00:00I know it's hard to read too much into a single day, but you take a look at the reaction
00:04to that print that we got at 830 this morning.
00:07The S&P 500, it initially popped. It opened much higher. Those gains have faded.
00:11But then you take a look at the bond market really holding its move.
00:15You saw that sell-off yield spiked up, and they pretty much stayed there, Ed.
00:19Well, the bond market's actually been remarkably quiet for quite some time here with all the commotion that's been coming
00:27out of Washington,
00:28out of the global economy. Japanese bond yields have been soaring,
00:32and yet our bond market's been just kind of sitting there around 4.2%.
00:38And I think it's basically still doing that.
00:41I think there are investors who've made a lot of money in the stock market
00:46and are rebalancing into the bond market, rebalancing into gold.
00:51So I think that's how you can explain how the stock market can go up.
00:54And yet the bond yield doesn't go up, and gold continues to move higher.
01:02Put it all together, and I think investors are of the opinion that the economy is in good shape,
01:10notwithstanding the sluggish pace of hiring, that it is based on productivity,
01:15and that technology, particularly AI, is making a difference in terms of boosting productivity.
01:23Right now, what we're seeing in the stock market is sort of everybody's scrambling for AI immunity.
01:30It's kind of ironic.
01:32After ChatGPT was introduced back in 2022,
01:36everybody was scrambling for the AI trade to go along to Magnificent Seven and other technology companies.
01:42Now they're trying to figure out, okay, what can I buy that isn't going to be threatened by AI technology?
01:50I really like that phrase, scrambling for AI immunity.
01:52I'm going to steal that one, Dr. Ed.
01:54So you mentioned the rebalancing and rebalancing into other asset classes beyond equities,
02:00and you mentioned gold as part of that.
02:02Gold is back to gaining once again after taking a big, big tumble from those highs that we saw in
02:07late January.
02:09How much more of that rebalancing do we need to see?
02:13I mean, is this something where we're kind of two-thirds of the way through, a third of the way
02:16through?
02:17Well, I think this goes on for a while because it much will depend on what happens in the global
02:23stock markets
02:24and in the U.S. stock market.
02:26You know, my base case scenario is a very optimistic one in which I think that we're already about six
02:32years into the roaring 2020s,
02:35so this is the seventh year of the roaring 2020s.
02:38I think by the end of the decade, and I'm assuming no recession, we had a lot of fears of
02:44recession since the beginning of the decade.
02:47I wasn't in that camp, and even now it's clear to me that given the resilience of the economy,
02:53if we have no recession, I think the stock market could be discounting something like $500 a share
02:59at the beginning of the next decade by the end of 2029.
03:04Multiply that by 20, you get $10,000 on the S&P 500.
03:08If that optimistic scenario works out, I think rebalancing into bonds and into gold
03:15will get the price of gold up to possibly as high as $10,000 per ounce.
03:21Hmm.
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