MacroVoices #506 Mike Green: Volatility, High-Yield, Precious Metals & More
Summary
Passive Flows: Mike Green argues a persistent passive bid from retirement accounts into broad index funds is structurally propelling equities higher and narrowing market breadth.
Bond vs. Credit Volatility: MOVE-index style Treasury vol is subdued, but investment-grade and high-yield credit spreads show growing concern amid weakening tech balance sheets and rising bankruptcy trends.
High Yield Mechanics: Tight HY spreads reflect structural supply shortages and forced reinvestment, with potential widening from future fallen angels rather than new issuance.
Covered Call Risk: The surge in covered-call ETFs effectively creates synthetic corporate debt; attractive yields mask equity-like downside without creditor protections.
Energy Outlook: He’s constructive on oil and especially natural gas, viewing them as cheap relative to monetary metals and seeing NG as highly levered to data center expansion and AI power demand.
Gold Drivers: Gold’s rally has been driven by Chinese diversification from Treasuries and renewed US retail flows; near-term, he sees signs of a peak and ongoing competition from Bitcoin ETF inflows.
Dollar Stablecoins: USD stablecoins can extend dollar adoption in unstable-currency regions, but they undermine a key social-use case often cited for Bitcoin.
Simplify Strategies: He highlights Simplify’s CDX ETF using derivatives and hedging to isolate credit-spread risk while improving carry, contrasting it with riskier levered or covered-call strategies.
Transcript
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 Serezna. Macrovoic's episode 506 was produced on November 13th, 2025. I'm Eric Townsend. Simplify Asset Management chief strategist Mike Green returns as this week's feature interview guest. We'll discuss everything from the reopening rally to precious metals to energy markets. Then be sure to stay tuned for our trade of the week segment right after the feature interview when Patrick will present an options trade to buy the dip in uranium miners. And I'm Patrick Sesna with the macro scoreboard week overw week as of the close of Wednesday, November 12th, 2025. The S&P 500 index up 79 basis points trading at 6850. Strong recovery has market trading nearyear highs again. We'll take a closer look at that chart and the key technical levels to watch in the postgame segment. The US dollar index down 45 basis points, trading at 9947. The December WTI crude oil contract down 121 basis points, trading at 58.88. The December Arbob gasoline down 258 basis points, trading at 189. The December gold contract up 554 basis points trading at 4213. Strong bullish breakout of key support begging the question if the next leg higher has started. The uh December copper contract up 241 basis points trading at 510. Uranium down 108 basis points to 7790. And the US 10-year Treasury yield down three basis points trading at 410. The key news to watch next week is the FOMC meeting minutes, the flash manufacturing and services PMIs, the November option expiration, and the much anticipated Nvidia earnings. This week's feature interview guest is Simplify Asset Management Chief Strategist Mike Green. Eric and Mike discuss market momentum, bond volatility, energy markets, and more. Eric's interview with Mike Green is coming up as Macro Voices continues right here. and macrovoices.com. And now with this week's special guest, here's your host, Eric Townsend. Joining me now is Mike Green, Simplify Asset Management's chief strategist. Mike, it's great to get you back on the show. Let's just dive right into this market. Last week, the the sky was falling, the world was ending, everybody was sure that the the market was going to crash. This week, government shutdown seems to have been averted. Everybody's saying it's new all-time highs around the corner. Um I I kind of have a feeling that you're going to say that the story is a little deeper than that. What's really going on here? What should we expect? How should we interpret this market? >> Well, I think the thing that you know I'm going to talk about is ultimately the most important factor that exists in the market. It's just a mindless bid that continues to come from 401k contributions, IRA contributions, money flowing into ETFs, mutual funds, etc. You know, that money largely flows into the broad indices, the total market index or the S&P 500 is really the the single biggest beneficiary of this and powers equities higher in a framework that is driven largely by momentum, but actually has some interesting characteristics slightly different than pure momentum. It's what I'm calling the passive factor. And and my math suggests unfortunately that that is now adding 12-300 basis points a year in excess performance versus what you would expect under a mean reversion or a valuation dominated market. And so you know a lot of what we are seeing is unfortunately just a statement of how we invest which is passively through broad indices into retirement accounts. We don't take that money out. um that how we're investing is a big deal and then the fact that so many people are investing under a government sponsored enterprise is driving the price of financial assets higher regardless of what the Federal Reserve does regardless of the money printer goes bur etc. Those can have real market impacts but they're not the the primary feature that's behind all of this. Okay, I definitely agree with your characterization, but you know, it begs the question, as much as there's plenty of reason for concern longer term, is there any reason to think that this phenomenon of momentum that you're describing is ending or has ended or that we should expect anything other than a continued meltup? >> There have been a couple of things that have have been concerning, right? So, one of the ways that you can tell a game is about to change or is changing is when quote unquote everybody figures out the rules to the game and starts playing to what they think is happening, right? And so, we saw a huge amount of retail surge into very speculative stocks. We saw chasing after short covering etc. in this last move. There are components of that that will exhaust itself, right? There's been some really interesting analysis on the returns of funds that are invested in Robin Hood type accounts etc. The losses just appear to be rising. Unfortunately, it appears that in aggregate many of the investment choices that people are making will eventually exhaust their capital. And so some of that discretionary has very much certain, you know, has very much elements of a, you know, short-term sentiment-driven bubble that was created by and large from the taco type phenomenon and the, oh, this isn't that big of a deal and blah blah blah. Um, all that has a risk of running out. the other effects and this is really one of these things that you know I just I I probably am the most annoying person on earth in this respect because every time we hear this narrative of oh this is now going to change the setting right whether it was interest rates going higher in 2022 or the loss of American exceptionalism in March of 2023 we he keep building these narratives that occasionally drive discretionary flows right we're going to buy Europe we're going to buy small caps we're going to buy Japan etc at the end of the Today the structural features in the United States and increasingly around the world are largely about directing flows of retirement assets which are copious into the S&P 500. And you know seeing that stop is going to be really hard. And then the second component of of it is the mechanics of how we invest. This passive factor has a concentrating factor built into it that creates a feedback loop that causes the market to get narrower and narrower. Many people are reporting this as an anomalous outperformance by the size factor. That's not what my research suggests. My research suggests that these are really the stocks that are most positively affected by the passive bid. There is a strong overlap with the size factor, meaning the largest stocks outperform, but it's not quite right. It's not quite what is actually driving this. And you know, until we change policy or until there is a significant enough macroeconomic change to change the direction of flows, it's just really hard to see where this stops. >> Mike, the volatility that we're seeing in the stock market, frankly, doesn't surprise me because we've got a very politically contentious environment. There's lots of headlines in different directions. It makes sense. But when I see bond volatility spiking up, that kind of alarms me more because I know that bonds are not really traded by retail investors, at least not actively. What's going on with bond volatility recently? And is it a signal that we need to be concerned about? >> Well, I think you have to separate bond volatility. So, there's a traditional bond volatility, the move index, which actually is created by my partner Harley Bassman, which is similar to the VIX. measures uh interest rate volatility as priced in options markets one month out that actually is quite depressed right so a lot of the speculation or fears of interest rates losing control that there is going to be a surge above 6% then 7% 8% there's really no evidence that that is currently priced into the markets the narrative that the US was going to encounter fiscal dominance and you know an immediate loss of credibility in the treasury market really disappeared fairly quickly. Um, on the flip side of that equation, when you talk about bond volatility, I also include the corporate bond sector and there we're actually starting to see a little bit of concern pop up. The credit default spreads and the spreads in investment grade have begun to deteriorate largely because of the weakening balance sheets and operating outlook for many of the the large technology companies. Companies like Meta, for example, have gone from a 70 billion net positive cash balance to my rough estimate is today they're about 30 to40 billion in net debt. So that's a remarkable deterioration and the strength in their balance sheet over the past couple of years with very little evidence that the investments that they've made along that path have secured them any unique uh source of incremental revenues or profits. And so the bond markets in investment grade and high yield are showing a little bit more concern than the the risk-free markets are. >> Mike, can you expand that description to include high yield bonds? Because frankly, this is a market that, you know, I thought should have crashed a long time ago, but it hasn't. So obviously I don't understand it. >> Well, I'm not sure that you don't understand it because my models would certainly suggest credit spreads should be a lot wider than they are right now. Um, you know, I build models on macroeconomic factors that exclude things like corporate bankruptcies, but even there in the corporate bankruptcy space, we're starting to see much higher levels of corporate bankruptcy than we've seen historically. And it does suggest that credit distress does exist. Now, the challenge in high yield, particularly in public market high yield, is as a fund, right, I run a high yield fund. I typically will receive between 20 and 25% of the cash of the assets of that fund back in cash in any given year. That's a combination of maturities which run on average at about 5 years. So about 20% of my cash is coming back from maturing bonds and somewhere between 7 and 8% is typically coming from uh the coupons associated with those bonds themselves. There's a little bit that will be lost to default in that process. I have to reinvest that into high yield. And when you have a high interest rate environment like you currently have, the incremental production or incremental sourcing of new high yield paper is depressed. So I have more paper that's maturing and coupons than I have paper to invest in. That forces me to buy secondary market bonds that in turn drives their prices to higher levels and yields and spreads to relatively low levels. Um, we know what's happening in the high yield space, right? It's priced at historically very, very tight spreads. That's particularly true if we compare it to areas like private credit where we're starting to see loan spreads widen significantly. It's remarkably true if we consider it against things like business development corporations, which historically have very closely tracked high yield because they're effectively a private credit metric. those have diverged to a level that we've really never seen before. So I I don't think it's that you don't understand high yield. I think it's just that there are mechanical market structure components that are currently driving high yield spreads to very tight levels albeit wider than they have been recently. There's increased concern as I mentioned in the investment grade space of what's called fallen angels which is a way of introducing supply into the high yield space without issuing new paper. That's simply investment grade companies that are downgraded and pushed into the high yield index. That requires me to sell other paper in order to buy that new paper in proportion to the index if I'm an index investor. Um, and can cause credit spreads to widen quite significantly. We saw this in 2005, for example, when Ford and General Motors were downgraded in the auto industry. Those concerns are growing. We're not yet there but you know so the leading indicators or lead leading candidates for that would include firms like Oracle for example um which could very much find itself in a distress credit environment and that very much belies the idea that they're going to be spending astronomical sums building out data centers to to meet the objectives of some of their partners. Um but that high yield space is wider but nowhere near as wide as I think it should be primarily because of the lack of secondary supply right now. Let me spin the question a different way because at least in my own trading, you know, I've got a certain amount of risk capital that's deployed in risk assets. Then I've got a bunch of T- billills and frankly, you know, T- bills don't really resonate for me as a private investor. I don't need the liquidity of being able to, you know, cash in a billion dollars and and not move the needle. It would make much more sense to get the higher yield of AAA corporates, except AAA corporates don't really yield much higher. Okay, what do I do to get more yield out of fixed income? You know, cash equivalent safety money in my in my portfolio? Well, I go to fill in the blank. Help me out here. Cuz I don't know what to do other than T bills because nothing that is short of high yield, which I I'm very concerned for the reasons we just discussed is is carries a lot of embedded risk. I don't see where the uh the moderate increase in risk or or small increase in risk gets me any better than T- billill yields anywhere in the fixed income market and that doesn't make sense to me. >> Well, I don't entirely disagree with you. Right. Part of what you're describing is the relative flatness of the curve. So, you're being paid well in T bills. There is reinvestment risk associated with the T bills. If interest rates, if you know concerns about economic growth turn out to be larger, then the Fed will cut interest rates and you will be reinvesting the proceeds of those T bills into less attractive T- billill yields. Whereas if you bought a fixed income bond a longer duration, for example, theoretically you've locked in that reinvestment for an extended period of time. You could see price appreciation as a result of that. Um I I don't entirely disagree with you that high yield given spreads is relatively relatively unattractive if the economic conditions that were concerned about lead to default performance and and I think there is key risk associated with that. Now the way I address that is by running a proprietary hedging process designed to isolate the impact of credit spreads. We've been very fortunate that it's worked really well uh and has allowed us to insulate against credit spread widenings like happened in February, March for example. Um but without that I would not be particularly interested in high yield. To answer your question, what other people are doing though and this is again part of the story that's playing out in high yield and investment grade and in other areas is that searching for yield has led people to engage in strategies like covered call writing. Um there's a an explosive growth of ETFs that are involved in various forms of covered call writing. Some are more speculative and riskier than others. Oftent times they will carry optically very attractive yields. What's happening there is is that you are doing the same thing ironically that we did prior to the global financial crisis. You're creating synthetic forms of corporate debt. And the important thing to remember about this is that you always want to define an instrument not by the title that it carries, right? Not covered call equity funds or high yield bond funds, but instead of it, think about their payout profile. And so a high yield bond has an incremental upside return associated with either lower interest rates. That means that I get some capital appreciation or the coupon associated with providing capital to riskier credits. All right? So the quality of the company that I'm underwriting is lower than the highest quality companies. I'm taking that increased risk in exchange for a higher premium or interest rate associated with it. Uh, but the most I can make is kind of, you know, slightly better than par and that coupon in a high yield space. If things go badly, right, I start losing principal fairly quickly and can end up getting wiped out in that high yield bond. Black Rockck just saw this with a private credit that they had on their books at a at par 100 just a month ago and today it's valued at zero. Um, that's the same structure as a covered coal. In a covered call, you own the equity. You have sold a call option against uh superior performance in exchange for a fixed income comportion portion to it. You know exactly what you're going to get the premium that you sold it at. You are also exposed to all the downside, right? So really what a covered call strategy is is just synthetically written corporate debt. Optically, many of those strategies offer really high returns right now, particularly if they're done against single speculative securities because you're embedding that value of the call option that you're selling. And these have become very very popular products that people are using to enhance their yield. It's, you know, the the knock I would give on high yield is that you are writing credits on slightly dodgy companies, but you're tend to do so at prices and at capital um attachment points that means that they're reasonably well underwritten. When you enter into a a high yield contract, you typically will have covenants that enforce your rights as an investor. When you go to a covered call strategy, you mimicked that payout. you're investing typically in higher quality companies because you'll often do it against the S&P or against the mega cap. Um, but you have absolutely no rights and your attachment point is much much closer, right? Right? So a 10% decline in equity for example can cause a meaningful draw down in a covered coal strategy that really shouldn't affect particularly investment grade or to a certain extent high yield performance because those strikes are typically written much lower in the capital structure. So I like the way people are dealing with it right now is they're taking a lot more risk. Unfortunately I think much of is is misrepresented to people. >> Mike, let's talk about energy next. Oil and gas prices were something that I think your very first Substack talked about. Re refresh us what your prediction was there, why you had that perspective, and what your current outlook is for the oil and gas market. >> I wrote a piece in which I was highlighting that the price of oil had actually risen in the aftermath of Russia's invasion of Ukraine to remarkably high levels um certainly relative to other commodity assets, in particular monetary commodity assets like gold. I called into question the thought process that people were employing which that we which was that economic growth if China were to reopen uh would lead to extraordinarily high prices in oil. My view is we already had extraordinarily high prices in oil and if anything we were likely to see demand destruction that ultimately would cause the production to exceed the demand. Um that forecast ended up being right. Now we're at a point where the price of many of those monetary commodity assets like gold and silver have risen to extraordinary levels relative to other industrial and consumed commodities. I think this more accurately reflects both the uh eventual move away from fossil fuels particularly in transportation but it probably more than reflects that at this point. So we've moved from being very very expensive to being very very cheap. sentiment has deteriorated. I'm actually pretty constructive on areas like oil and in particular natural gas, which is probably the single most levered exposure to the data center buildout um and AI story that I can find. >> Well, I definitely agree with you on natural gas and the AI connection. I I also think a lot of people are missing that one. We've talked about it here on Macrovoices before. I want to go back to your comments though. You said oil and gas are particularly uh you know underpriced compared to the monetary metals gold and silver. Let's talk about what's actually driving the gold and silver rally because you know some people say it's all about central banks and not wanting to uh to have their treasuries canled. This happened to Russia. Other people say no it has nothing to do with that. It's all about China buying for completely different reasons. Then there's uh other people that say it's all geopolitical risk. What really is driving this unprecedented rise in the monetary metal prices? >> Well, I guess I would lean into the camp that says it's more of B than A or C. Ultimately, I think the math is very clear in terms of what happened to gold in the aftermath of the US um taking Russia's reserves. It became very clear that treasuries were not a safe asset to hold your accumulated dollar reserves in. Um and China began to diversify aggressively with its extraordinary trade surplus. It began to buy significant quantities of gold both domestically and on the international market. Um what was really interesting about this is in the face of that you saw continuous liquidation of the financial gold assets like GLD and to a lesser extent GDX the um gold equity ETFs GDXJ etc. We actually saw a really interesting phenomenon where the buying for from China was largely offset by selling that was coming from uh the US domestic public retail investor. Um that stopped somewhere around 2024 and at that point you reversed it as Americans began American retail began buying gold exposure again. Now, it was pitched as a devaluation, as a debasement trade, that they were just going to print money, etc. We really don't have any evidence of that, but I wish it was that simple. But it really is just a function of the American retail investor stopped selling while China and others continued buying. That in turn has caused prices to move in a very aggressive fashion. Um, and now it becomes a question of, you know, do the higher prices beget yet higher prices? Does it become a self-fulfilling narrative? in George Soros's frame of reflexivity, or do we have we pushed this far enough that now Americans through a combination of price appreciation and reallocation of portfolios have as much gold exposure as they want? There's some indications that that's the case. There's also some indications that China's trade surplus is starting to deteriorate in a fairly meaningful way, which reduces the amount of funds that they have for buying gold. And so it it looks like gold has at least hit a near-term peak. Um you know the one of the reasons I think that the selling was actually occurring was because people were diversifying away from gold into things like Bitcoin. I have a very strong negative view towards Bitcoin. I think ultimately much of that will be reversed. But again, I wrote in my substack about this that if you X out that buying of Bitcoin, my calculations suggest that gold could be as high as 10,000 right now. So this this has very much been financial buying first by central banks that recognize they couldn't hold treasuries. Secondly, by retail chasing it, and we're still not really seeing the anti- Bitcoin trade. There remain positive flows into the Bitcoin ETFs, which is a competitive asset to gold. Let's talk a little bit more about China and where the relationship with the US and China is headed. >> Well, I mean, this is a tricky one um because candidly first we need to know what we're actually trying to accomplish in the United States. I think it's become very very clear that the United States relationship with China has deteriorated. We've moved to a position in which the two ostensible trading partners have increasingly become geopolitical rivals. My general sense is that China uh that this this should have been apparent to people as early as 2015. Really the emergence of Xi as a compromised candidate between the two primary parties in China and his subsequent purging of those parties to gain control really set the stage for a meaningful change in China's tone with the rest of the world. This you know century of humiliation and overcoming it became really operative. Um, and in my opinion, they they candidly played their hand a little bit too hard and too fast, making the United States increasingly aware of it and putting us in a position to start making some of the hard choices about separating away from China. There's an arrogance on both parties. The United States thinks it's going to be relatively easy to do this, or at least that's that's the way it's presented. I think in part because it has to be. Uh, China, I think, views itself as having competitive advantages that are going to be largely insurmountable. And I I don't think that's true. Right. There was a really interesting piece. The suit that was filed against the Trump tariffs was by a company called Learning Solutions, which highlighted that they sourced roughly 2500 products from China. Um, replacing each one and moving it to a different location would cost them somewhere in the neighborhood of $6,000 per product. that works out to about 15 thou $15 million of expenses. They had budgeted $5 million for tariffs and when the um elevated tariffs which are no longer in place went through, you know, they did the calculation that they could owe up to hund00 million in tariffs. So, in classic American fashion, rather than getting busy and dealing with the $15 million worth of expenses that would be required for diversifying away from China, they chose to file lawsuit against the government. Um, trying to claim that they were being forced to spend $und00 million. Um, that I think defines almost the relationship between the two, right? It is, it is going to be hard and it is going to be painful, but at the end of the day, it's a heck of a lot less than the tariffs. And so, the real risk that you run in the United States right now is the tariff policy, which I would never choose in a perfect world, right? If we had true free trade, if there was not um subsidy and monetary currency manipulation coming from China, which should have allowed its currency to appreciate to the point that its consumers became large global consumers. Instead, they chose to focus on enhancing the power of the CCP, repressing wages domestically by keeping their currency from appreciating. And now they've crossed the point where the supply of workers is beginning to fall. that's caused them to become increasingly automated and now they're stuck with extraordinary surplus production that they basically have to dump onto the rest of the world. Um, the rest of the world doesn't want that, right? We love getting the little trinkets, we love getting the little toys, etc. We love getting, you know, flat panel TVs, but we love jobs more. And at the end of the day, the Americans are way too munificent about the idea of free trade or unfettered access to the US markets. Europeans are much less open to it. Japanese are much less open to it. Koreans are much less open to it. Africa and South America in many ways are much less open to it. And so by forcing the Chinese to send product that would have historically come to the United States into those markets, the world is rapidly imposing trade barriers of its own on China. And that that suggests to me that China is in a very precarious position. Mike, I want to go back to what you said about Bitcoin because although I do share some of your um I guess skeptical concerns about Bitcoin itself, I I find that the the recently uh promoted view that US dollar stable coins are going to be used really as a way of propping up the the dollar dominant global monetary system. Seems very credible to me. seems like that's a way to essentially get the US dollar into the digital age without having to create a digital dollar that's actually, you know, a tokenized currency. What do you think about that Genius Act stable coin view that it potentially kind of replaces the the petro dollar system and allows uh a continued preference or a continued artificial demand for US Treasury paper? I mean ultimately every dollar that is released is to a certain extent backed by that already, right? So in order to get the dollars out, the US government is issuing paper that's going to be held by someone. Um all you're identifying is let's actually make this a continuing requirement in which stable coin funds will offer people the electronic or digital equivalent of a US dollar. It can be spent. It can be used. It does not earn interest, which I think is actually a critical flaw in the system. Um, nor does it treat domestic versus international in any meaningfully different way. Um, and so like I kind of buy into it a little bit. I I do think that it's important and that it will ultimately drive further adoption of the US dollar in regions of the world that do not have stable currencies. I'm just not sure how that's positive for Bitcoin, right? Um the whole argument behind Bitcoin as as a you know a uh uh social good was that it provided access to a currency that could be used in foreign countries um that didn't have stable systems. If if we replace that with a stable coin, you know, not that it ever really amounted to much in Bitcoin, but that seems to undermine one of the key features that was lauded for Bitcoin. Mike, I can't thank you enough for another terrific interview. But before we close, I want to talk a little bit about what you do at Simplify Asset Management. As I understand it, there were basically some regulatory changes that allow you guys to have what are effectively ETF or or mutual fund like instruments that do fancy tricks that used to be only hedge funds were allowed to do. Tell us a little bit more about what the regulatory change was and what are the products that you guys are offering as a result of that change. Well, there are two critical regulatory changes that caused me to transition from the world of hedge funds into the world of ETFs. Uh 2019 there was what was called the ETF rule. These are all very creatively named. Um the ETF rule facilitated and made easier the process of applying for a traditional uh ETF, particularly an active ETF. Historically, that was a very long process. There was a lot of concerns about transparency and it was very difficult to launch an ETF which is part of the reason that you saw only the large sponsors releasing ETFs and typically only in the form of like an S&P 500 for example. Um that rule opened up the floodgates to active and smaller ETFs like many of the products we offer at Simplify. The second key change came in September of 2020. It's what's called the derivative rule. And unsurprisingly, the derivative rule allows you to include derivatives inside mutual funds and ETFs. In particular, uh what it does is establish effectively risk metrics around it. So you declare a benchmark that you're held against. You are then allowed flexibility using derivatives to have up to two times the volatility of that index. This has contributed on one side to the proliferation of things like 2x levered funds or even 3x levered funds which can then turn around and point to a 2x levered fund as their benchmark. Um it has also facilitated the inclusion of derivative strategies like I use in my high yield product for example that are designed to take advantage of certain features in market structure. A really simple example of that is many high yield mutual funds and credit funds broadly will short the HYG ETF to reduce their market exposure and allow them to amplify their single security picks. That in turn actually places pressure on the balance sheets of dealers firms like Goldman Sachs, Morgan Stanley, etc. who have taken that high yield exposure onto their balance sheet and in a postvulkar world have to carry much higher capital against that. They're willing to pay me a portion of that excess return that they get in the form of securities lending for taking that risk back off of their balance sheet in what's called a total return swap. So that allows me at the base of my product to effectively receive HYG plus typically between 50 and 200 basis points. The nice part is is that additional return um almost inevitably flows during periods of market stress. And so it allows me to partially outperform in down periods because I'm earning a higher return on assets. The second thing that it allows me to do is include things like my proprietary hedging frameworks where I use an equity longsh short overlay that is designed to mimic credit spreads but to do so with a positive carry associated with it that allows me to mitigate the impact of a significant credit spread widening. um that couldn't have been done prior to 2020. And so we've been very fortunate. The rules have changed. But I just want to emphasize like I'm using it for a little bit of return enhancement and a lot of risk reduction. Most of the strategies that are out there have actually chosen just to embrace the the the increased risk in pursuit of higher return. >> And for investors who want to learn more about the various products that you're managing, what's the website or who do they call? >> So the best place to go to find out more about Simplify is www.simplify. simplified US. I emphasize the US there. We have the full list of products. We have deep dive explainers on the various exposures that we have. Um, and they're tuned to deliver everything ranging from fixed income exposures to more speculative equity exposures if that's really what you're looking for, as well as ways to thoughtfully create income from equity type assets. I I would encourage people to check out in particular the product CDX that I was describing. We've recently launched a product in the private credit space. PCR is the ticker there that employs similar tools to what we're doing within CDX. We have a five-star CTA um uh managed futures fund run by our partners at Altus, Charlie McGara, who I believe you've had on the show. Um these are all tools that are, you know, really excellent in building a portfolio as compared to simply deciding that you want to knock the cover off the ball with one particular investment. And I encourage people to check that out. If you're interested in my thoughts, you can follow me on Twitter. I'm Profplum99 PF Plum M99. Never anticipated having a presence in social media. Um, it's a confusing account, but a lot of people find value in it. And then, as we've talked about repeatedly, I write on my Substack. It is yes.com. Um, very reasonably priced. The objective is not to make money off of it as much as to make sure that people that are reading it value what they're reading. So if you are interested in it and you do not want to pay but you do want to read, feel free to reach out over Substack and I'm happy to comp you exposure. Patrick Szna and I will be back as macrovoices continues right here at macrovoices.com. Now back to your hosts, Eric Townsend and Patrick Szna. >> Eric, it was great to have Mike back on the show. Now listeners, you're going to find the download link for the postgame trade of the week in your research roundup email. If you don't have a research roundup email, that means you have not yet registered at macrovoices.com. Just go to our homepage, macrovoices.com, and click on the red button over Mike's picture saying looking for the downloads. Patrick, as you know, I'm super bullish on uranium miners long-term, but we've been in a consolidation for the last few weeks, and I think it may be nearing its end. We've gone from extreme overbought to oversold on both RSI and slow stochastics. The last consolidation in URRA ran from July 24th to August 20th, or just under one calendar month. Then we saw a whopping 70% rally over the next 6 weeks. The present consolidation began on October 15th and is now just a hair under one month old. In other words, if we use the duration of the prior consolidation as a benchmark, it's about time for the bottom to be put in on URA and the start of the next big rally. But hold on, we're already at historically elevated levels on these stocks. So going outright long URRA with new money or even adding to existing positions still carries considerable risk, making an options play seem more appealing to me. What would you recommend, Patrick, to play the possibility that uranium is close to putting in a short-term bottom here? And would you recommend outright shares in URRA or call options on URA or an outright long hedged by protective puts or something else? Eric, your uranium idea is at a technically interesting moment, but expressing it with options comes with some real complexities. As you can see on page two of the chart deck, the implied volatility of URRA has doubled from roughly 30% to 60% over the last few months. And when V does that, traditional long gamma expressions like buying calls outright becomes far less attractive. the carry cost goes up, data decay steepens, break evens move farther away, and you end up paying significantly more premium for the same directional exposure. On the other hand, simply stepping in and buying the stock has its own challenges. URA is volatile enough that any reasonable stop can get clipped by any single ugly daily move. So, in this environment, I'd rather structure the trade more intelligently. For me, that means using the in the money vertical call spread, which dramatically reduces the Vega load while still giving you the directional exposure you want. Using a deep in the money call as a long leg effectively creates a synthetic long forward, high delta, low Vega, and minimal exttrinsic value. When you pair that with a short out of the money call, the structure behaves like a capital efficient defined risk long position with the upside capped at the top strike. But here's the underappreciated part. You also get the downside convexity relative to holding the stock outright. If URA sells off sharply back towards the at the money region, that deep in the money call does not lose value one for one like the delta 1 stock position. The option sheds delta as it approaches the strike and the remaining time value cushions the loss. Equity doesn't do that for you. Now the URRA is trading around 4750. The structure I'm looking at is the January 202640 by60 bull call spread for an $8 debit. And importantly, it's important to observe that roughly $7.5 of that is intrinsic value. So functionally you should think of it as a capital efficient equity stake rather than a speculative options bet. Now on the upside if the trade is working and uranium continues to trend you will have the flexibility to exercise into the equity and carry the position longer term. So in short, you're getting most of the stock-like upside with defined risk and a nonlinear reduction of your losses if we get a fast correction from here. 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 bigpicturetrading.com. Now, let's dive into the postgame chart deck. >> All right, Eric, let's get into these equities. What are you thinking of the markets here, >> Patrick? We've already seen a brisk rally over the last few sessions on rumors of a government reopening. So, this is a perfect setup for the classic sell the news reaction. So, a pause or dip here is definitely possible. But that said, I think the major trend is still up and that new all-time highs are likely in coming weeks. I'd like to add a word of caution also about government supplied data releases. The market has been super eager for resumption of official data releases and analysts are chomping at the bit waiting to see what those first official data reports are going to show us as the government reopens. I think those analysts are badly misguided and just asking for trouble as they usually are. The only sensible way to interpret the current situation is that the government has been shut down for 43 days now. That's the longest political stunt shutdown in US history. And that means everything is a mess. Returning government employees will be picking up the pieces and trying to sort out how to resume data reporting. This is a perfect setup for several weeks of dirty data. It's some essential data that normally goes as the input to this or that report ends up being omitted because the source data wasn't available. Except they didn't put that in the footnotes because they were scrambling to get back to work. Yada. You get the idea. The only sane move here is to fade, ignore, and just not pay attention to all government data for a few weeks. write it off is probably wrong and ignore it until the system stabilizes a few weeks down the road. But I predict institutional finance will predictably do the exact opposite. They'll react dramatically to new data that they should be ignoring if they had their wits about them, which they seldom do. So my expectation is for several big overreactions in markets to data releases that should have been ignored, frankly, because the data wasn't yet reliable. From a trading perspective, my inclination is to fade those big moves if they happen, regardless of their direction. Eric, you're spot on with the economic data observations. There's a few things that we want to touch on here. Technically, we're trading near 52- week highs. The question that in is on my mind is are we seeing a bigger topping formation developing as we continue to see market breath deteriorating and the overall momentum of the market stalling. and we should have a quieter week from volatility from gamma pinning that could occur from the November option expiration. But I think the real momentum shift can come on Nvidia's earnings next week. The entire AI bubble has been driving almost all this market momentum. And I think that if in order for us to see 7,000 to 7500 on the S&P, it would have to come on new found momentum on Nvidia going higher. If we see that the uh energy is exhausted and Nvidia fades off of its earnings, uh that could really stall out the market and start to solidify this bigger topping formation that could see a very challenging period going into December. A lot of this will hinge on that. We'll know by next week's episode. So, let's see how this plays out. All right, Eric, what are your thoughts here on the dollar? Well, the Dixie is still flirting with a 100, but it still hasn't broken out. at least not yet. With the government reopening now apparently uh completely signed off, although who knows, it's only a few hours old as we're recording here. Uh assuming that the government reopening is really happening, I would expect turbulence for a short period before a clear trend emerges. So, let's give this another week or two before we decide what's really next and what what the next leg is going to bring for the dollar. Well, the US dollar index uh remains decisively above the 50-day moving average, now spending well over a month uh in bull trend. Now, we've had a oneweek consolidation, but that's held by almost all Fibonacci zones and still well above its summer trade range. And so, at this stage, uh seeing whether the bulls buy the dip at this 99 level is going to be critical. uh if they do, we could still see the US dollar dart higher, which would be a huge market disruptor on an intermarket basis as the reflation trade has been the big trade that's been working all year backed by this US dollar weakness. So, will we get that uh upside breakout is definitely the thing to watch here. Now, Eric, let's touch on crude. Once again, WTI is selling off as President Trump reiterated his call for $2 gas prices as his target. It's pretty clear to me that President Trump is beginning to work towards setting the stage for midterm elections and he's trying to take the most popular things like gas prices and bring them into the spotlight. I agree with many of our guests that the next big move in oil is likely to be up, but I'm not in any rush to buy. February is the seasonality low in the crude oil market. And for now, my plan is to wait till then to start building a long position. Hopefully with even better location, perhaps down in, you know, the low50s or high 40s before this is over. Meanwhile, backwardation at the front of the WTI curve is almost completely gone and a phase transition to structural contango appears imminent if the flat price weakness continues. Now, if that structural contango transition is confirmed, it will shake out a lot of longs in the market, further supporting my lower first, then higher outlook for oil prices. Well, Eric, crude oil remains in its primary downtrend. It failed at its Fibonacci zones and the 50-day moving average. So, right now, uh we certainly have not seen a transition to a bull move. Now, any breakout above $62 could set in a short squeeze on the upside, but that just simply has not begun to materialize at all. But what's an interesting divergence is the fact that energy stocks pretty much right across the board have started to rally. Many of them are well above their 50-day moving averages and have been accumulated in this um recent period of crude oil weakness. Not sure what to initially make of that. So, it's interesting the fact that traditionally energy stocks that correlate with the movement of oil prices have really started to diverge. I'm curious whether or not that trend can continue here in the weeks to come. All right, Eric, let's talk gold. Well, I said last week that I saw several technical indications that an upside reversal in gold was likely, and that's pretty clearly been proven out with the $300 rally off the lows. But now the overstold stochastics are back to flirting with overbought again. Now in the last big rally that we had up to new all-time highs, gold futures extended their overbought stochastic signal into extreme overbought and then sustained that extreme overbought plateau for several weeks. That's what brought us to the $4,400 high. If that happens again, we could be on the way to new all-time highs as I described last week. So maybe the big move is already on, but we're at a make or break point here. The stochastics are back to overbought from oversold last week. So another wave down is equally possible that could bring a new lower low. So it's still too early to call this decisively. But for now, my bullish thesis appears to be playing out. And even if it proves wrong and we see new lows below 3900, I'll still be buying that dip. There's no doubt in my mind that the gold bull market is still on. The question is only how long the current consolidation lasts and how deep of a correction we see before the bull market resumes in earnest. Eric, the gold rally over the last four days has been pretty impressive. It's just beat the uh 4200 fib zone which is uh really demonstrating relative strength on this. The question here is, is this just going to retest its previous highs in a longer consolidation or has the next bull phase already begun? I want to highlight that there's a lot of reasons to be structurally bullish gold in the long term. If this correction is over, this would have been the shortest correction of the last uh two years. And typically, they've lasted anywhere from 2 months to even four months. This is where I remain longerterm bullish, but I still really want to see whether or not resistance comes in here and whether this still develops into a deeper consolidation into uh December. Overall, uh the price action is quite positive and uh we'll be watching what it does as it trades up towards its previous highs here. All right, Eric, let's touch on uranium. As I mentioned in the introduction to the trade of the week, the technicals suggest to me that the month-old consolidation in uranium miners is probably coming to its end. And I'm buying this dip in the form of 55 strike calls on URA. Energy Secretary Chris Wright's pledge that he wants to build dozens more nuclear reactors before he leaves office. President Trump's pledge to lend $80 billion to Westinghouse to build new reactors. All the news flow is just incredibly positive, incredibly bullish. The big risk here is an unwind of the AI trade because frankly most people haven't even figured out the structural deficit in uranium supply. Most I think this is entirely my speculative and subjective opinion, but I think most of the strength we've seen since the April lows in uh in uranium miners has been attributable to AI people, people that that are excited about AI. They know that nuclear is needed to support the AI story. Now, ironically, the most likely reason for an unwind of the AI trade would be the realization, and it's a correct realization to be sure, that there won't be sufficient energy to fulfill the present market expectations for AI. So, in theory, that ought to be very nuclear bullish. If the problem is there's not enough energy and we need more energy, obviously that has to be bullish. But markets don't work that way. If the AI trade unwinds, then all the people who bought uranium because they were excited about AI are going to unwind those trades as they unwind their other AI trades. And that's going to be bearish at least in the short term for uranium. Well, Eric, I just want to touch here on uh the charts of the uranium uh equities and like you were observing, they've done this retracement and they are a little bit short-term oversold. What's particularly interesting to me is is that this entire pullback has hit the 61.8 Fibonacci retracement, which is a typical place to see the initial support lines. What I like here is that the 50-day moving average is right there to uh to actually depict the next trend. If we see the URRA is able to get back above that $52 area and and start building some momentum back on the highs, that will start to confirm that this short-term buy and dip has materialized and is confirmed. Then we'll be looking to see what what it does up along previous highs. Now, alternatively, if this is proven to still being early, what you should see is a lot of stalling price action and failed rallies that leads to a sustained period of trading below the 50-day moving average. Now, I'm not necessarily predicting that, but rather just observing that u the bulls really need to punch this through that 50-day moving average and build some momentum to really solidify this short-term low. Patrick, before we wrap up this week's show, let's hit the 10-year Treasury note chart. Now, finally, Eric, on that 10-year Treasury yield, uh while we certainly have seen a uh bounce higher in yields in that post FOMC meeting, overall the pattern of lower highs and lower lows is still quite intact. And if we see that any of that economic data that starts getting released here is showing the economy slowing, it may continue to allow yields to remain pivoting along this 4% level and potentially even break below. Uh so we're still watching for that bond strength and yield weakness to persist, but a lot of it will now hinge on uh the first reactions to some of these economic data and points that are going to start being released. 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. Patrick, tell them what they can expect to find in this week's research roundup. >> In this week's research roundup, you're going to find the transcript for today's interview and the trade of the week chart book, which is discussed here in the postgame, including a number of links to articles that we found interesting. You're going to find this link and so much more in this week's research roundup. That does it for this week's episode. We appreciate all the feedback and support we get from our listeners and we're always looking for suggestions on how we can make the program even better. Now, for those of our listeners that write or blog about the markets and would like to share that content with our listeners, send us an email at researchroundup@macrovoice.com and we will consider it for our weekly distributions. If you have not already, follow our main account on X at macrovoices for all the most recent updates and releases. You can also follow Eric onx, Eric S. Townsen, that's Eric spelled with a K. You can also follow me at Patrick Serzna. On behalf of Eric Townson and myself, thank you for listening and we'll see you all next week. 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 bigpicturertrading.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 Serezna 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 bigpicturtrading.com and by funding from Fourth Turning Capital Management LLC. For more information, visit macrovoices.com.
MacroVoices #506 Mike Green: Volatility, High-Yield, Precious Metals & More
Summary
Transcript
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 Serezna. Macrovoic's episode 506 was produced on November 13th, 2025. I'm Eric Townsend. Simplify Asset Management chief strategist Mike Green returns as this week's feature interview guest. We'll discuss everything from the reopening rally to precious metals to energy markets. Then be sure to stay tuned for our trade of the week segment right after the feature interview when Patrick will present an options trade to buy the dip in uranium miners. And I'm Patrick Sesna with the macro scoreboard week overw week as of the close of Wednesday, November 12th, 2025. The S&P 500 index up 79 basis points trading at 6850. Strong recovery has market trading nearyear highs again. We'll take a closer look at that chart and the key technical levels to watch in the postgame segment. The US dollar index down 45 basis points, trading at 9947. The December WTI crude oil contract down 121 basis points, trading at 58.88. The December Arbob gasoline down 258 basis points, trading at 189. The December gold contract up 554 basis points trading at 4213. Strong bullish breakout of key support begging the question if the next leg higher has started. The uh December copper contract up 241 basis points trading at 510. Uranium down 108 basis points to 7790. And the US 10-year Treasury yield down three basis points trading at 410. The key news to watch next week is the FOMC meeting minutes, the flash manufacturing and services PMIs, the November option expiration, and the much anticipated Nvidia earnings. This week's feature interview guest is Simplify Asset Management Chief Strategist Mike Green. Eric and Mike discuss market momentum, bond volatility, energy markets, and more. Eric's interview with Mike Green is coming up as Macro Voices continues right here. and macrovoices.com. And now with this week's special guest, here's your host, Eric Townsend. Joining me now is Mike Green, Simplify Asset Management's chief strategist. Mike, it's great to get you back on the show. Let's just dive right into this market. Last week, the the sky was falling, the world was ending, everybody was sure that the the market was going to crash. This week, government shutdown seems to have been averted. Everybody's saying it's new all-time highs around the corner. Um I I kind of have a feeling that you're going to say that the story is a little deeper than that. What's really going on here? What should we expect? How should we interpret this market? >> Well, I think the thing that you know I'm going to talk about is ultimately the most important factor that exists in the market. It's just a mindless bid that continues to come from 401k contributions, IRA contributions, money flowing into ETFs, mutual funds, etc. You know, that money largely flows into the broad indices, the total market index or the S&P 500 is really the the single biggest beneficiary of this and powers equities higher in a framework that is driven largely by momentum, but actually has some interesting characteristics slightly different than pure momentum. It's what I'm calling the passive factor. And and my math suggests unfortunately that that is now adding 12-300 basis points a year in excess performance versus what you would expect under a mean reversion or a valuation dominated market. And so you know a lot of what we are seeing is unfortunately just a statement of how we invest which is passively through broad indices into retirement accounts. We don't take that money out. um that how we're investing is a big deal and then the fact that so many people are investing under a government sponsored enterprise is driving the price of financial assets higher regardless of what the Federal Reserve does regardless of the money printer goes bur etc. Those can have real market impacts but they're not the the primary feature that's behind all of this. Okay, I definitely agree with your characterization, but you know, it begs the question, as much as there's plenty of reason for concern longer term, is there any reason to think that this phenomenon of momentum that you're describing is ending or has ended or that we should expect anything other than a continued meltup? >> There have been a couple of things that have have been concerning, right? So, one of the ways that you can tell a game is about to change or is changing is when quote unquote everybody figures out the rules to the game and starts playing to what they think is happening, right? And so, we saw a huge amount of retail surge into very speculative stocks. We saw chasing after short covering etc. in this last move. There are components of that that will exhaust itself, right? There's been some really interesting analysis on the returns of funds that are invested in Robin Hood type accounts etc. The losses just appear to be rising. Unfortunately, it appears that in aggregate many of the investment choices that people are making will eventually exhaust their capital. And so some of that discretionary has very much certain, you know, has very much elements of a, you know, short-term sentiment-driven bubble that was created by and large from the taco type phenomenon and the, oh, this isn't that big of a deal and blah blah blah. Um, all that has a risk of running out. the other effects and this is really one of these things that you know I just I I probably am the most annoying person on earth in this respect because every time we hear this narrative of oh this is now going to change the setting right whether it was interest rates going higher in 2022 or the loss of American exceptionalism in March of 2023 we he keep building these narratives that occasionally drive discretionary flows right we're going to buy Europe we're going to buy small caps we're going to buy Japan etc at the end of the Today the structural features in the United States and increasingly around the world are largely about directing flows of retirement assets which are copious into the S&P 500. And you know seeing that stop is going to be really hard. And then the second component of of it is the mechanics of how we invest. This passive factor has a concentrating factor built into it that creates a feedback loop that causes the market to get narrower and narrower. Many people are reporting this as an anomalous outperformance by the size factor. That's not what my research suggests. My research suggests that these are really the stocks that are most positively affected by the passive bid. There is a strong overlap with the size factor, meaning the largest stocks outperform, but it's not quite right. It's not quite what is actually driving this. And you know, until we change policy or until there is a significant enough macroeconomic change to change the direction of flows, it's just really hard to see where this stops. >> Mike, the volatility that we're seeing in the stock market, frankly, doesn't surprise me because we've got a very politically contentious environment. There's lots of headlines in different directions. It makes sense. But when I see bond volatility spiking up, that kind of alarms me more because I know that bonds are not really traded by retail investors, at least not actively. What's going on with bond volatility recently? And is it a signal that we need to be concerned about? >> Well, I think you have to separate bond volatility. So, there's a traditional bond volatility, the move index, which actually is created by my partner Harley Bassman, which is similar to the VIX. measures uh interest rate volatility as priced in options markets one month out that actually is quite depressed right so a lot of the speculation or fears of interest rates losing control that there is going to be a surge above 6% then 7% 8% there's really no evidence that that is currently priced into the markets the narrative that the US was going to encounter fiscal dominance and you know an immediate loss of credibility in the treasury market really disappeared fairly quickly. Um, on the flip side of that equation, when you talk about bond volatility, I also include the corporate bond sector and there we're actually starting to see a little bit of concern pop up. The credit default spreads and the spreads in investment grade have begun to deteriorate largely because of the weakening balance sheets and operating outlook for many of the the large technology companies. Companies like Meta, for example, have gone from a 70 billion net positive cash balance to my rough estimate is today they're about 30 to40 billion in net debt. So that's a remarkable deterioration and the strength in their balance sheet over the past couple of years with very little evidence that the investments that they've made along that path have secured them any unique uh source of incremental revenues or profits. And so the bond markets in investment grade and high yield are showing a little bit more concern than the the risk-free markets are. >> Mike, can you expand that description to include high yield bonds? Because frankly, this is a market that, you know, I thought should have crashed a long time ago, but it hasn't. So obviously I don't understand it. >> Well, I'm not sure that you don't understand it because my models would certainly suggest credit spreads should be a lot wider than they are right now. Um, you know, I build models on macroeconomic factors that exclude things like corporate bankruptcies, but even there in the corporate bankruptcy space, we're starting to see much higher levels of corporate bankruptcy than we've seen historically. And it does suggest that credit distress does exist. Now, the challenge in high yield, particularly in public market high yield, is as a fund, right, I run a high yield fund. I typically will receive between 20 and 25% of the cash of the assets of that fund back in cash in any given year. That's a combination of maturities which run on average at about 5 years. So about 20% of my cash is coming back from maturing bonds and somewhere between 7 and 8% is typically coming from uh the coupons associated with those bonds themselves. There's a little bit that will be lost to default in that process. I have to reinvest that into high yield. And when you have a high interest rate environment like you currently have, the incremental production or incremental sourcing of new high yield paper is depressed. So I have more paper that's maturing and coupons than I have paper to invest in. That forces me to buy secondary market bonds that in turn drives their prices to higher levels and yields and spreads to relatively low levels. Um, we know what's happening in the high yield space, right? It's priced at historically very, very tight spreads. That's particularly true if we compare it to areas like private credit where we're starting to see loan spreads widen significantly. It's remarkably true if we consider it against things like business development corporations, which historically have very closely tracked high yield because they're effectively a private credit metric. those have diverged to a level that we've really never seen before. So I I don't think it's that you don't understand high yield. I think it's just that there are mechanical market structure components that are currently driving high yield spreads to very tight levels albeit wider than they have been recently. There's increased concern as I mentioned in the investment grade space of what's called fallen angels which is a way of introducing supply into the high yield space without issuing new paper. That's simply investment grade companies that are downgraded and pushed into the high yield index. That requires me to sell other paper in order to buy that new paper in proportion to the index if I'm an index investor. Um, and can cause credit spreads to widen quite significantly. We saw this in 2005, for example, when Ford and General Motors were downgraded in the auto industry. Those concerns are growing. We're not yet there but you know so the leading indicators or lead leading candidates for that would include firms like Oracle for example um which could very much find itself in a distress credit environment and that very much belies the idea that they're going to be spending astronomical sums building out data centers to to meet the objectives of some of their partners. Um but that high yield space is wider but nowhere near as wide as I think it should be primarily because of the lack of secondary supply right now. Let me spin the question a different way because at least in my own trading, you know, I've got a certain amount of risk capital that's deployed in risk assets. Then I've got a bunch of T- billills and frankly, you know, T- bills don't really resonate for me as a private investor. I don't need the liquidity of being able to, you know, cash in a billion dollars and and not move the needle. It would make much more sense to get the higher yield of AAA corporates, except AAA corporates don't really yield much higher. Okay, what do I do to get more yield out of fixed income? You know, cash equivalent safety money in my in my portfolio? Well, I go to fill in the blank. Help me out here. Cuz I don't know what to do other than T bills because nothing that is short of high yield, which I I'm very concerned for the reasons we just discussed is is carries a lot of embedded risk. I don't see where the uh the moderate increase in risk or or small increase in risk gets me any better than T- billill yields anywhere in the fixed income market and that doesn't make sense to me. >> Well, I don't entirely disagree with you. Right. Part of what you're describing is the relative flatness of the curve. So, you're being paid well in T bills. There is reinvestment risk associated with the T bills. If interest rates, if you know concerns about economic growth turn out to be larger, then the Fed will cut interest rates and you will be reinvesting the proceeds of those T bills into less attractive T- billill yields. Whereas if you bought a fixed income bond a longer duration, for example, theoretically you've locked in that reinvestment for an extended period of time. You could see price appreciation as a result of that. Um I I don't entirely disagree with you that high yield given spreads is relatively relatively unattractive if the economic conditions that were concerned about lead to default performance and and I think there is key risk associated with that. Now the way I address that is by running a proprietary hedging process designed to isolate the impact of credit spreads. We've been very fortunate that it's worked really well uh and has allowed us to insulate against credit spread widenings like happened in February, March for example. Um but without that I would not be particularly interested in high yield. To answer your question, what other people are doing though and this is again part of the story that's playing out in high yield and investment grade and in other areas is that searching for yield has led people to engage in strategies like covered call writing. Um there's a an explosive growth of ETFs that are involved in various forms of covered call writing. Some are more speculative and riskier than others. Oftent times they will carry optically very attractive yields. What's happening there is is that you are doing the same thing ironically that we did prior to the global financial crisis. You're creating synthetic forms of corporate debt. And the important thing to remember about this is that you always want to define an instrument not by the title that it carries, right? Not covered call equity funds or high yield bond funds, but instead of it, think about their payout profile. And so a high yield bond has an incremental upside return associated with either lower interest rates. That means that I get some capital appreciation or the coupon associated with providing capital to riskier credits. All right? So the quality of the company that I'm underwriting is lower than the highest quality companies. I'm taking that increased risk in exchange for a higher premium or interest rate associated with it. Uh, but the most I can make is kind of, you know, slightly better than par and that coupon in a high yield space. If things go badly, right, I start losing principal fairly quickly and can end up getting wiped out in that high yield bond. Black Rockck just saw this with a private credit that they had on their books at a at par 100 just a month ago and today it's valued at zero. Um, that's the same structure as a covered coal. In a covered call, you own the equity. You have sold a call option against uh superior performance in exchange for a fixed income comportion portion to it. You know exactly what you're going to get the premium that you sold it at. You are also exposed to all the downside, right? So really what a covered call strategy is is just synthetically written corporate debt. Optically, many of those strategies offer really high returns right now, particularly if they're done against single speculative securities because you're embedding that value of the call option that you're selling. And these have become very very popular products that people are using to enhance their yield. It's, you know, the the knock I would give on high yield is that you are writing credits on slightly dodgy companies, but you're tend to do so at prices and at capital um attachment points that means that they're reasonably well underwritten. When you enter into a a high yield contract, you typically will have covenants that enforce your rights as an investor. When you go to a covered call strategy, you mimicked that payout. you're investing typically in higher quality companies because you'll often do it against the S&P or against the mega cap. Um, but you have absolutely no rights and your attachment point is much much closer, right? Right? So a 10% decline in equity for example can cause a meaningful draw down in a covered coal strategy that really shouldn't affect particularly investment grade or to a certain extent high yield performance because those strikes are typically written much lower in the capital structure. So I like the way people are dealing with it right now is they're taking a lot more risk. Unfortunately I think much of is is misrepresented to people. >> Mike, let's talk about energy next. Oil and gas prices were something that I think your very first Substack talked about. Re refresh us what your prediction was there, why you had that perspective, and what your current outlook is for the oil and gas market. >> I wrote a piece in which I was highlighting that the price of oil had actually risen in the aftermath of Russia's invasion of Ukraine to remarkably high levels um certainly relative to other commodity assets, in particular monetary commodity assets like gold. I called into question the thought process that people were employing which that we which was that economic growth if China were to reopen uh would lead to extraordinarily high prices in oil. My view is we already had extraordinarily high prices in oil and if anything we were likely to see demand destruction that ultimately would cause the production to exceed the demand. Um that forecast ended up being right. Now we're at a point where the price of many of those monetary commodity assets like gold and silver have risen to extraordinary levels relative to other industrial and consumed commodities. I think this more accurately reflects both the uh eventual move away from fossil fuels particularly in transportation but it probably more than reflects that at this point. So we've moved from being very very expensive to being very very cheap. sentiment has deteriorated. I'm actually pretty constructive on areas like oil and in particular natural gas, which is probably the single most levered exposure to the data center buildout um and AI story that I can find. >> Well, I definitely agree with you on natural gas and the AI connection. I I also think a lot of people are missing that one. We've talked about it here on Macrovoices before. I want to go back to your comments though. You said oil and gas are particularly uh you know underpriced compared to the monetary metals gold and silver. Let's talk about what's actually driving the gold and silver rally because you know some people say it's all about central banks and not wanting to uh to have their treasuries canled. This happened to Russia. Other people say no it has nothing to do with that. It's all about China buying for completely different reasons. Then there's uh other people that say it's all geopolitical risk. What really is driving this unprecedented rise in the monetary metal prices? >> Well, I guess I would lean into the camp that says it's more of B than A or C. Ultimately, I think the math is very clear in terms of what happened to gold in the aftermath of the US um taking Russia's reserves. It became very clear that treasuries were not a safe asset to hold your accumulated dollar reserves in. Um and China began to diversify aggressively with its extraordinary trade surplus. It began to buy significant quantities of gold both domestically and on the international market. Um what was really interesting about this is in the face of that you saw continuous liquidation of the financial gold assets like GLD and to a lesser extent GDX the um gold equity ETFs GDXJ etc. We actually saw a really interesting phenomenon where the buying for from China was largely offset by selling that was coming from uh the US domestic public retail investor. Um that stopped somewhere around 2024 and at that point you reversed it as Americans began American retail began buying gold exposure again. Now, it was pitched as a devaluation, as a debasement trade, that they were just going to print money, etc. We really don't have any evidence of that, but I wish it was that simple. But it really is just a function of the American retail investor stopped selling while China and others continued buying. That in turn has caused prices to move in a very aggressive fashion. Um, and now it becomes a question of, you know, do the higher prices beget yet higher prices? Does it become a self-fulfilling narrative? in George Soros's frame of reflexivity, or do we have we pushed this far enough that now Americans through a combination of price appreciation and reallocation of portfolios have as much gold exposure as they want? There's some indications that that's the case. There's also some indications that China's trade surplus is starting to deteriorate in a fairly meaningful way, which reduces the amount of funds that they have for buying gold. And so it it looks like gold has at least hit a near-term peak. Um you know the one of the reasons I think that the selling was actually occurring was because people were diversifying away from gold into things like Bitcoin. I have a very strong negative view towards Bitcoin. I think ultimately much of that will be reversed. But again, I wrote in my substack about this that if you X out that buying of Bitcoin, my calculations suggest that gold could be as high as 10,000 right now. So this this has very much been financial buying first by central banks that recognize they couldn't hold treasuries. Secondly, by retail chasing it, and we're still not really seeing the anti- Bitcoin trade. There remain positive flows into the Bitcoin ETFs, which is a competitive asset to gold. Let's talk a little bit more about China and where the relationship with the US and China is headed. >> Well, I mean, this is a tricky one um because candidly first we need to know what we're actually trying to accomplish in the United States. I think it's become very very clear that the United States relationship with China has deteriorated. We've moved to a position in which the two ostensible trading partners have increasingly become geopolitical rivals. My general sense is that China uh that this this should have been apparent to people as early as 2015. Really the emergence of Xi as a compromised candidate between the two primary parties in China and his subsequent purging of those parties to gain control really set the stage for a meaningful change in China's tone with the rest of the world. This you know century of humiliation and overcoming it became really operative. Um, and in my opinion, they they candidly played their hand a little bit too hard and too fast, making the United States increasingly aware of it and putting us in a position to start making some of the hard choices about separating away from China. There's an arrogance on both parties. The United States thinks it's going to be relatively easy to do this, or at least that's that's the way it's presented. I think in part because it has to be. Uh, China, I think, views itself as having competitive advantages that are going to be largely insurmountable. And I I don't think that's true. Right. There was a really interesting piece. The suit that was filed against the Trump tariffs was by a company called Learning Solutions, which highlighted that they sourced roughly 2500 products from China. Um, replacing each one and moving it to a different location would cost them somewhere in the neighborhood of $6,000 per product. that works out to about 15 thou $15 million of expenses. They had budgeted $5 million for tariffs and when the um elevated tariffs which are no longer in place went through, you know, they did the calculation that they could owe up to hund00 million in tariffs. So, in classic American fashion, rather than getting busy and dealing with the $15 million worth of expenses that would be required for diversifying away from China, they chose to file lawsuit against the government. Um, trying to claim that they were being forced to spend $und00 million. Um, that I think defines almost the relationship between the two, right? It is, it is going to be hard and it is going to be painful, but at the end of the day, it's a heck of a lot less than the tariffs. And so, the real risk that you run in the United States right now is the tariff policy, which I would never choose in a perfect world, right? If we had true free trade, if there was not um subsidy and monetary currency manipulation coming from China, which should have allowed its currency to appreciate to the point that its consumers became large global consumers. Instead, they chose to focus on enhancing the power of the CCP, repressing wages domestically by keeping their currency from appreciating. And now they've crossed the point where the supply of workers is beginning to fall. that's caused them to become increasingly automated and now they're stuck with extraordinary surplus production that they basically have to dump onto the rest of the world. Um, the rest of the world doesn't want that, right? We love getting the little trinkets, we love getting the little toys, etc. We love getting, you know, flat panel TVs, but we love jobs more. And at the end of the day, the Americans are way too munificent about the idea of free trade or unfettered access to the US markets. Europeans are much less open to it. Japanese are much less open to it. Koreans are much less open to it. Africa and South America in many ways are much less open to it. And so by forcing the Chinese to send product that would have historically come to the United States into those markets, the world is rapidly imposing trade barriers of its own on China. And that that suggests to me that China is in a very precarious position. Mike, I want to go back to what you said about Bitcoin because although I do share some of your um I guess skeptical concerns about Bitcoin itself, I I find that the the recently uh promoted view that US dollar stable coins are going to be used really as a way of propping up the the dollar dominant global monetary system. Seems very credible to me. seems like that's a way to essentially get the US dollar into the digital age without having to create a digital dollar that's actually, you know, a tokenized currency. What do you think about that Genius Act stable coin view that it potentially kind of replaces the the petro dollar system and allows uh a continued preference or a continued artificial demand for US Treasury paper? I mean ultimately every dollar that is released is to a certain extent backed by that already, right? So in order to get the dollars out, the US government is issuing paper that's going to be held by someone. Um all you're identifying is let's actually make this a continuing requirement in which stable coin funds will offer people the electronic or digital equivalent of a US dollar. It can be spent. It can be used. It does not earn interest, which I think is actually a critical flaw in the system. Um, nor does it treat domestic versus international in any meaningfully different way. Um, and so like I kind of buy into it a little bit. I I do think that it's important and that it will ultimately drive further adoption of the US dollar in regions of the world that do not have stable currencies. I'm just not sure how that's positive for Bitcoin, right? Um the whole argument behind Bitcoin as as a you know a uh uh social good was that it provided access to a currency that could be used in foreign countries um that didn't have stable systems. If if we replace that with a stable coin, you know, not that it ever really amounted to much in Bitcoin, but that seems to undermine one of the key features that was lauded for Bitcoin. Mike, I can't thank you enough for another terrific interview. But before we close, I want to talk a little bit about what you do at Simplify Asset Management. As I understand it, there were basically some regulatory changes that allow you guys to have what are effectively ETF or or mutual fund like instruments that do fancy tricks that used to be only hedge funds were allowed to do. Tell us a little bit more about what the regulatory change was and what are the products that you guys are offering as a result of that change. Well, there are two critical regulatory changes that caused me to transition from the world of hedge funds into the world of ETFs. Uh 2019 there was what was called the ETF rule. These are all very creatively named. Um the ETF rule facilitated and made easier the process of applying for a traditional uh ETF, particularly an active ETF. Historically, that was a very long process. There was a lot of concerns about transparency and it was very difficult to launch an ETF which is part of the reason that you saw only the large sponsors releasing ETFs and typically only in the form of like an S&P 500 for example. Um that rule opened up the floodgates to active and smaller ETFs like many of the products we offer at Simplify. The second key change came in September of 2020. It's what's called the derivative rule. And unsurprisingly, the derivative rule allows you to include derivatives inside mutual funds and ETFs. In particular, uh what it does is establish effectively risk metrics around it. So you declare a benchmark that you're held against. You are then allowed flexibility using derivatives to have up to two times the volatility of that index. This has contributed on one side to the proliferation of things like 2x levered funds or even 3x levered funds which can then turn around and point to a 2x levered fund as their benchmark. Um it has also facilitated the inclusion of derivative strategies like I use in my high yield product for example that are designed to take advantage of certain features in market structure. A really simple example of that is many high yield mutual funds and credit funds broadly will short the HYG ETF to reduce their market exposure and allow them to amplify their single security picks. That in turn actually places pressure on the balance sheets of dealers firms like Goldman Sachs, Morgan Stanley, etc. who have taken that high yield exposure onto their balance sheet and in a postvulkar world have to carry much higher capital against that. They're willing to pay me a portion of that excess return that they get in the form of securities lending for taking that risk back off of their balance sheet in what's called a total return swap. So that allows me at the base of my product to effectively receive HYG plus typically between 50 and 200 basis points. The nice part is is that additional return um almost inevitably flows during periods of market stress. And so it allows me to partially outperform in down periods because I'm earning a higher return on assets. The second thing that it allows me to do is include things like my proprietary hedging frameworks where I use an equity longsh short overlay that is designed to mimic credit spreads but to do so with a positive carry associated with it that allows me to mitigate the impact of a significant credit spread widening. um that couldn't have been done prior to 2020. And so we've been very fortunate. The rules have changed. But I just want to emphasize like I'm using it for a little bit of return enhancement and a lot of risk reduction. Most of the strategies that are out there have actually chosen just to embrace the the the increased risk in pursuit of higher return. >> And for investors who want to learn more about the various products that you're managing, what's the website or who do they call? >> So the best place to go to find out more about Simplify is www.simplify. simplified US. I emphasize the US there. We have the full list of products. We have deep dive explainers on the various exposures that we have. Um, and they're tuned to deliver everything ranging from fixed income exposures to more speculative equity exposures if that's really what you're looking for, as well as ways to thoughtfully create income from equity type assets. I I would encourage people to check out in particular the product CDX that I was describing. We've recently launched a product in the private credit space. PCR is the ticker there that employs similar tools to what we're doing within CDX. We have a five-star CTA um uh managed futures fund run by our partners at Altus, Charlie McGara, who I believe you've had on the show. Um these are all tools that are, you know, really excellent in building a portfolio as compared to simply deciding that you want to knock the cover off the ball with one particular investment. And I encourage people to check that out. If you're interested in my thoughts, you can follow me on Twitter. I'm Profplum99 PF Plum M99. Never anticipated having a presence in social media. Um, it's a confusing account, but a lot of people find value in it. And then, as we've talked about repeatedly, I write on my Substack. It is yes.com. Um, very reasonably priced. The objective is not to make money off of it as much as to make sure that people that are reading it value what they're reading. So if you are interested in it and you do not want to pay but you do want to read, feel free to reach out over Substack and I'm happy to comp you exposure. Patrick Szna and I will be back as macrovoices continues right here at macrovoices.com. Now back to your hosts, Eric Townsend and Patrick Szna. >> Eric, it was great to have Mike back on the show. Now listeners, you're going to find the download link for the postgame trade of the week in your research roundup email. If you don't have a research roundup email, that means you have not yet registered at macrovoices.com. Just go to our homepage, macrovoices.com, and click on the red button over Mike's picture saying looking for the downloads. Patrick, as you know, I'm super bullish on uranium miners long-term, but we've been in a consolidation for the last few weeks, and I think it may be nearing its end. We've gone from extreme overbought to oversold on both RSI and slow stochastics. The last consolidation in URRA ran from July 24th to August 20th, or just under one calendar month. Then we saw a whopping 70% rally over the next 6 weeks. The present consolidation began on October 15th and is now just a hair under one month old. In other words, if we use the duration of the prior consolidation as a benchmark, it's about time for the bottom to be put in on URA and the start of the next big rally. But hold on, we're already at historically elevated levels on these stocks. So going outright long URRA with new money or even adding to existing positions still carries considerable risk, making an options play seem more appealing to me. What would you recommend, Patrick, to play the possibility that uranium is close to putting in a short-term bottom here? And would you recommend outright shares in URRA or call options on URA or an outright long hedged by protective puts or something else? Eric, your uranium idea is at a technically interesting moment, but expressing it with options comes with some real complexities. As you can see on page two of the chart deck, the implied volatility of URRA has doubled from roughly 30% to 60% over the last few months. And when V does that, traditional long gamma expressions like buying calls outright becomes far less attractive. the carry cost goes up, data decay steepens, break evens move farther away, and you end up paying significantly more premium for the same directional exposure. On the other hand, simply stepping in and buying the stock has its own challenges. URA is volatile enough that any reasonable stop can get clipped by any single ugly daily move. So, in this environment, I'd rather structure the trade more intelligently. For me, that means using the in the money vertical call spread, which dramatically reduces the Vega load while still giving you the directional exposure you want. Using a deep in the money call as a long leg effectively creates a synthetic long forward, high delta, low Vega, and minimal exttrinsic value. When you pair that with a short out of the money call, the structure behaves like a capital efficient defined risk long position with the upside capped at the top strike. But here's the underappreciated part. You also get the downside convexity relative to holding the stock outright. If URA sells off sharply back towards the at the money region, that deep in the money call does not lose value one for one like the delta 1 stock position. The option sheds delta as it approaches the strike and the remaining time value cushions the loss. Equity doesn't do that for you. Now the URRA is trading around 4750. The structure I'm looking at is the January 202640 by60 bull call spread for an $8 debit. And importantly, it's important to observe that roughly $7.5 of that is intrinsic value. So functionally you should think of it as a capital efficient equity stake rather than a speculative options bet. Now on the upside if the trade is working and uranium continues to trend you will have the flexibility to exercise into the equity and carry the position longer term. So in short, you're getting most of the stock-like upside with defined risk and a nonlinear reduction of your losses if we get a fast correction from here. 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 bigpicturetrading.com. Now, let's dive into the postgame chart deck. >> All right, Eric, let's get into these equities. What are you thinking of the markets here, >> Patrick? We've already seen a brisk rally over the last few sessions on rumors of a government reopening. So, this is a perfect setup for the classic sell the news reaction. So, a pause or dip here is definitely possible. But that said, I think the major trend is still up and that new all-time highs are likely in coming weeks. I'd like to add a word of caution also about government supplied data releases. The market has been super eager for resumption of official data releases and analysts are chomping at the bit waiting to see what those first official data reports are going to show us as the government reopens. I think those analysts are badly misguided and just asking for trouble as they usually are. The only sensible way to interpret the current situation is that the government has been shut down for 43 days now. That's the longest political stunt shutdown in US history. And that means everything is a mess. Returning government employees will be picking up the pieces and trying to sort out how to resume data reporting. This is a perfect setup for several weeks of dirty data. It's some essential data that normally goes as the input to this or that report ends up being omitted because the source data wasn't available. Except they didn't put that in the footnotes because they were scrambling to get back to work. Yada. You get the idea. The only sane move here is to fade, ignore, and just not pay attention to all government data for a few weeks. write it off is probably wrong and ignore it until the system stabilizes a few weeks down the road. But I predict institutional finance will predictably do the exact opposite. They'll react dramatically to new data that they should be ignoring if they had their wits about them, which they seldom do. So my expectation is for several big overreactions in markets to data releases that should have been ignored, frankly, because the data wasn't yet reliable. From a trading perspective, my inclination is to fade those big moves if they happen, regardless of their direction. Eric, you're spot on with the economic data observations. There's a few things that we want to touch on here. Technically, we're trading near 52- week highs. The question that in is on my mind is are we seeing a bigger topping formation developing as we continue to see market breath deteriorating and the overall momentum of the market stalling. and we should have a quieter week from volatility from gamma pinning that could occur from the November option expiration. But I think the real momentum shift can come on Nvidia's earnings next week. The entire AI bubble has been driving almost all this market momentum. And I think that if in order for us to see 7,000 to 7500 on the S&P, it would have to come on new found momentum on Nvidia going higher. If we see that the uh energy is exhausted and Nvidia fades off of its earnings, uh that could really stall out the market and start to solidify this bigger topping formation that could see a very challenging period going into December. A lot of this will hinge on that. We'll know by next week's episode. So, let's see how this plays out. All right, Eric, what are your thoughts here on the dollar? Well, the Dixie is still flirting with a 100, but it still hasn't broken out. at least not yet. With the government reopening now apparently uh completely signed off, although who knows, it's only a few hours old as we're recording here. Uh assuming that the government reopening is really happening, I would expect turbulence for a short period before a clear trend emerges. So, let's give this another week or two before we decide what's really next and what what the next leg is going to bring for the dollar. Well, the US dollar index uh remains decisively above the 50-day moving average, now spending well over a month uh in bull trend. Now, we've had a oneweek consolidation, but that's held by almost all Fibonacci zones and still well above its summer trade range. And so, at this stage, uh seeing whether the bulls buy the dip at this 99 level is going to be critical. uh if they do, we could still see the US dollar dart higher, which would be a huge market disruptor on an intermarket basis as the reflation trade has been the big trade that's been working all year backed by this US dollar weakness. So, will we get that uh upside breakout is definitely the thing to watch here. Now, Eric, let's touch on crude. Once again, WTI is selling off as President Trump reiterated his call for $2 gas prices as his target. It's pretty clear to me that President Trump is beginning to work towards setting the stage for midterm elections and he's trying to take the most popular things like gas prices and bring them into the spotlight. I agree with many of our guests that the next big move in oil is likely to be up, but I'm not in any rush to buy. February is the seasonality low in the crude oil market. And for now, my plan is to wait till then to start building a long position. Hopefully with even better location, perhaps down in, you know, the low50s or high 40s before this is over. Meanwhile, backwardation at the front of the WTI curve is almost completely gone and a phase transition to structural contango appears imminent if the flat price weakness continues. Now, if that structural contango transition is confirmed, it will shake out a lot of longs in the market, further supporting my lower first, then higher outlook for oil prices. Well, Eric, crude oil remains in its primary downtrend. It failed at its Fibonacci zones and the 50-day moving average. So, right now, uh we certainly have not seen a transition to a bull move. Now, any breakout above $62 could set in a short squeeze on the upside, but that just simply has not begun to materialize at all. But what's an interesting divergence is the fact that energy stocks pretty much right across the board have started to rally. Many of them are well above their 50-day moving averages and have been accumulated in this um recent period of crude oil weakness. Not sure what to initially make of that. So, it's interesting the fact that traditionally energy stocks that correlate with the movement of oil prices have really started to diverge. I'm curious whether or not that trend can continue here in the weeks to come. All right, Eric, let's talk gold. Well, I said last week that I saw several technical indications that an upside reversal in gold was likely, and that's pretty clearly been proven out with the $300 rally off the lows. But now the overstold stochastics are back to flirting with overbought again. Now in the last big rally that we had up to new all-time highs, gold futures extended their overbought stochastic signal into extreme overbought and then sustained that extreme overbought plateau for several weeks. That's what brought us to the $4,400 high. If that happens again, we could be on the way to new all-time highs as I described last week. So maybe the big move is already on, but we're at a make or break point here. The stochastics are back to overbought from oversold last week. So another wave down is equally possible that could bring a new lower low. So it's still too early to call this decisively. But for now, my bullish thesis appears to be playing out. And even if it proves wrong and we see new lows below 3900, I'll still be buying that dip. There's no doubt in my mind that the gold bull market is still on. The question is only how long the current consolidation lasts and how deep of a correction we see before the bull market resumes in earnest. Eric, the gold rally over the last four days has been pretty impressive. It's just beat the uh 4200 fib zone which is uh really demonstrating relative strength on this. The question here is, is this just going to retest its previous highs in a longer consolidation or has the next bull phase already begun? I want to highlight that there's a lot of reasons to be structurally bullish gold in the long term. If this correction is over, this would have been the shortest correction of the last uh two years. And typically, they've lasted anywhere from 2 months to even four months. This is where I remain longerterm bullish, but I still really want to see whether or not resistance comes in here and whether this still develops into a deeper consolidation into uh December. Overall, uh the price action is quite positive and uh we'll be watching what it does as it trades up towards its previous highs here. All right, Eric, let's touch on uranium. As I mentioned in the introduction to the trade of the week, the technicals suggest to me that the month-old consolidation in uranium miners is probably coming to its end. And I'm buying this dip in the form of 55 strike calls on URA. Energy Secretary Chris Wright's pledge that he wants to build dozens more nuclear reactors before he leaves office. President Trump's pledge to lend $80 billion to Westinghouse to build new reactors. All the news flow is just incredibly positive, incredibly bullish. The big risk here is an unwind of the AI trade because frankly most people haven't even figured out the structural deficit in uranium supply. Most I think this is entirely my speculative and subjective opinion, but I think most of the strength we've seen since the April lows in uh in uranium miners has been attributable to AI people, people that that are excited about AI. They know that nuclear is needed to support the AI story. Now, ironically, the most likely reason for an unwind of the AI trade would be the realization, and it's a correct realization to be sure, that there won't be sufficient energy to fulfill the present market expectations for AI. So, in theory, that ought to be very nuclear bullish. If the problem is there's not enough energy and we need more energy, obviously that has to be bullish. But markets don't work that way. If the AI trade unwinds, then all the people who bought uranium because they were excited about AI are going to unwind those trades as they unwind their other AI trades. And that's going to be bearish at least in the short term for uranium. Well, Eric, I just want to touch here on uh the charts of the uranium uh equities and like you were observing, they've done this retracement and they are a little bit short-term oversold. What's particularly interesting to me is is that this entire pullback has hit the 61.8 Fibonacci retracement, which is a typical place to see the initial support lines. What I like here is that the 50-day moving average is right there to uh to actually depict the next trend. If we see the URRA is able to get back above that $52 area and and start building some momentum back on the highs, that will start to confirm that this short-term buy and dip has materialized and is confirmed. Then we'll be looking to see what what it does up along previous highs. Now, alternatively, if this is proven to still being early, what you should see is a lot of stalling price action and failed rallies that leads to a sustained period of trading below the 50-day moving average. Now, I'm not necessarily predicting that, but rather just observing that u the bulls really need to punch this through that 50-day moving average and build some momentum to really solidify this short-term low. Patrick, before we wrap up this week's show, let's hit the 10-year Treasury note chart. Now, finally, Eric, on that 10-year Treasury yield, uh while we certainly have seen a uh bounce higher in yields in that post FOMC meeting, overall the pattern of lower highs and lower lows is still quite intact. And if we see that any of that economic data that starts getting released here is showing the economy slowing, it may continue to allow yields to remain pivoting along this 4% level and potentially even break below. Uh so we're still watching for that bond strength and yield weakness to persist, but a lot of it will now hinge on uh the first reactions to some of these economic data and points that are going to start being released. 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. Patrick, tell them what they can expect to find in this week's research roundup. >> In this week's research roundup, you're going to find the transcript for today's interview and the trade of the week chart book, which is discussed here in the postgame, including a number of links to articles that we found interesting. You're going to find this link and so much more in this week's research roundup. That does it for this week's episode. We appreciate all the feedback and support we get from our listeners and we're always looking for suggestions on how we can make the program even better. Now, for those of our listeners that write or blog about the markets and would like to share that content with our listeners, send us an email at researchroundup@macrovoice.com and we will consider it for our weekly distributions. If you have not already, follow our main account on X at macrovoices for all the most recent updates and releases. You can also follow Eric onx, Eric S. Townsen, that's Eric spelled with a K. You can also follow me at Patrick Serzna. On behalf of Eric Townson and myself, thank you for listening and we'll see you all next week. 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 bigpicturertrading.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 Serezna 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 bigpicturtrading.com and by funding from Fourth Turning Capital Management LLC. For more information, visit macrovoices.com.