MacroVoices #486 David Rosenberg: Navigating Choppy Waters
Summary
Market Valuation: Rosenberg argues the equity risk premium near zero implies stocks are being treated as riskless, favoring caution on equities at a 22x multiple versus 4%+ risk-free rates.
US Treasuries: He is bullish on Treasuries, citing disinflation, recession risk, and favorable convexity with asymmetric upside if yields decline ~70 bps.
Inflation Outlook: Tariffs may lift price levels but softer labor markets and disinflation in services point to lower inflation into next year, supporting bond bullishness.
Gold: Strong central-bank demand, portfolio diversification, and macro hedging keep Rosenberg bullish on bullion; he also notes relative value in gold equities.
Weak Dollar: A notable breakdown in the DXY suggests a continuing correction; bonds and USD are signaling a weaker growth outlook than equities imply.
Crude Oil: Near-term bearish bias on oil due to potential OPEC+ supply and cooling global growth, though hosts eye buy-the-dip risks tied to renewed Mideast escalation.
Uranium: Spot uranium strength and a trend shift higher suggest a new bull phase; hosts favor accumulating exposure on dips ahead of seasonal demand.
Recession Risk: Rosenberg sees rising recession odds as refinancing bites, housing cools, and labor-market slack builds, questioning multiple-driven equity gains.
Transcript
[Music] This is Macrovoices, the free weekly financial podcast targeting professional finance, high- netw worth individuals, family offices, and other sophisticated investors. Macrovoices is all about the brightest minds in the world of finance and macroeconomics, telling it like it is, bullish or bearish, no holds barred. Now, here are your hosts, Eric Townsend and Patrick Serzna. Macrovoic's episode 486 was produced on June 26th, 2025. I'm Eric Townsend. Rosenberg Research founder David Rosenberg returns as this week's feature interview guest. Rosie and I will discuss the equity market outlook, inflation, precious metals, the US dollar, and much more. and I'm Patrick Sesna with the macro scoreboard week overweek as of the close of Wednesday, June 25th, 2025. The S&P 500 index up 187 basis points, trading at 6,092. It's now directly testing the previous all-time highs, begging the question, so what comes next? We will take a closer look at that chart and the key technical levels to watch in the postgame segment. The US dollar index down 125 basis points trading at 9770 clear breakdown to multi-year lows but is asking the question is the floodgate now open the July WTI crude oil contract down basis points trading at 6492 the perceived deescalation of Middle Eastern tensions is pulling that oil risk premium right out the July arbove gasoline also down 965 basis points to 206. The August gold contract down 121 basis points to 3343 consolidating towards that 3,300 support line. The July copper contract up 144 basis points trading at 492. Copper is breaking out. But what's next? Uranium up 530 basis points trading at 7850. Uranium continues to build on the week-overweek gains and the US 10-year Treasury yield down 11 basis points trading at 428. The key news to watch this week is the core PC price index. And next week we have the ISM manufacturing and services PMIs and very important US jobs numbers. This week's feature interview guest is David Rosenberg. Eric and David discuss impacts of geopolitics, outlook on inflation and tariffs, the US dollar, precious metals, and more. Eric's interview with David Rosenberg is coming up as Macrovoices continues right here at macrovoices.com. [Music] And now with this week's special guest, here's your host, Eric Townsen. Joining me now is Rosenberg Research founder David Rosenberg. Rosie, great to have you back on the show. It's been quite a while. Let's dive right into the obvious. Um, you know, everybody's talking about this market. You and I have had our reservations for the last couple of years, but it keeps charging higher and higher. It seems like nothing wants to stop it. What do you think? I think that what we always have to do is try and assess what the market is telling us in terms of its view of the economy and earnings and interest rates so on and so forth and what your own view is and that's how you can map out whether or not you want to be long or short or anything in between. So what is the market telling us? The market is telling us that once we get to this uh July 9th deadline on the reciprocal tariffs, we're going to be met with yet another reprieve uh from President Trump andor that we will see a flurry of deals coming to the four which haven't happened yet. But the market's telling you that it expects that the tariff file is going to be in the rearview mirror if it's not already in the rearview mirror. Uh you when it comes to the geopolitics, the market is clearly telling you that the fear that there would be either a blockade of the straight of Hormuz or that the IDF was somehow going to take out some of Iran's oil export terminals. That didn't happen. Even when the US went after the nuclear facilities, energy, which of course is their economic lifeblood, was left untouched. So you removed that worry. Uh and everybody believes that this war between Israel and Iran, just like the terror file, is in the rearview mirror. And of course how this relates most importantly on this point of the geopolitics is ultimately what it means for oil prices. So oil prices coming back down is viewed as basically a tax cut for the US economy and for the global economy. So that part we can easily explain. There's this prevailing view that with Donald Trump's popularity on the rise now that he can claim a win from that uh dramatic strike in Iran last Saturday that now that he has the political tailwinds that he's going to have a much easier time uh getting his uh big beautiful budget bill through Congress. So all these uncertainties in the market's mind uh have been put to bed that no tariff war between Israel and Iran is now contained and the road towards call it fiscal stimulus if you want is intact. Fiscal deficits themselves be damned but that the budget bill is viewed very positively by the marketplace. So that's what we have in our hands. And all the while the market believes that we're not going to have a recession. And the market believes that even without the recession, uh inflation is going to fall sufficiently uh to pave the way for the Fed to cut interest rates. So this is not a cup half full narrative from the stock market. This is a case of the cup being entirely full. And that's where we are today. Uh I I have a different view than the markets and we'll see how it plays out. But that is the signal from the market pricing as we sit here today. David, I should mention for the sake of giving our listeners some context that we recorded this interview on Tuesday afternoon. This has been such a busy news week that things will probably change by midday on Thursday, 48 hours from now when our our listeners actually hear this interview. Uh I'm curious. I I agree with you that in this moment that we're speaking, it seems like everybody's acting as though President Trump just solved the the whole thing. He he, you know, he declared that there's a ceasefire and everybody has agreed to it. It really feels to me like I'm not sure that everybody really agreed to it and that it's not really going to last that long. What do you think? again, are we headed for more geopolitical uh difficulty that could reverse that perception and get it or back around to oh, the president was overconfident. He thought he was had this all under control and actually it all blew up in his face. Well, I totally agree with you and uh the one thing I can tell you is that a leopard does not change his spots overnight. And uh we're not dealing about a war like the Russia Ukraine war is over territory. It's over land. Uh you could talk about uh the 67 war and the 73 war. Those wars were over land. This is a war between ideologies. This is radical Islamic fundamentalism against the biggest infidel on the earth uh which is the Jewish state Israel. So this is a different kettle of fish altogether. You're dealing with fanaticism. It's not about economic idealism like it was between the US and Russia during the cold war. This is something totally different. Uh so for anyone to believe that the ceasefire means that the war is over, especially with Israel having cleared out, you know, the uh the air waves through uh over Iran, which you would have thought was unthinkable, but that road was uh that path was uh blazed several months ago, but it was really quite spectacular. Donald Trump now expects Israel to um lay off. Even though Israel isn't targeting civilians, they're targeting military installations. A little bit one-sided, but uh the point is that I don't believe that this war is behind us. I don't believe that uh we will see regime change cuz I don't even know what that means when there's no real opposition. For all we know, the Revolutionary Guard would be the ones to step in. And I'm not so sure that would be any better situation than the Ayatollah. And then we'd of course we there's no evidence the Americans managed to dramatically impair Iran's uh nuclear capacity in the near term. Uh nobody knows where that 60% enriched uranium has gone. It's missing and it's obviously hidden. And the question would be how much time and how much effort would it take to get that to 90%. So I agree with you. This this story is not over. But you know the stock market's funny. Everybody tells me that they're a long-term investor. I invest over the long term. I hear that all the time. And yet the same people that tell me that I notice that they're on their phone every 15 minutes looking at their portfolio. So, the stock market used to be a longduration asset, but it's turned into a bit of a casino and a get-richquick scheme. It's not the same stock market that I grew up with in the 1980s. Even Gordon Gecko, who said greed is good in the 1987 Wall Street classic, it's a different market today and time horizons have been shortened dramatically. And I think that basically technology and social media have played a role in that. But I'd say that uh the markets have taken on a very a very short-term view and answer to your question I know that it was a long answer is that I agree with you that this war is not over the ceasefire we had few ceasefires in the war in Gaza didn't mean that there was the end to the war but I think that uh the markets just as we're seeing they get whipsawed like crazy it is a massively headline driven stock market you know when I grew up in the market back in the 1980s you But Bob Ferrell, the legend, would always say, "The markets make the news. The news does not make the markets." And I think if you'd ask him today, you'd say, "In today's market, it's all about the news." That seems really, really important to me because one of the things we used to say back in the day is either the news is going to shake the markets up and down. Uh but at the end of the year, at the end of the month, what's really going to count is the fundamentals. So if you stay tied to the fundamentals, you're going to do okay. Are you saying that's not true anymore? I'm not going to say the fundamentals don't matter at all. Maybe not as much as they used to. It's just basically in the math. What is the S&P 500 at any moment in time is the product of two numbers earnings and the multiple that investors are willing to slap on those earnings. What is the multiple and the move in the multiple base point for basis point is far more powerful on valuations than any shift in earnings growth. Earnings growth and earnings growth revisions move glacially, but the multiple moves late Bitcoin. So the multiple is the heartbeat, the pulse of confidence that investors have over the earnings outlook. So there's the earnings, the earnings outlook, then there is the confidence level, the confidence interval around those earnings. and the multiple at 22. You can't believe it's going to get much higher than that when the risk-free rate is over 4%. So you see what's happened here is we have an equity risk premium when you compare the earnings yield, the inverse of the PE multiple in the stock market and compare that to the yield you get say in the 10-year Treasury note. Normally you would get compensated. Normally the equity risk premium is called at 300 basis points. You're getting paid that as compensation on the earnings yield over the bond yield to justify the risk of taking on capital risk in the equity market. When the equity risk premium is zero like it is now, the stock market is telling you that the S&P 500 is a riskless asset. That's what it means when the ERP is zero. The market is telling you that it is treating stocks as a riskless asset when you get the same yield in the S&P as you get in the Treasury market. A very rare occurrence. It's been with us now for the past year at least. Still with us today. And uh that's what you know keeps me I wouldn't say totally on the sidelines but uh whatever my comfort level is in the equity market it's lower than it normally is because I do respect valuations not just absolute but relative to what I can get risk-free in the bond market when the ERP is zero like I said and I think the listeners would be well advised to know what the stock market is telling you at this moment of time that The stock market is being viewed as being in the same risk bucket as risk-free treasuries. So I would just pause at that whenever the earnings yield in the stock market and the yield you can get in the risk-free. Now when I say risk in the bond market there's always there's inflation risk, there's duration risk, there's cyclical risk, but there's no capital risk. Could it be that there is suddenly new capital risk in the Treasury market? I don't believe that. So, you don't think the market's discounting a a weaker credit of the US government? It may well be. But, you know, and the US did get drown downgraded by all three agencies. So, technically no longer AAA, but is the US going to default? Will it restructure? I mean, you hear all sorts of horror stories about that, and I have for years, but I don't think that's going to happen unless the United States somehow believed that the reserve currency status is just too much of a burden on middle America and on Main Street. And if the United States is willing to forego these massive fiscal deficits which are largely funded by foreign investors. So how would you ever bring them back to the table to fund the deficits that help keep US living standards intact if you dared pull a default? So that does not keep me up at night. What keeps me up at night is at some point there will be a rude awakening. There will be a classic to invoke Bob Ferrell once again in his 10 marker rules to remember which is the ten commandments to investing. And rule number one is how markets revert to the mean over time. And the equity risk premium historically is a mean reverting series. How will that mean revert? How will we get from zero to say 200 300 basis points? Either bond yields have to come way down or the stock market has to come way down. Pick your poison. And what do you anticipate is likely to happen. Well, I think there'll be a combination of the two. If I was really bullish on the stock market, I'd be allin, but it's always shades of gray. I probably have the same equity participation now that I had back in the summer of ' 07. So, it's pretty low, but it's not zero because I don't believe in zero and I don't believe in 100. I don't believe in black and white. I believe that there's always shades of gray. But I like to invest when there are tailwinds behind me and a 22 multiple benchmarked against a 4% plus risk-free interest rate is just not arithmetic that is compelling. My money is on the bond market and the bond market is unloved and it is underowned and it's actually rather maligned. If you go to the cocktail party and you talk to anybody about your exposure to treasuries, they'll run away from you like you're a skunk. Uh, who wants to talk about the bond market? So, I'm a contrarian by nature. I like the bond market right now. I've liked it ever since the long bond got to 5% yet again which back to 2007 has proven to have been a ceiling and when the 10-year note got to 4 1/2% I started loading up the gun for the Treasury market. So I also differ in the stock market in one respect which I mentioned which is that I do believe we're heading into a recession. People say to me, well, you thought so in 2022 and 2023, and that much is true, but I don't cry over spilled milk. And what happened in that period of Fed raising interest rates aggressively and inverting the yield curve was it didn't really hit the economy cuz everybody had locked in already at the interest rate lows back in 2020 and 2021. And um so a lot of people, especially homeowners, were sheltered like they'd never been before uh from the rate increases. But now these people are starting to roll over. Now you're starting to see people refinance. Uh and in the mortgage market refinancings have gone up a lot in the past year and you're starting to see how this is playing out in the supply of houses coming onto the market. I mean the the year-on-year growth in new supply in the resale market is 25 percentage points higher than the demand is right now. And that's why, for example, we saw today the K Schiller numbers. um you're negative two months in a row. That hasn't happened in several years. You're starting to see cracks in all the home price series. We know what residential rents have been doing. Uh that only recently started to show up in a cooling off in the CPI data, but house prices are starting to crack and they weren't cracking when the Fed raised rates. Home prices just kept on going up uh back in that period. So, we didn't have a negative wealth effect on spending. And uh the labor market was hot was hot as hell. The labor market's completely different today. You look at the job openings, you look at the hirings, and now you're looking at the claims data are starting to hook up. It's a different labor market now than it was back then. Lots of things are different. And like I said, I am not a once burned, twice shy sort of a guy. I learn from my mistakes and I move on. But I do not say well this did not happen three years ago therefore it's not going to happen. The tea leaves are right in front of me and in fact I have more conviction in the recession call now than it did 3 years ago. And in fact there's some measures suggesting that the economy is already in a recession. And let me just tell you that we do receive monthly GDP data. And GDP in the United States, real GDP, when you look at the monthly data, which can sometimes get lost in the quarterly averages, real GDP is running slightly negative on a 3-month and six-month basis. April over April of last year, real GDP is 1.3%. And I remember in the day when I started in the mid1 1980s, you got down to a one handle on real GDP on a 12-month trend basis. People would be asking me, are we heading in a recession? We're down to 1.3 today. And people say to me, well, it still has a plus sign in front of it, doesn't it? So that's the brain of today's market. Visav what happened back when I started the business? The market doesn't see it. GDP, real GDP is slightly positive year on year, but the three and six month trends are showing that that 1.3 is actually subsiding and the economy is actually contracting. The economy is actually contracting right now. And but you see then you have Jay Powell telling everybody that the economy is solid and I guess that the world will listen to Jay Powell over David Rosenberg. And when you have the central bank chairman saying things are solid, well, the economy is solid. The economy is solid. inflation is going to melt away. Fed's going to cut rates, no tariff war, no M East war, big beautiful bill, all the stimulus, and you're off to the races. And that just comes down to why investors, and it's not an earning story. Earnings estimates are not going up. What's been going up is the market multiple. What's been going up is the conviction level that we're going to get solid earnings. So, it's been a multiplddriven market. You asked me before about the fundamentals. No, this has actually been very much a momentum and sentiment based rally. I'm talking about the rally that we've had over the course of the past three or four months. It has not been fundamentally based. Earnings estimates are going down, not up. And it's been the news flow uh taking out, I guess you could say, taking out the tail risk in the market, the tail risk of a widening M East war, the tail risk of a global trade war. So these tail risks have been taken out. But you know to some extent I even scoff at that argument because it's it's not as if you know at the market lows in April after liberation day the Ford multiple got down to 18 18. And that's what we call a bargain. Seriously, you know, I started the business in the 80s. I remember in 1982 the trough multiple that actually paved the way for a 20-year bull market. the the market multiple troughed at 8 and today it was 18 and now we're up to 22. So even at 18 I was there thinking is this really I mean it it seemed horrible at the time. I mean the market's down 20%, some other stocks are down, sectors are down closer to 30%. But that was coming off those February highs which were I would say exuberant highs. We go down and the bottom in the market is an 18 multiple. Well, that is a new world altogether, but we never even got to stupid cheap levels. We got to an 18 multiple, which is even higher than the historical average. But those are the cards that were dealt. But you see, I am uh naturally risk averse. It doesn't mean I don't take risks, but the risks have to be calculated. And I like to invest when I have tailwinds. And I don't see the tailwinds right now. And I think there's a lot of speculation that's priced into the market right now. Uh speculation what's happening in the Middle East. Speculation as to what's going to happen or not happen in the trade war. Speculation on uh what happens with this big beautiful bill. uh what happens in the future given that nobody is willing, not even the hardcore Republicans are willing to tackle the deficit. So uh the markets have taken on I think uh maybe just too much of a rosecolor view as to what's going to be happening. I'm not buying this market. There's parts of the market I like, but I will not buy this market with a 22 multiple uh unless bond yields go back to where they were in 2021 cuz that's the only way the math makes sense. Let's talk about what you do like, which is the bond market. Seems to me like, you know, the enemy of the bond market is inflation. It seems to me that if you believe that President Trump is just bluffing for the sake of negotiation with all of these tariffs, okay, I see that. But if it turns out that these tariffs really happen and long-term we we really do have a tariff ccentric economy. It seems to me like that's very inflationary, isn't it? The classic economic answer is that it depends depends on a lot of things and uh I mean the tariffs are already here. We already got the 10% baseline tariffs. Uh they were like 2 and a half% before all of this nonsense began. So the tariffs are already here. And yet, you know, we're going to get a print later this week on the core PC deflator. The consensus is 0.1. It'll be the third month in a row of 0.1. Uh we had some tame CPI PPI data uh not just for one month, but for a couple of months. Uh the Fed of course is on the sidelines like a deer in the headlights because uh it wants to make sure that this is going to be sustained. Uh by the time they cut rates again, it'll be too late to save the economy. But they're more interested in um preserving their credibility, which they think they lost 3 years ago. So on the good side, I remember that what is being tariffed is 40% of the CPI. It's goods. And then the question becomes who pays it? I mean the the imports come in and then the importer pays the duty to the government. Uh and then it's a matter of how much gets passed on to say the retailer or the auto dealer and then what do they end up passing on to the final consumer and it comes down to where you are in the business cycle. Like for example, when we had all those supply shocks happening around CO, those supply shocks fed into wages because the labor market was heating up dramatically. And of course, the government through very large scale and extended jobless benefits were paying people not to work. People were actually making more money staying on the couch than going back to their old job, which forced employers to dramatically raise their wages to attract people back into the workforce. That's why it wasn't transitory. It lasted 18 months because the initial rounds of shocks from the ongoing impairment of global supply chains and of course we had the demand impact from all the fiscal stimulus and the reopening of the economy but it fed into wages. So we had a wage price spiral. It wasn't like the 1970s that it lasted a decade but it lasted 18 months. Now you're looking at the broad contours of the labor market right now and job openings are going down, not up. Hirings are going down, not up. Jobless claims are going up, not down. It's a completely different labor market. You see, then the quit rate, the voluntary quit rate, I call it the uh take this job and shove it index, uh the job hopping index. The job hopping index was surging. keep companies couldn't hang on to their labor, so they had to keep on paying up more for labor back in 2022 and 2023. That's not happening now. So, as a business person, you got to think about what is inflation? What is inflation? Is inflation the prices that you want to charge your customers or is inflation the prices that your customers are able and willing to pay? Now, in that period in 2021, 2022, and 2023, don't forget that the household sector was flush with $2 trillion of excess pandemic savings from the deep pockets of Uncle Sam. So, everybody turned price insensitive. They didn't care. You didn't feel it. And plus, you can get a job by snapping your fingers. Well, you can't do that anymore. And those $2 trillion of savings are gone. It all got spent. So, I think you're going to find, and you see it in the data, something called consumer resistance to any price increases. Companies will either have to cut costs elsewhere, raise their productivity ratios, or they're going to have to eat it in their margins. So, when I say that, it depends. Well, it depends on who is going to bear the brunt of the tariffs. That's the big question. But you see, when I'm looking at the broad contours of the labor market, which goes beyond focusing on monthly headline non-farm payrolls or even the unemployment rate, these are limited statistics. There is slack emerging in the labor market that goes unreported and is unappreciated, but is going to forstall the ability for anybody to demand higher wages from their bosses. That's not going to happen. So this whatever price increase we do get from the tariffs are going to hit the wall in the labor market and all they will do is create the conditions for negative real work-based incomes and then with that a contraction in real consumer spending which is about 70% of GDP and just reinforce the declining trend in growth that we're seeing right now that I discussed earlier. So the other part of the story is of course the 60% I didn't talk about which are services. Services aren't being tariffed and you're seeing restaurants, hotels, airlines, recreational services are all on a significant disinflationary trend right now. That inflation trend line in the consumer cyclical service area, that inflation trend line got broken quite a while ago. And then of course, like I said before, you have rents and you have house prices and they're going down. So what even if you get some pass through on the good side, the 60% call the services aside, you can't ignore that. And in fact, that was the principal story in that very tame CPR report uh that we just got a little while ago. But I fall into the camp that a inflation is a lagging indicator. B whatever we get on tariffs most likely will be uh a oneoff maybe a two off or three off series of increases. Those increases will get snuffed out by a loosening labor market. And because these tariffs will be damaging to aggate demand, we'll end up next year with inflation lower than would otherwise have been the case without the tariffs. You might end up with a higher price level, but inflation is not about the level. It's about the rate of change. And I think that'll be the big surprise going into next year is how far inflation goes down, especially now that the service sector is playing ball. And you're right, that is one of the principal reasons why I am bullish on treasuries. I think that we'll go from four and a half% and I think we'll be going down to 3%. And in fact, we don't even have to go down to 3%. To know this, to know the math. You see, the reason why people are scared of bonds is the horrible experience and memory of what happened in 2021 when the 10-year note was like.5%. And all you needed was a six basis point increase in the yield to generate a negative return. Imagine that. It was a historic period of time. Uh you had no coupon protection. And it only took a minuscule rise in yields to generate a negative return. And that's what everybody was saying for the next couple of years. 6040 asset mix is uh is a relic of the past which I I never believed. It was just a circumstance of what we were in coming out of the pandemic. fears that we were going to have the Spanish flu. And who knew that we're going to have Fiser Monday, you know, in early November of that very same year in 2020. Everybody was saying it was going to take 5 years to get a vaccine. Uh so we came out of it pretty quickly and then we were left with gobs of excess fiscal and monetary stimulus. That much is true. But you see the tables are turned because at uh call it, you know, we were not too long ago at 4 and a.5% on the 10-year note. Well, what does it take if you're at 4 and a half% on the 10-year note? What does it take to generate a negative return in your bond portfolio would be you'd have to go up 70 basis points. Okay? You'd have to go to 5.2%. To lose money in the bond market, you'd have to break above the cycle highs we had in October of 2023, uh, when the Fed was still in tightening mode, which we know it's not there any longer. But if we were to go down 70 basis points from where we are today, you'd make a 10% total return in the 10-year Treasury note. So go up 70 basis points, earn zero total return. Go down 70, earn 10 basis point 10%. Most people in the equity market don't understand bond math and the power of convexity. So I like that riskreward tradeoff. I like that riskreward trade-off in treasuries more than I like the trade-off between 4% plus risk-free rates and a 4% plus earnings yield. David, has the US dollar entered a new secular downtrend? And if so, what does that mean to your bond market outlook? It there's been many many instances in the past where bond yields and the dollar go down together. Uh it could well be uh that the bond market and the stock market see what I see uh because they're going down in tandem now the US dollar by more but they're going down in tandem because they probably the bond market and the and the dollar market probably has my economic view and as my view that the Fed will have more to do than what's priced in. Is the dollar in a fundamental bare market? Uh, I'm not going to go that far, but it certainly is in a classic steep correction phase. Really, the best hedge is probably gold, but I've like gold for a bunch of different reasons. Uh, you know, beyond just uh the hedge against the dollar. Gold has just got some other very great hedges and as a like bonds is a source of stability and a diversifier and a balance in the portfolio. But am I positive on the dollar right now? The answer is no. do what I say it's an going into a huge bare market and I I I doubt that's going to happen but it doesn't mean this correction is over with but I do think that you know people are looking at anomalies it is anomaly you think boy if the stock market's right we're going to have booming growth if you believe in the stock market story right now and the valuations you have to believe we're going to be re accelerating this economy to over 3% real growth I just told you the run rates won and the near-term trends are slightly negative Uh, but I think that's what the dollar market and the bond market are telling you. That is at odds with the stock market's telling you right now. So, who's your money with? The dollar and bonds or the S&P 500? That's cuz at some point there will be the convergence. My money is on what the dollar is saying and what the bond market is saying. And if they're right, uh, the S&P 500 is not going to be sitting above 6,000 for a whole lot longer. Let's go a little deeper on precious metals. Since you brought that up, it seems to me what makes this precious metals rally a little different from prior ones is we've seen so much strength in gold, but not in silver and platinum. Uh, you know, that echo effect wasn't there this time around. A lot of people thought that might be because it was central banks buying the gold uh as opposed to to retail and and commercial interests. Seems like just in the last few weeks that's changing. All of a sudden, silver wants to catch up again. Should we read any meaning into that? What's going on? No, we we wrote about that. They say that beer is the poor man's champagne and uh you know, silver is uh the poor man's gold. So, you can buy one at what, you know, $37 an ounce and and one, you know, heading up to $4,000 an ounce. So, silver is a is a good alternative for people that don't have big pockets. Not everybody can go out and buy uh you know, a few bars of gold. So um silver is a good proxy has a high correlation uh silver has a high correlation with gold. Uh I think it got to a point for anybody who drew the chart and I wrote about this the the silver to gold ratio really you mean you were talking about couple of standard deviation events here. So silver is just playing catchup. Gold's got more alluring properties uh and because it's it doesn't there's nothing cyclical about it but silver goes into a lot of industrial uses so it's more vulnerable to a slowing economy or recession but it is correlated with gold. It has uh quality characteristics. The reality is like you said though it's more of a catchup trade and you can't ignore what the central banks are doing. Central banks are continuing to buy record amounts of gold in their reserves. They're diversifying at an unprecedented rate and there was just a survey done by the world gold council saying that for the coming year a record share of the world central banks are going to be adding to their gold reserves. So this is no longer just a case of you know Brazil, Russia, India and China. This is broadening out into the developed world. Who knows where this can lead us? That's a very powerful flow of fund uh event as we know with QE how significant the central banks can be. But you remember throughout the 1990s the central banks of the world were dumping gold and were investing in treasury bills and in bonds and in yieldbearing securities and dumping their gold. Gold went into a 10-year fundamental bare market in the 1990s, which didn't end until the Washington Agreement in 1999 when the moratorum was placed on central bank gold sales. That was the low in gold at around 250 260 an ounce. Think of what it's done since then. The price of gold has gone up 11fold since the Washington agreement. The S&P 500, which is all you ever read about or hear about, is up five-fold. and gold is up 11fold. And so um you know I imagine that uh the day that the world central banks say okay we have actually diversified enough in a gold reserves um then you could say well we've just removed a very important prop from underneath uh this this gold rally but that has been the principal source of demand. The central banks if the world gold council is correct in its survey it's not going to be ending this year keep an eye on it. You know, we've done a lot of work on gold and really mapping out more how this bull market ranks against other bull markets, the pattern of behavior, and we think it could get to $6,000 an ounce. It's at the peak. Uh so, you know, it's pressed the pause button for the past uh couple of months, still up something like 30% for the year at least. But the bull market and gold is intact. That is a buy and hold. And if you're looking for something that trades at a steep discount to the gold price, uh, the gold mining stocks and they've been a great place to be, especially in Canada. So, um, that's a really been a a a a a core part of our model portfolio has really been what I refer to as the bond bullion barbell. The bond bullion barbell and it continues to work very well. Final question, let's touch on energy markets before we close. Obviously, we've got a lot of geopolitical tension. Once it blows over, are these uh oil prices high prices or low prices? Probably will end up uh trading in a range. I guess because of my economic view and how that translates into oil demand, uh I'm more bearish than bullish. And of course, you know, we'll get the flare ups. All the energy bulls got very excited in the last uh week or two because what was happening in the Middle East. So, you can always say, well, this is a great geopolitical hedge, oil. Uh, however, I don't really like to invest around geopolitical events. I I tend to find that doesn't work well for too long. I think that, you know, Donald Trump embarks on that trip uh to the Gulf States last month and uh he did come away with a jet uh from Qatar um but probably made the case that he wants more supply. And the one thing we know especially about Saudi Arabia and Kuwait is they have a lot of available supply. I don't think that Donald Trump's going to be successful with drill baby drill, but he probably will be successful in getting more oil into the market from OPEC plus at a time when the global economy is going to be cooling off. So I find it difficult to be bullish on on oil. And in fact, uh, the the energy stocks, which we used to really like a lot a few years ago, they're right near the bottom of our ranking scale on the, uh, on the equity sectors. There's there's better areas to hide in the stock market than energy. Well, David, I can't thank you enough for another terrific interview. But before I let you go, please tell us a little bit more about what you do at Rosenberg Research. for years and years and years. Uh, your Breakfast with Dave newsletter was famous in the industry, but you were kind of circling through a bunch of different research jobs for firms that were maybe controlling too much, putting a little bit of uh that permabull pressure on you. You broke free. What are you doing at re Rosenberg Research and uh how can people find out about all the exciting services you're offering? Thanks. Thanks for the question. And more importantly, how do we get a freebie out of this deal? Well, I'll put it this way. Anybody who is listening to this podcast will get an automatic one month free trial of everything I do. Uh so I still do the breakfast with Dave, a daily publication. That's the flagship, but we also do uh every month we do a special report in depth. Uh we did one on gold. We did one on airspace defense. We did one on demographics. We did we just uh completed a very big one on the AI revolution. always with the view towards how do you invest around this? What do you want to own and what do you want to avoid? And we have our monthly strategizer publication uh which I didn't I used to do at Mirror Lynch Canada and then I recreated it uh when I started Rosenberg Research over 5 years ago. And that's our go-to guide for how to invest your money across all the asset classes and all the sectors and it's global in nature. And so that right now I would say rivals Breakfast with Dave as uh the most popular publication that I produce. Uh, something else that has really been value ad I believe that I didn't used to do was I have an information hotline for all of my clients that there's an information hotline. You could send me questions, queries, criticisms, whatever you want, and I'll get back to you the same day. I spend 20% of my day just responding to the information hotmail. And um it keeps me sharp and it's a great way to interact with my clients cuz you know what in this business you can't control the markets but you can control client service. And for people that want to um you know uh kick our tires you can either just Google rosenbergress research and um that'll take you to the website you can go to information at roenbergressearch.com and it'll take you just fill out your name and one of our my client service people will get in touch with you. And for anybody who wants to reach me, I'm not going to give out my phone number because that's maybe a little too personal, but you can also reach me at my email address, which is uh drosenberg rosenbergress research.com. And again, the URL for anyone who wants to cash in that offer of a free one-month trial of all of Rosenberg Research's uh services, it's at rosenbergress research.com. Patrick Szna and I will be back as macrovoices continues right here at macrovoices.com. [Music] Now back to your hosts, Eric Townsend and Patrick Szna. Eric, it was great to have David back on the show. Now, let's get to that chart deck. Listeners, you're going to find the download link for the postgame chart deck in your research roundup email. If you don't have a research roundup email, that means you have not yet registered at macrovoiceic.com. Just go to our homepage, macrovoices.com, and click on the red button over David's picture saying looking for the downloads. Okay, Eric, let's start off with your thoughts here on the equity markets. Well, Patrick, my June hedges have expired, so I'm starting to accumulate September put spreads on S&P E- mini futures, but not too aggressively here. I think they're going to get cheaper before they get more expensive. So, I'm taking my time starting to accumulate and build a position. Eric, we continue to be at a really interesting moment in the markets here. We are now directly retesting those uh December, January, February highs up around uh the 6,100 area. Now to accompany that, we basically had a straight line rally from the April lows up 26 27% in a span of like 75 days and so this market is overstretched. Now one thing that is becoming an inherent feature of markets is the uh direct influence of flows particularly by systematic money. Recently there's been huge flows on vault targeting funds that are uh doing substantial buying driven by contracting real volatility. At the same time, we've had CTAs all have to do the bullish flip on the upside and dealers uh which were long a whole bunch of gamma were actually uh forced to pin and drive this market uh higher toward that pin and now kind of influencing this short-term market direction. The point that I want to highlight is that all of these forces have now stretched this market and are now like David was suggesting trading at some pretty high multiples in an environment where we really now need a whole bunch of very positive news in order for the market to stay up here. We could have a jobs numbers disappoint next week. we could have uh some uh tariff issues and later in July we could have disappointed earnings that uh don't meet up to these lofty expectations. There's a lot of things that uh that are in play and the market trading up along these highs in an overbought condition, including the fact that we're now 250 S&P points above the 50-day moving average, which is about as far as it typically goes before beginning some sort of a correction. We're in a a window where the asymmetry is skewed against the bulls on the short term. That doesn't mean it has to be an ominous market drop like what we saw back in March and April. Not necessarily. But a correction is long overdue here. One of the even a 5% correction is 300 plus S&P points. Uh that could see us trading down to 5,800 or even a little bit lower on a very quick get reversion. At this stage, I think that you have to be planning for at least some form of a correction and uh and things really could get very toppy here uh throughout the summer. All right, Eric, let's touch on that US dollar. Well, Patrick, the breakdown that we've seen this week to fresh lows below 97, trading at a 96 handle at recording time just confirms our predictions here on Macrovoices that a new secular downtrend is in play for the US dollar. And frankly, I think we could have a long way left to go to the downside. Well, on page three, I have that US dollar index chart, and we can really see those lows that were established in 2023 and 24 were not only decisively broken, but became resistance when the market tried to rally last month. We we seen in the over the last month is incredibly negative price distribution. Every rally has almost immediately failed as this is clearly in this uh decline of lower highs, lower lows and uh persistently being hit on the bid. While we're seeing some currencies like the US dollar, yen far more in a muddle, there's very clear trend in the euro, pound, and the Canadian dollar as an example. And so we are in find ourselves in a situation where this breakdown to a lower low has in fact put to bed this idea that we could have a support line or a double bottom along the previous low. And so the question is how low does it go? Well, the first and most immediate downside target is this 95 to 96 zone below another couple handles down where there's a measured move. But if we really zoom out on uh the weekly and monthly charts, there was this pronounced trade range that was established through 2016 all the way through 2021 for over 5 years where the bottom of the trade range was all the way down at the 90 level on the Dixie. Uh and the upper boundary range was this 100 to 102. And so if the the fact that we've broken down now is the question is are we now re-entering that trade range? Are we now vulnerable for the seeing the dollar index go all the way down to 90? Well, that's certainly on the table because with this breakdown, the distribution is so relentless. Even though the dollar is a bit oversold, it it's a clear trend that is in place and we want to first see where it settles down before trying to rockar call a a turning point in the dollar. All right, Eric, let's talk oil. Well, Patrick, you got to ask yourself, is this selloff that we've just had of $10 from more than $10 from uh $14 from the highs, is this a second chance to get in on an opportunity to get in on the long side of a new oil rally that could have legs? Well, clearly, uh it's we've just seen a pretty violent reversal to the downside. But the question to ask yourself is why did we see that reversal to the downside? Well, it was because President Trump said problem totally solved and now all nuclear facilities, all nuclear enrichment capabilities, uh, centrifuges and so forth have been completely and totally obliterated and destroyed according to President Trump and precisely nobody else. Sorry to be blunt here, folks, but I I think this really is as simple as I don't think the president understands. Or maybe there's just people around him are telling him what they think he wants to hear, but I don't think he gets it. I don't think he realizes that most analysts, everybody other than himself is saying they didn't do that much damage. The bunker busters didn't really destroy all the nuclear facilities as hoped, and it probably would only be a few weeks to get them restarted again. Well, okay. If that's what happened, when President Trump does figure it out, he's probably going to get aggressive again. And what we've just seen is $14 of risk premium come out of this oil market because President Trump calmed down. Why would we think this is the last time President Trump is going to uh get uncom? seems to me like there's an awfully good chance that we see another big upward price spike in oil if we get uh another round of this. And that seems extremely likely, especially considering that nobody else, including the folks that read the bomb damage assessments, agree with the the president's view that everything has already been neutralized. He actually said that there would be no need in talks with Iran to even negotiate a new nuclear deal because there was nothing to negotiate. there's no more nuclear risk to worry about because it's all been obliterated. Uh nobody else thinks that that's true. So when President Trump figures out that it's not true, I think he's going to do something that's going to take oil back up. So uh I think it's potentially uh at least if you're in a speculative mood uh a bargain buying opportunity here to get in on this long. Patrick, what's your take on it based on the charts? Well, maximum volatility is definitely what we're seeing and there was a huge risk premium being put into oil and the fears that the escalation was going to draw the US deep into this confrontation and that was very rapidly withdrawn out of the market earlier this week. Uh we now are trading at a very interesting moment. the $6465 level on WTI is uh in my mind a kind of key pivot because if we're on a sustained basis not only below the 50-day moving average but below this retracement zone then the only outcome is crude oil going for a direct retest of April and May lows which are all the way in the 57 and 60 level and the question really is is uh while maybe uh the escalation of the situation isn't that severe alternative point is that is oil in that kind of abundance that uh we could see in spite of all of these conditions oil trading right back to its previous lows. My view here is that it it's a buy on dip. Uh I don't think we're going to see at least I'm currently betting that we're not going to see that 57 to 60 zone and that this level will actually hold. Now does that mean I think oil is going to 80 85? Well, I mean, a lot of things would have to start kind of uh working in oil's favor for that kind of move, but a bounce back to $70 and us re-engage a new trade range where we spent September through January trading uh in in a kind of like $68 to $72 range. I totally think we can get up there and see a new elevated level uh for crude. So, I'm buying here looking for that kind of a bounce up to that zone. Eric, on page five, I have that gold chart. It continues to uh consolidate, but well above that 50-day moving average. Uh are you still bullish here? Well, Patrick, it makes perfect sense that we've had this deep uh dip or pullback or correction or whatever you want to call it, this 100 bucks down in gold price makes perfect sense for the same reasons that oil is selling off hard. Uh, you know, the world has been told now that nuclear holocaust was just diverted. Everything is fine. Iran nuclear facilities have all been destroyed. Uh, there's no more tension or grief between the US and Iran. Okay. Um, I think when President Trump figures out that the nuclear facilities were not really destroyed, that's all going to change. But for now, it makes perfect sense that if the the theme that's driving other markets is a perception that this is all blown over. You know, we saw uh 14 bucks come out of oil. We saw a 100 bucks come out of gold. I think we're going to see both of them go back up. So, buying both of those dips makes perfect sense. Uh so far, the low on gold intraday has been 3308 3308 on the August contract. I know that number all too well because I only missed it by almost exactly five bucks on my resting limit order below the market which didn't get filled today. I think I still have a shot though. The slow stochastics are only just starting to touch the oversold uh range. The RSI is still mid-range. So, I think there's definitely room for another small wave down here. Maybe to oh, I don't know, you know, a high 32 something, 3290, 3293 in there somewhere, maybe where I think the the bottom is, I'm still going to buy just above 3,300 on this dip if I can get it. And one way or another, I'll buy this dip. If it turns out I already missed the low, I'll chase it if I have to uh in order to get a seat at this table. Yeah, Eric, I'm in the buy on dip camp as well. Uh, at this moment, we have US dollar weakness, which typically is a tailwind for for gold that is priced in US dollars. And at the same time, almost all these pullbacks have held above its moving averages, held above fib zones, making it a very traditional consolidation. Now, at any one point, gold could start a bigger correction, but there's no reason at this moment from a price action perspective to believe that that has begun. And therefore, I'm in your camp that dips should be bought and there's room for this still to break out. Uh the first wave measured move is towards that 36 to 3700 if it does break out. So, we're watching whether this important 3,300 pivot ends up uh holding the line here. So, Eric, let's talk uranium. On page six, I have that spot physical uranium trust and uh prices have uh clearly been improving. What are your thoughts here, Patrick? The spot price of uranium, I've said many times, is the key. Once that gets moving, everything else will follow. And that's exactly what's happening. Uh spot uranium is 7750 now, almost at parody with $80 term price of uranium, the contract price for long-term contracting of uranium, which is where all the volume happens in the uranium market. Now, unfortunately, the gap filling pullback on uranium miners that I was hoping for is probably much less likely to happen at this point. Seems like it's kind of game on for this bull market. And now that spot uranium is moving to the upside, uh it seems like it's uh everything we can just to hold our horses. So, I'm still hoping that from a seasonality perspective, you know, this market shouldn't really heat up until September. I'm still waiting for a nice big dip to buy, but if we don't get one by mid August and I haven't gotten my full allocation on a dip, then I'll buy at whatever price I have to in order to hit my max leverage target before we get to Labor Day. By which I mean American Labor Day, 1st of September. Uh I think it's around September that seasonality and right after the WNA conference, which I think this year is the first week of September. uh right after that conference is when the buyers usually really start buying and I definitely want to be at my max leverage when that happens. Well, Eric, of course, uh, buying dips is always better than buying rips, but uh, I think the bigger thing that I want to highlight is the fact that we had a very clear and pronounced bare market in uranium where from January of 2024 when it peaked, uh, we basically spent 15 months in a very clear distribution cycle that saw uranium virtually lose 50% of its value based on the that SPR physical uranium trust. Now, uh, that sequence of lower highs and lower lows in that downwards channel has finally been broken, and we've now spent over, uh, a month and a half in a bull trend above the 50-day moving average. This is the very distinctly different price action than we've seen in the year prior. And so, to me, there's a lot of evidence that uranium has obviously entered a new bull phase. Uh, buying dips is clearly the more tactical way of approaching it. Uh but I do believe that these are still the very beginning phases of a bull run that could last the rest of the year and even a chunk of next year. And so uh continuing to watch whether uranium uh can build on this is 100% on my watch list. Patrick, before we close, let's hit that 10-year Treasury yield. What are the charts telling you? That 10-year Treasury yield off of its May high near 460 has now dropped down to 428. So, uh, we're we're, uh, seeing, uh, yields slightly weakening on the downside, uh, rolling over. The big question, are bonds, uh, bottoming, and are we going to see a rip in the bond markets, or is this just a retracement from a interest rate market that is simply not ready to make higher yields at these levels? I'm uh, relatively more neutral on the 10 and the 30-year bond. At this moment, there's plenty of room for them to be bottoming. uh you know David Rosenberg was talking about the idea that there's a very much asymmetry in owning these treasuries uh down along these levels. Uh but the question is is that have we really seen the beginning of this trend move and that is still very premature to make that call. But where I have higher conviction continues to be on page eight when I'm looking at that threemon sofa futures particularly I'm going out to December of 20126 18 months forward and this is uh where I find it really interesting because there's so many dynamics uh that could potentially have the Fed be forced to cut more interest rates than are currently being priced in. It could be uh the announcement of of a m much more uh dovish Fed chairman next year. It could be the um uh inflation continues to be benign or or a recession rears its ugly head. Whichever the catalyst to me uh I don't see much downside risk on this and I see obviously all sorts of of surprise risks that could actually have this thing rocket 100 basis points. continue to still really like this as a new trading opportunity. Folks, if you enjoy Patrick's chart decks, you can get them every single day of the week with a free trial of Big Picture Trading. The details are on the last pages of the slide deck or just go to bigpicturetrading.com. Patrick, tell them what they can expect to find in this week's research roundup. Well, in this week's research roundup, you're going to find the transcript for today's interview, as well as a chart book we just discussed here in the postgame, including a link to a number of articles that we found interesting. You're going to find this link and so much more in this week's research roundup. That does it for this week's episode. We appreciate all the feedback and support we get from our listeners and we're always looking for suggestions on how we can make the program even better. Now, for those of our listeners that write or blog about the markets and we like to share that content with our listeners, send us an email at researchroundup@macrovoices.com and we will consider it for our weekly distributions. If you have not already, follow our main account on X at Macrovoices for all the most recent updates and releases. You can also follow Eric on X, Eric S. Townson. That's Eric spelled with a K. You can also follow me at Patrick Serzna. On behalf of Eric Townson and myself, thank you for listening and we'll see you all next week. [Music] That concludes this edition of Macrovoices. Be sure to tune in each week to hear feature interviews with the brightest minds in finance and macroeconomics. 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MacroVoices #486 David Rosenberg: Navigating Choppy Waters
Summary
Transcript
[Music] This is Macrovoices, the free weekly financial podcast targeting professional finance, high- netw worth individuals, family offices, and other sophisticated investors. Macrovoices is all about the brightest minds in the world of finance and macroeconomics, telling it like it is, bullish or bearish, no holds barred. Now, here are your hosts, Eric Townsend and Patrick Serzna. Macrovoic's episode 486 was produced on June 26th, 2025. I'm Eric Townsend. Rosenberg Research founder David Rosenberg returns as this week's feature interview guest. Rosie and I will discuss the equity market outlook, inflation, precious metals, the US dollar, and much more. and I'm Patrick Sesna with the macro scoreboard week overweek as of the close of Wednesday, June 25th, 2025. The S&P 500 index up 187 basis points, trading at 6,092. It's now directly testing the previous all-time highs, begging the question, so what comes next? We will take a closer look at that chart and the key technical levels to watch in the postgame segment. The US dollar index down 125 basis points trading at 9770 clear breakdown to multi-year lows but is asking the question is the floodgate now open the July WTI crude oil contract down basis points trading at 6492 the perceived deescalation of Middle Eastern tensions is pulling that oil risk premium right out the July arbove gasoline also down 965 basis points to 206. The August gold contract down 121 basis points to 3343 consolidating towards that 3,300 support line. The July copper contract up 144 basis points trading at 492. Copper is breaking out. But what's next? Uranium up 530 basis points trading at 7850. Uranium continues to build on the week-overweek gains and the US 10-year Treasury yield down 11 basis points trading at 428. The key news to watch this week is the core PC price index. And next week we have the ISM manufacturing and services PMIs and very important US jobs numbers. This week's feature interview guest is David Rosenberg. Eric and David discuss impacts of geopolitics, outlook on inflation and tariffs, the US dollar, precious metals, and more. Eric's interview with David Rosenberg is coming up as Macrovoices continues right here at macrovoices.com. [Music] And now with this week's special guest, here's your host, Eric Townsen. Joining me now is Rosenberg Research founder David Rosenberg. Rosie, great to have you back on the show. It's been quite a while. Let's dive right into the obvious. Um, you know, everybody's talking about this market. You and I have had our reservations for the last couple of years, but it keeps charging higher and higher. It seems like nothing wants to stop it. What do you think? I think that what we always have to do is try and assess what the market is telling us in terms of its view of the economy and earnings and interest rates so on and so forth and what your own view is and that's how you can map out whether or not you want to be long or short or anything in between. So what is the market telling us? The market is telling us that once we get to this uh July 9th deadline on the reciprocal tariffs, we're going to be met with yet another reprieve uh from President Trump andor that we will see a flurry of deals coming to the four which haven't happened yet. But the market's telling you that it expects that the tariff file is going to be in the rearview mirror if it's not already in the rearview mirror. Uh you when it comes to the geopolitics, the market is clearly telling you that the fear that there would be either a blockade of the straight of Hormuz or that the IDF was somehow going to take out some of Iran's oil export terminals. That didn't happen. Even when the US went after the nuclear facilities, energy, which of course is their economic lifeblood, was left untouched. So you removed that worry. Uh and everybody believes that this war between Israel and Iran, just like the terror file, is in the rearview mirror. And of course how this relates most importantly on this point of the geopolitics is ultimately what it means for oil prices. So oil prices coming back down is viewed as basically a tax cut for the US economy and for the global economy. So that part we can easily explain. There's this prevailing view that with Donald Trump's popularity on the rise now that he can claim a win from that uh dramatic strike in Iran last Saturday that now that he has the political tailwinds that he's going to have a much easier time uh getting his uh big beautiful budget bill through Congress. So all these uncertainties in the market's mind uh have been put to bed that no tariff war between Israel and Iran is now contained and the road towards call it fiscal stimulus if you want is intact. Fiscal deficits themselves be damned but that the budget bill is viewed very positively by the marketplace. So that's what we have in our hands. And all the while the market believes that we're not going to have a recession. And the market believes that even without the recession, uh inflation is going to fall sufficiently uh to pave the way for the Fed to cut interest rates. So this is not a cup half full narrative from the stock market. This is a case of the cup being entirely full. And that's where we are today. Uh I I have a different view than the markets and we'll see how it plays out. But that is the signal from the market pricing as we sit here today. David, I should mention for the sake of giving our listeners some context that we recorded this interview on Tuesday afternoon. This has been such a busy news week that things will probably change by midday on Thursday, 48 hours from now when our our listeners actually hear this interview. Uh I'm curious. I I agree with you that in this moment that we're speaking, it seems like everybody's acting as though President Trump just solved the the whole thing. He he, you know, he declared that there's a ceasefire and everybody has agreed to it. It really feels to me like I'm not sure that everybody really agreed to it and that it's not really going to last that long. What do you think? again, are we headed for more geopolitical uh difficulty that could reverse that perception and get it or back around to oh, the president was overconfident. He thought he was had this all under control and actually it all blew up in his face. Well, I totally agree with you and uh the one thing I can tell you is that a leopard does not change his spots overnight. And uh we're not dealing about a war like the Russia Ukraine war is over territory. It's over land. Uh you could talk about uh the 67 war and the 73 war. Those wars were over land. This is a war between ideologies. This is radical Islamic fundamentalism against the biggest infidel on the earth uh which is the Jewish state Israel. So this is a different kettle of fish altogether. You're dealing with fanaticism. It's not about economic idealism like it was between the US and Russia during the cold war. This is something totally different. Uh so for anyone to believe that the ceasefire means that the war is over, especially with Israel having cleared out, you know, the uh the air waves through uh over Iran, which you would have thought was unthinkable, but that road was uh that path was uh blazed several months ago, but it was really quite spectacular. Donald Trump now expects Israel to um lay off. Even though Israel isn't targeting civilians, they're targeting military installations. A little bit one-sided, but uh the point is that I don't believe that this war is behind us. I don't believe that uh we will see regime change cuz I don't even know what that means when there's no real opposition. For all we know, the Revolutionary Guard would be the ones to step in. And I'm not so sure that would be any better situation than the Ayatollah. And then we'd of course we there's no evidence the Americans managed to dramatically impair Iran's uh nuclear capacity in the near term. Uh nobody knows where that 60% enriched uranium has gone. It's missing and it's obviously hidden. And the question would be how much time and how much effort would it take to get that to 90%. So I agree with you. This this story is not over. But you know the stock market's funny. Everybody tells me that they're a long-term investor. I invest over the long term. I hear that all the time. And yet the same people that tell me that I notice that they're on their phone every 15 minutes looking at their portfolio. So, the stock market used to be a longduration asset, but it's turned into a bit of a casino and a get-richquick scheme. It's not the same stock market that I grew up with in the 1980s. Even Gordon Gecko, who said greed is good in the 1987 Wall Street classic, it's a different market today and time horizons have been shortened dramatically. And I think that basically technology and social media have played a role in that. But I'd say that uh the markets have taken on a very a very short-term view and answer to your question I know that it was a long answer is that I agree with you that this war is not over the ceasefire we had few ceasefires in the war in Gaza didn't mean that there was the end to the war but I think that uh the markets just as we're seeing they get whipsawed like crazy it is a massively headline driven stock market you know when I grew up in the market back in the 1980s you But Bob Ferrell, the legend, would always say, "The markets make the news. The news does not make the markets." And I think if you'd ask him today, you'd say, "In today's market, it's all about the news." That seems really, really important to me because one of the things we used to say back in the day is either the news is going to shake the markets up and down. Uh but at the end of the year, at the end of the month, what's really going to count is the fundamentals. So if you stay tied to the fundamentals, you're going to do okay. Are you saying that's not true anymore? I'm not going to say the fundamentals don't matter at all. Maybe not as much as they used to. It's just basically in the math. What is the S&P 500 at any moment in time is the product of two numbers earnings and the multiple that investors are willing to slap on those earnings. What is the multiple and the move in the multiple base point for basis point is far more powerful on valuations than any shift in earnings growth. Earnings growth and earnings growth revisions move glacially, but the multiple moves late Bitcoin. So the multiple is the heartbeat, the pulse of confidence that investors have over the earnings outlook. So there's the earnings, the earnings outlook, then there is the confidence level, the confidence interval around those earnings. and the multiple at 22. You can't believe it's going to get much higher than that when the risk-free rate is over 4%. So you see what's happened here is we have an equity risk premium when you compare the earnings yield, the inverse of the PE multiple in the stock market and compare that to the yield you get say in the 10-year Treasury note. Normally you would get compensated. Normally the equity risk premium is called at 300 basis points. You're getting paid that as compensation on the earnings yield over the bond yield to justify the risk of taking on capital risk in the equity market. When the equity risk premium is zero like it is now, the stock market is telling you that the S&P 500 is a riskless asset. That's what it means when the ERP is zero. The market is telling you that it is treating stocks as a riskless asset when you get the same yield in the S&P as you get in the Treasury market. A very rare occurrence. It's been with us now for the past year at least. Still with us today. And uh that's what you know keeps me I wouldn't say totally on the sidelines but uh whatever my comfort level is in the equity market it's lower than it normally is because I do respect valuations not just absolute but relative to what I can get risk-free in the bond market when the ERP is zero like I said and I think the listeners would be well advised to know what the stock market is telling you at this moment of time that The stock market is being viewed as being in the same risk bucket as risk-free treasuries. So I would just pause at that whenever the earnings yield in the stock market and the yield you can get in the risk-free. Now when I say risk in the bond market there's always there's inflation risk, there's duration risk, there's cyclical risk, but there's no capital risk. Could it be that there is suddenly new capital risk in the Treasury market? I don't believe that. So, you don't think the market's discounting a a weaker credit of the US government? It may well be. But, you know, and the US did get drown downgraded by all three agencies. So, technically no longer AAA, but is the US going to default? Will it restructure? I mean, you hear all sorts of horror stories about that, and I have for years, but I don't think that's going to happen unless the United States somehow believed that the reserve currency status is just too much of a burden on middle America and on Main Street. And if the United States is willing to forego these massive fiscal deficits which are largely funded by foreign investors. So how would you ever bring them back to the table to fund the deficits that help keep US living standards intact if you dared pull a default? So that does not keep me up at night. What keeps me up at night is at some point there will be a rude awakening. There will be a classic to invoke Bob Ferrell once again in his 10 marker rules to remember which is the ten commandments to investing. And rule number one is how markets revert to the mean over time. And the equity risk premium historically is a mean reverting series. How will that mean revert? How will we get from zero to say 200 300 basis points? Either bond yields have to come way down or the stock market has to come way down. Pick your poison. And what do you anticipate is likely to happen. Well, I think there'll be a combination of the two. If I was really bullish on the stock market, I'd be allin, but it's always shades of gray. I probably have the same equity participation now that I had back in the summer of ' 07. So, it's pretty low, but it's not zero because I don't believe in zero and I don't believe in 100. I don't believe in black and white. I believe that there's always shades of gray. But I like to invest when there are tailwinds behind me and a 22 multiple benchmarked against a 4% plus risk-free interest rate is just not arithmetic that is compelling. My money is on the bond market and the bond market is unloved and it is underowned and it's actually rather maligned. If you go to the cocktail party and you talk to anybody about your exposure to treasuries, they'll run away from you like you're a skunk. Uh, who wants to talk about the bond market? So, I'm a contrarian by nature. I like the bond market right now. I've liked it ever since the long bond got to 5% yet again which back to 2007 has proven to have been a ceiling and when the 10-year note got to 4 1/2% I started loading up the gun for the Treasury market. So I also differ in the stock market in one respect which I mentioned which is that I do believe we're heading into a recession. People say to me, well, you thought so in 2022 and 2023, and that much is true, but I don't cry over spilled milk. And what happened in that period of Fed raising interest rates aggressively and inverting the yield curve was it didn't really hit the economy cuz everybody had locked in already at the interest rate lows back in 2020 and 2021. And um so a lot of people, especially homeowners, were sheltered like they'd never been before uh from the rate increases. But now these people are starting to roll over. Now you're starting to see people refinance. Uh and in the mortgage market refinancings have gone up a lot in the past year and you're starting to see how this is playing out in the supply of houses coming onto the market. I mean the the year-on-year growth in new supply in the resale market is 25 percentage points higher than the demand is right now. And that's why, for example, we saw today the K Schiller numbers. um you're negative two months in a row. That hasn't happened in several years. You're starting to see cracks in all the home price series. We know what residential rents have been doing. Uh that only recently started to show up in a cooling off in the CPI data, but house prices are starting to crack and they weren't cracking when the Fed raised rates. Home prices just kept on going up uh back in that period. So, we didn't have a negative wealth effect on spending. And uh the labor market was hot was hot as hell. The labor market's completely different today. You look at the job openings, you look at the hirings, and now you're looking at the claims data are starting to hook up. It's a different labor market now than it was back then. Lots of things are different. And like I said, I am not a once burned, twice shy sort of a guy. I learn from my mistakes and I move on. But I do not say well this did not happen three years ago therefore it's not going to happen. The tea leaves are right in front of me and in fact I have more conviction in the recession call now than it did 3 years ago. And in fact there's some measures suggesting that the economy is already in a recession. And let me just tell you that we do receive monthly GDP data. And GDP in the United States, real GDP, when you look at the monthly data, which can sometimes get lost in the quarterly averages, real GDP is running slightly negative on a 3-month and six-month basis. April over April of last year, real GDP is 1.3%. And I remember in the day when I started in the mid1 1980s, you got down to a one handle on real GDP on a 12-month trend basis. People would be asking me, are we heading in a recession? We're down to 1.3 today. And people say to me, well, it still has a plus sign in front of it, doesn't it? So that's the brain of today's market. Visav what happened back when I started the business? The market doesn't see it. GDP, real GDP is slightly positive year on year, but the three and six month trends are showing that that 1.3 is actually subsiding and the economy is actually contracting. The economy is actually contracting right now. And but you see then you have Jay Powell telling everybody that the economy is solid and I guess that the world will listen to Jay Powell over David Rosenberg. And when you have the central bank chairman saying things are solid, well, the economy is solid. The economy is solid. inflation is going to melt away. Fed's going to cut rates, no tariff war, no M East war, big beautiful bill, all the stimulus, and you're off to the races. And that just comes down to why investors, and it's not an earning story. Earnings estimates are not going up. What's been going up is the market multiple. What's been going up is the conviction level that we're going to get solid earnings. So, it's been a multiplddriven market. You asked me before about the fundamentals. No, this has actually been very much a momentum and sentiment based rally. I'm talking about the rally that we've had over the course of the past three or four months. It has not been fundamentally based. Earnings estimates are going down, not up. And it's been the news flow uh taking out, I guess you could say, taking out the tail risk in the market, the tail risk of a widening M East war, the tail risk of a global trade war. So these tail risks have been taken out. But you know to some extent I even scoff at that argument because it's it's not as if you know at the market lows in April after liberation day the Ford multiple got down to 18 18. And that's what we call a bargain. Seriously, you know, I started the business in the 80s. I remember in 1982 the trough multiple that actually paved the way for a 20-year bull market. the the market multiple troughed at 8 and today it was 18 and now we're up to 22. So even at 18 I was there thinking is this really I mean it it seemed horrible at the time. I mean the market's down 20%, some other stocks are down, sectors are down closer to 30%. But that was coming off those February highs which were I would say exuberant highs. We go down and the bottom in the market is an 18 multiple. Well, that is a new world altogether, but we never even got to stupid cheap levels. We got to an 18 multiple, which is even higher than the historical average. But those are the cards that were dealt. But you see, I am uh naturally risk averse. It doesn't mean I don't take risks, but the risks have to be calculated. And I like to invest when I have tailwinds. And I don't see the tailwinds right now. And I think there's a lot of speculation that's priced into the market right now. Uh speculation what's happening in the Middle East. Speculation as to what's going to happen or not happen in the trade war. Speculation on uh what happens with this big beautiful bill. uh what happens in the future given that nobody is willing, not even the hardcore Republicans are willing to tackle the deficit. So uh the markets have taken on I think uh maybe just too much of a rosecolor view as to what's going to be happening. I'm not buying this market. There's parts of the market I like, but I will not buy this market with a 22 multiple uh unless bond yields go back to where they were in 2021 cuz that's the only way the math makes sense. Let's talk about what you do like, which is the bond market. Seems to me like, you know, the enemy of the bond market is inflation. It seems to me that if you believe that President Trump is just bluffing for the sake of negotiation with all of these tariffs, okay, I see that. But if it turns out that these tariffs really happen and long-term we we really do have a tariff ccentric economy. It seems to me like that's very inflationary, isn't it? The classic economic answer is that it depends depends on a lot of things and uh I mean the tariffs are already here. We already got the 10% baseline tariffs. Uh they were like 2 and a half% before all of this nonsense began. So the tariffs are already here. And yet, you know, we're going to get a print later this week on the core PC deflator. The consensus is 0.1. It'll be the third month in a row of 0.1. Uh we had some tame CPI PPI data uh not just for one month, but for a couple of months. Uh the Fed of course is on the sidelines like a deer in the headlights because uh it wants to make sure that this is going to be sustained. Uh by the time they cut rates again, it'll be too late to save the economy. But they're more interested in um preserving their credibility, which they think they lost 3 years ago. So on the good side, I remember that what is being tariffed is 40% of the CPI. It's goods. And then the question becomes who pays it? I mean the the imports come in and then the importer pays the duty to the government. Uh and then it's a matter of how much gets passed on to say the retailer or the auto dealer and then what do they end up passing on to the final consumer and it comes down to where you are in the business cycle. Like for example, when we had all those supply shocks happening around CO, those supply shocks fed into wages because the labor market was heating up dramatically. And of course, the government through very large scale and extended jobless benefits were paying people not to work. People were actually making more money staying on the couch than going back to their old job, which forced employers to dramatically raise their wages to attract people back into the workforce. That's why it wasn't transitory. It lasted 18 months because the initial rounds of shocks from the ongoing impairment of global supply chains and of course we had the demand impact from all the fiscal stimulus and the reopening of the economy but it fed into wages. So we had a wage price spiral. It wasn't like the 1970s that it lasted a decade but it lasted 18 months. Now you're looking at the broad contours of the labor market right now and job openings are going down, not up. Hirings are going down, not up. Jobless claims are going up, not down. It's a completely different labor market. You see, then the quit rate, the voluntary quit rate, I call it the uh take this job and shove it index, uh the job hopping index. The job hopping index was surging. keep companies couldn't hang on to their labor, so they had to keep on paying up more for labor back in 2022 and 2023. That's not happening now. So, as a business person, you got to think about what is inflation? What is inflation? Is inflation the prices that you want to charge your customers or is inflation the prices that your customers are able and willing to pay? Now, in that period in 2021, 2022, and 2023, don't forget that the household sector was flush with $2 trillion of excess pandemic savings from the deep pockets of Uncle Sam. So, everybody turned price insensitive. They didn't care. You didn't feel it. And plus, you can get a job by snapping your fingers. Well, you can't do that anymore. And those $2 trillion of savings are gone. It all got spent. So, I think you're going to find, and you see it in the data, something called consumer resistance to any price increases. Companies will either have to cut costs elsewhere, raise their productivity ratios, or they're going to have to eat it in their margins. So, when I say that, it depends. Well, it depends on who is going to bear the brunt of the tariffs. That's the big question. But you see, when I'm looking at the broad contours of the labor market, which goes beyond focusing on monthly headline non-farm payrolls or even the unemployment rate, these are limited statistics. There is slack emerging in the labor market that goes unreported and is unappreciated, but is going to forstall the ability for anybody to demand higher wages from their bosses. That's not going to happen. So this whatever price increase we do get from the tariffs are going to hit the wall in the labor market and all they will do is create the conditions for negative real work-based incomes and then with that a contraction in real consumer spending which is about 70% of GDP and just reinforce the declining trend in growth that we're seeing right now that I discussed earlier. So the other part of the story is of course the 60% I didn't talk about which are services. Services aren't being tariffed and you're seeing restaurants, hotels, airlines, recreational services are all on a significant disinflationary trend right now. That inflation trend line in the consumer cyclical service area, that inflation trend line got broken quite a while ago. And then of course, like I said before, you have rents and you have house prices and they're going down. So what even if you get some pass through on the good side, the 60% call the services aside, you can't ignore that. And in fact, that was the principal story in that very tame CPR report uh that we just got a little while ago. But I fall into the camp that a inflation is a lagging indicator. B whatever we get on tariffs most likely will be uh a oneoff maybe a two off or three off series of increases. Those increases will get snuffed out by a loosening labor market. And because these tariffs will be damaging to aggate demand, we'll end up next year with inflation lower than would otherwise have been the case without the tariffs. You might end up with a higher price level, but inflation is not about the level. It's about the rate of change. And I think that'll be the big surprise going into next year is how far inflation goes down, especially now that the service sector is playing ball. And you're right, that is one of the principal reasons why I am bullish on treasuries. I think that we'll go from four and a half% and I think we'll be going down to 3%. And in fact, we don't even have to go down to 3%. To know this, to know the math. You see, the reason why people are scared of bonds is the horrible experience and memory of what happened in 2021 when the 10-year note was like.5%. And all you needed was a six basis point increase in the yield to generate a negative return. Imagine that. It was a historic period of time. Uh you had no coupon protection. And it only took a minuscule rise in yields to generate a negative return. And that's what everybody was saying for the next couple of years. 6040 asset mix is uh is a relic of the past which I I never believed. It was just a circumstance of what we were in coming out of the pandemic. fears that we were going to have the Spanish flu. And who knew that we're going to have Fiser Monday, you know, in early November of that very same year in 2020. Everybody was saying it was going to take 5 years to get a vaccine. Uh so we came out of it pretty quickly and then we were left with gobs of excess fiscal and monetary stimulus. That much is true. But you see the tables are turned because at uh call it, you know, we were not too long ago at 4 and a.5% on the 10-year note. Well, what does it take if you're at 4 and a half% on the 10-year note? What does it take to generate a negative return in your bond portfolio would be you'd have to go up 70 basis points. Okay? You'd have to go to 5.2%. To lose money in the bond market, you'd have to break above the cycle highs we had in October of 2023, uh, when the Fed was still in tightening mode, which we know it's not there any longer. But if we were to go down 70 basis points from where we are today, you'd make a 10% total return in the 10-year Treasury note. So go up 70 basis points, earn zero total return. Go down 70, earn 10 basis point 10%. Most people in the equity market don't understand bond math and the power of convexity. So I like that riskreward tradeoff. I like that riskreward trade-off in treasuries more than I like the trade-off between 4% plus risk-free rates and a 4% plus earnings yield. David, has the US dollar entered a new secular downtrend? And if so, what does that mean to your bond market outlook? It there's been many many instances in the past where bond yields and the dollar go down together. Uh it could well be uh that the bond market and the stock market see what I see uh because they're going down in tandem now the US dollar by more but they're going down in tandem because they probably the bond market and the and the dollar market probably has my economic view and as my view that the Fed will have more to do than what's priced in. Is the dollar in a fundamental bare market? Uh, I'm not going to go that far, but it certainly is in a classic steep correction phase. Really, the best hedge is probably gold, but I've like gold for a bunch of different reasons. Uh, you know, beyond just uh the hedge against the dollar. Gold has just got some other very great hedges and as a like bonds is a source of stability and a diversifier and a balance in the portfolio. But am I positive on the dollar right now? The answer is no. do what I say it's an going into a huge bare market and I I I doubt that's going to happen but it doesn't mean this correction is over with but I do think that you know people are looking at anomalies it is anomaly you think boy if the stock market's right we're going to have booming growth if you believe in the stock market story right now and the valuations you have to believe we're going to be re accelerating this economy to over 3% real growth I just told you the run rates won and the near-term trends are slightly negative Uh, but I think that's what the dollar market and the bond market are telling you. That is at odds with the stock market's telling you right now. So, who's your money with? The dollar and bonds or the S&P 500? That's cuz at some point there will be the convergence. My money is on what the dollar is saying and what the bond market is saying. And if they're right, uh, the S&P 500 is not going to be sitting above 6,000 for a whole lot longer. Let's go a little deeper on precious metals. Since you brought that up, it seems to me what makes this precious metals rally a little different from prior ones is we've seen so much strength in gold, but not in silver and platinum. Uh, you know, that echo effect wasn't there this time around. A lot of people thought that might be because it was central banks buying the gold uh as opposed to to retail and and commercial interests. Seems like just in the last few weeks that's changing. All of a sudden, silver wants to catch up again. Should we read any meaning into that? What's going on? No, we we wrote about that. They say that beer is the poor man's champagne and uh you know, silver is uh the poor man's gold. So, you can buy one at what, you know, $37 an ounce and and one, you know, heading up to $4,000 an ounce. So, silver is a is a good alternative for people that don't have big pockets. Not everybody can go out and buy uh you know, a few bars of gold. So um silver is a good proxy has a high correlation uh silver has a high correlation with gold. Uh I think it got to a point for anybody who drew the chart and I wrote about this the the silver to gold ratio really you mean you were talking about couple of standard deviation events here. So silver is just playing catchup. Gold's got more alluring properties uh and because it's it doesn't there's nothing cyclical about it but silver goes into a lot of industrial uses so it's more vulnerable to a slowing economy or recession but it is correlated with gold. It has uh quality characteristics. The reality is like you said though it's more of a catchup trade and you can't ignore what the central banks are doing. Central banks are continuing to buy record amounts of gold in their reserves. They're diversifying at an unprecedented rate and there was just a survey done by the world gold council saying that for the coming year a record share of the world central banks are going to be adding to their gold reserves. So this is no longer just a case of you know Brazil, Russia, India and China. This is broadening out into the developed world. Who knows where this can lead us? That's a very powerful flow of fund uh event as we know with QE how significant the central banks can be. But you remember throughout the 1990s the central banks of the world were dumping gold and were investing in treasury bills and in bonds and in yieldbearing securities and dumping their gold. Gold went into a 10-year fundamental bare market in the 1990s, which didn't end until the Washington Agreement in 1999 when the moratorum was placed on central bank gold sales. That was the low in gold at around 250 260 an ounce. Think of what it's done since then. The price of gold has gone up 11fold since the Washington agreement. The S&P 500, which is all you ever read about or hear about, is up five-fold. and gold is up 11fold. And so um you know I imagine that uh the day that the world central banks say okay we have actually diversified enough in a gold reserves um then you could say well we've just removed a very important prop from underneath uh this this gold rally but that has been the principal source of demand. The central banks if the world gold council is correct in its survey it's not going to be ending this year keep an eye on it. You know, we've done a lot of work on gold and really mapping out more how this bull market ranks against other bull markets, the pattern of behavior, and we think it could get to $6,000 an ounce. It's at the peak. Uh so, you know, it's pressed the pause button for the past uh couple of months, still up something like 30% for the year at least. But the bull market and gold is intact. That is a buy and hold. And if you're looking for something that trades at a steep discount to the gold price, uh, the gold mining stocks and they've been a great place to be, especially in Canada. So, um, that's a really been a a a a a core part of our model portfolio has really been what I refer to as the bond bullion barbell. The bond bullion barbell and it continues to work very well. Final question, let's touch on energy markets before we close. Obviously, we've got a lot of geopolitical tension. Once it blows over, are these uh oil prices high prices or low prices? Probably will end up uh trading in a range. I guess because of my economic view and how that translates into oil demand, uh I'm more bearish than bullish. And of course, you know, we'll get the flare ups. All the energy bulls got very excited in the last uh week or two because what was happening in the Middle East. So, you can always say, well, this is a great geopolitical hedge, oil. Uh, however, I don't really like to invest around geopolitical events. I I tend to find that doesn't work well for too long. I think that, you know, Donald Trump embarks on that trip uh to the Gulf States last month and uh he did come away with a jet uh from Qatar um but probably made the case that he wants more supply. And the one thing we know especially about Saudi Arabia and Kuwait is they have a lot of available supply. I don't think that Donald Trump's going to be successful with drill baby drill, but he probably will be successful in getting more oil into the market from OPEC plus at a time when the global economy is going to be cooling off. So I find it difficult to be bullish on on oil. And in fact, uh, the the energy stocks, which we used to really like a lot a few years ago, they're right near the bottom of our ranking scale on the, uh, on the equity sectors. There's there's better areas to hide in the stock market than energy. Well, David, I can't thank you enough for another terrific interview. But before I let you go, please tell us a little bit more about what you do at Rosenberg Research. for years and years and years. Uh, your Breakfast with Dave newsletter was famous in the industry, but you were kind of circling through a bunch of different research jobs for firms that were maybe controlling too much, putting a little bit of uh that permabull pressure on you. You broke free. What are you doing at re Rosenberg Research and uh how can people find out about all the exciting services you're offering? Thanks. Thanks for the question. And more importantly, how do we get a freebie out of this deal? Well, I'll put it this way. Anybody who is listening to this podcast will get an automatic one month free trial of everything I do. Uh so I still do the breakfast with Dave, a daily publication. That's the flagship, but we also do uh every month we do a special report in depth. Uh we did one on gold. We did one on airspace defense. We did one on demographics. We did we just uh completed a very big one on the AI revolution. always with the view towards how do you invest around this? What do you want to own and what do you want to avoid? And we have our monthly strategizer publication uh which I didn't I used to do at Mirror Lynch Canada and then I recreated it uh when I started Rosenberg Research over 5 years ago. And that's our go-to guide for how to invest your money across all the asset classes and all the sectors and it's global in nature. And so that right now I would say rivals Breakfast with Dave as uh the most popular publication that I produce. Uh, something else that has really been value ad I believe that I didn't used to do was I have an information hotline for all of my clients that there's an information hotline. You could send me questions, queries, criticisms, whatever you want, and I'll get back to you the same day. I spend 20% of my day just responding to the information hotmail. And um it keeps me sharp and it's a great way to interact with my clients cuz you know what in this business you can't control the markets but you can control client service. And for people that want to um you know uh kick our tires you can either just Google rosenbergress research and um that'll take you to the website you can go to information at roenbergressearch.com and it'll take you just fill out your name and one of our my client service people will get in touch with you. And for anybody who wants to reach me, I'm not going to give out my phone number because that's maybe a little too personal, but you can also reach me at my email address, which is uh drosenberg rosenbergress research.com. And again, the URL for anyone who wants to cash in that offer of a free one-month trial of all of Rosenberg Research's uh services, it's at rosenbergress research.com. Patrick Szna and I will be back as macrovoices continues right here at macrovoices.com. [Music] Now back to your hosts, Eric Townsend and Patrick Szna. Eric, it was great to have David back on the show. Now, let's get to that chart deck. Listeners, you're going to find the download link for the postgame chart deck in your research roundup email. If you don't have a research roundup email, that means you have not yet registered at macrovoiceic.com. Just go to our homepage, macrovoices.com, and click on the red button over David's picture saying looking for the downloads. Okay, Eric, let's start off with your thoughts here on the equity markets. Well, Patrick, my June hedges have expired, so I'm starting to accumulate September put spreads on S&P E- mini futures, but not too aggressively here. I think they're going to get cheaper before they get more expensive. So, I'm taking my time starting to accumulate and build a position. Eric, we continue to be at a really interesting moment in the markets here. We are now directly retesting those uh December, January, February highs up around uh the 6,100 area. Now to accompany that, we basically had a straight line rally from the April lows up 26 27% in a span of like 75 days and so this market is overstretched. Now one thing that is becoming an inherent feature of markets is the uh direct influence of flows particularly by systematic money. Recently there's been huge flows on vault targeting funds that are uh doing substantial buying driven by contracting real volatility. At the same time, we've had CTAs all have to do the bullish flip on the upside and dealers uh which were long a whole bunch of gamma were actually uh forced to pin and drive this market uh higher toward that pin and now kind of influencing this short-term market direction. The point that I want to highlight is that all of these forces have now stretched this market and are now like David was suggesting trading at some pretty high multiples in an environment where we really now need a whole bunch of very positive news in order for the market to stay up here. We could have a jobs numbers disappoint next week. we could have uh some uh tariff issues and later in July we could have disappointed earnings that uh don't meet up to these lofty expectations. There's a lot of things that uh that are in play and the market trading up along these highs in an overbought condition, including the fact that we're now 250 S&P points above the 50-day moving average, which is about as far as it typically goes before beginning some sort of a correction. We're in a a window where the asymmetry is skewed against the bulls on the short term. That doesn't mean it has to be an ominous market drop like what we saw back in March and April. Not necessarily. But a correction is long overdue here. One of the even a 5% correction is 300 plus S&P points. Uh that could see us trading down to 5,800 or even a little bit lower on a very quick get reversion. At this stage, I think that you have to be planning for at least some form of a correction and uh and things really could get very toppy here uh throughout the summer. All right, Eric, let's touch on that US dollar. Well, Patrick, the breakdown that we've seen this week to fresh lows below 97, trading at a 96 handle at recording time just confirms our predictions here on Macrovoices that a new secular downtrend is in play for the US dollar. And frankly, I think we could have a long way left to go to the downside. Well, on page three, I have that US dollar index chart, and we can really see those lows that were established in 2023 and 24 were not only decisively broken, but became resistance when the market tried to rally last month. We we seen in the over the last month is incredibly negative price distribution. Every rally has almost immediately failed as this is clearly in this uh decline of lower highs, lower lows and uh persistently being hit on the bid. While we're seeing some currencies like the US dollar, yen far more in a muddle, there's very clear trend in the euro, pound, and the Canadian dollar as an example. And so we are in find ourselves in a situation where this breakdown to a lower low has in fact put to bed this idea that we could have a support line or a double bottom along the previous low. And so the question is how low does it go? Well, the first and most immediate downside target is this 95 to 96 zone below another couple handles down where there's a measured move. But if we really zoom out on uh the weekly and monthly charts, there was this pronounced trade range that was established through 2016 all the way through 2021 for over 5 years where the bottom of the trade range was all the way down at the 90 level on the Dixie. Uh and the upper boundary range was this 100 to 102. And so if the the fact that we've broken down now is the question is are we now re-entering that trade range? Are we now vulnerable for the seeing the dollar index go all the way down to 90? Well, that's certainly on the table because with this breakdown, the distribution is so relentless. Even though the dollar is a bit oversold, it it's a clear trend that is in place and we want to first see where it settles down before trying to rockar call a a turning point in the dollar. All right, Eric, let's talk oil. Well, Patrick, you got to ask yourself, is this selloff that we've just had of $10 from more than $10 from uh $14 from the highs, is this a second chance to get in on an opportunity to get in on the long side of a new oil rally that could have legs? Well, clearly, uh it's we've just seen a pretty violent reversal to the downside. But the question to ask yourself is why did we see that reversal to the downside? Well, it was because President Trump said problem totally solved and now all nuclear facilities, all nuclear enrichment capabilities, uh, centrifuges and so forth have been completely and totally obliterated and destroyed according to President Trump and precisely nobody else. Sorry to be blunt here, folks, but I I think this really is as simple as I don't think the president understands. Or maybe there's just people around him are telling him what they think he wants to hear, but I don't think he gets it. I don't think he realizes that most analysts, everybody other than himself is saying they didn't do that much damage. The bunker busters didn't really destroy all the nuclear facilities as hoped, and it probably would only be a few weeks to get them restarted again. Well, okay. If that's what happened, when President Trump does figure it out, he's probably going to get aggressive again. And what we've just seen is $14 of risk premium come out of this oil market because President Trump calmed down. Why would we think this is the last time President Trump is going to uh get uncom? seems to me like there's an awfully good chance that we see another big upward price spike in oil if we get uh another round of this. And that seems extremely likely, especially considering that nobody else, including the folks that read the bomb damage assessments, agree with the the president's view that everything has already been neutralized. He actually said that there would be no need in talks with Iran to even negotiate a new nuclear deal because there was nothing to negotiate. there's no more nuclear risk to worry about because it's all been obliterated. Uh nobody else thinks that that's true. So when President Trump figures out that it's not true, I think he's going to do something that's going to take oil back up. So uh I think it's potentially uh at least if you're in a speculative mood uh a bargain buying opportunity here to get in on this long. Patrick, what's your take on it based on the charts? Well, maximum volatility is definitely what we're seeing and there was a huge risk premium being put into oil and the fears that the escalation was going to draw the US deep into this confrontation and that was very rapidly withdrawn out of the market earlier this week. Uh we now are trading at a very interesting moment. the $6465 level on WTI is uh in my mind a kind of key pivot because if we're on a sustained basis not only below the 50-day moving average but below this retracement zone then the only outcome is crude oil going for a direct retest of April and May lows which are all the way in the 57 and 60 level and the question really is is uh while maybe uh the escalation of the situation isn't that severe alternative point is that is oil in that kind of abundance that uh we could see in spite of all of these conditions oil trading right back to its previous lows. My view here is that it it's a buy on dip. Uh I don't think we're going to see at least I'm currently betting that we're not going to see that 57 to 60 zone and that this level will actually hold. Now does that mean I think oil is going to 80 85? Well, I mean, a lot of things would have to start kind of uh working in oil's favor for that kind of move, but a bounce back to $70 and us re-engage a new trade range where we spent September through January trading uh in in a kind of like $68 to $72 range. I totally think we can get up there and see a new elevated level uh for crude. So, I'm buying here looking for that kind of a bounce up to that zone. Eric, on page five, I have that gold chart. It continues to uh consolidate, but well above that 50-day moving average. Uh are you still bullish here? Well, Patrick, it makes perfect sense that we've had this deep uh dip or pullback or correction or whatever you want to call it, this 100 bucks down in gold price makes perfect sense for the same reasons that oil is selling off hard. Uh, you know, the world has been told now that nuclear holocaust was just diverted. Everything is fine. Iran nuclear facilities have all been destroyed. Uh, there's no more tension or grief between the US and Iran. Okay. Um, I think when President Trump figures out that the nuclear facilities were not really destroyed, that's all going to change. But for now, it makes perfect sense that if the the theme that's driving other markets is a perception that this is all blown over. You know, we saw uh 14 bucks come out of oil. We saw a 100 bucks come out of gold. I think we're going to see both of them go back up. So, buying both of those dips makes perfect sense. Uh so far, the low on gold intraday has been 3308 3308 on the August contract. I know that number all too well because I only missed it by almost exactly five bucks on my resting limit order below the market which didn't get filled today. I think I still have a shot though. The slow stochastics are only just starting to touch the oversold uh range. The RSI is still mid-range. So, I think there's definitely room for another small wave down here. Maybe to oh, I don't know, you know, a high 32 something, 3290, 3293 in there somewhere, maybe where I think the the bottom is, I'm still going to buy just above 3,300 on this dip if I can get it. And one way or another, I'll buy this dip. If it turns out I already missed the low, I'll chase it if I have to uh in order to get a seat at this table. Yeah, Eric, I'm in the buy on dip camp as well. Uh, at this moment, we have US dollar weakness, which typically is a tailwind for for gold that is priced in US dollars. And at the same time, almost all these pullbacks have held above its moving averages, held above fib zones, making it a very traditional consolidation. Now, at any one point, gold could start a bigger correction, but there's no reason at this moment from a price action perspective to believe that that has begun. And therefore, I'm in your camp that dips should be bought and there's room for this still to break out. Uh the first wave measured move is towards that 36 to 3700 if it does break out. So, we're watching whether this important 3,300 pivot ends up uh holding the line here. So, Eric, let's talk uranium. On page six, I have that spot physical uranium trust and uh prices have uh clearly been improving. What are your thoughts here, Patrick? The spot price of uranium, I've said many times, is the key. Once that gets moving, everything else will follow. And that's exactly what's happening. Uh spot uranium is 7750 now, almost at parody with $80 term price of uranium, the contract price for long-term contracting of uranium, which is where all the volume happens in the uranium market. Now, unfortunately, the gap filling pullback on uranium miners that I was hoping for is probably much less likely to happen at this point. Seems like it's kind of game on for this bull market. And now that spot uranium is moving to the upside, uh it seems like it's uh everything we can just to hold our horses. So, I'm still hoping that from a seasonality perspective, you know, this market shouldn't really heat up until September. I'm still waiting for a nice big dip to buy, but if we don't get one by mid August and I haven't gotten my full allocation on a dip, then I'll buy at whatever price I have to in order to hit my max leverage target before we get to Labor Day. By which I mean American Labor Day, 1st of September. Uh I think it's around September that seasonality and right after the WNA conference, which I think this year is the first week of September. uh right after that conference is when the buyers usually really start buying and I definitely want to be at my max leverage when that happens. Well, Eric, of course, uh, buying dips is always better than buying rips, but uh, I think the bigger thing that I want to highlight is the fact that we had a very clear and pronounced bare market in uranium where from January of 2024 when it peaked, uh, we basically spent 15 months in a very clear distribution cycle that saw uranium virtually lose 50% of its value based on the that SPR physical uranium trust. Now, uh, that sequence of lower highs and lower lows in that downwards channel has finally been broken, and we've now spent over, uh, a month and a half in a bull trend above the 50-day moving average. This is the very distinctly different price action than we've seen in the year prior. And so, to me, there's a lot of evidence that uranium has obviously entered a new bull phase. Uh, buying dips is clearly the more tactical way of approaching it. Uh but I do believe that these are still the very beginning phases of a bull run that could last the rest of the year and even a chunk of next year. And so uh continuing to watch whether uranium uh can build on this is 100% on my watch list. Patrick, before we close, let's hit that 10-year Treasury yield. What are the charts telling you? That 10-year Treasury yield off of its May high near 460 has now dropped down to 428. So, uh, we're we're, uh, seeing, uh, yields slightly weakening on the downside, uh, rolling over. The big question, are bonds, uh, bottoming, and are we going to see a rip in the bond markets, or is this just a retracement from a interest rate market that is simply not ready to make higher yields at these levels? I'm uh, relatively more neutral on the 10 and the 30-year bond. At this moment, there's plenty of room for them to be bottoming. uh you know David Rosenberg was talking about the idea that there's a very much asymmetry in owning these treasuries uh down along these levels. Uh but the question is is that have we really seen the beginning of this trend move and that is still very premature to make that call. But where I have higher conviction continues to be on page eight when I'm looking at that threemon sofa futures particularly I'm going out to December of 20126 18 months forward and this is uh where I find it really interesting because there's so many dynamics uh that could potentially have the Fed be forced to cut more interest rates than are currently being priced in. It could be uh the announcement of of a m much more uh dovish Fed chairman next year. It could be the um uh inflation continues to be benign or or a recession rears its ugly head. Whichever the catalyst to me uh I don't see much downside risk on this and I see obviously all sorts of of surprise risks that could actually have this thing rocket 100 basis points. continue to still really like this as a new trading opportunity. Folks, if you enjoy Patrick's chart decks, you can get them every single day of the week with a free trial of Big Picture Trading. The details are on the last pages of the slide deck or just go to bigpicturetrading.com. Patrick, tell them what they can expect to find in this week's research roundup. Well, in this week's research roundup, you're going to find the transcript for today's interview, as well as a chart book we just discussed here in the postgame, including a link to a number of articles that we found interesting. You're going to find this link and so much more in this week's research roundup. That does it for this week's episode. We appreciate all the feedback and support we get from our listeners and we're always looking for suggestions on how we can make the program even better. Now, for those of our listeners that write or blog about the markets and we like to share that content with our listeners, send us an email at researchroundup@macrovoices.com and we will consider it for our weekly distributions. If you have not already, follow our main account on X at Macrovoices for all the most recent updates and releases. You can also follow Eric on X, Eric S. Townson. That's Eric spelled with a K. You can also follow me at Patrick Serzna. On behalf of Eric Townson and myself, thank you for listening and we'll see you all next week. [Music] That concludes this edition of Macrovoices. Be sure to tune in each week to hear feature interviews with the brightest minds in finance and macroeconomics. 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