New York Times’ bestselling author Larry McDonald, founder of The Bear Traps Report, returns to The Julia La Roche Show for episode 310. McDonald warns that a credit crisis has officially started with 16+ "idiosyncratic" events spreading tentacles across markets, while a big disruption is coming in Q1 as $6-8 trillion may leave the NASDAQ 100. But this creates an incredible opportunity for the cheap part of the market as the great rotation from growth to value begins, with coal and natural gas companies offering 15% free cash flow yields while tech giants burn cash in an AI arms race that's destroying their balance sheets. The market has internally crashed with the average S&P stock down 30-40%, but a handful of names are masking the carnage—and Larry reveals where the smart money is rotating.

This episode is brought to you by VanEck.

Learn more about the VanEck Rare Earth and Strategic Metals ETF: http://vaneck.com/REMXJulia

Links:

How To Listen When Markets Speak: https://www.amazon.com/Listen-When-Markets-Speak-Opportunities-ebook/dp/B0C4DFVFNR

Colossal Failure of Common Sense: https://www.amazon.com/Colossal-Failure-Common-Sense-Collapse/dp/B002IFLWMK

Twitter/X: https://twitter.com/Convertbond

Bear Traps Report: https://www.thebeartrapsreport.com/

0:00 Intro: Welcome back Larry McDonald, founder of The Bear Traps Report & author of "How to Listen When Markets Speak"

1:30 Credit bulls turning bearish

3:50 Credit most times leads equities

7:12 When does 'idiosyncratic' become systemic?

9:32 Opportunities for great stock buys

13:30 Nvidia

15:03 Dark side of passive investing

20:40 Set up for an incredible rotation from growth to value

22:00 Update on the hard asset thesis, commodity bull market

23:20 AI power trade

26:45 Banks buying Credit Default Swaps

29:20 A credit crisis has started

32:00 Parting thoughts

Chris Whalen, chairman of Whalen Global Advisors and author of The Institutional Risk Analyst blog, joins The Julia La Roche Show for "The Wrap with Chris Whalen." Whalen breaks down why markets are heading into a turbulent year-end. With the Treasury pulling $1 trillion out of the banking system and the Fed holding emergency meetings with dealers, a liquidity crunch is brewing just as big banks close their books after Thanksgiving. Chris explains why there won't be a December rate cut despite Fed happy talk, why the "silent crisis" in commercial real estate and private credit is spreading to insurance companies holding retail investors' annuities, and why public companies with Bitcoin exposure are about to report massive losses at year-end. Plus: the housing correction has officially begun as home price appreciation goes flat and GSEs start marking down property values.

Links:

The Institutional Risk Analyst: https://www.theinstitutionalriskanalyst.com/

The Wrap: Is it November 2018 All Over Again?: https://www.theinstitutionalriskanalyst.com/post/theira778

Inflated book (2nd edition): https://www.barnesandnoble.com/w/inflated-r-christopher-whalen/1146303673

Twitter/X: https://twitter.com/rcwhalen

Website: https://www.rcwhalen.com/

Timestamps:

0:00 Intro: Welcome back to The Wrap with Chris Whalen

0:41 No consensus for Fed cut in December

2:22 Why John Williams' "happy talk" doesn't matter

4:35 Treasury is the gorilla: $1 trillion drained from markets

4:58 Year-end liquidity crisis brewing

6:24 What that emergency Fed meeting was really all about

8:40 Bitcoin's ugly fall

14:45 Housing correction ahead?

27:04 What Chris Is Watching: Money markets and bank earnings

28:47 Commercial real estate & private credit pain

30:29 Where to find Chris and final thoughts

Danielle DiMartino Booth, CEO and Chief Strategist at QI Research, joins Julia La Roche to break down the FOMC minutes. Danielle discusses the deep divisions within the Federal Reserve and their controversial decision-making heading into December. She argues the Fed is willfully ignoring abundant alternative data sources like ADP's weekly reports while claiming to fly blind without official jobs data—data that won't be released until after their December meeting due to administrative delays. Booth warns that if the Fed doesn't cut rates in December, they risk triggering a liquidity crisis similar to December 2018, when Powell's hawkish stance caused a market bloodbath on Christmas Eve and forced him to reverse course.

This episode is brought to you by VanEck.

Learn more about the VanEck Rare Earth and Strategic Metals ETF: http://vaneck.com/REMXJulia

Links:

Danielle's Twitter/X: https://twitter.com/dimartinobooth

Substack: https://dimartinobooth.substack.com/

YouTube: https://www.youtube.com/@DanielleDiMartinoBoothQI

Fed Up: https://www.amazon.com/Fed-Up-Insiders-Federal-Reserve/dp/0735211655

Timestamps:

0:00 - Introduction & post-FOMC reaction

0:27 - Deep divisions within the Federal Reserve

1:47 - Fed's tone deafness on inflation concerns

2:05 - Politics at the Federal Open Market Committee

3:32 - Alternative data sources: ADP & jobless claims

5:38 - The irony: administration's self-inflicted rate cut problem

6:51 - ADP data: what Powell said vs. what the Fed does

7:32 - Market reaction & Nvidia's impact

8:13 - Should the Fed cut rates in December?

9:39 - Powell's contacts: the willful blindness problem

10:12 - Fed independence vs. politicization

11:28 - The damage of playing politics with monetary policy

13:51 - Treasury yields & market concerns

17:38 - Debt servicing crisis & political implications

26:54 - Private credit & private equity discussions

27:30 - Liquidity crisis warning: emergency rate cut risk

28:44 - Question for Powell?

29:27 - Why an emergency cut may be necessary

31:52 - Closing thoughts