AI Arms Race: Framed as the trade of the decade with national-security scale spending; outcome seen hinging on spare electricity generation capacity, where China holds a structural advantage.
Nuclear and Gas Build-Out: US lags on conventional nuclear timelines and costs, prompting a likely natural gas power-plant surge and push to expand gas turbine manufacturing capacity.
Uranium: Goldman Sachs highlighted a looming structural supply deficit, potentially catalyzing institutional participation and setting up strong upside into 2026.
Long Yen: Bullish JPY expressed via December 2026 futures calls, backed by potential US-Japan rate differential compression, low implied vol, and convex upside.
Crude Oil: Forward curve flipped to near-term backwardation, suggesting a possible durable bottom near 55 and improving odds of a sustained rally if key moving averages are reclaimed.
Gold and Precious Metals: Gold broke to new highs with targets near 4,900–5,100 while cautioning about near-term pullbacks; silver, platinum, and palladium show parabolic moves with mean-reversion risk.
US Dollar: DXY remains in a decisive downtrend, breaking key supports with risk of a retest of prior lows; policy headlines could abruptly shift the outlook.
Markets and Companies: Equities likely drift higher into year-end absent catalysts; Nvidia puts were cited as a popular bearish AI bet, Goldman Sachs’ uranium note seen as a key catalyst, and JP Morgan options positioning eyed as a market magnet.
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 Szna. Eric, it was great to have Rosie back on the show. 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 Ros's picture saying looking for the downloads. Patrick Rosie made a strong case for revaluation of the Japanese yen. So for this week's trade of the week, talk us through how you'd position for that long yen theme. Eric, if Rosie is right and we get a deflation scare with the Fed ultimately cutting more aggressively, then the US Japan rate differentials are going to compress hard. And that's exactly the kind of backdrop where the yen can really move. Now, on top of that, the yen is already trading at historically cheap levels in real terms. I want to structure a long yen trade that gives us convex upside if the revaluation finally starts to play out. On page two of the deck, you can see the implied volatility on the yen sitting down near the lows of the year, which makes owning gamma relatively inexpensive here and materially reduces Vega risk of putting on a long ball structure. Normally, I'd be looking for some kind of options combination to engineer more tailored payoff, but given the upside potential relative to the premium outlay here, I think the best expression is to keep the upside open-ended rather than capping it. The December 2026 yen futures are trading around 66 and the December 4th 66 calls are about 24 points, roughly 3.6% 6% of the underlying for almost a year of optionality. Buying that gives you a clean topside yen exposure with clearly defined risk. The breakdown of the trade is on page three of the chart deck. 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 in to the postgame chart deck. Eric, last week you didn't give a strong view on the short-term direction of the stock market. So, instead of commenting on the S&P, you gave our listeners a long-term outlook for the likelihood of a doubbish policy error by the Fed in 2026. You also told me off the air that you also had some strong views on where the AI trade is headed for 2026. So, let's cover that before we dive into our usual weekly postgame chart deck. Well, Patrick, the trade of the decade is clearly AI. So, the most essential question is whether this is a bubble that's about to burst, as many astute investors are betting on by putting puts on Nvidia and making other bare trades on the AI story. An investor I respect recently told me that he thought that in the long term AI could be even bigger than the public internet as an investment trend. I agreed in principle, but immediately I was hit with the feeling that yeah, internet is the wrong trend to compare AI to. What I would say instead is that AI could be as big as the Cold War. The reason I prefer that analogy is that the public internet was primarily about private sector opportunity to profit from the emergence of e-commerce. AI has many applications, but to the US and Chinese governments, this will be an existential race for survival on par with the US Soviet arms race. The military and economic dominance implications of AI leadership are daunting and both governments understand this well. Hence the Genesis and Stargate announcements from the Trump administration. But I contend that most investors who are focusing on who has the best GPU technology or which large language model has the best inference performance. I think they're missing the real story. We're still early in this arms race. And what will ultimately matter the most in determining the outcome, in my opinion, is spare capacity for electricity generation. All the stories you've heard about AI consuming all of our electricity and demand from massive data centers, overwhelming markets, and sending electricity prices to the moon, it's all true. That's coming, plain and simple. And there's nothing we can do to stop it. AI is going to consume a shitload of electricity. There will be very loud cries from consumers for electricity to be rationed to AI data centers to prevent breaking the back of the American consumer. But the federal government already correctly understands that they can't give up or back off on AI. It's become an arms race that will literally determine the balance of power in the world starting in the mid 2030s and through the end of the century. So throttling AI's electric consumption simply won't be an option from a national security perspective. Now that's not true for all AI. Obviously chat GPT isn't essential to our our standard of living. But the development of AI technology and particularly the military and uh economic dominance aspects of AI that could provide a major competitive advantage economically to one nation over the other. Those are really important national security issues. Now, here's the rub. Building out new electric generation capacity takes several years for power plants fired by coal and gas and at least a decade for conventional nuclear. Now, you're hearing a lot about, you know, things like 3M Island coming back online. It's true that there are restarts of existing nuclear power plants that are going to provide a big shot in the arm initially, but those have already been sorted out. The the ones that can be turned back on, they're in the process of doing that. There aren't any more of those in the pipeline. After that, it's going to take at least a decade to design and build the next nuclear plants after those. And China saw all of this coming decades ago and planned ahead. China has more conventional nuclear reactors already planned or under construction right now than the entire US operating nuclear fleet. Think about that. It's a really profound statement and it's true. On the advanced nuclear front, China is the unquestioned leader in commercializing thorium energy. Now, it was invented in the United States in the 1960s. But while the West wastess valuable capital and intellectual energy on fusion energy projects that simply won't be economically viable for decades. China, on the other hand, has already got much more spare electric generation capacity than the United States and by a wide margin. And they're building a lot more. Simply put, China already has all the gigawatts they need to scale up their AI data centers as much as they could conceivably need to in the short term. And China is already hard at work building out the nuclear plants. Not thinking about it, not planning it, not putting it on the drawing board, but they're actually building the nuclear plants needed to take AI to the next level. Now, the Trump administration and in particular energy secretary Chris Wright definitely get honorable mention for doing all they possibly can to get the United States back on to a sane nuclear energy policy path. So, kudos to Chris Wright. Fantastic job. Couldn't be more happy with that guy. But look, he picked up the pieces from decades of failed US nuclear energy policy. And it's going to take decades to catch up with China. no matter what decisions are handed down from the White House. And we need to be honest with ourselves, Americans. The United States simply isn't as good as we once were at big bespoke public construction projects, particularly nuclear plants. There's only one nuclear plant that's been finished on time and on budget in my lifetime, so far as I know, that's the Baraka project in the United Arab Emirates. The other big nuclear completion that was just completed a couple of years ago was the Vodal power plant in Georgia. Guess what? Baraka basically the same reactor technology, but they chose the Korean reactor as opposed to the American reactor. They got it for about 1/3 to one quarter, depending on how you crunch the numbers of the cost of building Vodal. Now, a lot of people will say, "Vodal is not a fair comparison because that was a really screwed up project." Well, guess what? Most of our uh American big construction projects are screwed up with major cost overruns, schedule, and budget overruns. Uh what we've got in terms of hard data for a comparison is Vodal versus Baraka. And it shows us that the United States just is not good at economically building big nuclear power plants. China is building American designed nuclear power plants at a much lower cost than we can build them in the United States. Returning to the outlook for the stock market, the AI trend will probably be bigger than the public internet trend that began in the '90s and which continues to this day. But just like dot in the early 2000s, a bust or two along the course of this long-term trend is not only possible but likely. The right way to think about the AI trend is to liken it to the Cold War and expect government spending on the same scale in order to support it. But just as economics prevailed in the 1980s and the Soviet Union simply couldn't afford to outspend the United States and the Soviet US arms race, it's going to be energy rather than straight economics that determines the outcome of the AI race. And guess what? While I hate to be the bearer of bad news for our American audience, China is set to kick our asses down the street. USA has the absolute best technology leadership on both large language models and GPUs and designing nuclear power plants. But I contend that spare electric generation capacity at economically viable buildout cost is going to be what's most likely to decide this arms race. And right now, China is kicking our ass. I don't mean to criticize China. All they're doing is putting China first. And I certainly don't fault them for that. They've been hard at work building nuclear energy based on US designs that they didn't even have to steal because we gave them away. I expect US government spending on AI and new electric generation capacity, both nuclear and conventional, to skyrocket in this arms race, just as defense contractors profited tremendously in the Cold War. And while I definitely think that nuclear energy strategically is the right long-term solution, I predict that a moment of reckoning is coming where we figure out that conventional lightwater nuclear reactor technology just plain takes too long to build and it costs too much, at least the way we build it today. So, I'm afraid that the stage is set for us to lose the AI arms race before the first newly designed or or newly contracted lightwater reactors even come online. So, I predict that and this is where the market surprises and where the variant perception trading opportunity is. I predict that there's going to be a moment of reckoning where we say, "Holy we can't afford as much as nuclear is the best solution, we can't afford to wait for it. We need to go massively into really building out gas fired power plants as fast as we possibly can. Now, we're already doing that. There's a huge backlog just to order the uh the gas turbines that are needed to build those power plants. So, I predict that there's going to be some kind of government intervention that says we got to have a Manhattan project of natural gas fired power plant construction in the late 2020s and early 2030s, much of which will be designed as holdover supply until more strategic nuclear generation capacity can be completed because the nuclear construction will take much longer. We've already seen Secretary Chris Wright make some fantastic advances in nuclear energy policy. And I predict that one of his next big moves will be to tackle that 5-year plus backlog for ordering new gas turbines needed to build natural gas fired power plants and somehow make it a national priority to dramatically increase our capacity to build a whole lot more of those gas turbines and a whole lot more natural gas fired power plants. But at the end of the day, the bottom line is that China saw all of this coming decades ago. They planned ahead and they're already on their way to building plenty of electric generation spare capacity to fuel their AI boom. America will have to scramble to catch up and we have only ourselves to blame. Okay, on to my final prediction and this is my strongest conviction prediction of 2025. Patrick, I predict that your take on the S&P 500 this week is going to be considerably less long- winded than my views on the AI race. Take it away. Well, Eric, my view on the equity markets is pretty straightforward here. We have a break to basically 52- week highs. There's a huge open interest of options with the JP Morgan options whale sitting at the 7,000 strike with the December 31st expiration. At this stage, it's going to act like a magnet and odds are here that we're going to print 7,000 over the holiday period. After that kind of a move, uh we'll definitely size things up in the new year. But at this stage, there's no imminent uh downside risks unless a catalyst is introduced. And so assuming that the market here gravitates a little bit higher is almost certainly the path of least resistance. All right, Eric, let's dive into this US dollar. >> Patrick, same as last week. Basically, the Dixie sell-off continues in what's now become a very wellestablished downward price trend. Clearly, the trend is down. My outlook remains bearish, and the caveat is still that if there's a major policy announcement from uh President Trump and Secretary Bessant, that could change things in a heartbeat. But barring a major policy change, I think the downtrend continues. >> Well, for me, Eric, this dollar continues to actually show substantial deterioration. In my mind, the 98 level is a a a key support line and it's currently being violated and we have broken to lower lows. Very decisive downtrend. This stage I consider the window open for a retest of the year lows where the July and September lows came in around the 96 handle. And does that happen here in the last few weeks of the year or does that is that reserved for a January drop is yet to be seen. But at this stage uh the price action is very weak and further downside on the dollar is the path of least resistance. Eric, what are your thoughts here on crude oil? Patrick, we saw a material change in the shape of the forward curve this week. Until now, we've had persistent contango. That's a bearish signal from about the March 2026 contract all the way out to the early 2030s. The curve shifted this week to a slight backwardation from the front month all the way out to January of 2027, a full year from now. And then the contango resumes after that. Changes in the shape of the forward curve often presses big moves in the flat price. So I'm changing my prior call that 55 probably was not the bottom when because when the facts change, I change my opinion. Now, I'm not sure of this yet, but the way I'm seeing the forward curve evolving, although it's not quite deterministic yet when we were last at the same flat price about 3 weeks ago, we didn't have this much backwardation. So, I'm starting to feel, you know, my spidey senses are telling me maybe this rally is going to really have some some legs to it. And maybe that was a bottom at 55 uh last week. Getting above the 100 day moving average, which is 60 spot 26 WTI, would be a strong confirmation signal that something bigger than just a swing trade to the upside might be in the making. But it's still early to tell. Changes in the shape of the curve can be transient, and a return to structural contango at the front of the curve would invalidate everything I've just said. Meanwhile, my spread trade long CLZ6Z7 as described on last week's podcast is performing beautifully, having moved almost a full dollar now from minus1 spot 75 to minus0 spot 777. So 98 cents of upside just in the last week. Now 98 cents probably doesn't sound like a whole lot, but that's a pretty big move on a one-year time spread. Well, Eric, crude oil's at a critical level. The fib retracement of that December drop is right here around this $58 level. And the 50-day moving average is around 59. And so we have a scenario where if the bulls can clear that hurdle, that would be the first bullish price action that we would have seen in crude oil since September. And so will we see a holiday surge here in crude oil to see that upside will be thing to watch because a failure here still at 5859 leaves the window for double bottom retesting and all sorts of a sideways price action. That key level is not yet beat. All right, Eric, we got to talk about this breakout on gold. As predicted here on Macrovoices, the breakout above the prior 4,400 all-time high is upon us. And getting from 4,400 to 4500 took all of 24 hours. This activates measured move targets in the 4900 to 5100 range. But be careful trying to chase gold with new longs up here. We're flashing extreme overbought on the technicals. So, some kind of consolidation or cooling off is to be expected. And frankly, a move straight back down to retest the breakout zone at about 4370 or so would make perfect sense here. Remember, a very common pattern on breakouts is after a few sessions, we'll come back down and retest that uh previous resistance level as a support level. So, getting back down to 4370 is not at all out of the question. So, if you're chasing this market with new longs, you better be ready to ride out $150 to $200 of downside before the uptrend continues. Of course, I don't know that that correction is coming. Uh, it's it's hard to tell here, but with the vigor of this breakout, just about anything is possible. Remember also that we're in a very thin liquidity holiday period, so moves in either direction can be exaggerated. Eric, gold broke to an all-time new high and the upside window was certainly open. those measured moves are in play. But what's particularly more interesting and I want to talk about is what silver platinum and palladium are doing uh in putting that into the same context because silver has now completed a measured move up to 72 and has gone full-on parabolic. This is at a time when we are seeing full parabolic moves in platinum and platium all actually even surpassing upper targets. Now, while I'm not bearish, silver, platinum, and platium, I am looking to see whether they put in short-term swing highs or a blowoff top that causes a mean reversion. And the question that I'm asking myself is if we did see some sort of swing highs in those metals, what is the drag or impact it may have temporarily on gold? Now overall maybe gold may actually take flows as as some of the money leaves um those other metals. Uh but overall the price action on gold is very bullish. It is got lots of room to go on the upside and probably old dips will be bought within a$1 or $200 pullback if as the bull trend is very well established here. All right, Eric, let's touch on that uranium. Really big news this week in my opinion was Gold Sachs coming out with a research note that basically said absolutely nothing new for macrovoices listeners. Everything it contained is stuff we've talked about with Justin Hune or Mike Alen or Guy Keller in various interviews more than a year ago. But the thing is, it's Goldman Sachs who's saying it. And I say that this research note is a really big deal for the market. Why? Because the whole problem in the uranium sector is very low low institutional participation due to the ESG madness, the the now expired ESG mandates and a lack of understanding of the term contracting uh system and how it works in the uranium market and why the spot price of uranium isn't really the primary price signal even though most people assume that it is. The analogy I like to use here is a Hollywood director discovering a a young actress, a new movie star. Well, the talent was already there, but it's the director who has the power to make them a star that that really changes everything instantly. In this case, the profoundly bullish arguments uh have been there for well over a year, couple of years. We've been talking about them for years here on Macrovoices. The thing is the ESG crowd couldn't touch it because of ESG mandates. Institutional participation in this market is extremely low. Goldman's institutional reach is like Scorsesei discovering a new a new actor and turning them into a star. So, while Goldman has had plenty to say about nuclear energy in the past, that's probably why we've seen the outperformance in names like Oaklo, which is a a uh reactor company. Okay, that's not for the fuel. And I think the reason the fuel hasn't moved yet is everybody correctly understands that wait a minute, uh, conventional nuclear lightwater reactors take at least 10 years to build. We're not going to need any fuel for those new reactors for at least 10 years. Who cares about uranium? Well, what they just found out from Goldman Sachs, which of course has very high institutional pedigree, even though we broke the story 3 years earlier on Macrovoices, uh when Goldman says it, people listen. And now they're talking about the structural deficit in uranium supply that's starting in the next few years. I think this uh research note has the potential to wake the institutional market up to what Macrovoic's listeners have known for years, which is there's a tremendous bullish argument that really hasn't seen much investor participation yet in uranium and the uranium miners. So, I think 2026 could be the year that uranium prices really explode to the upside. And I think Goldman coming to the table with this latest research note could be a big catalyst in order to get us there. Well, I want to focus on the actual prices of uranium rather than uranium equities. And what we have generally seen here in the last few weeks has been strengthening of the uranium prices now attempting to approach their uh third quarter highs. Will we get that breakout in uranium? It it certainly to me is asymmetric with the fact that uranium consolidated over the last couple months it unwound all over bought states and certainly room that if this breaks out to get to some nice higher levels here on the short term. So looking for that followth through on uranium. Patrick before we wrap up the final regular format episode of 2025 let's hit that 10-year Treasury note chart one last time. >> Yeah Rick wrapping up here with that 10-year Treasury yield. It has been a consolidation for all of the month of December and really at this stage expecting uh a breakout here over the holiday periods is not realistic. Very likely that we stay bound within the 410 to 420 range waiting on some January economic news to potentially be the catalyst for the next move. Folks, if you enjoy Patrick's chart decks, you can get them every single day of the week with a free trial of Big Picture Trading. The details are on the last pages of the slide deck or just go to bigpicturetrading.com. That concludes this edition of Macrovoices. Be sure to tune in each week to hear feature interviews with the brightest minds in finance and macroeconomics. Macrovoices is made possible by sponsorship from bigpicturetrading.com, the internet's premier source of online education for traders. Please visit bigpicturetrading.com for more information. Please register your free account at macrovoices.com. Once registered, you'll receive our free weekly research roundup email containing links to supporting documents from our featured guests and the very best free financial content our volunteer research team could find on the internet each week. You'll also gain access to our free listener discussion forums and research library. And the more registered users we have, the more we'll be able to recruit high-profile feature interview guests for future programs. So, please register your free account today at macrovoices.com if you haven't already. You can subscribe to Macrovoices on iTunes to have Macrovoices automatically delivered to your mobile device each week free of charge. You can email questions for the program to mailbag macrovoices.com and we'll answer your questions on the air from time to time in our mailbag segment. Macrovoices is presented forformational and entertainment purposes only. The information presented on Macrovoices should not be construed as investment advice. Always consult a licensed investment professional before making investment decisions. The views and opinions expressed on macrovoices are those of the participants and do not necessarily reflect those of the show's hosts or sponsors. Macrovoices, its producers, sponsors, and hosts Eric Townsend and Patrick Szna, shall not be liable for losses resulting from investment decisions based on information or viewpoints presented on Macrovoices. 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Trade of The Week – MacroVoices #512
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 Szna. Eric, it was great to have Rosie back on the show. 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 Ros's picture saying looking for the downloads. Patrick Rosie made a strong case for revaluation of the Japanese yen. So for this week's trade of the week, talk us through how you'd position for that long yen theme. Eric, if Rosie is right and we get a deflation scare with the Fed ultimately cutting more aggressively, then the US Japan rate differentials are going to compress hard. And that's exactly the kind of backdrop where the yen can really move. Now, on top of that, the yen is already trading at historically cheap levels in real terms. I want to structure a long yen trade that gives us convex upside if the revaluation finally starts to play out. On page two of the deck, you can see the implied volatility on the yen sitting down near the lows of the year, which makes owning gamma relatively inexpensive here and materially reduces Vega risk of putting on a long ball structure. Normally, I'd be looking for some kind of options combination to engineer more tailored payoff, but given the upside potential relative to the premium outlay here, I think the best expression is to keep the upside open-ended rather than capping it. The December 2026 yen futures are trading around 66 and the December 4th 66 calls are about 24 points, roughly 3.6% 6% of the underlying for almost a year of optionality. Buying that gives you a clean topside yen exposure with clearly defined risk. The breakdown of the trade is on page three of the chart deck. 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 in to the postgame chart deck. Eric, last week you didn't give a strong view on the short-term direction of the stock market. So, instead of commenting on the S&P, you gave our listeners a long-term outlook for the likelihood of a doubbish policy error by the Fed in 2026. You also told me off the air that you also had some strong views on where the AI trade is headed for 2026. So, let's cover that before we dive into our usual weekly postgame chart deck. Well, Patrick, the trade of the decade is clearly AI. So, the most essential question is whether this is a bubble that's about to burst, as many astute investors are betting on by putting puts on Nvidia and making other bare trades on the AI story. An investor I respect recently told me that he thought that in the long term AI could be even bigger than the public internet as an investment trend. I agreed in principle, but immediately I was hit with the feeling that yeah, internet is the wrong trend to compare AI to. What I would say instead is that AI could be as big as the Cold War. The reason I prefer that analogy is that the public internet was primarily about private sector opportunity to profit from the emergence of e-commerce. AI has many applications, but to the US and Chinese governments, this will be an existential race for survival on par with the US Soviet arms race. The military and economic dominance implications of AI leadership are daunting and both governments understand this well. Hence the Genesis and Stargate announcements from the Trump administration. But I contend that most investors who are focusing on who has the best GPU technology or which large language model has the best inference performance. I think they're missing the real story. We're still early in this arms race. And what will ultimately matter the most in determining the outcome, in my opinion, is spare capacity for electricity generation. All the stories you've heard about AI consuming all of our electricity and demand from massive data centers, overwhelming markets, and sending electricity prices to the moon, it's all true. That's coming, plain and simple. And there's nothing we can do to stop it. AI is going to consume a shitload of electricity. There will be very loud cries from consumers for electricity to be rationed to AI data centers to prevent breaking the back of the American consumer. But the federal government already correctly understands that they can't give up or back off on AI. It's become an arms race that will literally determine the balance of power in the world starting in the mid 2030s and through the end of the century. So throttling AI's electric consumption simply won't be an option from a national security perspective. Now that's not true for all AI. Obviously chat GPT isn't essential to our our standard of living. But the development of AI technology and particularly the military and uh economic dominance aspects of AI that could provide a major competitive advantage economically to one nation over the other. Those are really important national security issues. Now, here's the rub. Building out new electric generation capacity takes several years for power plants fired by coal and gas and at least a decade for conventional nuclear. Now, you're hearing a lot about, you know, things like 3M Island coming back online. It's true that there are restarts of existing nuclear power plants that are going to provide a big shot in the arm initially, but those have already been sorted out. The the ones that can be turned back on, they're in the process of doing that. There aren't any more of those in the pipeline. After that, it's going to take at least a decade to design and build the next nuclear plants after those. And China saw all of this coming decades ago and planned ahead. China has more conventional nuclear reactors already planned or under construction right now than the entire US operating nuclear fleet. Think about that. It's a really profound statement and it's true. On the advanced nuclear front, China is the unquestioned leader in commercializing thorium energy. Now, it was invented in the United States in the 1960s. But while the West wastess valuable capital and intellectual energy on fusion energy projects that simply won't be economically viable for decades. China, on the other hand, has already got much more spare electric generation capacity than the United States and by a wide margin. And they're building a lot more. Simply put, China already has all the gigawatts they need to scale up their AI data centers as much as they could conceivably need to in the short term. And China is already hard at work building out the nuclear plants. Not thinking about it, not planning it, not putting it on the drawing board, but they're actually building the nuclear plants needed to take AI to the next level. Now, the Trump administration and in particular energy secretary Chris Wright definitely get honorable mention for doing all they possibly can to get the United States back on to a sane nuclear energy policy path. So, kudos to Chris Wright. Fantastic job. Couldn't be more happy with that guy. But look, he picked up the pieces from decades of failed US nuclear energy policy. And it's going to take decades to catch up with China. no matter what decisions are handed down from the White House. And we need to be honest with ourselves, Americans. The United States simply isn't as good as we once were at big bespoke public construction projects, particularly nuclear plants. There's only one nuclear plant that's been finished on time and on budget in my lifetime, so far as I know, that's the Baraka project in the United Arab Emirates. The other big nuclear completion that was just completed a couple of years ago was the Vodal power plant in Georgia. Guess what? Baraka basically the same reactor technology, but they chose the Korean reactor as opposed to the American reactor. They got it for about 1/3 to one quarter, depending on how you crunch the numbers of the cost of building Vodal. Now, a lot of people will say, "Vodal is not a fair comparison because that was a really screwed up project." Well, guess what? Most of our uh American big construction projects are screwed up with major cost overruns, schedule, and budget overruns. Uh what we've got in terms of hard data for a comparison is Vodal versus Baraka. And it shows us that the United States just is not good at economically building big nuclear power plants. China is building American designed nuclear power plants at a much lower cost than we can build them in the United States. Returning to the outlook for the stock market, the AI trend will probably be bigger than the public internet trend that began in the '90s and which continues to this day. But just like dot in the early 2000s, a bust or two along the course of this long-term trend is not only possible but likely. The right way to think about the AI trend is to liken it to the Cold War and expect government spending on the same scale in order to support it. But just as economics prevailed in the 1980s and the Soviet Union simply couldn't afford to outspend the United States and the Soviet US arms race, it's going to be energy rather than straight economics that determines the outcome of the AI race. And guess what? While I hate to be the bearer of bad news for our American audience, China is set to kick our asses down the street. USA has the absolute best technology leadership on both large language models and GPUs and designing nuclear power plants. But I contend that spare electric generation capacity at economically viable buildout cost is going to be what's most likely to decide this arms race. And right now, China is kicking our ass. I don't mean to criticize China. All they're doing is putting China first. And I certainly don't fault them for that. They've been hard at work building nuclear energy based on US designs that they didn't even have to steal because we gave them away. I expect US government spending on AI and new electric generation capacity, both nuclear and conventional, to skyrocket in this arms race, just as defense contractors profited tremendously in the Cold War. And while I definitely think that nuclear energy strategically is the right long-term solution, I predict that a moment of reckoning is coming where we figure out that conventional lightwater nuclear reactor technology just plain takes too long to build and it costs too much, at least the way we build it today. So, I'm afraid that the stage is set for us to lose the AI arms race before the first newly designed or or newly contracted lightwater reactors even come online. So, I predict that and this is where the market surprises and where the variant perception trading opportunity is. I predict that there's going to be a moment of reckoning where we say, "Holy we can't afford as much as nuclear is the best solution, we can't afford to wait for it. We need to go massively into really building out gas fired power plants as fast as we possibly can. Now, we're already doing that. There's a huge backlog just to order the uh the gas turbines that are needed to build those power plants. So, I predict that there's going to be some kind of government intervention that says we got to have a Manhattan project of natural gas fired power plant construction in the late 2020s and early 2030s, much of which will be designed as holdover supply until more strategic nuclear generation capacity can be completed because the nuclear construction will take much longer. We've already seen Secretary Chris Wright make some fantastic advances in nuclear energy policy. And I predict that one of his next big moves will be to tackle that 5-year plus backlog for ordering new gas turbines needed to build natural gas fired power plants and somehow make it a national priority to dramatically increase our capacity to build a whole lot more of those gas turbines and a whole lot more natural gas fired power plants. But at the end of the day, the bottom line is that China saw all of this coming decades ago. They planned ahead and they're already on their way to building plenty of electric generation spare capacity to fuel their AI boom. America will have to scramble to catch up and we have only ourselves to blame. Okay, on to my final prediction and this is my strongest conviction prediction of 2025. Patrick, I predict that your take on the S&P 500 this week is going to be considerably less long- winded than my views on the AI race. Take it away. Well, Eric, my view on the equity markets is pretty straightforward here. We have a break to basically 52- week highs. There's a huge open interest of options with the JP Morgan options whale sitting at the 7,000 strike with the December 31st expiration. At this stage, it's going to act like a magnet and odds are here that we're going to print 7,000 over the holiday period. After that kind of a move, uh we'll definitely size things up in the new year. But at this stage, there's no imminent uh downside risks unless a catalyst is introduced. And so assuming that the market here gravitates a little bit higher is almost certainly the path of least resistance. All right, Eric, let's dive into this US dollar. >> Patrick, same as last week. Basically, the Dixie sell-off continues in what's now become a very wellestablished downward price trend. Clearly, the trend is down. My outlook remains bearish, and the caveat is still that if there's a major policy announcement from uh President Trump and Secretary Bessant, that could change things in a heartbeat. But barring a major policy change, I think the downtrend continues. >> Well, for me, Eric, this dollar continues to actually show substantial deterioration. In my mind, the 98 level is a a a key support line and it's currently being violated and we have broken to lower lows. Very decisive downtrend. This stage I consider the window open for a retest of the year lows where the July and September lows came in around the 96 handle. And does that happen here in the last few weeks of the year or does that is that reserved for a January drop is yet to be seen. But at this stage uh the price action is very weak and further downside on the dollar is the path of least resistance. Eric, what are your thoughts here on crude oil? Patrick, we saw a material change in the shape of the forward curve this week. Until now, we've had persistent contango. That's a bearish signal from about the March 2026 contract all the way out to the early 2030s. The curve shifted this week to a slight backwardation from the front month all the way out to January of 2027, a full year from now. And then the contango resumes after that. Changes in the shape of the forward curve often presses big moves in the flat price. So I'm changing my prior call that 55 probably was not the bottom when because when the facts change, I change my opinion. Now, I'm not sure of this yet, but the way I'm seeing the forward curve evolving, although it's not quite deterministic yet when we were last at the same flat price about 3 weeks ago, we didn't have this much backwardation. So, I'm starting to feel, you know, my spidey senses are telling me maybe this rally is going to really have some some legs to it. And maybe that was a bottom at 55 uh last week. Getting above the 100 day moving average, which is 60 spot 26 WTI, would be a strong confirmation signal that something bigger than just a swing trade to the upside might be in the making. But it's still early to tell. Changes in the shape of the curve can be transient, and a return to structural contango at the front of the curve would invalidate everything I've just said. Meanwhile, my spread trade long CLZ6Z7 as described on last week's podcast is performing beautifully, having moved almost a full dollar now from minus1 spot 75 to minus0 spot 777. So 98 cents of upside just in the last week. Now 98 cents probably doesn't sound like a whole lot, but that's a pretty big move on a one-year time spread. Well, Eric, crude oil's at a critical level. The fib retracement of that December drop is right here around this $58 level. And the 50-day moving average is around 59. And so we have a scenario where if the bulls can clear that hurdle, that would be the first bullish price action that we would have seen in crude oil since September. And so will we see a holiday surge here in crude oil to see that upside will be thing to watch because a failure here still at 5859 leaves the window for double bottom retesting and all sorts of a sideways price action. That key level is not yet beat. All right, Eric, we got to talk about this breakout on gold. As predicted here on Macrovoices, the breakout above the prior 4,400 all-time high is upon us. And getting from 4,400 to 4500 took all of 24 hours. This activates measured move targets in the 4900 to 5100 range. But be careful trying to chase gold with new longs up here. We're flashing extreme overbought on the technicals. So, some kind of consolidation or cooling off is to be expected. And frankly, a move straight back down to retest the breakout zone at about 4370 or so would make perfect sense here. Remember, a very common pattern on breakouts is after a few sessions, we'll come back down and retest that uh previous resistance level as a support level. So, getting back down to 4370 is not at all out of the question. So, if you're chasing this market with new longs, you better be ready to ride out $150 to $200 of downside before the uptrend continues. Of course, I don't know that that correction is coming. Uh, it's it's hard to tell here, but with the vigor of this breakout, just about anything is possible. Remember also that we're in a very thin liquidity holiday period, so moves in either direction can be exaggerated. Eric, gold broke to an all-time new high and the upside window was certainly open. those measured moves are in play. But what's particularly more interesting and I want to talk about is what silver platinum and palladium are doing uh in putting that into the same context because silver has now completed a measured move up to 72 and has gone full-on parabolic. This is at a time when we are seeing full parabolic moves in platinum and platium all actually even surpassing upper targets. Now, while I'm not bearish, silver, platinum, and platium, I am looking to see whether they put in short-term swing highs or a blowoff top that causes a mean reversion. And the question that I'm asking myself is if we did see some sort of swing highs in those metals, what is the drag or impact it may have temporarily on gold? Now overall maybe gold may actually take flows as as some of the money leaves um those other metals. Uh but overall the price action on gold is very bullish. It is got lots of room to go on the upside and probably old dips will be bought within a$1 or $200 pullback if as the bull trend is very well established here. All right, Eric, let's touch on that uranium. Really big news this week in my opinion was Gold Sachs coming out with a research note that basically said absolutely nothing new for macrovoices listeners. Everything it contained is stuff we've talked about with Justin Hune or Mike Alen or Guy Keller in various interviews more than a year ago. But the thing is, it's Goldman Sachs who's saying it. And I say that this research note is a really big deal for the market. Why? Because the whole problem in the uranium sector is very low low institutional participation due to the ESG madness, the the now expired ESG mandates and a lack of understanding of the term contracting uh system and how it works in the uranium market and why the spot price of uranium isn't really the primary price signal even though most people assume that it is. The analogy I like to use here is a Hollywood director discovering a a young actress, a new movie star. Well, the talent was already there, but it's the director who has the power to make them a star that that really changes everything instantly. In this case, the profoundly bullish arguments uh have been there for well over a year, couple of years. We've been talking about them for years here on Macrovoices. The thing is the ESG crowd couldn't touch it because of ESG mandates. Institutional participation in this market is extremely low. Goldman's institutional reach is like Scorsesei discovering a new a new actor and turning them into a star. So, while Goldman has had plenty to say about nuclear energy in the past, that's probably why we've seen the outperformance in names like Oaklo, which is a a uh reactor company. Okay, that's not for the fuel. And I think the reason the fuel hasn't moved yet is everybody correctly understands that wait a minute, uh, conventional nuclear lightwater reactors take at least 10 years to build. We're not going to need any fuel for those new reactors for at least 10 years. Who cares about uranium? Well, what they just found out from Goldman Sachs, which of course has very high institutional pedigree, even though we broke the story 3 years earlier on Macrovoices, uh when Goldman says it, people listen. And now they're talking about the structural deficit in uranium supply that's starting in the next few years. I think this uh research note has the potential to wake the institutional market up to what Macrovoic's listeners have known for years, which is there's a tremendous bullish argument that really hasn't seen much investor participation yet in uranium and the uranium miners. So, I think 2026 could be the year that uranium prices really explode to the upside. And I think Goldman coming to the table with this latest research note could be a big catalyst in order to get us there. Well, I want to focus on the actual prices of uranium rather than uranium equities. And what we have generally seen here in the last few weeks has been strengthening of the uranium prices now attempting to approach their uh third quarter highs. Will we get that breakout in uranium? It it certainly to me is asymmetric with the fact that uranium consolidated over the last couple months it unwound all over bought states and certainly room that if this breaks out to get to some nice higher levels here on the short term. So looking for that followth through on uranium. Patrick before we wrap up the final regular format episode of 2025 let's hit that 10-year Treasury note chart one last time. >> Yeah Rick wrapping up here with that 10-year Treasury yield. It has been a consolidation for all of the month of December and really at this stage expecting uh a breakout here over the holiday periods is not realistic. Very likely that we stay bound within the 410 to 420 range waiting on some January economic news to potentially be the catalyst for the next move. Folks, if you enjoy Patrick's chart decks, you can get them every single day of the week with a free trial of Big Picture Trading. 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