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 become worse for the middle class, as higher wages and job security could offset inflation's impact.

Muir talked about the price of gold being driven up by speculators on the margins, with mining companies unable to profit from the increased gold price. He predicted that miners would be the next rolling mini bubble but was uncertain what would drive this expansion. Muir invited listeners to visit his website and Substack for more information on his perspectives on the gold market.

Time Stamp References:
0:00 - Introduction
0:33 - Rolling Mini Bubbles
4:18 - Chip Manufacturing
8:03 - Demand & Rising Price
9:52 - Bubbles & Risky Trades
11:12 - Japanese Value Stocks
16:04 - Monetary & Fiscal Stimulus
25:40 - Spending Canada Vs. U.S.
30:40 - Fiscal Dominance Era
38:23 - Fiscal Spending & Inflation
43:52 - Wags, Inflation & Gold
51:15 - Eastern Gold Holdings
54:04 - The Golden Endgame
58:28 - Performance of Miners
1:00:00 - Wrap Up

Talking Points From This Episode
- "Rolling mini bubbles" form quickly in markets when popular themes gain traction among hedge funds, but deflate rapidly.
- Canada's economy may suffer from higher interest rates due to greater sensitivity compared to the US.
- Gold prices are driven up by speculators, while mining companies struggle to profit from the increased price.

Guest Links:
Twitter:   / kevinmuir  
Website: https://themacrotourist.com
Substack: https://posts.themacrotourist.com
Podcast: https://markethuddle.com/
Email for Sample Letters: [email protected]

Kevin Muir started as an institutional equity derivative trader for a big Canadian bank in the 1990s. In 2000, Kevin decided that bank-life wasn't for him, so he traded his own account for the next two decades. Along the way, he started writing the MacroTourist newsletter, which he describes as an "almost daily" letter about the markets that still manages to have fun. The MacroTourist newsletter attempts to bring a unique take on a variety of different financial topics. Kevin's tagline is, "All I Bring to the Party is 25 Years of Mistakes."

Kevin Muir is a CFA and a graduate of the University of Toronto economics program.

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