Wall St Veteran Warns a "Bigger Drawdown" is Coming This Fall | Jared Dillian
Summary
Market Outlook: Environment remains unpredictable with tech strength, low volatility, and a focus on conserving capital until clearer opportunities emerge.
US Dollar: Near-term bullish view (3–6 months) driven by extreme bearish positioning and recent multi-day rally, despite long-term bearishness.
Precious Metals: Gold’s multi-month consolidation likely resolves higher, while silver, platinum, and palladium have broken long-term downtrends; tariffs create added complexity.
Commodities: Bloomberg Commodity Index bottomed last September and is consolidating for a move higher; full bull market likely requires meaningful Fed cuts, with mixed performance across ags, oil, meats, and softs.
Bitcoin: Late-cycle move could push toward 150,000 before a typical cycle drawdown of 70–80%, potentially to around 60,000.
Value Stocks: Potential rotation into value and small caps after a larger fall drawdown; value hasn’t led meaningfully since 2001–2004, but early signs are emerging.
Rates and Bonds: Consensus expects curve steepening if front-end cuts occur, but overall bond setup lacks a clear catalyst; any new Fed leadership likely cuts 100–150 bps, not to zero.
Tickers: No specific stock tickers were recommended; emphasis was on macro themes and asset classes.
Transcript
Hello, I'm Ed D'Agostino. Welcome to Global Macro Update. For the first time, we're going to do an in-person interview. I'm here with my buddy Jared Dillian. We're in Nashville, Tennessee. I'm here to see one of Jared's DJ shows, but we're gonna take this opportunity to have a little macro chat. Thanks for doing this. Yeah, of course. Yeah. It's good to see you. Yeah, it's always good to see you. Let's talk macro. Mm-hmm. Let's talk about this, in my opinion, wildly unpredictable environment to invest in. In general, what's your take on the markets right now? Uh, my take is, is that anytime Trump says something, it is, uh, harmful to my positions. Yeah. I'm always, always on the wrong side of it, it's been brutal. This is not the greatest time. Uh, I mean, not to be trading macro, but to be trading anything. We're kind of where we were before, where tech is going up every day and volatility is depressed, and interest rates are in a range, uh, for a bunch of reasons. I think there's some opportunities in FX and, uh, gold and precious metals. Um, but there's, in general, there's not a lot of opportunities out there. Um, and I think the, I think the goal is to conserve capital and wait for the opportunities. Let's talk a little bit about some of those individually. Fx, you've been, you've been calling for a dollar rally for a while now. Yeah. We maybe you're starting to see it. Well, I mean, first of all, I wanna be clear that I'm very bearish on the dollar on like a three to five year basis. Okay. But bullish on like a three to six month basis. Um, I think sentiment against the dollar got to extreme bearish levels. And you were seeing that in the commitment of traders you were seeing, um. You know, spec shorts in the 99th percentile, commercial hedgers in the 99th percentile, like people wore max short, the dollar. And what's happened in the last two weeks is that, uh, up until today you had nine days in a row of the dollar rallying and nobody was even talking about it. Yeah. Um, so you've had a pretty significant correction. Uh, I think it's gonna continue. Um. Today, I guess it came out that Trump was looking to replace Powell at the Fed, um, which got short term rates down, got the bond market up, got the dollar a little weaker. Uh, but still, I think, I think the dollar is gonna correct significantly higher over the next couple weeks. So, so we talked about that earlier. Before we started rolling, we talked about how, you know, I asked you the question is. Is the front end of the yield curve. So short term rates, is that sort of the most obvious trade in the world right now that no one is, is doing? Yeah, I, I don't, I don't think it is. Basically the thesis around short term rates is that Trump is gonna replace. Powell with Caligula's horse and there, there, he's gonna cut rates significantly and like, basically it's free money. All you have to do is be long like fed funds or sofa futures and you'll make money right. It's mostly priced in on that news today that Trump might replace Powell. Uh, the front end didn't move, like seven basis points. Uh, not a huge move. And really, if you look at the term structure, we have one cut priced in this year and most of the cuts priced in next year. So really, like if, just say hypothetically, if Trump replaced Powell tomorrow. We had a bunch of rate cuts this year, it would move that forward. Um, but ultimately, I don't think the Fed cuts more than a hundred basis points. Maybe 150. I think maybe you get rates down to 3%. Um, Trump wants them at zero. Or 1%, and I don't think there is a person that could get confirmed by the Senate who would go along with that. I've talked about Kevin Hassett being the possible next Fed Chairman, it looks like that's a pretty safe bet. Um, Hassett is kind of a Trump hack. But at the same time, Hassett, when asked about fed independence says all the right things. Um, so I think he views himself as sort of the protective barrier between Trump and 0% interest rates. So ultimately what I think happens is, let's just say this happens. Uh. Hassett takes over the Fed, he cuts a hundred to 150 basis points. He stops, it's not good enough for Trump. Then Trump is, starts talking about firing Hassett. Like, it's like there's, there's nobody, I mean, a, a guy like Stephen Moore who actually would cut rates to zero, like he, he was nominated to the Fed Board of Governors and he didn't get confirmed by the Senate. You know, so Yeah, I don't, and plus there's this, sorry to go on for so long. No, but there's this, um, this view that really the only person that matters is the chairman. Right? But the FOMC is 19 people. Right. And even if you had a Fed chairman who was hell bent on cutting rates to zero, you have like real people on the committee like Christopher Waller and Michelle Bowman and you know people, uh. You know, that would prevent them from doing that. So, uh, that would cause a lot of conflict at the Fed. That would cause a lot of turmoil. You might see a lot of dissent on rate decisions, but this scenario that people are talking about where Trump replaces Jay Powell and rates go to zero, like, I don't think it's gonna happen. Yeah. Even, even if he repla, if, if he managed to somehow replace Chairman Fed, chairman Powell early, he could put whoever he wants in. Doesn't mean that he has current blanc to set. Right? Yeah. Right. Yeah. Like I think, I don't think a lot of people realize that, yeah, let's play what if, which I hate, but kind of, I think we're forced into, into what if, uh, because of where we're at right now with this administration, which I, I, I want to get into why that is too, right? Because I, if I could ask the administration to do one thing better, it would simply be to just communicate better. Just just broadcast what your intentions are more clearly so that businesses can plan and investors can figure out. How to, how'd it go? I mean, do you find this a tough environment? Well, I, I think that's absolutely true. I think that was true with the tariffs. Like, yeah, I think if people kn knew the purpose of the tariffs, they could get behind it and go along with it. So, for example, if we. Knew that the tariffs are retaliatory tariffs. The purpose of them was to eliminate barriers to trade between both countries and trade from an even playing field. Yeah, like I think people could go along with that. But then you have this tariff on copper of 50%, which is ludicrous and is just gonna increase construction costs, like, you know, at the residential and commercial level like. There's, there's no rhyme or reason to a lot of this stuff. And it like you, like you said, like I, I don't know, I don't know if it was Milton Freeman or Hayek or one of these other economists, but it really talked about the ability of really the, the benefits of stable, stable, everything. Stable monetary policy, stable regulatory policy, stable fiscal policy so people can plan into the future. And we don't have that right now. Yeah. You know. I do know. Yeah, it's been hard. Say a new Fed chairman comes in and whether it's now or in June of 26, you know, Powell chairman's in May and he convinces the board to drop rates by 200 or 250 basis points. What happens Do, do mortgages go down? Because I think that's what people are really care about right now. Um, what happens in the long end? Do do borrowing costs for the United States go down or do they actually go up? Yeah, I think, uh, you know, it's funny, I was, um. In the office this morning, they had CNBC on and Muhammad del Arian was on TV and they asked him the exact same question and he said, no, like long-term rates will go up, like the curve will steepen. I thought about that and I said to myself, that is a very consensus view that the curve will steepen. Everybody thinks that, right? Uh, and it probably will happen, but if Mohamed is saying it, then maybe it won't happen. But nonetheless, like that's what should happen because, um, if you lower short term rates, it's going increase inflation expectations in the long end. Yeah. Plus we have all the supply. Look, the curve deepener has been the widow maker trade of the last three years, like everybody's expected. The curve to steepen, I mean off the lows quite a bit, but still has a long way to go. Let's move away from the Fed. Let's talk about, uh, how do you feel about Bessett Treasury Secretary? Um, is he doing a good job? I mean, he's, look, he's a smart guy. Everybody. There's no, I don't think there's one person in the world who says he's dumb. Like nobody For sure. Nobody says best than for sure. Um, I think he's full of shit sometimes. Um, I, I, well, he's in a political environment. Yes, yes. Um, especially when he talks about the tariffs and stuff like that. When he became treasury secretary, he went after Yellen and basically said that she had this opportunity to term out the debt and she didn't. Well, guess what? He had an opportunity to term out the debt and he didn't, and rates went up and now he refuses to do it. I mean, if I were bestin, I would start increasing the size of the auctions at 10 twenties and thirties like I would. I would, because. Four per four and a half percent on tens might look pretty good a couple years from now. Yeah. You know, I would lock in some of those rates even though they're high because they might go higher. So he's kind of gambling with this, like he seems to think that he can get the bond market up interest rates lower. Uh, I would, that's, that's not the way I would do it. So, so I mean, the, the question for a lot of people is. Our rates high right now. Like, like for, for people that have sort of come of age, like our, our nephews and nieces, uh, or my kids who are looking to buy houses in their twenties or thirties, like they're sitting there saying, oh my God, rates are really high, but we have gray hair. Um. Historically, rates really aren't that high. They're probably, or they should be. They're about average. Yeah. Yeah, they're about average. But, um, really, I mean, the issue Forbes is spending, which the big beautiful bill did not address. Um, now speaking of the big beautiful bill, the BBB, um, there's the old BBV, the what's the OBBV one? Yes. One big, beautiful bill. Um, most of the increase in the deficit was from, in fact, pretty much all of it. It was from the extension of the tax cuts. Right? Right. So it wasn't really because of new spending. There was some new spending on ice and stuff like that, but it's mostly from the extension of the tax cuts. And I personally believe that the tax cuts had to get extended like they have to. Like they've been in place for eight years if we didn't extend them. And a lot of people says, look, that's a tax rate for the rich. If you look at the pre 2017 tax brackets and the tax brackets today rates, tax rates would've gone up across all income levels. Especially at the low end, right? Especially at the low end. So it is, it is a tax break for everybody. So I think we need to do, extend that. Um, and then beyond that, you really have to look at cutting spending. If you're not going to increase taxes, then you have to cut spending. And the bill really didn't do anything about that, and Doge didn't do anything about that. And this is what Elon Musk is upset about and it's, you know, this is. I'm gonna borrow from Lynn Alden here. She says, nothing stops this train. Right? Like this is the one opportunity in the last 50 years to do something about the deficit where you have a guy like Trump, you have a guy like Elon Musk, it was a landslide election. You have political will to do it, and it still doesn't get done. It's never gonna get done. Yeah, I mean, the last time we made progress in this regard was. Was really the Clinton Gingrich. Yes, yes. Partnership is not probably the right way to describe it, but those two had to negotiate with each other and they got things done. Yep. And everyone won. Yep. We, we miss, uh, Clinton and Gig Rich, let's get back to investing a little bit. I'm just gonna toss some, some, uh, some, some things at you. You mentioned FX before. What about commodities? And let's start with metals. Metals are looking pretty good. Um. Gold has been in a four month consolidation. It's suffering from benign neglect. People have forgotten about it. You know, it was making new highs in the beginning part of this year, and it, and it got, I don't wanna say it was not a bubble at all, because sentiment didn't even get close to that point, but it got a little overheated. It's been consolidating for the last four months. It's gonna resolve higher. Um. I believe this, this, it's really true for all the metals, silver, platinum, palladium, uh, platinum and palladium, and broken out of long-term down trends. Um, there, I mean, it's, it's gonna be a food fight for metals over the next couple years. Yeah. And tariffs had a huge wrinkle into it. Yeah. Um, and you, by the way, you're a, you are CTA commodity trader at Armington Capital. Yeah. You have your own firm for commodity trading, so you have. Little bit of expertise in this area. Yep. What else in the commodity space do you like? Or what are you looking at? I look at the commodity index, so I, I spend a lot of time looking at the BComm, the Bloomberg Commodity Index. Okay. Uh, the funny thing about the BComm is that it charts really well, um, very, very easy to pick tops and bottoms in the becom. And what you had was a significant bottom last September. Um, and. You had a big rally off the lows and you've had this consolidation and it's still consolidating, it's gonna move higher. There's still parts of the commodity market that are a mess, like agriculture is a mess. Yeah. Um, oil is a mess. Interestingly, the meats have done really well. Cattle and hogs have done really well, but they're a very tiny part of the index. Uh, some of the softs have done pretty well, so cocoa, everybody knows, but coffee has done well. Um. So there's been pockets of strength. Um, but really I think what we need to get a fullthroated commodity bull market is that caligula's horse moment out of the Fed where you do get a new fed chair and they cut a hundred, 200, 300 basis points. You'll see commodities just lift off ' cause investors are gonna rush to hard assets basically. Yep, yep. Okay. Okay. Um, Bitcoin all time high. Yeah, I mean, you're talking to the wrong guy. I kind of struggle with Bitcoin. Um, me too. I had one of my subscribers email me the other day and he said that Bitcoin was going up forever. So I was like, like, is it, uh, maybe time to, uh, short some BITB or something like that? Whenever I hear it's going up forever. Yeah. Um, I do think that. Just from looking at the charts, I think it's gonna go up to about 150,000. Wow. Um, and then it'll turn into a frenzy. We have these four year cycles in Bitcoin, and every four years you get a 70 to 80% draw down. So you'll get a draw down, down to about 60,000. It's, it's absolutely gonna happen. Um, so I think we're in like the, the seventh inning of Bitcoin here in this cycle. Well, I mean, we both have friends who told us to buy when it was. $200 and then a thousand dollars, and then $2,000. Hey, I, you know, I, I bought it in 2019 and, uh, I bought a Corvette. So from your trade? From my trade, yeah. Let's end this with your thoughts on the stock market. Let's talk stocks, uh, market structure. It's kind of a boring summer. Not, not a lot going on at the index level, but below the surface there's a lot of opportunity and a lot of risk. What are your thoughts? Well, if you wanna just talk about the index after April happened. The, the tariff meltdown. Mm-hmm. And then we recovered. Um, you know, I told my subscribers, I said, I think we're gonna get wave two of this in the fall. Oh, I said I think we're gonna have a quiet summer and then we're gonna have round two in the fall, and round two will be a, a, a bigger drawdown. Um, I'm still kind of sticking with that for now. I think that the tariffs that, that tariff meltdown, I think it kind of broke the market. Um, the price action is. I mean, look, you're talking to somebody who literally stares at s and p Futures all day, and I see how they trade. Yeah, it's hard to put into words, but it trades differently now than before. The tariff meltdown, uh, the price action is not as strong. I think Trump broke the market. Um, I don't know what the catalyst is gonna be for a downturn in the fall. Um, it's really, I, I mean, I gotta tell you this is, I know this is your podcast and you, you know, you want like, things supported by facts and evidence. It's just a hunch. It's really more of a hunch than anything. Um, I'm not, I'm not crazy about the price action, you know, but having, but, you know, you led this off by saying that there's, you know, there's pockets of strength. Um, you know, there's, uh, I I think one of the, I think one of the silver linings of a big drawdown in stocks is that you'd see a rotation into value. I think that would happen. Okay. Funny you say that. So. We have a mutual friend, Peter BofA, who, who runs money, and I spoke with Peter last week. He's up 15% year to date. He's having a great year. He is anything but an index investor. He's not a tech investor, he is not an index investor. He really tends to focus on value. Um, and he's a stock picker. And he's, he's doing great. And, uh, you, you and I have had that conversation too. I know some of his picks. Yeah. He spoke at my conference. Yeah. I got to see his picks. Yeah. Yeah. Value. And he, and he tends to focus on small cap. Value. Not all, not uh, but, but there's some small cap layered in there. Um, what do you think about that strategy? Nothing would make me happier than for, to get a resurgence in value because it hasn't happened in 21 years. Yeah. The last time that value really got a bid was in 2001, 2004, and it was as a result of the.com bust. Right. Okay. So it was a flight to safety. You had money coming out of large cap into small cap and value. So I hope it happens again. Yeah. You think it will? So I'm starting, I do. To see signs that Yeah, it might be underway. Yeah. I think it's not necessarily the, a broad or a or, or an index level move. But on an individual stock move, there's some great opportunities out there. Yeah. What else? What didn't I ask you that I should have, Jared? Well, we didn't, we didn't talk a lot about the bond market in general. Yeah. I, I, I get to tell you, as a chart person, I've never been less enthusiastic about a chart than, um. Tens or thirties. I, I always have an opinion on bonds, usually a strong opinion. Um, and I play it from both sides of the market. I'm not a perma bond bull or a perma bond bear. I'm really good at trading sentiment in bonds, and there is nothing to do right now. Yeah. And if you think of this philosophically like. We're kind of in the middle of two sentiment polls, right? Where on one hand you have the deficit hawks who are afraid. We're just gonna have so much issuance in a pile of issuance and rates are gonna go parabolic and we're gonna get a margin call and we're gonna be insolvent. And on the other hand are like. Sort of the bond perma bowls who are always looking for pockets of weakness in the economy. Oh, the payroll number was only 140,000 jobs. Inflation is lower. But you know, and really, like you have these two competing factions and bonds are right in the middle, you know, so there's just, there's really nothing to do. You know, I, I mean, tens are at four and a half, bonds are at five. I, I haven't had a position in the last couple months and. I don't see myself, you know, having said that, if, if you were, if you were to put a gun to my head and say, which would you rather be? I would rather be bullish. I would be bullish. Bett. I would, yes, I would be, I would be betting on lower rates. Like that would, that would be my bias. Um, but I don't, I don't see any catalyst for that anytime soon. Where do you park your cash? Uh, like personally? Yeah. Uh, money market fund. Okay. And a bank account. Okay. Yep. Nothing fancy. Yep. Okay. A lot of the stocks in my portfolio are big, big dividend payers. Um, so you know, in addition to the money market fund, I have probably 40% of the portfolio that is puking out, like six to 8% dividends. So I get a, I get a lot of cash. Okay. And you, we talked about this. Once you take that cash, you don't, you don't reinvest it. That's right. Yeah. I like, uh, it's like that 2002 Aflac commercial with Yogi Berra. They, they give you cash, which is just as good as money. It's just good money. Yeah. If you aren't reading Jared's letters, you should be, you can go to Jared Dian money. Com to sign up for his free weekly letter. I'm Ed D'Agostino. This is Global Macro Update. Thanks for watching.
Wall St Veteran Warns a "Bigger Drawdown" is Coming This Fall | Jared Dillian
Summary
Transcript
Hello, I'm Ed D'Agostino. Welcome to Global Macro Update. For the first time, we're going to do an in-person interview. I'm here with my buddy Jared Dillian. We're in Nashville, Tennessee. I'm here to see one of Jared's DJ shows, but we're gonna take this opportunity to have a little macro chat. Thanks for doing this. Yeah, of course. Yeah. It's good to see you. Yeah, it's always good to see you. Let's talk macro. Mm-hmm. Let's talk about this, in my opinion, wildly unpredictable environment to invest in. In general, what's your take on the markets right now? Uh, my take is, is that anytime Trump says something, it is, uh, harmful to my positions. Yeah. I'm always, always on the wrong side of it, it's been brutal. This is not the greatest time. Uh, I mean, not to be trading macro, but to be trading anything. We're kind of where we were before, where tech is going up every day and volatility is depressed, and interest rates are in a range, uh, for a bunch of reasons. I think there's some opportunities in FX and, uh, gold and precious metals. Um, but there's, in general, there's not a lot of opportunities out there. Um, and I think the, I think the goal is to conserve capital and wait for the opportunities. Let's talk a little bit about some of those individually. Fx, you've been, you've been calling for a dollar rally for a while now. Yeah. We maybe you're starting to see it. Well, I mean, first of all, I wanna be clear that I'm very bearish on the dollar on like a three to five year basis. Okay. But bullish on like a three to six month basis. Um, I think sentiment against the dollar got to extreme bearish levels. And you were seeing that in the commitment of traders you were seeing, um. You know, spec shorts in the 99th percentile, commercial hedgers in the 99th percentile, like people wore max short, the dollar. And what's happened in the last two weeks is that, uh, up until today you had nine days in a row of the dollar rallying and nobody was even talking about it. Yeah. Um, so you've had a pretty significant correction. Uh, I think it's gonna continue. Um. Today, I guess it came out that Trump was looking to replace Powell at the Fed, um, which got short term rates down, got the bond market up, got the dollar a little weaker. Uh, but still, I think, I think the dollar is gonna correct significantly higher over the next couple weeks. So, so we talked about that earlier. Before we started rolling, we talked about how, you know, I asked you the question is. Is the front end of the yield curve. So short term rates, is that sort of the most obvious trade in the world right now that no one is, is doing? Yeah, I, I don't, I don't think it is. Basically the thesis around short term rates is that Trump is gonna replace. Powell with Caligula's horse and there, there, he's gonna cut rates significantly and like, basically it's free money. All you have to do is be long like fed funds or sofa futures and you'll make money right. It's mostly priced in on that news today that Trump might replace Powell. Uh, the front end didn't move, like seven basis points. Uh, not a huge move. And really, if you look at the term structure, we have one cut priced in this year and most of the cuts priced in next year. So really, like if, just say hypothetically, if Trump replaced Powell tomorrow. We had a bunch of rate cuts this year, it would move that forward. Um, but ultimately, I don't think the Fed cuts more than a hundred basis points. Maybe 150. I think maybe you get rates down to 3%. Um, Trump wants them at zero. Or 1%, and I don't think there is a person that could get confirmed by the Senate who would go along with that. I've talked about Kevin Hassett being the possible next Fed Chairman, it looks like that's a pretty safe bet. Um, Hassett is kind of a Trump hack. But at the same time, Hassett, when asked about fed independence says all the right things. Um, so I think he views himself as sort of the protective barrier between Trump and 0% interest rates. So ultimately what I think happens is, let's just say this happens. Uh. Hassett takes over the Fed, he cuts a hundred to 150 basis points. He stops, it's not good enough for Trump. Then Trump is, starts talking about firing Hassett. Like, it's like there's, there's nobody, I mean, a, a guy like Stephen Moore who actually would cut rates to zero, like he, he was nominated to the Fed Board of Governors and he didn't get confirmed by the Senate. You know, so Yeah, I don't, and plus there's this, sorry to go on for so long. No, but there's this, um, this view that really the only person that matters is the chairman. Right? But the FOMC is 19 people. Right. And even if you had a Fed chairman who was hell bent on cutting rates to zero, you have like real people on the committee like Christopher Waller and Michelle Bowman and you know people, uh. You know, that would prevent them from doing that. So, uh, that would cause a lot of conflict at the Fed. That would cause a lot of turmoil. You might see a lot of dissent on rate decisions, but this scenario that people are talking about where Trump replaces Jay Powell and rates go to zero, like, I don't think it's gonna happen. Yeah. Even, even if he repla, if, if he managed to somehow replace Chairman Fed, chairman Powell early, he could put whoever he wants in. Doesn't mean that he has current blanc to set. Right? Yeah. Right. Yeah. Like I think, I don't think a lot of people realize that, yeah, let's play what if, which I hate, but kind of, I think we're forced into, into what if, uh, because of where we're at right now with this administration, which I, I, I want to get into why that is too, right? Because I, if I could ask the administration to do one thing better, it would simply be to just communicate better. Just just broadcast what your intentions are more clearly so that businesses can plan and investors can figure out. How to, how'd it go? I mean, do you find this a tough environment? Well, I, I think that's absolutely true. I think that was true with the tariffs. Like, yeah, I think if people kn knew the purpose of the tariffs, they could get behind it and go along with it. So, for example, if we. Knew that the tariffs are retaliatory tariffs. The purpose of them was to eliminate barriers to trade between both countries and trade from an even playing field. Yeah, like I think people could go along with that. But then you have this tariff on copper of 50%, which is ludicrous and is just gonna increase construction costs, like, you know, at the residential and commercial level like. There's, there's no rhyme or reason to a lot of this stuff. And it like you, like you said, like I, I don't know, I don't know if it was Milton Freeman or Hayek or one of these other economists, but it really talked about the ability of really the, the benefits of stable, stable, everything. Stable monetary policy, stable regulatory policy, stable fiscal policy so people can plan into the future. And we don't have that right now. Yeah. You know. I do know. Yeah, it's been hard. Say a new Fed chairman comes in and whether it's now or in June of 26, you know, Powell chairman's in May and he convinces the board to drop rates by 200 or 250 basis points. What happens Do, do mortgages go down? Because I think that's what people are really care about right now. Um, what happens in the long end? Do do borrowing costs for the United States go down or do they actually go up? Yeah, I think, uh, you know, it's funny, I was, um. In the office this morning, they had CNBC on and Muhammad del Arian was on TV and they asked him the exact same question and he said, no, like long-term rates will go up, like the curve will steepen. I thought about that and I said to myself, that is a very consensus view that the curve will steepen. Everybody thinks that, right? Uh, and it probably will happen, but if Mohamed is saying it, then maybe it won't happen. But nonetheless, like that's what should happen because, um, if you lower short term rates, it's going increase inflation expectations in the long end. Yeah. Plus we have all the supply. Look, the curve deepener has been the widow maker trade of the last three years, like everybody's expected. The curve to steepen, I mean off the lows quite a bit, but still has a long way to go. Let's move away from the Fed. Let's talk about, uh, how do you feel about Bessett Treasury Secretary? Um, is he doing a good job? I mean, he's, look, he's a smart guy. Everybody. There's no, I don't think there's one person in the world who says he's dumb. Like nobody For sure. Nobody says best than for sure. Um, I think he's full of shit sometimes. Um, I, I, well, he's in a political environment. Yes, yes. Um, especially when he talks about the tariffs and stuff like that. When he became treasury secretary, he went after Yellen and basically said that she had this opportunity to term out the debt and she didn't. Well, guess what? He had an opportunity to term out the debt and he didn't, and rates went up and now he refuses to do it. I mean, if I were bestin, I would start increasing the size of the auctions at 10 twenties and thirties like I would. I would, because. Four per four and a half percent on tens might look pretty good a couple years from now. Yeah. You know, I would lock in some of those rates even though they're high because they might go higher. So he's kind of gambling with this, like he seems to think that he can get the bond market up interest rates lower. Uh, I would, that's, that's not the way I would do it. So, so I mean, the, the question for a lot of people is. Our rates high right now. Like, like for, for people that have sort of come of age, like our, our nephews and nieces, uh, or my kids who are looking to buy houses in their twenties or thirties, like they're sitting there saying, oh my God, rates are really high, but we have gray hair. Um. Historically, rates really aren't that high. They're probably, or they should be. They're about average. Yeah. Yeah, they're about average. But, um, really, I mean, the issue Forbes is spending, which the big beautiful bill did not address. Um, now speaking of the big beautiful bill, the BBB, um, there's the old BBV, the what's the OBBV one? Yes. One big, beautiful bill. Um, most of the increase in the deficit was from, in fact, pretty much all of it. It was from the extension of the tax cuts. Right? Right. So it wasn't really because of new spending. There was some new spending on ice and stuff like that, but it's mostly from the extension of the tax cuts. And I personally believe that the tax cuts had to get extended like they have to. Like they've been in place for eight years if we didn't extend them. And a lot of people says, look, that's a tax rate for the rich. If you look at the pre 2017 tax brackets and the tax brackets today rates, tax rates would've gone up across all income levels. Especially at the low end, right? Especially at the low end. So it is, it is a tax break for everybody. So I think we need to do, extend that. Um, and then beyond that, you really have to look at cutting spending. If you're not going to increase taxes, then you have to cut spending. And the bill really didn't do anything about that, and Doge didn't do anything about that. And this is what Elon Musk is upset about and it's, you know, this is. I'm gonna borrow from Lynn Alden here. She says, nothing stops this train. Right? Like this is the one opportunity in the last 50 years to do something about the deficit where you have a guy like Trump, you have a guy like Elon Musk, it was a landslide election. You have political will to do it, and it still doesn't get done. It's never gonna get done. Yeah, I mean, the last time we made progress in this regard was. Was really the Clinton Gingrich. Yes, yes. Partnership is not probably the right way to describe it, but those two had to negotiate with each other and they got things done. Yep. And everyone won. Yep. We, we miss, uh, Clinton and Gig Rich, let's get back to investing a little bit. I'm just gonna toss some, some, uh, some, some things at you. You mentioned FX before. What about commodities? And let's start with metals. Metals are looking pretty good. Um. Gold has been in a four month consolidation. It's suffering from benign neglect. People have forgotten about it. You know, it was making new highs in the beginning part of this year, and it, and it got, I don't wanna say it was not a bubble at all, because sentiment didn't even get close to that point, but it got a little overheated. It's been consolidating for the last four months. It's gonna resolve higher. Um. I believe this, this, it's really true for all the metals, silver, platinum, palladium, uh, platinum and palladium, and broken out of long-term down trends. Um, there, I mean, it's, it's gonna be a food fight for metals over the next couple years. Yeah. And tariffs had a huge wrinkle into it. Yeah. Um, and you, by the way, you're a, you are CTA commodity trader at Armington Capital. Yeah. You have your own firm for commodity trading, so you have. Little bit of expertise in this area. Yep. What else in the commodity space do you like? Or what are you looking at? I look at the commodity index, so I, I spend a lot of time looking at the BComm, the Bloomberg Commodity Index. Okay. Uh, the funny thing about the BComm is that it charts really well, um, very, very easy to pick tops and bottoms in the becom. And what you had was a significant bottom last September. Um, and. You had a big rally off the lows and you've had this consolidation and it's still consolidating, it's gonna move higher. There's still parts of the commodity market that are a mess, like agriculture is a mess. Yeah. Um, oil is a mess. Interestingly, the meats have done really well. Cattle and hogs have done really well, but they're a very tiny part of the index. Uh, some of the softs have done pretty well, so cocoa, everybody knows, but coffee has done well. Um. So there's been pockets of strength. Um, but really I think what we need to get a fullthroated commodity bull market is that caligula's horse moment out of the Fed where you do get a new fed chair and they cut a hundred, 200, 300 basis points. You'll see commodities just lift off ' cause investors are gonna rush to hard assets basically. Yep, yep. Okay. Okay. Um, Bitcoin all time high. Yeah, I mean, you're talking to the wrong guy. I kind of struggle with Bitcoin. Um, me too. I had one of my subscribers email me the other day and he said that Bitcoin was going up forever. So I was like, like, is it, uh, maybe time to, uh, short some BITB or something like that? Whenever I hear it's going up forever. Yeah. Um, I do think that. Just from looking at the charts, I think it's gonna go up to about 150,000. Wow. Um, and then it'll turn into a frenzy. We have these four year cycles in Bitcoin, and every four years you get a 70 to 80% draw down. So you'll get a draw down, down to about 60,000. It's, it's absolutely gonna happen. Um, so I think we're in like the, the seventh inning of Bitcoin here in this cycle. Well, I mean, we both have friends who told us to buy when it was. $200 and then a thousand dollars, and then $2,000. Hey, I, you know, I, I bought it in 2019 and, uh, I bought a Corvette. So from your trade? From my trade, yeah. Let's end this with your thoughts on the stock market. Let's talk stocks, uh, market structure. It's kind of a boring summer. Not, not a lot going on at the index level, but below the surface there's a lot of opportunity and a lot of risk. What are your thoughts? Well, if you wanna just talk about the index after April happened. The, the tariff meltdown. Mm-hmm. And then we recovered. Um, you know, I told my subscribers, I said, I think we're gonna get wave two of this in the fall. Oh, I said I think we're gonna have a quiet summer and then we're gonna have round two in the fall, and round two will be a, a, a bigger drawdown. Um, I'm still kind of sticking with that for now. I think that the tariffs that, that tariff meltdown, I think it kind of broke the market. Um, the price action is. I mean, look, you're talking to somebody who literally stares at s and p Futures all day, and I see how they trade. Yeah, it's hard to put into words, but it trades differently now than before. The tariff meltdown, uh, the price action is not as strong. I think Trump broke the market. Um, I don't know what the catalyst is gonna be for a downturn in the fall. Um, it's really, I, I mean, I gotta tell you this is, I know this is your podcast and you, you know, you want like, things supported by facts and evidence. It's just a hunch. It's really more of a hunch than anything. Um, I'm not, I'm not crazy about the price action, you know, but having, but, you know, you led this off by saying that there's, you know, there's pockets of strength. Um, you know, there's, uh, I I think one of the, I think one of the silver linings of a big drawdown in stocks is that you'd see a rotation into value. I think that would happen. Okay. Funny you say that. So. We have a mutual friend, Peter BofA, who, who runs money, and I spoke with Peter last week. He's up 15% year to date. He's having a great year. He is anything but an index investor. He's not a tech investor, he is not an index investor. He really tends to focus on value. Um, and he's a stock picker. And he's, he's doing great. And, uh, you, you and I have had that conversation too. I know some of his picks. Yeah. He spoke at my conference. Yeah. I got to see his picks. Yeah. Yeah. Value. And he, and he tends to focus on small cap. Value. Not all, not uh, but, but there's some small cap layered in there. Um, what do you think about that strategy? Nothing would make me happier than for, to get a resurgence in value because it hasn't happened in 21 years. Yeah. The last time that value really got a bid was in 2001, 2004, and it was as a result of the.com bust. Right. Okay. So it was a flight to safety. You had money coming out of large cap into small cap and value. So I hope it happens again. Yeah. You think it will? So I'm starting, I do. To see signs that Yeah, it might be underway. Yeah. I think it's not necessarily the, a broad or a or, or an index level move. But on an individual stock move, there's some great opportunities out there. Yeah. What else? What didn't I ask you that I should have, Jared? Well, we didn't, we didn't talk a lot about the bond market in general. Yeah. I, I, I get to tell you, as a chart person, I've never been less enthusiastic about a chart than, um. Tens or thirties. I, I always have an opinion on bonds, usually a strong opinion. Um, and I play it from both sides of the market. I'm not a perma bond bull or a perma bond bear. I'm really good at trading sentiment in bonds, and there is nothing to do right now. Yeah. And if you think of this philosophically like. We're kind of in the middle of two sentiment polls, right? Where on one hand you have the deficit hawks who are afraid. We're just gonna have so much issuance in a pile of issuance and rates are gonna go parabolic and we're gonna get a margin call and we're gonna be insolvent. And on the other hand are like. Sort of the bond perma bowls who are always looking for pockets of weakness in the economy. Oh, the payroll number was only 140,000 jobs. Inflation is lower. But you know, and really, like you have these two competing factions and bonds are right in the middle, you know, so there's just, there's really nothing to do. You know, I, I mean, tens are at four and a half, bonds are at five. I, I haven't had a position in the last couple months and. I don't see myself, you know, having said that, if, if you were, if you were to put a gun to my head and say, which would you rather be? I would rather be bullish. I would be bullish. Bett. I would, yes, I would be, I would be betting on lower rates. Like that would, that would be my bias. Um, but I don't, I don't see any catalyst for that anytime soon. Where do you park your cash? Uh, like personally? Yeah. Uh, money market fund. Okay. And a bank account. Okay. Yep. Nothing fancy. Yep. Okay. A lot of the stocks in my portfolio are big, big dividend payers. Um, so you know, in addition to the money market fund, I have probably 40% of the portfolio that is puking out, like six to 8% dividends. So I get a, I get a lot of cash. Okay. And you, we talked about this. Once you take that cash, you don't, you don't reinvest it. That's right. Yeah. I like, uh, it's like that 2002 Aflac commercial with Yogi Berra. They, they give you cash, which is just as good as money. It's just good money. Yeah. If you aren't reading Jared's letters, you should be, you can go to Jared Dian money. Com to sign up for his free weekly letter. I'm Ed D'Agostino. This is Global Macro Update. Thanks for watching.