OIL: SELL THE RUMOR, BUY THE NEWS?

Kevin thinks there’s a chance that the oil situation is more dire than people think. While he understands the reasons people think oil is going lower, he pointed out that the potential Iran deal is now basically priced into the market, which doesn’t leave much room for maneuver.

Add to that, the sentiment read (we love a bit of sentiment around here) is very much on one side of the boat. Kevin flagged an X thread from the great , which is gathering together a bunch of tweets dunking on oil bulls. You can find that here. “You should always to be careful,” Kevin said. “The market gods hate it when you celebrate and take a victory lap.”

Then there’s what’s happening in China. Kevin said China is being touted as the savior of the oil market because it’s been aggressively drawing down its Strategic Petroleum Reserve (SPR) - the largest in the world.

“The other side of that is that they’re going to have to fill that SPR back up,” Kevin said. Plus, the whole situation is making other countries begin to think that everyone’s going to need an SPR.

“So be careful, oil bears,” he said. “This could be a situation where you sell the rumor, buy the news… Even though it feels a little scary here, you [could be] thinking about dipping your toe in and trying some oil from the long side - not because of geopolitics, but because the reality is we’ve seen a lot of oil offline for a while.”

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THIS WEEK’S FOMC COULD BE VERY INTERESTING

Kevin thinks this week’s Fed meeting, the first under Chair Warsh, could be very interesting and yet, “almost nobody cares,” and the headlines are dominated by AI and Hormuz news.

Here’s the situation with the two main inputs they watch:

• Inflation: The PCE has “not been at their target since 2021,” Kevin said. While it was coming down for a while (2024 - start of 2026) but the Iran war changed that trajectory, and it’s now “really 130 basis points above where we should be.” So inflation alone would in theory be enough for the Fed to err on the side of being more hawkish.

• Employment: Kevin said that for the first 12 months of this presidency, there was no real growth in jobs, which allowed the Fed to lower rates. But in the last 3 months we’ve seen an uptick in job growth, which again, would normally lead the Fed in the direction of being more hawkish.

“When I look at this, I say they have no choice but to get more hawkish,” Kevin said. “That doesn’t mean they’re actually going to raise rates [this week], we’re not going to see that immediately. But I do think we’re going to see rates increasing in the forward part of the curve.”

However, in an interview aired on June 7 on NBC’s Meet the Press, President Trump said:

“There’s no reason to raise interest rates. We built the country by doing great and having rates low. What they do is when they raise interest rates, they try and kill success. I don’t want to kill success. We should actually lower interest rates.”

It’s a tough bind for Kevin Warsh. It’s also worth remembering that he is only one member of the board, so there is actually a chance “you see a situation where the Fed chair votes and dissents against the board,” Kevin said.

IS THE BANK OF JAPAN DRIVING THE NASDAQ RALLY?

Kevin is “confounded” that the Bank of Japan has let their currency to so weak for so long. “People will say, well, they can’t do anything about it. I disagree,” he said. “They can do things like adjust the asset mix of the GPIF, they could be more serious about intervention. They could raise rates. There’s lots of things that can be done.”

Kevin says a lot of the speculation in markets is emanating out of Japan and Korea, and it “unfortunately is making the world a less stable place.” The NASDAQ has had “an absolutely astounding rally, and what we’re seeing is that all these retail [investors in] Asian countries are flooding into these very speculative asset stocks, and when we get the correction it’s going to be destabilizing… The reality is that the Bank of Japan is probably driving this speculation more than people realize.”

🪢From Bloomberg, in January: Japan Retail Investors Ignore Domestic Bull Market to Opt for US

GOLD: A BUY UNTIL THE PBOC STOPS BUYING

The traditional relationship between gold, real yields, and the US dollar has fundamentally shifted, Kevin said. For decades, investors relied on a specific correlation, but “the world changed when the US went and zeroed the Russian assets reserves and it made a situation where that those US treasuries could no longer be trusted by a lot of these central banks and it made gold all the more attractive,” he said.

A significant part of his thesis rests on the behavior of central banks. While some institutions, like the Bank of Turkey, have had to sell gold to defend their currencies, creating moments where “gold gets offered,” he believes the People’s Bank of China (PBOC) will consistently “stand in there and buy.” He said:

“I still contend that the reason to own gold is not because the US dollar is going lower, it’s not because interest rates are going lower. The reason to buy gold is because the People’s Bank of China is the largest holder of FX reserves in the world by a huge factor. And their percentage of gold that they own of those reserves is minuscule compared to the rest of the world.”

Looking ahead, Kevin sees a multi-year trend of diversification for China, asserting they “have no choice but to continue to buy for years and years and years to come… When they start to get full, that’s when I’ll get worried. And that’s when you will see me abandon my secular bull thesis.”

🪢Side note: Kevin pretty much nailed the top in silver

ROLLING MINI BUBBLES

Kevin has been talking about rolling mini bubbles since 2014. What he said back then: “I was arguing that it seemed to be, we were getting these full on moves that were 6 months or a little longer, and they would be more and more violent and ferocious, and then they kind of collapse and we’d go onto the next one.”

There are endless examples of what Kevin calls these “Eiffel Tower formations” (we love it), including: solar, (most) EVs, silver, even Mag 7.

Kevin thinks the rolling mini bubble has moved on to semis. Of course, getting into the bubble when it’s already on the front page of every newspaper isn’t historically a great idea. “There’s no edge there,” he said. “I’m much more interested in trying to find the next rolling mini bubble.”

Here’s what’s on Kevin’s list as potential future mini-bubbles:

• Biotech: It’s been “left for dead” currently, but AI could lead to some serious advancements

• Agriculture: Still super cheap, and then you add in the situation with potential fertilizer shortages

• Oil refiners: A lot of the big surprises have been increases in price, but the refiners - not so much. Yet…

• Copper: “Has a chance”

“What you need is something that gathers people’s attention, has a bigger picture story, and it goes from being reasonable to expensive to crazy, and then I sell it,” Kevin said. “And then if it goes super crazy I probably short it.”

Quoting Canadian strategist Don Cox, he added: “Don’t invest in what’s on Page 1 today, invest in what’s on Page 17 on its way to Page 1 tomorrow.”

STOCK SCARCITY TO STOCK ABUNDANCE?

With a bunch of tech companies issuing equity, big IPOs coming to market, etc, there’s been some discussion that we have gone from an era of stock scarcity to stock abundance.

Kevin dug around and looked at the amount of shares outstanding in Microsoft, Google, Apple, and more, and found that over the years the numbers just kind of “collapsed down.” “When you saw it in black and white, you realized why these stocks were going up,” he said. “Companies are buying back more stock than they’re issuing, and retiring a huge amount of stock.”

However, Kevin thinks this trend is reversing as companies prioritize massive AI-related capital expenditures over returning cash to shareholders. He said companies are essentially saying: “We don’t have as much money anymore. What we’ll do is we’ll pull back on the amount of stock that we’re buying. We’ll spend that on building warehouses filled with NVIDIA GPUs.”

The most alarming signal for Kevin is the behavior of established tech leaders. He said: “Google knows better than most of us what their company is worth and for the first time in 20 years they’re issuing stock. They don’t do that. This is just unheard of.” Kevin agrees with Jim Chanos that “this is what you see at market tops,” and is surprised by how “complacent the market is about it.”

❗Kevin wrote a piece about this for his subscribers recently - he said if anyone wants a copy, just email Kevin@themacrotourist.com.

Thank you , , , , , and everyone else who tuned in live! We’ll be back tomorrow Talking Markets with Dale.

Important Disclaimer: It is crucial to remember that this article is for informational purposes only and should not be considered investment advice. Consult with a qualified financial advisor to assess your risk tolerance, investment goals, and overall financial plan.

JJ calls it exactly like he sees it, often breaking from the crowd when he identifies a false narrative circulating on platforms like X.

Overall, he said: “Don’t be too afraid of the future. I never made any money betting on the end of the world. Ever.”

THE MISINFORMATION BONFIRE

When JJ looks across the current landscape, he sees a massive gap between what the charts are saying and what the internet is shouting. He is particularly focused on two major themes: the narrative around oil and the profound effect AI is already having on capital markets.

On oil, JJ says people are getting very worked up about it but there’s low volume and falling open interest. “A tremendous amount of energy is put into the idea that we’re going to run out of oil, and we’re going to run out of oil really quickly. So I push back very, very hard on that.”

He argues that while markets can be algorithmically modeled, oil remains a “human market” where money is currently bored with the misinformation being peddled. He points to the rally in April as proof that “real money” isn’t validating the panic: “We had a vertical rally for about two weeks where you just had to hold your nose and buy. Just put your head down and get something... Money is bored with misinformation and it’s not validating anything that’s going on in terms of prices.”

THE ENERGY FORTRESS

JJ is dismissive of the idea that we are in a “red zone” crisis regarding oil shortages. He views the US as a powerhouse that is largely misunderstood by those who trade on headlines.

“America has become an energy fortress, the largest producer, exporter, refiner, with a massively well-managed industry,” JJ said. “Some of the best management of any companies anywhere in the world are right here in Houston and Louisiana and they really know what they’re doing.”

While many pundits predicted oil would rocket to $120 and stay there after the closure of the Strait of Hormuz, JJ notes that the market felt different. He explained: “The entire move high to low occurred in 24 hours... I know what markets feel like when they want to go higher. It’s never felt like it wanted to go higher. It still doesn’t feel like it wants to go higher.”

THE INVENTORY MATH

A key pillar of JJ’s thesis is that global oil inventories are much higher than the “tank bottom” narrative suggests. He cites EIA estimates of roughly 8.2 billion barrels in late January and February.

He broke down the reality of those billions: “3 billion of the 8.2 billion is downstream of crude. And crude has no value until it’s refined. So that’s 3 billion that’s in the secondary tertiary supplies, so you’ve got to get it to the refinery first. The 5.5 billion of that, there’s 3 billion of commercial stuff. And the reserves, about 2.5 billion barrels, is sequestered in fault-like circumstances, readily deployable because it’s ‘break the glass’ type of stuff.

JJ says the market is far more elastic than people realize. He believes supply can easily last longer than the Iranian Republican Guard can hold out, especially as drilling continues. “Rig count has been going up... if rig count goes up 20, you probably have 60 wells,” he said, adding that these properties are highly profitable at current prices.

The full depth of JJ’s analysis on the Saudi/Aramco “lies,” the deflationary trap of AI, and why he likes silver is available to our paid subscribers below.

Read more

VOL COMPRESSION BREAKS

Last week, Dale warned that he would not be short volatility heading into this week, a call that has proved prescient.

Dale explained that the charts had been signaling a major shift for some time, specifically pointing to a “three drive and a wedge” formation. “The formation was my market tell that it was building up compression,” Dale said.

He believes the current spike in the VIX is far from over and could catch many investors off guard. “I don’t think it’s over… we could have a move up towards 40 and challenge this VIX high. And that’s not what people are looking for.”

6,900 FOR THE S&P?

While the sell-off is broad-based, Dale is focusing on specific technical levels to determine the depth of the slide. His initial target was 7100, but he expects the ultimate floor to be lower.

• The 200-Day Moving Average: Dale anticipates the S&P will pull back to 6,900, which represents a 50% Fibonacci retracement and aligns with the 200-day moving average.

• Widespread Technical Damage: He noted that other markets are already acting as harbingers of this weakness. “A lot of 200-day moving averages have been broken. You had gold break its 200-day… Silver broke its 200-day. So there are things under pressure into an acceleration phase.”

• The Ultimate Line in the Sand: While 6,900 is Dale’s expected bottom for a “healthy” correction, he warned of a much darker scenario if key levels fail. “If we take out the March lows of 6,300, then I believe that the bull market is over and this longer term wave is over and we have a lot of downside.”

Despite the bearish technicals, Dale views this period as a necessary “cleansing cycle” rather than the end of the world. He agreed with Dr Divergence in the live chat that the market needs a "Capitulation Day" to truly bottom.

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PRECIOUS METALS IN THE CROSSHAIRS

While much of the market’s attention is fixed on the equity sell-off, Dale is keeping a very close eye on the technical breakdown in precious metals. For months, he has warned that the strengthening US Dollar would eventually act as a vacuum, draining liquidity out of every asset class, and gold and silver are finally feeling the heat. According to Dale, the technical damage is already significant as key support levels have vanished, and he still sees gold going under $4,000.

“A lot of 200-day moving averages have been broken. You had gold break its 200-day,” he said. He warned that once these long-term indicators fail, the price action can turn aggressive: “It gets pretty ugly when it breaks its 200-day. Silver broke its 200-day. So there are things under pressure into an acceleration phase.”

“It’s all one market, precious metals and stocks and everything, tech, everything’s going down together,” Dale said. This “one market” theory suggests that until the dollar rally peaks, there is nowhere to hide, even in safe-haven metals. “I’ve been talking $50 silver for quite some time. I think we’re going there,” he said.

ASLEEP IN THE OIL MARKET

Perhaps the most dangerous area of complacency, according to Dale, is the energy sector. While the market has been lulled into a sense of security by recent sell-offs and reserve releases, Dale sees a massive technical breakout looming.

“I think people are asleep,” he said. “I can imagine a breakout over 100 that could take us to new highs in energy… Closing over 100 bucks is both psychological and technical.” This view is exacerbated by a negative geopolitical outlook. He noted Nikki Haley’s recent comments suggesting that Iran will never sign a deal, potentially leaving military action as the only remaining option.

If the market is wrong about a peaceful resolution and oil spikes to $140 or $150, the ripple effects will be devastating for other asset classes. “You’re going to see the 10-year start to move towards 5%. You’re going to see the dollar continue to strengthen,” he said.

NAT GAS UPDATE

Dale said natural gas has shown a level of resilience that suggests its uptrend remains intact.

“Although we’ve pulled back a little bit, it’s done nothing wrong except move sideways,” he said. For him, the lack of aggressive selling in this sector is a significant technical signal, especially when compared to the carnage seen in other asset classes. He pointed out that the commodity remains in a healthy position relative to its recent lows: “It’s still well off the bottom.”

Dale suggests that if his prediction of a “cleansing cycle” continues to pressure equities, natural gas may be one of the few sectors that manages to “buck the trend.” While other key indicators like the 200-day moving averages for gold and silver are being broken, the sideways consolidation in natural gas is, in Dale’s view, a sign of underlying strength rather than weakness

SPACEX: THE “CULT PLAY”

The upcoming SpaceX IPO is currently “sucking up all the oxygen” in the market, but Dale remains deeply skeptical of the frenzy. He suggested that some of the recent weakness in other stocks, including Tesla, might be driven by investors liquidating positions just to raise cash for the SpaceX offering.

Dale’s critique of the IPO: “They’re structured to dump shares on the public while the owners cash out… Retail is the exit liquidity for the private market.” He described the enthusiasm as more of a “cult play” than a traditional investment based on business fundamentals or profits.

THE BOND MARKET TEST

Dale is keeping a very close eye on the fixed-income space, particularly as the market prepares for its first real look at the new Fed leadership. He warns that the recent action in Treasuries is likely just a prelude to higher yields, especially if his predictions for the energy market come to fruition.

“You’re going to see the 10-year start to move towards 5%,” Dale said, noting that a potential spike in oil to $140 or $150 would be the primary catalyst. While some investors have looked at recent stabilization as a sign of a peak, Dale remains unconvinced. “I still think regardless, even if we get a pullback to 4.35... this is not the high at 4.70 in the 10-year. I’m still looking for over 5%.”

This technical breakdown in bonds coincides with the high-stakes arrival of Kevin Warsh at the Federal Reserve. Dale pointed out that history suggests the bond market tends to give new Fed Chairs a brutal welcome.

“Almost every new Fed chairman comes in, there’s some type of crisis,” Dale said. He noted that Greenspan faced the ‘87 crash, Janet Yellen arrived during the “dot-com bust,” and Bernanke was met with the Great Recession. He believes Warsh will be tested immediately by the current “cleansing cycle” in the markets.

Furthermore, Dale suggested that the “Fed Put” that investors have relied on for decades might be a thing of the past under the new regime. “Warsh may not be, you know, a market put,” Dale warned. “It’s going to be much different with Warsh. I know why he was put in there, but I think it’s going to be difficult.” With a major Fed meeting and more inflation data looming next week, Dale expects the market to aggressively “test” the new chairperson’s resolve.

Thank you , , , and everyone else who tuned in live…! We’ll be back Talking Markets next Monday with the great .

Important Disclaimer: It is crucial to remember that this article is for informational purposes only and should not be considered investment advice. Consult with a qualified financial advisor to assess your risk tolerance, investment goals, and overall financial plan.

THE SILICON SHIELD

Even with geopolitics continuing to dominate the headlines, Jeremy said that the market’s momentum remains tethered to silicon, not crude. He views the current climate as a tug-of-war between macro instability and technological progress.

“You’ve got the battle of geopolitics and… you saw the headlines on Iran shooting some missiles and what was going to happen and where we’re going to intervene,” Jeremy said. “And then you’ve got Trump coming on the airwaves this morning saying they’re still trying to deescalate... The market keeps powering on. And it [is] really driven by the tech and AI story much more, overshadowing the risk from energy prices. So you’ve got these two battles for sure.”

While Jeremy said AI has yet to manifest in “standard productivity statistics,” he said that it is already visible where it matters most: the bottom line. “It is showing up in profits, so we think it would be longer term and even medium term optimistic on what this trend is. It’s still [in the] early phase of where it’s all going.”

And despite Friday’s sell off, he said: “I think the memory names sold off the most on Friday on fears that maybe we don’t need as much memory for some advances. But the bottlenecks are real. So I think that’s the real story for the next few years.”

NVIDIA AS A VALUE STOCK?!

In a move that Jeremy said made “people’s heads explode,” he has begun classifying AI leaders like NVIDIA as value plays. He argued that the traditional definitions of “growth” and “value” are failing to account for the massive earnings acceleration in top-tier tech.

“I came out like four or five weeks ago saying NVIDIA is a value stock,” Jeremy said. “I put it as the top holding in one of our value funds, WTV... I saw trading at market multiples, but with growth rates that are, I think, well superior to the market. And so we called it a value stock.”

Jeremy contrasts this with Tesla, which he describes as an “asinine” inclusion in some value indices simply because its growth has slowed. “It’s in the S&P 500 value index as a top six holding today. And you say, how is that the case? This is a 200 PE stock. The only reason why it’s in the S&P 500 value is because it’s not growthy enough... It’s just an expensive, slower growth stock. And so it gets weighed in value. It’s really asinine.”

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THE SPACEX WATERSHED

With SpaceX floating a $1.75 trillion valuation, Jeremy addressed whether this massive IPO signals a market top. While the “speculative frenzy” is real, Jeremy views it more as a necessity for capital-intensive technologies than a definitive warning sign.

“It is a sign that a lot of these things are coming to market and you can see a rush to that,” he said. “People definitely worry this rush to market means they’re getting while the going is good and there’s a fear of that. But they also just need capital. A lot of these companies are consuming a lot of capital, and the private markets handled it for so long. But then at some point they run out of that. And they need the public markets as the next phase. So I think it makes sense... I’m not really worried it’s a sign [of] a top.”

THE CORPORATE EQUITY RACE

A major point of discussion for investors is the recent decision by cash-rich giants like Google and Meta to pursue equity raises rather than debt. Jeremy suggests this is a calculated move by “the most sophisticated finance teams you could buy” to fuel an existential race for infrastructure.

“It’s this existential race [where] you can’t get enough of the supply,” he said. “NVIDIA is saying they can’t make enough of what people want. So they’re all racing to lock in as much supply as they can while they can get it. And will they overbuild at some point? Most likely. But for now, the race is on and they feel like it’s sort of existential for all of them.”

PHYSICAL AI: THE NEXT WAVE

While much of the market is fixated on Large Language Models (LLMs), Jeremy is looking toward “Physical AI,” a term used by NVIDIA’s Jensen Huang, the manifestation of intelligence in the tangible world through robotics and hardware.

“Physical AI is sort of the next wave of the sort of chip spend and all this sort of additional AI compute that you’re gonna need,” he said. He highlighted WisdomTree’s focus on this sector with their launch of WDRN, WisdomTree Physical AI, Humanoids, and Drones Fund. “You see AI coming to the real world,” he said. “Clearly it’s in industrial manufacturing, but you see other places you’re going to have physical AI, not manifesting in just an LLM, but in the real world.”

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THE “APOCALYPSE” THAT ISN’T

Addressing investor fears about AI-driven job losses, Jeremy said he thinks the narrative of an apocalypse is misplaced. Instead, he sees a shift toward higher productivity and a continued need for skilled human capital.

“As we’re using the AI tools ourselves, I don’t see wanting less workers. If I actually see some of this stuff making people more productive, I may want more people,” he said. “I actually think you want even more young people. To me, a lot of the narrative on the fear of job loss is a bit misplaced. And, you know, the history of innovation is we get new tools, we find new things to do with our time... it’s not going to lead to this AI jobs apocalypse people talk about. We’re not in that camp at all.”

A TIGHT SPOT FOR CHAIR WARSH

Looking toward the next Fed meeting, Jeremy highlighted a “tricky” environment for new Fed Chair Kevin Warsh. Drawing on the work of Professor Jeremy Siegel, Jeremy is closely monitoring the money supply, which he believes signals stickier inflation than the administration might like to admit.

“The money supply was [Professor Siegel’s] key guidepost in ’21 that said inflation wasn’t transitory. Well, you had a record like two-year jump in the last few months... annualized the last three months, it’s been like an 8% annualized rate,” he said. “You usually want to see that growing at 5-6%... it is going to make it harder in our view. These kind of are stickier inflation impulses. It’s going to be tricky to cut rates as the administration wants Warsh to do. And so he’s going to have a very interesting battle in his hands.”

OPPORTUNITIES IN JAPAN & HEALTHCARE

For investors seeking value, Jeremy remains highly bullish on Japan (OPPJ), where he sees a significant “equity premium” compared to domestic markets.

(For more on the Japan bull case, see our recent interview with Jesper Koll.)

“Japan remains one of my top ideas,” he said. “The S&P’s earnings yield versus the tips yield today, we’re like 2.5%. We have a Japan Opportunities OPPJ that is in the mid sixes. It’s 3-4 points cheaper. These stocks are still cheap.”

He also expressed renewed interest in Healthcare, citing AI’s potential to collapse drug discovery timelines from 15 years to just two. “I think you’re going to see a boom in innovation in healthcare. They’re very, very reasonably priced. What made them very successful long-term winners is low prices but still reasonable growth rates.”

Thank you to everyone who tuned in live! We’ll be back Talking Markets with Dale on Wednesday.

Important Disclaimer: It is crucial to remember that this article is for informational purposes only and should not be considered investment advice. Consult with a qualified financial advisor to assess your risk tolerance, investment goals, and overall financial plan.

Let’s get into it.

LESS COMPLACENCY IN THE MARKETS?

Dale thinks “some of the complacency is coming out of markets,” and that if the VIX starts getting back over 18 (16-ish currently) he wouldn’t be short vol.

S&P “really sold off at the close” yesterday (below), and Dale thinks we could still get a pullback to at least 7,100.

Meanwhile, Broadcom took a hit yesterday, selling off after earnings::

One thing that could throw the semis for a loop, Dale said, is if we start hearing stories about helium shortages and possible force majeure, maybe in Taiwan.

If that happens, and the wind is taken out of semis’ sails, then the momentum trade could move perhaps to direct energy-related things, he said.

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KING DOLLAR

Dale has been reminding us regularly that “if you get the dollar right, you get everything right.”

So, what’s happening with it this week?

“The key is that the dollar did not follow through to the downside from Friday,” he said. “We’re now challenging 99.5, and I believe we’re about to enter an acceleration phase to the upside, which will pressure everything… I’ve been patient for months waiting for this move to manifest, and it looks like it finally is.”

🎯Dale’s medium-term target is about 103, 104, but he said there’ll be some stops along the way. But he does think that’s potentially “one more good hurrah,” and that you could be short the dollar long-term.

METALS

And if the dollar accelerates to the upside, Dale would look for gold to accelerate to the downside, with targets even lower than 3,800 now:

As for silver, Dale’s next key level of support to watch out for is 70, and he thinks “you’ll have a chance to buy silver at $50 or lower”:

BONDS

Looking at the 10-year, Dale says he thinks yields “still have a shot’ to go over 5%… If we get soft payroll numbers on Friday, Dale may look for the 10-year yield to be a buy at 4.30, as he still believes it’s going to 5% in the longer-term.

And if 10-year yields go up, and TLT (below) makes a higher low, then Dale would be “interested in the long side.”

UPDATE ON NAT GAS

The Nat Gas trade has worked out well for Dale - on Friday, he said it looked like a good time to take some profits, and that’s how it’s worked out so far:

But Dale says “this market has legs.” “I think we’re $6-$10 nat gas by the end of this year or next year… Maybe higher. I’m bullish unless it takes out 2.82.”

AGS

• Cocoa: “There’s nothing wrong with it, I’d continue to buy dips.”

• Sugar: Sugar, whose 1-year chart looks like a rollercoaster, “looks vulnerable maybe for one more push down.”

• Wheat and corn: They’ve been one of Dale’s best exits this year - he was recommending to at least take partials before their dips over the last few weeks. He thinks there’ll be a buying opportunity around the Solstice.

• Soybeans: They’re holding up the best but they look vulnerable

💡Overall though, Dale said: “The long side of food, I have to believe is going to be one of the best long entries that’s going to pay off big next year.”

DALE ON…

THE YEN

Dale expects intervention in the yen as it hovers around the 160/USD again. He also thinks that the Bank of Japan has to raise rates at their next meeting.

🪢More on Japan from Jesper Koll: Japan’s Great Awakening

BITCOIN

Dale had been flagging $72,000 as a key downside level for Bitcoin, and it got through it in a hurry this week (at 68k-ish now!). He’s not bullish. “It’s been consolidating since January and all it did was get back to the neckline,” he said.

Thank you , , , and everyone else who tuned in live…!

Housekeeping note: While there’s plenty of market action, we’re entering the summer days when people start switching off a little earlier and enjoying some long weekends.

So, on Fridays during the summer, we won’t have Talking Markets.

We’ll also be delivering some extra For the Record and Macro Session episodes during the summer for members. We’ll keep you posted.

Important Disclaimer: It is crucial to remember that this article is for informational purposes only and should not be considered investment advice. Consult with a qualified financial advisor to assess your risk tolerance, investment goals, and overall financial plan.

He’s normally bullish on the US consumer; not so much this time…

MARKETS LOSING STEAM?

While markets continue to react to President Trump’s Iran posts, Vincent says: “Most smart people I talk to are kind of bearish…. They look at physical markets and they don’t really get fooled by the Trump tweets.”

He thinks that things will “get much harder in a couple of weeks once we run out of inventories, and we realize the talks are not going so great.” However, Vincent does think the speculative frenzy around upcoming IPOs (SpaceX, Anthropic, etc), is “probably going to keep the market going until the summer.” Vincent expects a market top sometime later in the summer or fall.

ECONOMIC TIPPING POINT

Vincent has been bullish on the US economy every other time he joined us on Talking Markets, so what he had to say yesterday made us sit up and take notice…

“I think we may be at a tipping point when it comes to high-end college-educated workers,” he said. He pointed out:

• There was a massive drop in personal savings in April

• The incomes of college-educated millennials collapsed

• Tax returns have come down

• Software companies are laying people off left and right

• Home equity loans are picking up

• Credit delinquencies across credit cards, autos, student loans are all at record highs

STAGFLATION

Vincent thinks we are in a stagflationary environment, “but no one’s going to admit it.”

He thinks that we have “underreported inflation for a long time, and some of the growth is really just the inflation illusion,” he said.

“Inflation is like cocaine. It feels great at the beginning, not so good after. When inflation started to take off in the late 60s, margins took off because everybody’s revenue was growing… You don’t realize that costs are growing at the same time, because your costs are recorded at a historical level, same with your fixed assets… The first phase of inflation is usually pretty good, you see better margins and higher multiples.

We are now getting to the second wave, where people realize, ‘huh, maybe it’s not growth, it’s actually inflation.’ And that’s when you see the hangover effect.”

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CHANGING STIMULUS

“We live in what I call permanent stimulus,” Vincent said, but the form that stimulus takes is changing.

During COVID, it was a super wide net: “We had the CARES Act, everybody was basically defrauding the government and claiming income they never had,” he said.

With Trump, the net was narrowed a little with the One Big Beautiful Bill, which covered social security and working class people.

“Now, we are narrowing even more,” he said:

1. We’re feeding the data center build out

2. Tariff refunds: “We are paying more in refunds than we are collecting in tariffs”

3. Later this year, Vincent thinks we’ll see a huge military blowout budget

“So we went from just sending money to everybody in the Biden years, to spending close to a trillion dollars in effectively corporate welfare,” Vincent said. “It’s basically shifting a trillion dollars from consumers to corporate cronyism.”

WWKD?

What will Kevin do?

Vincent thinks new Fed Chair Kevin Warsh is “going to regret having campaigned so hard for the job,” he said. “It’s going to be a terrible environment, and interesting to watch.”

“If I’m right, we get 2 or 3 more bad inflation reports, then we see 2-year yields significantly above the Fed funds rate,” he said. “You can’t cut there. Because if you cut when the market wants you to hike, what you end up doing is steepening everything and you make the mess even worse.”

So, he thinks Warsh is in for a rough start, but he also pointed out that that’s not super unusual: “Every time we have a new Fed chairperson, we tend to have major selloffs. So it would be in character for markets to have this sell-off as they try to test a new chairperson.”

And if it does, “there is no good solution,” Vincent said. “Because the economy is slowing and inflation is picking up, so whatever you do is going to be the wrong choice.”

3 HORSEMEN TO WATCH

We’re “really on the edge” for 3 key levels Vincent monitors.

Japanese Yen at 160 per USD: The Bank of Japan has intervened before at that level; and right now it’s hovering at 159:

Oil: Long-dated oil contracts are approaching $80, and while Trump “jawbones the front end, the long end of the market keeps going up.”

10-Year Yield: The 10-year yield already temporarily crossed the 4.6% level, and is still “on the edge.”

Now, the market is pricing in that “it’s all going to get better,” Vincent said. But the exact opposite scenario is possible:

• Oil goes up, breaks the 80 line on the 12 month…

• That puts pressure on the currencies of Asian importers like Japan and South Korea…

• Then the only way the Asian importers can afford the high oil price is by selling US assets…

• As they sell US assets, the yields go higher, and then that tips over the stock market in the summer.

“So again,” we’re on the edge,” Vincent said. “We don’t know which way the knife is going to fall. But I think the more time that passes without a proper resolution, we draw down inventories and get closer to that tipping point.”

BRAZIL UPDATE

Vincent has been telling clients to “maybe wait a little on Brazil.” It’s underperformed recently (EWZ) not least because of some corruption scandals, and there are big elections happening there in October.

But in general in Latam, “the political and economic trends are very favorable,” he said.

“Everything that’s getting squeezed today are things that are being produced in Brazil” he said. “You still have record highs, if you look at real rates, of 6-7%. So all the things that worry us in the West are tailwinds for LatAm. And I would argue that valuations are still not very demanding.”

OPPORTUNITIES

Vincent said it’s a good time to find things that have lagged, not least because even a lot of the EM indices now are now almost as concentrated as the US index, and pretty stuffed with AI names.

Vincent mentioned China as one spot that’s lagged,

And never forget that “when things are really difficult, it means cash is probably quite attractive, especially now that we’re not going to get cuts, and we maybe get 1 or 2 more hikes.”

FINALLY…

Vincent recommended this phenomenal letter from Macro Tourist (who was in the chat…!) Enjoy.

Thank you , , and everyone else who tuned in live…! We’ll be back Talking Markets with Dale Pinkert on Wednesday.

Important Disclaimer: It is crucial to remember that this article is for informational purposes only and should not be considered investment advice. Consult with a qualified financial advisor to assess your risk tolerance, investment goals, and overall financial plan.

To discuss what one of the biggest macro shifts in years, , economist, investor, and author of the Japan Optimist Substack, joined us on Macro Sessions to give his boots on the ground perspective.

Jesper last joined us on Talking Markets in June 2025 to tell us that Japan was “unbelievably rich” yet “dirt cheap.” At the time, the Nikkei was at around 38,000. Now, it’s 66,329.50. Yup…

🏠Housekeeping note: The first 17 minutes or so are free for everyone to watch, but the full session is available only to paying subscribers. Thank you as ever for all of your support—and if you’re interested in subscribing, you can do so here.

THE NEW WEALTH EFFECT

While official inflation numbers in Japan are dipping, Jesper says that’s largely because of government intervention: “The government is holding and subsidizing gasoline prices, and introducing price reductions for utilities, for example.”

Japanese Prime Minister Sanae Takaichi, who has been in office since October 2025, is essentially fiddling while prices go up. She is “trying to manipulate the inflation data,” Jesper said. “We’re going to get another supplementary budget where the bulk of it is going to be a handout to reduce the impact of rising utility costs on Mr and Mrs Watanabe, which is a weird policy in the sense that you’re not allowing the supply side to actually get creative in, for example, deregulating the utility markets so that some new suppliers can actually start to come in.”

When you look beyond government intervention, “the reality of consumer price inflation accelerating is very strong,” Jesper said. And unlike the past, where it was because of the weak yen, plus rising energy and food prices, this time the drivers are different.

“Over the last six to nine months, [we are seeing] actual pricing power,” Jesper said. “You find that even small and medium-sized companies are increasing prices. A year ago, two years ago, there was still this almost shame if you increase the price of a candy bar or if you increase the price of your meal in your restaurant. That is gone.”

According to Jesper, three distinct engines are firing simultaneously to lift household confidence and drive this demand-pull inflation:

• The Wage Revolution: The annual shunto base-pay negotiations have delivered wage increases exceeding 5% for two straight years.

• The Youth Premium: Due to severe structural labor shortages, starting salaries for the younger generation shot up by 7% last year and another 8% this year. That’s a ginormous reversal after thirty years of stagnant, zero-growth pay.

• The Real Estate Rebound: After a generation of negative wealth effects, property values have firmly bounced back past their historic pre-bubble peaks in the 1980s, making everyday citizens feel significantly wealthier.

ANIMAL SPIRITS AND THE ONSHORING BOOM

Things are changing for more than Joe Public (Or Mr. and Mrs. Watanabe) - the domestic banking system is experiencing a structural awakening.

For the first time in decades, Japan’s money multiplier has turned positive. Banks have reversed a 30-year contraction and are actively lending to both consumers and local corporations.

“We now have animal spirits,” Jesper said. “You’ve got 3 consecutive years of business investment expenditure actually accelerating.”

And it’s not money that’s flowing overseas, it’s happening in Japan. “Geoeconomics plays a very big role because Japanese CEOs now know that if you don’t do it here in Japan, you cannot rely necessarily on the stability of the supply chain. So onshoring is a big factor going forward.”

Jesper contrasted Japan with the US - he said the US economy has become “lopsided” in favor of AI spend, while in Japan, business investment is everywhere:

“…Whether it’s the service sector, the retail sector, the manufacturing sector, all the way from large corporations through to small and medium-sized companies. The basic driver behind all of that is the reality that there is now inflation, that corporations have pricing power, and that banks are willing to lend to you.”

LABOR SHORTAGE REALITY CHECK

Transitioning from decades of economic stagnation to a high-pressure, inflationary environment isn’t a walk in the park. The economy, Jesper said, is “screaming” under the weight of resource constraints:

“Everywhere you look, every CEO I talk to, is struggling because of resource constraints. You want to build a data center here in Japan? Get in line. The waiting line to get a contractor now is over 3 years long.”

This battle to get and retain talent is reflected in wages:

“If you’re in your 20s and 30s in Japan, if you switch jobs, the average increase in pay is 40%, according to recruitment data,” Jesper said.

BANK OF JAPAN “WAY BEHIND THE CURVE”

The Bank of Japan’s key short-term interest rate is currently 0.75% - which is at multi-decade highs. The market currently projects that Japan’s neutral policy rate will top out around 1.5%, but Jesper thinks that estimate is far too conservative:

“If you have a growth potential of around 1%, and you’ve got an inflation target of around 2%, then the neutral rate, if you look like something like a Taylor rule, should be somewhere between 2.5-3.5%.. The true neutral rate, in my opinion, is much closer to 2.5-3% percent, and that’s the repricing that is going on in the system.”

Jesper said that a big reason the Bank of Japan has moved slowly on this is due to structural fragilities in the secondary banking system, many of which are losing deposits as an aging rural population shrinks.

But those fragilities are being mitigated - about 8 billion dollars of private equity capital is currently focused on consolidating the secondary banking system. “In other words, you have a white knight in terms of private equity firms wanting to consolidate the financial system,” Jesper said. “Over the next couple of months, we should see one or two headline cases of some of the regional banks actually being integrated.”

❗Once the Bank of Japan is confident that’s going smoothly, he thinks they “get a green light to actually normalize the policy rate.” He predicts a rapid acceleration in the back half of the year, forecasting that the official policy rate will climb from 0.75% today to 2.25% by this time next year.

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CLEAN UP IN AISLE ZOMBIE

The consolidation isn’t restricted to regional banks either, meaning that Japan’s long-standing policy of preventing bankruptcies at any cost looks like it’s coming to an end.

Now, the ruling LDP party is “actually confident that you can let the zombie companies go,” Jesper said. “All the conversations I have with the Prime Minister’s office are around creating regional and national champions that can actually compete against [the likes of] Samsung or BYD.”

🪢More from Jesper: Towards National Champions

Private equity also has a role to play here, Jesper said, as do activist investors “sort of nudging the CEOs [about the fact that] they have the capital markets on their side if they have a growth strategy that focuses on consolidating the industry. So there’s a good ecosystem starting to be built here. I don’t expect failures; I do expect consolidation.”

And Jesper also sees megabanks getting involved, pointing out that Sumitomo Bank has bought a 10% stake in SBI group, known as an aggressive relatively new institution.

“I think you will see Japanese mega banks taking more risk by actually starting to do some of that consolidation in the secondary banking system, as well as Japanese megabanks taking the lead in issuing their own stablecoins and starting to raise their independence from the current settlement systems coming through.”

THE BIGGEST RISK OF THIS GOING WRONG

🔒The conversation continues below. Jesper discusses what could change the Japan bull story, why the demise of the carry trade is imminent, Japan’s take on AI, and the sectors of the Japanese stock market he’s keen on. To upgrade your Market House membership and get access to the whole thing, right this way.

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HAPPY BIRTHDAY DALE…!

H/T to someone in Dale’s Discord for that… (if you’re not in there, it’s free to join here.)

Let’s get into it…

NAT GAS

Dale’s been flagging nat gas to us for weeks, and yesterday he said he thinks “this is an embryonic bull market… I actually think we’re going to take out these highs.”

He highlighted a classic technical formation and a subsequent breakout that has now survived multiple tests. If you’re not in the trade already, he said “you didn’t buy the bottom” but “you’re not late… It’s just started. Your probabilities to be long now have more evidence behind it than it did down at the lows when I was bottom picking it.”

However, the narrative hinges on maintaining current support levels. “If you’re long natural gas, you do not want to see it close back under [the2.80] lows because that would tell you Pinkert was wrong about an embryonic bull market and it was just a nice swing trade,” he said.

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SEMI STALL?

Dale thinks the dominance of the semiconductor sector is being challenged by broader market strength. “There’s been some rotation out of semis because the market’s been much stronger than the semis have, the socks and the S&H,” Dale said, referring to the PHLX Semiconductor Index and the VanEck Semiconductor ETF.

“The SMH looks kind of toppy to me. It’s sitting on its nine-day [moving average] too. I’m not looking for a crash, but, you know, semis could pull back SMH towards 500 and maybe in a hurry,” he said.”

He’s a “stubborn bear” on SMH - not for a crash though, but for “a break to buy” maybe when SMH gets down 10%.

There are lot of conflicting things happening in markets, Dale said, and one good example is poster child NVIDIA. Even though it got hit late in the day yesterday, Dale said it looks like it could be on the way to a third drive to a top:

OIL

While Dale remains skeptical of an Iran peace deal, he sees technical potential for a WTI flush to $70 if it does occur - a “peace dump,” if you will. “I’d be buying every oil share on the market if that happens,” he said. “Because that would be a three drive. I’d buy one big flush in oil to 70.”

This bullishness on a deep retracement is coupled with a view that the structural problems facing the oil market are merely delayed rather than resolved. “I think the problems with oil are later,” he said.

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S&P

Despite the S&P reaching new highs, Dale said he wouldn’t be buying it at current levels (but would buy it below 7,135).

He pointed out that the index is no longer moving in lockstep with underlying momentum indicators. “It’s almost more bearish to me now because last week we had no divergence in the S&Ps when I was calling for a double top,” he said. “But even with the new high, we’re diverging on the daily.”

However, his caution is short-term, and he can actually see a “third wave” technical path to 9,000 for the S&P:

“If we just get a pullback and halfway back is going to be around 6900, and then we have a third wave… you might get 2000 handles from seven. That will give you 9,000 in the S&Ps.”

BONDS

While TLT has shown signs of life, Dale warned that it’s currently testing technical ceilings: "TLT put a nice follow through week after this reversal. But we're into some resistance here”…

Dale thinks the recent price action in Treasuries appears to be driven more by positioning than a fundamental shift in sentiment. He said the move could be fleeting, noting that “the initial phase could just be short covering, a little relief.”

“I’m sure there aren’t a lot of bond bulls out there right now after what we’ve seen for the last few years,” he said. “Maybe this is a turn I want to see how it acts on a break… Even if I wanted to buy bonds, I would wait for some type of retrace to see how it acts. I wouldn’t reach for them right here.”

CURRENCIES

The US dollar has entered a period of relative stagnation, though Dale suggests that a decisive move may be approaching. “The dollar actually rallied for a couple of days when you think it would have been weak on the hopes of a peace deal,” he said. “But yesterday they reversed it, failed for major resistance, 99 and a half again.”

He said the dollar’s influence on the broader market has been muted of late, but warns this is likely to change: “Basically the dollar has done nothing for such a long time that it hasn't been a factor because we've just been moving sideways,” he said. “It will become a factor when we start closing over 99.5 and then par and a half, but there could be one more break here towards a low 98s.” Dale would be a buyer of the dollar down there, and would be looking to sell Euro and Cable."

METALS

GOLD

Recent technical breakdowns have clouded the immediate outlook for gold, Dale said: “I'm much more neutral short term with gold. I had the breakdown this week... now we negated the breakout. We could wash out.” King Dollar’s key here too: "The whole key is going to be the dollar. If the dollar roars and I don't get a pullback to 98.10, this will abort too.”

GOLD MINERS

There are pockets of relative strength within the mining sector, he said, specifically highlighting GDX: “GDX actually held up better than gold.” “Maybe we’re going to get a rally.”

SILVER

“I'm still more negative silver because of the gold silver ratio... gold's up 1% today and silver's unchanged,” he said. “So, unless gold is just going to drag silver up, my preferred setup is when silver is leading the way. It's more of a pure precious metal bull market.”

💡“I believe that the gold silver ratio is headed higher,” he said. “It's going to cause silver to way underperform gold. I prefer longs and gold when the metals are weak and shorts and silver when the metals are strong.”

COPPER

"In copper, I think we peaked and we're just correcting that decline and there'll be a selling copper too,” he said.

FOOD AND FERTILIZER

DBA

“This chart doesn’t look good to me,” Dale said. “I don’t think we’ll make new lows, but I think we could probably buy a deeper retracement.”

WHEAT

"Right now, wheat Looks pretty weak,” he said. “Maybe we’re going to have a chance to buy back at the 540, 550 range.”

Elsewhere, corn looks weak too, but soybeans have been “holding up the best.”

CRYPTO

BTC

“I was looking for 72,000 and we almost got to 72,000,” he said. “We’re starting to get some divergence here.”

“There’s been some call buying in Bitcoin... I’m thinking you take a shot at the long side around 72 and you risk about six to 68 but this is a channel that has to hold that comes in about 71 or so,” he said. However, if it doesn’t hold then a breakdown could lead to 60,000 or even 50,000.

ETH

Meanwhile, “Ethereum actually looks like it's putting in a higher low,” he said. “It's going to be interesting to see if it could start to hold if the market corrects.”

AND FINALLY…

A quick programming note… While there’s plenty of market action, we’re entering the summer days when people start switching off a little earlier and enjoying some long weekends.

The bad news… Dale’s Friday residency isn’t happening this summer.

The good news… Starting next week, it’ll be Dale’s Wednesday residency instead. 🥳

So, on Fridays during the summer, we won’t have Talking Markets.

We’ll also delivering some extra For the Record and Macro Session episodes during the summer for members. We’ll keep you posted.

Thanks for all of your support… And have a great weekend.

Thank you to everyone who tuned in live…! We’ll be back Talking Markets on Monday With StoneX Group’s Vincent Deluard.

Important Disclaimer: It is crucial to remember that this article is for informational purposes only and should not be considered investment advice. Consult with a qualified financial advisor to assess your risk tolerance, investment goals, and overall financial plan.

(Special h/t to for intro’ing us…!)

THE ONLY SECTOR THAT’S WORKING… BUT IT’S FRAGILE

Quinn says tech is overbought and “looks and smells like a bubble, but people get mad when I say that.”

Retail is poouuurrring into leveraged semiconductor ETFs (example below), and while Quinn said he imagines it’s priced in, “in 2021 things were priced in for a while too.”

“It’s really the only sector working in the market,” he said. “Then when you have these mechanical vol dynamics that keep the indices pinned and drifting higher, you get momentum piling in.”

💡”I wouldn’t put my money there at this stage. I think we’re reaching a point where this relative outperformance is getting pretty extreme and probably more fragile,” he said. “That’s not to say they need to come screaming down, but I think looking for less crowded pockets of the market is probably prudent.”

There are huge moves - 5, 6 standard deviation moves - happening inside the momentum factor right now, Quinn said, and when you look what’s inside it, it’s semiconductors, NVIDIA, Micron, etc. “So it’s just one trade.”

There’s also a big impact on indices - if you’re an index ETF buyer, you may well be in more tech than you think. “The indices are really just tech now, because NVIDIA is 9% of the S&P 500, companies in the S&P comprise about 80% of the overall market cap weight… So I think it’s less useful to look at the indices because they’re all sort of become the same.”

So, what could take it down? “A lot of times it’s unrelated market macro catalysts,” Quinn said. “It could be something in Japan, could be something with forex, or bond market volatility. At some point there’s going to be a slowing of this trend.”

ENERGY AND COMMODITIES: A TRADER’S MARKET

It’s a “trader’s market” prone to “nasty positioning rinses” right now, Quinn said, but he does think commodity prices will “continue to drift higher over time.”

• Oil and the Mid-Terms: Quinn is skeptical of current oil price signals. “The administration approved 170 barrels of the SPR to be released, which would take it down to the operational minimum,” he said. “If you map out the levels of drainage on a weekly basis, it pretty much lasts until the mid-terms. Effectively, it’s the classic politician move to keep prices suppressed into midterms and then kick the can and not really care about the repercussions after.” Right now, he’s a “big fan” of “things that capture value in the longer parts of the oil curve, eg dated Brent futures going out to December, sometime in 2027, which “kind of reduces the [impact] of the Trump headline propaganda.”

• Energy as an AI Powerhouse: Energy is “a very critical component of the AI CapEx trade,” and Quinn thinks capital will move from semiconductors into power generation: “I wouldn’t be surprised if those flows from the thematic bulls in that trade start to make their way into [things like] natural gas, solar... Uranium... all these power generation and electric kind of realm areas.” He believes stuff like solar and uranium are becoming “accepted by both [political] parties,” making them attractive long-term positions regardless of election outcomes.
  
  He also thinks capital will start rolling back into some of the raw good inputs of the AI trade in the coming months - silver, platinum, etc.

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QUINN’S HOUSING THESIS

Quinn’s housing thesis is centered on the idea that the sector has been “left behind” and “unloved” for nearly four years, struggling with high interest rates and labor shortages. He sees a bifurcated market where high-value homes remain in bull markets while the lower-tier segment suffers from a lack of affordability and an ongoing recession among the middle-to-lower income groups.

He views housing as a great inflation hedge (and sees more inflation coming because of factors including government reaction to AI-related job losses). Central to his thesis is a historical parallel to the 1970s, where rising rates did not stop price appreciation:

“My biggest view there is that from 1970 to 1980... It’s hard to believe, but mortgage rates over that time period doubled. So it went from like six to seven to 12 to 14%. And home prices tripled... and that’s really over that time period, it’s a lot of inflation.”

He said rising replacement costs will inevitably drive nominal home prices higher:

“If you think about replacement costs, every input into a home is increasing. The land, the labor... all the raw goods, concrete, cement... fuel... I think you’re looking at like probably inflation plus two or three I think on average. And if it’s a good area I think you’re looking at inflation plus like five to seven percent.”

This thesis also matches with Quinn’s bond bear stance. He said that “locking in those 30-year fixed rates is advantageous” because he anticipates long-term financing rates could rise to “8-9% over the course of the next few years.” He believes that even if real returns decline, nominal prices will be supported by a government that doesn’t want to allow economic pain:

“The policy maker reaction function will prolong and harden the inflation response just given they have no appetite for pain. And so they’d much rather... take the pain via inflation, where in a real world, your returns fall, but the numbers still go up. You’re not seeing job losses and nominal declines. You’re seeing inflation and real return declines.”

💡He also sees a contrarian opportunity in homebuilders, noting that “in 2022, homebuilders outperformed... [even though] rates rose the whole entire year,” and he believes most speculative “tourists” have already left the trade.

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BONDS

While he’s a bond bear longer-term, Quinn thinks the administration will “keep a lid on” yields for the rest of this year, partly because the consumer is struggling. He’s a “fader of rate hikes” at the moment, pointing out that “central banks typically never hike into an energy supply shock.” He added: “With 1.5 hikes priced in by mid-27, I’m a buyer of SOFR futures.”

However, he said that the eventual policy response to economic weakness will be inherently inflationary (his 5-year view).

He’s closely monitoring the steepener trade, which he says “has perplexed everyone as it has gone nowhere.” He attributed this stagnation to geopolitical events, saying that the “Iran war really pushed out any potential Fed accommodation, which is growth negative.”

🪢Must-read: Scouting the Tape - Bonds ‘R F’d (Lekker Insights)

QUINN ON…

IPOS

The scale of upcoming IPOs including SpaceX is “historical,” he said: “We're talking potentially 4-5 trillion in market cap from 3 companies that would automatically instantly put them in the top 10 US publicly traded companies... Never remotely even close happened in history.”

Regarding index implications, he said, “If you add $4 or $5 trillion of market cap new companies to that, you have to mechanically reduce the other positions to make room.” He expects these IPOs will be “advertised gloriously to retail” and could “moon in the first couple of weeks to astronomical, fully diluted market caps.”

GOLD

Gold and gold miners have been “pretty left behind” especially compared to the tech sector, and Quinn expects them to come back into fashion in the next risk-off period. That, he thinks, could happen “summer into fall.”

CRYPTO

“Bitcoin is underperforming drastically versus every other tech sector,” he said. Despite massive purchases by MicroStrategy, Quinn pointed out a "huge overhang of supply, demand and balance" and poor liquidity. He said speculation is stalled because “you need a prosperous Main Street and economy for people to want to start speculating.” The market needs “time-based capitulation, sometimes more than price,” he said, adding that he thinks the market will “at least revisit the lows in Bitcoin” and won't be '“interesting until Q3, Q4.”

Thank you , , , , , and many others who tuned in live…! We’ll be back Talking Markets on Friday with Dale.

Important Disclaimer: It is crucial to remember that this article is for informational purposes only and should not be considered investment advice. Consult with a qualified financial advisor to assess your risk tolerance, investment goals, and overall financial plan.

We met Robert at ’s TG Macro Conference back in February, and quickly realized we had to chat to him on camera. Robert’s boots-on-the-ground data shows that tech’s digital footprint is starting to be held hostage by old-school geopolitics, supply chains, and Joe Public.

Let’s get into it…

THE FERTILIZER CANARY IN THE GEOPOLITICAL COAL MINE

When it comes to the Strait of Hormuz crisis, the market’s focus on oil is far too narrow, Robert said. The real, immediate threat of the blockade in the Strait of Hormuz isn’t just about oil tankers; it’s about the vital inputs that keep the global agricultural sector from collapsing.

“A lot of the public and media focus on the Strait of Hormuz has been about oil. And I’m not saying that’s not important, but don’t forget sulfur, sulfuric acid, which is important in petrochem, urea, phosphate fertilizer. Depending on which one we’re talking about, we’re talking about 10, 20, 30% of the global supply of those fertilizers coming through the Strait.”

Robert read data from a recent Senate hearing on fertilizer from a developer building a fertilizer complex in Nebraska, highlighting the exact on-the-ground cost pressures :

“Since February... We have seen a 33% rise in anhydrous ammonia prices, 55% rise in urea, 25% in liquid nitrogen and 5% in DAP, 3% in potash . Same time, farm diesel prices are up 72% increasing the cost of field work, fertilizer, transportation and irrigation. So those are massive increases in farming, which of course is a difficult business to begin with.”

The anxiety from people directly affected by this is real. Robert just got back from addressing rural electric cooperatives in Wyoming:

“I was speaking to Wyrulek, which is a rural electric cooperative in Southern Wyoming. The audience, 300-400 people, all ranchers and farmers. And to hear them talk about what’s happening with fertilizer prices, diesel fuel prices, they are very, very concerned.”

THE PERMIAN PARADOX: NEGATIVE GAS PRICES

While the rest of the world (TTF in Europe and JKM in Asia) deals with natural gas prices ranging from $17 to $19, the US remains insulated by the shale revolution, with Henry Hub sitting near $3. In fact, in the Permian Basin, an overwhelming surplus that has occasionally led to negative prices.

“At the beginning of this month, the natural gas prices in the Permian Basin here in Texas, in some cases were as low as... minus $5 per million BTUs,“ Robert said. “In parts of Texas... natural gas prices were not selling. They were giving them away. So if you have a fertilizer plant in West Texas, you were getting natural gas suppliers to pay you to take their fuel because there’s so much gas.”

Quite extraordinarily, Permian is producing more gas than the entire country of Canada, and yet there is not a single gas rig running in the Permian Basin. The gas is a byproduct of oil drilling, creating a massive, low-cost supply that serves as a deflationary shield for the US economy, at least for now.

Robert’s thesis:

“My hunch is that those European and Asian prices are going to pull Henry Hub higher, but how much higher is the question... Because the drillers are so good at responding to price signals.

The US is sitting atop galaxies of natural gas and they just keep and the drillers keep getting better and better at producing it. So could we see $4, $5 natural gas? Yes, we could. And I think that would be good for the drillers. But I think still this differential between the US and Asia, US and Europe is going to continue because you got to put it on a ship. You got to freeze it, put it on a ship, unload it. And then that adds, you know, depending on what number you’re five, six, seven dollars per million BTUs.”

AI IS A NATURAL GAS STORY

Despite the push for “clean” or “alt” energy, the physical reality of powering the AI revolution comes down to one fuel: natural gas.

“AI is a natural gas story, right?” Robert said. “The power for AI is all going to be generated, nearly all of it will be generated by natural gas-fired generation, whether it’s reciprocating engines... or gas-fired turbines. There’ll be some wind and solar and a little bit of batteries... but it’s a gas story”.

However, the “Giant Five”—Microsoft, Apple, Google, Amazon, and Meta—are so cash-rich that they are becoming price-insensitive. They are willing to outbid everyone else for parts and power, which Robert warns will drive up electricity bills for everyone else:

“If the hyperscalers can come in and bid up the price, say, of transformers, what does that do for Wyrulek or a small electric cooperative in Wisconsin or you name it, right? So again, these repercussions, these impacts are felt more broadly in the economy because of this, you know, the market size and market power of the Giant Five.”

THE UNPRECEDENTED POPULIST GRID REVOLT

But the tech sector’s assumption that they can simply buy their way into unlimited grid capacity has ignored a vital variable: local human nature.

A grassroots backlash is starting to get real traction across the country. Local citizens, farmers, and ratepayers are looking at these massive concrete server complexes and realizing that they are consuming their water, ruining their local environments with high-decibel cooling fan noise, and hogging their regional power supply.

The sheer velocity of this resistance is catching Big Tech completely off guard. Robert’s tracking data reveals a trend:

“89 rejections of data centers, rejections or restrictions of data centers in the US... just since January 1st. There were 49 in all of last year and I think four or five in the year before. We’re seeing an unprecedented backlash against big tech, Silicon Valley, the tech elites. I’ve never seen anything like it.”

🔒The conversation doesn’t end here. Below the paywall line, we dive into the details of this populist uprising. Robert takes us directly onto the ground to analyze town hall showdowns where billionaire investors are being shouted out of rural counties, problems on the supply chain side for the US, and reality checks on alt energy and nuclear.

To unlock full access to this and all future editions of ‘For the Record,’ upgrade your subscription here.

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BONDS

Dale believes we may have reached a pivotal moment in bond pricing. “I haven’t seen this kind of price action in rates in a long time,” he said. “The target off the bear flag [in TLT] was 82. The low was early this week at 82.70, close enough for government work. And then by the end of the week, we actually have a reversal week in bonds at this major 82 support level.” This 82 level represents a line in the sand for the market’s perception of the new Fed leadership, and the reversal suggests that shorts may finally be finding a reason to cover.

Despite the potential floor in long-duration bonds, the short end of the curve continues to reflect intense pressure. Dale pointed out that the two-year yield remains a source of concern for those hoping for an immediate peak in rates. Looking at the 2-year, he said:

“This does not look like rates have peaked. It’s almost like we have from a steepening to a flattening happening and maybe the bonds are smelling something about between rates and inflation that maybe people want to lock in some duration.”

Regarding the 10-year, which recently touched 4.70%, Dale remains skeptical that a final top is in place due to the lack of technical divergence. “Even though we’re pulling back, we got to 4.70, about 4.69. We’re pulling back. There could be higher targets or this could be it. Maybe rates are turning,” he said.

S&P & NASDAQ: POTENTIAL DOUBLE TOPS?

Dale is now warning of a potential double top formation in the major indexes. While the recent move up is statistically significant, the shorter-term charts are showing signs of divergence. “And it looks like we have the potential for a double top. We failed to make a new high, but even if we did, what’s different about this rally compared to this rally is this high was confirmed. So this was a pullback, but this time it looks like we’re not going to confirm even if we make a new high. and it may have been a failure to do so here,” Dale said of the S&P 500. He sees a similar lack of confirmation in the tech-heavy Nasdaq, noting that both are diverging on the four-hour timeframes.

Dale isn’t saying the bull market is over, but he does still think it’s due a healthy correction:

“Whether the S&Ps make a new high or not, I’m looking for a pullback to the 7,100 level. Same story as last week. Okay, this time I have even a little more conviction because of the divergence, and so I think that we could have a decent break. We get through there, we could go halfway back to 6,900.”

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SEMICONDUCTORS: PULLBACK INCOMING?

Dale is concerned that the sector is becoming overextended. He pointed out a three drive formation that suggests that even if the index makes a new high, the internal participation is weakening. “Some of the leaders did not make new highs, even though the SOXX and SMH did,” he said. “Micron is a failing rally. And SanDisk looks worse. Why aren’t the leaders making new highs with the indexes? Even though these bounce back, they look like failing rallies to me.”

The risk here is that if the semiconductor engine stalls, it will take the rest of the market with it. “It’ll take the whole market down,” Dale said when asked if rotation could save the indexes. He compares the process of forming a major top to the slow turning of a massive vessel. “Tops take time, just like it takes an aircraft carrier some time to turn around or a tanker to get from Hormuz to their home country. So tops and bottoms at times have to develop. They have to distribute stock. So to me, it looks like there’s some distribution coming in here.”

AGS

Cocoa

In cocoa, Dale sees a potential entry on a retracement. "Nice pullback in here. Right into a gap. This is retracement week. So you measure from here to here and then put a price order in at 6.18 back and risk the low. That's how you would construct a trade,” he said.

Sugar

For sugar, Dale is looking for a break toward 1,400 to clear out existing long positions.

Corn

And he’s also waiting for a specific level in corn, saying, "450 would be a good area to start looking at corn."

Wheat

Meanwhile, in wheat, Dale is looking for a deeper shakeout. "My dream scenario is that we pull back all the way back towards 560, 540 in the coming weeks, in the next month or so, just to shake out all the bullishness and all the people that got long food after the war started," he said.

METALS

Dale remains firm in his bearish outlook for gold: "We're at another real critical level right here,” he said. “So a lot's going to have to do with what the dollar does. We still were lower on the week and the dollar didn't do much, but I know it's hard to see, but it was a down week in gold, a shade of an up week in silver, but I'm still bearish and I still do think we're going to 3,800.”

He pointed out that while some pivots have held, the broader trend is under pressure, and he is watching the dollar's strength as the primary driver for the next leg down in metals.

CURRENCIES

CAD

Dale was long CAD early in May, and has had a pretty great run with it: "I was long the Canadian dollar. I went to the door. I said, close enough for government work. Book ‘em, Dano.”

Euro

Dale’s now looking for a potential relief rally in the Euro back toward the 1.680 or 1.170 levels, though his core bias remains dollar-positive

DXY

Speaking of the dollar, DXY recently failed to break through the 99.5 level, but Dale views this as a temporary setback rather than a trend change. "The dollar failed to get through this 99 and a half level. So I actually even scalped it from the short side, but I'm still buying breaks all the way down to, you know, 98. I still think that you have to be long the dollar in this environment.”

DALE ON…

BITCOIN

Dale sees the potential for a shift in sentiment for crypto: "Bitcoin also has maybe a taste of risk off coming. The key in Bitcoin is going to be about 72 K, which is a target I've been talking about.”

OIL

It’s still “sideways,” Dale said. He drew a line that shows, “if someone put a gun to my head, the possibility of [around] $71 [in WTI.] The other possibility is breaking back out above $100.”

TESLA

Tesla right now “looks like this is a failing rally,” he said. “So that's not that bullish looking. We haven't made a new high in Tesla in how long? December. I think it's a sell with stops over the high and that you could get a pretty good break.”

Thank you , , and everyone else who tuned in live…! As markets are closed on Monday in observance of Memorial Day, we’ll be back Talking Markets on Wednesday, May 27, with Lekker Capital’s . Have a great weekend.

Important Disclaimer: It is crucial to remember that this article is for informational purposes only and should not be considered investment advice. Consult with a qualified financial advisor to assess your risk tolerance, investment goals, and overall financial plan.

As he wrote last week:

Let’s get into it…

A “NERVE-WRACKING” MARKET: CHOOSE YOUR FIGHTER

It’s a very difficult and nerve-wracking market right now, TG said. You basically have to believe one of two things:

• The Strait is going to remain closed and the oil price is going to migrate higher for longer, or

• President Trump and his diplomatic team are going to be successful, reopen the Strait, and oil is going to go back in its “natural direction, which seems to be grinding lower”

These are two pretty divergent roads as is, but then you have the added wild card of, if and when the Strait does reopen, is it going to be 100% for business with no capacity constraints, etc?

Trying to trade this - or trade around it - is hard, Tony said: “A lot of those decisions, you don’t get a lot of time. You lose a finger in this market really quickly with the way oil is gyrating higher and lower.”

And then there are all the other market inputs:

• Inflation expectations

• Bonds reacting and rates breaking out

• Pressure on physical commodities

• Short covering in technology and the semiconductor “bubble”

Yeesh. In true TG fashion, he said: “Everybody’s sitting there going, I don’t know whether to scratch my ass or wind my watch.”

TECH VS COMMODITIES: 2022 REDUX?

If you take away the semiconductor rally, TG pointed out, this year’s leadership is “still all commodities.”

Tony’s trying to be in the right sectors, and is currently feeling like the semiconductor rally might be running its course. “I need tech to back off so all that money can flow into the commodity space like we had in 2022,” he said. “[In 2022], tech got clobbered, commodity sectors and metals and mining were up 15-30%, and the S&P was down 15% because it’s all heavily weighted in big tech.”

Tony was expecting a similar year this year, but the Iran War kind of threw everything up in the air, including in commodity markets: “The energy sectors leapfrogged the mining sectors that were all out in the lead,” he said. “Now it’s oil services, E&P, North American oil and gas that are all in the lead alongside the semiconductor bubble… So, something’s got to give.”

We could be in one of those scenarios where “we look back and say, ‘man, that was an easy semiconductor short into that spike with inflation starting to catch fire,” Tony said. “Just from watching the stocks, it seems like they’re getting to absurd levels and multiples and it doesn’t seem sustainable.”

But on the other hand, “I’m literally just a little bit scared that the trend could be changing a little bit unless semis back off,” he said. “If semis back off, I’ll be full bull, hook, line, and sinker into the commodity space again. But I feel [semis] are taking up a lot of capital in the room and people are chasing that and fading the metals trade.”

MINING

Tony’s been long industrial miners, gold miners, and uranium miners and “they’re all in the tank,” he said. “So it’s been very much a treacherous trade. Luckily, we grabbed energy to offset some of those mining losses. But we’re bobbing and weaving. It’s just been hard work to stay alive.”

💡When oil sells off, buying miners “will be the trade,” Tony said. “[But] the visibility on that right now is completely zero… We’re not anywhere near a phase of going back to that new regime of resource nationalism that we were very comfortably cruising at before the Iran War.”

❗”If you’re flat, this is a place to buy XME and GDX,” TG said. “It’s a great spot for first time money. If I wasn’t in them, I’d be sitting around these prices looking to pick away from the long side.”

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THE EASIEST TRADE RIGHT NOW

The easiest trade right now is “be long gold,” Tony said. That’s at least in part because there’s so much oscillating elsewhere. “[Gold] is low volatility, it’s staying in a range, it’s finding value at the bottom of the range and migrating higher for no reason, it’s selling off from the top of the range for no reason… It’s just at a comfortable price. And it’s not under any pressure to break in any direction right now.”

💡”In this market, where sectors are shooting off in every other direction, the good trade for me is to sit in something that’s not giving away money,” Tony said. “It’s hard to stay right-footed when oil comes in up 10%, down 10%, up 10%, down 10%. That’s the thing that everyone’s facing.”

And looking further out than just a safe place to sit in, Tony said he thinks that once the Iran War is done and oil prices calm down, “probably quarters from now,” we’re going to go back to the Dollar Decimation Trades:

“We haven’t stopped anything in our spending or borrowing and that whole reflex flywheel is still in motion… There’s a new high in our deficit, new high in all of our borrowing, the Fed’s got to print money… All of that crazy s*it going on and all of that is still bullish gold and silver under the surface.”

NVIDIA

It’s “still a bubble” but “we have no idea how big it’s going to get,” Tony said.

Look out today how NVIDIA opens after it yet again beat expectations yesterday: “If it comes in at a new all-time high, I’ll take a shot at shorting that,” he said. That said, it’s done similar before: “3 or 4 times before, it’s gapped open to a new all-time high, collapsed after earnings, and then it just holds trend and keeps going.”

But, “at some point it’s going to be a top,” Tony said. “It’s going to test the 200 day and it’s going to break down, and instead of recovering like it did a couple of weeks ago, it’s going to keep going… I would love to see this thing teed up like a beach ball back at the highs to give us a chance to sell it.”

TG ON…

RISK MGMT IN THIS ENVIRONMENT

“Where I’m wrong or where I’m taking profit on a trailing stop, I’ve been happy to just let the market take me out and de-risk a little bit,” Tony said. “Rather than having 10 positions on the pad, have 4 or 5 or 6… It’s a little bit easier to manage, a little bit less P&L volatility, a little bit of a pile of cash to deploy when you see the opportunity that you really are excited about.”

TRUMP’S TRADING

From the WSJ: “Money managers for the president made more than 3,700 trades in the first quarter, including million-dollar purchases of Nvidia, Dell and other Big Tech stocks.”

“How is that even possible for the President of the United States?” Tony asked. “This is a guy that’s moving markets. So is he moving markets to get out of the trades in his account? Or is he moving markets to try to actually bargain? So the whole thing just looks like the biggest sh*t show anybody’s ever seen.”

IPO SZN

With a lot of talk around the SpaceX IPO, as well as the potential Anthropic and OpenAI IPOs, Tony said there’s nothing like an IPO to mark a top: “It could be another AOL Time Warner to mark the top of a bubble in semis… That would be pretty cool.”

GLOBALISM

“Globalism is over,” Tony said. “The technocrats were riding high for 20 years, flogging the Constitution to move fast and break s*it… I think this is kind of the end of that run for them. They’re not going to get preferential treatment anymore. I really believe that AI is pretty much the end of the road, because we’re not going to go for biometric chips in our bodies or anything like that. I don’t think people are going to give up their divinity to these tech dweebs.”

S&P

“I’m trying to not worry as much about the direction of the S&P and just try to be in the right sectors,” Tony said. “30% of the S&P is the Mag 7, so if you’re not trading the Mag 7, why are you even paying attention to the S&P?”

TG MACRO CONFERENCE 2

Put these dates on your calendar folks… On February 18 and 19 2027, the TG Macro Conference returns to the Virgin Hotel in Nashville. After this year’s was so damn good, expect it to sell out pretty quickly. Tickets will be released in June.

Thank you , , , , and everyone else who tuned in live…! We’ll be back Talking Markets on Friday with Dale.

Important Disclaimer: It is crucial to remember that this article is for informational purposes only and should not be considered investment advice. Consult with a qualified financial advisor to assess your risk tolerance, investment goals, and overall financial plan.

BOND MARKET “DIRTNAP”

Back in February on Talking Markets, George had a very prescient take on bonds:

Yesterday, he said: “There were good reasons to be concerned about bonds already back in February. Now people have woken up because yields spiked and the market finally sold off…. [but] this problem didn’t just start last Thursday. This has been building for some time.”

“How much sense does it make to buy a 10-year piece of paper yielding 4% when you’ve got 7% budget deficits, copious money printing, rising commodity prices?” he said. “It doesn’t. I would argue that real interest rates have been too low.”

❗”Things don’t matter until they matter,” George said. “The market only has the ability to focus on one thing at a time, whether it’s the AI trade or tariffs or whatever. It’s always a shiny object. Meanwhile the termites are working away in the background.”

THE IRAN WAR

George thinks the markets have been “remarkably sanguine” about the Iran war up until now, especially as he doesn’t “see any reason why the Iranians are going to give in.

Oil is now starting to tell a different story too, he said. Looking at deferred contracts - agreements where the physical delivery of oil or the payment for an oil shipment is postponed to a later date - George said “they were remarkably well behaved up until recently, and that’s important because energy stocks are most highly correlated to long-term prices, deferred contracts.”

What George is now starting to see is the back end moving up, which is telling us “this is not going to go away as quickly as some would like to believe.”

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THE REAL THING(S)

In a recent Substack, George wrote:

“A financial asset is a claim on something,” George said yesterday. “You always have to be able to service whatever your obligations are… When the size of the financial economy becomes so big relative to the real economy it becomes more and more difficult for the real economy to service all those obligations.”

Speaking of financialization, George is particularly concerned about some of the IPOs coming up, including SpaceX. “You look at some of the valuations being put on some of these things… they’re fanciful, to put it mildly,” he said. “And it may all be fun while it’s happening, everyone’s getting drunk, but eventually there’ll be a hangover with it.”

💡”I actually think SpaceX is a watershed moment for markets,” he said. “They walked up the valuation from $200 billion to $400 billion to $800 billion, and then all of a sudden it’s $1,775 billion. Says who? Says Elon Musk. Just because he says so is what it is? No. They’re doing about $15 billion in revenue… It is pure la la land right now. And they’re not the only ones.”

INTERLUDE: JOIN GEORGE’S BEST INCOME IDEAS ONLINE SUMMIT

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AI BUBBLE?

George is concerned about both the valuations and the business models in the AI sector.

Comparing it to the dot-com bubble, he said “the issue wasn’t that the Internet didn’t grow the way people said it was going to. It did grow the way they said. The problem was that the Nortels and Lucens and Cisco’s and AOLs of the world had no path to monetization in the relevant time frame, [and] all those stocks got obliterated.”

As an example, George flagged ChatGPT’s $20 retail tier: “That $20 price tag captures only a fraction of the cost of the energy that is required by ChatGPT to run the thing… In my view, there’s no credible path to monetization which is going to come remotely close to justifying these valuations.”

💡”I think the story is starting to fray around the edges,” he said. “And all it’s going to take is one of the major hyperscalers to announce they’re delaying or cutting back on CapEx (that’s the warning sign Brent Donnelly’s looking out for too) and this thing is going to implode so fast it’ll make your head spin.”

WHAT GEORGE LIKES RIGHT NOW

Currently, George sees significant value in the energy sector, which he believes is still “way underappreciated. He highlighted a massive disconnect in market representation, noting that “energy free cash flow is going to account for 13% of S&P free cash flow, but it’s only 4% of the index.” He particularly likes service companies and drillers herebecause “we’re going to need more oil. There’s no two ways about it... global oil consumption is at record highs now.”

In the metals space, George is strategically bullish on the “whole mining complex.” While he acknowledges that recent price action has been volatile, he still “strategically, not tactically... love the miners, not just the gold and silver guys.” He suggests that gold prices could “easily” reach “6,000, 8,000 10,000,” a move that he believes would cause mining stocks to “double or triple from here.” He pointed to specific value in companies like SSR Mining (SSRM), which said is trading “on seven times earnings, not cash flow, earnings.”

George also sees major opportunities on the short side, specifically within consumer stocks. He said internals of the market are flashing warning signs for names like Home Depot, McDonald’s, and Lululemon: “They’re a disaster… There’s a lot to do on the short side of the consumer stocks.”

GEORGE ON…

THE FUNDAMENTALS

It’s neither a pro nor anti-Trump statement to say that “Trump is a volatility generating machine,” George said. “What he says one day… flip a coin, who knows what he’s going to say the next day. I really think you have to keep your eye on the prize which is to stay focused on the fundamentals.”

INVESTING IN WHAT’S ON PAGE 16

Citing former strategist and economic historian Don Cox, George said: “He always spoke about the idea of investing in what’s on page 16 in the newspaper… The basic idea was you wanted to focus on ideas that were not front and center, that’s not top of mind for everyone.”

Thank you , , , and everyone else who tuned in live! We’ll be back Talking Markets on Wednesday at 4pm ET with the one and only .

Important Disclaimer: It is crucial to remember that this article is for informational purposes only and should not be considered investment advice. Consult with a qualified financial advisor to assess your risk tolerance, investment goals, and overall financial plan.

Let’s dig in…

BOND WARNING?

Bond yields rose yesterday to year-long highs, up to 4.6% on the 10-year and 5.12% on the 30 year. As for our old friend TLT (above), Dale said back when it was $87 that the chart looked like it was first going to take out $85, and if it did it could end up in the 70s.

Yesterday, he said the current breakdown measures to $82, “and we could be there Monday.” Pointing out all the gaps on the chart, he said TLT is “trading like a penny stock,” and while bonds “used to be the most liquid market out there, this is not an efficient market.”

🚩Working his chart magic, Dale pointed out that 82 as the low goes back to July of 2023, and that a formation starting from March of this year (when it was $93) “then we’re talking $73. And I don’t want to freak everyone out, but my third drive line comes in at $52. That’s a financial crisis. I don’t know what’s going to turn it… I don’t know what conditions besides outright deflation is going to give me a bull case for bonds at this point.”

It’s a global bond problem, Dale said, mentioning the JGBs and UK gilts too. “It’s an ugly picture,” he said. “It is getting oversold but it has the smell of a crash.”

The yield on benchmark U.S. 10-year notes rose 13.8 ​basis ​points to 4.597%, from 4.459% late on Thursday while the 30-year bond yield rose 10.9 basis points to 5.122%.

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CURRENCIES

Going home last week, Dale thought the dollar was going to head lower first, and it didn’t - it had a “pretty good week” this week:

Dale said the interest rate narrative and the sell-off in the bond market are drivers of strength in the dollar, and he’s still looking for $103 in DXY.

💡”Remember, it’s all one market,” Dale said. “When the dollar is good, it puts pressure on things. It dries up some liquidity. And when the dollar is declining, that adds liquidity to the system to just buy the world.”

Plenty happening across global currencies too:

• GBP/USD (Cable): Dale describes the recent action as “a pretty ugly week in cable,” adding “who wants to own anything in the UK with what’s going on there?” He suggested using any temporary strength to exit or short the currency.

  

• The Japanese Yen: He sees further weakness that will force official action, noting: “which tells me that the BOJ better get their wallet ready to see if they’re going to come in again at 160 US dollar yen.”

• The Canadian Dollar: Dale points to Canada as a leading indicator for the broader dollar move, observing that “last week Canada finished higher despite a lower dollar. So this was really the tell for the move in the dollar”.

• The Euro: While the pound has struggled significantly, Dale said the Euro has “held up much better.”

METALS

Gold didn’t really do anything this week, while there was an upside move in silver. “That was because the gold-silver ratio (above) plummeted one more time and reversed,” Dale said. “And that’s what’s giving us the turn where silver should really underperform gold for a while.”

• When the ratio decreases, silver is outperforming gold.

• When the ratio increases, gold is outperforming silver.

That sharp reversal means Dale is still in the sub $50 camp for silver. “When you look at silver’s weekly, it looks like the market beginning its washout phase,” he said.

As for gold, Dale still thinks we’re going lower: “I actually have targets now around $3,500, and I think we could be there in a hurry. If there’s an early week rally, I’d sell any rallies in gold and silver and buy weakness in the dollar if it gives you a chance.”

On copper, Dale said it “surprised” him to the upside but didn’t have a good close to the week, though he said it might be one to buy on a pullback (but not here). Elsewhere, platinum broke down again - it’s currently around $1,979 and Dale is looking for $1,400.

S&P: PAUSE BUT THEN MELT-UP?

The bullish scenario is that this is just a pause in the S&P before it continues to melt up:

He pointed out Wave 1 in the chart above: “What we should get is some kind of correction, maybe a quick break to 7,100, worst case 6,800, that’ll be Wave 2. And then you can look for something like almost 8,000” in Wave 3 “which would be the monster.” (which Corvin mentioned on Wednesday too).

“So this is break to buy in a lot of stuff,” Dale said. “I don’t think it’s the end of the bull market.” While at first glance that might seem at odds with what the bond market is saying, Dale said: “You can have disintermediation where rates could keep going up but the market keeps going up until… no one knows where the rubber band would snap. We had that in 1987 - rates were going up and the markets were going up, and bonds didn’t bottom out until we had the break in the market.”

Timeline caveat: Dale still thinks the “bull market is over this year.”

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SEMIS

All the semis look “heavy,” Dale said. The big ones “really got hammered this week,” including Micron down $50.

Ahead of NVIDIA’s earnings next week, Dale said: “It went from being one of the weakest semiconductor stocks to one of the strongest, but it looks heavy.”

DALE ON…

AGS

“If you missed the first wave up in grains, there’s going to be a nice entry point down the road… I think there’ll be a better buying opportunity late June.”

OIL

“It’s sideways… we could press up to new highs [but] I have not been trading it.”

NAT GAS

The reason Dale hasn’t been trading oil is because he found what he thinks is a better lower risk situation: “This will be the third week that I’ve been talking about Nat Gas,” he said. “Nobody likes it, and we’ve broken out. They say never sell a sleeping market and it was sleeping for a quarter. So this is where I’m long.”

Thank you , , , and everyone else who tuned in live…! We’ll be back Talking Markets on Monday at 4pm ET, with . Have a great weekend.

Important Disclaimer: It is crucial to remember that this article is for informational purposes only and should not be considered investment advice. Consult with a qualified financial advisor to assess your risk tolerance, investment goals, and overall financial plan.

Thanks for a fantastic chat, gentlemen…!

UP UP AND AWAY

Citing Michael Hartnett’s weekly Flow Show note, sent to BofA clients, Harry said that US stocks are annualizing 20% so far this year, gold is annualizing 30%, both tracking rare “big stuff” type events. “It’s the fourth year of double digit gains in stocks, and that only happens to stocks during war, or during peace, or during bubbles,” Harry said. “As for gold, it’s only happened during stagflationary episodes like ‘71, ‘74, ‘77, ‘80.”

On a structural level, Harry explained that these upward moves are sustained by a constant stream of "passive flows, retirement flows, demographic flows, and stock buybacks from corporates.” He argues that the market currently has "more buyers than sellers," and these flows are being directed into an equity market that is increasingly seen as a hedge against inflation. Add to that, the expansion of the monetary base, driven by banking supervisory reforms and prudential regulation relief, is providing additional liquidity that continues to push asset prices higher.

AI: CENTRAL PLANNING WITH AMERICAN CHARACTERISTICS?

The ginormous AI build-out supported by the US government is “central planning with American characteristics,” Harry said. “This AI boom definitely has bubble-like characteristics, but it’s also how American capitalism mobilizes resources for strategic imperatives. China uses explicit state planning and the US uses markets, indexation, venture speculation, hyperscaler balance sheets, tax incentives, and equity market animal spirits.”

Does this work though? Yes, Harry said, but with downsides: “It’s messy, it’s leveraged, and it’s pretty unfair to late investors, but you get data centers built, you get the power demand for data centers and the infrastructure built at enormous speed. This is just how the US gets its strategic imperatives done.”

Corvin noted that this validation is already appearing in the physical world, with "copper going through the ceiling," suggesting that the government-backed push for AI infrastructure and resources is being priced in. He added that if it all “keels over,” he doesn’t expect it to happen until the end of this year.

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THE GEOPOLITICAL PIVOT

With Donald Trump’s visit to meet Xi Jinping in China this week, (accompanied by Elon Musk, among others), Harry’s concerned that the market might be misreading the diplomatic temperature.

“One particularly astute friend of mine argued that the US is going to be deeply disappointed that in fact Xi is going to read the Riot Act to Trump and threaten further escalations if the situation in Iran gets worse,” he said. “The phrase my friend used was Trump’s up and coming China visit could result in a sharp adjustment in expectations in much the same way that Pearl Harbor had a sharp adjustment in expectations in the US.”

While the market wants to focus on this meeting being about “soybeans and fentanyl cooperation,” Harry warns that the underlying tension, particularly regarding Iranian stability and energy flows, could provide a nasty shock to investors.

IS THE INFLATION SPIKE JUST STARTING?

With high CPI and PPI readings, the question on people’s lips is: are we in for an inflation shock, and do markets care?

Harry thinks this kind of inflation surprise is actually positive for stocks. Citing a paper which analyzed which asset classes did well during the Weimar Republic, he said that in hyperinflationary environments, corporates who borrow to build hard assets effectively see their debt vanish while their equity value explodes.

“You borrow money to build a steel plant and you borrow money at 5% and then you go for a 4,000% hyperinflation and clearly your debts disappeared completely,” he said. “And that’s a boost to the value of the equity and a disaster to the value of bonds... equities are more inflation resistant than bonds.”

THE HIDDEN RECESSION

A major reason the bond market hasn’t stabilized, according to Harry, is that the labor market isn’t behaving like it used to. The gig economy may be masking the true state of the American consumer.

“If you have a gig economy and you have demographic effects eroding the supply of labor, you may never get a particularly significant erosion in employment,” he said. “Everybody might be employed in multiple gigs and they never show up as unemployed... and yet, their welfare, they might be significantly worse off. You might transition from a job making 5X to 1 making X. And, you know, we’re not accustomed to thinking in terms of that.”

THE PATH TO S&P 8,000

Despite the “clear and present danger” of a bubble, both Corvin and Harry agree that fighting the momentum or trying to call a top at the moment is a “mug’s game.”

Corvin made a brave forecast:

“Here’s my forecast. S&P 8,000 by the end of the year... if you look at trend following hedge funds, they’ve had a phenomenal year... trend following is one of those things like for years it’ll go sideways and people will complain it’s the end of that style because of the crowding effect. And then all of a sudden it just surprises you.”

Harry didn’t find the 8,000 target absurd, noting that “when you see a bubble, the correct response is to buy it, not to sell it.” He admitted that even he is seeing signs of extreme speculation in his own portfolio: “Even I’m starting to make money on penny stocks. And there’s no way that’s skill, right?”

THE EM QUESTION

Harry said that, from a purely fundamental standpoint, Chinese equities appear attractive, but he is unwilling to commit significant capital: “I think Chinese stocks are great value and very cheap, but I still don’t buy a lot of it.”

His hesitation stems from a “once bitten, twice shy” experience with Russian assets. Having owned Russian stocks when they were sanctioned, Harry remains locked out of those positions, noting that all his holdings are now frozen. He fears a similar “bamboo curtain“ could fall between the West and China, effectively rendering Western-held Chinese stocks worthless or inaccessible.

A major point of concern for Corvin and Harry is how Emerging Market ETFs are constructed. Investors often buy an “EM” label without realizing they are actually making a massive bet on a single company or region. “If you own something that says it’s emerging market, the odds of owning a ridiculous amount of Taiwan semiconductor are incredibly high,” he said. “So a lot of EM ETFs might have a surprisingly high China or Taiwan component.”

THE BOTTOM LINE FOR INVESTORS

The technicals currently show equities in confirmed bull trends, while bonds look “terrible,” Harry said. And with the SEC and FINRA lowering day-trading minimums from $25,000 to $2,000 in June, a new wave of “frothiness” and retail pumping could be the final catalyst for a massive blow-off top.

Corvin thinks there’s a ways to go before a blow-off top, though. “It’s going to be a painful end, [but] the question is when does it end?” he said. “For me, it’s definitely going to be next year. So I think from now until the end of the year, just pile into assets, commodities, equities, whatever you can get your hands on.”

Harry added that he likes commodities still because “we’re already in a wartime environment,” and dislikes bonds here because “bonds always do badly in a wartime environment.”

Thank you , , , and everyone else who tuned in live! We’ll be back Talking Markets with Dale on Friday. See you then…

Important Disclaimer: It is crucial to remember that this article is for informational purposes only and should not be considered investment advice. Consult with a qualified financial advisor to assess your risk tolerance, investment goals, and overall financial plan.

A “NEW WORLD” IN TECH

While the tech rally has been reined in slightly this morning following this morning’s announcement that CPI rose to 3.8% for the last 12 months ending in April, that follows a pretty incredible day for tech stocks yesterday, led by Micron:

“It’s a new world,” Jeff said. “This is very much like the boom that went from the microprocessor to software back in the 80s and 90s. This is the internet to AI. It’s real. There are going to be setbacks, we’ve had a couple already, but you can see by the action in tech and the stock market in the face of war in the Middle East, that the underlying technology has got legs and teeth.”

PRODUCTIVITY BOOM

💡”It reminds me a bit of the early/mid-90s, when I started working for my father and taking over the Stock Trader’s Almanac,” Jeff said. “We took the Almanac calculations that were done on paper and converted them to Excel, and there was just this explosion of productivity and capability happening. We’re seeing that just starting now with AI.”

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THE ANNUAL EBB AND FLOW

As a “brainiac of market history,” as Paul described him in the live chat, Jeff and the Almanac draws a line from the past to the present to the future. “People are creatures of habit,” he said. “And we do things in regular, repetitive manners and so do institutions.”

An example of this is his “best six months” switching strategy, developed by his father in 1986, which say the best six months for markets are November through April. But that doesn’t mean getting to April or May and exiting:

“People talk about ‘sell in May and go away.’ Well, we reposition in May, but you got to buy in October and get your portfolio sober is what I like to say. It’s based upon the mutual fund deadline, the October 31 deadline [whereby] funds have to reconcile their accounting from the previous year’s 10 months, the current 10 months, and the calendar year for transactions for year end. So there’s a forced event that happens there.”

For years, at the Almanac Jeff has overlaid that with a MACD technical indicator, and they start looking for a MACD crossover to better time the entry and exit in and out of that best and worst six months. “When we get that signal, we’ll tighten up stops, we’ll limit some new longs, and we’ll be a little bit more cautious,” he said. “It’s not ‘go away.’ It’s reposition, reevaluate, and be smart about it.”

THE TRUMP EBB AND FLOW

At the Almanac, Jeff and team have been studying President Trump: “He likes to shake things up in Q1 and then work the deal and navigate and massage the policy initiatives to keep the market moving up through the rest of the year,” he said.

This behavior, which Jeff refers to as part of the "Trump TACO trade," involves an early attempt to "shake things up early and then, okay, there's a pushback and then we got to change course.” Jeff suggests that this presidency cycle is currently "overriding" traditional seasonal patterns, such as the typical period of weakness or sideways action known as sell in May. He pointed out that while the sample size is small, "this is a pattern that is hard to deny" and currently shows the market "tracking this Trump presidency seasonal cycle.” Consequently, Jeff believes that the typical seasonal setbacks may be less impactful this year because the "Trump cycle kind of override[s] that other seasonal pattern.”

❗Jeff isn’t “full-blown, we’re going to the moon here,’” he said. Between mid-terms, Iran, and oil, “we could get a little weakness or sideways chop as things get figured out,” he said.

DON’T FIGHT THE TAPE…

“The tape is telling us what’s going on,” Jeff said. “The market is the collective understanding of all of the factors going in to the economic picture.”

What Jeff is seeing in the market at the moment:

• While the AI trade is huge, he’s been seeing some widening in market breadth (including in small caps - though he does think that small caps outperformance over the large caps may begin to level off “a little bit”)

• Among the “best sectors for the worst six month” is utilities, which shows up with “very consistent gains” March through October; along with biotech, healthcare and staples

…READ THE TAPE

“Watch the tape, read the tape, but take some profits along the way and don’t be greedy,” Jeff said. “Now that the market’s rebounded so much, it might be a little bit prudent to take some things off the table. So instead of fighting the tape, take some profits along the way.”

Thank you to everyone who tuned in live!

Important Disclaimer: It is crucial to remember that this article is for informational purposes only and should not be considered investment advice. Consult with a qualified financial advisor to assess your risk tolerance, investment goals, and overall financial plan.

THE CURRENCY VIX

Dale’s primary warning signal this week isn’t found in the major indices, but in the USD/CAD. While the US Dollar finished the week lower, Dale pointed out a critical divergence forming in the pair.

• The Volatility Signal: Dale said USD/CAD is the “VIX of the currency complex,” and he thinks the pair has bottomed, which typically serves as a leading indicator that professional traders are expecting a spike in broader market volatility.

• The Dollar Floor: Despite a popular bearish narrative, Dale is not convinced the Greenback is finished. “You would think that with everything that’s going on, all the de-dollarization, the basement trade, that the dollar would have already made new lows,” he said

• Pullbacks: Dale is looking to “buy pullbacks” in the USD/CAD, believing the dollar is currently carving out a significant floor.

TECH MANIA AND THE GAMMA SQUEEZE

Dale said the “blow-off action” in technology stocks is unlike anything he has seen in his entire career (50 years!)

• Compass vs. Ruler: Looking at charts for Micron and SanDisk, Dale described the moves as so vertical that “you can’t draw a trend line.” He said traders now “need a compass, not a ruler“ to map the parabolas.

• Price is King: Dale said technicals are currently overriding everything else. “Price is king,” he said. “I don’t care what your ideas are. If you’re just going to trade on your ideas, you’re going to be humbled”.

• The VIX Hammer: Dale pointed to a “hammer” candlestick pattern in the VIX, describing it as a “subtle candlestick for downside momentum exhausting,” even as stocks continue to climb.

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THE METAL PIVOTS

Dale remains a disciplined bear on precious metals…

• Gold: He identified 4670 as the critical marker. He believes gold’s decline is not over and won’t be “until the dollar finally turns.” To change his bearish stance, he would need to see a close back above 5000. Until then, he expects the next move to “generate the flush I’m looking for.”

• Silver: The “line in the sand” is 78. “Don’t be long under 78,” he said, noting that he is looking for reasons to sell next week. His long-term target remains $50 silver once demand destruction fully impacts the market.

• Discipline: Dale emphasized the importance of these levels: “When you find a good pivot, don’t erase it... above the line you’re long, beneath the line you’re short“.

ENERGY

While obviously still elevated, crude oil’s relative sideways action recently is down to “the largest release of strategic reserves in history,” Dale said. However, he warned that this supply cushion “is going to run out,” which will eventually lead to renewed price pressure on the upside.

Dale’s “ultimate contrarian” pick right now is Natural Gas (BOIL). Describing his strategy as “buying what everyone hates right now,” he sees a potential bottom forming and suggested a move over 2.75 would be a significant sign of a trend change.

AGRICULTURAL CYCLES AND ROTATION

Looking toward the bread basket, Dale is monitoring a “super El Niño” pattern building in the Pacific.

• Wheat: While he was early to the bull case, he is now waiting for “one more slam“ down to the 5.40 level before the summer solstice in late June.

• Rotation: If technology finally rolls over, Dale expects a rotation into “unloved” sectors. He would view a tech correction as a “great buying opportunity in agricultural stocks, fertilizer stocks, and energy stocks.”

BONDS AND YIELDS

Finally, Dale remains unconvinced by the recent bond action, noting that yields have not given up much ground despite “peace news” headlines. He is still targeting 82 in TLT and described the current market as “whistling past the graveyard“ regarding rising rates.

Thank you to everyone who tuned in live…! We’ll be back Talking Markets on Monday at 4pm ET with Jeff Hirsch. Have a great weekend.

Important Disclaimer: It is crucial to remember that this article is for informational purposes only and should not be considered investment advice. Consult with a qualified financial advisor to assess your risk tolerance, investment goals, and overall financial plan.

LIQUIDITY CONCERNS

The “hose of liquidity” is funneling into Main Street, which is what the US administration said they wanted to do, Chris said. “So it shouldn’t really be a surprise that you see parts of the stock market really taking off on any opportunity they get,” he said. “But how that looks in terms of risk assets overall, it becomes a little but complicated” because some of the stuff we’re seeing “doesn’t reflect what we traditionally see across these markets and how liquidity traditionally works.”

At Ainslie, they look at a number of factors around global liquidity, not just M2. “So we’re talking about the shadow monetary base, which includes bank reserves, bond collateral values, which also includes the MOVE index,” Joe said. Over the last couple of years:

• The US dollar has come down, which helps global liquidity, and

• The MOVE index has come down

“Based on where we are now in terms of that global liquidity, yes the nominal number is sitting around $190 trillion, which is edging up slowly,” Joe said. “However, below, we’re seeing a loss of momentum in terms of global liquidity. And we can’t really see where the next leg up of global liquidity is going to be… We may just end up in this sort of sideways regime in terms of liquidity for a little while until somehing breaks.”

Joe added that they expect liquidity to bottom early 2027.

🔗Chris and Joe are therefore broadly aligned on the liquidity question with Michael Howell.

🔗More from Ainslie on current liquidity conditions.

THE IMPORTANCE OF THE MOVE INDEX

A critical component of the Ainslie Capital framework is the MOVE Index, which tracks bond market volatility. Currently, based on the MOVE, the bond market appears to be “priced for perfection,” which limits the potential for further liquidity-driven gains. Joe explained

“In terms of the MOVE index, we’re already sitting at quite low numbers. So how do bond collateral values based on the MOVE index drive themselves a lot higher than where they are now when we’re already sort of somewhat priced to perfection? ... Every time we have seen the MOVE index spiking up, we have seen stocks struggle in terms of like very, very correlated performance.”

Chris added that the MOVE index has been trending down despite a setup that should have triggered high volatility, largely due to “heavy manipulation” from Treasury QE where the yield curve is being managed. He cautions that “you can’t continue to just issue at the short end of the curve... it can’t be done forever.”

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METALS

Gold and silver‘s monster rally has established what Chris believes is a new base for the next leg of the cycle. This move was driven by a combination of central bank accumulation and industrial demand. Chris provides insight into the rally and what he sees coming next:

“You had gold being bought hand over fist by central banks, particularly in the lead-up to concerns around Iran and before we were even there but into the war itself because people are going, ‘well, we don’t know the outcome here,’ so as a central bank you want to have some protection there... Gold did not collapse after such a massive move. What you generally see when you go back and look at these charts for long enough, you get huge moves to the upside then they pull back but they never pull back anywhere near—they don’t even test the previous highs often, which is what we’re sort of seeing at the moment. It makes a new base, and that’s the new base that makes a lot of sense when you think about it in terms of the monetary inflation aspect.”

Furthermore, silver remains in a long-term deficit, which is exacerbated by its importance in AI and tech plays. Chris suggested that even in a global recession, while metals might take an initial hit, they “tend to do very well out of global recession.”

BITCOIN

Is BTC leading or lagging? It’s “no one’s master,” Chris said. At current levels around $80,000, Joe thinks BTC is “somewhat overbought” and anticipates a sharp pullback in the short term. However, for long-term investors, the asymmetric risk remains to the upside. Chris elaborates:

“The real challenge here is the asymmetric risk with Bitcoin always remains the upside. So you can’t not be exposed, right? That’s the difficulty. So in my mind, it truly is one of those buy the dip opportunities where you go, ‘well, we think it’s probably going to be messy. We think it’s probably going to be messy to lower even over the short to midterm.’ So if that’s the case, but we know the destination is much higher, you would be taking advantage of that as those dips come.”

But if Ainslie is correct and liquidity doesn’t bottom until 2027, Joe said investors should be prepared to “bear volatility for 12, 18 months.”

THE REAL ECONOMY VS THE FINANCIAL ECONOMY

There is a chasm between the real economy (labor, production, and Main Street) and the financial economy (capital markets and Wall Street). Chris said current administration policy in the United States has intentionally directed the “hose of liquidity” toward the real economy rather than traditional financial channels.

Joe said this shift represents a fundamental trade-off. In his view, money is effectively binary; if it is being utilized to drive growth on Main Street, it is “necessarily leaving the financial economy.” This dynamic is something China has navigated for decades, and Joe sees the US now entering a similar regime:

“The problem with China and the difference between China and advanced economies like the US is that, historically speaking, China is funneling liquidity into the real economy. And we’ve seen that, right? We’ve seen the Chinese economic boom over the last 20 years and stocks haven’t necessarily done that well... Like what the US is [doing] at the moment, they’re targeting the real economy. So if capital is moving into the real economy, it’s not necessarily moving into financial markets because there’s opportunity in the real economy.”

This movement from “capital to labor” creates a difficult environment for traditional financial assets. Chris pointed out that while the “Chinese miracle” was a triumph for poverty reduction and the middle class, it served as a cautionary tale for equity investors. He warns that the Western markets may be mispricing the risks associated with this transition:

“When you look at China historically having done that, we all go, ‘oh, well, the Chinese miracle that occurred when they lifted so many people out of poverty into the middle class.’ But that wasn’t great for their financial markets at all. So that trade off is real. And that’s something that really, I think, isn’t being appreciated by the markets currently... I’d be a bit worried about how the markets pricing itself at the moment on the back of where the money’s actually flowing.”

Thank you , , and everyone else for tuning in live! We’ll be back Talking Markets at 4pm ET on Friday with Dale.

Important Disclaimer: It is crucial to remember that this article is for informational purposes only and should not be considered investment advice. Consult with a qualified financial advisor to assess your risk tolerance, investment goals, and overall financial plan.

OIL!

Oil hit 2026 highs yesterday as the ceasefire in the Middle East looks increasingly shaky. Peter flagged a significant shift in the structure of the market - while front-month prices often react to headlines, he is closely watching the back end of the curve.

“It was the first time that I can remember since this war started where the back end of the crude curve actually was trading much higher,” he said. “I think that’s when people start to care is when the December contract... instead of a week ago being 75... is above 80. If 80 becomes 85, if 85 becomes 90, then that’s the market telling us that, at least for now, that they expect oil prices to remain higher for longer and that even if there’s a resolution to what’s going on, prices are still going to remain elevated for a while”.

He added that even if current conflicts were resolved today, a new dynamic has emerged: “What you’re going to likely see is companies that are going to be stockpiling crude and other products as strategic reserves... even when things end, there’s going to be a bid under these commodities for a while to come.”

GAS WAKE-UP CALL

The surge in energy isn’t just a futures market story; it is hitting the American consumer rapidly. Peter pointed out that the average price of gasoline rose roughly 45 cents in less than two weeks.

“For the average person that’s filling up, it’s one thing to go from 3 to 3.50... You don’t really pay attention,” Peter said. “But then when you go from 4 to 4.45 within, call it 10 plus days, that is a new wake up call... this is a record high for the average gallon of gasoline,.”

Regarding the tipping point for demand destruction, Peter cited Casey’s General Store, which suggests $5.00 is the psychological barrier. However, Peter suspects the reaction might come even sooner: “We have to start thinking about the consumer reaction to this just over the past 10 days.”

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CONSUMER STAPLES STOCKS

While many investors are fleeing consumer staples like Clorox or Kimberly Clark, Peter sees potential value in “hated” names like ConAgra and Kraft Heinz. He said that these stocks have already been penalized for the inflationary pressures they’ve faced since 2022.

Specifically regarding Kraft Heinz, Peter noted: “This is a company that has lost market share for 10 straight years... the new CEO is finally saying, enough already. And they’ve done some tests that have those products that they invest in has seen a pickup in sales... at nine times earnings a 7% dividend yield with a very reasonable 65% ish payout ratio and one out of 22 analysts that cover it... I’m pretty sure that the stock currently reflects all the hate.”

THE AI TRADE

he AI trade is no longer a “rising tide lifts all boats” scenario, Peter said. The market is beginning to differentiate between the hyperscalers spending the money and the companies receiving it.

“The recipients of the spend are obviously beneficiaries... the semiconductors, the infrastructure builders when it comes to the data centers,” he said. However, he cautioned that the type of party in memory and storage (like Micron or Western Digital) historically ends in a bust: “We’re already seeing a big increase in supply coming online in the next couple of years and they’ll eventually be a bust. But right now, you know, it’s party on.”

Crucially, Peter flagged a potential shift in the narrative: “If OpenAI starts to question all the spend and starts to rein in some of it, well, who’s the beneficiary of a lot of OpenAI spend? Semis and data center construction. So I think that’s a really big story that we need to pay attention to.”

INTEREST RATES

Long-term interest rates are climbing not just in the US, but globally. “Yes, it’s partly inflationary, but I think it’s also a debt and deficit worry, which is becoming more of a focus of investors,” Peter said. “So maybe for the first time ever, debts and deficits really matter... I think about 4.5% in the 10 years when the market really starts to care... And maybe 5% third year, people are going to start to care. But this is a really big deal. This is something that’s not going away”

THE MIXED UP ECONOMY

Peter recently wrote about the current state of the economy as having 33 positive aspects and 32 negatives—a near-perfect split that explains the current market confusion.

“When you break down the economy... you see how extraordinarily mixed it is,” Peter said. “You have the data center construction strength... and you have upper income spending that is very robust. But there are other parts of the economy that’s still very mixed. Housing is in its own recession”. He also noted that recent manufacturing strength might be artificial: “a lot of that manufacturing strength are companies that are stockpiling and trying to buy as much raw materials and product that they can before price increases and potentially supply shortages.”

THE US/CHINA RELATIONSHIP

Looking toward the summit between Xi Jinping and Donald Trump May 14-15, Peter emphasized that the relationship has evolved into a more even, if fraught, partnership.

“The trade war is over with China,” he said. “The trade war ended when US manufacturers realized that they couldn’t continue on without the magnets that China was holding back. And the White House got a real wake-up call realizing the same thing.”

Quoting Louis Gave, Peter used an analogy to describe China’s increased leverage: “2018, when Trump punched China via tariffs, China went down. And what has China done since then? They’ve gone to the gym... and they’re in much better shape today. So in last year, when Trump punched China again, China punched him back... China has some leverage and they’re not going to be pushed around.”

Thank you to everyone who tuned in live! We’ll be back Talking Markets at 4pm ET on Wednesday with Chris Tipper and Joseph Brombal from Ainslie Wealth.

Important Disclaimer: It is crucial to remember that this article is for informational purposes only and should not be considered investment advice. Consult with a qualified financial advisor to assess your risk tolerance, investment goals, and overall financial plan.

🤝

THE YEN

The big currency story of this week was the yen:

It rose against the dollar in the back half of the week after officials in Japan said they were ready to intervene.

This was expected by Vincent Deluard on Talking Markets a couple of weeks ago:

Dale’s cautious against celebrating a massive unwind of the carry trade, pointing out that investors “really piled into the long side of the USD” and were “pressing the short side of yen when the BOJ did not raise rates.” “If the yen starts to appreciate and rates are still high, that makes the carry trade more expensive,” he said. “And people use that to finance all kinds of instruments.”

He thinks Japanese officials have reached a turning point, saying “they know that they’ve drawn the line and they’re going to have to back it up,” saying that the “154 and a half level” is “very important.”

Looking ahead, Dale remains skeptical about the long-term success of these interventions, noting that the yen has “been crashing for years.” He said that “there’s still a chance that they fail,” and suggests a scenario where the yen continues to weaken significantly, perhaps even to 170 this summer.

DOLLAR WRECKING BALL?

Dale is still constructive on DXY (to 101, 102).

“If I’m right about the dollar, I’d be getting out of the Emerging Markets ETF (EEM),” he said. “It’s a real popular ETF and it’s had a great run, but it hasn’t made a new high, and it’s starting to show some divergences. If the dollar rallies, this thing could give up all its gains and then some… So be really careful about things like Brazil and emerging markets, because a dollar rally is not going to help them.”

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OTHER CURRENCIES

• Euro and British Pound (Cable): The short side of Cable and Euro” is Dale’s “highest conviction currency trade.” He views the recent movement in the Euro as a “failing rally” and expects it could trade down to “112, 110.” For the British Pound, he sees a “strong technical case” for a drop to a “classic textbook target” of 129.60, a level he believes is “enough to shake out the last cable bull.”

• Australian Dollar (Aussie): Dale said the Aussie recently “broke out to a new high with not a lot of follow-through,” suggesting a lack of conviction in the move.

• Canadian Dollar (Loonie): A “risk-off currency” that “seems to mimic the VIX a lot,” Dale said. While it previously gave him a “toothache” because it was one of the “weakest dollar pairs,” Dale recently shifted his position. He “actually bought some Canadian today,” believing the currency has found a bottom at “important levels” characterized by “higher lows.”

THE INDICES

While the S&P closed at a new record high yesterday (7,230.12), Dale said the new highs “weren’t confirmed” and that “it wasn’t a great close.”

As for the Dow, Dale said that was “even more interesting because it didn’t make a new high - it never took out last year’s high”:

It tried to and then reversed, which Dale sees as a bit of a negative sign “because really, the Dow is where the huge money flows from oil money and everything… They buy the Dow. They want the most liquid stocks with size, [so] that if they wanna hit the button, it’s not going to move the market. It looks like the generals are going to be retreating and maybe letting the troops fight it out for a few more days, but I think that’s toppy looking to me.”

Nasdaq, on the other hand is still showing a lot of strength “because of the semis,” Dale said:

On some individual names:

• Micron has continued to go “parabolic…”

• NVIDIA “has been the weak sister in some eyes and had a real ugly week,” and could even be “a nice short”

• Amazon’s chart looks good and could be going to new highs, but it’s had an amazing run and so he’d be taking partials in case of a general market correction

METALS

Dale still bearish gold, pointing out that it has struggled even during periods of dollar weakness. One of his “highest conviction trades” is the belief that investors should “sell rallies and gold”. He identifies the “4680” level as a critical marker, stating that a close above it “could change [his] view”.

He’s also still cautious on silver, saying “if silver took out 78, you had to get out of the way,” and that if the price breaks the 70 level, it could lead to further declines toward “60 and then 50.” He views the overall technical setup as part of a broader trend where rising rates will “continue the decline in metals.”

Dale thinks Dr Copper is ailing, flagging recent price action as a potentially “failing rally.” “I’m bearish,” he said. “I wouldn’t be loving copper”. He suspects that copper could “take out this low” (at the smiley face below) due to factors like demand destruction and a global slowdown, even within the current inflationary environment.

AND FINALLY… AGS

Dale is still bullish on the agricultural sector, particularly wheat, which he famously predicted would “become the silver of the grain complex” on Talking Markets at the start of the year. While he believes the current rally is still “embryonic,” there’d be nothing wrong with “taking a little off the table” to protect gains.

Dale expresses a preference for corn over wheat right now, and also maintains a very positive outlook on sugar, which “looks great.”

Still, he said, agricultural prices are not immune to broader market forces, suggesting that “if energy unwinds too, could pull back even more.”

Thank you , , and everyone else who tuned in live! We’ll be back Talking Markets with the great Peter Boockvar on Monday. May the Fourth be with us all…

Important Disclaimer: It is crucial to remember that this article is for informational purposes only and should not be considered investment advice. Consult with a qualified financial advisor to assess your risk tolerance, investment goals, and overall financial plan.