is the MSCI world value versus growth.

And so with value, you’re down what? You’re down about 7% so far, year-to-date. It’s not great, but it’s not any big deal compared to what everyone’s talking about. And if we look at, so this is growth.

The growth is the yellow line. And it’s down now some 17%. And again, what’s growth? What’s value? Here’s a top 10 holdings in both indices.

So your classic value type stock. Strange enough, there’s a few so-called IT stocks in there, Qualcomm, Cisco. What else? Applied Materials, Intel’s in there.

And then on the growth side, your classic Apple, Amazon, Microsoft, Google, Nvidia, et cetera. Now, we would have it that the great rotation has begun, and it was already beginning happening some time prior. Now, if you’ve been hiding out in commodity stocks or commodities, gold amongst others, and emerging markets, you’re down anywhere between 5% and 9%.

Magnesium 7 down, what’s that? 26%. Let’s say 25%. That’s bear market already.

S&P is at 16% thereabouts, plus or minus 15%. So there’s a big gap opening up. Chris, I don’t know if you want to talk about what the sort of, I guess, a bit of a discussion about the stagflationary effects of what’s happening.

Historically, when you look at the consequence of tariffs, they are broadly inflationary or stagflationary. And so I think that’s important for people to understand because there’s this, like, everyone’s trying to understand what it actually means. And it’s easy to get caught up in the noise and looking at sort of the individual aspects.

Oh, okay, we’re putting tariffs on X country and maybe on X goods. And maybe it hits auto manufacturing or hits this or hits that. And so there’s this desire to understand what it means.

Again, if you look back and you say, okay, what’s the broad, overarching consequence of tariffs? They are inflationary. And they’re inflationary because they basically reduce the liquidity in the market. They impact supply chains.

And it’s almost impossible to understand the full extent of what they might mean. And what I mean by that is, as I mentioned before, with shipping, there is the obvious what you can see, and then there are consequences to that. Now, there’s sort of second and third order thinking.

And so you could put a tariff on just say, platinum in South Africa, right, which is the largest platinum producer in the world. For example, what’s the consequences of that? Well, there’s a consequence of that to auto manufacturing, right? Because platinum is used in catalytic converters in vehicles. And so then there’s a cost pressure on vehicles and so on.

And so there’s entire sort of supply chains. And I’m just using one tiny example of platinum and the tariff on platinum. So it’s almost impossible to kind of go through every single tariff and what it means to that country and to that sector or commodity.

And then even the second and third order consequences of which there will be many. So you pull yourself all the way back and say broadly, what does this mean? Broadly, what it means is that you have a stagflationary environment, which brings about higher costs to goods, quite frankly. The supply chains get disrupted, they have to be reorganized.

You can imagine if you go back to the platinum thing, if you’re an auto manufacturer, okay, now suddenly you’ve got a higher cost of platinum, can we source it somewhere else? From who? Are the shipping routes same? Maybe you’re getting your catalytic converters from X supplier, now the cost has gone up. Can you get them from another supplier? And maybe you can, but maybe it takes three weeks, not one week to deliver. There’s friction, essentially.

So all of these things are inflationary. The other component is that there is an inability by central banks to mitigate that by monetary policy. They can mitigate other things that could be inflationary by monetary policy.

This one they can’t. So at the moment, they’re yelling at, Trump’s coming out basically trying to pressure the Fed to lower interest rates. That’s not going to have any impact.

It’s not going to have any impact on your cost of your catalytic converters. Lower credit and the cost of credit is not going to change that. So broadly, it’s important to understand what does this basically mean? It means we have a state inflationary environment coming forward.

So Trump’s plan seems to be to create some sort of capital rotation away from stocks and into the bond market, effectively bringing down interest rates. But that doesn’t seem to be happening right now. It’s the opposite.

It’s 10 years up to 4.2% now, and you have this wounded market in the process. So what do you make of this? Why would you invest in bonds when the cost of servicing debt now is the same as the US defense spending? The US is in trouble. There’s another component I’ll just add in here, which is throwing this particular grenade into the market now.

When five years ago, there was businesses, okay, let me put it this way. One of the topics that Trump has been talking about is basically to make America great again. And a component of that is to bring back manufacturing to the US.

Okay, fine. And part of that is also to, you know, you talk about the rust belt, for example, bring back jobs. Are we going to bring back jobs to Detroit? For example, I don’t see that happening for a number of reasons.

One is we’ve moved on. We’ve moved on at an accelerated pace, largely as a consequence of the COVID scam. So what do I mean by that? Well, when COVID came along, or when should I say government’s reaction to it came along, and shut down businesses and caused workers to go on holidays, and so on and so forth, a lot of businesses were forced to retool, and many of them chose technology, right? So you had less in the workforce replaced by technology.

Okay, so that lesson was already learned. Now, he’s saying, oh, we’re going to bring back jobs basically to America. Largely jobs, especially in the sectors that he’s talking about, which is manufacturing are dominated by technology, robotics, automation, and things of that nature.

Again, that lesson was learned in 2020, 21. Guess who leads the world in robotics and automation? It’s not America. China, isn’t it? Now, you’re going to be importing those technologies, right? When you’re pressured with these, oh, we’re going to bring back jobs basically to America.

Largely jobs, especially in the sectors that he’s talking about, which is manufacturing, are dominated by technology, robotics, automation, and things of that nature. Again, that lesson was learned in 2020, 21. Guess who leads the world in robotics and automation? It’s not America.

China, isn’t it? Now, you’re going to be importing those technologies, right? When you’re pressured with the impact of these tariffs, you’re shooting yourself in the foot because you’ve already lost competence or dominance, should I say, in many of these arenas. So fine. Does that mean now the US needs to get retooled and get more productive, if you will, in robotics and all those technology aspects? Yeah, sure.

They’re behind the curve and the race is on. So while they’re now trying to redo that, the rest of the world moves on and they don’t have the same constraints around them. I think in large part, it’s been an ill-thought process.

It’s been a bit ham-fisted and it’s been one whereby the old problem of looking at a problem and thinking that there’s a solution and it’s a one solution and hitting it, not understanding second and third order consequences is absolutely on display at the moment. Absolutely on display. I think you said this before we hit record, but you said Trump is about 30 years too late in implementing this strategy.

This may have worked 30 years ago, but not today. Why is that? Well, I mean, it’s because of what you just said, but why is he still doing it? I’m not sure. I can’t get inside of his head.

But to the point that I was making before, US manufacturing has been in decline for 30 years insofar as it is mostly now, it’s the fire economy, finance, insurance and real estate. So manufacturing hasn’t been as dominant in the US now as it was 20, 30 years ago and on an ongoing basis. So to try and bring that back, I think is the strategy.

That’s part of the Make America Great Again narrative. The issue is that the rest of the world is not static and it’s a competitive environment. So I don’t see that as being a plausible setup because there’s many mechanisms to it.

It’s not just the fact that the US isn’t producing engineers or STEM, science, technology, engineering and math. If you look at it, there’s many factors. We can look across the entire world and university spaces and the United States is a massive loser or language in that.

We’re not, the US is not producing the same level of technical competence in those areas. On the other hand, and it’s going to sound like I’m a champion for China and I’m not. This is just a matter of looking at the reality on the ground.

China is producing many, many more times technical competence in STEM. That’s just the reality. So then there’s a dynamism that exists with that and the United States doesn’t have it.

So can they get it back? Yeah, but it takes more than just a few tariffs. It takes now basically going back into the education system, into the universities, probably getting rid of all the Marxists and getting, promoting things like STEM. But that’s a generational way if you started immediately today.

So the alternative then is, okay, do you import some of that technical talent? Sure, you can do that. But increasingly, that’s not as attractive as it used to be. The United States is still a place that many people want to go to.

But sadly, it’s been attracting people that you don’t necessarily want. And again, the world’s a competitive place. So anyways, I think it’s too little too late at this point in time.

But look, a lot of this doesn’t really matter what I or Brad or you think. It’s about the reality of a global macro shift, this rotation that we talk about that’s in place. So seeing these things is kind of actually totally normal.

Seeing this sort of chaos, seeing these knee-jerk political maneuverings, monetary maneuverings, they’re consistent with historical precedent. And so when you understand from that perspective, you can just calm down and go, okay, this is what it is. You might like it or not like it, that doesn’t really matter.

What typically happens? Where do you need to be placing a capital? That’s really the only question that you need to be asking yourself as an investor. Interesting. And I see you’ve got the S&P relative to the NASDAQ here.

And it looks like we’ve been bottoming for about four or five years now. Brad, you want to go through this chart? Well, there we go. That’s what it’s all about.

I think this is probably one of the most important charts. It’s very, very simple, isn’t it? S&P relative to NASDAQ. Well, we’re going back here to the mid-1980s.

And that does appear to be a bottom-forming process as of the last five years. Now, the small insert chart is the same as the big chart, but just on different timescales. But the point being is that for all the talk about the AI boom and growth stocks and the NASDAQ, et cetera, if you bought the S&P back in 2021, late 2020, thereabouts, you performed more or less in line with the NASDAQ.

Anyway, so it’s begun. That there is a long-term bottoming process. And it’s going to be a reversal of what we’ve seen in the last, gosh, I’ll say 10 years, it’s longer than that.

It’s like 2008, 2007, that’s 13, 15, 16, 17 years. Pick a time. So we’ve got 10 years ahead of us of value stocks outperforming growth.

Now, we go to, I think we’ll see it next slide. Yeah, so here’s, this is the MSCI world value versus MSCI world growth. And same sort of thing.

I mean, it’s a bit rugged and a bit rough and ready, but you can sort of see a bottoming process there. Again, the other irony is if you took this time scale here, and let’s say from 2019 until now, if you invested in value stocks back in late 2020, 2021, you’ve actually done better than in growth on a global perspective. And Denny, this often happens in the last five or so years, three, four years, whatever, all the talk of the town has been the Magnificent Seven.

It’s been the AI thing, so on and so forth. But quietly beneath the background, there’s been a revolution going on. No one’s really aware of it.

And this often happens. Okay, so gold relative S&P 500, that to me looks like a long-term change. Well, it’s a bottoming process.

The next move would be the upside and significantly so. Now, this is relative. I mean, if the S&P goes down and gold doesn’t move, then obviously this chart goes up.

But there’s a revolution going on. This is gold minus relative to the NASDAQ. Now, you may not see much in this chart, but quite revolutions going on.

So now, again, gold minus, let’s say GDX relative to QQQ, it’s a silent bull market. So the point being, if you bought gold minus at the start of 2016, or anytime 2018 right until now, pretty much on average, plus or minus, you performed in line with the NASDAQ. It’s like, what? That’s weird.

No one’s talking about that. And that’s true. You know, gold and GDX are performing in line with NASDAQ.

And this, I think, is on a total return basis. There we go. So certainly, you know, things are changing and people just don’t realize the change is going on.

Commodities. So this is a CRB relative S&P 500. That does look like some sort of bombing processes and underwinding.

You can see the magnitude. So bombing process, one thing, Danny, the other aspect to your mind is the duration and magnitude of that underperformance. Which becomes like a coiled spring, right? Yes, absolutely.

And you’ve got a, what? A seven to one ratio between where we’re at today versus the top in 2009, we would say. Yeah, well, a lot of upside can occur. And there’s a lot of safety in commodities, put that way, Danny.

And they’re not doing so bad, even with the drama in the markets at the moment, the tariffs and all. So emerging markets. So this is the, what’s the MSCI Emerging Markets Index, which EEM, ETF EEM tracks relative to the S&P 500.

And as unloved and as unwanted as they ever were back in the long-term capital crisis in 98 and the tech, you know, the height of the tech bubble. And again, the duration and magnitude of the underperformance is astounding from 2011 until now, that’s what, 11, 16 years, fishing a straight line. Like again, cold spring, Danny, cold spring.

Yeah. And it’s, I mean, it looks like it’s still got momentum to the downside too, at least the previous chart did. Well, yeah, it hasn’t, look, it hasn’t changed.

You couldn’t, yeah, technically you couldn’t say, well, that’s changed trend. No, it hasn’t. You couldn’t say that.

Maybe the bottom is already in. But the thing is, with it being like this, for such a long period of underperformance and the magnitude of the underperformance, what it suggests is that you should be looking for value, looking for opportunities in emerging markets and not the S&P 500. That’s the essence of it.

I see. Well, this is commodity producers relative to the S&P 500. For all the negative talk out there, if you bought them in 2020, 2021, you performed in line with the S&P 500.

Now, so rest of the world versus the US. This is, yeah, this is, again, you’ve had ever since 1990, the underperformance of the world versus the US. And well, okay, that’s going back a long time, but even since 2010.

So this suggests that one should be looking for opportunities outside the US and there’s probably value to be had there. Right. And this is, well, that was a pattern.

I mean, we’ve been going down for decades. I mean, pretty much since the 80s, the end of Reagan era. It’s been America beating out the rest of the world.

That’s correct. Now, a lot could be attributed to Japan in the late 1980s. Obviously, Nikkei peaked out then and dropped significantly.

And Nikkei was a Japanese market was a huge, I think in 1989, thereabouts, the Japanese stock market was same market cap near enough as the US. Obviously, that’s all unwell. And so that’s a big part of that.

Of course, Europe is part of that now as well. Now, we’re back to the same chart again. I think this was the really, really important thing.

It’s like a change is at hand. If I change it, it’s the same chart, Danny, but I’m using a log scale. So, and you can see a sort of bottom formation there.

Log scale is sort of every move is proportionate to the other, like a percentage change instead of absolute change. And so that’s essentially where we leave things off. There’s a rotation happening, and it’s been happening for a while.

And people are caught up with this whole tariff thing. And that’s a bit of a side issue. Yes.

Yeah. And so this rotation event, it appears to be, commodities stand to benefit from this as the primary asset class, so to speak. Correct? Well, commodities, yes.

Emerging markets. Well, obviously, some developed markets too, outside the US. I can think of another great number of great markets that no one’s really looking at.

But yeah, just the essence is, look, the idea of the magnificent seven and the AI thing, that’s over. And for the next 10 years, you’re going to have outperformance and value in emerging markets and commodities, and so on and so forth. Fascinating.

I mean, this kind of makes sense because if you look at all these wars starting up, you would suspect that intensive resource costs would only incentivize resource wars. And that’s what we’re getting lately. So it- Conflict is never deflationary.

It’s always inflationary. Yep. The question is, is it the chicken or the egg? Does conflict arise because of the inflationary environment or does the inflationary environment arise from the conflict? Can it be both? Maybe.

Yeah. Well, it’s, look, inflation is an impact on the individual, right? And it’s one that makes a lot of pretty bloody uncomfortable, especially if you’re at the- where it’s pressuring your living standards. And you do that enough and people get upset, which is why we’re looking at the sort of domestic conflict in Europe.

I mean, it doesn’t get reported in the mainstream media, but there’s a lot of protests on a continuous basis for all manner of things. And so, you know, and as the, then the governments are put in a position where they go, well, we want to try and mitigate that. So guess what? They borrow money and they print it and give it to the peasants to try and pacify them.

But the printing of money creates more inflation. And so around that circle as you go. And then of course, there’s the position where those in power don’t want to be losing power and it’s easier always to blame things on some external enemy.

And so it’s quite easy to then blame that external enemy and rally the forces to go and go to war, which is what Europe’s doing now. They’re trying to blame everything in Putin and rallying to war. Germany’s just come out saying they’re going to borrow 400 billion.

At least they don’t have the money. Of course, Ursula von der Leyen has said that they’re going to, quote, use underutilized capital from individuals and tap that money for investment, quote unquote investment. But basically, they’re going to steal citizens’ money to go to war and then they’ll blame it on Russia.

And so that allows them to default synthetically without, with a justification for doing so. Again, these things are historically kind of normal. Because Europe doesn’t have any resource collateral.

So they have no other, it seems like they’re incentivized to go into war. Whereas Russia and China, these places appear to be commodity fortresses. And that’s where you have the conflict ultimately gets fought over resources.

Because you can ideologically oppose someone, but you can’t physically oppose them because they have the resources or the technology. I think there’s been an overestimation of the ability of technology to solve issues too, to the extent where the Europeans go, well, we just need technology, with a misunderstanding that technology, the bedrock to technology actually is, for example, energy. AI is a good example.

Oh, we’re going to solve all these problems with AI. Great. Okay.

Where’s the electricity going to come from? Because they’re very, very hungry. Well, it’s the wind farms in Germany. Oh, look, they’re not working.

We have to power them up with diesel engines, which is what they’re doing. Where are we going to get the diesel from? Shit, we don’t have any diesel. Maybe we import some coal from Indonesia because we shut down all our coal-fired power stations.

Yeah. And the Davos milieu seems to have made concessions. If you look at what’s going on in Canada, you have Mark Carney saying, essentially repealing the carbon tax that his party enacted, and acting as a hero for doing it.

But it’s like, you guys are just conceding to the fact that you were wrong. So, Danny, for all the listeners there, just stand back, take a thousand-foot view, understand what you are, if you’re an investor or a trader. We think it’s way, way easy to be an investor.

And look at those underlying dynamics evolving. Look at opportunities outside the US. Look at opportunities in emerging markets and resources.

Gold’s just part of that. And stay away from, gosh, just stay away from the Magnificent Seven and all the wonderful tech thing and so on and so forth. And you won’t do so bad.

And we could go back and talk about our experiences when the TMT bubble collapsed. The S&P fell from March 2000, March 2003, fell by 45%. If you just selected a bunch of value stocks, just large cap value stocks, 3M was one of them.

They weren’t hard to find back then. You didn’t lose any money. You came out pretty much even.

Obviously, you’ve mentioned the small cap value. You’d actually made money at the end of that bear market. When the S&P goes down, it’s not an easy ride.

You get these whipsaws and you think, oh, gosh, it’s all selling off, the world’s coming to an end. But actually, no. If you can find value, if it’s good value, it doesn’t tend to go down.

It holds. Yeah. One of the best analogies, and I may have heard it from you, I can’t remember who I heard it from, was that if someone were to try to sell you a brand new Lamborghini for $30,000, you wouldn’t be thinking to yourself, maybe I can haggle it down to 20,000.

It’s like, no, I would just buy the Lambo for 30 grand. If it’s value, if it’s a discount, then it’s a discount. That’s right.

But Lamborghinis and stocks are two different things. Yes, people lose their minds when it comes to stocks. Anyway.

Yeah. Well, awesome interview, guys. Anything else you want to bring up before we put a pin in this and wrap it up? No, I think that’s it.

Not really. Just the inevitability of chaos and try and determine how you’re going to deal with that, because this isn’t going to be… I think this is going to be a trend or a situation which will repeat itself. Not to say we’ll have a repeat of trade tariffs and things, but things of this nature that you wouldn’t have experienced in your lifetime.

We’re at the period of time where those things happen. If you just think about the last five years, the things that we’ve watched happen, whether it be monetary policy, whether it be the shutting off of Russia from the SWIFT system, conflict, all of these sorts of things, a lot of us are going, oh, wow, what’s that? But those are historically kind of normal. So I’d say it’s worth it to try and steal your mind for the fact that you’re in this environment.

This is something that lasts typically like a decade. Because the real risk here is in doing something really silly and getting caught unawares. So it’s a mental game.

Yeah. I mean, you guys have been a North Star for me, so to speak, for the last five years. And so I want to encourage my audience to utilize your service, capitalist exploits.

I’ve been a subscriber since 2020, and you guys have really helped guide the way, not only through your stock recommendations, but also your education as well. So again, we have a special $1,000 discount to the newsletter down below that you’re only going to find here. So if you are interested, guys, which I highly encourage, again, link to that is down below in the description box, as well as the pinned comment.

Gents, thank you so much for coming on. Chris, I think you have like a Twitter. I believe it’s capitalist exploits or something like that.

I’ll have it posted down below too. But is there anything else you want to promote before we wrap up? All right. Well, thanks for coming on, gents.

It’s been a pleasure as always. We’ll see how things play out over the next month or so until we have you guys on again for another update. But if you guys enjoyed the content, be sure to give us a like and subscribe to the channel.

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I’ll catch you in the next episode. Thanks, Denny. Thanks, Denny.