Ben Brey of Capital Misallocation and the 🐿️ with Kevin Muir - Live broadcast recorded at 7pm EST on Thursday 11th December.
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Pod Summary
Introduction & Canadian Politics
Discussion begins with Kevin’s “fantastic call” on Canadian politics, specifically regarding Mark Carney and Pierre Poilievre. Kevin argued that Donald Trump’s intervention united Canadians and pushed the country toward a pro-business environment, regardless of the election outcome.
Mark Carney’s influence is described as a “lurch to the right” that is even more pro-business than Poilievre, stabilizing the government and quietly securing energy deals.
Canadian Economy & Energy (Minute 5
Kevin believes Canada is on its best economic footing in decades, driven by a stable government and a commodities bull market. Canadian energy stocks are highlighted as long-life assets managed by a stable partner (Canada) compared to the geopolitical risks of Russia or Saudi Arabia.
Trump’s tariffs (e.g., aluminum) are viewed as a blessing in disguise, forcing Canada to diversify its trade partners and build infrastructure (pipelines) rather than selling resources to the US at a discount.
A comparison of fiscal deficits notes that while the US runs massive deficits (7% to GDP), Canada and Europe were previously too conservative (2-2.5%), hampering growth until recently.
Currency Markets (Minute 17)
The discussion turns to the Canadian Dollar (CAD). Kevin shifted from a bear to a bull on Canadian resources, noting the chart looks similar to the 2001/2002 cycle where low currency and low oil preceded a massive boom.
Kevin analyzes the US Dollar (USD), noting that for a decade, European pension funds used US stocks as a volatility dampener (stocks down, USD up).
This correlation broke down recently (”Liberation Day”), where US stocks, bonds, and the dollar fell simultaneously, forcing international investors to start hedging their USD exposure.
Kevin argues the USD going sideways despite massive AI-driven capital inflows is a sign of underlying weakness. He predicts the dollar will fall when the tech bubble corrects.
Bonds & Inflation (Minute 36)
Kevin, formerly a “Kodiak bear” on bonds, has moved to a neutral stance. He no longer shorts them but prefers long inflation breakevens over nominal bonds.
Benny identifies as a “gigantic bond bull,” arguing that the bond market is smaller than people realize and underinvested.
Mag 7, AI Bubble & Market Valuation (Minute 45)
Discussion on the “Mag 7” stocks: Kevin highlights a divergence where free cash flow is dropping while EPS rises, driven by massive capital spending on AI infrastructure.
Kevin warns of extreme concentration risk, with 40% of the S&P 500 in the top 10 names. He predicts a 33-50% correction in these leaders.
Institutional investors are starting to cut equity allocations due to concentration risk, whereas retail investors have the advantage of not being forced to chase the benchmark.
See you on Sunday night at 7pm EST!
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