Financial Repression Thesis: Luke's strategy involves being long on gold and Bitcoin while shorting long-duration treasuries, utilizing instruments like ETFs and futures for capital efficiency.
Market Volatility: The podcast discusses the potential for a significant market correction due to an overextended bull trend, suggesting that volatility is likely to increase.
Equity Market Insights: There is a focus on the deterioration of market breadth and the potential for a correction, particularly if key sectors like financials and major tech stocks (MAG7) start to decline.
US Dollar Outlook: The discussion highlights a potential shift from a bullish to a bearish dollar trend, with a focus on technical levels and market positioning.
Commodities Discussion: The podcast covers bullish perspectives on crude oil and gold, emphasizing technical strength and long-term fundamentals despite short-term overbought conditions.
Uranium Market Dynamics: A rotation from speculative uranium miners to physical uranium investments like Sprott Physical Uranium Trust (SPUT) is suggested as a strategic move.
Copper Investment: The podcast notes a positive outlook for copper, supported by recent market events and expert opinions, indicating potential for continued price strength.
Interest Rate Trends: The discussion includes analysis of the 10-year Treasury yield, with expectations of resistance at current levels unless market conditions change significantly.
Transcript
[Music] This is Macrovoices, the free weekly financial podcast targeting professional finance, high- netw worth individuals, family offices, and other sophisticated investors. Macrovoices is all about the brightest minds in the world of finance and macroeconomics telling it like it is. Bullish or bearish, no holds barred. Now, here are your hosts, Eric Townsend and Patrick Szna. >> Eric, it was great to have Luke back on the show. Always great to get an update on his insights. >> Patrick, let's hit the trade of the week. Luke's financial repression thesis centers on being long gold and Bitcoin while shorting longduration treasuries. The macro thesis is clear, but we're talking about instruments with different contract sizes and other complications. Please give us your best thinking on how to put that trade on. And I mean exactly including the tickers. Listeners, you're going to find the download link for the postgame trade of the week in your research roundup email. So Eric, I wanted to go a little deeper into that financial repression trade that Luke shared. The basic idea is to be long gold and Bitcoin against a short position in long duration treasuries. Now, for asset managers, simply owning physical gold and Bitcoin, you can easily pair the position with an ETF like Harley Bassman's interest rate hedge ETF, which is the symbol PFIX. Now, I wanted uh though to focus on the leverage trader who can put on all three legs directly in the futures market. That's a very capital efficient way, but it requires discipline and contract mechanics, including understanding expiration cycles, planning your roles, factoring in RO costs, and dealing with liquidity. Now, I'm going to focus today on using the December 2025 gold futures contract, which is the symbol GC, the December 2025 Bitcoin futures, symbol BRR, and the December 2025 Ultra Treasury Bond Futures, symbol UB. Now, you can see the breakdown of the trade on page two of this week's chart deck. Now, with close to 90 days left on these contracts, a trader has to build into their trade plan a quarterly role and potential rebalancing. Now, the real art is in the sizing. Do you size based on notional exposure or do you volatility adjust in a more of a ris parity framework? The math is pretty striking. Bitcoin's volatility runs dramatically higher, about three times that of gold and roughly four times that of long bonds. That means if you really tried to equalize risk across the trade in the risk parody framework, you'd need a much larger treasury short against a relatively small Bitcoin position. In this example, we will size gold roughly three times the notional exposure of Bitcoin. So for a combined $1 million long exposure, that works out to about a quarter of a million dollar in Bitcoin, roughly two BRR contracts, and about $750,000 in gold around two GC gold contracts. Now against that $1 million long basket, the V adjusted hedge would be about $1.75 million short in treasuries, which translates to rough leash being short three UB contracts. Now, my own take on this is that it's a very volatile and messy pairing, and it comes with considerable volatility risk. Personally, if I was running this with a lot of leverage, I'd be thinking about tail risk hedges on top, whether that's through options or other overlays just to keep the draw downs contained. That explanation worked for the pros, but we don't have time to delve into all the details of a retail version of this trade. So, how about giving our retail listeners the quick 10,000 ft overview? Now, for retail investors, particularly for traders without access to futures, one of the biggest obstacles is not having access to a prime broker. Shortselling can come with all sorts of extra margin requirements and costs, especially if you're trying to express the trade through something like the TLT. This is where I think options can become a powerful tool. By using deep in the money options as a synthetic, you can replicate the position in a risk controlled way with smaller capital requirements and without traditional shortselling margin headaches. Patrick, every Monday at Big Picture Trading, your webinar explains how retail investors can put on our most recent trade of the week. For those listeners that want to explore how to put on these trades in greater detail, don't miss out on a 14-day free trial at bigpicturtrading.com. Now, let's dive into the postgame chart deck. All right, let's dive into that chart deck. Now, listeners, you're going to find the download link for the postgame chart deck in your research roundup email. If you don't have that research roundup email, it means you have not yet registered at macrovoices.com. Now, just go to our homepage, macrovoices.com, and click on the button over Luke's pictures saying looking for the downloads. Okay, Eric, what are your thoughts here on equity markets? Well, a few notables, including a Goldman Sachs trader that was kind of pimped up on Zero Hedge, are calling the top here. This is it. Okay, they could be right. As we've discussed over several recent shows, this market is way, way, way overextended and overbought on a technical basis, a very significant correction could happen at any time. There's lots of reasons to think news events could bring it about, but I think that the run it hot thesis still makes perfect sense. As Luke described, policymakers are boxed in a corner, and the only obvious way out is financial repression and secular inflation. Bottom line, I have very little directional conviction right here, but frankly, I'm pretty darn confident that whatever comes next won't be boring. I'm not trying to trade this one. If I were, it would be a long straddle on E- mini S&P futures. Well, Eric, what I do agree with you is that volatility is coming back in. Now, one of the reasons we're going to see that is there was a very large September option expiration that just happened last week. So, now the market has unpinned from all of that gamma. At the same time, it's quite overbought and there's no denying that this bull trend has been so strong. But uh from a perspective of the length and magnitude of this rally that we've come off of the liberation do lows for this decade, this has now been the longest and the largest in magnitude rally without a 5% market correction. And while at any one moment the stock market can continue in a bull trend, there's simply no technical breakdown. One has to recognize that we are in the ninth inning of this run and inevitably some form of a correction is going to get underway. Does it have to be like a boo boogeyman market crash? No. But corrections happen often as many times as four times a year. And so uh us getting a some sort of a reversion from this really amazing bull advance would be incredibly normal. So what are we looking for uh for signs that this market correction may be underway? Well, I think we have to look a little bit deeper under the hood. Now, one thing I have here on page 4 is a chart of market breath. And what we've seen in the S&P 500 is that while it held at 52- week highs, the deterioration of the market breath approached 50% where literally one out of every two stocks in the S&P 500 was already downtrending. So we're seeing a deterioration of that breath. At the same time, uh we're now seeing less and less of the MAG7s rallying. And while we do have a few of them that actually had great impulses, many of them are stretched and some like Amazon are outright rolling over. If we see the MAG 7s start to roll over and also if the financials make a break, you can literally go to the XLF and just draw a trend line along its previous lows and see if we're going to get some sort of breakdown. And if we have financials and the MAG7s rolling over, it's going to be very hard for the S&P 500 to stay up just because of the sheer market cap waiting of these giants in there. Now, ideally, I'm going to be watching to see whether it is more of a sector rotation rather than a riskoff of everything down. uh particularly if we see things like some of the defensive sectors start to rebound. Uh that would be signs that uh that some sort of a corrective move is underway. From a technical perspective, it's as simple as watching where that 50-day moving average is because it lines up with the Fibonacci retracement of the post jobs number rally that we've had as well as where all the highs from July and August formed. And if we started to see price action fail at those points, it would become a clear indication that some sort of a distribution cycle has kicked in, it's very important to see more technical damage before calling a turn. Why is that? Because there's so much systematic trading out there. Whether it's vault targeting funds, whether it's CTAs or or or whether it is just short gamma on dealers books, you need a deterioration in the price in order to create that snowball effect of lower prices beget more selling and it creates that negative feedback that basically causes the stock market to have one of those deeper down draw downs. And so it is insufficient for there to be just a 100 point pullback. it needs to be a little bit deeper in order to create that negative effect. Are we in the midst of that? Well, a number of measured moves are done on the upside. So, and this has been such an extraordinary rally that at some point here, we're just going to end up seeing just from exhaustion some profit taking kick in. Let's see if this is the week where it all begins. All right, Eric, let's move on to the dollar. Well, given this week's feature interview topic, I'll zoom out to the longer term picture on the US dollar this week. My predictions of several years ago now were that Brent Johnson would first be proven right on his long dollar calls, but that eventually Luke's secular bearish dollar view would play out and we'd enter a secular dollar decline. Now, it's too early to say decisively that I got that call right, but my strong sense is that I did. Brent's dollar milkshake scenario did play out just like he said it would. We saw a massive rally in the Dixie all the way up to 116 that nobody thought was possible. I think now it's Luke's turn. I think it's time for Luke to be proven right. And that means a much lower Dixie. My next major target lower is 89. But if Luke's really right that we're going from the uh the slow part to the fast part where things accelerate, then 89 is just the first step on the way down. Well, Eric, going back to July, we had an attempt on the dollar index to break back above its 50-day moving average. It spectacularly failed, and we saw throughout the summer a breakdown for a complete double bottom retest of its July low. And so now a complete retest of its June low. But now that that held in the post FOMC period, we now have seen the dollar try to work its way back above the 50-day moving average and above what I consider a critical level around the 98 level. Now, what is interesting about this? Well, the dollar bearer has now been, you know, eight plus months in play and it is very consensus. And now I while I'm not necessarily bullish on the dollar, what I do recognize is that it's incredibly oversold and uh everyone is relatively short the dollar in terms of positioning. So uh any sort of a squeeze here could create that counter reaction. Now, I don't want to already call it because we haven't yet seen key technical levels broke uh broken, but any sustained price action north of 98 for multiple days uh will certainly at minimum have neutralized the sell cycle and would put the trade range that's been established over the summer back in play. All right, Eric, let's move on to crude oil. Patrick, WTI moved back above its 200 day moving average for the first time in a month late Wednesday. More importantly, the XZ spread, that's the November December WTI spread, widened back out to about almost 60 cents, almost double what it was a couple weeks ago. That may suggest that front of curve backwardation may have bottomed. And to be sure, I'll be watching structure closer than flat price as I try to gauge what comes next. Well, Eric, to me, what's actually important is that overall over the last month, there's been generally negative news. news that would typically have caused bears to have an window to take oil prices lower. But yet throughout uh August and going into September, every time oil is sold, it held the line around that 616263 level uh establishing a base which is very close to the Fibonacci retracement zones of that May uh to July rally. So now uh we uh see oil strengthening back above that 50-day moving average. What I particularly like about oil is that nobody really is interested right now with gold and uranium and uh and the AI stocks all ripping. Oil has been left for dead. But really to me this is what the kind of a backdrop where I get super bullish because when nobody's paying attention but the price starts behaving in a more bullish way is what sometimes when the most asymmetry exists. Let's see whether or not oil can build on this and actually uh break above the $66 level which I think would be quite technically significant. All right, let's talk on gold. Patrick, I agree with Luke Groman that investors would be crazy not to be satisfied with the amazing returns we've already seen on gold. And despite that, we are now seriously overbought and ripe for a correction on a technical basis, the long-term fundamentals couldn't be more bullish. So, I'm in total agreement with Luke Roman on those points. But what came to mind for me when I heard Luke say gold and Bitcoin investors aren't complaining about this market was actually that I remembered Rick Rule's wisdom that this raging gold bull market is nothing to celebrate even for us gold bulls who are profiting handsomely from it. The reason gold is ripping higher is that the world is going to And the same slowly at first but then all at once phenomenon applies there too. Now, I'm staying long here because I'm a trader and I don't think this trade is done. But I can honestly say that I would much prefer an outcome where I lose a considerable percentage of my net worth on the gold trade because it turned out that oh, in the end, actually, all my geopolitical concerns were overblown and it turned out to be a false alarm. Crappy returns and even a huge loss still beats the heck out of World War II in my book. And I'm going to take this opportunity, Patrick, to say that I now believe that this period we're living through right now will ultimately be recorded in the history books as the time when the Second American Civil War broke out. Civil War is never an isolated event. It's an escalation of an outofcrol political division. And that's exactly what we're living through right now. To be clear, I am not saying that Charlie Kirk's murder or the shootings that occurred in Dallas at the ICE detention center or any of the other violent actions taken by any individual evidences the outbreak of a civil war. That's crazy. Those things do not evidence that crazy people do crazy things and that applies to both sides of the political divide. And there certainly have been violent events perpetrated by both sides of this political division. The reason that I'm going to call September 2025 as the month the Second American Civil War began is not the actions, but rather the reactions. Any of these events could happen at any time. But for both some parts of the corporate media and some elected officials to publicly take the position that some of the people killed in America in crimes had it coming. or that maybe it's the government that's to blame for having policies that are so unjust that these crimes were actually legitimate acts of justifiable violence. That's the signal that we're getting right here. What we're seeing is not the actions of individuals. That's not an important signal. It's the reaction of the news media and the elected public officials that are not saying violence is always bad and crime is always bad. They're saying some of them at least are saying, "Huh, maybe this is justified." And I want to be super clear on this. I'm not taking sides, at least not on the podcast. What I'm saying is that this is not unprecedented. In civil wars, what happens is elected officials and media who in normal times unconditionally endorse peace and only peace are now saying openly that the circumstances have escalated to the point that they feel that they really are at war. And many of them are saying openly that violence is justified in the interest of correcting the injustices that they perceive to exist in today's society. What usually happens next is that political parties are transformed into waring factions who eventually go to literal armed conflict against their own countrymen because the political or ideological divide became so extreme that they felt violent conflict was the only remaining option. Strauss and how's work on the fourth turning or kandraf winter if you prefer that terminology is very much in play here. This is what happens in fourth turnings. The tail end of it is the worst and the last fourth turning before this one culminated in World War II. Charting dates on a cycle with 80 to 100year periodicity is tricky business. But my best guess is that this fourth turning will end sometime between 2029 and 2034. American Civil War II is something that the vast majority of Americans and the rest of the world can survive. Nuclear World War III is not. And frankly, the biggest question in my mind is which of those two events will be the culminating event that ends this fourth turning. All of this is massively, utterly bullish gold long-term. But I've honestly never hoped ever in my life more to be proven wrong, humiliated publicly, and lose money in the process than I do right now on my overweight gold long because it simply does not make sense to stay long gold here and not take profits unless you have an extreme view as to what could happen next and the degree of geopolitical as well as financial and u and inflation risk that exists in the system. I think Luke did a brilliant job in his interview. This is something that I've been thinking about for quite a while as to when I would uh say on the podcast that I I think the second American civil war has begun and I feel that Luke's interview that he gave set the stage perfectly. Uh I think he explained it probably better than I could. That's what I think is happening and I sure hope I'm wrong. Well, Eric, I just want to look at gold purely from a technical perspective. And what we have is an extraordinary bull market where uh every dip is almost immediately bought. Now, there are all the measured moves technically that measure all the way out to 3,900 to 4,000. So, there is nothing stopping gold from tacking on a couple hundred bucks to the upside. Uh but this is a balancing act of the long-term outlook going at one or two years where gold being north of 4,000 is probably a very high probability outcome versus the short-term technicals as to where is there short-term drawdown risk and buying opportunities on pullbacks. Overall, the price action has been relatively positive. But the bigger question is that what will happen if the broader intermarkets get all wonky. Imagine uh a scenario that the market is not expecting the dollar rallying uh the uh stock markets going risk off and going through some sort of correction. The bigger question is can gold stay isolated and march to the beat of its own drum or will it succumb to intermarket forces and then be dragged down with it into some sort of a correction that in the bigger picture is quite insignificant to gold but on the short term anyone who's highly leveraged will feel a little bit of stress on their gold positioning. Overall, I remain quite bullish gold, but uh uh really this is a a period where you should be focused on buying dips and not chasing rips. And at this moment, even if gold got up to 3,900 4,000, I would almost certainly be actively using option overlays to secure those prices on any advances up there. All right, Eric, let's touch on uranium. We got a really, really important signal this week. On Wednesday, spot uranium was up, but the uranium miners were down. And there's usually a strong positive correlation there across the board. Now, to give credit where it's due, both Patrick and our good friends over at uraniumsider.com have been pounding the table for the last few weeks, saying the only thing left in the nuclear space that's still cheap was sput. That's the one that invests directly in the uranium spot market. And what Patrick has suggested and what our friends at Uranium Insider have suggested is, "Okay guys, the uranium uh stocks, the the miners, they already had their run on speculation. It's time for a rotation out of those more speculative uranium miners into sput because that's what's still cheap here and that's what doesn't need a retracement before it moves considerably higher." I think Patrick and our buddies over at uraniumsider.com totally nailed that call. This is where spot uranium finally catches up to and surpasses both term price as well as its prior high. I also described the uh self-reinforcing aspect of that virtuous cycle of sput being at the money. That's in my Twitter feed if you're interested. And yes, ironically, that could spell a sell the news event on the more speculative miners that have already seen their big move to the upside. Now, I should confess that despite I the fact that I just endorsed that recommendation to rotate out of the miners into sput, I didn't do that. I just kept all of my mining shares and added to my sput position. That clearly increased my risk at a time when the market has already had an incredible run. And I am not worried. I'm in this trade for the long haul. If my uranium mining shares dump in reaction to calls for a broad market top and reversal or who knows whatever else happens, I guess I'll just have to learn to play the drums like Dr. Michael Barry did in the big short. I am that confident that the uranium and nuclear trade has only just gotten started in big picture terms. But it's already come too far too fast. So a correction would make perfect sense, especially if broad market weakness is the catalyst. So first off, let's talk about uranium itself. the spot prices just broke out and uh things like uh the sprop physical like you suggested are just beginning to break out. I think there's lots of room in the uh those um closed end funds that hold uranium itself uh to have upside. But the bigger question about uranium stocks in my mind is how correlated or how influenced would they be in a correction in the AI space because a lot of times the AI investors are also pairing the uranium long stock positioning in the same theme uh of energy consumption. And my curiosity is whether or not a correction that kicks in in the AI space would lead to profit taking on many of these uranium stocks that had just an absolutely extraordinary multi-month run here on the upside. That is certainly the thing to watch. Now Eric, we do have to talk about copper here. Patrick, it's ironic that even I occasionally learn something from listening to macro voices. I told you guys a couple of times in the last few weeks that I would be sorely tempted to add to my long copper position, but you know, it's already pretty seriously overweight and it would be crazy to add more. Well, guess what? Listening to the last couple of episodes and our expert guests opinions really confirming that long copper view persuaded me to add considerable size this week to my long uh HGZ6. That's Hotel Golf Zulu 6. That's the futures contract. It's a December 26, not 25. And I did that after realizing that rebalancing just my gains in golden uranium justified more size just for the sake of rebalancing. At least that was my rationalization. So it was only pure dumb luck, not skill that I happened to increase my futures position on copper by 50% just hours before Freeport Mcmaran declared force majour in the wake of a serious accident at a copper mine in Indonesia a couple of weeks ago. that shock, panic, uh, whatever you want to call it, move took us back above the 200 day moving average. And just eyeballing the chart, if this rally can continues, that's a big if, because, because we need to see, uh, this signal translate into a real recovery, not just a a quick panic reaction to news that retraces. But if we stay above the 200 day moving average, it will and if we can keep the rally going a little more than that, it looks like we're going to avert what otherwise looked like an impending death cross on the daily chart. The market tested the 50-day moving average on Wednesday, but still closed below it. Now, if we can get above four spot 90 or so and stay there and that number that I'm quoting is on the December 25 chart, Hotel Golf Zulu 5 on that chart above four spot 90. If we can get there and stay there, then I think the long overdue recovery in copper may finally be upon us. And it definitely comports with Luke's view that they're going to have no choice but to run this economy hot. >> Well, Eric, it's awesome to hear that you got good positioning there on your copper things. did talk about that copper trade very timely uh last week as a trade of the week and so it's nice to see that any listeners that were acting upon that had a great start to that trade. Now overall uh copper here has lots of room to go back up to that kind of five to five and a quarter range and so at this moment uh with this kind of a great tailwind there's lots of room for copper to strengthen here in the next couple weeks or month ahead. Patrick, before we wrap up, we usually hit the 10-year Treasury note chart. I don't think you can skip that one this week in wake of Luke Groman's interview. What do you think? And how does it comport with what Luke told us? >> While we saw yields break down towards 4% before the FOMC, really Powell did cool things off in the rates markets and uh bonds uh have uh weakened and subsequently yields have risen uh and we're now actually testing some pretty key levels. I think this kind of even 420 425 yield area is going to be very important. If the primary trend is now lower yields, this should be the resistance level on yields and we should see them start to weaken from here. And if for whatever reason yields strengthened above these levels, it would have to be acknowledgment that something has changed in the rates markets and we'd have to then see whether or not uh retesting of highs would be on the table. Right now, I'm actually anticipating this to fail at this level and weaken. And let's uh let's see if uh this overhead resistance does in fact stall things out here. Folks, if you enjoy Patrick's chart decks, you can get them every single day of the week with a free trial of BigPictur Trading. The details are on the last pages of the slide deck or just go to bigpicturetrading.com. That concludes this edition of Macrovoices. Be sure to tune in each week to hear feature interviews with the brightest minds in finance and macroeconomics. Macrovoices is made possible by sponsorship from bigpicturetrading.com, the internet's premier source of online education for traders. Please visit bigpicturetrading.com for more information. Please register your free account at macrovoices.com. Once registered, you'll receive our free weekly research roundup email containing links to supporting documents from our featured guests and the very best free financial content our volunteer research team could find on the internet each week. You'll also gain access to our free listener discussion forums and research library. And the more registered users we have, the more we'll be able to recruit high-profile feature interview guests for future programs. So, please register your free account today at macrovoices.com if you haven't already. You can subscribe to Macrovoices on iTunes to have Macrovoices automatically delivered to your mobile device each week free of charge. You can email questions for the program to mailbag macrovoices.com and we'll answer your questions on the air from time to time in our mailbag segment. Macrovoices is presented forformational and entertainment purposes only. The information presented on macrovoices should not be construed as investment advice. Always consult a licensed investment professional before making investment decisions. The views and opinions expressed on macrovoices are those of the participants and do not necessarily reflect those of the show's hosts or sponsors. Macrovoices, its producers, sponsors, and hosts Eric Townsend and Patrick Serzna, shall not be liable for losses resulting from investment decisions based on information or viewpoints presented on Macrovoices. Macrovoices is made possible by sponsorship from bigpicturetrading.com and by funding from Fourth Turning Capital Management LLC. For more information, visit macrovoices.com. [Music]
Trade of The Week – MacroVoices #499
Summary
Transcript
[Music] This is Macrovoices, the free weekly financial podcast targeting professional finance, high- netw worth individuals, family offices, and other sophisticated investors. Macrovoices is all about the brightest minds in the world of finance and macroeconomics telling it like it is. Bullish or bearish, no holds barred. Now, here are your hosts, Eric Townsend and Patrick Szna. >> Eric, it was great to have Luke back on the show. Always great to get an update on his insights. >> Patrick, let's hit the trade of the week. Luke's financial repression thesis centers on being long gold and Bitcoin while shorting longduration treasuries. The macro thesis is clear, but we're talking about instruments with different contract sizes and other complications. Please give us your best thinking on how to put that trade on. And I mean exactly including the tickers. Listeners, you're going to find the download link for the postgame trade of the week in your research roundup email. So Eric, I wanted to go a little deeper into that financial repression trade that Luke shared. The basic idea is to be long gold and Bitcoin against a short position in long duration treasuries. Now, for asset managers, simply owning physical gold and Bitcoin, you can easily pair the position with an ETF like Harley Bassman's interest rate hedge ETF, which is the symbol PFIX. Now, I wanted uh though to focus on the leverage trader who can put on all three legs directly in the futures market. That's a very capital efficient way, but it requires discipline and contract mechanics, including understanding expiration cycles, planning your roles, factoring in RO costs, and dealing with liquidity. Now, I'm going to focus today on using the December 2025 gold futures contract, which is the symbol GC, the December 2025 Bitcoin futures, symbol BRR, and the December 2025 Ultra Treasury Bond Futures, symbol UB. Now, you can see the breakdown of the trade on page two of this week's chart deck. Now, with close to 90 days left on these contracts, a trader has to build into their trade plan a quarterly role and potential rebalancing. Now, the real art is in the sizing. Do you size based on notional exposure or do you volatility adjust in a more of a ris parity framework? The math is pretty striking. Bitcoin's volatility runs dramatically higher, about three times that of gold and roughly four times that of long bonds. That means if you really tried to equalize risk across the trade in the risk parody framework, you'd need a much larger treasury short against a relatively small Bitcoin position. In this example, we will size gold roughly three times the notional exposure of Bitcoin. So for a combined $1 million long exposure, that works out to about a quarter of a million dollar in Bitcoin, roughly two BRR contracts, and about $750,000 in gold around two GC gold contracts. Now against that $1 million long basket, the V adjusted hedge would be about $1.75 million short in treasuries, which translates to rough leash being short three UB contracts. Now, my own take on this is that it's a very volatile and messy pairing, and it comes with considerable volatility risk. Personally, if I was running this with a lot of leverage, I'd be thinking about tail risk hedges on top, whether that's through options or other overlays just to keep the draw downs contained. That explanation worked for the pros, but we don't have time to delve into all the details of a retail version of this trade. So, how about giving our retail listeners the quick 10,000 ft overview? Now, for retail investors, particularly for traders without access to futures, one of the biggest obstacles is not having access to a prime broker. Shortselling can come with all sorts of extra margin requirements and costs, especially if you're trying to express the trade through something like the TLT. This is where I think options can become a powerful tool. By using deep in the money options as a synthetic, you can replicate the position in a risk controlled way with smaller capital requirements and without traditional shortselling margin headaches. Patrick, every Monday at Big Picture Trading, your webinar explains how retail investors can put on our most recent trade of the week. For those listeners that want to explore how to put on these trades in greater detail, don't miss out on a 14-day free trial at bigpicturtrading.com. Now, let's dive into the postgame chart deck. All right, let's dive into that chart deck. Now, listeners, you're going to find the download link for the postgame chart deck in your research roundup email. If you don't have that research roundup email, it means you have not yet registered at macrovoices.com. Now, just go to our homepage, macrovoices.com, and click on the button over Luke's pictures saying looking for the downloads. Okay, Eric, what are your thoughts here on equity markets? Well, a few notables, including a Goldman Sachs trader that was kind of pimped up on Zero Hedge, are calling the top here. This is it. Okay, they could be right. As we've discussed over several recent shows, this market is way, way, way overextended and overbought on a technical basis, a very significant correction could happen at any time. There's lots of reasons to think news events could bring it about, but I think that the run it hot thesis still makes perfect sense. As Luke described, policymakers are boxed in a corner, and the only obvious way out is financial repression and secular inflation. Bottom line, I have very little directional conviction right here, but frankly, I'm pretty darn confident that whatever comes next won't be boring. I'm not trying to trade this one. If I were, it would be a long straddle on E- mini S&P futures. Well, Eric, what I do agree with you is that volatility is coming back in. Now, one of the reasons we're going to see that is there was a very large September option expiration that just happened last week. So, now the market has unpinned from all of that gamma. At the same time, it's quite overbought and there's no denying that this bull trend has been so strong. But uh from a perspective of the length and magnitude of this rally that we've come off of the liberation do lows for this decade, this has now been the longest and the largest in magnitude rally without a 5% market correction. And while at any one moment the stock market can continue in a bull trend, there's simply no technical breakdown. One has to recognize that we are in the ninth inning of this run and inevitably some form of a correction is going to get underway. Does it have to be like a boo boogeyman market crash? No. But corrections happen often as many times as four times a year. And so uh us getting a some sort of a reversion from this really amazing bull advance would be incredibly normal. So what are we looking for uh for signs that this market correction may be underway? Well, I think we have to look a little bit deeper under the hood. Now, one thing I have here on page 4 is a chart of market breath. And what we've seen in the S&P 500 is that while it held at 52- week highs, the deterioration of the market breath approached 50% where literally one out of every two stocks in the S&P 500 was already downtrending. So we're seeing a deterioration of that breath. At the same time, uh we're now seeing less and less of the MAG7s rallying. And while we do have a few of them that actually had great impulses, many of them are stretched and some like Amazon are outright rolling over. If we see the MAG 7s start to roll over and also if the financials make a break, you can literally go to the XLF and just draw a trend line along its previous lows and see if we're going to get some sort of breakdown. And if we have financials and the MAG7s rolling over, it's going to be very hard for the S&P 500 to stay up just because of the sheer market cap waiting of these giants in there. Now, ideally, I'm going to be watching to see whether it is more of a sector rotation rather than a riskoff of everything down. uh particularly if we see things like some of the defensive sectors start to rebound. Uh that would be signs that uh that some sort of a corrective move is underway. From a technical perspective, it's as simple as watching where that 50-day moving average is because it lines up with the Fibonacci retracement of the post jobs number rally that we've had as well as where all the highs from July and August formed. And if we started to see price action fail at those points, it would become a clear indication that some sort of a distribution cycle has kicked in, it's very important to see more technical damage before calling a turn. Why is that? Because there's so much systematic trading out there. Whether it's vault targeting funds, whether it's CTAs or or or whether it is just short gamma on dealers books, you need a deterioration in the price in order to create that snowball effect of lower prices beget more selling and it creates that negative feedback that basically causes the stock market to have one of those deeper down draw downs. And so it is insufficient for there to be just a 100 point pullback. it needs to be a little bit deeper in order to create that negative effect. Are we in the midst of that? Well, a number of measured moves are done on the upside. So, and this has been such an extraordinary rally that at some point here, we're just going to end up seeing just from exhaustion some profit taking kick in. Let's see if this is the week where it all begins. All right, Eric, let's move on to the dollar. Well, given this week's feature interview topic, I'll zoom out to the longer term picture on the US dollar this week. My predictions of several years ago now were that Brent Johnson would first be proven right on his long dollar calls, but that eventually Luke's secular bearish dollar view would play out and we'd enter a secular dollar decline. Now, it's too early to say decisively that I got that call right, but my strong sense is that I did. Brent's dollar milkshake scenario did play out just like he said it would. We saw a massive rally in the Dixie all the way up to 116 that nobody thought was possible. I think now it's Luke's turn. I think it's time for Luke to be proven right. And that means a much lower Dixie. My next major target lower is 89. But if Luke's really right that we're going from the uh the slow part to the fast part where things accelerate, then 89 is just the first step on the way down. Well, Eric, going back to July, we had an attempt on the dollar index to break back above its 50-day moving average. It spectacularly failed, and we saw throughout the summer a breakdown for a complete double bottom retest of its July low. And so now a complete retest of its June low. But now that that held in the post FOMC period, we now have seen the dollar try to work its way back above the 50-day moving average and above what I consider a critical level around the 98 level. Now, what is interesting about this? Well, the dollar bearer has now been, you know, eight plus months in play and it is very consensus. And now I while I'm not necessarily bullish on the dollar, what I do recognize is that it's incredibly oversold and uh everyone is relatively short the dollar in terms of positioning. So uh any sort of a squeeze here could create that counter reaction. Now, I don't want to already call it because we haven't yet seen key technical levels broke uh broken, but any sustained price action north of 98 for multiple days uh will certainly at minimum have neutralized the sell cycle and would put the trade range that's been established over the summer back in play. All right, Eric, let's move on to crude oil. Patrick, WTI moved back above its 200 day moving average for the first time in a month late Wednesday. More importantly, the XZ spread, that's the November December WTI spread, widened back out to about almost 60 cents, almost double what it was a couple weeks ago. That may suggest that front of curve backwardation may have bottomed. And to be sure, I'll be watching structure closer than flat price as I try to gauge what comes next. Well, Eric, to me, what's actually important is that overall over the last month, there's been generally negative news. news that would typically have caused bears to have an window to take oil prices lower. But yet throughout uh August and going into September, every time oil is sold, it held the line around that 616263 level uh establishing a base which is very close to the Fibonacci retracement zones of that May uh to July rally. So now uh we uh see oil strengthening back above that 50-day moving average. What I particularly like about oil is that nobody really is interested right now with gold and uranium and uh and the AI stocks all ripping. Oil has been left for dead. But really to me this is what the kind of a backdrop where I get super bullish because when nobody's paying attention but the price starts behaving in a more bullish way is what sometimes when the most asymmetry exists. Let's see whether or not oil can build on this and actually uh break above the $66 level which I think would be quite technically significant. All right, let's talk on gold. Patrick, I agree with Luke Groman that investors would be crazy not to be satisfied with the amazing returns we've already seen on gold. And despite that, we are now seriously overbought and ripe for a correction on a technical basis, the long-term fundamentals couldn't be more bullish. So, I'm in total agreement with Luke Roman on those points. But what came to mind for me when I heard Luke say gold and Bitcoin investors aren't complaining about this market was actually that I remembered Rick Rule's wisdom that this raging gold bull market is nothing to celebrate even for us gold bulls who are profiting handsomely from it. The reason gold is ripping higher is that the world is going to And the same slowly at first but then all at once phenomenon applies there too. Now, I'm staying long here because I'm a trader and I don't think this trade is done. But I can honestly say that I would much prefer an outcome where I lose a considerable percentage of my net worth on the gold trade because it turned out that oh, in the end, actually, all my geopolitical concerns were overblown and it turned out to be a false alarm. Crappy returns and even a huge loss still beats the heck out of World War II in my book. And I'm going to take this opportunity, Patrick, to say that I now believe that this period we're living through right now will ultimately be recorded in the history books as the time when the Second American Civil War broke out. Civil War is never an isolated event. It's an escalation of an outofcrol political division. And that's exactly what we're living through right now. To be clear, I am not saying that Charlie Kirk's murder or the shootings that occurred in Dallas at the ICE detention center or any of the other violent actions taken by any individual evidences the outbreak of a civil war. That's crazy. Those things do not evidence that crazy people do crazy things and that applies to both sides of the political divide. And there certainly have been violent events perpetrated by both sides of this political division. The reason that I'm going to call September 2025 as the month the Second American Civil War began is not the actions, but rather the reactions. Any of these events could happen at any time. But for both some parts of the corporate media and some elected officials to publicly take the position that some of the people killed in America in crimes had it coming. or that maybe it's the government that's to blame for having policies that are so unjust that these crimes were actually legitimate acts of justifiable violence. That's the signal that we're getting right here. What we're seeing is not the actions of individuals. That's not an important signal. It's the reaction of the news media and the elected public officials that are not saying violence is always bad and crime is always bad. They're saying some of them at least are saying, "Huh, maybe this is justified." And I want to be super clear on this. I'm not taking sides, at least not on the podcast. What I'm saying is that this is not unprecedented. In civil wars, what happens is elected officials and media who in normal times unconditionally endorse peace and only peace are now saying openly that the circumstances have escalated to the point that they feel that they really are at war. And many of them are saying openly that violence is justified in the interest of correcting the injustices that they perceive to exist in today's society. What usually happens next is that political parties are transformed into waring factions who eventually go to literal armed conflict against their own countrymen because the political or ideological divide became so extreme that they felt violent conflict was the only remaining option. Strauss and how's work on the fourth turning or kandraf winter if you prefer that terminology is very much in play here. This is what happens in fourth turnings. The tail end of it is the worst and the last fourth turning before this one culminated in World War II. Charting dates on a cycle with 80 to 100year periodicity is tricky business. But my best guess is that this fourth turning will end sometime between 2029 and 2034. American Civil War II is something that the vast majority of Americans and the rest of the world can survive. Nuclear World War III is not. And frankly, the biggest question in my mind is which of those two events will be the culminating event that ends this fourth turning. All of this is massively, utterly bullish gold long-term. But I've honestly never hoped ever in my life more to be proven wrong, humiliated publicly, and lose money in the process than I do right now on my overweight gold long because it simply does not make sense to stay long gold here and not take profits unless you have an extreme view as to what could happen next and the degree of geopolitical as well as financial and u and inflation risk that exists in the system. I think Luke did a brilliant job in his interview. This is something that I've been thinking about for quite a while as to when I would uh say on the podcast that I I think the second American civil war has begun and I feel that Luke's interview that he gave set the stage perfectly. Uh I think he explained it probably better than I could. That's what I think is happening and I sure hope I'm wrong. Well, Eric, I just want to look at gold purely from a technical perspective. And what we have is an extraordinary bull market where uh every dip is almost immediately bought. Now, there are all the measured moves technically that measure all the way out to 3,900 to 4,000. So, there is nothing stopping gold from tacking on a couple hundred bucks to the upside. Uh but this is a balancing act of the long-term outlook going at one or two years where gold being north of 4,000 is probably a very high probability outcome versus the short-term technicals as to where is there short-term drawdown risk and buying opportunities on pullbacks. Overall, the price action has been relatively positive. But the bigger question is that what will happen if the broader intermarkets get all wonky. Imagine uh a scenario that the market is not expecting the dollar rallying uh the uh stock markets going risk off and going through some sort of correction. The bigger question is can gold stay isolated and march to the beat of its own drum or will it succumb to intermarket forces and then be dragged down with it into some sort of a correction that in the bigger picture is quite insignificant to gold but on the short term anyone who's highly leveraged will feel a little bit of stress on their gold positioning. Overall, I remain quite bullish gold, but uh uh really this is a a period where you should be focused on buying dips and not chasing rips. And at this moment, even if gold got up to 3,900 4,000, I would almost certainly be actively using option overlays to secure those prices on any advances up there. All right, Eric, let's touch on uranium. We got a really, really important signal this week. On Wednesday, spot uranium was up, but the uranium miners were down. And there's usually a strong positive correlation there across the board. Now, to give credit where it's due, both Patrick and our good friends over at uraniumsider.com have been pounding the table for the last few weeks, saying the only thing left in the nuclear space that's still cheap was sput. That's the one that invests directly in the uranium spot market. And what Patrick has suggested and what our friends at Uranium Insider have suggested is, "Okay guys, the uranium uh stocks, the the miners, they already had their run on speculation. It's time for a rotation out of those more speculative uranium miners into sput because that's what's still cheap here and that's what doesn't need a retracement before it moves considerably higher." I think Patrick and our buddies over at uraniumsider.com totally nailed that call. This is where spot uranium finally catches up to and surpasses both term price as well as its prior high. I also described the uh self-reinforcing aspect of that virtuous cycle of sput being at the money. That's in my Twitter feed if you're interested. And yes, ironically, that could spell a sell the news event on the more speculative miners that have already seen their big move to the upside. Now, I should confess that despite I the fact that I just endorsed that recommendation to rotate out of the miners into sput, I didn't do that. I just kept all of my mining shares and added to my sput position. That clearly increased my risk at a time when the market has already had an incredible run. And I am not worried. I'm in this trade for the long haul. If my uranium mining shares dump in reaction to calls for a broad market top and reversal or who knows whatever else happens, I guess I'll just have to learn to play the drums like Dr. Michael Barry did in the big short. I am that confident that the uranium and nuclear trade has only just gotten started in big picture terms. But it's already come too far too fast. So a correction would make perfect sense, especially if broad market weakness is the catalyst. So first off, let's talk about uranium itself. the spot prices just broke out and uh things like uh the sprop physical like you suggested are just beginning to break out. I think there's lots of room in the uh those um closed end funds that hold uranium itself uh to have upside. But the bigger question about uranium stocks in my mind is how correlated or how influenced would they be in a correction in the AI space because a lot of times the AI investors are also pairing the uranium long stock positioning in the same theme uh of energy consumption. And my curiosity is whether or not a correction that kicks in in the AI space would lead to profit taking on many of these uranium stocks that had just an absolutely extraordinary multi-month run here on the upside. That is certainly the thing to watch. Now Eric, we do have to talk about copper here. Patrick, it's ironic that even I occasionally learn something from listening to macro voices. I told you guys a couple of times in the last few weeks that I would be sorely tempted to add to my long copper position, but you know, it's already pretty seriously overweight and it would be crazy to add more. Well, guess what? Listening to the last couple of episodes and our expert guests opinions really confirming that long copper view persuaded me to add considerable size this week to my long uh HGZ6. That's Hotel Golf Zulu 6. That's the futures contract. It's a December 26, not 25. And I did that after realizing that rebalancing just my gains in golden uranium justified more size just for the sake of rebalancing. At least that was my rationalization. So it was only pure dumb luck, not skill that I happened to increase my futures position on copper by 50% just hours before Freeport Mcmaran declared force majour in the wake of a serious accident at a copper mine in Indonesia a couple of weeks ago. that shock, panic, uh, whatever you want to call it, move took us back above the 200 day moving average. And just eyeballing the chart, if this rally can continues, that's a big if, because, because we need to see, uh, this signal translate into a real recovery, not just a a quick panic reaction to news that retraces. But if we stay above the 200 day moving average, it will and if we can keep the rally going a little more than that, it looks like we're going to avert what otherwise looked like an impending death cross on the daily chart. The market tested the 50-day moving average on Wednesday, but still closed below it. Now, if we can get above four spot 90 or so and stay there and that number that I'm quoting is on the December 25 chart, Hotel Golf Zulu 5 on that chart above four spot 90. If we can get there and stay there, then I think the long overdue recovery in copper may finally be upon us. And it definitely comports with Luke's view that they're going to have no choice but to run this economy hot. >> Well, Eric, it's awesome to hear that you got good positioning there on your copper things. did talk about that copper trade very timely uh last week as a trade of the week and so it's nice to see that any listeners that were acting upon that had a great start to that trade. Now overall uh copper here has lots of room to go back up to that kind of five to five and a quarter range and so at this moment uh with this kind of a great tailwind there's lots of room for copper to strengthen here in the next couple weeks or month ahead. Patrick, before we wrap up, we usually hit the 10-year Treasury note chart. I don't think you can skip that one this week in wake of Luke Groman's interview. What do you think? And how does it comport with what Luke told us? >> While we saw yields break down towards 4% before the FOMC, really Powell did cool things off in the rates markets and uh bonds uh have uh weakened and subsequently yields have risen uh and we're now actually testing some pretty key levels. I think this kind of even 420 425 yield area is going to be very important. If the primary trend is now lower yields, this should be the resistance level on yields and we should see them start to weaken from here. And if for whatever reason yields strengthened above these levels, it would have to be acknowledgment that something has changed in the rates markets and we'd have to then see whether or not uh retesting of highs would be on the table. Right now, I'm actually anticipating this to fail at this level and weaken. And let's uh let's see if uh this overhead resistance does in fact stall things out here. Folks, if you enjoy Patrick's chart decks, you can get them every single day of the week with a free trial of BigPictur Trading. The details are on the last pages of the slide deck or just go to bigpicturetrading.com. That concludes this edition of Macrovoices. Be sure to tune in each week to hear feature interviews with the brightest minds in finance and macroeconomics. Macrovoices is made possible by sponsorship from bigpicturetrading.com, the internet's premier source of online education for traders. Please visit bigpicturetrading.com for more information. Please register your free account at macrovoices.com. Once registered, you'll receive our free weekly research roundup email containing links to supporting documents from our featured guests and the very best free financial content our volunteer research team could find on the internet each week. 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