Larry McDonald Says the Paper Wealth Bubble Is Bursting and the Great Rotation Is Here

A market regime change is underway, and the warning signs are no longer subtle. In this Outlook 2026 special, Larry McDonald, founder of The Bear Traps Report, joins Kitco News Anchor Jeremy Szafron to explain why a credit accident has already begun—and why most investors are dangerously unprepared.

McDonald points to clear fractures in private credit, highlighting the collapse of the First Brands DIP loan, now trading in the 30s, and CoreWeave bonds yielding 12% as proof that underwriting discipline has failed. He warns that Wall Street’s promise of “quarterly liquidity” in private markets could become the next Lehman-style shock, trapping capital when investors rush for the exits.

The conversation also turns to geopolitics and policy, as McDonald outlines a new axis of power in Washington and explains why capital is poised to rotate out of the $32 trillion Nasdaq 100 and into what he calls the “bombed-out villages” of hard assets—including energy, copper, and coal.

McDonald closes with actionable deep-value trade ideas, breaking down opportunities in Diageo, Schlumberger, and Brazil, as investors reposition for a world defined by scarcity, inflation risk, and credit stress.

Recorded on December 15, 2025.

This Outlook 2026 segment is brought to you by Discovery Silver, combining high-quality gold production with one of the world’s largest undeveloped silver deposits.

Follow Jeremy Szafron on X: @JeremySzafron (https://twitter.com/JeremySzafron)
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Follow Larry McDonald on Twitter: @Convertbond (https://twitter.com/Convertbond)

00:00 – The Credit Accident & The Fed’s $200B "Bazooka"
02:15 – "Pure Madness": Restarting QE at Full Employment
05:30 – The "Shadow Fed": Fannie & Freddie Liquidity Up 25%
08:20 – The Private Credit Crisis: First Brands DIP & CoreWeave
13:30 – The "Quarterly Liquidity" Trap: The Next Lehman Moment?
16:20 – The Great Rotation: $32T Nasdaq vs. Commodities
18:30 – AI Valuation Absurdity: 34 Rio Tintos in 1 NVIDIA
22:00 – Deep Value: Why GM & Diageo Are "Tax Loss" Buys
24:30 – The $42 Billion Robotaxi Alcohol Thesis
27:00 – Natural Gas: The FCG ETF & Free Cash Flow Yields
33:00 – Bitcoin vs. Gold: When to Rotate?
36:00 – Oil Services: Schlumberger & The "Gulf of America"
37:45 – The Brazil Opportunity: 15% Real Rates

#KitcoNews #LarryMcDonald #Recession #Fed #Gold #Bitcoin #StockMarket #Outlook2026 #CreditCrisis #PrivateCredit
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