Dowd explains, "We had two scenarios when we talked last.  One was the conflict would get resolved in the April – May time frame.  Oil would peak out around $125 (per barrel), and inflation would peak out in May and go lower.  That's what happened, but recently, MOU (Memorandum of Understanding with Iran) has been torn up and oil is back on the rise.  Oil collapsed to around the low $70s to high $60s after the MOU.  It's now $80 and change.  So, unless this is resolved quickly, the other scenario is on the table. . ..  If the conflict continues and gets worse, and you want to watch it progress, if we break out technically, meaningfully to $100 to $125, and back test and hold support, then the next level is $200 to $250 a barrel.  All we are talking about here is my thesis that we are going into a global recession, and it gets pulled forward that much quicker.  We will have a burst of inflation and massive demand destruction."

The Iran/US war is not the only headwind Dowd sees.  AI (artificial intelligence) investment is in bubble territory according to Dowd, and the lights are about to go out on that trade.  Dowd says, "The stock market is 45% AI and AI adjacent.  When the equity market figures out the party may be slowing or it's over, that will affect the stock market.  It's a feedback loop that I think is beginning.  Let's call it the AI summer of discontent. . .. Closing time is closer than most people think.  The party has been going on for a while.  We had this huge impulse in semiconductor stocks in April and May.  The indices have 17% to 19% of the S&P 500, the semiconductor index.  That is a warning sign in and of itself.  This is a notoriously cyclical boom and bust industry. . .. There is inflation going on in this . . . AI build.  All the projections of return on investment are going the way of the dodo bird because they are now paying exorbitant prices for commodity memory chips.  Also, power costs are going up, and they have to build power plants.  The whole math does not work with the AI infrastructure in the credit driven AI complex.  So, the math kind of implodes on itself at some point. . .. I think the party is closer to the end than the beginning, and closing time will be upon us soon."

When the AI bubble pops, Dowd expect a "nasty pullback in the stock market."  This is why Dowd is telling investors to raise cash levels just like famed investor Warren Buffett is doing by holding record amounts of cash in his fund.  Dowd says, "Cash is dry powder."  And for those who think the US dollar is going to tank, Dowd thinks just the opposite and says, "The dollar looks quite bullish."

Dowd still likes gold as a core asset, and his target price is unchanged at $10,000 per ounce in the next few years.