MacroVoices #536 Larry Mcdonald: The Migration is Upon us

Larry McDonald frames the current equity market as a replay of Q4 2021, when the NASDAQ was in what he calls a transitory inflation trance before losing 7 to 8 trillion dollars in valuation through 2022. As of June 10, 2026, the S&P 500 is down 379 basis points week over week at 5272.67 and testing its 50-day moving average, while gold is down 748 basis points to 4133 and WTI crude is down 624 basis points to 90.03. The NASDAQ 100 moved from 30 trillion in late March to 41 trillion in under 50 trading days, a move McDonald says has no historical precedent, and he draws a direct parallel to the move from 19 trillion in Q4 2021 to 12 trillion in Q4 2022.

The IPO pipeline is central to McDonald's stress thesis. SpaceX alone represents approximately 6 percent of US GDP, dwarfing Facebook's 2012 IPO at under 1 percent and Saudi Aramco's record 25 billion dollar raise. Combined with Google's roughly 80 billion dollar secondary and raises from Anthropic and OpenAI, immediate capital demand totals 200 to 250 billion dollars. Eric Townsend adds that insider and VC lockup expirations could release approximately 3 trillion dollars of restricted shares by end of 2027, with SpaceX shares unlocking around December 2026. McDonald notes Facebook fell 40 to 50 percent in its first year once lockups expired and argues SpaceX could be bought 50 percent cheaper within a year of its IPO. The S&P 500 has significantly underperformed the equal-weight index in the last 10 days because the largest most liquid stocks are the easiest to sell, and Mag-7 stocks have been net negative since October as investors liquidate large-caps to fund IPO allocations.

Super core CPI is running at 3.7 percent, already above the prior decade high of 3 percent, and annualizing the last three months produces a 5.2 percent rate by year end. McDonald predicts headline inflation reaches 5 to 6 percent and potentially 6 to 8 percent within a year, driven by 100 days of Strait of Hormuz closure and AI capital expenditure. The federal deficit is running at 1.9 trillion dollars and interest on US debt is 1.1 trillion dollars over the next 12 months, compared to 300 billion when the last hiking cycle began in 2021, which McDonald says makes meaningful Fed rate hikes structurally impossible despite market muscle memory pricing them in. He favors the two-year to thirty-year yield curve steepener trade and cites IVOL as one expression of it, viewing current curve flattening as a facade given the debt interest burden.

McDonald's macro framework is a great migration from financial assets and large-cap tech into hard assets, driven by elevated inflation and a multipolar world. He predicts a colossal growth-to-value rotation given 41 trillion dollars concentrated in NASDAQ 100 growth stocks at near all-time high CAPE and PE ratios, while energy and materials offer the cheapest free cash flow yields in the market. Healthcare has declined from 16 percent to 8 percent of the S&P 500 despite an aging baby boomer population controlling approximately 79 trillion dollars of wealth, and McDonald predicts a large rotation out of semiconductors into healthcare in the second half of the year. He specifically names Intuitive Surgical as trading on its 200-week moving average and describes it as a screaming buy. Oil services companies Weatherford and SLB are highlighted as significant outperformers, with SLB's AI potential described as one of the most exciting investments in the market today.

On gold, the flush of hot money began around March 2 coinciding with the Iran conflict, inverting the usual geopolitical hedge correlation. Rising front-end Treasury yields are pulling capital away from gold, rate cut expectations have shifted toward a potential hike, and emerging market central banks including those in the Middle East have been selling gold to raise cash. Despite the selloff McDonald predicts gold reaches 6,500 dollars an ounce within one year. He highlights Agnico Eagle at 5.9 times enterprise value to EBITDA, approximately 40 percent off and near its cheapest valuation in 20 to 30 years, with 6 to 7 billion dollars of free cash flow and 2 billion dollars of buybacks underway, estimating 10 to 15 percent downside versus 200 percent upside. His service is buying gold miners only in thirds and quarters given uncertainty about further weakness.

On uranium, McDonald and Townsend flag a major supply and demand imbalance expected between 2027 and 2029, compounded by production timeline overruns of one to two years and brain drain from uranium mining into Bitcoin mining and AI. Contract buyers conditioned by a decade-long bear market must step up purchases within 12 to 18 months but have no futures market to hedge through. The stated strategy is to hold SRUUF through volatility and rotate into miners such as URNM or NUKZ only after a significant drawdown, given that uranium miners fell 30 to 45 percent during the 2024 trade war and yen carry trade blowup. Townsend is not in any rush to add to uranium positions and does not believe the time has arrived yet.

Trapped natural gas in Canada and Texas is framed as the next AI play given data center energy demand, with approximately 800 to 1000 data centers expected globally over five years representing 5 trillion dollars of spending.