David Hunter’s Dire Warning: A Final Melt-Up Before the Global Deflationary Superstorm

The world may be standing at the edge of a historic financial event. Legendary macro strategist David Hunter, Chief Market Strategist at Contrarian Macro Advisors, believes the global economy is racing toward a final, explosive melt-up in asset prices - followed by an unprecedented, catastrophic bust.

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After five decades on Wall Street, Hunter’s message isn’t just another bearish call. On our latest Podcast he lays out a plan to help investors survive the extremes of human nature, monetary failure, and systemic collapse. And if he's right, most are woefully unprepared for what’s coming. After the final melt-up, Hunter argues central banks will be slow to act.

Liquidity Will Disappear When You Need It Most

   "At the time when you're going to need liquidity more than you ever needed it... it won't be there."

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Liquidity is the lifeblood of modern financial markets. When it’s abundant, asset prices rise effortlessly. But when it dries up, markets can fall into a death spiral.

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Hunter warns that in the coming collapse, liquidity will vanish precisely when it's needed most. History provides a chilling guide: in 2008, interbank lending froze almost overnight after Lehman Brothers collapsed. Today, the risks are even greater. U.S. margin debt, after briefly dipping in 2023, has soared back near record highs, standing at over $775 billion in March of 2025 according to FINRA.

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The bond market shows similar fragility. Primary dealers, who traditionally serve as liquidity providers in U.S. Treasuries, now account for a shrinking share of market activity. Non-bank institutions and foreign players dominate, meaning that when fear strikes, orderly trading could collapse in a matter of hours.

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Simply put: in a system addicted to leverage and fast money, liquidity won't just shrink. It will evaporate.

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The Central Banks Will Fold and Print Money Under Pressure

   "They're telling you now, 'we're going to be disciplined... we're going to be like Paul Volcker.' They won't. I guarantee you."

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Central bankers today project confidence. They vow to "stay higher for longer" on interest rates and to defeat inflation once and for all.

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Hunter isn't buying it. He believes that when the real storm hits, their discipline will crumble almost instantly - just as it did in 2008 and 2020. Recall: after a brief period of quantitative tightening, the Federal Reserve unleashed $3 trillion in liquidity within just months to stave off financial collapse.

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Today, the stakes are even higher. Global debt-to-GDP ratios have exploded past 336% (IMF, April 2025)—an all-time high. U.S. government debt service costs alone have surpassed $1 trillion annually, according to the CBO. Politicians and voters alike have grown addicted to cheap credit. Hunter believes the political pressure to "save the system" will be overwhelming—and central banks will fold.

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A Global Bust Far Worse Than 2008

"This isn't going to be just another recession. It's going to be a deflationary bust—bigger than anything we've seen in our lifetimes."

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Many market participants expect a mild recession—a "soft landing." Hunter believes they are catastrophically wrong.

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After the rise to new market highs, he predicts a global deflationary bust that dwarfs anything seen since the 1930s. An 80% collapse in the S&P 500, massive corporate bankruptcies, sovereign debt crises—nothing is off the table.

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In the private credit market alone, leveraged loans outstanding now exceed $1.7 trillion (S&P Global Market Intelligence), a record high. These shadow lenders operate without the regulatory safeguards of traditional banks, heightening systemic risk.

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In past downturns, governments could stimulate demand. But now, with aging populations, broken supply chains, and political gridlock, the usual playbook may fail spectacularly. Hunter warns this time could be different—and far worse.

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But First: A Final Melt-Up

   "Before we see the bust... markets are going to rip higher in one last melt-up."

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Paradoxically, before the collapse, Hunter expects a breathtaking rally—a final euphoric surge that traps the last skeptics.

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He believes the S&P 500 could roar to 8,000, the NASDAQ to 27,000, and gold to $4,000/oz. Already, the seeds are sprouting: despite mounting economic headwinds.

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Meanwhile, gold prices have touched new all-time highs above $3,400/oz—a potential early sign that investors are hedging against monetary debasement amidst growing fears the world is slipping into recession.

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Even corporate junk bonds are rallying, with CCC-rated debt spreads tightening—a classic warning that risk appetite is blinding investors at precisely the wrong time.

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Hunter sees this as the final stage of denial: the moment when greed overwhelms caution.

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Human Nature Never Changes: Greed Becomes Fear

   "Markets always overshoot—both on the upside and the downside—because human nature never changes."

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At the core of Hunter’s thesis lies an immutable truth: markets are not rational calculators. They are emotional amplifiers of fear and greed.

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The latest AAII Investor Sentiment Survey (April 2025) shows 58% of retail investors are bullish—the highest reading since early 2022, just before a major selloff.

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Similarly, the CNN Fear & Greed Index has hovered in "Extreme Greed" territory for weeks.

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Hunter argues that these sentiment extremes signal one thing: the rubber band is stretched taut. When it snaps, the reversal will be savage.

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How to Prepare: Preserve, Then Grow

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Hunter’s message isn’t purely doom and gloom. It’s a strategic warning, with a few silver linings.

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First comes preservation: raise cash, lower leverage, and own hard assets like gold. During deflationary crises, those holding liquidity and real stores of value historically emerge strongest. Hunter believes gold will get sold off, but that the US dollar and Treasuries will emerge as the true safe haven.

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Gold, in particular, shines when trust in paper assets crumbles. After an initial selloff during the 2008 crisis, gold rebounded sharply, outperforming stocks, bonds, and real estate over the next several years. Paramount to Hunter's thesis is an inflationary commodity-led boom that will take everything from copper to oil and silver to all-time highs.

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The Final Melt-Up Before the Superstorm

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David Hunter’s forecast isn’t easy to digest. It challenges the narratives of endless liquidity, central bank omnipotence, and soft landings. After the initial melt-up to new all time highs, the Global Bust will usher in a 12-18 month period of harsh recession. Afterwards copious amounts of government stimulus and soaring money supply will send many assets and commodities through the roof, before a more drawn out deflationary cycle that sweeps away decades of financial excesses.