0:07

This is Macro Voices, the

0:09

free weekly financial podcast targeting

0:11

professional finance, high net worth

0:13

individuals, family offices and other

0:16

sophisticated investors. Macro Voices is

0:18

all about the brightest minds

0:20

in the world of finance

0:22

and macroeconomics telling it like

0:24

it is. Bullish or bearish.

0:27

No holds barred. Now, here

0:29

are your hosts. Eric Townsend

0:31

and Patrick Sorezna. Macro

0:35

Voices episode 470 was produced

0:37

on March 6th 2025. I'm

0:40

Eric Townsend. Robobanks, Michael Avery

0:42

returns as this week's feature

0:44

interview guest. We thought Michael's advice

0:46

to take President Trump seriously, but

0:48

not necessarily, literally, proved to be

0:51

quite prescient. So we asked him

0:53

back to comment on this week's

0:55

overwhelming news flow on so many

0:58

fronts, from Trump and Zelenski's Oval

1:00

Office antics, to Canada and Mexico

1:02

tariffs, to four significant executive orders

1:05

from President Trump, to crypto, to

1:07

the U.S. sovereign wealth fund, to

1:09

the explosion of populism around the

1:12

globe, to where we stand with

1:14

China. And I'm Patrick Sorezna with

1:16

the macro scoreboard week over

1:18

week as of the close

1:21

of Wednesday March 5th 2025.

1:23

The S&P 500 index down

1:25

191 basis points trading at

1:27

5842. So far all the

1:29

buy-on dips have been falling

1:31

flat. We'll take a closer

1:33

look at that chart. and

1:35

the key technical levels to

1:38

watch in the post-game segment.

1:40

The US dollar index down

1:42

207 basis points trading out

1:44

10427 the biggest three-day drop

1:46

we've seen in over a

1:48

year. The April WTO contract

1:51

down 337 basis points now

1:53

trading at 6631 now testing

1:55

the 52-week lows. The April

1:58

Arbob gasoline down 200 basis

2:00

points trading at 214

2:02

the April gold contract

2:04

down 14 basis points

2:06

trading at 2926 copper

2:08

up 551 basis points

2:10

trading at 479 new

2:12

breakout on copper but

2:15

will it break out

2:17

above last month's highs

2:19

Ugranium down 139 basis

2:21

points trading at 6405.

2:23

The U.S. Tenure Treasury

2:25

yield up 1 basis

2:27

point training at 431.

2:29

And the key news

2:31

to watch this Friday

2:33

are the jobs numbers.

2:35

And next week we

2:37

have the CPI and

2:39

PPI inflation numbers and

2:41

the Bank of Canada

2:43

monetary policy statement. This

2:45

week's feature interview guest

2:47

is Rabel Banks, Michael

2:49

Avery. Eric and Michael

2:51

discuss Ukraine. Trump's diplomacy.

2:53

Tariffs, China and more.

2:55

Eric's interview with Michael

2:57

Avery is coming up

2:59

as Macro Voices right

3:01

here at macrovoices.com. And

3:03

now with this week's

3:06

special guest here's your

3:08

host Eric Townsend. Joining

3:11

me now is Michael every global

3:13

strategist on economics and markets for

3:15

Robobank Michael you're back kind of

3:17

early we don't normally have someone

3:19

back just six weeks after your

3:21

first appearance on macro voices where

3:23

you were super popular we had

3:25

another guest booked this week who

3:27

had to back out when we

3:29

went to look for a backup

3:31

guest I just thought wow as

3:33

much as it's only been six

3:35

weeks your comment when you were

3:37

on before saying Take President Trump

3:39

very seriously, but not always literally.

3:41

Prove to be so prescient. It

3:43

just seemed like such a fit

3:45

this week. Michael, what the heck

3:47

just happened in the Oval Office?

3:49

What's the real agenda? What's going

3:51

on here? How do we make

3:53

sense of this news flow around

3:55

Zalenski and Trump and the falling

3:57

out? Where is this all headed?

3:59

What does it mean? How do

4:01

we sort it out? Great question.

4:03

Good to be back. And I

4:05

have to say, let's be honest,

4:07

that's six weeks, feels like six

4:09

months or six years. In terms

4:11

of the news flow that we've

4:13

seen and the sheer exhaustion that

4:15

I think we're all feeling. So

4:17

there's a lot to unpack there.

4:19

Should we start with Zelenski? Let's

4:21

do it. Okay, so I mean

4:23

there are so many different ways

4:25

that you can look at that

4:27

you can look at that. of

4:29

it from different sides. Clearly what

4:31

we saw on that fateful Friday

4:33

in the White House was a

4:35

diplomatic failure of historic proportions at

4:37

the very very highest level. That's

4:39

not how diplomacy is supposed to

4:41

be done in public. I can

4:43

assure you that's how a lot

4:45

of diplomacy is done when the

4:47

cameras are turned off, but that

4:49

we should never have been done

4:51

like that. And you can blame

4:53

Trump, some people have, you can

4:55

blame Zelenski, and I personally think

4:57

far more of it. since Winsolenski

4:59

he didn't realize where he was

5:01

and the audience he had and

5:03

you know he was using a

5:05

lot of the same rhetorical tricks

5:08

that go down well in Europe

5:10

and do not work in America

5:12

but you know the long and

5:14

the short of it is that

5:16

trust was already not there and

5:18

it blew up but I think

5:20

the greater likelihood is and the

5:22

way things are moving by the

5:24

time people are listening to Ukraine

5:26

to add extra pressure on top.

5:28

There really aren't many good options

5:30

for Ukraine other than signing that

5:32

minerals deal, which is what blew

5:34

everything up on Friday, and then

5:36

proceeding to try and flesh out

5:38

what does or doesn't constitute some

5:40

kind of security guarantee of sorts

5:42

afterwards, because it's not going to

5:44

happen the other way around. Europe

5:46

isn't really in a position practically

5:48

to do it. America has said

5:50

it won't do it. No one

5:52

else will. and so it's really

5:54

that on nothing so i expect

5:56

we will return to that and

5:58

i think zilenski you know much

6:00

humbled even if he doesn't do

6:02

it in person will end up

6:04

signing let's talk Talk about the

6:06

mineral deal and what it actually

6:08

means itself because President Trump repeated

6:10

the exact same phrase at least

6:12

a dozen times. Raw Earth Minerals.

6:14

R.A.W. Earth minerals. Now I've been

6:16

trading commodities for a while. I've

6:18

never heard of a raw Earth

6:20

mineral. A lot of people talk

6:22

about rare earth elements, things like

6:24

neodenium and so forth. The thing

6:26

is, Javier Blass, very well-respected commodities

6:28

journalist from Bloomberg, has been very,

6:30

very vocal saying, hey, Ukraine doesn't

6:32

have any substantial reserves of any

6:34

of those. Certainly not $500 billion

6:36

worth. this doesn't make any sense.

6:38

And then I've seen some other

6:40

communications where they've talked about these

6:42

raw earth minerals, such as nickel

6:44

copper and lithium. Last I knew

6:46

those were all base metals. And

6:48

they even mentioned crude oil. So

6:50

what is this mean? It's not

6:52

really raw minerals. Is it just

6:54

they want a slice of any

6:56

natural resource in Ukraine that that

6:58

might have value? What's really going

7:00

on here? Well again, this comes

7:02

back to the seriously, but not

7:04

literally thing. Those who understand this

7:06

situation from a different angle to

7:08

the geology side, which is very

7:10

accurate that you're bringing up there,

7:12

see it like this, the deal

7:14

was, and if it's signed, will

7:16

be, a fig leaf. There aren't

7:18

$500 billion worth of those particular

7:20

resources, however you want to define

7:22

them in Ukraine. And the amount

7:24

of time it would take to

7:26

develop them and get your money

7:28

back on that, even if it

7:30

were true. is just ridiculous in

7:32

terms of any kind of future

7:34

that Donald Trump is interested in.

7:36

So that in itself doesn't really

7:38

mean anything, but what it does

7:41

do is tick boxes for Trump,

7:43

because first of all, if anyone

7:45

hadn't spotted, you know, this is

7:47

abundantly clear, he wants out of

7:49

this war, because it is a

7:51

major... distraction for the US and

7:53

a drain on resources militarily at

7:55

a time when it wants to

7:57

be pivoting 100% to Asia. We've

7:59

heard the same thing from previous

8:01

presidents and nothing happened on that

8:03

front and he definitely wants to

8:05

do it. That's one point. And

8:07

secondly, and we can discuss this

8:09

maybe in a moment as a

8:11

sidebar, he would like to try

8:13

and achieve some kind of detente

8:15

with Putin if he can because

8:17

he thinks just maybe he can

8:19

do an inverse Nixon. Nixon of

8:21

course went to China after the

8:23

Sino-Soviet split. And it's been a

8:25

logical strategy for the US to

8:27

pursue for a long time to

8:29

try and break off Russia from

8:31

China. Now I don't think that

8:33

will work, but I can understand

8:35

why he would like to try

8:37

it. So he wants to end

8:39

the war quickly, and to do

8:41

that, he's obviously just trying to

8:43

get a ceasefire in place, just

8:45

as starters, and then avoid having

8:47

this security commitment, I mean, Salenski

8:49

was pushing him for and pushing

8:51

him for on the Friday, when

8:53

everything blew up. Because if they

8:55

do do that, effectively you've extended

8:57

the equivalent of NATO article 5

8:59

membership to Ukraine, without Ukraine even

9:01

joining NATO, that if Russia attacks

9:03

Ukraine, we will step in. Which

9:05

is how NATO is supposed to

9:07

work. So they could never really

9:09

do that. And even Europe itself,

9:11

I think, is going to find

9:13

it difficult to actually come to

9:15

do that when push comes to

9:17

shove. So what this was was

9:19

an attempt to try and buy

9:21

time, get everything to just calm

9:23

down for a while. which, you

9:25

know, suits Russia in terms of

9:27

their war economy as overheating and

9:29

it suits Ukraine to a certain

9:31

degree, suits Europe to a degree,

9:33

and certainly suits the US, and

9:35

then just dangle this prospect of

9:37

some kind of economic integration between

9:39

Ukraine and the United States, which

9:41

is incredibly ambiguous in terms of

9:43

what would actually mean, as if

9:45

it's some kind of security guarantee

9:47

that, you know, Vladimir Putin would

9:49

never consider breaching in the future,

9:51

because... At least on that basis,

9:53

Trump would not be repeating what

9:55

past presidents did. in Iraq and

9:57

in Afghanistan where you spend trillions

9:59

of dollars, occupy the place for

10:01

years and walk away with absolutely

10:03

nothing. That's not how real, real

10:05

politic works. If you're doing economic

10:07

statecraft from a real politic perspective

10:09

and you're there involved militarily, you

10:11

want to get paid for it.

10:14

There needs to be some economic

10:16

upside, not just a strategic upside

10:18

in terms of the military dimension.

10:20

There needs to be some money

10:22

flowing from it. this was a

10:24

fig leaf I believe that maybe

10:26

you know some people's imaginations was

10:28

a real cash cow. I doubt

10:30

that's the case but you know

10:32

I could be wrong but at

10:34

least would provide the fig leaf

10:36

for then a basis for a

10:38

ceasefire and potentially discussions about what

10:40

security guarantees could mean but the

10:42

more people look at the deal

10:44

and point out how silly it

10:46

is the less likely that is

10:48

to happen. and the more Zilenski

10:50

is kept saying, well no I

10:52

want security I want security that

10:54

it's likely that is to happen.

10:56

So in some respects from a

10:58

US perspective it was like the

11:00

best short-term deal that was possible.

11:02

Michael let's keep things rolling as much

11:05

as there's a lot to talk about

11:07

in Ukraine. There's also so much more

11:09

news though and I should mention to

11:11

our listeners this was recorded early on

11:14

Tuesday morning who knows what will have

11:16

happened in the two days between now

11:18

and when you hear this but as

11:21

of this moment the next big piece

11:23

of news is when everybody thought Canada

11:25

and Mexico tariffs were going to be

11:27

one of these things that you know

11:30

every 30 days they get renewed and

11:32

we're working toward a deal. President Trump

11:34

at least as of recording time of

11:37

recording time. has said, nope, not gonna

11:39

waive them this time, they go into

11:41

effect. I think it's midnight tonight, or

11:43

perhaps it was midnight last night, I'm

11:46

not sure, Michael, you can fill us

11:48

in. What's going on? Why has it

11:50

suddenly turned from a threat to it's

11:52

really happening? Is it really happening, or

11:55

is it just a bigger threat? What's

11:57

going on here? Okay, this is a

11:59

really, really crucial point, because the 20%

12:02

tariffs on China are happening. negative order

12:04

there has been signed. That's real, that's

12:06

in the bag. The 25% 10% for

12:08

energy from Canada and from Mexico, Trump

12:11

verbally yesterday said, you know, we're still

12:13

set to go and it's too late

12:15

for any negotiations. That's purely verbal. You

12:18

know, nothing was surprised if there was

12:20

a sudden pivot there. And why it's

12:22

critical is not just because this would

12:24

be very damaging to the Canadian-Mexican and

12:27

even US economy if it were to

12:29

occur. But because it's a pivot point

12:31

for the overall US grand strategy, or

12:33

what I call the US grand macro

12:36

strategy, because bear in mind, Trump has

12:38

already floated that there could be a

12:40

tariff exception for Australia, which is a

12:43

US defense ally in the Asia Pacific.

12:45

He's floated that there could be some

12:47

kind of trade deal with the UK,

12:49

despite the fact that on paper he

12:52

shouldn't get along with a British Prime

12:54

Minister at all. And certainly... JD Vans

12:56

probably wouldn't. And so you say, okay,

12:59

there are potential exceptions being made here,

13:01

although China is getting a 20%. Our

13:03

exception is going to be made for

13:05

Canada and Mexico if they give some

13:08

kind of quid pro quo. And Mexico

13:10

has suggested, crucially, that if it were

13:12

to match external tariffs on China, in

13:15

other words, it will do on China,

13:17

what the US is doing, could it

13:19

then avoid the US tariff? itself. And

13:21

there have been US figures including the

13:24

Treasury Secretary percent who said, yes, that

13:26

makes sense. So I don't know if

13:28

Trump's already made up his mind and

13:30

they're going to press ahead anyway, but

13:33

it makes much more statecraft sense to

13:35

not have a tariff on Canada and

13:37

Mexico, except maybe in certain sectors which

13:40

are deemed to be national security, but

13:42

generally not. But to have a joint

13:44

North American external tariff against China... So

13:46

that effectively the USMCA is a closed

13:49

loop. on that front, similar to how

13:51

the European Union works with its joint

13:53

external tariff. And that makes sense if

13:56

you then try and bolt on the

13:58

UK and bolt on Australia and you

14:00

start to see the foundations for a

14:02

North America plus defence allies, the UK

14:05

and Australia both being in the Orcus

14:07

grouping, which Trump when he was asked

14:09

by a journalist, you know, didn't know

14:11

what it was referring to, but I

14:14

think he just misunderstood the question. As

14:16

a front against China. But if it

14:18

is going to be 25% against Mexico

14:21

and Canada with no exceptions, and they

14:23

are not taken off again, you know,

14:25

within days or weeks, before the real

14:27

damage starts, then we're looking at a

14:30

completely different grand strategy of basically the

14:32

US alone against everybody, at which point,

14:34

yeah. It's incredibly volatile for markets if

14:37

that happens. I'm not saying it's not

14:39

volatile if we have a group against

14:41

China. That's also incredibly volatile, but at

14:43

least it's the framework you can understand.

14:46

If it's the US against all, it's

14:48

far more complex and chaotic. Let's go

14:50

a little deeper on that subject of

14:53

volatility and markets, because that's what our

14:55

listeners care about. Normally, when we talk

14:57

about how you trade this or how

14:59

you trade that, it seems like what's

15:02

going on here as President Trump is

15:04

intentionally trying to... create kind of a

15:06

reputation for himself. You never know what

15:08

I really mean until you find out.

15:11

That's not something that's easy to trade.

15:13

So I mean, is it straddles and

15:15

vol plays here? What do you do

15:18

to try to navigate a situation where

15:20

literally, I don't think you or I,

15:22

Michael, have any idea whether or not

15:24

Canada or Mexico tariffs are still going

15:27

to be a big issue. Just 48

15:29

hours from our recording time when our

15:31

listeners hear this. totally forgotten or it'll

15:34

be a huge big news deal and

15:36

it's impossible to tell. That's very very

15:38

difficult. Sure and look there are three

15:40

ways to play it. First of all

15:43

you don't play and that's valid where

15:45

you can afford not to. Secondly as

15:47

you correctly said straddle and vol and

15:49

basically just try and do your best

15:52

to ride it out with tight stops

15:54

on everything where you can, hedge where

15:56

you can. And the last one, and

15:59

you know I'm going back to talk

16:01

my own book here, is to say

16:03

do both of those and alongside that

16:05

try and look at what makes real

16:08

strategic sense here from the US perspective.

16:10

And I would still put it to

16:12

you that whilst America can do okay

16:15

in the long run without Mexico, without

16:17

Canada, it's an enormously stronger force versus

16:19

China with those two economies bolted on.

16:21

and with Australia bolted on, and with

16:24

the UK bolted on, you know, for

16:26

all the problems that every one of

16:28

those economies have, jointly, you know, with

16:31

some internal reforms. That's quite the economic

16:33

beast. So in that respect, the one

16:35

thing Trump can't do is look wimpy

16:37

on tariffs at this stage, because they

16:40

haven't even gone on yet against these,

16:42

you know, purported allies and trade partners.

16:44

But it would make far more sense

16:46

to scare the hell out of everybody.

16:49

let people think that he really is

16:51

serious and even maybe go ahead with

16:53

it briefly just to have them feel

16:56

the pain for a couple of days

16:58

and that people think wow he's really

17:00

serious and then take them off only

17:02

if then the quid pro quo as

17:05

I said is that he builds this

17:07

bigger block for a larger strategic purpose

17:09

so if you're thinking strategically and you

17:12

can be out of the game where

17:14

you can do and you can hedge

17:16

your volatility risk as well I think

17:18

that's the most logical way to do

17:21

it. Okay, picking up on what you

17:23

said about understanding the US strategy and

17:25

kind of trading around that, I want

17:27

to go over some executive orders that

17:30

have come out and help us interpret

17:32

not just what the order means, but

17:34

what it's going to mean for markets

17:37

and how you would trade it. Let's

17:39

start with this America-first investment strategy, executive

17:41

order. What's going on here? That one

17:43

was huge, absolutely huge, and there are

17:46

so many of them coming out. and

17:48

the detail in them can be quite

17:50

nitty gritty. I completely get why many

17:53

people in markets just start to be,

17:55

you know, punch drunk and don't pay

17:57

attention, but that one was absolutely huge.

17:59

I mean, there are many details. in

18:02

it, but the juiciest ones were that

18:04

effectively Cipheus, so the foreign investment screening

18:06

board that's always been there in the

18:09

US, is now going to make sure

18:11

that China cannot have any say or

18:13

investment in a whole swathe of the

18:15

US economy, including agricultural land, technology, infrastructure,

18:18

you're out. And if you are a

18:20

China front man, you're also out. Leading

18:22

back to the point I was just

18:24

making about maybe having a larger view

18:27

than a different strategy, at the same

18:29

time it was made clear if you

18:31

go on the US green list by

18:34

absolutely separating your supply chain and technology

18:36

chain from China, then you get fast

18:38

track FDI approval. So you have a

18:40

two-tier system. If you're China, you're out.

18:43

If you're a front man for China,

18:45

you're out. If you're nothing to do

18:47

with China, you're straight in. With hardly

18:50

any paperwork. So that in itself is

18:52

huge. And the secondary element of the

18:54

executive order was to do everything that's

18:56

possible to try and dissuade American capital

18:59

from investing in the Chinese military. Now,

19:01

of course, you can't do that directly

19:03

anyway, but China has what's called a

19:05

civilian military fusion where every civilian company

19:08

has to cooperate with the state and

19:10

with the military if they're asked to.

19:12

So there isn't really a differentiation between

19:15

the two. It's, you know, it's a

19:17

polite fiction. So effectively, if America wants

19:19

to, it can interpret that executive order

19:21

to say, you just can't buy Chinese

19:24

stocks. And it's ironically just as Chinese

19:26

tech shares have gone through the roof.

19:28

So that's now there as well. And

19:31

above and beyond that, one other little

19:33

morsel, there was a list of countries

19:35

who were put down as adversaries of

19:37

America that need to be watched. And

19:40

Hong Kong was on the list. So

19:42

I mean, that's not a complete surprise

19:44

to anyone who's seen the changes there

19:47

over the past few years. But to

19:49

have that in black and white. That's

19:51

huge. And as I said that absolutely

19:53

that absolutely speaks to, that absolutely speaks

19:56

to. In principle, the framework of saying,

19:58

be in team America. and

20:00

you get fast-track approval. Don't be in

20:02

team America and your name is on

20:05

all this, you're not getting in a

20:07

talk. Michael, let's move on to the

20:09

next executive order. What the heck is

20:11

meant by USTR investigation into Chinese maritime

20:13

industries? Again, really sounds technical and boring

20:16

and it's staggeringly important when you understand

20:18

the history of it and the implications.

20:20

So the Biden admin. had actually launched

20:22

a USTR complaint about the fact that

20:24

if you look at global ship building

20:26

China dominates we all know that and

20:29

control of key ports China's very very

20:31

high up the list there and in

20:33

terms of ocean carriers China's really really

20:35

important as well so basically anything that

20:37

happens in a civilian sphere at sea

20:40

China dominates in the same way that

20:42

the US Navy dominates militarily and a

20:44

lot of that is with state firms

20:46

and all of that is with subsidies

20:48

of different kinds. So the current USTR

20:51

has said that they're carrying out an

20:53

investigation and what they are proposing is,

20:55

after March 24th and they've had a

20:57

round of discussions with different people, they

20:59

are proposing to fight Chinese state control

21:01

of maritime industries with a number of

21:04

really radical measures. First of all, they're

21:06

going to charge China-built ships, which is

21:08

a huge, huge number of the global

21:10

fleet, on entering a US port. 1,000

21:12

dollars per net ton up to a

21:15

1 million dollar cap and 1.5 million

21:17

dollars if it's a China-built and operated

21:19

ship. Now if you make several port

21:21

stops from Asia to US ports dropping

21:23

off cargo, that really adds up. That

21:26

could be 3 or 4.5 million dollars

21:28

per journey. That really makes it expensive

21:30

to start using those services. And at

21:32

the same time, they're going to charge

21:34

people who have got Chinese built ships

21:37

in their fleet. but don't send them

21:39

to the US. So say for example

21:41

you're a European carrier and you keep

21:43

all your Chinese built ships in Asia.

21:45

and you send your European built ships

21:47

or your Japanese built ships to America

21:50

and you say, ha ha, nothing to

21:52

pay. No, they know where they're, they

21:54

know which ships you've got and who

21:56

built them and they'll still make you

21:58

pay. So in other words, the pressure

22:01

is to absolutely diversify your fleet away

22:03

from China by making it more expensive.

22:05

And then adding on top of that,

22:07

they're now talking about introducing quotas for

22:09

American crude and American flag chips to

22:12

carry a share. of total U.S. exports,

22:14

which could be anything from corn to

22:16

chips to missiles. So initially they're talking

22:18

about 1% of all American exports will

22:20

have to be carried on those kinds

22:22

of vessels. That will rise to 3,

22:25

and then to 5% over the next

22:27

couple of years, at which point 3%

22:29

of that cargo has to be on

22:31

an American built ship, and then that

22:33

will rise to 15% of all outbound

22:36

cargo, and 5% of all the ships

22:38

have to have been built. in America.

22:40

So you're basically forcing people to build

22:42

in America and you're making it much

22:44

more expensive to go with the cheapest

22:47

most efficient option which is of course

22:49

from a Chinese state controlled industry. And

22:51

why this is interesting is if you

22:53

look back at American history in this

22:55

area, which I have done, I wrote

22:57

a paper on it a few years

23:00

ago called in deep ship and that's

23:02

with a P, but you know you

23:04

understand the implication, America has used this

23:06

strategy in the past several times. It

23:08

used it against the British. in order

23:11

to develop a merchant marine just after

23:13

your independence when there was no economic

23:15

logic in doing so everyone would have

23:17

said just buy your stuff from the

23:19

Brits on their ships and America said

23:22

no if we do that we'll never

23:24

develop and we'll never be a commercial

23:26

power and we'll never have you know

23:28

strategic autonomy so they made it more

23:30

expensive to bring to buy things from

23:33

Britain and they built lots of ships

23:35

with subsidies and they did the same

23:37

thing a couple of times and each

23:39

time then market forces kicked in and

23:41

the merchant marine shriveled away to nothing.

23:43

So we're basically repeating history, but the

23:46

implication is you get a sharp bifurcation

23:48

in the global fleet. you get massive

23:50

destruction of supply chains and you get

23:52

the re-industrialization of America. Michael, let's keep

23:54

going on the executive orders. I've got

23:57

two more of them for you. Crypto

23:59

currency. Seems to me like President Trump

24:01

gave the crypto community everything they wanted.

24:03

Then, crypto sold off. Is that just

24:05

to sell the news event? What happened?

24:08

Well, I mean, there are lots of

24:10

things that could have driven that. The

24:12

market has been very, very choppy of

24:14

late. Part of the legislation that's still

24:16

being drawn up, and we'll find out

24:18

more in the next couple of days

24:21

again, suggests that the assets that Trump

24:23

wants to put in this crypto reserve

24:25

have to be made in America, as

24:27

it were, that you can't use non-made

24:29

in America stable coins, which of course

24:32

makes a lot of them out there,

24:34

not valuable. Now they have... suggested the

24:36

names of some that they do want

24:38

to include and even those have started

24:40

to sell off again because people are

24:43

starting to wonder if it's a continual

24:45

bait and switch that there's a whole

24:47

discussion that can be had about how

24:49

crypto and a network of crypto assets

24:51

can be used by the US to

24:54

create fiscal space for themselves out of

24:56

really you know digital digital magic to

24:58

be honest it remains to be seen

25:00

it's certainly an ironic action that you

25:02

come out as pro-scripto and you end

25:04

up with crypto selling off but That

25:07

really is part and parcel of some

25:09

of the inverse outcomes that you get

25:11

from trying to interpret Trump too literally

25:13

sometimes. Let's move on to the final

25:15

executive order and the one that baffles

25:18

me the most. As far as I

25:20

understand what a sovereign wealth fund is,

25:22

Michael, that's for creditor nations. In other

25:24

words, nations that possess wealth and need

25:26

to invest it. They create a fund,

25:29

sort of like a big hedge fund,

25:31

to invest their wealth. Why does the

25:33

biggest debtor nation in the history of

25:35

the world need a sovereign wealth fund?

25:37

It's a fantastic question. I'm really glad

25:39

you asked it like that because no

25:42

offense at all. That's exactly how it's

25:44

asked by people who I think don't

25:46

get what Trump's trying to do. So

25:48

let me try and do it as

25:50

simply as I can here. You're exactly

25:53

right. Good call. Okay, so you're absolutely

25:55

right in that it doesn't make sense

25:57

from a traditional framework like that. And

25:59

the US doesn't run a fiscal surplus,

26:01

so there's no accumulated wealth, and it

26:04

doesn't run a current account surplus, so

26:06

there's no accumulated national savings. So how

26:08

can it be done effectively? And I'm

26:10

going to try to do it as

26:12

simply as I can here. It's a

26:15

way to achieve geostrategic goals with as

26:17

little oversight from Congress as possible, and

26:19

some of which are in, you know,

26:21

very, very gray areas, and it doesn't

26:23

count as debt on the balance sheet.

26:25

So let me give you an example

26:28

of how it could work. So let's

26:30

say, for example, you have a piece

26:32

of land lying around, it's a federal

26:34

asset, and it's worth $6 billion US

26:36

dollars. Big piece of land in one

26:39

of the state somewhere. If you set

26:41

up this sovereign wealth fund, what they're

26:43

talking about doing is saying we will

26:45

take that six and we will use

26:47

typical financialization magic, because the US is

26:50

the past master of financialization, and we

26:52

will strongly encourage the private sector to

26:54

leverage that up ten times, to the

26:56

point where we have $60 billion to

26:58

play with. Then we will give $1

27:00

million to everyone who lives in Greenland,

27:03

and when they have their independence referendum

27:05

in April, we will strongly incentivize them

27:07

to become a US protector or a

27:09

US state. What does it cost to

27:11

the US up from? Nothing. What have

27:14

they got? Greenland. Is Greenland worth more

27:16

than 60 billion dollars in terms of

27:18

the assets and the geo strategic location?

27:20

I would wager that it is. Now

27:22

that's one extreme example. Did Congress have

27:25

a say no? Because it's a sovereign

27:27

wealth fund. Can they allocate funds to

27:29

it or say we're not going to

27:31

issue them? No. Is there any debt

27:33

on the balance sheet? No. None whatsoever.

27:36

And if there is, it's actually from

27:38

the private sector. and you know obviously

27:40

debt to GDP does matter when it

27:42

starts to get high even in the

27:44

US and what have you got a

27:46

hard asset so if you play it

27:49

right you actually managed to use the

27:51

power of financialization, which, as I said,

27:53

is a US specialization, and it's also

27:55

one of the reasons why the US

27:57

is no longer an industrial power, because

28:00

you've financialized and de-industrialized, but you use

28:02

financialization almost kind of off-book to buy

28:04

hard assets like Greenland or ports or

28:06

other reserves or raw earths, as you

28:08

were saying, and you suddenly start to

28:11

transition back to being much more of

28:13

a physical... controller and producer of things.

28:15

So that's what I think the game

28:17

is. That sounds to me more like

28:19

an executive branch slush fund than a

28:21

sovereign wealth fund. Correct. Do I get

28:24

it now? Okay. Yeah, that's that's what

28:26

it really is. It can be that

28:28

too. Absolutely. And of course, will it

28:30

line people's pockets? Well, is this the

28:32

USA? Yes, of course it will. But

28:35

can it at the same time manage

28:37

to strategically shift the US from being

28:39

Also an asset holder, a hard asset

28:41

holder, it can do both at the

28:43

same time. And it can also, you

28:46

know, feather people's nests if that is

28:48

the way it goes. Michael, I'm all

28:50

out of executive orders. Let's go back

28:52

to this. It's only been six weeks

28:54

since we had you on macro voices.

28:56

Who would have guessed the 10-year yield

28:59

would be 50 basis points lower? What

29:01

gives? So this is another one of

29:03

those strange inverses because... Bessen, the Treasury

29:05

Secretary, has said openly, they're no longer

29:07

looking at Fed funds. And by the

29:10

way, you'll notice all the screams or

29:12

rate cuts have gone away. But they

29:14

are looking at the tenure. That's what

29:16

they think is the key pivot point

29:18

in terms of the financial pressure being

29:21

felt within the economy. That would ostensibly

29:23

tell you that therefore it would go

29:25

down. But of course nothing that the

29:27

admin has been doing so far really...

29:29

would encourage that. The only thing you

29:32

could say might lean in that direction

29:34

is all the cost-cutting from Doge, because

29:36

people are now starting to worry that

29:38

if you fire enough civil servants, enough

29:40

federal workers, enough NGO people, you cut

29:42

enough... spending off in an economy which

29:45

has been propped up by a vast

29:47

fiscal deficit, you get a recession, which

29:49

of course, if the Fed isn't going

29:51

to move, which for now it isn't,

29:53

because of the potential inflation risk from

29:56

tariffs, you are going to see reflected

29:58

in the 10-year. So you could say

30:00

they've done it cleverly by a doge

30:02

to get the 10-year down and therefore

30:04

ease pressure on parts of the economy,

30:07

or you could say it's happened entirely

30:09

fortuitously and they had nothing to do

30:11

with it. But as I said, it's

30:13

not a complete surprise that you have

30:15

an admin which is the 10 year

30:17

is important to us. And suddenly, despite

30:20

the fact that many policies are inflationary,

30:22

the 10 year goes down. So again,

30:24

seriously, but not literally, perhaps that applies.

30:26

Let's move on to what I think

30:28

is maybe the biggest theme of our

30:31

time really, which is I perceive, I

30:33

don't know how to explain this other

30:35

than I'll call it a contagion of

30:37

populism. It feels to me like as

30:39

much as so many people around the

30:42

world are so incredibly critical of President

30:44

Trump. It also feels like the Trump

30:46

populist revolution is spreading. All of the

30:48

sudden, the Reform UK Party, which nobody

30:50

took seriously before, is really getting traction.

30:53

AFD didn't win the German elections, but

30:55

I think they came in second. I

30:57

don't know how Maloney is doing in

30:59

Italy, but it feels like we're seeing

31:01

what I'll call a contagion of populism

31:03

that's spreading around the world. Did President

31:06

Trump start this? Is he just part

31:08

of it? Why is it happening and

31:10

where is it headed? Again a great

31:12

question. I wrote a piece in early

31:14

2019 called The Age of Rage, specifically

31:17

saying that I thought there would be

31:19

a tidal wave of populism which would

31:21

come sweeping through and initially it would

31:23

be to the left and then it

31:25

would move to the right and that

31:28

the rightest argument would win. And the

31:30

argument I made within that. echoing other

31:32

work by far more serious thinkers who

31:34

have been looking at this for a

31:36

very very long time is that the

31:38

historical pattern is you do get waves

31:41

of populism not just in the US

31:43

but globally and you get them around

31:45

technological transitions you get them around phase

31:47

shifts in terms of how the economy

31:49

is operating you get them around demographic

31:52

waves there are lots of conflating factors

31:54

that can all come together but if

31:56

you look at economy after economy and

31:58

not just within democracies but right the

32:00

way around the world people are pretty

32:03

dissatisfied they all feel that there are

32:05

various different crises that they are facing

32:07

in their lives whether it's the crisis

32:09

of liberal democracy, the climate crisis if

32:11

you come from one particular camp, whether

32:14

it's the failure of institutions or a

32:16

globalist elite if you're from a different

32:18

camp, pretty much nobody is satisfied with

32:20

the way things are working at the

32:22

moment and young people are the very

32:24

least satisfied. And if you look at

32:27

the job prospects many of them have

32:29

and how unaffordable housing is, which by

32:31

the way was a deliberate policy choice

32:33

made by their... their parents as a

32:35

generation and their grandparents to say, okay,

32:38

let's keep the economy going with more

32:40

expensive housing and assets. You can understand

32:42

why they're angry. If you grow up

32:44

and you see you will have a

32:46

worse living standard than your mom and

32:49

dad, and potentially even than your grandparents

32:51

did into their old age, why wouldn't

32:53

you be angry? So this isn't just

32:55

a US phenomenon. It isn't just a

32:57

European one. It's a global one. And

32:59

yet the solutions are extremely hard to

33:02

find. On one level you have to

33:04

say we have to say we have

33:06

to cooperate. and yet to cooperate you

33:08

have to build the kind of structures

33:10

which only seem to operate on a

33:13

basis which increases inequality which creates more

33:15

populism or you can say that it

33:17

needs to be nationalists of the world

33:19

united and everyone goes for a kind

33:21

of Trumpism and at the moment that

33:24

appears to be the argument that is

33:26

winning but of course that will create

33:28

masses of volatility of its own but

33:30

what worries me the most there is

33:32

if it fails or if it succeeds

33:34

let's start with that it's entrenched and

33:37

of course that's entrenched. You can guarantee

33:39

that will last for a generation or

33:41

a political generation because it's worked. But

33:43

if it doesn't work, then I don't

33:45

think everyone is suddenly going to say,

33:48

let's go back. to the sensible center.

33:50

Let's go back to acronyms and NGOs

33:52

and technocrats because they know what they're

33:54

doing. No, I fear far worse populism

33:56

is to come if this brand of

33:59

populism can't manage to achieve some kind

34:01

of results. And I don't just mean

34:03

in the States, I mean everywhere. Michael,

34:05

what does that mean for the European

34:07

Union? Because frankly, I am having a

34:10

hard time imagining Terry Breton reinventing himself

34:12

as a populist... politician. It seems like

34:14

in general the European Union is not

34:16

set up to to embrace or could

34:18

ever embrace populism. Are we going to

34:20

see a breakdown of the EU as

34:23

a result of this? Well I'm not

34:25

going to forecast that because no one

34:27

knows exactly what will occur and no

34:29

one knows exactly how the EU will

34:31

mutate. In fact at the moment you

34:34

can see that very much in response

34:36

to the Ukraine crisis which we started

34:38

by talking about there's an attempt to

34:40

try and whip up a brand of

34:42

kind of EU populism. which is to

34:45

say, you know, let's rally around the

34:47

flag and around the Ukrainian flag, introduce

34:49

all the national security kind of changes

34:51

and defense changes that nationalists have been

34:53

arguing for for a very very long

34:55

time, but let's do that under a

34:58

European pan-European umbrella. So let's, you know,

35:00

let's waive the European flag. So this

35:02

is an interesting concept to monitor, but

35:04

yes, Europe itself is doing that because

35:06

it recognizes... that there are nationalist and

35:09

populist pressures rising, not just from the

35:11

right, but also from the left in

35:13

some countries because that's more of a

35:15

European tradition. And you are getting around

35:17

the third of the vote in many

35:20

European economies going for anti-European populist parties.

35:22

Now imagine if you were to have

35:24

a crippling recession. I mean, I'm not

35:26

forecasting one. That's the dangerous base to

35:28

be building from. Imagine if you were

35:31

to have a geopolitical crisis, for example,

35:33

you know, something far worse happening in

35:35

Ukraine. from that basis. Yes, Europe itself

35:37

is openly saying they understand that there

35:39

are existential risks here. Macron has used

35:41

exactly that phrase. So... things will have

35:44

to change and I think Europe will

35:46

do so the question is can it

35:48

do so in time and you know

35:50

what what intellectual and political baggage will

35:52

have to be jettisoned in order for

35:55

it to do so Michael I saved

35:57

the biggest elephant in the room for

35:59

last let's talk about China China okay

36:01

well it's the dragon in the room

36:03

rather than the elephant and You have

36:06

to understand what an important week we

36:08

are talking in, even if listeners are

36:10

going to hear this on Thursday rather

36:12

than Tuesday. Because not only do we

36:14

have the backdrop of Europe talking about

36:16

whether they will or won't increase defense

36:19

spending, not only do we have the

36:21

question of whether US tariffs will or

36:23

won't go on Mexico and Canada, not

36:25

only do we have that addressed to

36:27

Congress by President Trump, which some people

36:30

are suggesting could see him even saying

36:32

he wants to withdraw from NATO. We

36:34

also have China's two sessions, which is

36:36

when they start to set policy. is

36:38

what they can do as a backdrop

36:41

to what the US might be doing

36:43

in terms of tariffs and all the

36:45

executive orders that I've been discussing and

36:47

just how disruptive they are. We have

36:49

to wait and see there, and it

36:52

wouldn't surprise me if China itself doesn't

36:54

say wait and see as well, because

36:56

everything is so fluid, they're not quite

36:58

sure what opportunities might arise. I mean,

37:00

if the Western Islands really does fragment,

37:02

where does China sand vis-a-vis that? So

37:05

I think they'll play their cards close

37:07

to their chest, but I want to

37:09

redirect the question slightly and put it

37:11

like this. everything we are talking about

37:13

from President Trump trying to get out

37:16

of Ukraine on any terms possible, President

37:18

Trump trying to create some kind of

37:20

detente with Russia which I've alluded to,

37:22

Europe realizing that it may not be

37:24

able to rely on NATO and saying

37:27

okay we need to rearm and we

37:29

need to rearm Ukraine, tariffs maybe or

37:31

maybe not going up on Canada and

37:33

Mexico and maybe we do or don't

37:35

have a fortress America that trade block

37:37

may be being extended to the UK,

37:40

which means they can't go with Europe

37:42

and Australia. All of this, all of

37:44

it factors back to the lead. the

37:46

fact that the US's grand macro strategy

37:48

is laser focused on China, that China

37:51

as a rival to it and the

37:53

first country since the Soviet Union to

37:55

really potentially be ahead of it in

37:57

some key areas, is what everything is

37:59

about. All the other factors that you're

38:02

seeing, all the other stories, they all

38:04

conflate, they're all linked, each one of

38:06

them can drive the other, like cogs

38:08

in a machine. But China is at

38:10

the center of the whole thing. So

38:13

yes, we'll look to see what China

38:15

says, but you can't ever not have

38:17

it at the back of it at

38:19

the back of the back of your

38:21

mind. even if you're talking Ukraine or

38:23

Russia or quote-unquote raw earths or terrorists

38:26

on Canada or Mexico etc etc etc

38:28

etc. Michael you knew this was coming

38:30

we've got so many different topics that

38:32

we've talked about I'm gonna hit you

38:34

with the same dirty trick question as

38:37

last time that I interviewed you how

38:39

the heck do you assimilate all of

38:41

this into a cohesive macro trading strategy?

38:43

Well again, it depends on how many

38:45

assets you're playing with, what scale your

38:48

risk appetite, your time frame, all the

38:50

standard disclaimers, and of course the other

38:52

one that I don't give investment advice.

38:54

I have to make that abundantly clear.

38:56

I don't manage money, and I'm not

38:58

trying to manage anyone's here in this

39:01

conversation. But that said, I repeat what

39:03

I began with and what I just

39:05

reiterated a moment ago, that you either

39:07

have to be a complete expert. in

39:09

your own little micromarket. If you're just

39:12

looking at a particular FX Cross and

39:14

you trade that really well, you've got

39:16

a good feeling for the momentum in

39:18

it. Of course, headlines are going to

39:20

buff it around at the moment. Of

39:23

course, you're going to want much tighter

39:25

stops and into trading more carefully than

39:27

usual. But you can keep doing that.

39:29

That's absolutely fine. If you've got a

39:31

broader set of assets you're looking at

39:33

or you're trading global equity equity markets,

39:36

etc. You have to take a much

39:38

bigger picture picture picture view. Yes, you

39:40

still need that volatility hedging. Yes, you

39:42

need to perhaps sit this one out

39:44

for a while if you really don't

39:47

know which way it's going. If you

39:49

can afford to do that for a

39:51

couple of weeks or a couple of

39:53

months, that's not the... thing in the

39:55

world to do, particularly if you've still

39:58

got a fairly high T bill rate,

40:00

like you have in the US, in

40:02

US dollars. But you need to try

40:04

and have at least some kind of

40:06

understanding of what the hell is going

40:09

on here, which is what my role

40:11

exists for, specifically that. I'm not the

40:13

expert on, quote, on, quote, on, quote,

40:15

raw earths, or the 10-year yield, even

40:17

though I've looked at many of them

40:19

in the past in the past in

40:22

different ways. But what I am trying

40:24

to do is explain. that there is

40:26

a picture here, there is some kind

40:28

of strategy, chaotic as it may appear,

40:30

and sometimes the chaos can be part

40:33

of that strategy. And if you can

40:35

start to understand elements of that too,

40:37

you can start to see where you

40:39

think things will sit in 12 months.

40:41

Now there can be a hell of

40:44

a lot of volatility in the next

40:46

12 hours, or 12 days, or 12

40:48

weeks, but over a 12 month horizon,

40:50

which I presume is much more logical

40:52

for people who are thinking about retirement,

40:54

it will certainly stand you in good

40:57

steadier. Michael, I can't thank you enough

40:59

for another terrific interview. Two in a

41:01

row is the case maybe. Before I

41:03

let you go, please tell us again

41:05

what you do at Robobank, how people

41:08

can follow your work, and how they

41:10

can contact you. Well, I mainly try

41:12

and get enough sleep. In this current

41:14

environment, and I'm not doing very well,

41:16

but as you said at the beginning,

41:19

I'm a global strategist and my job

41:21

is to look cross-asset, cross-discipline, to try

41:23

and work out what the big... global

41:25

themes are on how they all intersect.

41:27

And at the moment it is this

41:30

statecraft, not economic policy and grand macro

41:32

strategy. Rabobank itself obviously is the world's

41:34

leading food and agribank. That's the sector

41:36

in which we specialize. If you want

41:38

to follow my work, please go and

41:40

have a look at Rabobank knowledge. That

41:43

website has all of our good stuff.

41:45

If you'd like to follow what I'm

41:47

saying in particular. You can look for

41:49

me on LinkedIn, Michael Avery, Rabbi Bank.

41:51

And if you'd like to interact with

41:54

me more frequently, because I'm there a

41:56

bit more often, look for me on

41:58

X at the Michael Avery. And I

42:00

enjoy a good... and throw on all

42:02

the topics that we're talking about here.

42:05

And, you know, you have to keep

42:07

abreast of it all. This is not

42:09

something that you can turn off of,

42:11

you know, for a couple of days

42:13

and go and do something else. To

42:15

quote Lenin, there are decades where nothing

42:18

happens and weeks where decades happen. And

42:20

potentially, this could be one of those

42:22

weeks. Patrick Serena and I will be

42:24

back as Macro Voices continues right here

42:26

at Macro Voices. Now,

42:33

back to your hosts, Eric Townsend

42:35

and Patrick Sorezna. Eric, it was

42:37

great to have Michael back on

42:40

the show. Now, let's get to

42:42

that chart deck. Listeners, you're going

42:44

to find the download link for

42:46

the Postgame chart deck in your

42:48

research roundup email. If you don't

42:51

have a research roundup email, that

42:53

means you have not yet registered

42:55

at Macro voices.com. And click on

42:57

the red button over Michael's picture,

43:00

saying... looking for the downloads. In

43:02

addition, this week you'll find in

43:04

the Research Roundup email a link

43:06

to a recording from Jeff Snyder

43:09

to supplement last week's interview on

43:11

the show. Okay, Eric, let's get

43:13

your thoughts on the equity markets.

43:15

The S&P bounced nicely off supported

43:18

the 200-day moving average, but while

43:20

Wednesday looked like a reversal candle

43:22

in many ways, we still failed

43:24

to close above any of the

43:27

short-term moving averages. So technically speaking,

43:29

the short-term trend is still down

43:31

until we get a daily close

43:33

above 5875 or so. A daily

43:35

close below the prior lows around

43:38

5750 would suggest that we could

43:40

be just beginning a much deeper

43:42

correction. So I'd say it's make

43:44

or break time for the stock

43:47

market, and we ought to find

43:49

out fairly soon which way it's

43:51

headed. Now again, the signals to

43:53

watch are for a daily close

43:56

above 5875 or below 5750. Now

43:58

I know that big 75 point

44:00

spread between those two levels sounds

44:02

like a very wide... margin, but

44:05

with the short-term moving averages pointed

44:07

down and the 200-day moving average

44:09

pointed up, it will only be

44:11

a few more sessions before those

44:14

key support and resistance levels start

44:16

to converge. At that point, we'll

44:18

have to see the market break

44:20

in one direction or the other.

44:22

Eric I agree with your technical

44:25

levels. It's going to be critical

44:27

to see whether the bulls can

44:29

turn this off of these key

44:31

levels. We're sitting or approaching a

44:34

lot of key Fibonacci levels as

44:36

well that typically would spur on

44:38

a market bounce, but... as at

44:40

least as of this moment, we

44:43

have yet to see the buy-on-dip

44:45

traders follow through in any meaningful

44:47

way. Every bounce is immediately faded.

44:49

Now we do have the jobs

44:52

numbers coming out on Friday morning,

44:54

and maybe that becomes the catalyst

44:56

that either spurs the markets higher

44:58

or really creates a continuation pattern

45:01

to the downside. And so we'll

45:03

see what comes of there. But

45:05

there's some underpinning things that I

45:07

want to highlight on page three.

45:09

I have the chart of the

45:12

magnificent seven and while we are

45:14

clearly seeing is sector rotation that

45:16

we continue to see all of

45:18

these mag seven stocks selling pretty

45:21

aggressively and that money being redistributed

45:23

in a number of different sectors

45:25

health care particularly doing well a

45:27

lot of consumer staples doing well

45:30

but these mag sevens are a

45:32

huge waiting in the market cap

45:34

weighted S&P it's very difficult to

45:36

imagine a scenario where the S&P

45:39

has any... big meaningful rally without

45:41

the MAG 7s putting in short-term

45:43

lows and starting to turn and

45:45

there's really just no sign of

45:48

that at the moment. So on

45:50

page four I have that S&P

45:52

500 percentage of stocks above their

45:54

50-day moving averages just a measure

45:56

of the breadth of the market

45:59

and my argument has always been

46:01

that if the MAG 7s can

46:03

to drive the rally then you

46:05

need a broad rally where the

46:08

value majority of stocks are rising

46:10

and so we'd need to see

46:12

breadth increasing and so instead though

46:14

we have a breakdown of breadth

46:17

not only during this January February

46:19

period have we not been able

46:21

to get up above 60% of

46:23

stocks rising but we're clearly rolled

46:26

over and turning down this is

46:28

happening at the same time as

46:30

things like the Russell 2000 small

46:32

cap index is breaking lower lows

46:35

and so the breadth of the

46:37

market isn't there either This is

46:39

not a healthy market environment and

46:41

even though bottoms can sometimes happen

46:43

from these kind of oversold levels,

46:46

there simply isn't a really oversold

46:48

condition that says that this is

46:50

imminent any day. If we continue

46:52

to have news flow that comes

46:55

out there that creates confusion amongst

46:57

traders and uncertainty, there's every opportunity

46:59

to market sell off to get

47:01

much deeper. And so that brings

47:04

the question. of, well, should one

47:06

ensure their in portfolios? And it's

47:08

something that we do quite actively

47:10

at big picture trading, buying all

47:13

sorts of options to hedge out

47:15

downside risk. But on page five,

47:17

I have that volatility index, the

47:19

VIX, and this is a measure

47:22

of the volatility premium that is

47:24

being charged in options. Now, it's

47:26

a, the market is in theory,

47:28

right pricing volatility. And so with

47:30

us at these. 23, 24 levels,

47:33

the implied ranges, daily ranges are

47:35

even close to in the 50

47:37

to 100 S&P point ranges. So

47:39

huge swings in the market are

47:42

there and this makes option premiums

47:44

more rich. And so how does

47:46

one go about hedging when options

47:48

are more expensive? Well, this is

47:51

where you can still... put on

47:53

tactical debit spreads and other things

47:55

that are far more volatility neutral

47:57

that allow you to have some

48:00

degree of protection in this period

48:02

of uncertainty. All right let's move

48:04

on to that dollar. Wednesday's close

48:06

below 104 on the June Dixie

48:09

contract confirmed that we're in a

48:11

new short-term down trend on the

48:13

Dixie but this is all politically

48:15

driven so changing news flow could

48:18

change the trend in a heartbeat.

48:20

Now on page 6 I have

48:22

that US dollar index and what

48:24

a three day drop. It really

48:26

was driven though by simply the

48:29

euro and the pound sterling, the

48:31

European currencies. We're not seeing the

48:33

same type of velocity in the

48:35

other cross currencies and so really

48:38

that spur higher in the euro

48:40

has driven this drop. We're at

48:42

this critical 104 level and while

48:44

one can argue that this breakdown

48:47

is a trend changer and it

48:49

certainly has that possibility. We are

48:51

at a really important moment where

48:53

if the bulls were going to

48:56

save it, they would need to

48:58

see a rally that recovers much

49:00

of the prior sell-off back to

49:02

like 106 or 107 in a

49:05

very short order. If we see

49:07

that old rally attempts stall out

49:09

at 105 and are very heavy,

49:11

then... really there becomes increasing confirmation

49:13

that the US dollar has some

49:16

deeper cell cycle ahead of it

49:18

that may send it right back

49:20

down to September October or lows

49:22

near 100. I don't I'm gonna

49:25

really want to size up the

49:27

price action in the next two

49:29

three trading sessions to really size

49:31

this up. All right Eric, let's

49:34

stock oil. The key technical levels

49:36

have all been taken out to

49:38

the downside so the question now

49:40

is how low can oil go.

49:43

Wednesday's low on WTO at 65

49:45

spot 20 was almost an exact

49:47

match of the Intra Day low

49:49

on September 9th 2024. To find

49:52

a lower low you'd have to

49:54

go all the way back to

49:56

May 3rd of 2020. 23 when

49:58

WTO very briefly tested 63 spot

50:00

65 on a crazy inter-day swing

50:03

but wound up closing much higher

50:05

on that day at about 68

50:07

spot 15, 5 bucks higher. So

50:09

as far as any kind of

50:12

closing print or lower price action

50:14

It's been several years since we've

50:16

seen prices as low as they

50:18

were on Wednesday. But as Michael

50:21

Every said in the feature interview,

50:23

this has been one of those

50:25

weeks where decades happen. So anything

50:27

is possible from here. Well Eric

50:30

we are at 52 week lows,

50:32

but they are a long major

50:34

lows. So on page 7 when

50:36

we have that chart you can

50:39

see all of the lows that

50:41

oil established here over the last

50:43

six months. And this could still...

50:45

act as a support line. But

50:47

when a support line like this

50:50

is tested this often, there is

50:52

sometimes a period where the market

50:54

breaks to lower lows, often hitting

50:56

a whole series of stop losses

50:59

and other things just sitting below

51:01

that previous support line. If we

51:03

see a further breakdown, we could

51:05

see a quick washout to like

51:08

$63-62 dollars on the... downside, but

51:10

we are already quite oversold and

51:12

I think that at some point

51:14

a reactionary rally, at least back

51:17

to 70 to 72, would be

51:19

normal. At this stage, with us

51:21

being down here, I don't want

51:23

to already be buying, betting on

51:26

that reversal just yet. I think

51:28

that a quick washout of even

51:30

on the two, three dollars is

51:32

entirely on the table before we

51:34

get some proper reaction. bounce. All

51:37

right Eric, let's move on to

51:39

gold. Patrick, it's really remarkable to

51:41

see just how quickly all the

51:43

dips are being bought in gold

51:46

and that's true in all different

51:48

time frames, short term, medium term,

51:50

even... long term. Now that's a

51:52

really bullish long term signal. We

51:55

were hopelessly over-bought on a technical

51:57

basis a few weeks ago, and

51:59

the swing correction that we just

52:01

experienced shook that off, setting up

52:04

a new rally. And we never

52:06

even got below the 34-day moving

52:08

average, which so far has marked

52:10

the bottom of this correction. The

52:13

38.2% FIB retracement level was at

52:15

2824, and so far the bottom

52:17

of this correction was $20 above

52:19

that level at 2844. The stage

52:21

appears to now be set to

52:24

test 3,000 with the Daily RSI,

52:26

still below half-mast at 44, and

52:28

pointed sharply up as of Wednesday's

52:30

close. Well Eric definitely gold has

52:33

been bought on dip and we

52:35

do get these bullish reactions to

52:37

the upside but we still haven't

52:39

yet broken to a higher high

52:42

and so with us in this

52:44

consolidation often like you think back

52:46

to like April or May of

52:48

last year gold will go and

52:51

retest highs and then consolidate back

52:53

down to lows and stay within

52:55

a consolidation period or trade range

52:57

at this stage with us having

53:00

more or less tested the 3,000

53:02

level and while we didn't print

53:04

it exactly, we approached it. This

53:06

is an area where gold is

53:09

fulfilled, its upside targets for the

53:11

last impulse. And so I'm still

53:13

open to the idea that this

53:15

is going to be a consolidation

53:17

period for gold. Now the one

53:20

argument you can make for gold

53:22

is that with this potential US

53:24

dollar breakdown, that could become a

53:26

new tailwind. for gold rising and

53:29

if that continues to emerge and

53:31

we see a breakout to a

53:33

fresh new 52 week high that

53:35

could see a move measure up

53:38

all the way up to 32

53:40

to 33 hundred on the upside

53:42

will we see that breakout? At

53:44

this moment, I still want to

53:47

see how the dust settles here

53:49

for this short-term trade range that

53:51

we're establishing as we approach the

53:53

previous highs. And we'll see over

53:56

the next week or two whether

53:58

the bulls have enough gas in

54:00

the tank to really get this

54:02

going. All right, Eric, let's move

54:04

on to uranium. What are your

54:07

thoughts here? Well, it's been yet

54:09

another week of extremely bullish nuclear

54:11

news flow and yet another week

54:13

of new cycle lows on spot

54:16

uranium and uranium mining shares. There's

54:18

no doubt in my mind that

54:20

what we're seeing here is the

54:22

process of retail capitulation, the well-known

54:25

tradition of the dumb money selling

54:27

to the smart money right around

54:29

market bottoms. The obvious question is

54:31

whether it's over yet, and nobody

54:34

knows the answer for sure. My

54:36

take is that given the extreme

54:38

oversold RSI and plenty of signs

54:40

of capitulation in the tape action,

54:43

there's a good chance that the

54:45

cycle bottom might be in this

54:47

week if and only if the

54:49

broader equity market correction is also

54:51

over and the S&P moves above

54:54

its short-term moving averages to mark

54:56

a new short-term uptrent. But if

54:58

we see the S&P break and

55:00

close well below its prior lows

55:03

around... 5750, then all bets are

55:05

off and lower numbers on uranium

55:07

and uranium miners would be a

55:09

near certainty in that scenario. I

55:12

continued to buy the dips this

55:14

week and I'll continue buying more

55:16

if we see new lower lows.

55:18

Well Eric, uranium is still very

55:21

actively distributed. If someone keeps leaning

55:23

into that bid and it is

55:25

seeing some distinct distribution, so at

55:27

this juncture with these lower highs

55:30

and lower lows, we want to,

55:32

I want to see where the

55:34

selling subsides, where we see bottoming

55:36

formations, where the momentum shifts, none

55:38

of those things are yet evident.

55:41

At some point, this is going

55:43

to be a compelling buy-on-on-dip opportunity.

55:45

But the question is just one

55:47

buy it on price alone or

55:50

does one wait till the price

55:52

action starts to shift to show

55:54

that new accumulation is underway and

55:56

that as of this moment you

55:59

may have a very cheap price

56:01

but there is very little sign

56:03

that a new wave of accumulation

56:05

or new trend is anywhere underway.

56:08

Finally Eric I wanted to just

56:10

touch on copper and when we

56:12

take a look at this chart

56:14

it was consolidating over the last

56:17

couple weeks back down toward its

56:19

50 day moving average down towards

56:21

four and a half dollars and

56:23

we had a very bullish breakout

56:25

the other day and with this

56:28

breakout it is attempting to break

56:30

the February highs and set in

56:32

motion a trend continuation. What I

56:34

really want to just see is

56:37

whether the bulls can hold the

56:39

gains. fakeouts, then this will feed

56:41

right back to four and a

56:43

half dollars within a couple trading

56:46

sessions. If the bulls can keep

56:48

this, let's say, north of 465,

56:50

470 on all little pullbacks and

56:52

the price action goes for another

56:55

break to new highs, that could

56:57

go back to testing the May

56:59

highs that just above $5 on

57:01

the copper price. Folks, if you

57:04

enjoy Patrick's chart decks, you can

57:06

get them every single day of

57:08

the week with a free trial

57:10

of Big Picture Trading. The details

57:12

are on the last pages of

57:15

the slide deck, or just go

57:17

to Big Picture trading.com. Patrick tell

57:19

them what they can expect to

57:21

find in this week's research roundup.

57:24

Well in this week's research roundup

57:26

you're going to find the transcript

57:28

for today's interview and the chart

57:30

book we just discussed here in

57:33

the post game including a number

57:35

of links to articles that we

57:37

found interesting you're going to find

57:39

this link in so much more

57:42

in so much more in so

57:44

much more in this week's research

57:46

roundup that does it for this

57:48

week's episode we appreciate all the

57:51

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57:53

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