Bond Market To 'Revolt' As Fiscal Disaster Nears | Doug Ramsey

Watch on YouTube ↗  |  April 18, 2025 at 23:39  |  28:01  |  The David Lin Report
Speakers
Doug Ramsey — CIO, The Leuthold Group

Summary

Doug Ramsey, CIO of The Leuthold Group, argues the U.S. economy is likely entering recession and that the recent market decline is the start of a cyclical bear market rather than a buyable correction. He warns that unsustainable fiscal deficits could trigger a bond market revolt, expects the dollar to weaken as the Fed cuts rates, and sees gold supported by currency debasement. Ramsey is defensively positioned with low net equity exposure, favors multi-cap valuation over the S&P 500, and recommends defensive sectors over cyclicals.

  • Doug Ramsey says the economic expansion is likely ending and recession risk is high.
  • He views the market decline as a cyclical bear market, not a buyable correction.
  • Ramsey warns 7% deficit spending and no spending cuts could cause a bond market revolt.
  • He attributes dollar weakness to expected Fed rate cuts despite fiscal deficits.
  • Gold is highlighted as a beneficiary of currency debasement and large deficits.
  • Leuthold is defensively positioned with about 42% net equity exposure.
  • He favors broad multi-cap equities and defensive sectors over the expensive S&P 500 and cyclicals.
  • He mentions the Leuthold Grizzly Fund as a short-selling hedge vehicle.
Ideas
Doug Ramsey CIO, The Leuthold Group 0:51
Cyclical bear market, recession, S&P below 4000.
Ramsey believes the economic expansion is ending and the market decline is the first leg of a cyclical bear market, not a buyable correction. Job growth has slowed to stall-speed levels, manufacturing is contracting, and tariffs are an external shock that could accelerate a recession. He also notes the S&P 500 is expensive at about 19x forward earnings, and a typical recessionary bear market bottom near 14x would imply an S&P 500 below 4,000.
SPY HIGH
Doug Ramsey CIO, The Leuthold Group 15:01
Fiscal deficits risk bond market revolt.
Ramsey warns that unsustainable fiscal policy—running a 7% of GDP deficit near full employment with no meaningful spending cuts—could cause the bond market to revolt if the Fed cuts rates. He attributes the recent Treasury selloff more to fiscal indiscipline than tariffs and expects long-end yields to face upward pressure.
TLT HIGH
Doug Ramsey CIO, The Leuthold Group 15:01
Fiscal deficits risk bond market revolt.
Ramsey warns that unsustainable fiscal policy—running a 7% of GDP deficit near full employment with no meaningful spending cuts—could cause the bond market to revolt if the Fed cuts rates. He attributes the recent Treasury selloff more to fiscal indiscipline than tariffs and expects long-end yields to face upward pressure.
10-Year Treasury Yield HIGH
Doug Ramsey CIO, The Leuthold Group 19:00
Currency debasement supports gold prices.
Ramsey highlights that gold and the S&P 500 have risen by similar amounts from the March 2020 low, suggesting much of the gain in asset prices has come from currency debasement. With large deficits and fiscal excess, gold is supported as a hedge against the declining currency.
GLD MED
Doug Ramsey CIO, The Leuthold Group 20:33
Dollar weakens on expected Fed cuts.
Ramsey attributes dollar weakness to investors anticipating Fed rate cuts despite escalating deficit spending. He says the flow data are delayed and hard to read, but his best guess is that expected easing, not reserve-currency loss, is driving the dollar lower.
DXY MED
Doug Ramsey CIO, The Leuthold Group 23:05
Grizzly fund hedges high-beta equity exposure.
Ramsey says Leuthold's in-house short-selling strategy, the Leuthold Grizzly Fund, is used to implement asset allocation hedges, and he notes it can serve as a permanent small portfolio hedge for managers running high-beta equity strategies.
GRZZX MED
Doug Ramsey CIO, The Leuthold Group 23:43
Multi-cap median stocks look undervalued.
Ramsey says the broad multi-cap equity universe, including the Leuthold 3000, is far more attractive than the S&P 500. The median stock in that 3,000-stock universe is borderline undervalued, whereas the S&P 500 remains expensive at about 19x forward earnings.
US multi-cap equities MED
Doug Ramsey CIO, The Leuthold Group 26:17
Favor defensives over cyclicals in recession.
Ramsey uses a cyclical-over-defensive S&P 500 ratio that broke to a 52-week low after the yield curve inversion, which he treats as a recession signal. He says health care, utilities, and consumer staples are classic recession hiding places, while consumer discretionary, industrials, and materials are the vulnerable cyclical side.
Defensive sectors (healthcare, utilities, consumer staples) MED
Doug Ramsey CIO, The Leuthold Group 26:17
Favor defensives over cyclicals in recession.
Ramsey uses a cyclical-over-defensive S&P 500 ratio that broke to a 52-week low after the yield curve inversion, which he treats as a recession signal. He says health care, utilities, and consumer staples are classic recession hiding places, while consumer discretionary, industrials, and materials are the vulnerable cyclical side.
Cyclical sectors (consumer discretionary, industrials, materials) MED
Up Next
1:28:53
Is This The End of Steady Lads?
Steady Lads Podcast · Apr 18
36:50
Global Recession Now Inevitable? Oil Will Collapse, Here's How Low | Doomberg
The David Lin Report · Apr 18
26:53
Trump Raises China Tariffs To 245%: What Will Retaliation Look Like? | Thomas Hoenig
The David Lin Report · Apr 17
10:08
Is Bitcoin A Safe Haven?
1000x Podcast · Apr 17
34:47
Bond Market Breaking? The Warning No One Is Talking About | DoubleLine's Bill Campbell
The David Lin Report · Apr 16

This The David Lin Report video, published April 18, 2025, features Doug Ramsey discussing SPY, TLT, 10-Year Treasury Yield, GLD, DXY, GRZZX, US multi-cap equities, Defensive sectors (healthcare, utilities, consumer staples), Cyclical sectors (consumer discretionary, industrials, materials). 9 trade ideas extracted by AI with direction and confidence scoring.

Speakers: Doug Ramsey  · Tickers: SPY, TLT, 10-Year Treasury Yield, GLD, DXY, GRZZX, US multi-cap equities, Defensive sectors (healthcare, utilities, consumer staples), Cyclical sectors (consumer discretionary, industrials, materials)