Transcription
Gold is not your safe haven if we have a major financial crisis here. The Treasury bonds of the US is going to be the safe haven as they were in 2008. Real estate will never be the same when we come out of this downturn. David, that is what's the worst thing for the economy. Most people don't own a lot of stocks. You'll see stocks down the S&P up to 50% within 3 months and the Nasdaq up to 60%. And it'll happen so fast. Then you'll panic and sell and then it'll bounce against that to say you're wrong and then it'll crash 80 to 90% in the next 2 years.
>> Harry Dent, founder of HS Dent, is back with us to give us his prediction for what's going to happen in 2026. He's calling this the biggest market bubble of all time. Now, he said this before on my show. Late last year, he called 2026 a year of a major market crash. So far, things are starting to roll over. Bitcoin's down from its top late last year. Gold's down from its top earlier this year. Three of the Mag 7 stocks are down year-to-date. So, what's going to happen next? How will this topping pattern continue? Harry's going to reveal to us the market indicators he he's looking at that will indicate to him when the market will top and he's going to tell us how far this correction will extend into next year.
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Now, there's a trade for the S&P 500 close by end of 2026. There's a 20% chance, 19% chance according to Kalshi traders, it will close between 7,800 points to 8,000 points. For reference, it's currently at 7483. Harry disagrees. Harry thinks that this is going to go the opposite direction and it's going to crash significantly. It's going to drag down the entire economy with it. Housing is going to crash. It's going to wipe out an entire generation of wealth. And the baby boomers wealth tied to housing, that's going to suffer first. So, let's take a listen to what Harry has to say.
Welcome back to the show, Harry. Good to see you.
>> Nice to be back, David.
>> Uh the everything bubble. You called this the everything bubble. You predicted an unprecedented crash. You've argued that the 16-year market bubble was artificially inflated by massive government stimulus. You've called for several leading indicators to show where the markets are headed, including Bitcoin, which is down more than 50% from its top. So, this market bubble, if you want to still call it a bubble, has been rolling over somewhat in the last couple of weeks with tech now leading the charge downward. The Nasdaq has now side gone sideways and consolidated around its top. And just earlier this week, uh South Korean's uh stock market index, dominated by semiconductors, fell 8% in a single day. Um there's some news that uh big meg seven stocks, including Meta, are now moving into less I guess chip-intensive industries like cloud computing. The point is, right now, the technicals don't look great for markets. Uh tell us what's going on and how this fits into your overall market thesis, what we're seeing right now.
>> Yeah, I mean, again, what what's really happening is there's two big things that drive the economy. Generational cycles of spending, which, David, are very simple. 46-year lag on the birth index adjusted for immigrants, which I can do accurately as well. Um and and and that said, oh, you know, the trends are down 2008 to 2022-23. This should have been more like the 1930s. But, the other important trend is innovation and technology cycles, and those are on a 45-year clock, not the 39-year clock like like the demographic cycle. So, that cycle finally peaked in 2020 and is now pointing down ever since. And that one keeps going down the most into 2032. So, so cycles are adverse for the first time since the early '80s. I mean, all cycles, but the bubble just has its own momentum, and the government has created the last part of this bubble since 2008 with $31 trillion of stimulus poured in, deficits, and money printing combined, and kept it going. And now I think we're at the point where the whole thing finally starts to crack. Now, we have to see signs of it. And And the best sign, and I've studied every bubble burst in history now in the last couple hundred years, and the first crash out of a bubble tends to be 50% in just two to four months. So, we If this bubble's getting ready to crack now, which I think on a great delay it is, we should see the markets go down very strongly into October or late this year. And And that's what I'm looking for now. So, whether you believe my thesis or not, it is a good time to be conservative until we see what happens because also there's a consistent 4-year cycle in stocks and the economy all the way back to 1900 that says into the fall of this year stocks should be down and the economy should slow a bit. Anyway, I'm just saying all it takes is a minor slow down to trigger a major bubble burst. And I cannot compare this bubble in length or size since 2009 to any bubble in history. So, it's not going to be a a good outcome when it does crash.
>> What triggered the bubble pop in 2000 and 2001 for the tech bubble? And what triggered in 2008? Uh just give us similarities here. We know what happened exactly, but just draw similarities from now to prior bubbles.
>> Yeah, that's a great question cuz there's two different things. In in in in early 2000 when the peak in the 78% Nasdaq crash in the 2002, that was simply overvaluation. The the tech just like today, the tech stocks went up so much that they just crashed of their own bubble and momentum. So, we now have that second tech bubble now, even more extreme, longer, but this time well, in 2007, the the trigger of the downturn was the the generational spending wave of the largest generation in the history, baby boomers, peaking and turning down on a simple 46-year lag to their birth index. So, so that was 2008 crisis. 2000-2002 was a tech bubble bursting. Now, we have a second tech bubble bursting, even more dramatic, um on top of all this. And so, a bigger bubble that should crash harder. And now that any bubble crash of this magnitude, I can tell you, David, from history, takes 2 and 1/2 to 3 years. That's the the least it ever happened, just like 29 to 32. That was 34 months from top to bottom, and 89% down for the Dow back then, which is more like the Nasdaq now.
>> But Harry, valuations for tech have been stretched for quite some time. It's the most richly valued sector. That's just the way it is and people have pointed out that just because something looks expensive, it doesn't mean the price can't continue to go up, right?
>> Right. Well, well, again, bubbles go up longer than people think, but but I'm What people don't get is when they do crash, they are murder. I'm just telling you. And then and this this is the longest, biggest bubble in history and now what I see is we have a 4-year cycle that has been very consistent that stocks just take a break. Stocks are typically down 10 to 20% every 4 years. Just like back in the in 2022 was the last simple 4-year correction. To me, with this bubble so hard pushed and now the government pulling back 2.7 trillion in the stimulus in the last year, just enough to to stop the endless momentum of the bubble, I think this is when you could get the first crash of a bubble and the first crash is always at least 50% for like the S&P 500 and 60% for like the Nasdaq, the leading edge stocks. And once we get that, I think it'll change everybody's perceptions and we'll go from there. But once you get that, I think we'll be down 90 to 95% as much as that in the next few years. If this thing falls apart and the government cannot react as fast and you got to admit, the government's been stimulating non-stop. $31 trillion poured into an average 20 trillion economy, one and a half times GDP they've thrown in over the last, you know, 16 years or so to keep the the economy David should have grown 7, 8% on that alone and it's been 2 to three percent and feeble. So so to me all you have to do be is be careful into this down four-year cycle. The most likely time for stocks to crash is always like July to October. See what happens here. If nothing happens here, then you know, maybe we just kind of coast sideways, but there's little upside for markets this overvalued and history is crystal clear on that. John Hussman and every other great indicator on this you know, so so at best we can't go up much more, but at worst we see the biggest crash since 29 to 32 in the next two to three years. So it just pays to be more conservative here. More out of stocks and be into the highest quality bonds, which are the US 10 and 30-year Treasury bonds. Those are the bonds that were the safe haven in 2008 and in the early 30s. Those are the bonds that will not default no matter what cuz they can print money if they have to.
>> But the let's talk about that. The 30-year yield already been rising ever since uh uh Warsh has taken the helm of the FOMC. Actually even before that. Inflation has
>> And that's not a good sign. That's a headwind That's a headwind for stocks.
>> Inflation expectations have been going up ever since the Iran war started. A lot of people have been shorting shorting bonds right now. Are you concerned that the bond yields will continue rising because of higher inflation expectations?
>> No, no, I'm I'm not. That the rising bond yields all of that is exactly what triggers the the stock market top. Stocks do better when bond yields are going down and are low. They it's a leverage to stock. Stocks are I mean David, I've studied the entire history of the stock market since the late 1790s, okay? Stocks have never been this overvalued this broadly, okay? Uh in 2000 and now are the highest valuations ever makes 1929 look like nothing. Okay? That's where we're at. All we need is a trigger here and then things start going slowing enough to unravel the unprecedented debt debt default even in good times. Once things get tough, they default like crazy. There has never been a debt bubble to even compare to this. So So all it takes is a trigger here cuz cuz the only thing different David this time than the roaring 20s or the 50s and 60s or past major long-term top is governments finally realized they had the power to stop a bubble from crashing. So they've kept this bubble going 16 more years. It should have peaked, you know, back in 2007 and again more so in 2020 and here it's still going up. So I'm just telling people if you want to stick with this market, fine, but you better have a quick trigger cuz when this thing burst, my prediction is you'll see stocks down the S&P up to 50% within 3 months and the Nasdaq up to 60% and it'll happen so fast, then you'll panic and sell and then it'll bounce against that to say you're wrong and then it'll crash 80 to 90% in the next 2 years if history has anything to say about this. Bubbles always burst and they always burst harder than any other upturns in history.
>> I'm curious [clears throat] to understand more about your demographics research. You've spent a lot of time researching how demographics affect market cycles and bubbles. Yeah. Here in Canada where I'm based, I'll give you an example. The population declined uh for the first time ever in the country's history. I think second year in a row. So the population is stalling due to higher deaths than births and lower immigration. And now we have a recession. A technical recession. The government doesn't want to admit it, but we have two quarters of negative GDP. And the whole world, the whole developed world is heading towards the same trend. Fewer births, more deaths, and uh fertility rates declining. What does that mean for the next 20 years?
>> Yeah, David, I mean, that that is the huge long-term trend. This has not ever happened before, okay? The leading countries in the world, the developed world, which is five times richer than the emerging world, okay? And all the population growth is in the emerging world, but the developed world is plateauing and actually starting to shrink, starting with Japan and South Korea. It's going to follow all throughout the developed world. This is the big trend. We are peaking long-term. But at the top of this peak, we're seeing high inflows. The The baby boomers caused the the major peaking growth in 2007 to peak, but their investment flows, as they're getting saving for investment, are only peaking recently in 2024. So So valuations in stocks keep going higher while the fundamental demographics in the developed world are are have been fading since 2007 and will more so uh in the in the next decade. So So that's the dynamic. Markets are And And when you look at that, markets are even more overvalued than they've ever been versus the fundamentals. And so it just means we have to have a bigger crash to get down to reality. So I know this doesn't sound, you know, people say, "Yeah, yeah, but the markets keep going up no matter what, and the government keeps supporting them." That The problem is the governments have supported markets too much. 31 trillion dollars, okay? In in stimulus since 2008. That's the only thing that's kept stocks going to new highs and the markets going up. And when they finally crash, and then people start to lose confidence, or the government's not fast enough to catch up, because they created this mantra. I call it this is a Frankenstein bubble of all time. The This is not Mr. Hyde, this is Frankenstein. They This is a totally artificial bubble. Most bubbles, like in the roaring '20s or the 1990s, are are are natural bubbles when the economy's so good, investors just get overexcited and overvalue. This is the opposite. The economy should have been a lot worse, and they blew it up artificially, totally with artificial stimulus. So, that's a much more dangerous bubble from my point of view.
>> Just on the demographics for the US, there's a trade on this on prediction markets. This is from Kaushik, the largest one in the US. Will any US state experience a population decrease of at least 10% between 2025 and 2035? 24% chance currently assigned. What does your research say about population growth in the US? I I guess a lot of it would come from immigration, if that's that's going to be the case.
>> Yes. Yes, we and the entire developed world would have no population growth without immigration for most countries, especially in the US has the greatest advantage, including longer term, because we attract the not only immigrants, but the best immigrants from around the world. So, that is our advantage, okay? And and and Japan has shown Japan peaked in their overall demographic trends. What I could My demographics are are taking the internal aging of the population plus the new immigrants coming in, and the peak in spending for the domestic population is 46, 47 for most countries, and the immigrants come in at 23 and come in late, but then just accelerate that, okay? But it But it's all predictable. And and it's all saying the entire developed world is peaking here, you know, with just a few exceptions like Australia because of huge immigration from from East from Asia and and Scandinavia, but those are small. The entire developed world is peaking here and slowing down as far as we can see.
>> Right. So
>> So there's there's there's nothing to keep us going. No secret, you know, okay, we can get over the next downturn, things will jump up to new highs. No, we're already at highs probably twice what it have been without all this stimulus in the last 16 years.
>> Does that does that change the wealth transfer thesis at all if immigration will continue to drive new wealth into the country and you know, the boomers are going to pass eventually and their wealth is going to go to I guess their offspring, but then who's going to be spending that money? Is it is it going to be the current generation or new generations of immigrants, you think?
>> Yeah, no, no, it it young people spend and then I know the exact numbers on this data is from the end of the workforce at 20 on average between 18 and 22 high school and college and they spend more into 46 47 depending on the country and but the more affluent people that go to college spend more into age 51 to 54. So so we can tell when people going to spend what what I've been saying David, the entire developed world is peaking. And that that happens. It happened to Rome. It happens to anybody in history. The more affluent you get the less babies people have. The more they get focused on their own standard of living and having kids is a detriment to that. Affluent people have less kids than less affluent. The the developed world's having way fewer kids than the emerging world and on and on and on. But but regardless of that, I since I study demographics, I can predict all of that. When the developed countries going to peak, when the emerging countries going to peak. India's not going to peak until 2050-55. That's the next China. They're going to urbanize like China more rapidly and drive the next global boom along with a lot of other emerging countries. But China's, David, is already done. They're the only emerging country because of their one-child policy for decades that does not have young people coming up to follow their peak and will keep declining. And they also have the highest debt levels compared to incomes of any country in the history because of their over-stimulus of their economy. They have 22% empty houses and and offices in China. They The for the next boom, if it ever happens at all, they don't need to build anything. So, how can you have a boom when real estate and investments and and infrastructures are the biggest part of GDP growth? So, this is This is a different world coming and nobody's going to see it until we have this crash. And as Warren Buffett sees, we see who's swimming naked.
>> India's GDP per capita is still around $2,800. It's It's still low relative to
>> Adjusted for purchasing power, it's it's much higher. But yes, much lower than China.
>> Yes. Why Why did India develop so late? And people would argue, "Well, if it hasn't done so already, if it hasn't industrialized, it probably never will. At least not for the foreseeable future." What do you say to that?
>> Yeah. Yeah, I say baloney. You know what China looked like in the early '80s? I had a I had a friend visit there and go into the interior and see the real people in in rural China. He His His description was growling, spitting pigs. He's been all around the world, sub-Saharan Africa, everywhere. And he was saying he's never seen lower life than that. That was China in the early '80s before they invested in infrastructures and before their demographics turned very positive, and all these things that they basically urbanized. You know, went from 20 to to to 70% urbanization that time. Urbanization is the biggest single driver globally around the world as countries urbanize and get into more specialized labor and larger markets, the the the GDP per capita triples, okay? The growth in that. So so urbanization is huge, and since 1920, the entire world's been urbanization urbanizing, and and India simply followed China, okay? And then after India, it's going to be sub-Saharan Africa into 21 20 to 2140. I can predict all of this today, David, abroad. Okay? So so this is no surprise to me. It it it's just that the the China has bubbled so much, India will be the huge beneficiary when the China bubbles burst and the world stops investing in China and says, "Oh, what's the next big thing?" David, there's only one other play, India. And Pakistan.
>> Going back to US markets, well, I guess global markets, Bitcoin. Um this is popular in India as well, and this is popular all around the world. But right now, the price has not shown popularity, like I mentioned in the introduction, it's down 50%. Now, you've used Bitcoin as leading indicator. This is a trade for actually, when will Bitcoin hit 150K? Nobody thinks it's going to hit 150K before January 2027, 4% chance, okay? Any other market talking inside of this?
>> with that. But but I think it's going to be in the 600 to million range, um 10 to 15 years from now. Bitcoin is the next big thing. It's not just a stupid-ass coin. It is the way to digitize the entire financial services and money part of the economy and that is five times the GDP, okay? GDP globally is 105 to 110 trillion. Financial assets are 630 to 650 trillion dollars. So, so, so that's what crypto is about. People don't understand it. Bitcoin doesn't make any sense. It has no value. No, Bitcoin is something that if it grows large enough and gets accepted, which it's rapidly doing and will continue for the next decade or two, will be the basis that the US dollar used to be for the entire global monetary system and it needs that. It needs an objective non-country system. So, so Bitcoin is an important thing that doesn't make sense until you see that it could be the and it is called that, the digital gold of the future and the global economy needs that. Um, so, so Bitcoin is going to crash. I've been [clears throat] predicting it's going to go down to at least 30,000 by the end of this year, maybe lower and then the next stop will probably be 250, then 500. So, I mean, it's it's going to be closer to a million dollars 10 to 15 years from now and then it will be big enough to be bigger than gold and and and to continue to grow with a digital economy instead of a material economy. Gold was the monetary standard for a a physical economy, material economy. Bitcoin's that for the digital economy.
>> Is this cycle that you're predicting for Bitcoin applicable to gold as well? Will crash and then it's going to go up much higher? So, here we have gold price at the end of the year.
>> Oh, gold gold has gone up with gold and silver have joined this bubble, okay? So have a few other things, okay? Recently. And so, that's that just shows what I'm saying. It's an everything bubble. This this bubble has so much strong momentum, it's going to pull everything into it before it peaks. So, the fact that gold and silver finally joined it. They were going up, but they weren't bubbling. Gold and silver joined, okay? Now, other things are joining in the last little stages here. This bubble is telling me it is ready to blow right about now. And when it does, it devalues all of this financial asset bubble and then forces us to get back to investing in innovation instead of speculation. And and and monetary velocity is the key indicator that tells you when bubbles are forming and when they're about to end. And money velocity has been dropping since 1997, right in the middle of the first tech bubble, and is now just turning up saying, "Okay, finally we can come out of this in the future." But but but but we have to have a crash to clear out this bubble cuz bubbles and assets are not productive. Investments going into things just cuz they're going up, not because they're productive. So, that's the opposite of what markets are supposed to do.
>> Gold price at end of year, traders predicting 52% chance above 4300. So, 50/50, it goes above where it's at now. Let's just take a look at what gold's done in prior gold cycle. So, let's take the GLD as a proxy, okay? And we have here let me just remove all these other other other things here. In 2011, right? In 2011, it's you know what? I'll use spot gold. In 2011, it's gone down about 50% since it's top all the way down to 2012, right? 50 43% in 20 from 2011 to 2013. Multi-year bottoming period. In 1980, that was an even bigger drop, uh, down about 70% depending on the peak, uh, where you start the peak. And now it's already come down about 30% from its 5,500 level earlier this year. I think you remember that day quite well. I I I want to ask you how this how this current market looks similar if different if not different than 2011 versus 1980.
>> First of all, if I looked at this chart and had no idea what it was, I'd say this is five perfect waves up and now the next low would be around 800 to 1,100 for gold right back at that 2015-16 bottom on your chart. In other words, see the three spikes? Okay, 1980, 2011 here. This is a perfect long-term and and and gold goes up on 30 and 60-year cycles along with the commodity complex says the next low would be back to the last low at 1,074 on your chart right here, give or take. That's I used to be saying gold's going to go down 40-50% and it'll look a lot better than stocks. No, that No, that says gold's going to be down 60-70%. So, gold is And I will stand on this prediction, folks. Gold is not your safe haven if we have a major financial crisis here because now and this this chart, I'm glad you brought it up. If that's not a bubble, this last wave from 2023 to 2026, I don't know what is. This bubble's going to burst. Gold is not going to be the safe haven. Uh, the Treasury bonds of the US is going to be the safe haven as they were in 2008.
>> So, Treasury bonds are going to be a safe haven, but what happens when the Fed raises interest rates? Will bonds still be the safe haven?
>> It doesn't matter what the Fed does. When the economy collapses, growth is going to go down so much in future projections that they're going to be projecting deflation or lower interest rates and lower inflation, not higher. So, the inflation bubble burst and that takes the burst out of the bond yield. So, bond yields, I'm telling you, I'm expecting a Treasury bond yield and we've already seen 0.4% so many years ago in the last downturn, 2008-2009. We're going to see Treasury bond yields go down to zero or lower. Because of the down of a major downturn and no growth and no inflation is finally going to be knocked out for good. This inflation, it was natural into the 1970s and early '80s. This inflation has only been caused by excess money stimulus and when that gets washed out, we're going to see zero inflation for the rest of our lives in the developed world.
>> What happens to the housing market this year when market rates continue to go up?
>> Well, that's only bad for the market.
>> affected?
>> Housing has bubbled now way worse than it did coming into early 2006. Nobody ever thought housing could go down much cuz it goes up forever and I was telling people, "No, this is a bubble in housing. We didn't have that in the roaring '20s or the '50s or any other boom in history." This time, housing is bubbled cuz of easy lending and housing crashed 34% just in general and more in the high-end sector. Housing's going to go down not as much as the stock market, but 50-60-70% and David, that is what's the worst thing for the economy. Most people don't own a lot of stocks. Most A lot of people, the great majority, own real estate and when their house goes down or their real estate investments on top of that go down, that's going to be something and and really I have a quote and look at all my past books in the last so many years, real estate will never be the same when we come out of this downturn, okay? Because real estate lasts forever, unlike stocks and other investments, and and basically is the baby boom dies out, there's going to be not enough investment to keep real estate will actually have negative net demand trends because baby boomers will start selling faster than millennials are buying, and that's never happened before in history, okay? Never ever real estate is not going to be your best long-term investment for the rest of most of our lifetimes, and I could get shot for that, but I'm telling you that's clear if you look at demographics.
>> Most of the baby boomers' wealth is tied to real estate, though, Harry.
>> Yes, it is. And of course, and then so they get smashed, they got benefited by their own boom in this whole in their whole cycle, but as they retire, which they've already done by 2024, 100% of baby boomers on average have retired, and then they start spinning down their retirement, you know, and then and then they die, and you know, I can tell you exactly when the last baby boomers going to die, 2040. End of 2040, they're going to the selling is going to drag real estate down more than any time in history, even though the millennials are still buying, but at slower levels. So, the the millennials are there's more millennials than baby boomers, but the magnitude of the generation is less, and the dying of the baby boomers is going to start offsetting the stimulus from the the the the the increased spending of millennials, and and we've never seen again, something we've never seen before, and if you don't if you don't study demographics, you would never see this coming.
>> So, finally, we've talked about the markets rolling over, and they already started to roll over for What other market topic signals are you seeing that will validate your crash thesis for into 20 the end of 2026?
>> Yeah, yeah. That great question and it's crystal clear. The first crash of most bubbles is 40 to 50% within two to four months. But if this thing is peaking now, which I think probably is happening. And again, this thing keeps stretching out. So, I've been a lot less definitive than I've been in the past. But if this thing's peaking now, which my best bet would be it is, we should see a sharp 40-50% crash in stocks by the end of this year. That would be the sign that this bubble's over and that even if the government's turn around and stimulate more, it'll be too little, too late because people start finally get fear. People feel like you can't lose by buying stocks or real estate. It's been like that in real estate forever. Now, it's like that in stocks. Once you shake that, then it's hard to unshake it. So, so that's what I'm looking for. That's the biggest sign. If that doesn't happen by the end of the year, then we'll probably move more sideways until something like that happens. But I think that's the best scenario that we do see an unexpected sharp crash into the end of this year, especially into October.
>> Thank you very much. Appreciate that, Harry. Where can we follow your work?
>> harrydent.com. I've got a I've got a paid newsletter, but I got a free newsletter. I send a weekly article to everybody for free. harrydent.com.
>> We'll put the links down below and we'll make sure that people follow Harry Dent in the links there if they want to read more of your newsletter and written work. Thank you so much, Harry, for coming back on the show. We appreciate your updates as always.
>> Thank you, David.
>> And thanks for watching. Don't forget to like and subscribe and don't forget to use my code LIN, L I N, when you sign up to Kaushi. Remember, new users who use my code can get $10 when you trade $10 for the first time. Link down below or scan the QR code here.