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0:02

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1:01

that call today. For Trump to have and

1:03

knows he's going to get a recession under

1:06

his watch, he doesn't want that being part

1:08

of his legacy. There's got to be the

1:10

light at the end of the tunnel. Hope

1:13

is not a strategy, Daniel. Trump has

1:15

basically said, I'm changing the rules, but

1:17

he won't tell people with the rules

1:19

are. The rules change when he wakes

1:22

up. I think I've heard of worse

1:24

things. I mentioned Elon Musk calling trade

1:26

advisor Peter Navarro, you know, dumber

1:28

than a sack of bricks. They're

1:30

not on the same page here.

1:32

I said eight years ago that

1:35

Peter Navarro was the most dangerous

1:37

economist in the country. A tariff

1:39

on energy is a stupid idea.

1:41

Could you see China saying we're going

1:44

to dump our treasuries and we're going

1:46

to dump our US dollars? Who cares?

1:48

I mean, seriously, who are they going

1:50

to dump their treasuries to? This is

1:52

the exorbitant privilege of being the world's

1:55

reserve currency. It's one of the things

1:57

I think Trump is putting in danger.

2:00

Big breath. China saying it will

2:02

fight to the end in a

2:05

tariff war with President Donald Trump,

2:07

Elon Musk calls trade advisor Peter

2:10

Navarro, dumber than a sack of

2:12

bricks, and Vanguard advising clients to

2:14

stay the course and to resist

2:17

the urge to deviate from their

2:19

financial plan as markets are falling

2:22

sharply here. How's that for a

2:24

sentiment check, folks, joining me today

2:26

to digest all of this and

2:29

more. John Maldon, he publishes thoughts

2:31

from the frontline through Maldon economics

2:33

and is a New York Times

2:36

best-selling author. Please welcome to the

2:38

program. The brilliant John Maldon. How's

2:41

that from intro, John? That was

2:43

a great intro. Thank you very

2:45

much, Danielle. It's 25 years I've

2:48

been writing and just, you know,

2:50

I think we first met when

2:52

you were like 14 years old.

2:55

We're going to cook. That's right.

2:57

12. 12. Actually, John, do you

3:00

remember it was in Iceland? We

3:02

had a, we were invited on

3:04

this. Yes, what a trip that

3:07

was. What a trip, right? But

3:09

a trip. So that was the

3:11

last time we saw each other.

3:14

And how much has the world

3:16

changed? If I had told you

3:19

back then, whenever that was, 10

3:21

years ago, that all this would

3:23

unfold, would you have ever believed

3:26

me? Maybe. And the reason I

3:28

say maybe is that in 1994,

3:31

Neil Howe, my close friend Neil

3:33

Howe and Richard Schaus wrote a

3:35

book called Generation in 1997, they

3:38

wrote a book called The Fourth

3:40

Turning. And where they described for

3:42

400 years of Anglo-Saxon history, here's

3:45

how we repeat ourselves every 80

3:47

years in generational cycles. And they

3:50

were calling, saying sometime in the

3:52

late 20s. early 30s, we're going

3:54

to see something like what we're

3:57

seeing now of generational change. World

3:59

War II, the... World War II,

4:01

the Revolutionary War, the whole Cromwell

4:04

thing in England, and we just

4:06

goes back and we repeat these

4:09

cycles. So when you were saying

4:11

there's going to be significant change,

4:13

I could have believed it. I

4:16

might not have believed what you

4:18

told me at the time, but

4:20

I would agree with that we're

4:23

going to see change. That's a

4:25

book I'm writing right now. I'm

4:28

looking at. four or five different

4:30

ways people talk about generations of

4:32

history when they're looking back. And

4:35

they all point to kind of

4:37

a crisis coming up at the

4:40

end of this decade. And it's

4:42

not that Trump is the cause.

4:44

Okay. I mean, there were some

4:47

people who say, no, Trump just

4:49

the accelerant. This is a social

4:51

mindset. of people becoming frustrated for

4:54

one reason or another and looking

4:56

for change. And so that's why

4:59

we're going back and forth and

5:01

back and forth. And I'm reminded

5:03

of, I think it was Queen

5:06

Victoria or Queen Victoria was saying,

5:08

you know, with her counsel or

5:10

her chamber. So gentlemen, we have

5:13

to have change and Salisbury said

5:15

Salisbury. change man change aren't things

5:18

bad enough and sometimes sometimes you

5:20

have to be careful when you're

5:22

asking for change which is what

5:25

we're having right now so that'll

5:27

lead us into some of the

5:30

questions that you sent me yeah

5:32

well well we're talking points you

5:34

know and I mentioned the first

5:37

one here China the latest come

5:39

coming up from there and who

5:41

knows by this time this airs

5:44

Friday, John, what will happen with

5:46

this, the negotiations, but right now

5:49

they want to fight to the

5:51

end. What do you think happens

5:53

here? This China win? This Trump

5:56

win? Here's the problem that we

5:58

have. We are

6:00

no more than 25% at best

6:02

of China's exports to the world.

6:05

And in most markets, in most

6:07

niches, we're 10 to 15%. So

6:09

can they get along without us?

6:11

Yes. Do they need us? Absolutely.

6:14

China's problem is that they've lost

6:16

the trust of the world. Their

6:18

foreign direct investment has dropped from

6:20

80 billion back in 22 to

6:22

zero today. The world has just

6:25

said, we can't invest in China.

6:27

And in fact, we want to

6:29

try to get as much money

6:31

out as we can. And the

6:34

Chinese people are trying to get

6:36

money out. The government has lost

6:38

their trust. And they've got a

6:40

housing market that's collapsing. Consumer spending

6:43

is not rising. In fact, the

6:45

savings is going up because the

6:47

average Chinese, at least if you're

6:49

looking at the behavior, is just

6:51

as concerned as we are. They

6:54

may be very pro-China, just like

6:56

we're very pro-US, but the behavior

6:58

says we're concerned about the future.

7:00

And I think for everybody in

7:03

the world, that's the correct position

7:05

right now. But going back, everybody,

7:07

and I've lived a few years

7:09

now, we're always concerned about the

7:11

future. There's never been a time

7:14

in history where everybody says everything

7:16

is going to be perfect in

7:18

the future. So here we are.

7:20

Let me ask you this. Let's

7:23

play out this scenario. Could you

7:25

see China saying, okay, US? We're

7:27

going to dump our treasuries and

7:29

we're going to dump our US

7:31

dollars. Then what? Who cares? I

7:34

mean, seriously, who are they going

7:36

to dump their treasuries to? They're

7:38

going to sell it to somebody.

7:40

We're not buying them. So, is

7:43

Russia going to buy them? Japan's

7:45

somebody in the world has to

7:47

buy those treasuries this is This

7:49

is the exorbitant privilege of being

7:51

the world's reserve currency. And it's

7:54

one thing that I think Trump,

7:56

it's one of the things I

7:58

think Trump is putting in danger.

8:00

We have the exorbitant privilege of

8:03

getting stuff from the rest of

8:05

the world. Nike shoes, t-shirts, chips,

8:07

whatever. And they take our dollars.

8:09

I mean, you know, Trump says

8:12

we don't export anything. Yes, we

8:14

do. We export dollars. Now we

8:16

also export more than we ever

8:18

have. But we export dollars and

8:20

they get those dollars and they've

8:23

got to do something with them.

8:25

Typically they ended up in the

8:27

central bank and the central bank

8:29

ends up buying treasuries. But a

8:32

lot of times it ends up

8:34

in people's hands, they say, we

8:36

want to buy your stocks. Part

8:38

of the reason, 19% at the

8:40

beginning of this year, 19% of

8:43

our start market was owned by

8:45

foreigners. You think they're not pulling

8:47

their money out? That's part of

8:49

the reason we're having the crash

8:52

because they're losing confidence. They're not

8:54

certain of what's going to happen.

8:56

And if you're an investor and

8:58

you're facing uncertainty, what you do,

9:00

you pull back, you stop, maybe

9:03

you move. There are other places

9:05

that look less uncertain. And so

9:07

I'm not worried about China saying

9:09

we're going to dump your dollars

9:12

to who? Okay, well let me

9:14

ask you this. Could they be

9:16

like forget the dollars? We'll solve

9:18

it for gold. Well,

9:21

they could put it in gold.

9:23

Sure. And China's buying gold. But

9:25

who's going to sell them that

9:27

gold? Those dollars still have to

9:29

go somewhere. They still have to

9:31

buy. I mean, say they go

9:33

to London or Switzerland, they buy

9:35

gold. Those dollars in, or London

9:37

is Switzerland's problem. They're not coming

9:39

back to the US. Nobody's selling

9:41

gold here. We're

9:43

seeing internal conflicts brewing now.

9:46

I mentioned Elon Musk calling

9:48

trade advisor Peter Navarro You

9:50

know dumber than a sack

9:52

of bricks. So they're not

9:55

on the same page here.

9:57

I mean I I Said

9:59

eight years ago that Peter

10:01

Navarro was the most dangerous

10:03

economist in the country I

10:06

think I said something like

10:08

which I repeated this week.

10:10

Peter Navarro has the economic

10:12

understanding that God gave a

10:14

goose. So much for that

10:17

PhD. So much for that

10:19

PhD. Somebody on Twitter wrote

10:21

that, you know, do you

10:23

think Musk, you know, has

10:26

better understanding than Navarro and

10:28

somebody answered, well, David, my

10:30

friend David Bonson answered, well,

10:32

Musk is, you know. greater

10:34

than Navarro, but a baked

10:37

potato is greater than Navarro.

10:39

Navarro sees things in this

10:41

trade world that just aren't

10:43

real. I mean he thinks

10:46

that Vietnam is taking advantage

10:48

of us because they sell

10:50

us Nike t-shirts and I

10:52

mean Nike's and t-shirts and

10:54

other stuff and they you

10:57

know we we buy like

10:59

130 billion a solar from

11:01

Vietnam. They only buy 13

11:03

billion of our stuff. Well,

11:06

they're only making an average

11:08

of $4,000 a person. They

11:10

can't buy a lot of

11:12

our stuff. I mean, that's

11:14

not the deal. The deal

11:17

is we get cheap labor

11:19

there and we need that

11:21

because we don't want people

11:23

in sweatshops. Like when I

11:26

was growing up, we, you

11:28

know, there were 340,000 people

11:30

in the garment district in

11:32

sweatshops in New York. making

11:34

all sorts of clothes and

11:37

those were not fun places

11:39

to work. We don't, we

11:41

have to, we have to

11:43

bring people in from Latin

11:45

America, Mexico a lot, to

11:48

harvest our food and we

11:50

give them temporary visas. We

11:52

do it every year because

11:54

people don't want to go

11:57

harvest food. I've actually worked

11:59

in hay fields growing up,

12:01

you know, that's hard hot

12:03

sweaty work. We're trying to,

12:05

as the US, we're trying

12:08

to move up the food

12:10

chain, just like Singapore. did.

12:12

Lee Kwan Yu, they started

12:14

out manufacturing labor markets in

12:17

the 60s, I mean just

12:19

making t-shirts, okay, and things,

12:21

and they moved up the

12:23

chain, and now you go

12:25

to Singapore, and they are

12:28

the highest tech manufacturing, they're

12:30

the highest tech services, I

12:32

mean they're a shipping powerhouse,

12:34

they've moved up the food

12:37

chain, which is what all

12:39

countries want to do. So,

12:41

I mean, we're putting a

12:43

tariff, I think it was

12:45

40% or something like that,

12:48

on the Southo. Little African

12:50

country, we've been there. They

12:52

make $1,000 a year. I

12:54

don't know. They can't buy

12:57

our stuff. And we want

12:59

to put a tariff on

13:01

the few things they sell.

13:03

I mean, they're not our

13:05

market. Do I think that

13:08

we should be approaching China

13:10

differently? Yes, China's a different

13:12

case. China has not very,

13:14

Vietnam's pretty open to us.

13:16

Their tariffs are minimal. Okay,

13:19

they could go to zero

13:21

tariffs and it wouldn't make

13:23

any difference. It literally wouldn't

13:25

make any difference what, how

13:28

much they buy. Okay. So

13:30

you think China's justified. And,

13:32

and, and they have, they

13:34

have a mercantilist policy, a,

13:36

And that's a problem. But

13:39

90% of the countries, 95%

13:41

of the countries on Trump's

13:43

wall of doom, you know,

13:45

those countries, those countries aren't

13:48

cheating us. What about the

13:50

European countries? Europe, there's two

13:52

problems and with Europe number

13:54

one. They've lived on, I

13:56

mean, and I think Trump

13:59

is right on this, they've

14:01

lived under our umbrella and

14:03

they've taken advantage of our

14:05

defense. And the deal was...

14:08

with NATO, they were going

14:10

to put X percent in,

14:12

2 percent, 3 percent, and

14:14

they haven't done that. And

14:16

the US taxpayer stepped up

14:19

and the, you know, and

14:21

the Europeans get much greater

14:23

social benefits than our country

14:25

does. It's not really fair.

14:28

They need to step up.

14:30

And Trump tried to get

14:32

them to do it the

14:34

last time. They didn't pay

14:36

any attention. So, okay, now

14:39

let's see if we can

14:41

get your attention. That's correct.

14:43

Now, if they went to

14:45

zero tariffs on American cars,

14:47

Europeans are going to buy

14:50

many American cars. I'm assuming

14:52

you've been to Europe a

14:54

few times, Daniel. You know,

14:56

they... I am Italian, John.

14:59

Huh? I am Italian, John.

15:01

And Canadian. No, the gasoline

15:03

is expensive and the parking

15:05

spots are small. I mean,

15:07

it's, we don't make cars

15:10

in general for Europeans. We

15:12

make them for our American

15:14

markets and bigger markets. We

15:16

could sell some, and yes,

15:19

we'd sell more. There are

15:21

places that people want suburban

15:23

and escalates and so forth.

15:25

I would prefer them to

15:27

open up their agriculture market,

15:30

just like I would like

15:32

Japan to open up the

15:34

rice market. I mean, I'm

15:36

pretty much a free trade.

15:39

I don't want governments telling

15:41

people what you can do

15:43

and how to run your

15:45

businesses, whether it's... a

15:48

Democrat government or Republican government.

15:51

Just get out of the

15:53

way. Businesses can figure out

15:55

how to do what they

15:58

can do. One more point,

16:00

John. You mentioned defense. and

16:03

how Europe has taken advantage

16:05

of the US. And in

16:07

fact, we just saw the

16:10

news today Pentagon pulling out

16:12

troops from Europe. That's a

16:15

separate topic. Would you make

16:17

the same argument against Canada,

16:19

that Canada has taken advantage

16:22

of the US? In general,

16:24

we have the... US, you

16:26

know, the USMCA agreement. We

16:29

should stick by that agreement

16:31

until it's time to, because

16:34

that's what we agreed to.

16:36

It was trumpet negotiated. When

16:38

it's time to renegotiate, I

16:41

would like to renegotiate lower

16:43

tariffs, more free trade. Is

16:45

that going to hurt some

16:48

Canadian businesses? Yes. Is it

16:50

going to hurt some US

16:53

businesses? Yes. I mean, hey,

16:55

I get it. Canada can

16:57

make cheaper lumber than we

17:00

can. Okay, fine. We can

17:02

make cheaper dairy products than

17:04

they can. I mean, and

17:07

it's going to come down

17:09

to negotiation. We'll see who

17:12

wins in the Canadian elections.

17:14

I have my papers, of

17:16

course, but I would like

17:19

to see more free trade.

17:21

I think putting... A tariff

17:23

on energy is a stupid

17:26

idea. I mean, I want

17:28

to see pipelines crossing the

17:31

border everywhere. So can I

17:33

ask who you would like

17:35

to see? I'm guessing you'd

17:38

like to see a conservative

17:40

win in Canada. I would

17:43

much prefer polive to Kearny,

17:45

absolutely. Well, Kearny's a step

17:47

up from Trudeau. I mean,

17:50

like a big step up.

17:52

But they need, I mean,

17:54

there's a reason that you're

17:57

getting a separate movement. in

17:59

Alberta. And I don't think

18:02

that can ever happen. But

18:04

it's a, it's a, it's

18:06

an emotional point where the

18:09

Albertans are really disadvantaged to

18:11

the rest of Canada, because

18:13

of the taxes, because of

18:16

the taxes, because of the,

18:18

terrorists and protectionism between their

18:21

provinces. Can you imagine New

18:23

York saying to Texas or

18:25

Florida, well, you can't ship

18:28

your food or your cattle,

18:30

we're only going to take,

18:32

you know, we're only going

18:35

to eat beef from blue

18:37

states or from states that

18:40

have this type of income

18:42

or vice versa, Texas saying

18:44

we don't want anything that

18:47

comes, you know, no, no.

18:49

We have, we have, the

18:52

US is a free trade

18:54

zone. And that's what made

18:56

us strong. And Alberta is

18:59

frustrated because it's not a

19:01

free trade zone. So that's

19:03

a good point, John. I've

19:06

been saying it. If any

19:08

silver lining, it's that it's

19:11

shine the light on Canada's

19:13

broken policies and hopefully the

19:15

country will start waking up.

19:18

Just before we move on

19:20

to markets here. Overall,

19:23

do you think that the

19:25

US will walk away from

19:28

all these trade negotiations on

19:30

top? Will the US eventually

19:32

get what they want and

19:34

win here? Hope is not

19:36

a strategy, Daniela. I hope

19:39

it does. Okay, but that's

19:41

not a strategy. Are we

19:43

going to get what we

19:45

want in every case? No.

19:47

Will we get some of

19:50

what we want? Yes. I

19:52

mean, some countries, if you're

19:54

Argentina or Vietnam, you say

19:56

fine, thank you, you know,

19:58

whatever you want. If you're

20:01

China, if you're Europe, if

20:03

you're Canada, no, they're going

20:05

to want to negotiate. And

20:07

they feel they have the

20:09

ability to do so, and

20:12

they will. I mean, what

20:14

I like to see a

20:16

free trade zone with Europe

20:18

and Canada, absolutely. Do I

20:20

want to take European policies

20:23

that have strangled their countries?

20:25

and put them into the

20:27

US? No, I don't. I

20:29

mean, Europe has a problem.

20:32

They're not growing. And, you

20:34

know, they had a commission

20:36

and they said, well, gee,

20:38

guys, it's Brussels and the

20:40

regulations that we have and

20:43

we need to change that.

20:45

But... They don't want to

20:47

change their regulations because much

20:49

of its protectionists. The French

20:51

farmers want their subsidies. The

20:54

German auto manufacturers want their

20:56

subsidies. I mean, I headed

20:58

in my letter last week.

21:00

Let me do a five-second

21:02

plug. My letter is at

21:05

Maldon Economics. It's free. I've

21:07

been writing it for 25

21:09

years. You know, just... Go

21:11

to it put your name

21:13

in become one of my

21:16

multi. You know my one

21:18

million closest rents. That's my

21:20

my plug is over now

21:22

Daniel I put a Graph

21:24

in I think I did

21:27

Last week that showed German

21:29

manufacturing jobs Germany is exporting

21:31

More than it's ever done.

21:33

I mean it's like monster

21:35

compared to the US in

21:38

terms of percentage of its

21:40

GDP Their manufacturing jobs since

21:42

1950 have been going from

21:44

the upper left to the

21:46

lower right. They are losing

21:49

manufacturing jobs every year. Why

21:51

is that? Because just like

21:53

the US, we're using more

21:55

technology to make stuff. People

21:57

keep talking about China stole

22:00

our jobs. No, they didn't.

22:02

Technology did. And they didn't

22:04

steal jobs. They made us

22:06

more efficient. I mean, nobody,

22:08

in 1800, 80% of the

22:11

people worked on farms. Today,

22:13

we produce massive amounts of

22:15

more food with one to

22:17

two percent. Nobody wants to

22:19

go back to everybody working

22:22

on the farm. We've become

22:24

more efficient. We've used technology.

22:26

We're producing more cars than

22:28

we ever have. Better cars.

22:30

I was talking with a

22:33

friend of mine and we

22:35

were laughing about how our

22:37

cars in the 1960s, we

22:39

started thinking about having to

22:41

trade them in or buy

22:44

new ones when the car

22:46

hit 60,000 miles because it

22:48

started having problems. Today's cars

22:50

just are getting broken in,

22:52

barely. The tires last 60,000

22:55

miles. Everything's improved. And it's

22:57

going to continue to improve.

22:59

I'm an optimist about the

23:01

future. Not so much about

23:03

governments, but I'm an optimist

23:06

about the future and humanity.

23:08

I mean, we're going to

23:10

have to learn to adjust.

23:12

In 10 years, you're going

23:14

to be buying a robot.

23:17

for roughly what you're buying

23:19

a $30,000 robot, $300 a

23:21

month, that will be able

23:23

to do all your housework

23:25

and your yard work. Or

23:28

if you're a business, you

23:30

can get them making stuff

23:32

and manufacturing all the little

23:34

stuff. I mean, it's, and

23:37

there'll be AI driven. I

23:39

mean, that's going to be

23:41

a change. It's going to

23:43

be a real change. We

23:45

went from the factory to

23:48

the farm over five or

23:50

six generations. I mean from

23:52

the farm to the factory

23:54

over five generations. Now we're

23:56

going to do it in

23:59

like... a generation, a

24:01

generation, that's really screaming fast.

24:03

So we're gonna have to

24:05

do a lot of adaption.

24:07

And those of us who

24:09

are free market, you know,

24:11

everybody should stand up from

24:13

themselves, individuals, we're gonna have

24:15

to recognize that there are

24:17

people that are gonna get

24:19

left behind because we haven't,

24:21

we haven't educated people enough.

24:23

The jobs may or may

24:25

not be there. Things are

24:27

going to be changing. We're

24:29

going to have to figure

24:31

out this. We're all in

24:34

this together boat. And don't

24:36

ask me how that's going

24:38

to look because we're not

24:40

there yet. But we're going

24:42

to have to change our

24:44

view of how government is

24:46

involved and how things work.

24:48

John, you have these things.

24:50

It's not a, it's not

24:52

a pleasant conversation for a

24:54

conservative, you know, quasi libertarian

24:56

like me to be having,

24:58

but it's the truth. You

25:00

know, it makes me think,

25:02

yeah, maybe we're definitely more

25:04

efficient, but maybe living on

25:06

the farm, those were just

25:08

better times and days. I

25:10

can tell you. I know

25:12

from stories of my parents

25:14

who were born right after,

25:17

you know, at the end

25:19

of World War II in

25:21

Italy, I know it was

25:23

not, these were not easy

25:25

times. No, they weren't easy

25:27

times. And there are up

25:29

and downs and just like

25:31

there is in any business

25:33

and you're subject to the

25:35

weather. One of the things

25:37

that... all economists agree on

25:39

is we're subject to incentives

25:41

and what we have to

25:43

recognize is we have to

25:45

make sure that people have

25:47

the right incentives to work

25:49

businesses have the right incentives

25:51

and one of the things

25:53

they're going to do is

25:55

their incentive is to make

25:57

their life better. That's

26:00

what we want. We want

26:02

to make the lives of

26:04

our children better. I mean,

26:06

I'm, there's lots of things

26:09

that, I mean, I'll just

26:11

give you an example, my

26:13

39 year old twin daughter,

26:15

we adopted her and she

26:17

had open heart surgery last

26:19

week and Tulsa, you know,

26:21

double bypassed. It's a genetic

26:24

thing. And the technology that

26:26

they had or on was,

26:28

I mean you walk in

26:30

the hospital room, it was,

26:32

literally eight computers were feeding

26:34

into her from different things.

26:36

And they said yesterday they

26:39

had, they were 12. And

26:41

the technology was fabulous. Saved

26:43

her life. Doctors said after

26:45

they got into her heart

26:47

if she wouldn't blast it

26:49

another month. And it was

26:51

just, it's just a genetic.

26:54

Now. Her insurance is

26:56

irrationally high and it has a

26:58

$10,000 deductible and a 10,000 co-pay

27:00

and you know, they're working class

27:03

families, I mean, middle class families,

27:05

and so you try to figure

27:07

out how to make a life

27:09

for your kids better. That's what

27:11

we all do. You try to

27:14

figure out, you know, everybody is

27:16

trying to make their own way

27:18

in life. I didn't mean to

27:20

get philosophical. You want to talk

27:23

about markets. No, no, I think

27:25

I brought you on that path.

27:27

But I'm happy to know that

27:29

your daughter, she's doing well. Yes,

27:32

fantastic. That's what, you know, at

27:34

the end of the day, that's

27:36

all that matters. Wanted to share

27:38

this email, that Vanguard sent its

27:40

clients, John. It says, you know,

27:43

we'll throw it up, fire it

27:45

up on the screen there, says,

27:47

stay the course, we'll be right

27:49

there with you. basically saying, you

27:52

know, with the White House announcements,

27:54

there's all this volatility, but during

27:56

uncertain times, folks, resist years to

27:58

deviate from your financial plan. So

28:00

they're asking clients. begging clients not

28:03

to take money out of the

28:05

market. What do you make of

28:07

that? How's that for a sentiment

28:09

check? Well, first of all, you

28:12

have to remember who started Vanguard

28:14

and why, and they were in

28:16

the, you know, kind of random

28:18

walk, and so you, you know,

28:21

they want you to say in

28:23

the market, because over the long

28:25

term, long term, being 20, 30,

28:27

40 years, not two years, or

28:29

three years, or 10 years. Over

28:32

the long term, Marx has gone

28:34

up. So stay the course, you

28:36

know, it's like the whole old

28:38

George Bush first thing, stay the

28:41

course, a thousand points of light,

28:43

you know, all that line. So

28:45

that was that was Vanguard's reason

28:47

for being a Genesiqua. I mean,

28:49

that's just what they did. So

28:52

that's not anything new for them.

28:55

I don't follow that approach. I

28:58

haven't changed any of my portfolio

29:00

at all. I mean, I'm still

29:02

doing the same things. I haven't

29:05

sold anything, if you will. We

29:07

are shifting some assets from some

29:09

hedge funds back actually into the

29:12

market. But that was determined five,

29:14

six months ago. Here's our process,

29:16

is what we're moving to. And

29:19

it's a... For me, it's a

29:21

bet on the American future of

29:23

dividend stocks. I still have a

29:26

lot of alternatives. I still have

29:28

my gold. It's still sitting in

29:30

the vault. It has a move.

29:32

Well, I was going to ask

29:35

it. Can you share? I was

29:37

buying it in the early 2000s.

29:39

And I'm so, you know, I'm

29:42

very happy with it. And I've

29:44

got a lot of capital gains.

29:46

But my hope is those capital

29:49

gains go away. I hope gold

29:51

goes to zero. Because that means

29:53

everything else worked. And I can

29:56

give those coins to my kids

29:58

to play checkers with. Now I

30:00

don't think that's what's going to

30:03

happen. Unfortunately, I think my goal

30:05

is going to continue. you to

30:07

go up because I think the

30:09

world is going to become less

30:12

certain. But there may come a

30:14

time, if there comes a time

30:16

when I sell my gold, one

30:19

of two things will happen. Either

30:21

John Maldon has personally had some

30:23

problems he needs to sell his

30:26

gold or the world has really

30:28

gotten perfect and gold is not

30:30

a point. I think the former

30:33

is more likely than the latter.

30:35

Though we try to do everything

30:37

we can to. you know, not

30:40

sell not sell your gold. Can

30:42

you share a little bit more

30:44

of what you're so your long,

30:46

your long stocks then, John, you

30:49

don't look at this and escape?

30:51

You don't dance close to the

30:53

door, as someone said to me

30:56

earlier this week. I made a

30:58

living and a good one in

31:00

the late 90s of early 2000s

31:03

timing the market. Because there were

31:05

certain ways you could look at

31:07

European markets to the US markets

31:10

and you could you really could

31:12

time the market. There are other

31:14

ways long term moving average you

31:17

can time the market. Timing the

31:19

market has become exquisively different and

31:21

first of all. There is I

31:24

don't even think there is such

31:26

a thing as the market. There

31:28

is. There are a lot of

31:30

stocks. I want to be long,

31:33

a lot of stocks, or some

31:35

stocks I don't want to be,

31:37

I don't want to be long.

31:40

There are stocks that I'm holding

31:42

for the long term. So if

31:44

you're dancing close to the door,

31:47

you're not an investor, you're a

31:49

trader. You should be thinking about

31:51

what I want my portfolio to

31:54

look like a year from now,

31:56

two years, five years from now.

31:58

Where do I think? In my

32:01

view, I want to bet on

32:03

America. I'm Warren Buffett like that.

32:05

Now, in the short term, is

32:07

Europe going to outperform, has that

32:10

performed in the short term? the

32:12

US? Yes. Could I have made

32:14

that call in January? No. Rather

32:17

than letting your emotions or this

32:19

is what I think is going

32:21

to happen and there's some people

32:24

by the way that are very

32:26

good macro traders. There's some brilliant

32:28

macro traders. I'm going to tell

32:31

99.5% of your listeners that they

32:33

are not. You're just not Stan

32:35

Druckenmiller, neither am I. You know,

32:38

I'm not Leon Cooperman. I'm not

32:40

one of those guys, okay? And

32:42

I mean, I've got this, a

32:44

lot of the same data they

32:47

have. They just, they think differently.

32:49

Interesting. Yeah. What do I think,

32:51

what do I believe is going

32:54

to, the world in 2035 is

32:56

going to look like. We're going

32:58

to be buying food, we're going

33:01

to be buying medicines, we're going

33:03

to need housing, we're going to

33:05

eat clothing, we're going to need

33:08

all the things that we need

33:10

today. We're still going to want

33:12

to be family, we're still going

33:15

to want to travel. I mean,

33:17

I want businesses that have repeatable

33:19

mechanisms, good times and bad times,

33:21

and they pay me a dividend.

33:25

to own their stock. And if

33:27

their stock goes up too much

33:29

and their dividend falls, I'm not

33:32

buying any more of it. Maybe

33:34

I'll sell it because their stock

33:36

has gone up, it's giving me

33:39

five or ten years worth of

33:41

dividends in one year. And I

33:43

find another stock. I want to

33:46

be in alternatives that don't care

33:48

what the market does. I want

33:51

a lot of private credit. I

33:53

want macro. There's certain types of

33:55

hedge funds I want, there's certain

33:58

times I don't want. There are

34:00

ways to find. to reduce your

34:02

volatility to find piece of my,

34:05

my, markets down 20% my, you

34:07

know, portfolio that I'm going into,

34:09

down five, maybe, maybe, maybe, I

34:12

don't, I literally don't check it,

34:14

so I don't know. You mentioned

34:17

Warren Buffett, you know, and his

34:19

decision now to sit on 300

34:21

billion in cash, obviously paying off

34:24

while other billionaires were wiped out.

34:26

I mean, does this just solidify

34:28

his status as the... greatest investor

34:31

of all time when you're speaking

34:33

about they just think different right

34:35

if you look at when he

34:38

bills cash up it's generally when

34:40

he thinks there's a buying opportunity

34:43

coming because their company generates a

34:45

lot of cash he's just not

34:47

seeing a lot of things as

34:50

a value investor that he wants

34:52

to buy now he has a

34:54

problem and it's called size I

34:57

mean you're sitting on 300 billion

34:59

of cash You've got to put

35:01

30 billion into something to make

35:04

it a meaningful number of your

35:06

cash. For me, I can put

35:08

30,000 into something and that becomes

35:11

meaningful if you, you know, and

35:13

I can invest 30,000 in it

35:16

gets sucked up. 30 billion is

35:18

harder to do. He's got a

35:20

size problem. But nonetheless, there are

35:23

going to be some. phenomenal buys

35:25

out there and will be. I

35:27

mean, look at all the great

35:30

new companies that are coming up.

35:32

There's a lot of entrepreneurship, a

35:34

lot of value being created everywhere.

35:37

Let's wrap with this, John. I'm

35:39

just looking at, you know, warning

35:42

signs you're looking at. I know

35:44

you recently wrote about junk bond

35:46

spreads, signaling a worry for you

35:49

jumping the most since March of

35:51

2020. Any other indicators? you think

35:53

we should be paying attention to?

35:56

Well... I

36:02

believe that we're going to see

36:04

the first quarter coming in at

36:06

a what I would call a

36:09

statistical recession. I'm sure you've had

36:11

other people that you've interviewed talk

36:14

about the massive amount of gold

36:16

that's come into the US in

36:18

the first quarter, people trying to

36:21

jumpstart, get ahead of the tariffs.

36:23

It turns out there's probably not

36:26

going to be tariffs on gold.

36:28

But imports actually reduce GDP on

36:30

a statistical. We've had, I don't

36:33

know, you can probably better than

36:35

me, my back of the napkins

36:38

is something like 150 billion of

36:40

gold came in first quarter. That's

36:42

enough to move GDP by one

36:45

to one and a quarter, maybe

36:47

one and a half percent down.

36:50

The last time I looked at

36:52

the Atlanta Fed GDP now, they

36:54

were talking like a two and

36:57

a half percent GDP, negative GDP,

36:59

for first quarter. But for the

37:02

first time ever, they put in

37:04

a dotted line that says, Here's

37:06

what it would be without gold,

37:09

because gold has pushed it down

37:11

so much. It's still negative territory.

37:14

It's still around 1% negative GDP.

37:16

But gold has moved at that

37:18

much one trade. And I would

37:21

just gently suggest to you

37:23

that people buying gold is not

37:25

an actual negative statistical effect. It's

37:28

just the way we calculate GDP.

37:30

I think what Trump is doing,

37:32

and creating certainty, and he's creating

37:35

a lot of uncertainty, is

37:37

going to give us a recession

37:39

this quarter. So we're going to

37:42

have two back-to-back quarters, which is

37:44

a definition of a recession that

37:46

will be negative, and it'll be

37:49

the Trump recession. And I've

37:51

said this with every other recession

37:53

before, markets go down during a

37:56

recession. They just do. And so

37:58

you need to have had your

38:00

plan. last year because you should

38:03

have been planning for a

38:05

recession. Not that you thought a

38:07

recession was going to happen, but

38:10

that one could always happen. So

38:12

what's my plan? How am I

38:14

going to go through it? I

38:17

think we're going to have a

38:19

recession. What do we know? Markets

38:22

always come back. Now, they don't

38:24

come back necessarily fast, but they

38:26

will come back. And so you

38:29

need to have a strategy. How

38:31

are you going to feather back

38:34

in? If you've been wise enough

38:36

to have gotten out, how are

38:38

you going to feather back in?

38:41

So I would leave that with,

38:43

you know, don't, don't, I've seen

38:46

like in my lifetime, business lifetime,

38:48

like eight recessions. I mean, I

38:51

don't know. They come and go.

38:53

I live through, you know, 80,

38:55

80, as a young businessman. I

38:58

was borrowing money from the bank

39:00

at 18% to buy to buy

39:03

to buy carloads of paper that

39:05

I was turning up 22 and

39:07

24% I mean that was it

39:10

was crazy inflationary times. That's just

39:12

what you did. We get through

39:15

these things. We always do. That's

39:17

what free markets do. Now Trump

39:19

is upsetting the apple cart. I'm

39:22

hoping that they're going to get

39:25

Some negotiations and he'll have an

39:27

off-rap because Trump is never going

39:29

to say he was wrong That's

39:31

just not in his personality, but

39:34

he will look for an off-rap

39:36

and The more volatile the world

39:38

gives the less The closer that

39:40

off-rap he's going to be able

39:42

to find He's just going to

39:45

he's going to be looking for

39:47

one markets will figure it out.

39:49

We will figure this out That's

39:51

what individuals do Governments

39:53

and the Federal Reserve do

39:56

not get us out of

39:58

a recession. That

40:00

is, drives me nuts when

40:02

people say, well, the Federal

40:04

Reserve needs to cut rate

40:06

to keep us from having

40:09

a recession or we're in,

40:11

no, no, no, Federal Reserve

40:13

should, in my case, not

40:15

be setting rates, but that's

40:17

beside the point. What gets

40:20

us out of recession is

40:22

a million businesses saying, well,

40:24

here's my reality, this is

40:26

what I'm gonna do today.

40:28

And I've got to, you

40:30

know. reduce losses and create

40:33

profits. And it's those people

40:35

changing their business model, changing

40:37

their menus, what in restaurants

40:39

or whatever. They change things

40:41

and they create their own

40:43

profit and that in general

40:46

brings the entire country of

40:48

business will do well. Adjusting.

40:50

What you said earlier, what

40:52

you said at the start,

40:54

how to adjust. It makes

40:57

me think John. For for

40:59

Trump to have and knows

41:01

he's going to get a

41:03

recession under his watch Right

41:05

and you know he doesn't

41:07

want that being part of

41:10

his legacy that there's got

41:12

to be something there's got

41:14

to be the light at

41:16

the end of the tunnel

41:18

He has to leave on

41:20

a high note is what

41:23

I think I what I

41:25

think he wants to do

41:27

27 because if we have

41:29

a recession and if they

41:31

haven't figured out how to

41:34

pull this thing back by

41:36

third quarter, midterms are not,

41:38

midterms are not good for

41:40

the party in the White

41:42

House. Bush was the one

41:44

exception to that and that

41:47

was, you know, 9-11. But

41:49

that, I mean, we got

41:51

a margin of 5. He

41:53

better get it done now.

41:55

My concern is that the

41:57

more we tilt... into the

42:00

negative problems? Can he get

42:02

those? Are there gonna be

42:04

some Republicans that are gonna

42:06

say, well, we'll go along

42:08

with this, extending the 2017

42:11

tax cuts, but we're not

42:13

gonna go along with anything

42:15

else? I think it's absolutely

42:17

possible. It's gonna be tough

42:19

to get that house of

42:21

cats to herd in one

42:24

direction. I think we're going

42:26

to see more volatility, more

42:28

uncertainty, until, I mean, Trump

42:30

has basically said to the

42:32

world, I'm changing the rules,

42:35

but he won't tell people

42:37

what the rules are. The

42:39

rules change when he wakes

42:41

up. That's not, businesses need

42:43

uncertainty. Investors need certainty. If

42:45

you're a CEO of a

42:48

company, going to be 47%

42:50

tariffs or whatever they are

42:52

on Vietnam, I can manufacture

42:54

stuff now because now I

42:56

can compete. Are you certain

42:58

about that? No, what if

43:01

they change? Could it go

43:03

away? I'm not going to

43:05

put a shovel in the

43:07

ground for six months or

43:09

nine months or a year

43:12

until I'm certain of what

43:14

the future is going to

43:16

look like. And that lack

43:18

of certainty, I mean, first

43:20

of all, big major plants

43:22

take four or five years,

43:25

even small ones take a

43:27

year of two years. And

43:29

small ones do have a

43:31

little effect here and a

43:33

little effect there, but they

43:35

don't add up quickly. It's...

43:38

We talk about recessions like

43:40

it's the end of the

43:42

world. Daniela, have you ever

43:44

had a time in your

43:46

life where your income from

43:49

one year to the next

43:51

went down by three percent?

43:53

Absolutely. Absolutely. Okay, was it

43:55

the end of the world?

43:57

Nope. Okay, it was tough.

43:59

Did you figure out what

44:02

you were going to do

44:04

next year? I figured it

44:06

out and you come back

44:08

bigger and better. Okay, and

44:10

that's, but the point is

44:12

that, let's say we have

44:15

a deep recession, three percent.

44:17

That's terrible. That's epic proportions.

44:19

It's three percent. Okay, we

44:21

figure it out. That's what

44:23

we do. And it's, it

44:26

sounds terrible. We've made it

44:28

into this nasty thing. And

44:30

by the way, they're not

44:32

fun. I got eight kids

44:35

and one of them called

44:37

me yesterday that his company's

44:39

cutting back on his hours

44:41

and he just had another

44:43

kid. He's got fewer hours

44:45

at his health care cost

44:47

arising because he's got cancer.

44:49

It's now in remission. I

44:51

mean, so. Another you know

44:53

another one's watching some of

44:55

the bids from the companies

44:57

they're working with go away

44:59

Recessions are uncomfortable and they

45:01

affect people and I am

45:04

not making light of them

45:06

at all But I don't

45:08

want to despair. I don't

45:10

want to you know, I

45:12

don't want to panic Deep

45:14

breath. What am I going

45:16

to do to do? myself

45:18

and then my family and

45:20

then my friends and then

45:22

big on my mind every

45:24

Friday morning is what am

45:26

I going to do to

45:28

get my readers through that's

45:30

what that's I focus on

45:33

that for 25 years big

45:35

breath yeah that was fun

45:37

we got to do this

45:39

more often of course John

45:41

Maldon the brilliant John Maldon

45:43

I am sending up positive

45:45

thoughts and prayers to your

45:47

family. Eight kids, John, God

45:49

bless. Oh, yeah. Well, that's

45:51

why I'm still... 75 years

45:53

old and working. But they

45:55

keep you young and non-grang

45:57

kids. And optimistic enough that

45:59

I'm launching a brand new

46:01

business with my doctor partner,

46:04

we're launching a series of

46:06

what we hope will be

46:08

in four or five years,

46:10

40 or 50 longevity clinics

46:12

around the country. Fantastic. Helping

46:14

people live longer. You know,

46:16

that optimistic thing in me

46:18

just, it's there. It's a

46:20

wonderful, wonderful character trait John.

46:22

You can read John Malden

46:24

Economics, right John? Give that

46:26

plug for us. Watch from

46:28

the front line. Just click

46:30

on it. When you click

46:33

on thoughts from the front

46:35

line, we will give you

46:37

an opportunity to put your

46:39

email address in. It's free

46:41

and you'll be one of

46:43

my one million closest friends.

46:45

I'll be there every Saturday

46:47

morning in your inbox. Now

46:49

that we have reconnected, we'll

46:51

be seeing more of each

46:53

other. Yes, you've got my

46:55

email and phone now, so

46:57

there we're together. There we

46:59

go. Yeah, awesome. And thank

47:02

you all for watching. We'll

47:04

have more great content coming

47:06

your way. Sign up at

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47:10

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47:12

our YouTube channel. That's it

47:14

for me. Thanks for watching.