Super Terrific Happy Hour Ep. 26: The Downloadable Ringtone

Here's a bit where I remind you that nothing we discussed during the super terrific happy hour should be considered as investment advice. This conversation is for informational and hopefully entertainment purposes only. So while we hope you find it both informative and entertaining to say nothing of super and terrific, of course, please do your own research or speak to a financial advisor before putting a dime of your money into these crazy markets. And now I'm with the show. People always tell me you should have your money working for you because you send your money out there working for you a lot of times it gets fired. You go back there what happened I had my money it was here it was working for me yeah I remember you're on money. We had to let them go. Welcome everybody to a special festive often rescheduled but we finally got this done super terrific happy hour joining me as always bringing all the adjectives to the party is the wonderful Stephanie von Byte. Hello my friend how are you? I'm fantastic I'm super and terrific now how are you? I am cold is what I am cold I'm chilled to my bones for my first winter in another day or long you know what it'll be fine it'll be fine other people do it there's no reason I can't stiff I mean you did it for how many years as a kid I guess back then though you don't feel cold do you ever remember being cold as a kid I never remember ever you can call no I don't remember being cold I mean I remember being told that I was cold and I should go in but okay I am oh okay I didn't realize so I don't know but in fairness the amount of extra fat I have my body now you would think it was going the other way but it seems to be I must have porous fat stiff because I'm freezing it's ridiculous. You know it reminds me of a joke about a polar bear which I won't do now but anyway. Right now you look like a polar bear with your white turtled sweater and your white bones and yeah see you're all bundled up. Yeah let no the headphones are black but that's the coating of snow on the headphones. Before we get to the super terrific happy hour we should talk quickly about the super terrific happy day. What do you think? I'm so excited for this. That's going to be a blasphemy such a fun time last year. Way more fun than I expected it to be and so I'm really looking forward to this. Yes and for those of you that aren't aware we are do it again. Last year we had the inaugural super terrific happy day in St. Petersburg, Florida at the Vinoy Hotel and thankfully it wasn't just deaf and either enjoyed the audience. So you didn't really enjoy it too because they asked us if we'd do it again and rescuing we couldn't quite get it done within 2025 but we are getting it done very early in 2026, February the 17th to be precise. Again at the Vinoy Hotel in St. Petersburg and you really should come and join us. We've got a whole bunch of people join us. We've revealed some of their names and I'll just get in trouble this time for our being people's names that we haven't officially revealed yet. Who do we know that we can tease before the official teas after the preliminary teas and the original teas? I'm really excited for Tom Van Dyck, the former Kansas City Fed guy because here we are Fed just relaunched QE. Of course it's not QE it is they described. And he famously just said uncle on his tenure at the Federal Reserve when they decided to re-up QE following the global financial crisis. So it'll be really interesting to get his observations on where we're headed and whether we can ever get out of this QE infinity situation that we seem to find ourselves in. Tom's an amazing guy. I had the privilege to interview him last year. He's been one of my quiet heroes for some years now. Well I could use to go back and read all the Fed minutes. I found myself cheering some of the things he said during the depths of the crisis so when these things got published he was the only guy standing up to Penanky. It was amazing really and he was standing up to Penanky at the time in the room and obviously the world doesn't find out about that until years later when all this stuff gets finally released. And I think he was the tent pole around Chris Leonard's fantastic book The Lords of Easy Money which if anyone out there hasn't read that you do your favorite treat yourself for Christmas. It's a terrific read and the Tom story is told in that. I spent two or three hours talking to Tom and he was so candid and so gracious and so humble about that whole thing. It was a fantastic conversation. I don't think for anybody who like you and I has observed what's going on at the Federal Reserve and actually would like to talk to someone who's been a part of it who will actually stand there and not give off the run answers and scripted answers and avoid stuff. Tom is just a fascinating guy to get a chance to go and listen to first of all. Then obviously with the format of the Super Terrific happy to spend time chatting to over cocktails and stuff. He's just an amazing guy. He's going to be one of us because as his my friend Mike Green, I'm really excited that Mike's coming. He's always just towering intellect and a fascinating guy to listen and talk to but he went viral with I don't know if he read his articles on the poverty line recently. They were fantastic as all his work is on his sub stack which is called yes, I give a fig and those three pieces justifiably went viral and Mike was interviewed by the great and good about them and the quality of Mike's thinking is just next level and so I'm thrilled to get the chance to talk with him again. We'll talk about that for sure and who does what else will happen by the time we get to February but Mike is another terrific speaker. He's really the pioneer in all of the analysis of the impact of passive investing on market concentration and all of that. The panel is associated with that so I'm sure that he'll touch on that at some point in the conference as well. We got a lot of terrain to cover with all these big. No, we do and yeah it's great because a lot of these subjects we're going to talk about they're not going to be the things that everyone's been slogging to death. The other guy I'm really excited for people to get chance to listen to is Andrew McDermott who's a good friend of mine and Andrew's a Japan expert and I have this feeling that Japan is going to be so important in 2026 Andrew spends his days and nights immersed in Japan. He's been an investor in Japan for many years and he's again a fascinating guy and I think having the chance to talk to him about what's happening in Japan and why it's so important for the rest of the world is going to be another just terrific conversation. Yeah, it's amazing to watch the rest of the G7 following the trail of it. Japan has blazed in a fairly ominous direction. So that's going to be a fascinating conversation. Dumptails with the whole situation with the Fed, etc. But yeah, it's going to be an amazing conference and we still have more speakers that we're keeping under our hats and a couple were going to sound coming forth with but it's opportunity to be in a fairly small audience where you will get to interact with the speakers in sunny South Florida in the middle of February. You had me at sunny Steph, but this is a shameless plug. But if you want to find out more, you don't need to listen to us for any longer about it. But if you go to supertrifecthappyday.com, you'll find out everything you just know about the conference and you can get touch with me at Steph if you've got any specific questions. But tickets are selling pretty quickly. Don't hang around. Otherwise, you won't be able to join us there and you'll miss out on all the fun, which I promise you will be spectacular and terrific and super. Yeah, we've both posted the info for the conference on our Twitter. I'll post it again after this goes and. This is true. Let's get to some of the orders of the day, shall we? Let's save gold for the end because that's going to be fun to talk about for you and I in particular. But I want to talk about the piece that you published yesterday, maybe certainly very recently. And you called it "Crowded House of Men at Work", which was my Antipodian connections. I love the title. The bond markets was the lot of the focus on that piece. And I don't want to steal your funder, but let's talk a little bit about this is the composition of the bond market because you highlighted various disparate aspects of it. And I understood it all. But once again, as you tend to do, you put the numbers around it. And even I think and I understood what was going on. I looked at those numbers and I can't be right. Surely that can't be right. But I haven't found you to be wrong yet about your numbers. Talk us to the first few pits of that piece. Well, wait. Numbers come directly from the federal government. So they could be wronged. They could very well be wrong. But deliberately so. I doubt they would be trying to overstate the amount of borrowing they're doing. But who knows, they are dumb enough to maybe do that by accident. Anyway, the government publishes monthly and update on the public debt, total federal debt. Most people think about our financing needs as a function of the deficit, which is roughly two trillion a year. I think as investors look at the demands for capital and the markets, they figure like governments in for two trillion. And then we've got corporations and consumers. And so as long as the deficit stays at around two trillion, they don't really shift their faking about capital demands and the impact on interest rates. But because of Janet Yellen's protocol of issuing debt at the front end of the yield curve during the enormous COVID stimulus spectacular. And for the years, thereafter, a huge amount of the 38 trillion in total federal debt that people are concerned about is short term. It rules every year. And so I went through and looked at the numbers. This past year in 2025, I think the number was seven trillion or so somewhere between seven and eight trillion in debt that we ruled in 2025, most of which was in the form of these teabills. But when Besson came in, he even though he railed against this financing structure when he was on the campaign trail, I think as soon as he sat down behind his desk and looked at the numbers, he quickly figured out, I'm stuck. There's no way for me to shift issuance to longer dated maturedies, much as I would like to because the interest costs would explode. So he continued this protocol of issuing teabills to finance the bulk of the deficit, such that when we turn the calendar page at the new year in 2026, the federal government will have to rule $10.3 trillion in debt. I mean, it's just mind-boggling. So people still think about the deficit. It's right here. The deficit's reaching terror for revenue, whatever. And as if the problem is solved, meanwhile, in the background, there's this giant sucking sound that is the government needs to get $10.3 trillion. And what I think is interesting is obviously what are the main fees in my bonnet? And we've talked about it so many times that people are tired of hearing about it. It is the corporate debt situation and how leveraged U.S. corporations are and how much their financing was done in relatively short term. So we got $10.3 trillion that the government wants next year. And then we've got another 1.2 trillion or so that the corporate sector wants. And that doesn't include private credit and all the other. And it doesn't obviously include consumers or state and local governments, etc. To say nothing of foreign institutions that want to borrow in dollars as they see the dollars being depreciated. You know, I just posed a question. How can you have this enormous demand for capital without creating sound dislocations in the credit market? It just seems likely that someone's going to be left by the wayside, given all these demands for capital. It's interesting because you look at those numbers. I think you said we're averaging just under $7 trillion a year. Actually, this is a big year, 2026. He said $10.3 for the federal. But I think the federal government, he said $6.5 or $6.7 or something trillion a year essentially going out for the next four or five years. And I saw a Twitter exchange the other day. Someone had posted peace saying that the Treasury or the US government have failed their audit for the eighth straight year or something. And they posted it and said, "Thank you very much and good night." As though this was a thing and Brent Johnson as he tends to do, he can't leave these things alone. He made a great point. He said, you're saying that like it's a big deal, but surely the fact that it's happened, this is the eighth straight year, it's happened, should let you know that maybe it isn't as big a deal as you think it is, which is a fair point to make. If it was a big deal, you wouldn't have thought it would, you would have thought it would have mattered at some point in the last eight years, but it hasn't. But the other side to that, obviously, is the where Minskie moment at the San Pao, whatever you want to use. At some point, of course, it matters. Of course, all this stuff matters. All this can be fudged, but the numbers you went through here, they can't be. This is what the government needs to keep the lights on, basically. And you didn't even mention yet another China piece of, was it quarter of a trillion of AI boring? Yeah, 250 billion. It was. year that they think will go up to a trillion by 2028, which is at no time, that's two years. So, yeah, all this AI cap X is being funded through debt, including by companies that are generally cash rich. They've been borrowing to fund the AI. So you've got the menis and ghouls and all this stuff. This year, I think they borrowed to the China about 150 billion or so. These numbers are probably a little stale, but forecast for 250 next year and then a trillion for year or two thereafter. So, yeah, like our capital demands are only increasing. Unless, of course, this AI saying it's revealed to be a bubble even that burst. But let's, we can come back to that in a second. But the other part of this, and again, you had to chart in here. And we're talking about foreign official borrowing of Treasury's versus private foreign owners. And again, everybody keeps going through this thing and looking at the aggregate and saying there's no real change here. And the bottom line is, of course, there isn't a change because the numbers absolute. It's the interest rate. That's the variable. What they need to pay to get to it. They are going to borrow all that money somehow. The fact that it hasn't really changed, it doesn't matter so much as the fact that the official sector has been declining. And it's been declining. It's, anyway, it's flatline for a decade basically. And it's now declining. We've got far less official buyers of treasures. I think you had the number in there was about 50 on billion that are on track to net sell. And of course, it does bear restating. These buyers are the buyers that the Federal Reserve needs because they they're friendly in air quotes. And B, you can put a bit of pressure on at the state level to behave and fall in line and buy a few more here and don't sell a few more there. But it feels to me like that influence is waning. It has been waning for a while. It feels like it's maybe approaching a tipping point here where people are going to stand up and say, "No, just because you want us to buy more treasure is, it doesn't mean we're necessarily going to want something more out of it." And you've got a self-proclaimed, the greatest negotiator in the world in the White House. So everyone knows he's there to negotiate with. I don't know. There's a lot of things coming together here, Steph, that I find interesting and somewhat alarming. And one of them was the size of the footprint that the government has. What were the numbers with that? The Federal Government is 40% of total US debt, which is massive. But more importantly, there's 60% of the US bond market. We've never seen anything close to that before. And we're just going back to your point about the Exodus foreign central banks. They're reliable and perfunctory. As long as they were our financiers, it was durable. We didn't really have to worry about how are we going to come up with the money to roll all this paper because they just, as T-bills or any debt matured, they just recite all the back into treasuries. And obviously, you and I have been talking about this for ages. They started to see the writing on the wall and started to diversify away from the dollar. But then the weaponization of reserves with freezing rushes, reserve assets was the major accelerates in that. And now you've got to the point where you have foreign central banks outright selling US treasuries. And that's been masked by foreign private institutions, insurers, etc. Coming in and they bought close to 500 billion over the last year. So that's silently masked. This very scary exodus of foreign central banks. It's accelerating behind the scenes. But what really scares me is that increasingly now you've got your reliance on foreign institutions, which are less reliable than the central bank. They may actually decide there are other more compelling opportunities and they're not going to be muscled by the president or anyone else. But more than that, you've got this huge footprint by US hedge funds who have been doing this arbitrage between the cash and the futures market and the treasury arbitrage and the treasury market. And I think the BIS report suggested that number was their total treasury positions that were $4 trillion. I would describe the hedge fund as the opposite end of the spectrum from foreign central banks in terms of the durability and reliability of them as financiers of our deficits. So it strikes me that worth I hate to use the phrase banana republic, but when you're issuing all your debt with tea bills and you're relying on hedge funds to continue to support it, that's not for me a confidence inspiring batch five. No, I'm plus that full trillion number. That's US hedge funds, right? What was it? Two and a half three offshore. So that's $7 trillion of fast money in the treasury market that I don't know that you can put an awful lot of direct pressure on them. You can make all kinds of threats, but they're not going to hang around because by the time you get to punish them, they're out the trade and they'll take their challenges, right? And it's important for people to understand that $7 trillion hedge funds is relative to $28 trillion in total treasury debt that's marketable and people talking about $38 trillion in total debt, but most of that is held within government accounts. So then marketable debt is under $30 trillion and you've got $7 trillion of that $30 trillion, let's call it being held by hedge funds. Again, not the most confidence inspiring ratio, I would say. You had the chart from the FT and then it went back. I think 2020 mid 2022, we were at $3 trillion and now we're at $7. So that like a lot of charts, it's an awful lot of charts that the post 2022, everything's up and to the right in a crazy fashion and we'll come on to gold, which is obviously doing the same thing a little later on. Get all the things we're talking about. Ultimately, I think feedback into gold. Well, the other one that's doing that is the spread between the 30 year and the 10 year both in the pan and here and I think that's the first dovetail you get the spread between the longer dated paper blowing out and then eventually you get to the gold part, but we'll get to that later. What is today's GDP print? I mean, for all this do you think? Kind, it's a really good question. Much stronger than expected. It said the devil is in the details because trade was a huge portion of that. We had a huge increase in exports, which isn't surprising given the weakness and the dollar in a drop in imports. So that lifted it. If you look at real final sales to domestic purchasers, which takes out inventories and exports in the government, I think you were closer to two and a half, which is pretty much where we've been running. So it looked like a very strong third quarter number, but when you strip away all the one off kind of things, you're pretty much status quo and then of course we'll have the impact from the government shutdown in the forest garden. The real question is what happens in the first half of 2026 when the one big beautiful bill stimulus kicks in and you have the huge increase in tax refunds associated with that. I think they were talking about a hundred and fifteen billion in tax refunds, which would be a substantial windfall. I think the important thing is not to get jerked all over the place with these swings because the fourth quarter will be weak and especially second quarter will be stronger. Ultimately, I think the topics that we are just talking about are the ones that are going to drive the markets going forward. And if anything, if the economy does firm up on the stimulus, it almost makes it harder because if you think the economy is strong and it's going to support another year double digit earnings growth, wouldn't you rather land to the Googles and the metas and whenever and the US government as the Fed expands its balance sheet and inflation possibly runs hot. That's another risk. We haven't yet killed the inflation demon and now we're going to have a huge stimulus on top of it. You've got smoldering inflation embers and a tax cut that could like the match under them. Well, the other thing that I want to bring into this is someone you wrote about last month, I think late last month, or early this month, which was the bankruptcy finance. I can't believe we went through it yourself when this stuff rang in. Oh, no, I love it. I absolutely love it. It's great, but you had a chart of bankruptcy filings. And I think I'm right in saying this is the highest number of bankruptcies to October that we've seen since 2010 where obviously the credit crisis is just still feeding through and all the bankruptcies were falling like dollar notes. From 2022, they've essentially doubled. Again, we saw first brands and we saw tricolor and those are kind of things that people again, they went through and they were big news for a little while and people assumed that because they wake up and their front yard was on fire that everything's fine and then we should be worried about it. But again, the numbers there with the bankruptcy is and it's just signs of the kind of credit stress that you always get when you reach these turning points and you always get right before things start to finally unwind. What have you made of this? As you followed those headlines through, have you seen any other kind of trends there that you've noticed? Well, I've been niffed by the whole thing because, as they said, this has been the B in my bonnet for embarrassing to admit since the Fed started tightening in 2022. I said, this is going to precipitate a crisis in the corporate bond market because you've got a lot of corporate debt that's very low quality and very marginal borrowers and they're not going to be able to handle servicing that debt at higher rate. When you look at the number of zombie corporations out there is also, I think, the highest since the global financial crisis. So, you've companies that already can't service their debt out of existing income and now they're rolling paper at higher rates. I've been, when I saw Tri-Color in first brands, I started thinking, okay, now this is going to snowball rapidly and of course, it was just that one cockroach in theory or two and there were two cockroaches, but no, you're still seeing these stories. They're continue to be strains evident in the private credit space, but nobody seems to be concerned about it to a level that it's threatening the corporate credit market more broadly. You're not seeing, for example, you see a modest increase in brands on triple-C rated corporate bonds, etc. But the lowest end of the credit spectrum hasn't really taken a huge beating on these issues in private credit, which blows my mind because you have to imagine that if the private credit firms are struggling and going under, that they're just a window into what's going on at the low end of the public debt market chain. And again, going back to bankruptcies, how can you have the largest number of bankruptcies since the global financial crisis and yet presume that all these companies are hailing hearty and are going to be able to service their debt at higher rates? Obviously, they're not, because it's never that went out of business, so it's weird to watch this, and it's especially weird to watch it. Now it makes more sense when the Fed cutting rates, because you know, you're being punished for being responsible if you're returned on a money market fund is going to go to zero than maybe you do take some risk. But back when the Fed was tightening and then holding rates higher, it just didn't make any sense to me why people were taking these chances. And I'm still confused by it, but I guess it's going to take a much bigger, higher profile company, having issues before this happens. I thought maybe blue owl gating it's fun because everyone wanted out and still the little panic, but I took my door out this week and we were out at some shopper and other and someone said something, one of the people in the shop was helping us, said something to me that really stuck my head, it's been right around my head all week. And I can't exactly remember the context, because it's what I've been thinking about, let's take it over for it. But it was basically she was talking about something that we were asking about that was going to take a bit longer to get or to find or something. And in a very matter of fact way, we don't do that because that would just take longer and there's just no point in doing that, because it takes longer. So we don't bother. And it was the way she said it, this idea that even if something's better, if it takes time, then no, it's just a flat note, we're not prepared to sacrifice time for quality. Everything is about time, everything must be immediate, everything must be done today, soon as possible time. If you're looking for a solution to a problem, we don't want the right solution, we want the quick solution. And I've been thinking about that all week, and it's just funny, as you were talking about that stuff there, about first brands and Dracula. And you said, you thought that would be important. And again, I think when we talk about that being a tipping point, we come back to this idea that if it's not an immediate tipping point, then it's not a tipping point. But you and I have been around the sun enough times in these markets to know that the headlines are never the story. The stuff that's going on underneath is way more important. If you go back to 2008, and there are enough people around that have a memory of that, one would imagine, all of this stuff had started happening a year before it was in the headlines. It was probably six months before best earnings went under when all those alphabets who leveraged funds hit the wall. And it was almost 18 months until Lehman went under after the first shot for five and the first bankruptcies went through. I can't help but get that feeling again. The blue owl, I'm glad you brought blue owls. That was another one when you start seeing these big hedge funds gate returns, gate redemptions to investors. It's never a good sign. And it's never just one fund that does that. But again, since 2008, this time preference thing has completely changed. No one seems to think about long-term effects either of investment decisions or stress in the system. It's like someone throws a grenade and you can't look around them because it didn't go bang, you're fine walking around the ribbit. You have no idea if the fuse is just faulty and it's going to go off. You have no idea. No one seems to care anymore. No one really seems to worry about this stuff. It seems except you or me. I'm not quite sure what you wrote. No one cares about gold many, many years ago, but yeah, no one cares. I come to the same conclusion, but honestly, they're different tact and that is it feels like post-2008 that fed tightening in 2022 changed my entire thought process about the way the market's operate anymore because I was hysterically warning that the Fed, if it raised rates 25 basis points, wouldn't precipitate a crisis in the corporate market. And whatever they did, they massive tightening. I had my hair on fire and it turned out in hindsight that investors basically worked on the assumption that the tightening was almost irrelevant because the more they tightened, the sooner they were going to have to cut rates on the other side. I wrote that thing about Paging God or Pavlov. It just feels like over the last since Greenspan in '87, I mean, that's that long ago. They've spent basically, you know, the better part of 40 years learning that anytime the market goes down, it's just some, if you just hold on, the Fed's going to come and bail you out. So when they tightened in 22, the market reaction was so, they were so enured to this trend put that it almost was like they didn't tighten at all. They tighten. It was completely neutralized. And then you see now, which I think is fascinating, all of the reverse thing in the treasury market. Like the risk, the perception of risk is now in the treasury market. It's not in the corporate sector. So here's the Fed cutting rates. But the longer to the yield curve refuses to move. In fact, we're back up to almost four two today on the tenure. And you've got the Fed cutting rates and doing not kiwi. And the long into the yield curve just refuses to follow the Fed funds rate lower. And I think this is where I really expected, all right, that'll be the wake up call because if risk free rates don't come down, then spreads might compress. Many jump spreads will get a little narrower. But junk yields aren't going to go down in a face of a stubbornly high treasury yield. So I totally confounded, I guess, is what I'm trying to say at this point. So here's the thing. So here's the thing that I've been thinking about because you and I, we are broken records on this. And what's interesting to me, and I hadn't really thought about it until this week, is that we keep self-flatulating about, we've been wondering about the stuff and it doesn't, nothing seems to matter. But the consistent thing that we've both said throughout this period is that all of these things that we've been worried about ultimately feed back into a need to own gold. And you and I have both been very consistent about that. And it's been something that we've laughed and cried about. But interestingly, if you look at it, the weird thing is all the things that we've worried about have kept on happy and kept on getting worse, which has meant we're even more adamant that you need to own gold. And yet, none of them have fed through into markets. But if you kept buying gold as mitigation for all these things that we're worried about, you're doing better than you were in the equity market, you're doing better than you were anywhere else. I don't know quite what the hell's going all step from honest with you because it's like problems, check, solution, check. And in the middle, there's a big yada yada where they don't sink up and I really don't quite understand it from honest. The only way I guess you could try to explain it is that they're two totally different constituents. The people who see that the emperor has no clothes, who have been flowering into gold led by, let's say, these are Western investors. These were initially foreign central banks, especially China, Russia, India, etc. So you can come with that conclusion that you've got these ignorant Western investors who still say they're blindly chasing risk on the assumption that everything's fabulous. And then everyone else who's figured out that the mass doesn't work and they're running to gold because I don't know how else you can explain it. But I'm like you, I guess I've all those gotten to the point where I don't care anymore if the corporate credit market blows up from an intellectual vindication standpoint, it would be nice to be able to say, yeah, all those things I was warning about really did matter. It just took a little longer. But frankly, I don't care because like you said, the thing I recommended people do to avoid that catastrophe has paid off. I feel a little snarky. I don't really care what happens to this stock market. Knock yourself out. It's a bubble, have fun buying all those AI stocks and see if it works for you. But I'm going to sit here and have my gold. And not worry about it. I feel like I'm copying out. But that's really where I add right now. It's strange. Obviously, the big buyers of gold were initially to your point earlier on the central banks who were trying to, let's say, less than their dependence upon the good graces of the United States Treasury in just enough of a way so that they wouldn't scare anybody. I wouldn't bring any attention on themselves. And they seem to be done quite a good job with that. But the interesting thing is gold is now almost expensive enough and the chart almost not stupid enough that Western investors are going to start trying to buy it, which obviously means that it will probably have a big correction. So this idea of something being reassuringly expensive enough that it makes sense to buy it. I've watched this rise and you and I were talking of Mike before we started recording. We're both actually nervous about gold. Every day you wake up and it's not up another 50 bucks and silver, head of 70 dollars like it hasn't got care of the world. Those historically, if you spend any time in these precious metals markets are never good science because as much phomo as there is in magnificent seven equities, it's a whole different nature when you get to precious metals because there is that that man's lust for shiny things to just takes over. It wouldn't surprise me at all to see gold and silver have a meaningful correction. I don't think they're anywhere near done in terms of where they're ultimately going. No, we're near, but they have a habit of hurting the most people in the most painful ways that they possibly can. And so if we get a whole load of people hurting into them now because they're starting to see all these all-time eyes every small bit of wake up, I don't think there are enough people in them at the moment for them to decide to turn around and slap everybody, but we must be getting close to if I would think. Well, I was just putting up the chart of total ETF holdings overlaying with the price of gold and obviously you've seen a huge increase in retail interest in gold. So ETF holdings are substantially from the lows in 2024, but they are now just back to the level they were at in September 22. So in September 22, gold was trading at 1600. So gold is almost tripled in that amount of time and the ETF holding is essentially unchanged, which is a statement about potentially how much more interest there is yet to come on the retail side, but that could be a dangerous way to look at it. But like you said, the more expensive it gets, the more appealing it is to people. It's so backwards, but that seems. What do you make of silver? I don't know if silver is just because it had been lagging for such a long time. And it was always going to do this kind of thing because this is what silver does. But the strength of this rally has confounded even me. I'm quite surprised that how crazy it's gone and such is so much so because silver is one of these things that when it blows through these levels, it doesn't tend to blow through three or four levels in a row without correcting. And this time, it doesn't have a care in the world. It's unbelievable. Actually, every morning I wake up and I'm checking these prices going to holy cow. I did it again. I'm expecting that day when I wake up and they're both down 10%. That wouldn't surprise me at all. But it doesn't seem to be happening, which I find fantastic, but some will curious. Yeah. That's so hard for us to evit of this space for so long to get acclimated to these kind of moods. For me, I feel like I'm almost owning one of these meme stocks. I'm not supposed to feel this way. It's not supposed to just move parabolic moves higher every day because this is not normal. Let me ask you about that because that's an interesting thing for us to talk about because I'm the same. The thought of selling my gold is not one cent of my head and the thought of taking profits and trading out so I can buy back in lower. That's just that's never been the reason I've owned it for. But I'm curious is if the way you look at it is different or has changed or you find yourself rethinking about the how do you manage this stuff? Because you know, well, you say it's right. This whole phoma thing. I've got guys in WhatsApp chats, friends of mine who are basically bullied into buying gold or silver a few years ago and have winged a moment on the way up. And one of my good friends is a gold and silver portfolio manager and he's got a ton of friends that bought this stuff. And of course, now they're all over it like white on rice. And it's been fascinating to listen to the change in their attitudes. And because they're not professionals, you've had this, I don't know why I bought this dog too. I'm never selling it. This thing's going up every day. It's going to go up every day forever from now on. It's fascinating to me to watch the less than psychology. If you found yourself rethinking it at any levels that you look at going, oh, I just haven't, but I've never ever, and I've been very focused. I never look at the price really out of anyone's idle curiosity. I generally try not to look at the price but these days it's hard not to. You don't have to look at the price. But no, like you, I feel like the reasons that I own golds are all reasons that are starting to play out, but we're nowhere at the end of this story. We have a long runway before my thesis anyway, thrown in golds completely is dead and buried. I think there's a lot yet to come on that score. But like you're saying, when things move this far, this past, and you get all the sudden, people want to talk to you at a cocktail party, much less. I guarantee you, you get invited to many multiples more complex and I do. But it's, wow, this is a weird experience. It's like an out of body experience. I don't really know how to navigate all this is weird. And so, my only thought when we talked about it briefly before we jumped on here was trying to just set up some small hedge for the inevitable pullback that you talked about. But ultimately, no, I would never think that now is the top. Now that there's some interest from people who would laugh in your face if you said you weren't hot and told, that doesn't make me feel like the story is changed. But on the other hand, I am mindful that the spanking will be forthcoming. So it's tough. I'm trying to figure out the best way if I want to handle it and how I want to go about that. That's a little not so easy. But no, I was here and it's really just a silver, you know, I guess I came to gold for all the monetary debasement reasons. And so I never really followed silver as closely as part of that basket. But it's not a reserve asset the way gold is a reserve asset. And it also has a lot of economic uses. So it's like you're making a bet both on the currency and on the outlook for global economic activity. And so I really just focused on gold. And now I'm kicking myself. I wish I had more exposure to silver. But ultimately, I think like he said, silver is probably just playing catch up because it was depressed relative to gold for so long. And then I think all of this stuff will probably cool off, not go down, normalize. And once these ratios fall into line, we'll just continue to plow higher. That's my view. But what do you think on that? Well, two things. First of all, I think you and I could get ourselves rich if we just clip out you saying the spanking will be forth coming instead of downloading the ringtone. I think we could retire for good if we do that. But more importantly, it was funny. If you think about the bottom price is done. And if you're buying gold and silver because you thought it was a trade, then you definitely have some decisions to make here. Right. If it was a pure trade for you, then you've definitely got some decisions to make here. There's no two ways about it. But if you were buying gold and silver because you were worried about the much bigger picture problems that they tend to mitigate, whether it be a sovereign debt crisis, whether it be the double digit inflate, whatever it may be, then I would think, because it's certainly this is the way I look at it, that what they've done in the last several months, as these macro stories have gotten juicier, should actually help redouble your conviction that these are the right things to own. And that means you're kind of almost hoping for a pullback, because if you were tentative in buying gold and silver, because still maybe this would be a half decent hedge, it's not like the prices have gone where they've gone for no good reason whatsoever. They've just gone a bit further, but all the reasons of falling into line one after the other, all the things that we've been talking about for years are actually playing out. And so there's now some proof there that gold and silver do react to these kind of problems that we've talked about, whether it's debt crises, whether it's interest expense, whatever it may be, there's dozens of them. And so now that they've proven that they do mitigate that, they do react to those things, you almost think hopefully they'll be a pullback, because now I've seen evidence that this is a good way to position myself. If I am worried about those things, I'd much rather buy my hedge at $3,000 an ounce, they would afford a half. That's the way I look at it. It makes me think that if gold and silver pullback, you've seen how they respond. None of the background stuff is changing, or it's likely to change anytime soon. It really isn't. Because these are such big picture things, you're almost hoping that you get a chance to buy the stuff for 30% off in the post-Christmas sales. Well, I don't know how much I'm hoping for that kind of thing. It would be painful, but never the less. You've only mentally, it's only mentally painful, right? That's, I guess that's the thing. It's sure. It's a psychological thing. Getting back to Japan, because I think this is going to be a journey. I'm a gateway to hear what Andrew McDermott's tireless, I'm sure they'll talk about it, is how long it'll be before the pay could Japan decide so they can't tighten. It's amazing to me to watch this, because it seems clear that every G7 country is going to have to print to monetize these massive unfunded obligations that they have. We're all on the same boat in terms of having massive government debt that there aren't enough buyers for us in the central base. We'll have to come in and essentially act as buyer of last resort. But here, Japan, over there, pretending that they're fighting an inflation problem and that it would have any impact on this untenable fiscal situation that they have. It's just fascinating to watch. And I'm shocked that they are actually, I guess I'm not shocked from the standpoint of having to fight the near-term battle of inflation. But I just, I don't know how long do you give this experiment? I think the question is, how long does the market give them to continue this experiment? Because it's already starting. Some of these moves in Japanese bonnills, the twos and tens have been remarkable. And there's enormous pressure on Japan now. And yeah, there has been for some time, but it's interesting because the nature of its change. For all those years, they kept doing something and not getting the result they wanted because they were trying to get out of deflation. Now they've got the result they wanted and they can't do anything. And so both situations, there's been a disconnect. The previous situation was fine because it suited everybody that Japan's inability to get what they wanted provided the carry trade for everybody. And everyone just said, this is great. Yeah, more power to you. Let's hope you're failure to do anything continuous forever. And now it's not a failure to do anything. It's an inability to do anything, but that's going to be tested at some point. Already people are dissatisfied with inflation in Japan. It's a genuine kind of 2%. It's not the kind of fake three going on 12 that we have in other countries. And the Japanese are often arms about it. So once again, Japan has always been the place to keep an eye on as a potential roadmap. But now I think it's the place you have to keep an eye on because policy decisions that get made there, I am going to ripple through everything else because we're talking about rates going up, not down. And rates across the go down are always good to no one really had to worry about it. But again, as goes Japan, so goes everybody else ultimately. And while the composition of their bond market is dramatically different to everybody else in terms of how domestic it is. And so it's certainly got some insulation. It's not going to happen in a vacuum because of the currency. And so we are going to have a ringside seat to what happens with Japan in the next quarter, I would imagine. And people better be paying attention. And that is not another shame. Just plug for the certificate. We will talk about it. But Japan is one of those things that everyone feels like it's important because they've been told that Japan is important. And they've heard about the carry trade and all this other stuff. But you're about to find out I suspect why Japan really is important. And it's going to be so many needs to pay attention to without question. Yeah. It's interesting is I listen to you talking about that to think about this notion of maybe a central bank can ball because obviously for decades, global hedge funds have been funding their levered positions in yen and positioning is carry trade. Then the bank of Japan decides to start tightening. And you would have thought that could have precipitated a massive unwind of all these levered positions and create some real chaos in the markets. And it didn't happen. And so you wonder why didn't it happen? And it seems more than coincidental that the basic Japan started rating rates almost at the same time that the Federal Reserve and everyone started cutting. So it's weird. I'm like, okay, if you guys want to raise rates, then I guess we better hurry up and cut rates over here so that we can sustain these very levered positions. These markets right now, this is what the biggest concern I have is just the leverage underlying the markets broadly that we've built up over the last several decades. And I mean, I don't think there's any way to quantify exactly how much there is. But we know that every year that carry trade got bigger and bigger and more people were in bolden to do it. And it was free money. It just there was no concern about risk whatsoever. And here we are navigating unprecedented geopolitical and fiscal and economic risks. At a time when we've got these massive levered positions that we can't really identify or quantify to me. Again, that's just why I sleep so well at night knowing that I've got cold. And I'm not smart enough to figure out where the problems are going to rise. But I know I'm protected wherever they do. Amen to that. Well, I guess it's Christmas. So we shouldn't keep people too long because they've all got really annoying relatives to get back to. And we get my excuse to sneak off for now. I really have to go listen to super jumping happy hour. I'll be back. But it's the clues in the title. It's an hour. So we really need to get them out of here before the hour. So when you say we wind this up, we share everybody a Merry Christmas and happy holidays and all the other things that you have to do these days and call it a year. What do you think? We can't close without wishing everyone a happy festival. Oh, I was going to leave that to you. Festivals for the rest of us. List everybody. Thank you very much for listening to us. We will do this more frequently next year, I hope, because we've been a bit lax this year, Stephanie, over there, various schedules, but we'll get the wheels back on the geloppy by the time the year rolls around. And one more reminder, the super terrific happy day. Again, February 17th at the Vinoy Hotel in St Petersburg. Super terrific happy day.com. You'll find out everything you need to know there. The tickets are selling pretty quick. So don't do it. And we will look forward to seeing you there in the meantime. Thank you very much for listening. If you want to follow the great Stephanie Pomboi, Steph, tell them how they do that. @s Pomboi on Twitter or you can google me at macromavans.com. You sure? You sure? And you can see her in the flesh in Tampa on February 17th, 2026. Alright, Steph, listen, a lot to the family. Have a great Christmas and I will see you early in the year. Merry Christmas. They're spaking. We'll be towards coming. So while we hope you find it both informative and entertaining, to say nothing of super and terrific, of course, please do your own research or speak to a financial advisor before putting a dime of your money into these crazy markets.