Market Crash Or Buying Opportunity? Economist Answers | Jim Thorne

NVIDIA

Across the shows: 108 speakers in other episodes, 91 bullish and 62 bearish calls, past 30 days

• Jim Thorne · Wellington-Altus Private WealthBullish

  Jensen Huang scandal is a board problem; Nvidia's CUDA moat and GPU demand remain intact.

  Jim says the question is whether the affair story changes Nvidia's earnings power, GPU supply and demand, or its lead. He thinks it doesn't. The real issue is the board: Huang may or may not be replaced. CUDA gives Nvidia a large technological lead and moat. He concedes Nvidia could lose some orders, but he doesn't expect a meaningful earnings hit and sees excess demand for GPUs. He expects the stock to sit in the penalty box for a while before the noise clears.

  “I look at this not as a fundamental problem, it's a board problem. ... it doesn't affect the fact ... that Nvidia has a huge technological lead and their moat is CUDA.”at 11:41

Bitcoin

Across the shows: 24 speakers in other episodes, 20 bullish and 7 bearish calls, past 30 days

• Jim Thorne · Wellington-Altus Private WealthBullish

  Bitcoin's pullback to its rising 200-day average is normal; he would buy here.

  Jim reads the crypto move as a normal, healthy pullback after a significant rally, grinding back to the 200-day moving average. That average has turned from a negative slope to a positive one, so he expects the next phase to be strong. He calls Bitcoin an uncorrelated asset, since it is being whipsawed by people while its underlying thesis is intact. He points to the financial industry moving on-chain, tokenization and the GENIUS Act as ongoing drivers, and says he'd be buying rather than shaken out.

  “I am suggesting to people that the pullback to the two hundred day is normal and I wouldn't be shaken out of it. I would be buying here.”at 30:04

AI infrastructure & data centers

• Jim Thorne · Wellington-Altus Private Wealth

  Hyperscalers become free-cash-flow positive sooner as near-term capex slows, making them very interesting.

  Jim expects capital discipline among hyperscalers to reduce their near-term capex, even as data centers continue to be built. Because capex is lower, these companies should turn free-cash-flow positive sooner. He says investors should shift from the AI bottleneck trade (power, memory, GPUs) toward the hyperscalers and toward companies that use AI to raise margins. He calls hyperscalers 'very interesting' for that reason, while adding that the AI bottleneck trade is still fine.

  “what we're going to get is the hyperscalers are not going to have to spend as much CapEx in the near term, which means they're going to become free cash flow positive sooner.”at 6:09

• Jim Thorne · Wellington-Altus Private Wealth

  Capex discipline and financing limits will sort winners from losers without ending the data center buildout.

  Jim argues that hyperscalers' capex has been running ahead of free cash flow, and that some have relied on outside financing, such as Microsoft's 20-year paper at 6% and Meta's expected long-dated bond issuance. He thinks this separates high-quality hyperscalers, which will still get the capital they need, from low-quality data center players, which will not be financed. He expects US capex of roughly $1.0–1.5 trillion for 2027 and 2028 and says the cycle is being pushed out past 2030. Capex discipline also means more compute scarcity, and 100% tax deductibility for capex is locked in until January 2031. He sees the near-term volatility as upsetting but a natural evolutionary process.

  “I think what this does, David, is it basically separates the winners from the losers and the high quality hyperscalers are going to get the capital that they need. So I'm not really concerned about that.”at 8:14

• Jim Thorne · Wellington-Altus Private Wealth

  Democratic control won't stop data center buildout; capital will shift to friendlier states like Texas, Florida, Alabama.

  Jim says he doesn't see the Democratic midterm wins stopping data center construction. He cites the Texas governor saying approved plans will be good to go for 2027 and 2028. He adds that if Texas became more like California, capital would move to Florida, Alabama or other friendly states. He also says data centers are good for economic growth and that the open question is whether they will be required to pay for their own electricity.

  “I don't know why everybody got their knickers in the knot, so to speak, when the Democrats got elected.”at 23:43

US stock market outlook

• Jim Thorne · Wellington-Altus Private Wealth

  S&P 500 reaches 8,000 by year-end and 10,000 in 2027 on $450 earnings, 4% 10-year and 22x multiple.

  Jim says his 8,000 year-end target is unchanged despite the tech selloff, framing the decline as a process of bottoming rather than a break. His 2027 case is 10,000 on the S&P 500, built on roughly $450 of earnings, a 10-year Treasury yield falling to 4%, and a 22x multiple. He argues the AI trade's liquidation is one part of a broader rotation, so index gains should come from breadth rather than only from tech.

  “target for 8,000 by the end of the year hasn't changed. ... My number for '27, I still think we hit 10,000 on the S and P with $450 of earnings.”at 5:13

• Jim Thorne · Wellington-Altus Private Wealth

  Cyclical sectors, equal-weight S&P, banks and small-cap value should outperform as the AI trade contracts.

  Jim says his earlier call before the tech liquidation was to lean into cyclical areas: equal-weight S&P 500, banks, small-cap value and the old Wilshire 4500. He argues the AI trade is contracting while the rest of the market's breadth expands, because cyclical parts of the US economy have not participated in the AI rally. He still holds this view, though he expects a violent tech bounce over two to three weeks, so he advises trimming overweight tech into that bounce and adding to cyclicals.

  “my call had been before the liquidation trade in tech was you wanted to lean into the cyclical areas... I think that still is the case”at 30:27

Market sentiment, positioning & volatility

• Jim Thorne · Wellington-Altus Private Wealth

  The AI selloff was hedge-fund liquidation, so expect a violent near-term tech bounce and trimming.

  Jim describes the Nasdaq and AI-trade drop as a liquidation trade, in which hedge funds that were overextended got forced out. He calls the selloff a process of bottoming rather than a fundamental break. Because technology is extremely oversold, he expects a violent bounce over the next two to three weeks. He advises investors who are excessively overweight tech to trim into that bounce and add to cyclicals, and those already balanced to hold.

  “I look at the, what happened with the NASDAQ and the AI trades as a liquidation trade, where some hedge funds got over their skis and we got liquidated.”at 5:24

Oil & fuels

• Jim Thorne · Wellington-Altus Private Wealth

  Ending the Iran war would drop energy, gasoline and tanker rates, removing the energy shock.

  Jim argues the energy shock is the core driver of the rate and inflation picture, and that it is caused by the Iran war. He says ending the war would make energy and gasoline drop significantly and bring tanker rates down. He notes tanker rates and insurance costs add a substantial amount to oil prices, so that cost would fall too. He thinks this shock 'drops like a stone' once the war ends, which would remove the reason for the Fed to raise rates.

  “we've got to end the Iran war. And if you end the Iran war, you're going to start to see energy drop significantly, gasoline drop significantly. And also you're going to see tanker rates drop.”at 15:49

US Treasuries & yields

• Jim Thorne · Wellington-Altus Private Wealth

  The 10-year yield falls to 4% as the oil shock fades, normalizing the curve.

  Jim says the 10-year yield is following oil, and that his call is for it to fall to about 4% once energy prices drop. He wants the curve normalized to where it was before the Iran crisis, with a typical 80 to 100 basis point spread to the 2-year. With a 4% 10-year, the 2-year would be about 3%, and because the Fed follows the 2-year, that would force cuts. He notes the 10-year is currently near 4.9%, so the call requires a large move down.

  “if the ten year goes to 4%, which is what my call is, then historically the spread between the tens and the twos somewhere between 80 to a 100 basis points.”at 16:27

US rates & the Fed

• Jim Thorne · Wellington-Altus Private Wealth

  Fed hiking is an energy-shock mistake; it should go one-and-done, then cut toward 3% by end-2027.

  Jim argues the Fed has been anchoring on headline inflation, which is distorted by energy. He says the Fed's excessive rate hikes have been buckling interest-rate-sensitive sectors outside AI, and that the neutral rate for cyclical sectors is much lower than the current policy rate. Once energy falls, there is no reason to raise rates. He uses the 2007–2008 analogy: the Fed hikes once into an energy shock, then cuts. With the 2-year leading the Fed, he expects cuts to about 3% by the end of next year.

  “the two year leads the fed and the fed should be cutting down to 3% by the end of next year.”at 16:39

Tariffs & trade policy

• Jim Thorne · Wellington-Altus Private Wealth

  Trump's tariffs will persist, since reversing them would need a law the president can veto.

  Jim argues the Democrats cannot easily reverse the president's trade actions. Doing so would require Congress to pass a law saying the president doesn't control trade, and the president has veto power. He expects the core supply-side policies, and the tariffs that support re-industrialization, to stay in place, with a moderate Democratic economic platform in 2028. He sees midterm political noise as less important than these policies' persistence.

  “if they're going to want to reverse what the president is doing, they basically have to pass a law that says that the president doesn't control trade, rightly or wrongly. And remember the president has veto power.”at 18:21

US inflation

• Jim Thorne · Wellington-Altus Private Wealth

  War-driven base effects roll off by May, sending CPI sharply lower and PCE and CPI to 2% by Q2.

  Jim says the base effects from the war, which began to kick in around this time last year, roll off by about May of next year. That makes CPI and PCE drop sharply year over year. He cites falling gasoline prices in Toronto, from $1.85 to $1.50 a liter, as evidence that headline inflation is retreating. He argues the Fed has been wrongly anchored to headline inflation, and that the energy shock is a negative supply shock that will drop away.

  “the base effects of this war that really started to kick in this time last year roll off by about May of next year... we could easily see PCE and CPI get to 2% in the second quarter”at 20:12

US deficit & government debt

• Jim Thorne · Wellington-Altus Private Wealth

  Supply-side growth can outgrow US debt, as in the 1950s and 60s, escaping secular stagnation.

  Jim says he uses the 1950s and 60s as a roadmap: America grew out of its post-World War II debt, with debt-to-GDP falling from about 125% to about 35% by the mid-1970s. He sees the same path now through supply-side policy, including Eisenhower-style infrastructure, data center buildout and re-industrialization behind tariffs. He cites Fed Chair Warsh saying the US is escaping secular stagnation, and argues that strong productivity growth allows growth to outrun the debt if inflation stays low.

  “I'm anchoring off of the fifties and the sixties coming out of World War II when we grew, that was the time period of time that I'm suggesting that America grew out of the debt crisis”at 24:41

AI bubble & tech valuations

• Jim Thorne · Wellington-Altus Private Wealth

  Today's AI and tech valuations are nothing like the 1990s bubble, so bubble fears are overstated.

  Jim says people forget how much wealth the stock market and the Internet trade created in the 1990s. He argues that people who think the market is in an AI bubble now are comparing it to something much smaller than the 1990s episode. He links strong asset-price appreciation to economic growth, saying it also helps close the deficit. He presents this as one reason to stay invested rather than to fear a crash.

  “those that think that we're in a bubble now, it's nothing compared to what it was like in the 1990s.”at 27:09

Banks

• Jim Thorne · Wellington-Altus Private Wealth

  Money-center banks embracing AI and crypto could re-rate above tangible book, lifting the S&P toward 14,000.

  Jim says the sector he watches most is money-center banks, and how fast they adopt AI and blockchain/crypto. If they do, he argues they could trade at a higher multiple of tangible book than they do now. He ties that re-rating to a 14,000 S&P 500 by the end of the decade. He sees the financial sector as the place where these two technological themes will show up in earnings, so it is what investors should watch.

  “There is an argument that if they embrace AI and crypto that, you know, they could be trading at a multiple of tangible book, which is much higher than it is right now.”at 32:45

US housing

• Jim Thorne · Wellington-Altus Private Wealth

  Housing is in recession and most rate-sensitive; now is the time to start looking at real estate.

  Jim says real estate is the sector most sensitive to central bank rate cuts and hikes. He argues policymakers know it is in recession and that rates need to come down to help it. He says the Fed has been stymied by the president's Iran action pushing up energy and rates. If the narrative shifts and oil falls, rate cuts would follow, so real estate is at a point where investors should start looking, since 'everybody hates it.'

  “right now is the time to be starting to kick tires in real estate. Everybody hates it.”at 34:32