Cracks Beneath The Surface

Larry McDonald (Bear Traps Report) joins Episode 51 of @Benny_Squirrel . We chat about three structural inflation drivers: a $2 trillion AI/infrastructure CapEx boom, a $1.9 trillion fiscal deficit, and 72 days of straits closure rippling through supply chains. He warns that 8% inflation in Q3 is plausible, that markets are dangerously complacent due to recency bias around Trump deal-making, and that the Fed has limited tools to respond. Beneath the surface, multiple stress signals are flashing: record-narrow market breadth, CCC credit underperformance, consumer purchasing power destruction, and semiconductor supply chain fragility. He calls the pending SpaceX/OpenAI/Anthropic index inclusions "the scam of the century" and flags private credit/insurance companies as hidden bag holders. His positioning: long commodities, materials, industrials, and selective China equities; short the US consumer, broad index, and insurance names with private credit exposure.