The Reckoning Is Now Here & A Recession Comes Next | Jan van Eck

**Jan van Eck** (0:00)
So we've been talking about the fiscal reckoning for a year, and I think that still what's happening is we're in the middle of it. So the reckoning is here, and the bottom line is, is I think that the government will cut spending and or raise taxes by about 3% of GDP, and that's a big move, and that's causing austerity and it's causing downward pressure on equity markets.

**Adam Taggart** (0:34)
Welcome to Thoughtful Money. I'm its founder and your host, Adam Taggart. When markets are in turmoil as they are now, I often emphasize that the most useful people to interview are asset managers. Because they don't have the luxury of merely having an opinion on the road ahead, they have to commit capital to their convictions and be judged upon the results. Today, we've got the great fortune of having the return appearance of one of the most respected capital allocators in the business, Jan van Eck. Jan is CEO of van Eck, an asset management firm with over $100 billion in assets under management, invested across a wide family of ETFs and funds, spending equity, bonds, commodity, digital, and regional asset classes. As we've done the past several quarters now, Jan and I will spend the next hour discussing his latest macro and market outlooks, as well as where he sees the biggest opportunities for investors right now. Jan, thanks so much for joining us today.

**Jan van Eck** (1:28)
I can't wait to dive into it, Adam.

**Adam Taggart** (1:30)
Yeah, it's not like there's much to talk about, Jan, is it? No, a lot has happened. And right off the gate here, when you were on last time, I think I sort of asked you to assess the mood of the markets, and you had said cloudy. And I think that for all the reasons why you said that, they've certainly been validated since then. So congratulations on making a good call.

**Jan van Eck** (1:57)
Thank you. I got some of it right, some of it wrong. But I got the conclusion right, at least. Exactly.

**Adam Taggart** (2:02)
Well, hey, look, that's all that really matters at the end of the day. So we're talking not even quite yet, a week after Liberation Day, where President Trump really surprised everybody, not by putting tariffs on, as he said he was going to, but the calculations that he came up with and the severity of the quote-unquote reciprocal tariffs that he slapped on, pretty much every country out there, were much higher than many people expected, and the world is still reeling from that right now. So I guess I'd love just any opening words you have on how that may have changed the game here. And I know you have the past couple of times we've talked, you prepared a slide deck. When you're ready, let's just get straight into those. Yeah, sure.

**Jan van Eck** (2:48)
I mean, look, I think the summary is that, what we've been saying is that it's the first year after a presidential election, and every four years, that's when serious policy happens, fiscal policy primarily, and then the Fed reacts to that. And indeed, that's been happening. So we've been talking about the fiscal reckoning for a year. And I think that still what's happening is we're in the middle of it. So the reckoning is here. And the bottom line is, is I think that the government will cut spending and or raise taxes by about 3% of GDP. And that's a big move. And that's causing austerity and it's causing downward pressure on equity markets. So that's the kind of summary of the presentation. But what I would love to do in the short time that we have is go through the details because there's not a lot of information in the press, I think, about how we get to that number. And there are a lot of comments that I think need to be discounted. So I look forward to kind of sharing my analysis and getting your input and the input from listeners.

**Adam Taggart** (3:59)
All right. Well, look, let's not beat around the bush. Let's just roll up our sleeves and dive right in.

**Jan van Eck** (4:03)
Okay. So, title, In the Middle of the Reckoning. And I guess that's very resonant. So let's just talk about my conclusions. Again, taking a big picture perspective on the markets, the most important thing that's been happening is the profligate spending by the federal government. Last year, it was about 6.5% of GDP were the government deficits. And, you know, people were talking about the great America and America exceptionalism. And to me, that was just sort of a fake economy. And I mean that because it was because the government was stimulating so much. Of course, our growth was great. Of course, we didn't have a recession. Of course, interest rates stayed high. But we're switching paradigms. And that's really what I want to talk about. And I think we're switching paradigms in a major way. So that 3% of GDP cut means austerity, means recession. We also talk, of course, we have to talk about tariffs and how that reinforces my conclusion of my primary base outlook. And then van Eck believes that there are multi-year trends that investors can take advantage of. And the ones that we've talked about before, gold continues to be good. And we'll talk about Bitcoin. But we were a little cautious on India in the fourth quarter. And I think now that's more attractive. I'll explain why. And last summer, we were bearish on semis. And I think that now prices have fallen to attractive levels there. So I'll give you some data to chew on. So I hate repeating slides. And the colleague said I shouldn't do this. But I just think that when you have a multi-decade slide, this is the type of macro perspective that we at van Eck love. And again, this just shows in the green line, low unemployment, yet in the blue line, high government budget deficit. And what we used to call that, Adam, is two feet on the gas, right? And I think we're now taking both feet off, but let's get into the meat of that.