macro and geopolitical events were going

to cause an outflow of capital from the

United States. It's not that

foreigners stopped investing their

marginal dollar into the United States.

They did at a nearly record pace. US

assets did extraordinarily well in 2025,

but they underperformed many foreign

markets. They underperformed the world,

both in terms of the stocks not going up

by as much and also the dollar itself

was a drag. Today's show is brought to

you by Fiscal AI, the fastest growing

stock research platform on the internet.

Many of the charts and tables we're

going to be using today and showing on

screen are from Fiscal AI is where my

market day starts and ends. The link is

in the description for 15% off. I'm

joined by my friend and business partner

Max. Max, good to see you.

>> Good to see you, too. Everyone was

saying in 2025 that the dollar's

dominance is over and that basically uh

tariff policy and other macro and

geopolitical events were going to cause

an outflow of capital from the United

States and it would be severely bad for

US assets. And I I think Max

superficially

that appears to have not been the case.

uh because you look at just how

incredibly well-performing the US stock

market has been, how incredibly well

performing the US credit markets have

been. We all we all know that. And then

in particular, we could show later a

chart from Joseph Wang showing that at

least for the first three quarters of

2025, net foreign flows into were about

six or 700 billion dollars. So the

capital kept on coming. So that's that

that's not a question. What what's

interesting is just that the hedge ratio

increased. So basically it's not that

foreigners stopped investing their

marginal dollar into the United States.

They did at a nearly record pace, let's

say, but in they just hedged that a

little bit more. So they were a little

bit more cautious and they uh as they

deployed records amount of capital into

the US uh bond and equity market they

just on the margin hedged that currency

risk a little bit more. So that is what

2025 looks like. So we can say Max that

oh this narrative of the dollar the

death of the dollar it it didn't happen

in 2025 or Max is have we have I spoke

it too soon because I know you've done

some work on just showing a different

different picture and how the rest of

the market actually in some ways kind of

did crush the US. So so take us through

the statistics Max take us a tour of

2025 by country. What does it show? It's

always interesting in years like 2025

when you have US equity markets

performing well. Uh the big tech stocks

leading the way. You know, we had the

S&P 500 up in the high teens. You had

the NASDAQ up a little over 20%. Um and

of course you had the Russell 2000 up

but not nearly as much. Um up around

like 12 and a.5%. And so when you see

that, you tend to hear, oh well, the US

continued to dominate. As you said, we

had record record flows into US markets.

But when you actually step back and you

look at the performance of major global

equity benchmarks and as well some of

the individual countries, the US was not

the only game in town. We've been

hearing that the US has been the only

game in town and that's why everyone is

so overweight US equities. Well, that

was not the case in 2025. And you can

look at the broader indices like the All

Country World Index. And I'm looking at

the ETFs and total returns here because

it does a nice job of taking care of all

of the currencies and as well accounting

for dividends. And the All Country World

Index was up 22.4%. So, it beat the S&P

500, it beat the NASDAQ. If you go even

further because obviously the all

country world index includes the US and

you look at EM the emerging market MSEI

ETF you're up 34%.

And then when we actually go look at

some of the individual countries and

look there are lots of different uh MSCI

indexes out there that cover all sorts

of countries. We just took sort of the

top 15 or so markets by global uh by

market cap and looked at them. So, Jack,

what do you think the best performing

market was last year?

>> South Korea.

>> Yes, you're right. South Korea was up a

whopping 95.3%.

So, the the South Korean market in

general just absolutely dominated

everybody else in the world. You also

saw China did very very well. I believe

China, the M MCHI ETF was up 31%.

So, you really saw a ton of countries

outperforming the United States. You

look at most of the European countries

on the list, they outperformed the

United States. There were some dogs out

there in terms of major equity markets

that underperformed. Jack, of those top

15, what do you think was the worst?

>> I know India did relatively badly.

>> India was pretty bad. India was only up

2.7% on a total return basis. The INDA

which is the Msei India ETF which is

again one of the reasons you should look

at the total return and look at the ETFs

is because India's currency actually

fared pretty badly this year and so if

you look at just the index returns in

rupees it's not going to look as bad. Um

the actual worst performing country was

the Kingdom of Saudi Arabia. So the KSA

ETF was down 8.2%.

There were not many countrywide indices

that were down on the year. That was the

only one in that top 15. Everybody else

was up and I would say the overwhelming

majority actually outperformed the S&P

500. So whether you're talking about

emerging markets, developed markets,

after adjusting for currencies, after

adjusting for dividends, you would have

been better off outside of the US not

investing in Nvidia or or the rest of

the MAG7. So I think that's just a

little bit of a narrative violation

that's important for people to look at

and just in general this is a process

that is good to do not just at year end

but all the time right like you hear

these market narratives you hear people

talking about price performance but

until you actually go look at the

screeners that are available out there

and say well what is leading the way

what are the best performing stocks best

performing markets uh it's very easy to

just believe the the narratives that you

hear and then when we're just talking

about equity markets when we go as you

said start to look cross asset look at

silver gold and other assets that um

that had spectacular years in 2025 it's

pretty clear that uh it was not just

Nvidia and the MAG 7

>> and Max what about Europe and Japan

>> looking at the EWJ 25.8% 8% performance

total return in 2025. So higher than the

NASDAQ, higher than the S&P 500,

let me see here.

Then the ETF that I chose for Europe,

which does include the UK as well as the

European Union, that was 35.6%.

So that's kind of what I was saying that

it's not just an emerging market

phenomenon. It is a true exus

phenomenon.

>> So the bull market is global. US assets

did extraordinarily well in 2025, but

they underperformed many foreign

markets. They underperformed the world

in both in terms of the stocks not going

up by as much and also the dollar itself

was was a drag. Max, I I took it a

little bit further and I looked into we

don't want to talk about micro cap

stocks. Let's take a $5 billion market

cap. So decentsized companies. What are

those companies over $5 billion market

cap that are up over 100% in 2025? Most

years there aren't a ton of them, but of

course last year huge bull market, there

were a lot of them. So Max, so in total

there were 297 companies. Take a guess.

What are the top three countries where

they're from and and and roughly uh you

know how many companies?

>> Well, I imagine the US did very well. We

already determined that South Korea was

one of the tops. Um you know, I know

Japanese stocks did well. I I would say

that it's the US and Asia um that are

probably topping the list. Did the US

keep the lead? No. The US was number

two. China was number one at 81

companies in China. Mark cap of over $5

billion that were up over a 100% in

2025. Most of these companies, Max, you

and I had not heard of these and I'm

guessing that many in our audience had

also not heard of these companies as

well. In the US, there were quote

unquote only 43 companies that exceeded

the giant bogey of of 100%. And then the

third was South Korea. It's really

interesting. China has 81

companies. I think there's a massive

bull market in China. And also, Max, you

said Msei China was up whatever percent.

I think that might somewhat under

undercover it because the Msei

um waiting like it has a lot of dogs and

it it has a lot of companies that like

went public in 1998 that are not really

doing much. Active managers might be up

even even more in China. Now the reality

is maybe there aren't that many active

managers uh you know western investors

who are investing in China because they

just got obliterated over the past 10

years. And also on and index waiting

point max. Yeah. So you you said S&P was

up X and AQE was up like one or two% of

above that. I think that like of the Aqu

like 60% of it is the US. So yeah, you

got to look at like XUS and yeah the

point is foreign markets do really well.

Gold and silver have absolutely trounced

it and uh they are up just in an

enormous amount. So it's it's gold,

silver, the rest of the world,

semiconductors, AI, in particular, Max

Memory. One of the reasons South Korea

did so well, it's biggest waiting by is

SKHix, a a memory company. These

companies are just destroying it. Um

they are up 300 400%. And I'll be

honest, I don't know a bunch about the

memory things. Obviously, there is a

shortage right now. Uh it can be tough

to bet on the shortages. I shortages

often, maybe always, result in gluts.

There will be a time when everyone isn't

scrambling for high bandwidth memory and

uh these these stocks probably come back

to earth but that that moment is not now

max and you know I I they're ridiculous

numbers over last year's performance but

max we're recording only a handful of

few days into 2026 already these memory

companies SanDisk Western Digital Lamb

Research has you know more than semis

less less memory but it seems like this

AI trade just keep keeps on going

>> and I did want to make one clarification

ation on the company returns is that we

were looking at one year backwards total

return. So technically these are not the

calendar returns from December 31st to

uh December 31st and 2025. We are

including just a few days of 2026 in

those total returns when we're talking

about the indexes uh that we were

looking at the index ETFs that was true

calendar year. Um but Jack I also think

it's important to look at the sectors.

So, I know you also took a look at the

S&P 500 and just those 11 gigs sectors.

Uh, naturally, it I think we can all

determine that tech was one of the best

performers, but was it actually the

leader when all was said and done?

>> It was the leader. There are 11 sectors

in the S&P. Um, take a guess. So, tech

was the leader. What was the second

best, third best, and what was the

worst, second worst, third worst? Take a

guess. I know a lot of consumer stocks

did well. Um, as far as

what was third best, I couldn't really

hazard a guess. I mean, in terms of

worst performing, I got to put energy in

there. I think, uh, is real estate its

own sector?

>> It is.

>> Yep. I think real estate probably did

bad. Lots of expectations for rate cuts

that didn't quite come to fruition. Um,

and then

who's

I'll put utilities down there just

because utilities never move. So if in a

market in a bull market, utilities

probably didn't do well. The only thing

you were truly wrong about was uh the

first thing you said consumer

discretionary was actually not strong.

Consumer discretionary was up a mere

7.4%. The biggest holding being Amazon.

Consumer spending is not as hot as many

other things in the stock market and in

the economy. I know Amazon

underperformed the S&P last year. So,

that was what you're wrong about. Okay,

now here's the good news. Um,

communications was was the second best.

Third best was industrials and you

basically nailed the worst performing.

The worst performing was actually

staples, not utilities. So, normally

Max, in a totally risk-on year,

utilities is the boring thing. And

normally, you know, we've had many

risk-on years we've covered together,

Max. Like everything crushed and the

underperformers were staples and

utilities because they're riskoff

trades. So when there's uh every

everything that's risky is doing well,

these things lag. But Max, utilities is

a bit of a risk-on trade now because

there are these independent power

producers, IPs, that are slightly, you

know, less regulated. So they can sell

electricity at uh high rates to these

data centers. And so stocks like Vistra

and um constellation energy those stocks

are up massively. So utilities actually

did did quite well. You were right about

real estate and uh you were also right

about energy. Energy was the third

worst. I also m notice max like it's

just when we're going through in in in

the screeners like it's amazing how some

of the best performing stocks vast

majority of them are either like

materials so gold and precious metal

mining maybe some copper mining or AI

like the companies designing the chips

so the semiconductors the like there's

this company called Victory Giant that

was up like 650%

over the past year they make the printed

circuit boards so there's basically a

ton of companies in China that make a

lot of things involving with data

centers that there's a shortage of and

they're up just hundreds of of percent

and uh many people including myself had

had not heard of of that. So, it's

really those are the big themes.

>> We're talking about these like companies

that are up over 100%. Like most of the

market like lives in a more normal range

and as well the bigger companies, it's

just hard for a company that is over a

trillion dollars to add a trillion

dollars in in market cap in a year. So,

you're just not going to see that. So,

when we talk about, oh, these markets

outperformed, that doesn't mean that

more market cap was created or or more

value was created at the end of the day.

So, you know, the US market was trailing

EM, but you think about like the total

total value created. The US still

created more value, but we as investors

who are not beholden to the capacity

constraints, we get to look at all of

the different fish in the sea uh for for

opportunities. That's something that,

you know, Noris Bank just doesn't get to

do that. Um, and that's that's what

really controls the flow. So I I do

think it's it's important to put it in

consideration. But yeah, I mean a lot of

the names that that were the best

performers of the year, you look at it

and there's plenty of good fundamental

reason. Some of the other names like

just the the top two companies that we

came across were Hong Kong based NASDAQ

listed companies. One is Regenel

Bioscience Holdings. QMM holdings was

another one. So yeah, QMM Holdings, they

do AI avatars, which is something I

think we've all seen. It's certainly

something that's happening. Is that a

$6.8 billion business? I don't know.

Regenel Bioscience holdings. I just went

to the news tab for it and there were

only three news stories and one of them

was like investors are suing uh Regenel

Biosciences. Interesting to see that

oftentimes the best performing stocks on

the year. um there's little to no

fundamental bearing uh beyond narrative

in many cases just looking at QMM

holdings revenues in 2022 less than 2021

2023 less than 2022 2024 less than 20

2023 last 12 months less than 2024 so

its revenue has declined for five years

in a row four years in a row needless to

say anything that Max and I say on this

program we're you know you and I are not

recommending stocks but we are

especially not recommending QMM holdings

Jesus and also Max, I'll say I think

this is typical of late cycle behavior

of you have these huge run-ups in in

very speculative stocks that um are not

making money in some instances are not

making revenue and in some instances

have no plausible reality where they

ever can make money. Max, what comes to

mind is quantum computing uh that you

know this technology that uh is real but

the commerciality of it is is not there.

And um from what I understand, from what

I've heard, like the market, the the the

near-term 5 to 10 years, what it can do

is hack Bitcoin, which could be very

valuable. You know, people like Lyn

Alden and Luke Roman have talked about

that as a threat to Bitcoin. And you

know, Lynn thinks that Bitcoin is going

to be okay and it it can, you know, kind

of dodge and weave and bob and weave and

be fine. But basically, other than

hacking Bitcoin, it has is, you know,

basically no near-term use cases.

Martinia said over the next 30 years, he

doesn't think it's going to make really

any revenue at all. And these stocks had

been absolutely mooning for way beyond

fundamentals probably because real

companies like Nvidia and Lamb Research

and all these other companies had gone

up so much they say, "Oh, hey, we're

we're futuristic computing, too, and we

do this blah blah blah blah." Um, and

you know, in the frenzy of the summer,

those stocks had go had gone up and

surged to tremendously high levels. Um,

they they now appear to be coming back

to Earth. So, like today, all these

companies I posted like Lamb Research, a

real company, very profitable, you know,

mo uh duopoly triopoly very profitable

and you know funding what is powering

this global economic boom of of AI

whether that boom is sustainable or

whatever setting that aside so lamb

research was up today and quant the

quantum stocks are down and I think that

on the margin is healthy when you have

real stocks going up and fake stocks

going down I should disclose that you

know I am actually short some some

quantum names in very small size and you

know long some what I perceive to be

real semiconductor names

>> as you said we've already had some

pretty crazy trading to start the year.

What else are you looking out for in

2026? I know you've been talking to

people about what is next in 2026. Max,

I I'll talk about 2026 in a sec. I do

want to shout out our sponsor fiscal AI.

Uh it is a tremendous platform for

researching what really drives companies

and stocks at the end of the day in the

long term, which is company

fundamentals. Um so you know all the

three statements their multiples their

trailing multiples their forward

multiples they have se segments and KPIs

which is data from actual uh filings

that it you know is very non-GAAP but I

I think is really cool as well and they

also have unlike a lot of other

platforms incredibly in-depth

international data. So a lot of you know

platforms like oh US is the only game in

town and if you look up some company

like they barely even have the stock

price of of that that company. Fiscal is

not that. So they you know we talked at

the beginning just about opportunities

internationally and how internationally

was uh the the best performer last year.

I think for people with an international

focus uh it is it is a lot of value

there and people can get 15% off with

the link in the description. Okay Max.

So 2026 I don't think the AI I mean

caveat you know who who am I? I'm just

some guy. I don't know what happens.

Caveat, I don't think the AI trade is

over. I think that there's an enormous

amount of proyclicality in this trade uh

that ultimately will and you know a be a

boom that we are in and ultimately a

bust. So I I am not oh this is going to

grow at 15% every year very very

gradual. No, I think that this is going

to be a dramatic uh boom that we are in

probably the mid to late say fifth sixth

inning. Who knows? I mean saying fifth

or sixth inning is kind of like that

hedge of saying I think there's going to

be a 40% chance of a recession because

you know you can't it doesn't make you

look wrong but I I where I will stick my

neck out on this is on this

procyclicality like um you know it's no

secret I've been you know a little bit

of a bull on on the AIS in the semis um

you know you you know I've talked about

this over the past year but I did share

some concern like I guess in November I

guess because I'm like okay is OpenAI

going to be able to raise all this money

like if OpenAI can raise this money I'm

It's it's the the the trade continues.

Um the madness continues if you think if

you think it's madness and they're just

going to continue to spend money on

Nvidia chips as well as throughout the

ecosystem. And it's going to benefit not

just the semis but the companies

supplying the electricity, the random

companies in Asia that are making the

little adhesives that uh connect

everything on the printed circuit

boards. Boom. Boom. Boom. Okay. Um that

that I think that the party continues.

Um and OpenAI in December was announced

it's going to raise a hundred billion

dollars at over $800 billion value

valuation. It announced that there were

reports of that it's trying to but I I I

think if it can't raise and there's

truly no bid for you know the VC at

OpenAI and they do a down run that's

when I start to get concerned but uh

based on my reading of news reports

that's just um not where it's going to

happen. So I feel like that max it is a

secular trend but you could have a

higher level of confidence um that like

the trend is going to continue. I where

in precious metals you know where I've

also been involved you know you and I

talked about silver in October which

time-wise was not early but in terms of

price-wise for silver it was actually

you know somewhat early. Um there I'm

just like who knows? I mean I think

there's a looking at supply and demand

of of silver it's uh there is a shortage

if you count that physical bar coin and

bar demand as as true demand and gener

the thing about silver is also pro

cyclical because people buy coins and

bars when the price is high and rising

there was a brutal brutal precious

metals bare market from 1981 to 2000

basically and there even though the

price went down you you know people

weren't seeing value they were selling

and melting their silver every single

year and every single year it went down

and they melted more silver. So I think

these things are tremendously pro-

cyclical. Um I still would lean on the

the bullish side on silver and gold. Um,

I've been involved in kind of a very

very safe or safer way, which is the

precious metal streaming companies where

I feel like, you know, if if someone

were to buy this or if I were to buy

this today at uh, you know, and then

wake up 20 years later, like these

companies are going to be in a good

place just because they have such low

costs and uh, extraordinarily high

margin. So even if the price of silver

were to go down 60%, you know, these

companies are going to be around. You

can't say that about a you know some

some silver miners which is you know a

much more risky business and even in uh

you know gold and silver mining even in

2022 oh inflation's here gold's going to

do well price of gold went down and oil

went up and oil was a huge inflationary

cost for all these gold gold miners

which is somewhat um underappreciated. I

think silver is also industrial use

case. It uh it's used in a lot of

electronics. Solar I think it also is

going to be used in AI based on my

preliminary research. Um used used in

AI. There are some things that only

silver can be used for. Uh and then

there's a question of okay silver gets

so expensive. Are they going to replace

it with copper? Some things they can

replace it other things they can't

replace it. Um, Al, Alex Campbell, who I

actually haven't interviewed, I think, I

believe, uh, you know, former head of

commodities at at Bridgewwater. Um, but

I'd love to interview him. He was so

early on silver, he's absolutely nailed

it. He had a post where he said that

actually the demand destruction for

silver for the solar companies doesn't

even begin until $125, which sounds

pretty extreme to me, but I think there

it's there's no real secular trend. I

guess the the trend is so the trend is

the trend is solar and the trend is

there's a supply uh shortage and this

and the trend is that silver is mined

primarily as a byproduct from other

metals. So it's relatively inelastic

supply. Um so you know copper and zinc

prices go up then silver supply will go

up because everyone's going to be be uh

mining silver as a byproduct. But you

know, silver prices could go up a ton

and silver supply wouldn't necessarily

respond as long as copper and gold and

the other things that are you know from

which silver is mined as a byproduct

stays uh safe stable.

>> We've been talking about opportunity.

We've been talking about all these

stocks that are up. Uh what about the

risks and what about the losers?

>> So in terms of risk, it's funny. Lisa

Bramitz posted on Twitter from

Bloomberg. She posted a chart from

Deutsche Bank showing a poll of

investors. What do you think the biggest

risks to market stability in 2026 is?

And Max, do you want to take a guess

what investors thought uh, you know,

recorded in the middle of December, what

investors thought the biggest, you know,

top three risks would be?

>> Top three risks. Um, I mean, always

valuations, right? Valuations are high.

It's always going to be valuations and

inflation. That's always a favorite. Uh

inflation. Um

and then private credit. Come on, right?

Private credit crisis. Those are those

have got to be the the big three. So,

two out of three. The first one was tech

valuations plunge and AI enthusiasm

waines. So, it was a valuation point,

valuations contract. But it really is

the broader point of AI is a bubble and

it's going to pop in 2026. 57% of people

pled investors pled said that that was

their biggest risk. The next one didn't

really make sense. New Fed chair pushes

for aggressive cuts and causes market

turmoil. If there's a new Fed chair who

pushes aggressively for cuts and there's

a lot of cuts, I think the market

turmoil is going to be

>> higher. That's not

>> That's the bond vigilantes. That's like

we we lo the Fed loses credibility.

Yeah, that that's that just never

happens though. Like I mean, you know,

literally that's never happened.

>> Well, we've never had we've never had a

Fed chair who pushes for something that

you know, you could argue that they

misinterpret the data from time to time

or they're not looking at a full

picture, but you've never had we've

never had a Fed chair who's just

entirely politically motivated in their

decisions.

So Max, there was a giant bond bubble

2020 2021 and and before then and bond

market thought you the implied thoughts

of the bond bond market has no thoughts

but the implied thoughts of the bond

market was that inflation was low and

transitory and we're just global

deflationary bust global disinflation

demographics etc etc. But you know that

that was wrong obviously with the

inflation of 2022. And so you had you

had a genuine bond bare market that was

brutal uh in 2022 and to a much less

extent 2023. But these general bond

vigilante points max like generally I

see you know it caused the tenure to go

from 4.2% to 4.4%. And if you're a

leverage investor and you're you know a

macro uh hedge fund trader or former

hedge fund trader like you can make a

lot of money and congratulations on that

trade. But just as someone who's kind of

like calling balls of strikes of what is

significant and what's significant to

the market, the tenure going from 4.2%

to 4.4% is is not is not serious. And I

have never seen this. The Fed is uh the

bond market has lost control. The you

know the government has lost control of

the bond market. Like I just never seen

that happen other than in 2022 when

there was just this huge inflationary

shock. But that was

>> it happened in the UK.

>> True, true, true, true.

>> It happened in I meant US. I meant US

>> and and there look I it's not market

risk and

end of all times are very different

things and so a lot of times when people

say like what is the big risk like the

size of the valuation bubble uh argued

out valuation bubble for AI is so large

that people are like if that pops it's

going to be huge

but yeah I mean the idea 2022 is exactly

what you're talking about that that

stocks and bonds stopped to do what they

normally do together and the

deleveraging that that caused is

arguably what led to the markets

underperforming as much as they did.

Absolutely, Max. But there was a huge

inflationary shock. I if in if the

investors pled thought that that was the

risk, I think I assume they would have

said inflation to 6% or to 10%. You

know, inflation went to 9% in 2022 as

you know. What they're saying is that

the Fed is going to cut by so much that

the bonds market sells off. And Max, you

know, okay, we saw that to a tiny degree

in um in 2023. No, no, no. Yeah. 2024,

the Federal Reserve cut in September and

everyone thought this is what's going to

get mortgage rates down. This is what's

going to go to the 10-year down. But the

10-year and mortgage rates and the

30-year actually went up because the

curve steepened massively. Okay, sure.

But that's the 10 year goes from 4.2% to

4.6% or 5%. That's not relevant, you

know, that's not I don't I don't think

that if the Fed cuts massively and then

tenure goes to 5%. I don't think that's

a risk to to the uh the stock market. I

think um I think the short end matters a

lot more than many claim. If you look at

like where real estate in where

commercial real estate and business

finance from bank financing a lot of it

is at the five-year rate and in and in

some cases literally sofur like all this

private credit lending is lit you know

98% 99% sofur. So uh people say the the

Fed has no control because it only

controls the short end and it's the long

end that matters. Okay, that's true for

housing, for mortgage housing, but for

much of uh business finance and uh

capitalism, if you could use that word,

you know, the Fed, the Fed controls a

very very very relevant le letter. So,

I'm just, you know, I'm not making fun

of anyone. I'm just kind of disagreeing

with that. Number two, you Max, you

nailed it. Uh the risk of number three

is crisis and c private capital, private

markets. Um I think that that makes a

lot of sense. We've covered, you know,

uh, Max, the issues that private credit

has had with with, uh, uh, first brands

and other, uh, blowups in private

credit. Many people, particularly on

YouTube, Max, were very interested in in

this topic. The issue is, you know,

we're not talking about now is there's

really been no news. And this is the

kind of thing, you know, I know you did

an interview today where private equity

was was addressed as a topic. Um, it's

uh, that that can can be kicked down a

road. You have no many time you have no

idea how how many times that can can be

kicked down the road and you have no

idea how long the road it's it's a long

long road. So you know it's possible

everyone who's naysaying private credit

is absolutely right but you know it

doesn't happen until uh 2028.

Interesting to me Max is that uh okay so

by the way the risk number four is bond

yields rise more than expected. That's

somewhat similar to risk number two. I

think um I think I've shared my views on

that. I don't I don't think that's a a

very likely option. Again I could be

totally wrong. Like I feel like

sometimes I worry that I'm sound

arrogant, but that just podcasting it's

just shorthand, you know. Okay. Um me me

saying I don't know it's it's it's

unnecessary. It goes goes without

saying. Okay. But um the the interesting

the 10th risk is a US hard landing. Only

9% is a US hard landing. So basically

there are nine risks that investors

think poses a bigger risk to market

stability in 2026 than a hard landing or

a recession. I think that's crazy. Max,

you look at the just the slowdown in the

rates of growth. It's been going on

since late 2021, early 2022

spending in terms in nominal terms, sp

consumer spending, um, uh, uh, uh, GDP,

uh, earnings, all they've continued to

go up, but the rate of growth has gone

down and down and down. Income, job

growth, it's all just declined very,

very, very slowly. and in a way that

corporate profits could still increase

because you know as inflation declined

from 2022 in real terms everything got a

a second wind a real boost and that's

you know what's that's been the fertile

ground for this bull market that we've

been in over the past three years but

like the trend is down for these rates

of growth and as much as you know I've

I've pushed back on people saying growth

rates are collapsing like you know the

consumer spending is only growing at 4%

instead of you know it's only growing at

6% instead of 10% it's like 6% is still

high that trend is still going down. So

I I think that um on I don't know what

would populate my my 10 risks or the you

know Jack Farley's biggest risk to

market stability in 2026 but a US hard

landing and a you know US recession is

definitely higher than number 10.

>> What do you think?

>> Well I I would say that six on the list

kind of encompasses that. It just adds a

cause like AI causes a noticeable impact

on unemployment and markets extrapolate.

Like I would argue that that could be

lumped in with the hard landing. Um,

it's just saying that AI adoption

impacts employment rather than it just

being a general slowdown.

>> Max, I'm so glad you said that. That is

the I think one of the most relevant

things in the market right now. First uh

touched on my interview with Dan Krauss

who really opened my eyes on this. He

looked at the relationship between the

job market, so unemployment or or

payroll growth and profits showing

normally that profits grow as the labor

market grows. So uh you know as the

economy is strong companies hire more

people those people make more money they

spend money on more things those things

that people buy and services that people

buy pads corporate profits and it's a

virtuous cycle and so it makes sense

that normally those things are

correlated but over the past I don't

know let's say 12 to 18 months some

people can check out the interview it

came out in November that that that has

diverged that trend and actually the

labor market has weakened a lot more

than you'd think if Look at corporate

profits and corporate profits have been

soaring while the labor market has been

stagnating. And you know the Fed use

likes to use this word softening. The

labor market has been softening. But you

could really say it's been weakening.

And so you look at corporate profits,

you think the labor market would be way

stronger than it is. You look at how

weak the labor market, you think

corporate profits would be way uh lower

than they are. So there is a real

divergence. And the question is, is that

because of AI? And are we going to live

in a world max in 2026? Are we going to

encounter a world where the the the job

labor market has recessionary

readings but corporate profits are up

15%. Um that's possible. Actually, you

know, I recently interviewed um Catrini

of of Catrini Research and um

[clears throat] his one of his trade

ideas for 2026 was uh uh he called it BS

jobs, but it it's LLM layoffs, you know,

large language model layoffs that

basically white collar employment uh is

very weak as companies uh maybe they

don't fire people, but they just cease

they slow down their hiring, which on

the on the margin, you know, net net is

basically the same thing. and that

basically stock market can soar, profits

can sore as the labor market is really

really really weak. And you know I think

he he cited um how Levis's you know the

gene makers uh they they their profits

went up when they when they uh shipped

all the jobs overseas and to to Asia and

started manufacturing their genes

exclusively not in the US. Obviously it

has you know very very deleterious

social uh uh consequences in the US but

just from a corporate perspective um you

know the profits go up. So, I think that

is a possibility um in in 2026. Uh a

definite possibility.

>> Yeah, Jack. Now, I I do want to ask

about one story that was a big 2025

story uh that nobody really seems to be

talking about anymore and and that was

tariffs. Um we talked a lot about

tariffs in the first half of the year

and now we don't seem to be talking

about them at all. And it certainly

seems like in terms of US foreign

policy, there is a new shiny object to

play with uh being Venezuela. So it

doesn't even seem like something that

you're going to hear about from the

administration uh despite the fact that

the market has moved on from it.

>> Yeah, Max. Um, you know, when when

President Trump shocked the market on

that liberation day, April, you know, I

I really thought many investors thought

that it could cause a recession and

prices would go up, profits would go

down. Um it [snorts]

I I think that on the one hand I'm going

to be you eating my humble pie as I ate

all throughout 2025 you know once I

realized that the it had reversed that

um you know that that didn't happen and

I was wrong to be worried you know I've

talked to institutional investors and

I've actually shared oh I was wrong I

was wrong and they said Jack you you

know you we we were all wrong to be

worried because we thought that tariffs

you know would be 30 or 40%. the

effective tariff rate now is about 17%.

There's this chart from from Wells

Fargo. Um, and you know, so 17% is a

huge increase from 2% where they were

where they were before the US effective

tariff rate, but um, they're probably

headed headed lower and let's say it's

called 15%. Now, Max, I would have

thought 15% tariffs. If you told me uh a

year ago Trump's going to raise tariffs

to 15%, I'd say, "Oh, the stock market's

not going to like that at all." And on

the margin that will be net net negative

for for stocks. Um I would have been

surprised if you told me the S&P was up

you know close to 20% and the rest of

the world was up uh uh over 20%. I mean

China you Trump was going to go so hard

on China and raise tariffs on China. The

last thing you could possibly own is

Chinese equities. You know you you gave

the number before about how Chinese

equities have massively crushed it uh in

in 2025.

And um I mean I I think that a lot I I

think number one the US sector you you

know was is a lot more uh service

dependent and in particular the profits

of the S&P 500 in particular are much

more concentrated on the service sector

than good sector. I mean if you told me

that a year ago I'd be like oh yeah

that's true but I you know it often it

takes pain and it takes you being wrong

to really learn something and have that

you know imprinted on you. And uh I

definitely I definitely learned that

from from being wrong. It's like, yeah,

if um you know, if if if tomatoes and

apples are a little bit more expensive,

um that doesn't really matter to

Microsoft. Like Microsoft is going to be

fine, you know, and Apple, you know, it

was time, you know, you know, Max, you

me and a couple other, you know, hedge

funds got a little little bearish on

Apple, you know, for for a few days, few

weeks there in April. But, um Apple was

fine. They got they got an exemption

from China.

>> Yeah. I I I think that it's it's partly

uh you know the haters were wrong that

the doomsayers were wrong that tariffs

is going to be a disaster. A it's partly

that for sure. Um I think it also is

that President Trump the effective

tariff rate was a lot lower than it was

initially announced to be. I'll give the

president credit on this that he has

convinced the market that a 15% tariff

rate is low because he threatened them

with a 40 to 50% tariff rate. So now we

all think 15% tariffs that's so low

whereas a year ago we thought we were

used to a 2% tariff. It's amazing no

one's talking about it at all. I still

think I still think it matters and I

think also that it has very slow effects

uh that remain to be seen. I do think

when it comes to yeah prices I mean

prices have uh you've not seen a large

inflationary effect of tariffs

definitely and I I think that's because

uh corp corp corporate profits have

taken the heat but again it's like the

the company that take the heat was a

random industrial supplier that has 10

people you know it's not it's not

Microsoft you know so and and if if

Microsoft and all these other companies

took a little bit of the heat they uh

you know they could definitely afford it

with how much money they're making.

Definitely. I also say Max I mean I was

briefly short I know I lost you know a

few percentage points in like being

short you know all these importers like

Walmart um uh discount uh sorry Five

Below which you know sells stuff all

from China uh Toys R Us um which you

know toys mostly made in China all these

all these companies like it's amazing

how how uh all these companies that are

hugely imp dependent on global trade and

you think that their profits would be

massively hurt by it and their stock

prices would be hurt. It really it

really didn't happen. So yeah, it

definitely was uh was surprising. And

yeah, you you were referencing

Venezuela, I assume, Max.

>> Yeah, I was definitely talking about

Venezuela. Uh certainly last year you

saw um as the war in Israel got more

attention. uh the administration started

to focus more on that aspect of foreign

policy and now with what's going on uh

with Venezuela and the arrest of Maduro.

Um that is definitely what's getting

most of the press uh I imagine that that

will will certainly take up most of the

spotlight, but just felt it important to

to put a bow on tariffs for 2025 as we

look forward to 26. Is there anything

else on your mind for 2026?

Well, I mean, the Venezuela thing

matters. Uh, hasn't like impacted the US

stock market that much. I I do think we

didn't talk about in the interview, but

um, Catrini in his 26 trades for 2026

did list as a trade idea, I think it was

called geopolitical special situations.

Venezuela and and the if Maduro gets

removed from power or exits power. Uh

you know he put together a basket uh of

oil comp companies that are in the oil

services business that you know going to

get more business um because the the the

oil could could uh begin to flow again

and and interestingly Venezuelan bonds

as well. And so that Venezuelan bond

trade in particular uh had had performed

uh quite well. So there's I I'm I really

like my interview with Satrini, 26 trade

ideas for for 2026 and people should

check that interview out. I I think um I

think the vast majority of people if

they listen to that interview will uh

will find will find it interesting.

>> Yeah. And on my side I interviewed uh

Harley Bassman for monetary matters. I

will add um on some of his trades. So he

does a stocking stuffer write up every

year where he goes through some macro

trades and he's the convexity maven.

He's a bond guy. So uh whereas a lot of

the trades for Catrini were thematic

equity, these were all very much your

classic uh interest rate and bond trades

that you would expect from Harley. And

so he had one for if you're somebody who

thinks the Fed is going to take rates

dangerously low. He had one there. He

had one. If you think rates are going to

uh skyrocket and um as well some trades

for steepening of the yield curve, which

based off of what we've talked about um

that that we are likely to see interest

rates fall with a new Fed share, but

that the market might not really like

that at the long end. He gave some

interesting trades for front-end levered

um investment vehicles like BDC's, some

of the high- quality BDC's, closed end

funds and REITs that are going to

benefit from the fact that um they have

not been making money on their leverage.

Uh but now they they would be making

money on that leverage. So, um some

interesting trades for the more

macro-minded people out there.

>> Yeah, I mean the bond market does

matter. I don't want people think Jeff's

saying bonds don't matter. I uh I mean

Harley is a is a brilliant brilliant guy

and uh it's interesting on on those

trades. Yeah, BDC's they will benefit as

interest rates go down. in particular, I

think agency mortgage um a agency

mortgage rates in particular will will

benefit as interest rates go down

because on the BDC's they're like

borrowing but then they're also long

floating rate products mostly that that

whereas whereas the the MREs they're

long mostly you know fixed rate um fixed

rate products. Uh we'll leave it there.

People can find um me on Twitter at

Jackfarley96.

Uh, Max, tell people where they can find

you, where they can find your podcast,

Other People's Money, and tell them a

little bit about fiscal. Give them a

reminder.

>> All right. Yeah. So, you can find me on

Twitter, Maxy. Um, as well, Other

People's Money. You can listen to it on

the Monetary Matters feed on the same

YouTube channel if you're watching us

right now. Um, and then in 2026, uh,

there are just too many people for us to

interview. So, Jack was very, very busy

in 2025. Uh, we at Monetary Matters do

not want to take our foot off the gas.

So, I'm just going to do more

interviews. So, you'll see me outside of

these Jack and Max episodes. If you're

Monetary Matters listeners, Harley

Bassman was the first interview I did.

We've got more coming up. I'm doing

another interview tomorrow. We're going

to start to get into Venezuela and some

of the stuff that's happening in the

energy markets um, and as well AI and

how that's impacting the demand for

certain energy natural resources. So,

I'm not going to spoil the guest, but

that should come out later this week.

Going to be a quick turnaround. Um, and

uh, yeah, as far as fiscal goes, you

know, just a reminder that all the

charts, most of the charts you looked at

today are coming from Fiscal AI. Um,

it's the fastest growing equity research

platform on the internet. And whether

you are uh an individual investor who

just wants to play around in the

platform or you are a professional

investor who needs to be able to

download data, they're able to offer

this equity market data to you at a

fraction of the price of many of the

incumbents because they own the data.

They're using AI to gather this data

directly from the filings. It's also

part of the reason that they have such

great coverage of international markets

because they're not putting all of their

they're not having to buy this data and

they're not having to employ people

thousands and thousands of people all

around the world to do that. So, that's

how they're able to offer this to you.

And at the link in the description, you

can get 15% off.