Tom welcomes back private trader and newsletter publisher Kevin Muir of "The Macro Tourist" to the show. Kevin discusses the concept of "rolling mini bubbles" in markets. These bubbles form when an asset class or theme gains popu…
Tom welcomes back private trader and newsletter publisher Kevin Muir of "The Macro Tourist" to the show. Kevin discusses the concept of "rolling mini bubbles" in markets. These bubbles form when an asset class or theme gains popularity among hedge funds, causing price increases based on perceived momentum rather than underlying value. Muir cited Tesla and the electric vehicle (EV) market as examples, noting that while these bubbles can inflate quickly, they also deflate rapidly.
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Muir suggested that certain stocks, particularly those related to EVs and artificial intelligence, are currently experiencing a bubble. He advised investors to focus on buying undervalued stocks and mentioned Japan as an area of potential value due to recent government actions benefiting the stock market. Muir also discussed the concept of reflexivity, introduced by George Soros, which suggests that investor actions can influence and be influenced by market performance, leading to more frequent and violent bubbles.
The interview touched on Canada's economy, with Muir arguing that it is not as strong as the US despite similar fiscal stimulus during COVID-19. He pointed out that America spent more overall, experienced a larger housing bubble burst in 2008 leading to deleveraging, and currently has lower consumer debt compared to Canada. These factors make Canada more sensitive to higher interest rates, which Muir predicts will negatively impact the Canadian economy.
Muir also discussed monetary stimulus, stating that it is less effective in changing behavior than fiscal stimulus. He suggested that recent inflation trends are partly due to a shift towards domestic production and increased labor bargaining power. Despite this, Muir noted that life may not necessarily b..
