SKEPTIC’S GUIDE TO INVESTING

US & Canada : Partners in Prosperity

• Steve Davenport, Clement Miller

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We explore the potential seismic shift in US-Canada relations following Mark Carney's election as Prime Minister of Canada and the implications for North American economic integration.

• Moving back to centrist economic policies in both the US and Canada
• Canada's competitive advantage in natural resources was ignored under Trudeau
• The historical importance of the proportionality clause in US-Canada trade agreements
• Why Calgary might become an economic powerhouse like Houston or Dallas
• The weaponization of the US dollar against Russia has damaged trust in treasuries
• Gold and Bitcoin emerging as potential anchors in a new monetary system
• Trump's tariff tactics may be positioning for a larger deal on natural resources
• Northern Ontario's rare earth deposits represent critical supply chain opportunity
• Potential deregulation of US banks returning to pre-Dodd-Frank lending conditions
• Investment opportunities in tech, gold, Bitcoin, pipelines, and corporate bonds

The midterm elections will be crucial for determining if Trump can translate executive orders into durable legislation that reshapes the North American economic relationship.


Straight Talk for All - Nonsense for None

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Disclaimer - These podcasts are not intended as investment advice. Individuals please consult your own investment, tax and legal advisors. They provide these insights for educational purposes only.

Clem Miller:

Hello everybody and welcome to Skeptic's Guide to Investing.

Clem Miller:

We're here with my partner, steve Davenport, who will be with us in a moment, and with James Thorne, who is with Wellington-Altus asset asset management firm and a former colleague of Steve's and myself and a real famous economist investment economist in Canada and today we're going to be talking about a lot of things, but I think the overriding theme is the fact that we we just had a uh, an election in canada and um, and in this election, uh, we had mark carney uh become um officially, uh, the prime minister of canada, uh, or premier of canada, and and uh, whatever you want to call it, and uh and uh.

Clem Miller:

Jim here is going to talk about that uh and talk about relations between Canada and the United States, and he I think he's uniquely qualified to talk about that, being somebody who bridges between Canada and the United States himself personally. I'm sure this conversation will go in a lot of different directions because you know we have a lot of discussion on a personal level that goes in a lot of different directions about what's going on in the global economy and finance and other areas. So, Jim, why don't I just hand it over to you and I may jump in? I'm sure Steve, when he comes in, will do so. Likewise, we'll just come in with some questions, but you know, why don't you give us a start and tell us about what your thoughts are on this, on this election of Mark Carney?

James Thorne:

Sure, I think the overriding theme that investors globally have to get a handle on is that we're moving back to the center. Right, we're moving back, whether it's extreme, progressive right or progressive left policies. We're moving back to the center, and I think you're starting to see that in Washington, although there is a lot of Trump derangement syndrome there, I think Carney is moving Canada back to the center. I think, carney, what he's going to do is he's going to. You know, two things can be right at the same time, clem. So we know that he was the father, or the alleged father of, you know, carbon credits and trading and the green initiative. But you know, two things can be right at the same time. Right In the sense that you know Canada has to embrace, canada has one competitive advantage, which is its natural resources, and under the Trudeau regime, that was ignored. And so what had happened, you know, is ignored. And so what had happened? You know? Per capita GDP dropped precipitously in Canada, we're almost going to be going below the halfway mark or the demarcation of the OECD average, and productivity is negative. Okay, and so you know, in the scheme of things and both of you guys know we've talked about this, we've been chatting for decades, you guys. And so for me, the big theme here is look, canada has to embrace this. Natural resources, and Carney is going to do that. And can he do that and also be true to his green initiative, at the same time where wall street, bay street, which is the Canadian version of wall Street, and the city of London have basically abandoned his net zero initiative as well? Resources you know, you need rare earths. I mean, man, when I was working with you guys, we were talking about all the rare earths in Northern Ontario. They were never developed under Trudeau, right, they will get developed. Uh, you know, talking about money coming from the united states up to canada to help develop the natural resources. And and then the last thing I would say to you, going back to your big contacts when I had, you know, when I had nice hair like clem, which I'm dying for. But if you go back to the 1980s and this is a thing I think slipping through the cracks, when Mulroney and before Mulroney and Reagan got together, there were high tariffs between Canada and the United States and we had what was up here called a branch plant economy, which meant that the bicycle was made in the United States. All the parts were shipped up to Toronto and I had a summer job putting together all the parts for the bike to be sold in Canada. It was called the branch plant economy, right?

James Thorne:

When Reagan and Mulroney signed the free trade deal, you know, it became, you know, free trade between the two countries. Well, what did the United States gain from that? Right, because President Trump is absolutely right, we don't have the size to be able to compete, right? So what was it? It was a continental natural resource plant. It was the United States secured a constant supply of natural resources that Canada was forced to guarantee. That clause in the free trade agreement was never touched. It was called the proportionality clause until Lighthizer and Friedland negotiated the last free trade agreement under Trump 1.0. That clause was not renewed.

James Thorne:

Now, I don't know. You guys know me for a long period of time. You know my happy places in a John Le Carre novel or reading James Bond, right, I know conspiracy, that's my happy place at the beach, right? I don't know why it wasn't signed, right, but let me give you an example. So when you go back and you know we have C-SPAN up here and, and you know, let's use aluminum as the reference point. In 1990, the united states had 40 smelters. You guys got four. Right, you guys get box site. You guys got a lot of box site but you don't have the smelters and you don't have the cheap hydro. Who's got that? Que Quebec? The Premier of Quebec comes back from DC, he goes to the question period and he basically gets asked which is like what gives? This is totally illogical. What we're being told is not what's really going on. He basically says it's security. They want security, the Americans, which is the proportionality clause.

Steve Davenport:

So what do I think is going to?

James Thorne:

happen. Carney's going to have to sign. Carney's going to sign a deal with Trump on, we're going to go back to a version of the Reagan Mulroney deal. Ok, carney has to cut a deal with Danielle Smith, the premier of Alberta. Imperial Oil, which I worked at as a grad student in the summer, is one of the preeminent oil companies in Canada. 75% of it's owned by Exxon Mobil. Okay, so why do I say that we're going to develop?

James Thorne:

Canada has more oil than the United States. The Permian Basin is being depleted. You guys are going to have to shift to go over to the Marcellus, because we know that there's sweet. You know we got the shale oil under the NAC, gas under the Marcellus, right? I suggest to you Trump's let it slip. He's going to want to build the Keystone. He's going to want to build a bunch of pipelines. He's probably going to want to get, you know, let's say, double the output from Alberta, and you guys need the oil. Why do you need the oil? Because you haven't upgraded your refiners. You need to mix it right the sweet and the sour so you can refine it. And guess what happens? You guys get to keep the margin right.

James Thorne:

So, after all these years, what have Canada not done since Mulroney and Reagan? What has Canada not done since Mulroney and Reagan? No pipelines built east to west, no refineries built Right. So that's what's going to happen Up here.

James Thorne:

The existential move is going to be I think that nobody's talking about is Calgary is going to become an economic global power. If Canada becomes a hard power in resources, which I think is going to happen, then there's going to be somewhat of a power shift out of the elite of Montreal to Calgary. And same way, think of Calgary like Houston or Dallas. It's going to be that important last remnants, the death nail of economic policy in Canada being driven by the elite in Quebec, right. And so what will be very interesting? So you come back, you have that Rose Garden ceremony, you have President Trump do what he did on Liberation Day, which to me was it wasn't really surprising to me because I've read his book it was a response. But having said that, you get the documentation and what's interesting is when they get to the chapter on canada. All they really want to talk about is the quebec language law and the agricultural supply management system, which is code for Quebec dairy farmers and cheese right.

James Thorne:

You know, the monks make this wonderful cheese at St Benoit de Lac, which is just over the border from Vermont. I taught at Bishop's for three years when I finished off my PhD, and so you're sitting here going yeah, really, so President Trump is doing this for Wisconsin cheese. Really, you really think so? Do you really think the Americans? You think that Trump really cares about the language law? No, but Carney has said that that's sacrosanct. So last thing that I'll shut up is don't underestimate the fact that Mark Carney is Goldman.

James Thorne:

Mark Carney was the chairman of Brookfield. He moved the head office of Brookfield from Toronto to New York, and don't underestimate the fact that one of the wheelhouses that Brookfield has is real estate, is real estate, and so I think Mark Carney and Mr Trump President Trump are going to work well together. They're both extremely bright. They will cut a deal, and I think the most interesting thing about this is the fact that when you look at the uk deal that was signed, remember, guys uh, the crown is still the head of state in canada. Yeah, king is coming over for the throne speech.

James Thorne:

Right, it's called crown land up here yeah um uk and the united states signed it for economic security. We're gonna cut a deal and I think we're gonna go back to the reagan mulroney ish. You know, security we're gonna. You know what's the quid quo pro going to be? Yeah, sure you can build some cars, yeah, yeah, you know. And here's the last thing about the steel industry up here who do you think owns the steel? Do you think the steel industry up here is domestically owned?

Clem Miller:

claim like clefs yeah, and you guys own our steel industry.

James Thorne:

So so you start throwing the facts at the wall and you to sit there and go. What the heck is going on? That's what I think's going on. I think they made a mistake. I think they realize it, I think they're trying to put the genie back in the bottle and you know, I think what they really want is nap gas. They want the rare earth. We have a thing in ontario called the ring of fire right, they're signing a deal in ukraine, you got it.

James Thorne:

In Northern Ontario, have you heard? It's there, let's develop it Now. Here's the key, though, and they're talking about it through line it's got. I think it's going to be American capital coming up here to develop all this stuff. I really do, I think you know. I mean the hydroelectric plant in Quebec US money comes in Right. The LNG plant, the LNG field off of Newfoundland, right Developed by American money, you got. That's the type of thing that I think is going to happen.

Clem Miller:

So go ahead. Oh, there's so many questions I could ask you, jim, so I don't know where to start, but I'm sure I won't get through to all of them. But I guess one question I have is where do the Chinese? Here are two questions. Where do the Chinese fit into all of this? It would be one question. And the second question would be, you know, is there enough support in Alberta for separating from the rest of Canada? I don't necessarily mean joining the United States, but you know to what degree is there, you know, independent sentiment in Alberta?

James Thorne:

We're at 40 billion in assets at Wellington Altus right now, growing real fast, just going financial services in a company. When we started, I joined when we were about 4 billion. We're at 40 right now, growing real fast, just growing financial services company. We made big inroads into Alberta.

James Thorne:

So I talk to these guys all the time Carney has to make a deal because if they don't, they're going to leave. They're done, you understand. Unless you add Saskatchewan as well, they're done. It's over. Like, for example, quebec gets all these equalization payments from Alberta okay, because of the oil that comes out of the Grand Intership and the sale of natural resources, okay, but you know that in Quebec they make a lot of money through the hydroelectric power yeah, right, and that money is not calculated in the equalization equation. So everybody. So what's happening? And the wonderful thing I think about internet and social media is everybody knows about this. Now People are fed up, people are totally fed up. I think what you get is I think people understand that what I do is I sit there and I go, and Mark Carney is from the West.

James Thorne:

His dad was a principal. He understands that. That's why I'm a little bit more emphatic, because if they don't do this, alberta will have a referendum and leave. Because when I talk to these guys all the time, alberta is done. Alberta is done with what they call the Laurentian elite. Okay, that is the power base in Montreal. They're done. So does that mean? What does that mean? What are the hand, what are the cards going to be played by the Demarais family? You know the Irving family. You know Canada is just like the United States. There are these big families that control large swaths of factors of production. Right, have they come to that belief that this is what needs to get done, or are they willing to have Canada break apart? That's where we're at, and I think, when you think about what President Trump has done by attacking the sovereignty question, right, it's a brilliant move. Right, he went right after the Achilles heel of Canada. Right, it's a brilliant move in game theory, absolutely brilliant.

Steve Davenport:

I'm really interested in your take on Ontario and the rare earth Because to me the rare earth question, as we talk about growth in AI, all of these things, and especially in electrification of cars, it seems like the rare earth is going to constrain us pretty soon unless we have a lot of development. And I guess I wonder why is it that Canada didn't jump in front of China in this rare earth space and try to become the leader in the world? Or like why is it? Is it because of the environmentalism.

Steve Davenport:

That's a part of the government or is it because I like? I like Carney's policy, which is we're not going to expect the consumers to do everything in terms of environmental solutions. We got to expect the people, you know, pulling stuff out of the earth, where that's where most of the damage is coming to the economy, and out of the earth, where that's where most of the damage is coming to the economy and the environment. Is there going to be a new type of rare earth development or is it simply going to be? We're doing this in Canada, just like we're doing the smelting in Canada, and we'll let that economic and environmental impact fall on their shoulders, versus the shoulders of China or other countries.

James Thorne:

There used to be two decades ago, and I don't know if it still exists there used to be a really great global macro newsletter. I think it was called 13D. Yeah Right, Yep, they were all over northern Ontario and rivers. Right, it's been. It's there.

James Thorne:

I'm going to go back to, I think, just to skim through, a question that Clem asked about China. I think we have to be honest, that I think I think President Trump is absolutely right to basically re-engage the Monroe Doctrine and recognize the fact that maybe that you know, certain powers to be in Washington DC were asleep at the switch in terms of allowing China to get more influence in this sphere of the global economy, on this side. Think of Panama, what have you? Right? So I think the Chinese influence is is a very subtle, but it's there and it's been growing over some decades. Right, that's one. Two, the big question, you know this is like we're back in baltimore talking right, why aren't they developing it? Why aren't they building a road? Why aren't they processing it? Right, you used to have yet one processing plant, and I think it was an ohio for rearers. Yeah, right, I mean so this. So we're going back, I'm going back, I'm going back to where you know decades ago.

Clem Miller:

I know the answer to the question, and it is. It's something that I had researched for teaching my class. So what happens is that rare earths are all over the place. There are rare earth mineral deposits, and not just in China and Northern Ontario and the US, but all over the world, australia, et cetera. The problem is with the refining. Refining rare earths is very environmentally damaging. Right, it creates a lot of pollution, and so China was willing to accept this pollution because it doesn't really care about its citizenry. But Canadians and Americans and Australians and others are very mindful of the economic or the environmental damage, health damage associated with rare earths, and so that becomes a constraining factor in terms of the refining of rare earths. Smelting is clean, well, no, well, I think your argument, you know.

Steve Davenport:

I think that's the answer. If they allow smelting, then why?

Clem Miller:

would they? That's my understanding. Yeah, good point. That's my understanding. Yeah, good point, but that's my understanding as to why rare earths have not been developed to a greater degree outside of China.

James Thorne:

Well, it looks like there's a big sea change. If the president has just signed a deal with Ukraine for the rare earths, right, I mean I think it's that's certainly not going to impact the US citizens too widely. Somebody from Canada that you need in the room to renegotiate an agreement, economic agreement, with the United States and help in, you know, helping rebuild the structure of the global economy Bretton Woods 2.0. He's a guy you'd want him. Carney is a guy you want in the room. Okay, correct. And then the other one I guy I would say that is very impressive is scott percent.

James Thorne:

I mean, we cannot discount the fact that this guy is a superstar. We can't discount the fact that he was with. I mean, think about this. I mean, and he explains it. I mean, okay, so he was a junior to, to stanley drunkenmiller, right, and and you know the set comes up and you know Bisset comes up and goes, hey, hey. You know, let's look at the peg in the UK. You know, look at this, this is weird, we could attack this, right. And then they go to. You know, george Soros, right, and you know, let's leave his politics on the table, I mean off the table. Generational investor, you've got to put them in the same conversation as Warren Buffett, right, and they took on the you know, the Bank of England, right, and so you've got to go, and he teaches history of economic thought at Yale, so he'd fit right into this conversation, and I would argue that that Carney would as well. And so what I'm trying to say these guys all know what we're talking about.

James Thorne:

It's not like previous administrations where we would question the people at the table, if you know what I mean. I mean, there's a guy in Biden's administration his name slips me that didn't know what modern monetary theory was, and he was the head of economic. You had guys in the last administration that couldn't pass a graduate level macro course, right? I mean, in the last bastion of that's got to be the Fed, right, we got people that are around DC. They don't have a clue what's going on. These guys do, and so you know. If that's the case, then you know where are we going to put the smelter? Are we going to put it into Cleveland? How about Buffalo? They got lots of Niagara Falls. They got lots of cheap energy. I don't know where it's going to go, but as the cent said cheap energy is the fundamental requirement to win the AI war.

James Thorne:

And you know Clem, you still live in the DC area right Baltimore. I mean I'm just reading from here up in the great white north that it's a matter of national security, right, yeah, I mean we need cheap oil, we need cheap natural gas, we need rare earths.

Steve Davenport:

So we're there going on in Scotland, wales, northern Ireland, and I kind of wonder if, when you look at Canada, I mean a separation down the middle of somewhere around Saskatchewan and West being one country and then Ontario and Quebec East being a second country, because they really are very different in terms of that. But then I look at this Ontario question about the rare earths and I say, well, if I was in the west of Alberta and I was going to you know succeed.

Steve Davenport:

I'd want to be including a natural resource like the rare earths. I mean, could Canada, could England be on the force or in the process of some type of a realignment of borders? Do you see that really happening in the next four years?

James Thorne:

No, and I think what you touch on which is really interesting, is when you go down the rabbit hole. What is interesting about Saskatchewan and Alberta is you really know who settled it, and this is I'm going to give you a Ted Cruz. Ted Cruz was born in Alberta. Right, saskatchewan and Alberta were really populated by folks from Texas. Oh right, so you get that when you go there, you get that it starts in Alberta and starts in. It starts in Saskatchewan and it's a beautiful province, but when you get to Alberta, dude, it feels like Houston. You know the riding the horses.

James Thorne:

And so the American influence out there is prevalent and it's ingrained in their DNA. Right, but look no.

Steve Davenport:

The deal's going to get cut.

James Thorne:

Well, here's what I say up here If they don't cut a deal, if Carney does not cut a deal with Alberta and Saskatchewan, and Carney comes through with another four years of Trudeau-like economic policies, then sell everything in Canada, right, the dollars go on to 60 cents, nobody's going to care about being up here. This thing's going to blow apart and as investors, you're just not going to want to be around here and the world will just walk away from us, and then they'll come back after the fact, right? So, hypothetically speaking, of course, steve, you could have that happen. I just when you start listening to what Carney is saying look, carney had a call with Smith and she hit it on her Twitter. She said we're all good, it was a great call. Right Before the election, she came out with 10 points that had to be met publicly public gain. Now she comes out and says it's all good. So there's going to be a deal. It's going to be very interesting to see what happens at the G7 in Alberta. I think it's in the middle of June. I think Zelensky is going to be there.

James Thorne:

You know, you camp on Carney's Twitter and he completely interesting. Basically, he starts tweeting about the Ukraine and the, the peace deal with russia and all that. It might as well have been out of the state department, you can see. But you know, what happened is everybody's focused on this. Right, it just in time, you know. You know we're all you know, turning on to cnbc and the and the latest noise. And you see, if you just stay still, you can see the pivot happening.

James Thorne:

Right, I'm of the view if we were back together, guys, and we were managing money, I mean, the first thing I would say to you is watch the US dollar. And we had a managed decline of the Dixie down to 100, right, you know. Look at the Swiss two-year it's negative, right. Look at rates in China. They've got debt deflation. Bissette is right, china's holding a pair of twos.

James Thorne:

What is that going to look like? Look the look at the taiwanese dog. You can start to see the currency market and the global rate markets outside of the united states. Right, um, start to price in. You know something and put it this way something is up, something is of a foot. Do you understand that? And and so the smart money in the credit market and the currency market are adjusting real time, whether or not jimmy kramer and the crew on cnbc picks up on this, because they're looking at you know, johnson, and johnson's quarterly numbers is beyond they're looking at you know, johnson, johnson's quarterly numbers is beyond me. But I look, you know. First, to me it's the US dollar is the most important thing and, yes, us hegemony still exists. We're going to have to do a new Bretton Woods 2.0. I think it's Bitcoin. Watch Bitcoin fly. Oh my God.

James Thorne:

I know I wanted to wake you guys up on that Before you go down that pathway.

Clem Miller:

My question to you is gold. Okay, I have a not insignificant portion of my portfolio now in gold and I've been using that to offset my uh, obviously, my stock holdings during this uncertain time. Um, so I don't consider it a permanent, uh part of my portfolio, um, but still, gold is doing well. So my question to you, steve, uh, jim, is is you know, what do you think about gold? Where does gold you know, in this whole story that you know you're relaying, you know this view of the world, where does gold fit?

James Thorne:

I'll go back to the let's go. Okay, so, so, and we've we've had these conversations before, but let me go back and review the bidding, to use a bridge term. Look, there are unintended consequences to policy decisions by the White House. Ok, I don't care what the world says, but the most powerful economic and financial power is still the United States, even though we're moving from a unipolar world to a multipolar world.

James Thorne:

I think the critical mistake that Biden and Yellen made was weaponizing the US dollar during the Ukraine conflict. I think they made a critical mistake in basically going after the SWIFT payment system and going after Russia's holdings of US treasuries Full stop. And why do I say that, guys, imagine if we were a team together and we were consulting the Middle East or consulting people around the world and we saw what Yellen and Biden did to the I think it was a half a trillion dollars worth of Russian holdings of US treasuries, which is a legally binding contract. Guys, holdings of US Treasuries, which is a legally binding contract, guys, biden and Yellen just destroyed your franchise, which was the medium of exchange and the store of value.

James Thorne:

Right, they did that, right? So you and I? So we are consulting some royal family somewhere that has all of their holdings in US treasuries, right, because of the petrodollar world, remember? Right? Okay, wouldn't we advise them, given what happened to Russia during the Ukraine, to do what? To maybe diversify away from the US treasuries, right, I think, guys? So I love gold. I think it's gone too far, too fast. But, clem, I think gold and Bitcoin are the same, are that are the same story.

Steve Davenport:

And so that's one.

James Thorne:

That's one, and I think this is the other interesting thing that's going to happen. Hey guys, we're going to deregulate the US financial industry again and it's going to be through the supplemental leverage ratios, right, we are. So think about this right now, with the Fed making a completely and totally stupid decision to have Fed funds rate at 433. Jamie Dimon can park all of his money at the Fed and make 433 risk-free.

Clem Miller:

Yeah.

James Thorne:

Okay, right, when the two year is somewhere like 383, I don't know, it's bouncing around we need to find a new buyer of treasuries. Well, the new buyer of treasuries will be that they will revise the supplemental leverage ratio for banks and they will be able to go back to prop trading of fixed income for their account and it will not be charged against their capital. Guys, we're going back to pre-Dodd-Frank. Happy days are here again for Wall Street. That's where we're going, but Scent talks about it. We're going to deregulate. Right, we're going to deregulate, and he said it the other day, where he said because of deregulate, because of you didn't say it this way, I'm saying it this way Because of Dodd-Frankd, frank banks, regional and money center don't lend. Who's getting all that lending? It is the private equity guys. Through what? Through their business development banks in the united states yeah, yeah right.

James Thorne:

So you know this is the weird thing about where you know this is the game. You can see them churning, you can see Bessette's fingerprints. He knows exactly what he's doing. So investing wise. I think regionals are very important. I think money centered banks are very important, because lending is going to come back and prop trading is going to come back, and so if we're going to have this secular bull market that I I am present presenting to you because of demographics, us financials are the place to be and people are going to freak because I say deregulation right guys, I'll be dead and gone by the time this thing blows up again.

James Thorne:

Okay.

Clem Miller:

You know, jim, I think you may be right About going back to pre-Dodd-Frank and it may not actually be all that bad, because now you've had this experience Of having better risk management so it may not explode as it did in the past. But the problem I have in investing in banks is that you really and obviously we've worked for a bank, so I sort of have this kind of internalized view of it is, you really don't know what's going on inside a bank. Somebody who's outside a bank an investor has't know what's going on inside a bank. You know somebody who's outside a bank an investor has no idea what's going on inside it. They're black boxes, and so that's my, my main concern from an investor standpoint about investing in banks.

James Thorne:

Can I, can I blow your? I just want to throw the cat amongst the henhouse right now the Fox. So, going back to the Bitcoin, I don't't, I want you to just, you know, be open-minded. Be open-minded, think like pretend we're back at university in the grad lounge having a beer. Okay, all right, look why most yeah, no, no, because guess what happened? The canadian industry is over it's budweiser. We got taken over by the american watered down beer up here. Okay, I mean, I'm teasing, but but the thing that's, when you look at, when you look at micro strategy to your point, clint, do you know what the pristine capital is that has full transparency and full and and and full. You know what it is? Bitcoin, bitcoin.

James Thorne:

Michael Saylor is going to convert microstrategy into a bank and use all of the holdings of Bitcoin as its capital, which is clean, clear and transparent, and that is going to freak Wall Street out. Now may take some time, but think about what's happening now. All he's doing is arming the fact that he's taking and this is what you know and everybody's freaking out. It's no different than Tyco. It's no different than EDS. It's no different than Tyco. It's no different than EDS. It's no different than any other publicly traded company that issues stock to buy, to buy back, you know to, to pay a big dividend that's higher than their free cash flow, or pay down debt. All he's doing is he's arbing at doing the exact same thing and buying Bitcoin, which has perfect scarcity, and the FASB accounting rules have changed so that he can mark that to market. Ok, so you, now you have more companies replicating that. I am not saying that this isn't going to end well, you can just see what he's doing. He's found the weakness in the game. He's going to exploit it. Gamestop's going to do the same thing.

James Thorne:

But the thing I come back to, which you hit on is, and this is why I say you go to Bretton Woods and what do do we need? We need something neutral to anchor the us dollar. Okay, it could be gold. Right might be gold. Well, could be bitcoin. We got to do something. We got to go back. You know, king said bank corp, but because of what yellen and biden did, we got to do something, got to do something right and there's legislation right now about that. I think it didn't get through the first time because they're, you know, they're working their way through it, but I think it's going to get done so, but then I sit there and go, clem, what if you sat there and you had a bank and you knew what? That black box question that you talked to me about or you issued is no longer there. You know what the capital is. It is completely now. It's Bitcoin. It's Bitcoin.

Steve Davenport:

It's the clarion, it's not, but you don't.

James Thorne:

You don't. It's not just the capital. What's the beautiful thing about this? What's the beautiful thing about business development banks? They don't have any leverage, but at least you can go through their filings and know what their loans are.

Clem Miller:

We don't know what the book.

James Thorne:

We don't know what JP Morgan's book is right. We have no clue, do we? We don't know what the counterpoint risks are right. We don't know right, james.

Steve Davenport:

I think this is the part of the call where we're going to go our separate ways. I think you're wrong about a lot of the presumptions of everything being figured out and everything going to work out perfectly. I look at what Trump did when he came into office first time Trump 1.0. He started attacking Obamacare and he wasted a year or a year and a half of his capital on Obamacare. And now I agree with you. All of the things he could do with Canada and energy would make the US stronger. Rare minerals all of that is a wonderful idea.

Steve Davenport:

My question to you is why start with tariffs if what you really want is deregulation of energy? Why not start with the thing that's the easiest to do? Why not start with something that you could get almost international agreement on? Yes, developing Canada, rare earth puts them in the hands of a friendly neighbor versus an unfriendly. So it all makes sense what you're saying about the Canada relationship. But my question to you, james, is, if it's so easy and so clear, why would you take tariffs and create all of this kerfuffle over something? And then you know, my question is still I don't think the big beautiful bill passes. I think there's too many problems that are going to be involved with the conservative Republicans, problems that are going to be involved with the conservative Republicans. So if the big beautiful bill doesn't pass, we don't ever get to this world relationship between the US and Canada that you're dreaming of. And if we don't get there, I think your secondary scenario of Canada becoming irrelevant because people don't want to invest I think that's what becomes more likely.

James Thorne:

So I think you're not talking to, you're not talking to David Rosenberg, you're not talking to the end of the world. Guys, no joking so here let me, let me so. So here's look at, it's a great, it's a great point. And remember guys, look at you know what I do is it's behavioral finance, right, right. And if you go back to kahneman, pervert, toversky's working paper, it's, it's on prospect theory.

James Thorne:

I suggest you read it yeah uh, what they talk about is that they have an example in the white paper 1986 I think it is, and they talk about these, these, these mountain climbers in in the french alps. They get, you know, avalanche or a blizzard comes and they work their way to a safe house and they get found five days later and they say, how did you get to the safe house? And they said, well, we had a map. And then they looked at the map and they said it was a map of the Pyrenees, not the map of the Alps. And then Kahneman and Traversky say is go, yeah, but you had a map, you had a narrative. So what I'm doing is I know my narrative's wrong, stephen, you understand, I know it's wrong. It's, you know, is it 60% right? Is it 70% right?

James Thorne:

If I'm having a narrative. Then we can push off, you know, using a Canadian metaphor of push off the dock and we can go on our canoe trip knowing that there's going to be stuff happening along the way. So let me just give you things that don't add up to me. Look, a tariff is a tax. I don't know if you taught that, clem, when you talked to your class. Who has the power of the purse? The White House does not have the power of the purse.

James Thorne:

The white house does not have the power of the purse wayne one of the reasons we could argue about what happened with fannie and freddie during the network sweep was the fact that obama couldn't get his tax so that you could basically subsidize obamacare right. So what trump is doing right now is unconstitutional. Oh, yeah, and what is he doing? He's saying oh my gosh, it's a matter of national security. Quebec cheese is not a matter of national security, dude.

Steve Davenport:

No, we're too numb, you guys are too numb.

James Thorne:

right, I'm just teasing, of course, but why isn't anybody calling him on? So here's the point, steve.

Clem Miller:

Well they are. There are some lawsuits right now saying that none of this tariff stuff should be done.

James Thorne:

I know, but hold on. So let's play it out. Let's play it out. The big deal is the midterm elections. The big deal is he needs to get a super majority. If there is a time to do it, it's now, because the Democrats are in such dis when you have the Democrat leader, it's Bernie Sanders and AOC O-M-G Okay.

Clem Miller:

I agree with that my problem is-.

James Thorne:

It's a hypothetical guys. If there's a time that they can run the table, right, if this is the time to take your shot down the field, right. And so what I would suggest is happening he's front-loading all of the chaos right, walking stuff back, and the bigger question is does he get what he needs in the midterms? And then, if he does, does he, can he convert the EOs, the executive orders, into law? That is what I think is the play in theory.

Steve Davenport:

In theory, what you're saying works, james. It all works in theory. The problem I see is that he could have started with infrastructure in 2016. And if he would have got an infrastructure bill he would have won the midterms and he would have probably had a better chance with Obamacare. My feeling is his tempest in a teapot attitude about he's going to solve this problem. And you look at the US budget and you say 13% are exports and 11% are import. You know we don't have a trade deficit. That is cataclysmic.

James Thorne:

So you're not, as you're not. The United States is not. First off, it's for's, for you know, imports are 14, direct imports from china, 1.5. So so the point I'm going to make to you is maybe they're creating a situation where they want chaos. That's my point. Right, because it does. The facts don't suggest that that's what you would lead with. I completely agree with what you're doing, but to sit there, and you can sit there, go. There's one. It's the gang that couldn't shoot straight. Got it Right?

James Thorne:

If I hear Trump is a dumb as a box of rocks, okay, I get it. But what if he knows what he's doing? And if he knows what he's doing, why is he creating the chaos that he's creating right now? The chaos that he's creating right now, what is up? And then, what I say to the folks up here is just be still. We're playing a game in the schoolyard where the teacher is saying making the rules up as they go along, and there are kids responding to every statement as opposed to. Why don't we just stay still? Why don't we watch what happens? Let's see where this goes, do you understand?

James Thorne:

Let's see how this plays out and recognize the fact that President Trump does not have the power of the purse and what he is leading with. Once you strip out the security problem, it's unconstitutional.

Steve Davenport:

So look I get that.

James Thorne:

They want to and they should. The lesson from COVID is to bring critical industries back to the United States in case of a crisis. And when you listen to Besant talk, that's what he says. And then you listen to what Navarro says and who's the guy from Cantor?

Clem Miller:

Ludnick, ludnick.

James Thorne:

And they're all over the place. And then you throw in Stephen Moore and you're just banging your head against the wall.

Steve Davenport:

Right.

James Thorne:

So if there was a, I don't want to, but I look at the market goes up 75% of the time. I do not think there's going to be a recession. And you've got to sit there and say to yourself what the heck is going on, because that Rose garden ceremony was a joke, it was a high school play. Right, they got the response that they wanted. So what's the end game? And to me, the end game is they're going to try to circumvent the four-year cycle, which the four-year cycle is economic slowdown in 26 and a significant market correction in 26.

James Thorne:

If you have all that happening in 25, you get oil down. Gasoline at the pump is below $2 a gallon in 26. He works that down, the economy's humming, the stock market's humming, and he's got a shot at getting a big majority and then he can pivot. And then the real risk to Clem and Steve and you guys is the fact that now he's got enough power to make all this into law law, not these silly EOs, right? That is going to be very enticing and interesting if we do cross that bridge. But you're absolutely right, steve, it might be all ephemeral, it might be.

Steve Davenport:

He has no clue what's going on right now.

Steve Davenport:

I question my enemies and look at everybody as the art of war. We're battling here in this market to try to determine what's best for our clients and ultimately it's about investing and ultimately it's about putting capital to work in places that you trust will preserve your capital and grow it at a reasonable rate. That's what I'm trying to do. I love the ideas of energy, especially Exxon, because I have a large client with Exxon, so I love that concept of what you're talking about with imperial oil. I believe that Canada should be one of our greatest allies. I agree with you know all of your premises on actualizing Canada's true potential. I don't know how, as a country, they can go so far to hating everything about energy, to now turn and go. We're going to centralize and make ourselves a natural resource provider to the United States. It would seem like some of the things that have been said about being a 51st state and everything else would potentially make us, you know, have worse relations with Canada and worse probability of any of this coming to fruition. But Steve.

James Thorne:

Steve, the only reason why Carney got in was because of Montreal and Toronto, the bourgeois socialists right from Marx and Engel right. The only reason that the two little areas of the country that look like upper you know, upper Manhattan, you know Manhattan Upper East Side put him in. The rest of the country is blue right. The rest of the country is conservative, and all Carney did was basically, you know, take Polyev's platform of you know, a business focused platform, and so what I think he's going to do is he's going to, you know, this is this is hoteling's lemma Right, where you know. If you're going to, you know, you know where do you want to position the ice cream? Where do you want to position your ice cream cart? On a beach, when everything is in it's evenly distributed to maximize sales? Right, right in the center. Who is going to be upset? Are you kidding me? Of course, the extreme left, right, but they've got no other way to go because you know what the extreme left did they abandoned the NDP, right? They?

James Thorne:

abandoned, which is a which is a extreme left party that makes Chuck Schumer look extreme, far right. Okay, guys, when I lived in the States, I was Democrat. I am viewed as being a staunch conservative, and I say I'm a moderate Democrat. So the point I'm trying to make to you is I think the people that are going to get upset about this are going to be the extreme left in Canada, and guess what? Their party just lost official party status up here because of their strategic voting. So they don't have a horse.

James Thorne:

They're done for five years, done, wow All right they're done for five years done, wow, all right, you know you don't want it. You want to know who the official opposite after, after the, the, the conservatives, it's the bloc, the separatist in quebec, party, quebecois, but but you know, I it when you, when you look at it, when you look at it, you know that's what you do. You know, in strategy, you, you set a course and you come up with an idea to the best case, you know. I mean, you know I was in New York talking about you know, why is the Fed at 433? Right? When you know, why are they ignoring their beige book, when it's the beige book is more dovish than it was in September and they're cutting 50? Right? Why? Why do they think that tariffs are inflationary, where, if you were at Georgetown teaching an economics 101 course, you know that tariffs are a tax and they adjust the relative prices. They're not inflationary, right? I mean, this is basic stuff, right? I don't know. So, steve, I don't know why everybody's doing what they're doing, right?

James Thorne:

But the objective here is to basically come up with a narrative. That so, and my narrative is this we're going to go, we're going to cut these deals Right, the market is offside and go back to our institutional days. Guys, all right, the retail investor bought the debt, the institutional guys didn't. What happens in September, after Labor Day, when you're 700 basis points behind your benchmark Because we give Steve's narrative right and the CIO walks in and says Steve and Clem, you guys got to get this close right, you got to get this close, or we, you know your funds closing Right. So, and that's so, when you look at the book of where we are, the institutional people they didn't buy the debt, retail investors did.

James Thorne:

There is huge risk at the end of this year For institutional investors in the four. I think the fourth quarter this year is going to be crazy. Clem, your gold is going to go absolutely bonkers in the fourth quarter. Absolutely bonkers, bonkers, upper, bonkers, upper, bonkers up. You're going to have to go. What you need to do is start looking at, get Steve to start looking at some Vancouver we're going to get into these. There's a property in arizona that was staked out in 19. You know 05 and you know what they, we, we got the claim and we're raising money and we're gonna drop up you know we're gonna.

Clem Miller:

I don't, I don't, I don't do that crap, I just uh, I just in the gold we're going to get the fever?

Steve Davenport:

I think you should write a call at 4000 on the GLD, and that would be where I would try to make some money, because I think you're right, I think gold will take off. My only adjustment to your scenario is look, when Trump tells you to buy the market, it's going to rock it up. I call that a George Costanza moment. George Costanza, with any decision he made, he always did the opposite because he knew that would be right. And if Trump is saying, to put your money in now, it's going to rock it up. I'm not sure whether that means I should just sell everything now or I should sell half.

James Thorne:

No, no, you go on to chat GBT and find out what happened last time in Trump 1.0, when he said that, and what the market did. Okay, and I can say to you the game is not this the game is the midterms. The game is is he needs to? If he's going to have this legacy, he's got to start putting things into law and not executive because the next person who comes in the next administration can come in, can wipe out his legacy in a, in a swipe of a pen, if he could.

James Thorne:

If he could and this is a big if get significant, you know a significant amount of majority that he could start pushing these things through in law. Right, right then you couldn't have these activist judges doing this and that, right, and so I, I'm. So I'm with you, steve, but I'm sitting here going what's the game? And it's not that he's stupid and he doesn't know what he's doing.

Steve Davenport:

I don't think he is, but I also think that his timing and his pushing of issues that may not be central and making those central when he has goodwill capital he used up a lot of goodwill capital with all of those tech people who lost money.

James Thorne:

Oh, I agree. So did he make the mistake like in, anything can happen. Did he make the mistake of, when the cabinet was meeting, that he listened too much to Peter Navarro?

Steve Davenport:

Correct.

James Thorne:

Did he make that mistake? Because this looks like the move that was made was a move. Miller, when you have really smart people coming out that are legends, that are saying a 10% across the board terror, we can handle. That's what you know. Stanley said on the record. Why he did this other stuff is beyond me. And then I say, is it, is it, is it Navarro?

Clem Miller:

Yeah, it is Navarro. It's Navarro because Navarro went to jail for him. No, seriously.

Steve Davenport:

I think that this is you know, it is going to be a classic year. I think that all of the points you make are great in terms of giving us better perspective for the economics and the histories of the individuals involved, especially Carney. I love your comments about how he was running Brookfield and how he was from Goldman and I agree there is a lot of potential for a great deal of good things to happen between US and Canada. My only question has been he's got one goal and that is win the midterms and not blow up, and he's not behaving as an individual and as administration to do that. If he can get this bill passed in the month of May. If he doesn't get it passed and he goes into the summer recess and he starts to run up against the debt ceilings, the ability of the Democrats to be disruptors goes up and as they go up, I think, the market goes down.

Steve Davenport:

So my belief isn't a fourth quarter problem. My belief is it's a third quarter problem and he's going to have it because he hasn't focused on the right things. I could be wrong, but that's my—.

James Thorne:

Right. So if Trump does run the table a hypothetical and I think you need—is it 67 votes in the Senate constitutional amendment, what do you think the response of the United States would be if he gets enough votes so that he could change it, so he could run for a third term?

Clem Miller:

that's never going to happen, because he needs three quarters of the states too.

James Thorne:

He needs the states as well, yes, then why is Bannon out there basically saying he's going to get a third term? He needs three quarters of the states too.

Steve Davenport:

He needs the states as well.

James Thorne:

Yes, Then why is Bannon out there basically saying he's going to get a third term? What does Bannon know that we don't?

Steve Davenport:

There's some way that he could potentially be the VP on Vance's ticket and Vance would get elected, and then Vance would resign.

James Thorne:

Oh, that's kind of like what happened in Russia with Putin. And what's the guy Medvedev? Yeah, they did that in Russia, didn't they?

Steve Davenport:

Yes, they did so that's one scenario, and another scenario is something to do with him not completing his second term. So you're allowed to have two terms and so, because he didn't complete his second term, he would appeal to the Supreme Court for why he is still entitled to be reelected.

James Thorne:

And so you think that Judge Roberts and Amy Comey are going to basically vote for that.

Steve Davenport:

Are you kidding me? No, that's why I think that scenario is less likely than the Vance scenario.

Clem Miller:

No, neither of those two things. If you read very carefully, neither of those two things can actually happen because it has to do with being elected twice. It's not whether they serve two terms or whether he's elected as a vice president versus a president. If he's elected twice, then he can't.

James Thorne:

He can't do it oh, is there, is there, is there, in, in. Blow your mind out, click. Is there a possible road to him getting another term other than go and basically attacking the results of the 2020 election?

Clem Miller:

you mean like doing that again? No, trump, like how Trump?

James Thorne:

Why are these people out there saying he's going to get another term?

Steve Davenport:

I don't understand. So what are they hanging their hat on?

James Thorne:

What are they doing? What's banning smoking? Is that the question I'm asking BARRY PRICE? He's just creating a fog MIKE GREEN.

Steve Davenport:

That's right BARRY PRICE. Everybody wants this fog to get bigger and thicker and we're going to forget all the different things that are going on. Are we forgetting that he said on day one I'm going to call putin and ukraine's going to be over. I remember hearing that.

Clem Miller:

See, here's the thing, here's the thing maga maga is a personality cult. So if you take away, if you take away the personality, there's no cult left and there's no support anymore.

James Thorne:

So you. So whoa, whoa, whoa. You don't think, you don't, so you, I, I'm, I'm. So if you go back to Brenton woods, right Kane said that there would be this rise of populism. Isn't MAGA just the rise of populism? That always happens and is? Is MAGA just not a manifestation of Occupy Wall Street and what happened in Japan and what happened in Europe, and what happened in Europe and Trump?

Clem Miller:

you know, president Trump jumped on the bandwagon and exploited that for his own Right. It's a it's a populist coalition that could have existed anyway without Trump. But you're right, trump did seize it and he turned it into a personality cult. So it was a populist movement and now it's a personality cult. It's been changed.

James Thorne:

So then? So help me out here. What happened to JD Vance to make him go from hating Trump to becoming his VP?

Clem Miller:

He wanted to be VP.

James Thorne:

So it's power.

Steve Davenport:

I think it is Entire's power. I think it is.

Clem Miller:

Entirely power.

Steve Davenport:

I think it's potential to be the future of the party.

Clem Miller:

So everybody has a price.

Steve Davenport:

Right, I think we got to wrap this up, so I'm going to ask everybody, given the scenarios that we all believe in, which could be right or wrong, wrong what assets should we be buying for our clients for the next six to 12 months that we think will be the place to be as we see the policies of US and Canada move forward? They can be Canadian assets, they can be US assets, they can be international assets. Maybe we want to own some Swiss franc. I had a client send me a text about should I be in the Swiss bank. I think that we have to look at things overall and make decisions for our clients. If you had a client, $10 million or a million dollars what would you tell them to do with that 20% that you're concerned about in the market right now? Stick it out, try something else, or sell and go to cash. I mean, give me your scenario for that 20%, starting with James and then going to Clem, and then I'll give you mine.

James Thorne:

Okay. So the environment we're going into is slowing growth, right, we're not going to have a recession because the US economy is 70% service, okay. So the only time we've ever gone into a recession is after a shock, right, 9-11, 08. I don't think the tariff thing is a shock. We're going to have a slow growth environment and we're going to start to see liquidity be pumped in. I would ask you guys to go look at the Hong Kong overnight market right now. It's dropping like a stone. They're injecting liquidity everywhere in the world, but the United States M2 is growing. So, in a slow growth environment globally where we're increasing liquidity, history says, or the data says, it's really simple you buy secular growth.

James Thorne:

I like the companies that have been absolutely smoked this year. So I think large cap tech in the United States is the place to be. I love. I think gold is a place to be. I think it. I just don't like the parabolic charts gone too far, too fast and I think Bitcoin is going to go and they're going to run hard. So that would be and if you go back. So I am of the view that we're going back to a pre-COVID world where we're going to have secular stagnation and inflation is going to go below 2 percent. You know, pushing on a string liquidity trap that would be my view.

James Thorne:

I am not believing the move in Germany. That is a head fake, ok. And then in Canada I would buy the pipelines. I think that's an interesting. I think the pipelines in the United States are very interesting and you know, I don't think you want to buy energy names oil because you know the correlation. I think you're going to have to drill, drill, baby drill. One area that I think is very interesting. That hasn't been reflected in the stock. But you know, natgas has had a really good run here and we need NatGas for AI, so NatGas is having a good. You know, the commodity is having a great run. The stocks sink. The stocks haven't reflected it, which means that the street doesn't believe the move. Do you know what I mean If they believe a recession is?

Steve Davenport:

coming, then they don't believe that move. You know what I mean.

James Thorne:

And for clem leave, a recession is coming, yeah, and my favorite is buy the gdx j just for clem because he's a gold bug. Buy the, buy the junior gold miners. I like gold, but I, I, I. Right now my favorite play is I think Bitcoin and crypto derivative plays are. You're getting into the wheelhouse and that's going to run to the end of the year and I like secular growth there.

Steve Davenport:

So at 100, you buy Bitcoin, beg your pardon. At 100, it's kind of run up, hasn't it?

James Thorne:

Oh yeah, Dude, it's gone. It's gone. I mean, think about it. We've never had an asset that has perfect scarcity, right, and so you know it's.

Steve Davenport:

I think that what Trump's doing with using the assets that have been seized as the first way to start it is very creative you get a Bitcoin reserve.

James Thorne:

That's where August comes. We get a Bitcoin reserve where the government starts buying 250 coins a year. You think that maybe the smart money will start trying to front run it. And here's the other thing about it is that if it's and this is just you know what we've learned what is it? It's not. Fundamentals don't rule, and we've had this. It's funny. I tell this story all the time and it's not. It hasn't happened up here.

James Thorne:

When the when the SEC came into us and basically looked at our asset allocation program, I go back to M&T and Wilmington trust, right, and they said that you couldn't have proprietary, you couldn't have proprietary product. Have proprietary, you couldn't have proprietary product right In your asset allocation program. What did we do? Right, etfs, right. So we're in an environment right now where it's flows matter and liquidity matters. You know target date funds matter. If you go in there and you're a young person working at an institution that's got a 401k and you've got a 2070 fund, you drop it in Every paycheck. You're basically buying the Russell. You know the NASDAQ 100, aren't you? So to me, it's flows and liquidity. We're about to get through a huge liquidity period, the four-year credit cycle. We have to refinance the credit right. The Fed will cut, there won't be a financial crisis and so an asset like gold or Bitcoin benefit from increase in liquidity, and then they don't have the problem of dealing with the cyclicality of their earnings. It's a complete emotional momentum liquidity play.

Steve Davenport:

I like that Clem what are you doing?

Clem Miller:

So, as you know, as a lot of our listeners know, I'm approaching this from a standpoint of trying to have lower beta right now, lower forward peg, so I know there's more attractive relative valuations and also lower short interest, which implies less speculation stocks that have less speculation. So I look at a combination of those three factors. I'm less thematic in my thinking, you know. That being said, you know I do have, I am kind of fundamentally attracted to, to, you know, some of the AI, some of the Mag7, not all of them and I'm slowly ramping that back up again. But, you know, because there was a, I think, a good buying opportunity in mid April in order to do that. But I'm still well below one, you know, more like 0.7 or 0.8 average portfolio average beta on my portfolio, something around 1.8.

Steve Davenport:

Give us a buy from club. Give us a buy.

Clem Miller:

I would still say I would say staples, uh, insurance, um, I those. Those are the two things that I would say uh, are and gold, okay, that I would say are and gold, okay, staples gold, and keep a significant portion also in cash. But you know also, like I said, I'd say in the tech realm I would say Microsoft, amazon and Google. You know the alphabet, but stay away from tesla, and and I'd stay away also from um, from apple, I'm also. I'm in nvidia as well. Okay, I'm going to go a little bit different.

Steve Davenport:

I believe that we are going to create, or there is going to be, a crisis around treasuries, and I think that that crisis around treasuries is going to be because, just like James has talked about, when we weaponize SWIFT, I think we will weaponize treasuries, and I think what's going to happen is we're going to create people or entities that are going to not be allowed to receive treasury interest payments, and so there will be the haves and the have-nots. We will have a treasury that will decide all Chinese purchases of treasuries will remain principal assets, but we'll have no payment to them. So we will cause treasuries to be weaponized, and I think we'll go towards corporate bonds. So I like LQD.

Steve Davenport:

I like corporate bonds because I think their balance sheets and their ability to pay are going to continue to go up as we see deregulation, and I think that we're going to see governments and the amount of debt. We have become a bigger and bigger question, as I think there will be a blow up around the debt ceiling and the fact that we don't get a deal passed on the big beautiful bill. So I would buy your LQDs and say I own the balance sheets of the best companies in the world and therefore they're going to survive when governments are going to shoot themselves in the foot Everybody. One last word, last word, james. What do you think?

James Thorne:

To channel Mr Buffett be greedy when people are fearful and be fearful when investors are greedy. I still think people are too fearful right now. I think there will be a time when you want to get significantly more defensive. I just think it's later. I think it's after the midterm elections.

Steve Davenport:

Okay.

Clem Miller:

Plum last word. I think it's smart to be somewhat defensive right now, so I would disagree with that. I was interested in your LQD comment because I would think that if there were significant disruptions in the underlying treasury market it would also affect LQD. So basically I stay away from bonds altogether. I'm not a big, I mean, despite having some background in asset allocation. Really I'm sort of an equities plus cash and plus gold recently guy.

Steve Davenport:

After our meeting last time with Steve Gattuso talking about the national debt, I believe the problems there are much bigger and much deeper and much more difficult to solve. If we had a great government who was on top of everything and ran things extremely well, I would feel good about our addressing the national debt. We're not doing anything and all we're talking about is adding to it with $4 trillion more from this big beautiful bill. I don't think that's the solution for us. I don't think 50 or 100 basis points from the Fed is going to do anything, because I think we have too much debt at the federal level.

James Thorne:

Steven, we need negative rates and rates are negative. Real rates are negative in Switzerland. They're going to become real. We're going to get real negative rates in the United States. We've got to get that sustainable and then I know you guys are going to love what I'm going to say.

Clem Miller:

Then we're going to grow our way out of it, which is what we've always done. Yeah, we're going to need a lot more immigration into the United States in order to do that, though.

Steve Davenport:

Sure I think there's another episode there in three or six months. So I appreciate everybody listening on the Skeptic's Guide and I appreciate our guest, james Thorne PhD. I always have something to think about after talking to you and I appreciate your insights on Canada and the US and all that you do for the investment public. I think everybody should follow you on LinkedIn and read some of your market commentators On Twitter as well.

James Thorne:

Dr J strategy and everybody. Make sure that we treat mothers great. This weekend it's Mother's Day weekend.

Steve Davenport:

Altus Wellington is looking to have you. Happy Mother's Day, everybody, and let's be good to each other, all right.

James Thorne:

Take care guys, bye-bye, bye.

People on this episode

Head Shot

Clem Miller, CFA

Co-host
Head Shot

Steve Davenport, CFA

Co-host

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