'It's Over': Strategist Reveals Which Assets Are About To Crash | Mike McGlone
Summary
Macro Theme: The guest emphasizes a post-inflation deflation setup, citing wealth reversion risks, China’s weak yields, and historical parallels to 2008.
Energy Outlook: Crude oil is expected to mean-revert lower due to supply elasticity, political incentives to reduce prices, and backwardated futures pointing toward sub-$60-70 by midterms.
Natural Gas Signal: Natural gas price spikes repeatedly fade, reinforcing the broader commodity elasticity thesis and foreshadowing downside in other fuels.
Metals View: Precious metals (gold, silver) have become stretched and highly volatile; performance is now tightly linked to the equity market’s direction.
Industrial Metals: Copper strength looks vulnerable without a rising U.S. stock market and stronger China demand, making it a potential prudent short if equities roll over.
Crypto Stance: Cryptocurrencies, especially Bitcoin, are underperforming beta and viewed as a poor diversifier, with rallies dependent on a rising equity market.
Portfolio Positioning: Prefers being underweight risk assets and overweight US Treasuries, expecting duration buyers near 5% on the long bond and higher equity volatility ahead.
EV Adoption: EV adoption and technology continue to displace oil demand globally, aided by cheaper Chinese models (e.g., BYD) despite U.S. tariffs.
Transcript
If you're bullish metals, you got to be bullish the stock market. Sorry, that's just the way things are. When you get to 2.4 times GDP, that's the way life is. In that December crude oil future right now, it's $77. I fully expect it to be closer to 50 by the time we get to midterms. Well, it's over. It's the glory days for Bitcoin and cryptos are over. Gold is just way stretched, overdone, and now it's a highly volatile spectate risk asset. The stock market goes down, it's going to go down. You see why my focus is on the stock market. >> Mike McLean joins us once more. He's a senior commodity strategist at Bloomberg Intelligence. And we're going to be talking about his outlook on inflation, whether or not we're in an inflationary or deflationary trade right now as we speak, Fed monetary policy, a long end of the curve for the bond market, what's going to happen, what's going to happen to commodities, gold, silver, oil. Welcome back to the show. Good to see you, Mike. >> Hello, David. It's good to be back. Thanks for having me. >> Key risk you're watching for this week as we're speaking on the 24th of Friday of of April. Well, I'm a commodity guy and um definitely all about crude oil right now. It's Friday. The good news is the crude oil is actually down. So, the market's not pricing in more weekend risk. But it's showing a market that um is proving one of my key themes in commodities. And that is the bull market in commodities, not in prices, it's in elasticity. I mean, the ability or the inability for prices to stay up after going up. And one good example is US natural gas. It was up 100% on the year. got to near $7 per mm BTU, just above 7. That was a front contract. And as we speak on Friday, April 24th, it's 2.5. It's the same thing it did in 2022 to 23. It led everything down in terms of crude oil, corn, and soybeans, and wheat, everything that pumped went down, and natural gas led the way. And I think it's going to do that again this year. It's it just reiterates my key theme is markets are bullish crude oil for a good reason. Right now, crude oil is up for a good reason, but it's going to accentuate those those themes and those trends that really kicked in when Russia invaded Ukraine. And that is technology replacing crude oil and then surplus of supply versus demand in the US and Canada and a whole western hemisphere to continually just balloon. >> Crude oil is currently sitting at $91 an ounce a barrel rather. Now Mike, the question is whether or not inflation or deflation is the name of the game. You've been calling for deflation for quite some time. Inflation now seems to be top of mind for investors, economists, and the Federal Reserve alike. As the latest CPI print went up, not down. Now, here's the other side of the story, though. If oil stays high, we could see demand destruction from consumers, which means they spend less, which means deflation. What's more likely in the near term? I'm thinking this year will be fill or kill for my key theme of postinflation deflation. Following what's happening in China, 1.76 is their tenure note yield. That's pretty severe deflation. But what happens typically is when you get inflated markets like this, you mentioned what happens. We're going to have the Fed, we'll see demand destruction. The most significant thing for deflation is wealth reversion. Now, we're seeing the opposite this year so far. Stock market was down quickly and right back up. It doesn't go down. That's your significant trigger. We're nowhere near the deflation we're going to get eventually. But this year's a key trigger. And remember, this really much very much happened in 2008. It was one of my key signals. We were heading towards a deflationary environment. In July of 2008, CPI peaked around 5.6% with WTI around 147. One month's crude oil and everything just spiked and then anything collapsed. It was that inflation that that went to deflation. I see parallels this year, most notably in the rest of the world. Now we have things like gasoline and gas oil and most notably um distill it products refined products in the rest of the world and Europe and a lot of Asia spiking which is really curtailing that demand. Um and there's for good reason. Obviously this trade is still closed. That's I think markets looking at as a bit of a battle bulge. But in this country, we're seeing not seeing signs of it yet, but it's classic signs. When you have um things like gasoline jump over 50%, unled gas, diesel drop rally almost 75%. Um that cuts off people's um capital budgeting decisions and not just people, but their their investment decisions and capital budgeting and it makes people pull back. Now, we haven't seen that yet. Not certainly not seen in the stock market, but I think it's going to happen. The bottom line for me from a commodity standpoint is that what I pointed out about elasticity prices just don't stay up. So one thing that's really happened this year is we got crude oil back above 100 as we speak fronts at 93. But you got to look where this puck is going and that's I keep honing on that in that December crude oil future. Right now it's $77. I fully expect it to be closer to 50 by the time we get to midterms. And the bottom line is you have to think to yourself as we have the leader of the world's largest energy producer, net exporter of crude oil and the largest exporter of LNG natural gas wants prices to be lower, wants energy prices to be lower, wants inflation to lower by the time we get to midterms. I think he has a good ability to do that. Trends are in his favor. He might tweak a few things to make that happen. But it's just that unique statement to be able to make that. That's all that matters. I think it's going to happen. So I just point out there has been a major trend. I've been watching for at least a decade in all commodities and that is the um increasing surplus of supply versus demand in crude oil and liquid fuels in US and Canada. Now it's around 8 million billions barrels a day. And the only thing that's really curtailed that trend that's just is which was really peaked just before 2008 right around 2007 with a deficit around 12 million barrels a day is every time prices go down. Now we just got a spike. So it's going to accelerate that process. In the meantime we have a very motivated government to bring on more supply and reduce those prices. So that's deflation in commodities. I pointed out in natural gas. Natural gas right now $2.5 per MMB2 is about unchanged for 26 years since the end of 1999. It spikes, goes down. If it goes up too much, it goes back down. You see that trend in that cycle. So certainly from commodities, but all that matters is all this volatility we're seeing in crude oil and gold. It's very high. Gold volatility spiked to the highest since 2009 versus this S&P 500. It's a high since 2006. We've never seen that kind of volatile feel volatility without it trickling over the stock market much. So far so good. It's been wonderful. But one thing that's also happened is we've seen this collapse in the cryptos starting from last year's peak. That was a good leading indicator. Gold blasting off I think was a good leading indicator. And for that bottom line for postinflation deflation is just a backup in the stock market. For now that's not a problem. Remember it's only April. We're still way early in this year. >> According to some analysts, gold doesn't need the Fed to cut rates to move higher. What it needs is exactly what we already have right now. A Fed that's frozen, real wages that are shrinking, 13 consecutive months of downward payroll revisions, and a debt load that Fed chair Jerome Pow himself said will not end well. That's not a bearish take. Those are the Fed chair's own words. >> It's it's really important that we get back to we don't have to pay the debt down. We just need to to to have, you know, primary balance and and begin to have the economy actually growing better, growing more quickly than the economy. It will it will not end well if we don't do something fairly soon. >> When real economic conditions deteriorate and policy cannot respond, gold and silver have historically been where sophisticated investors go. Not paper gold, but physical metal you actually own. Now, I've been covering precious metals for a long time. I know the space. And if you're listening to the show, you're likely not new to the gold conversation as well. You've probably been pitched by a dozen gold dealers already. But here's what's different about Priority Gold. Today's sponsor, Priority Gold, they show you how to add physical gold and silver to your retirement portfolio tax and penalty-free. And they actually walk you through it. You get a free portfolio review with no pressure and no rush. They are not trying to close you on a call. They have thousands of five-star reviews from people who have been through the process and appreciated that approach. They handle all the paperwork and right now they're offering up to $10,000 in free silver on qualifying purchases. So scan the QR code here on the screen right now or click on the link in the description down below to get your free precious metals playbook. Pier Anduan's uh largest hedge fund went down 52% according to Bloomberg's report. uh this uh 52% in the first half of April on bullish oil bets that didn't work out. So oil went down in April not up. Now for those people this is this is my question for those people traders investors who are long b long and bullish oil who are expecting much higher prices either a the market is not pricing in accurately the risks involved in the war and so it you know it's basically inaccurately gone down if you if you make that assertion or two the uh the assumptions behind why oil should be higher are just wrong. So I'd like to I'd like to reiterate a book I led read decades ago called market wizards and one of the key persons in there was a guy named Charlie D. Franceski trading in treasury and bond futures. I knew him personally wasn't really considered a friend but I remember speaking to him a few times. His key theme was the only thing that matters is that number in your statement market is always right and yeah some people claim it's wrong and they bet against it but one thing I do like is when people uh forget about the rest of the market. So crude oil's popped up but we all see what crude oil crude oil is ability when it breaks rallies at this velocity to break things now we're seeing that in the global economy we're seeing seeing that in and we just see haven't seen equity market and that's the key thing I I feel bad for Mr. under but I need to send him that book and remember the lesson of the elasticity. The answers have changed. Crude oil does not stay up. Every time it gets to near 120, it goes back to 40. That's for two decades now. Now that's WTI and somewhat Brent. And I also pointed out what happened in natural gas. It gave you a good signal in US natural gas. It popped up to seven. Now it's back down to 2.5. But the key theme is what's happening the rest of the market. There's a pretty decent SS surplus of supply of corn in the US. What is corn? A bofuel? It's a number like people saying about there's no new refineries but it covers almost 15% of unled gas now not that but getting there there's a pretty significant excess supply of soybeans we have wheat and not as much but those key bofuel sources have futures curves that are somewhat backwardated just like crude oil so let's not put it in isolation I like to look at a broad commodity market and those are all fuel sources there's an abundant supply in this there's all the demand all the GDP estimate revisions for the whole world are heading downward. And the key thing about crude oil is it only goes up as much as it can and the higher it goes, the harder it falls. Natural gas just proved that in Q1. The fact that copper has still remained at all-time highs, what does that tell you about demand for oil? I'm looking at this and I'm thinking, well, if oil is high and there is no demand elasticity, meaning people will buy oil at whatever price that is set by the market, they have to consume oil. then perhaps expansion into other areas that will require raw materials and critical minerals like copper would go down. That doesn't seem to be the case per what the market is telling us. What do you think? So copper is on my above six you showed right there is on my potentially prudent short list because it is stuck. Supply demand um situation for copper has somewhat been alleviated. It wasn't in a deficit. Now it's somewhat surplus decent amount of supply globally. The key thing for copper to go up is bottom line is you need to see demand pull increasing demand pull out of China. So I put it between the declining bond yield in China which shows deflationary forces and the absolute prerequisite of copper goes up. This US stock market has to go up. So if you see that copper price right there, if you divide by the S&P 500, I just slapped three zeros off the S&P 500. It's basically has been the same of the copper price for almost 10 years. Then copper started lagging in 2023. So I look at copper as anybody who's bullish all the metals most particularly most notably copper you pre prereequisite is the stock market has to go up that to me is why switch over to my inordinate burden for copper now I do think the macro big picture everybody gets it um you know it's called electrification and decarbonization all that means demand for copper but those are things we've known for 5 years now it's just showing pretty significant divergent weakness versus beta versus a stock market it's a highly correlated economic ally sensitive metal and then I also look over entire industrial metal complex. I do the same kind of analysis. The only way that whole industrial metal complex can go up now is the stock market has to go up. Stock market drops 10% expect copper industrial metals to drop 20%. Any value at risk model I think that's appropriate does that. The thing is now that's David unique. It's the same for gold too. You can see the correlations lately because volatility is so high in gold. Gold's gone up so much. It got it got the highest ever versus copper for a little while ago. You got highest ever versus a bloomer commodity index. Highest in 40 years versus a basket of treasuries. Um and the highest ever versus a bloomer commodity index. Gold is just way stretched overdone and now it's a highly volatile spectate risk asset. If stock mark goes down, it's going to go down. You see why my focus is on the stock market. I just unfortunately and my mental value at risk models. >> All this stuff to be bullish every metal almost all of them on a macro picture including platinum and platinum stock market has to go up. Are you an equities analyst now? Then is that unfortunate this is because because you're an I say this facitiously because you're a commodities analyst but like you're rightly pointed out the the correlation is basically one between the S&P copper and gold for the last couple months and and you know look look at this V-shaped recovery here all assets going up and down together. So what's who's following what? Because if everything's just following the stock market then you have to be focused on where the S&P is going. So that's what I am a commodity strategist, but I focus on what matters for the market. And I like to say to people, if you're bullish metals, you got to be bullish the stock market. Sorry, that's just the way things are. When you get to 2.4 times GDP, that's the way life is. It's the highest since 1929 US, 1989 in Japan. That's just the way life is. It's how it's happening. Gold has kind of figured that out a little bit, but gold got too expensive. But that's just a fact. So here's another fact is some people sometimes claim, "Oh, you're too technical." And sometimes they claim, "Oh, you're too focused in the stock market." It's only because I focus on what matters for that commodity at the time. So right now the most significant factor is what I me for crude oil is what I mentioned earlier is we have the leader of the world's largest energy producer and net exporter of crude oil natural gas who wants lower energy prices and there's election November. That's paramount. It's part of the reason this invasion happened a few started a few months ago the US Iran war. Get it over with. Get it cleaned up before we get to midterms. We have to figure out the direction of the stock market. And you're looking at oil at $90 a barrel and the stock market still at all-time highs actually surpassing alltime highs. Can you write off the theory that higher oil prices are going to be detrimental for EPS earnings for uh for for the for the next quarter? >> Well, that's the key thing. Earnings are phenomenal. They've lagged a little bit. They've cured down a little, came down a little bit, but it's all predicated on stock market has to keep going up. It's all related. So I I'm I'm impressed how the markets look past crude oil up to 90, you know, up to 100 and backed off. But it's seen what I seen. It's seen, yeah, it's seen that elasticity I write about all the time. Crude oil, if it continues higher, it'll break everything, including itself. It's its own worst enemy. But it's just like me. You look forward to that, you know, where that puck's going. That December crude oil around 77 is probably where we're going to be or lower by the time we get the midterms or by the time these expire. But the bottom line is the stock market's not going to go down ever until it finally starts going down. That's why I have to look at it. At some point it will. Um but main thing I've been wrong on but there's also been the key themes that have really warning us. Bitcoin breaking down and cryptos breaking down peaking last year and still just basically hovering way underperforming the stock market on a volatility adjusted basis way underperforming. So very much of the signal there and what gold did last year by breaking out like that is telling you there's a major signals that all the the indications for a stock market peak are there. And the key theme I look at David is volatility is just too low for what the volatility you're seeing in this in gold and precious metals. So I look at this year is that my key theme remains stock market volatility will go up. Still been wrong on that way hide from the market hide in treasuries and just stay away pick your spot. So I look at say anytime that long bond can get near 5%. It cannot stay above. I think it's unlikely to stay above. I think there'll be duration buyers there. I looked at the key theme you mentioned copper as a potential prudent short around six. If it can stay above six, great. But if it, you know, breaks down, stock market breaks down, it's going to go down a lot harder harder. Silver, I knew initially above 100. It's a prudent potential short. Now that's dropped only 5 about 25% from that level. Bitcoin near 100,000. It got to 96,000. Now it's dropped about 25%. It's bouncing a little bit. Yes. But those are levels that I think are the leading indicators that are only going to stabilize if the stock market goes up. And if start goes down or they lead the way down, they're going to go down at the higher volatility ratio they typically do, which means much more. So I stick with that theme. Right now it's a wonderful environment. Remember it's only April and the key theme is there's extreme complacency in the stock market. Now a lot of people are hedging. But that's problem sometimes is when you get hedged and we got the VIX up to 30. That's great. You know, some of your long V positions kick in, but hedging is is difficult to manage. I like to just say sometimes to just get out, hang out in treasuries and wait for opportunities. Maybe the price, maybe the stock market's pricing in the fact that the Iran war doesn't really matter. That's one interpretation. Does it matter for you? >> Oh, absolutely. From a crude oil standpoint, I think what's happening though is I think it's going to end up and I think the market's looking at it is a bit of the battle of Bulge in World War II. Yes, that was a bit of an aberration and then it came back. Mr. Trump will get this figured out. It's basically his war now. I mean, it's a lot worse than I think he initially thought. And when the first invasion happened and then the leadership was killed, I thought that would be it. they'd capitulate, not close the straight. But, you know, just the fact that he's making statements that they don't have a navy, but they've been able to close the straight as people are looking over at him. This is a problem. And then what's happening with the polls? They're getting crushed. What's he going to do about that? He needs energy prices lower. How's that going to happen, David? So, this is very political, but it's also very fundamental. I just point out this is just an absolute opportunity for land man to bring in more supply and continue to do what they've been doing for at least a decade and that's pressuring all commodities with this excess surplus of energy and food production in the US that needs to be exported and I certainly mean crude oil, natural gas, corn, soybeans and wheat. >> Why is Bitcoin surging? By surging I mean it's gone up about uh 20% since the beginning of April. >> So the fact is Bitcoin's down 11% on the year on a one-year basis. is down 17% with the S&P 500 up 32%. On a 2-year basis, it's up 21% with the S&P 500 up 43%. It's performance absolutely sucks. And it started really with the advent of ETFs and Mr. Trump getting elected. Poof. That was the end of the glory days for Bitcoin. Now, the bottom line is bounces cuz by the by the time the invasion happened, it was down like five months in a row and it reached really good support. My key levels this year initially was around 94,000 for a very good support, 64,000 for very good I'm sorry, 94,000 for very good resistance, 64,000 for very good support and we're just trading within that range. But the bottom line is I look at this space is similar to copper although it's a bare market. It needs a stock market to go up but the whole crypto space is trading like it has unlimited supply and you think see that things from the like from the Bloomberg Galaxy crypto index. It's basically unchanged since 2021. S&P 500 is up what almost 100% since that time period. And it has a very high volatility only goes up when stock market goes up and when stock market goes down it goes down a lot more. It's just a poorly performing asset that's glory days are over and I think people just haven't figured it out yet. So it's great to have that bounce. I don't know how much high does it go. I viewed initially my prud and short level was around 94. I moved that down to 75. Now right now it's 77. So, it's a little bit above my second level, but it's still underperforming beta. And you have to look at it this way. If you're bullish this space, any cryptos, most nobly index or broad basket or Bitcoin, you almost have to be completely dependent on stock market going up for it to go back to those old glory days when people like Mr. Trump hated it. It's it's over. So that's the key thing is that's the one thing David I just loved being bullish and writing about it when the powers at be and our our president and Biden Trump won and and Biden didn't hated it and they did not see what was happening in the space and the whole base layer going to the dollar and the advent of crypto dollars and um stable coins all invested in treasuries but now that they've all figured it out poof trade's over we've gone up too much in price >> it is underperforming beta I mean only in the last couple weeks when the S&P started rising uh did Bitcoin start to outperform, but you know, you're looking at it year to date. It's down 11% like you said, the S&P is flattish, up about 4%. We we we we tend to think of Bitcoin as um risk on times two. I guess that narrative doesn't work anymore. >> Yeah. Well, it's over. It's the glory days for Bitcoin and cryptos are over. We're seeking a low price cure. I still think at least this year the next key supports around 50,000. I put 75 as the first prudent resistance and I think the whole low price curve is not going to be complete until it gets to around 10,000. That's also left from the Bloomberg Galaxy crypto index. It got to near 4,000. It's dropped 50% to 2,000. I think it's going to drop another 50% to 100,000. That's basically a random walk price for 5 years. And it looks very much like the S&P 500 overlaid with his 200 day moving average. Just a poorly performing asset. High volatility, high correlation. any institution who's in investing in this space and and in and in in the underlying and and doing it for a diversification standpoint. I'd love to sit in those meetings and think, what are you thinking? What are you watching? The best days are over. Let the purge happen and things like Dogecoin and Shibuinu are still worth billions of dollars and track nothing. What's purge that? So, I think we're part of a purge. It's the bounce and it's just going to take a little while to to extrapulate all that to to get through that. It's just a matter of time. Again, if stock market goes up, we've been able to bounce. But start rose goes down. I need to see some kind of signs that I won't be right on that call and I haven't seen anything yet. It's just bottom line like I mentioned one two-year basis certainly since 2021 the performance is just horrible. >> Just going back to oil for a minute. Do you think that we can bake in $1 per barrel higher permanently cuz that's the toll that the Iranians are charging for ships going through the street of Hormuz and it looks like the Americans are conceding to that for now. nothing. Virtually no rallies in commodities hardly ever permanent. So why is cocoa and orange juice some of the worst performing assets um and um commodities this year? Because they went up too much. It's just the way it works in commodities. It's the elasticity. The thing we started on this program, the bull market elasticity is the most significant theme in commodities. Even gold's too expensive now. And the key thing to remember is you have supply, demand, and price on the same model. When price shifts exponentially, supply goes up, demand goes down, prices adjust. Pluto right now is breaking things. And that excess of supply in the US is just ballooning. It takes time. I mean, it takes a year or so. But the average cost of production in the US is around $55 a barrel. On the screen, you see 93. You go out to DC, you see 77. That's why everything is backwardated. Not just crude oil, but soybeans and corn and natural gas or they're flat because these producers can bring in more every day. We have major motivation from this administration and this is even in the past it wasn't as motivated but they still brought in the supply and price right now is favorable to sell forward in the curve bring on supply and at the same time demand's getting crushed and one key theme about that Dave is when you see the price of gasoline jump 50% in such a short period of time and price of diesel drop jump almost 75% to almost near the alltime highs that's the grease of the economy that's just going to shut down the consump consumer and consumption and it's going to increases supply. >> Somebody tells me, "Hey, David, I want to switch my gas car to an electric car because oil is at $90 a barrel, WTI, uh, higher for Brent." >> What do I tell them? >> Rest of the world's doing it. I've I did it in 200, my Chevy Volts 2012, 2014 model. And key theme is I'm I'm enjoying this. The fact that the US has 100% tariffs on some of these very cheap, very good, very efficient EVs coming out of China points out what's happening with the paradigm shift in the world. Look what's happening with automakers in Germany and Japan and the economy in Germany. They are just getting crushed. The whole rest of the world are just saying, "Thank you very much. I'll take some of those BYDs." My colleagues I speak to overseas, I'm like, "Yeah, you see them everywhere. I've seen them on the road, so you can't see them here. We have the tariffs to protect our domestic industry, but it's don't understand the underestimate the overwhelming technology that gets a boost when prices jump like this. Um, so you know, there's different models, but just the fact that a lot of the rest of the world can get same kind of vehicle that I bought 12 years ago. I have a plug-in hybrid. It's a Chevy Volt, and it's basically you can get that from $10 to $20,000, and it has three times the range that my vehicle has, and it costs a lot less than I paid 12 years ago. That's where the techn is going. That's where maybe you know silver is going up a lot and copper is going a lot. But things like crude oil are just becoming like going the way of whale oil. Is gold is short potential short on your list? >> Yes, I I do think well it's diff it's different to say short gold and silver. Gold's ancient store value, but what's happened with the velocity of the rally we saw in gold and silver this year typically will put in a peak for decades. So, we could make a new high, but I think gold is likely to trade between 3,000 and 6,000 for a decade. And one key thing I want to remind people, I was on the sell side of that trade of gold being bullish gold in 201 up to 2011. And remember how great it looked in 2013 after it rallied and then hovered around 1500 for like 2 years and then collapsed. We could do that. But I think what it's going to do is going to drive people crazy for a long time. The best of the performance of gold is over. Most notably, silver. Remember what happens? Prices go exponentially. It shifts the whole metric and everybody will point out the fundamentals but that's always what happens in peaks and I have to put on my my relative value prudent investor hat and you know I've been gold bullish gold for decades particularly after 21 22 and 23 when it couldn't get above 2000 it finally did in 20ou in 2024 but now it's just run too far and um it's just the lessons of when price goes up that much and it gives you a gift to lighten up you're supposed to do that so I think it's stuck in a real long range firm something really really bad some kind of really bad debasement or inflation has to happen but to me typically this is part of that signal that happens after we get to that st that cycle of postinflation deflation >> seems like a lot of things have lost steam the software sector's down uh year to date um about >> 23% that's the IG uh IGV uh gold like you said is just trailing sideways so is silver uh oil um has lost steam since April early April We talked about that extensively. Bitcoin um is just underperforming like you mentioned. The only thing that's doing really well uh in terms of big indices is the S&P >> and the NASDAQ as well. I'm not talking about soybeans or other commodities, but yeah. How would you describe this phase that we're in? >> Well, we're we're we're in this phase that um I think towards the end of a bull cycle. Now, I've been saying that for a while. People get it. The signals are quite clear, but it's not going to end till it ends. And the next key theme, the next major catalyst for recession is some wealth reversion. We get to 2.4 times GDP. The lessons in life are unless you're very young and you have time to diversify, you don't want to be overweight, any market that that that's that expensive. And being in Florida, I just what it does, it sucks everybody in. It makes everybody think they're smart. It keeps going up until finally it stops. So that's what kind of I think what's going to happen in in the stock market is basically going to is what happened in the crypto market back in October. Remember it just took one day and it killed the sentiment. It's built it's been going down since now we're bouncing in a bare market but the signals are there and remember you know who really peaked the bitco the uh crypto market was Mr. Trump and I think he potentially can do that stock market too. All this bravado and cheerleading can make prices go too high, make people make the wrong decisions for the wrong reasons at the wrong levels and then it puts an enduring peak. So I view this as um near the end and it could who knows how long it could last. This could be like 1929 when it just kept running and running and running and collapsed in the last quarter of the year. Um could do that but either way I still say it's a year to be overweight treasuries and pick your spots to to be responsive selling and maybe responsive buying. The only thing I really found attractive to buy so far is that B long bond one gets near 5%. >> You're overweight treasuries in a year where people are expecting inflation to go up. Doesn't the tanker attract inflation expectations? >> Exactly. Well, that's exactly like Benjamin Darly says, but we generally anticipate seldom occurs. What was the sentiment for Bitcoin at the beginning of 2025 versus gold? So David, it was one of these key signals I love getting anidally. At the end of 2024 is actually before Mr. Trump got elected, I was at a conference. I pointed out how I was tilting towards gold away from Bitcoin. And one of these people actually older than me said, "I feel sorry for you." And I'm getting that same sentiment in precious metals just a few months ago and now in in in in stock market, you know, it just won't do anything but go up. But these are signals when you're supposed to just be prudent and stay away and be careful and even in gold. And that's why I say that 5% long bond's wonderful, but these are how things happen. Just key theme here is when we do get a little bit of normalization in the stock market if we so that 10% correction rate at the beginning of the year that was almost 25% of GDP. If you get just a 10% drop or 15 10% drop that stays down that's going to be the signal that's going to be everything is going to follow it in terms of deflation. But we're not there yet. It hasn't happened. It's not going to happen ever. And that means at some point it will. I think it's going to be this year and so far it's only April. >> All right. Final 30 seconds. We're going to do a 30 second speed round now. Mike, uh, $10,000 gold or $10,000 Bitcoin. What's more likely? >> 10,000 Bitcoin. >> Okay. Uh, oil back down to $60 or $120? >> 60. >> The 10-year Treasury yield 4.3%. Uh, what's more likely? 4% or 5%. >> 3.9. >> 3.9. Will the Fed fund Will the Fed funds rate go down this year, stay the same, or up? >> And it's going to go with the stock market. Down with the stock market and not change much if stock market keeps going up. >> Inflation at 3.5 by the end of the year or three? Uh, two. >> Wow. Okay, there's a headline. Um, and finally, uh, would you be in uh, overweight tech stocks or underweight right now? >> Underweight virtually every risk asset in overweight treasuries. >> Okay, thanks very much, Mike. Great to talk to you as always. That was a lot of fun. Where can we get where can we follow you to get the latest updates >> on your show, David. Much appreciate being on. I'm on the Bloomberg terminal on X at Mike Mcloone 11 and on LinkedIn, senior commodity strategist Bloomberg Intelligence, Mike McLeone. and thanks for having me on. >> You've got um quite a number of new followers on X. 78 almost 80,000 followers on X. So uh make sure to smash that follow button for Mike Mclo's account. Get them up to 80,000 this weekend. Thanks a lot, Mike. Mr. Mcloone. Appreciate it. We'll speak again next time. >> Thank you. >> Thank you for watching. Don't forget to like and subscribe.
'It's Over': Strategist Reveals Which Assets Are About To Crash | Mike McGlone
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Transcript
If you're bullish metals, you got to be bullish the stock market. Sorry, that's just the way things are. When you get to 2.4 times GDP, that's the way life is. In that December crude oil future right now, it's $77. I fully expect it to be closer to 50 by the time we get to midterms. Well, it's over. It's the glory days for Bitcoin and cryptos are over. Gold is just way stretched, overdone, and now it's a highly volatile spectate risk asset. The stock market goes down, it's going to go down. You see why my focus is on the stock market. >> Mike McLean joins us once more. He's a senior commodity strategist at Bloomberg Intelligence. And we're going to be talking about his outlook on inflation, whether or not we're in an inflationary or deflationary trade right now as we speak, Fed monetary policy, a long end of the curve for the bond market, what's going to happen, what's going to happen to commodities, gold, silver, oil. Welcome back to the show. Good to see you, Mike. >> Hello, David. It's good to be back. Thanks for having me. >> Key risk you're watching for this week as we're speaking on the 24th of Friday of of April. Well, I'm a commodity guy and um definitely all about crude oil right now. It's Friday. The good news is the crude oil is actually down. So, the market's not pricing in more weekend risk. But it's showing a market that um is proving one of my key themes in commodities. And that is the bull market in commodities, not in prices, it's in elasticity. I mean, the ability or the inability for prices to stay up after going up. And one good example is US natural gas. It was up 100% on the year. got to near $7 per mm BTU, just above 7. That was a front contract. And as we speak on Friday, April 24th, it's 2.5. It's the same thing it did in 2022 to 23. It led everything down in terms of crude oil, corn, and soybeans, and wheat, everything that pumped went down, and natural gas led the way. And I think it's going to do that again this year. It's it just reiterates my key theme is markets are bullish crude oil for a good reason. Right now, crude oil is up for a good reason, but it's going to accentuate those those themes and those trends that really kicked in when Russia invaded Ukraine. And that is technology replacing crude oil and then surplus of supply versus demand in the US and Canada and a whole western hemisphere to continually just balloon. >> Crude oil is currently sitting at $91 an ounce a barrel rather. Now Mike, the question is whether or not inflation or deflation is the name of the game. You've been calling for deflation for quite some time. Inflation now seems to be top of mind for investors, economists, and the Federal Reserve alike. As the latest CPI print went up, not down. Now, here's the other side of the story, though. If oil stays high, we could see demand destruction from consumers, which means they spend less, which means deflation. What's more likely in the near term? I'm thinking this year will be fill or kill for my key theme of postinflation deflation. Following what's happening in China, 1.76 is their tenure note yield. That's pretty severe deflation. But what happens typically is when you get inflated markets like this, you mentioned what happens. We're going to have the Fed, we'll see demand destruction. The most significant thing for deflation is wealth reversion. Now, we're seeing the opposite this year so far. Stock market was down quickly and right back up. It doesn't go down. That's your significant trigger. We're nowhere near the deflation we're going to get eventually. But this year's a key trigger. And remember, this really much very much happened in 2008. It was one of my key signals. We were heading towards a deflationary environment. In July of 2008, CPI peaked around 5.6% with WTI around 147. One month's crude oil and everything just spiked and then anything collapsed. It was that inflation that that went to deflation. I see parallels this year, most notably in the rest of the world. Now we have things like gasoline and gas oil and most notably um distill it products refined products in the rest of the world and Europe and a lot of Asia spiking which is really curtailing that demand. Um and there's for good reason. Obviously this trade is still closed. That's I think markets looking at as a bit of a battle bulge. But in this country, we're seeing not seeing signs of it yet, but it's classic signs. When you have um things like gasoline jump over 50%, unled gas, diesel drop rally almost 75%. Um that cuts off people's um capital budgeting decisions and not just people, but their their investment decisions and capital budgeting and it makes people pull back. Now, we haven't seen that yet. Not certainly not seen in the stock market, but I think it's going to happen. The bottom line for me from a commodity standpoint is that what I pointed out about elasticity prices just don't stay up. So one thing that's really happened this year is we got crude oil back above 100 as we speak fronts at 93. But you got to look where this puck is going and that's I keep honing on that in that December crude oil future. Right now it's $77. I fully expect it to be closer to 50 by the time we get to midterms. And the bottom line is you have to think to yourself as we have the leader of the world's largest energy producer, net exporter of crude oil and the largest exporter of LNG natural gas wants prices to be lower, wants energy prices to be lower, wants inflation to lower by the time we get to midterms. I think he has a good ability to do that. Trends are in his favor. He might tweak a few things to make that happen. But it's just that unique statement to be able to make that. That's all that matters. I think it's going to happen. So I just point out there has been a major trend. I've been watching for at least a decade in all commodities and that is the um increasing surplus of supply versus demand in crude oil and liquid fuels in US and Canada. Now it's around 8 million billions barrels a day. And the only thing that's really curtailed that trend that's just is which was really peaked just before 2008 right around 2007 with a deficit around 12 million barrels a day is every time prices go down. Now we just got a spike. So it's going to accelerate that process. In the meantime we have a very motivated government to bring on more supply and reduce those prices. So that's deflation in commodities. I pointed out in natural gas. Natural gas right now $2.5 per MMB2 is about unchanged for 26 years since the end of 1999. It spikes, goes down. If it goes up too much, it goes back down. You see that trend in that cycle. So certainly from commodities, but all that matters is all this volatility we're seeing in crude oil and gold. It's very high. Gold volatility spiked to the highest since 2009 versus this S&P 500. It's a high since 2006. We've never seen that kind of volatile feel volatility without it trickling over the stock market much. So far so good. It's been wonderful. But one thing that's also happened is we've seen this collapse in the cryptos starting from last year's peak. That was a good leading indicator. Gold blasting off I think was a good leading indicator. And for that bottom line for postinflation deflation is just a backup in the stock market. For now that's not a problem. Remember it's only April. We're still way early in this year. >> According to some analysts, gold doesn't need the Fed to cut rates to move higher. What it needs is exactly what we already have right now. A Fed that's frozen, real wages that are shrinking, 13 consecutive months of downward payroll revisions, and a debt load that Fed chair Jerome Pow himself said will not end well. That's not a bearish take. Those are the Fed chair's own words. >> It's it's really important that we get back to we don't have to pay the debt down. We just need to to to have, you know, primary balance and and begin to have the economy actually growing better, growing more quickly than the economy. It will it will not end well if we don't do something fairly soon. >> When real economic conditions deteriorate and policy cannot respond, gold and silver have historically been where sophisticated investors go. Not paper gold, but physical metal you actually own. Now, I've been covering precious metals for a long time. I know the space. And if you're listening to the show, you're likely not new to the gold conversation as well. You've probably been pitched by a dozen gold dealers already. But here's what's different about Priority Gold. Today's sponsor, Priority Gold, they show you how to add physical gold and silver to your retirement portfolio tax and penalty-free. And they actually walk you through it. You get a free portfolio review with no pressure and no rush. They are not trying to close you on a call. They have thousands of five-star reviews from people who have been through the process and appreciated that approach. They handle all the paperwork and right now they're offering up to $10,000 in free silver on qualifying purchases. So scan the QR code here on the screen right now or click on the link in the description down below to get your free precious metals playbook. Pier Anduan's uh largest hedge fund went down 52% according to Bloomberg's report. uh this uh 52% in the first half of April on bullish oil bets that didn't work out. So oil went down in April not up. Now for those people this is this is my question for those people traders investors who are long b long and bullish oil who are expecting much higher prices either a the market is not pricing in accurately the risks involved in the war and so it you know it's basically inaccurately gone down if you if you make that assertion or two the uh the assumptions behind why oil should be higher are just wrong. So I'd like to I'd like to reiterate a book I led read decades ago called market wizards and one of the key persons in there was a guy named Charlie D. Franceski trading in treasury and bond futures. I knew him personally wasn't really considered a friend but I remember speaking to him a few times. His key theme was the only thing that matters is that number in your statement market is always right and yeah some people claim it's wrong and they bet against it but one thing I do like is when people uh forget about the rest of the market. So crude oil's popped up but we all see what crude oil crude oil is ability when it breaks rallies at this velocity to break things now we're seeing that in the global economy we're seeing seeing that in and we just see haven't seen equity market and that's the key thing I I feel bad for Mr. under but I need to send him that book and remember the lesson of the elasticity. The answers have changed. Crude oil does not stay up. Every time it gets to near 120, it goes back to 40. That's for two decades now. Now that's WTI and somewhat Brent. And I also pointed out what happened in natural gas. It gave you a good signal in US natural gas. It popped up to seven. Now it's back down to 2.5. But the key theme is what's happening the rest of the market. There's a pretty decent SS surplus of supply of corn in the US. What is corn? A bofuel? It's a number like people saying about there's no new refineries but it covers almost 15% of unled gas now not that but getting there there's a pretty significant excess supply of soybeans we have wheat and not as much but those key bofuel sources have futures curves that are somewhat backwardated just like crude oil so let's not put it in isolation I like to look at a broad commodity market and those are all fuel sources there's an abundant supply in this there's all the demand all the GDP estimate revisions for the whole world are heading downward. And the key thing about crude oil is it only goes up as much as it can and the higher it goes, the harder it falls. Natural gas just proved that in Q1. The fact that copper has still remained at all-time highs, what does that tell you about demand for oil? I'm looking at this and I'm thinking, well, if oil is high and there is no demand elasticity, meaning people will buy oil at whatever price that is set by the market, they have to consume oil. then perhaps expansion into other areas that will require raw materials and critical minerals like copper would go down. That doesn't seem to be the case per what the market is telling us. What do you think? So copper is on my above six you showed right there is on my potentially prudent short list because it is stuck. Supply demand um situation for copper has somewhat been alleviated. It wasn't in a deficit. Now it's somewhat surplus decent amount of supply globally. The key thing for copper to go up is bottom line is you need to see demand pull increasing demand pull out of China. So I put it between the declining bond yield in China which shows deflationary forces and the absolute prerequisite of copper goes up. This US stock market has to go up. So if you see that copper price right there, if you divide by the S&P 500, I just slapped three zeros off the S&P 500. It's basically has been the same of the copper price for almost 10 years. Then copper started lagging in 2023. So I look at copper as anybody who's bullish all the metals most particularly most notably copper you pre prereequisite is the stock market has to go up that to me is why switch over to my inordinate burden for copper now I do think the macro big picture everybody gets it um you know it's called electrification and decarbonization all that means demand for copper but those are things we've known for 5 years now it's just showing pretty significant divergent weakness versus beta versus a stock market it's a highly correlated economic ally sensitive metal and then I also look over entire industrial metal complex. I do the same kind of analysis. The only way that whole industrial metal complex can go up now is the stock market has to go up. Stock market drops 10% expect copper industrial metals to drop 20%. Any value at risk model I think that's appropriate does that. The thing is now that's David unique. It's the same for gold too. You can see the correlations lately because volatility is so high in gold. Gold's gone up so much. It got it got the highest ever versus copper for a little while ago. You got highest ever versus a bloomer commodity index. Highest in 40 years versus a basket of treasuries. Um and the highest ever versus a bloomer commodity index. Gold is just way stretched overdone and now it's a highly volatile spectate risk asset. If stock mark goes down, it's going to go down. You see why my focus is on the stock market. I just unfortunately and my mental value at risk models. >> All this stuff to be bullish every metal almost all of them on a macro picture including platinum and platinum stock market has to go up. Are you an equities analyst now? Then is that unfortunate this is because because you're an I say this facitiously because you're a commodities analyst but like you're rightly pointed out the the correlation is basically one between the S&P copper and gold for the last couple months and and you know look look at this V-shaped recovery here all assets going up and down together. So what's who's following what? Because if everything's just following the stock market then you have to be focused on where the S&P is going. So that's what I am a commodity strategist, but I focus on what matters for the market. And I like to say to people, if you're bullish metals, you got to be bullish the stock market. Sorry, that's just the way things are. When you get to 2.4 times GDP, that's the way life is. It's the highest since 1929 US, 1989 in Japan. That's just the way life is. It's how it's happening. Gold has kind of figured that out a little bit, but gold got too expensive. But that's just a fact. So here's another fact is some people sometimes claim, "Oh, you're too technical." And sometimes they claim, "Oh, you're too focused in the stock market." It's only because I focus on what matters for that commodity at the time. So right now the most significant factor is what I me for crude oil is what I mentioned earlier is we have the leader of the world's largest energy producer and net exporter of crude oil natural gas who wants lower energy prices and there's election November. That's paramount. It's part of the reason this invasion happened a few started a few months ago the US Iran war. Get it over with. Get it cleaned up before we get to midterms. We have to figure out the direction of the stock market. And you're looking at oil at $90 a barrel and the stock market still at all-time highs actually surpassing alltime highs. Can you write off the theory that higher oil prices are going to be detrimental for EPS earnings for uh for for the for the next quarter? >> Well, that's the key thing. Earnings are phenomenal. They've lagged a little bit. They've cured down a little, came down a little bit, but it's all predicated on stock market has to keep going up. It's all related. So I I'm I'm impressed how the markets look past crude oil up to 90, you know, up to 100 and backed off. But it's seen what I seen. It's seen, yeah, it's seen that elasticity I write about all the time. Crude oil, if it continues higher, it'll break everything, including itself. It's its own worst enemy. But it's just like me. You look forward to that, you know, where that puck's going. That December crude oil around 77 is probably where we're going to be or lower by the time we get the midterms or by the time these expire. But the bottom line is the stock market's not going to go down ever until it finally starts going down. That's why I have to look at it. At some point it will. Um but main thing I've been wrong on but there's also been the key themes that have really warning us. Bitcoin breaking down and cryptos breaking down peaking last year and still just basically hovering way underperforming the stock market on a volatility adjusted basis way underperforming. So very much of the signal there and what gold did last year by breaking out like that is telling you there's a major signals that all the the indications for a stock market peak are there. And the key theme I look at David is volatility is just too low for what the volatility you're seeing in this in gold and precious metals. So I look at this year is that my key theme remains stock market volatility will go up. Still been wrong on that way hide from the market hide in treasuries and just stay away pick your spot. So I look at say anytime that long bond can get near 5%. It cannot stay above. I think it's unlikely to stay above. I think there'll be duration buyers there. I looked at the key theme you mentioned copper as a potential prudent short around six. If it can stay above six, great. But if it, you know, breaks down, stock market breaks down, it's going to go down a lot harder harder. Silver, I knew initially above 100. It's a prudent potential short. Now that's dropped only 5 about 25% from that level. Bitcoin near 100,000. It got to 96,000. Now it's dropped about 25%. It's bouncing a little bit. Yes. But those are levels that I think are the leading indicators that are only going to stabilize if the stock market goes up. And if start goes down or they lead the way down, they're going to go down at the higher volatility ratio they typically do, which means much more. So I stick with that theme. Right now it's a wonderful environment. Remember it's only April and the key theme is there's extreme complacency in the stock market. Now a lot of people are hedging. But that's problem sometimes is when you get hedged and we got the VIX up to 30. That's great. You know, some of your long V positions kick in, but hedging is is difficult to manage. I like to just say sometimes to just get out, hang out in treasuries and wait for opportunities. Maybe the price, maybe the stock market's pricing in the fact that the Iran war doesn't really matter. That's one interpretation. Does it matter for you? >> Oh, absolutely. From a crude oil standpoint, I think what's happening though is I think it's going to end up and I think the market's looking at it is a bit of the battle of Bulge in World War II. Yes, that was a bit of an aberration and then it came back. Mr. Trump will get this figured out. It's basically his war now. I mean, it's a lot worse than I think he initially thought. And when the first invasion happened and then the leadership was killed, I thought that would be it. they'd capitulate, not close the straight. But, you know, just the fact that he's making statements that they don't have a navy, but they've been able to close the straight as people are looking over at him. This is a problem. And then what's happening with the polls? They're getting crushed. What's he going to do about that? He needs energy prices lower. How's that going to happen, David? So, this is very political, but it's also very fundamental. I just point out this is just an absolute opportunity for land man to bring in more supply and continue to do what they've been doing for at least a decade and that's pressuring all commodities with this excess surplus of energy and food production in the US that needs to be exported and I certainly mean crude oil, natural gas, corn, soybeans and wheat. >> Why is Bitcoin surging? By surging I mean it's gone up about uh 20% since the beginning of April. >> So the fact is Bitcoin's down 11% on the year on a one-year basis. is down 17% with the S&P 500 up 32%. On a 2-year basis, it's up 21% with the S&P 500 up 43%. It's performance absolutely sucks. And it started really with the advent of ETFs and Mr. Trump getting elected. Poof. That was the end of the glory days for Bitcoin. Now, the bottom line is bounces cuz by the by the time the invasion happened, it was down like five months in a row and it reached really good support. My key levels this year initially was around 94,000 for a very good support, 64,000 for very good I'm sorry, 94,000 for very good resistance, 64,000 for very good support and we're just trading within that range. But the bottom line is I look at this space is similar to copper although it's a bare market. It needs a stock market to go up but the whole crypto space is trading like it has unlimited supply and you think see that things from the like from the Bloomberg Galaxy crypto index. It's basically unchanged since 2021. S&P 500 is up what almost 100% since that time period. And it has a very high volatility only goes up when stock market goes up and when stock market goes down it goes down a lot more. It's just a poorly performing asset that's glory days are over and I think people just haven't figured it out yet. So it's great to have that bounce. I don't know how much high does it go. I viewed initially my prud and short level was around 94. I moved that down to 75. Now right now it's 77. So, it's a little bit above my second level, but it's still underperforming beta. And you have to look at it this way. If you're bullish this space, any cryptos, most nobly index or broad basket or Bitcoin, you almost have to be completely dependent on stock market going up for it to go back to those old glory days when people like Mr. Trump hated it. It's it's over. So that's the key thing is that's the one thing David I just loved being bullish and writing about it when the powers at be and our our president and Biden Trump won and and Biden didn't hated it and they did not see what was happening in the space and the whole base layer going to the dollar and the advent of crypto dollars and um stable coins all invested in treasuries but now that they've all figured it out poof trade's over we've gone up too much in price >> it is underperforming beta I mean only in the last couple weeks when the S&P started rising uh did Bitcoin start to outperform, but you know, you're looking at it year to date. It's down 11% like you said, the S&P is flattish, up about 4%. We we we we tend to think of Bitcoin as um risk on times two. I guess that narrative doesn't work anymore. >> Yeah. Well, it's over. It's the glory days for Bitcoin and cryptos are over. We're seeking a low price cure. I still think at least this year the next key supports around 50,000. I put 75 as the first prudent resistance and I think the whole low price curve is not going to be complete until it gets to around 10,000. That's also left from the Bloomberg Galaxy crypto index. It got to near 4,000. It's dropped 50% to 2,000. I think it's going to drop another 50% to 100,000. That's basically a random walk price for 5 years. And it looks very much like the S&P 500 overlaid with his 200 day moving average. Just a poorly performing asset. High volatility, high correlation. any institution who's in investing in this space and and in and in in the underlying and and doing it for a diversification standpoint. I'd love to sit in those meetings and think, what are you thinking? What are you watching? The best days are over. Let the purge happen and things like Dogecoin and Shibuinu are still worth billions of dollars and track nothing. What's purge that? So, I think we're part of a purge. It's the bounce and it's just going to take a little while to to extrapulate all that to to get through that. It's just a matter of time. Again, if stock market goes up, we've been able to bounce. But start rose goes down. I need to see some kind of signs that I won't be right on that call and I haven't seen anything yet. It's just bottom line like I mentioned one two-year basis certainly since 2021 the performance is just horrible. >> Just going back to oil for a minute. Do you think that we can bake in $1 per barrel higher permanently cuz that's the toll that the Iranians are charging for ships going through the street of Hormuz and it looks like the Americans are conceding to that for now. nothing. Virtually no rallies in commodities hardly ever permanent. So why is cocoa and orange juice some of the worst performing assets um and um commodities this year? Because they went up too much. It's just the way it works in commodities. It's the elasticity. The thing we started on this program, the bull market elasticity is the most significant theme in commodities. Even gold's too expensive now. And the key thing to remember is you have supply, demand, and price on the same model. When price shifts exponentially, supply goes up, demand goes down, prices adjust. Pluto right now is breaking things. And that excess of supply in the US is just ballooning. It takes time. I mean, it takes a year or so. But the average cost of production in the US is around $55 a barrel. On the screen, you see 93. You go out to DC, you see 77. That's why everything is backwardated. Not just crude oil, but soybeans and corn and natural gas or they're flat because these producers can bring in more every day. We have major motivation from this administration and this is even in the past it wasn't as motivated but they still brought in the supply and price right now is favorable to sell forward in the curve bring on supply and at the same time demand's getting crushed and one key theme about that Dave is when you see the price of gasoline jump 50% in such a short period of time and price of diesel drop jump almost 75% to almost near the alltime highs that's the grease of the economy that's just going to shut down the consump consumer and consumption and it's going to increases supply. >> Somebody tells me, "Hey, David, I want to switch my gas car to an electric car because oil is at $90 a barrel, WTI, uh, higher for Brent." >> What do I tell them? >> Rest of the world's doing it. I've I did it in 200, my Chevy Volts 2012, 2014 model. And key theme is I'm I'm enjoying this. The fact that the US has 100% tariffs on some of these very cheap, very good, very efficient EVs coming out of China points out what's happening with the paradigm shift in the world. Look what's happening with automakers in Germany and Japan and the economy in Germany. They are just getting crushed. The whole rest of the world are just saying, "Thank you very much. I'll take some of those BYDs." My colleagues I speak to overseas, I'm like, "Yeah, you see them everywhere. I've seen them on the road, so you can't see them here. We have the tariffs to protect our domestic industry, but it's don't understand the underestimate the overwhelming technology that gets a boost when prices jump like this. Um, so you know, there's different models, but just the fact that a lot of the rest of the world can get same kind of vehicle that I bought 12 years ago. I have a plug-in hybrid. It's a Chevy Volt, and it's basically you can get that from $10 to $20,000, and it has three times the range that my vehicle has, and it costs a lot less than I paid 12 years ago. That's where the techn is going. That's where maybe you know silver is going up a lot and copper is going a lot. But things like crude oil are just becoming like going the way of whale oil. Is gold is short potential short on your list? >> Yes, I I do think well it's diff it's different to say short gold and silver. Gold's ancient store value, but what's happened with the velocity of the rally we saw in gold and silver this year typically will put in a peak for decades. So, we could make a new high, but I think gold is likely to trade between 3,000 and 6,000 for a decade. And one key thing I want to remind people, I was on the sell side of that trade of gold being bullish gold in 201 up to 2011. And remember how great it looked in 2013 after it rallied and then hovered around 1500 for like 2 years and then collapsed. We could do that. But I think what it's going to do is going to drive people crazy for a long time. The best of the performance of gold is over. Most notably, silver. Remember what happens? Prices go exponentially. It shifts the whole metric and everybody will point out the fundamentals but that's always what happens in peaks and I have to put on my my relative value prudent investor hat and you know I've been gold bullish gold for decades particularly after 21 22 and 23 when it couldn't get above 2000 it finally did in 20ou in 2024 but now it's just run too far and um it's just the lessons of when price goes up that much and it gives you a gift to lighten up you're supposed to do that so I think it's stuck in a real long range firm something really really bad some kind of really bad debasement or inflation has to happen but to me typically this is part of that signal that happens after we get to that st that cycle of postinflation deflation >> seems like a lot of things have lost steam the software sector's down uh year to date um about >> 23% that's the IG uh IGV uh gold like you said is just trailing sideways so is silver uh oil um has lost steam since April early April We talked about that extensively. Bitcoin um is just underperforming like you mentioned. The only thing that's doing really well uh in terms of big indices is the S&P >> and the NASDAQ as well. I'm not talking about soybeans or other commodities, but yeah. How would you describe this phase that we're in? >> Well, we're we're we're in this phase that um I think towards the end of a bull cycle. Now, I've been saying that for a while. People get it. The signals are quite clear, but it's not going to end till it ends. And the next key theme, the next major catalyst for recession is some wealth reversion. We get to 2.4 times GDP. The lessons in life are unless you're very young and you have time to diversify, you don't want to be overweight, any market that that that's that expensive. And being in Florida, I just what it does, it sucks everybody in. It makes everybody think they're smart. It keeps going up until finally it stops. So that's what kind of I think what's going to happen in in the stock market is basically going to is what happened in the crypto market back in October. Remember it just took one day and it killed the sentiment. It's built it's been going down since now we're bouncing in a bare market but the signals are there and remember you know who really peaked the bitco the uh crypto market was Mr. Trump and I think he potentially can do that stock market too. All this bravado and cheerleading can make prices go too high, make people make the wrong decisions for the wrong reasons at the wrong levels and then it puts an enduring peak. So I view this as um near the end and it could who knows how long it could last. This could be like 1929 when it just kept running and running and running and collapsed in the last quarter of the year. Um could do that but either way I still say it's a year to be overweight treasuries and pick your spots to to be responsive selling and maybe responsive buying. The only thing I really found attractive to buy so far is that B long bond one gets near 5%. >> You're overweight treasuries in a year where people are expecting inflation to go up. Doesn't the tanker attract inflation expectations? >> Exactly. Well, that's exactly like Benjamin Darly says, but we generally anticipate seldom occurs. What was the sentiment for Bitcoin at the beginning of 2025 versus gold? So David, it was one of these key signals I love getting anidally. At the end of 2024 is actually before Mr. Trump got elected, I was at a conference. I pointed out how I was tilting towards gold away from Bitcoin. And one of these people actually older than me said, "I feel sorry for you." And I'm getting that same sentiment in precious metals just a few months ago and now in in in in stock market, you know, it just won't do anything but go up. But these are signals when you're supposed to just be prudent and stay away and be careful and even in gold. And that's why I say that 5% long bond's wonderful, but these are how things happen. Just key theme here is when we do get a little bit of normalization in the stock market if we so that 10% correction rate at the beginning of the year that was almost 25% of GDP. If you get just a 10% drop or 15 10% drop that stays down that's going to be the signal that's going to be everything is going to follow it in terms of deflation. But we're not there yet. It hasn't happened. It's not going to happen ever. And that means at some point it will. I think it's going to be this year and so far it's only April. >> All right. Final 30 seconds. We're going to do a 30 second speed round now. Mike, uh, $10,000 gold or $10,000 Bitcoin. What's more likely? >> 10,000 Bitcoin. >> Okay. Uh, oil back down to $60 or $120? >> 60. >> The 10-year Treasury yield 4.3%. Uh, what's more likely? 4% or 5%. >> 3.9. >> 3.9. Will the Fed fund Will the Fed funds rate go down this year, stay the same, or up? >> And it's going to go with the stock market. Down with the stock market and not change much if stock market keeps going up. >> Inflation at 3.5 by the end of the year or three? Uh, two. >> Wow. Okay, there's a headline. Um, and finally, uh, would you be in uh, overweight tech stocks or underweight right now? >> Underweight virtually every risk asset in overweight treasuries. >> Okay, thanks very much, Mike. Great to talk to you as always. That was a lot of fun. Where can we get where can we follow you to get the latest updates >> on your show, David. Much appreciate being on. I'm on the Bloomberg terminal on X at Mike Mcloone 11 and on LinkedIn, senior commodity strategist Bloomberg Intelligence, Mike McLeone. and thanks for having me on. >> You've got um quite a number of new followers on X. 78 almost 80,000 followers on X. So uh make sure to smash that follow button for Mike Mclo's account. Get them up to 80,000 this weekend. Thanks a lot, Mike. Mr. Mcloone. Appreciate it. We'll speak again next time. >> Thank you. >> Thank you for watching. Don't forget to like and subscribe.