MacroVoices #494 Micheal Every: Markets, Policy, Russia & More

Summary

• Market Outlook: The S&P 500 index is showing signs of exhaustion despite the bull trend, with a recent decline of 108 basis points, indicating potential market volatility ahead.
• Geopolitical Insights: The Trump-Putin summit suggests a potential pause in the Ukraine conflict, which could have significant economic implications for the US, Ukraine, and Europe, with the US possibly pivoting its focus towards Asia.
• US Dollar and Commodities: The US dollar index has found a new fair value zone, while commodities like crude oil and gold are experiencing mixed trends, with oil maintaining a downtrend and gold contained within a trading range.
• Fed Policy and Economic Strategy: Discussions around the next Fed chair and potential interest rate cuts highlight a strategic shift towards integrating economic policy with geopolitical goals, including the introduction of stablecoins backed by T-bills.
• European Relations: The US-European Union relationship is under strain, with Europe facing challenges in achieving strategic autonomy and potentially becoming more economically integrated with the US.
• Investment Opportunities: The ongoing geopolitical tensions and economic strategies suggest potential opportunities in precious metals and other geopolitical risk hedges, as well as in sectors benefiting from US military and economic policies.
• Uranium Market Dynamics: The uranium market is experiencing a correction, driven by geopolitical developments, but the long-term bullish outlook remains strong, presenting a potential buy opportunity.

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 Serezna. Macrovoic's episode 494 was produced on August 21st, 2025. I'm Eric Townsend. Rebel Banks Michael Every returns as this week's feature interview guest. We'll discuss everything from what Trump and Bessant are really trying to achieve to prospective next Fed shares to US European Union relations to precious metals and much more. and I'm Patrick Sesna with the macro scoreboard week overweek. As of the close of Wednesday, August 20th, 2025, the S&P 500 index down 108 basis points, trading at 6396. While the bull trend remains intact, we are starting to see some exhaustion in the price action. We'll take a closer look at that chart and the key technical levels to watch in the postgame segment. The US dollar index up 44 basis points, trading at 98.22. definitely has found its new fair value zone. The October WTI crude oil contract up 10 basis points trading at 6271. The downtrend is intact, but the puzzle to solve is will we see a short-term drop back below the $60 level in the weeks to come. The October arbasol up 262 basis points to 196. The December gold contract down 59 basis points, trading at 33.88. a 4-month trade range continues to contain all of the price action. The September copper contract down 133 basis points to 444. The uranium up 97 basis points, trading at 7320. And the US 10-year Treasury yield up five basis points, trading at 429. The key news to watch this week is Friday's speech by Fed Chair Powell at the Jackson Hole Symposium. And next week we have the US preliminary GDP. the core PCE price index and the much anticipated Nvidia earnings. This week's feature interview guest is Rabel Bank's Michael Evy. Eric and Michael discuss the Trump Putin summit, what a deal could economically mean, Fed policy, oil markets, and more. Eric's interview with Michael Ever 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 Townsend. Joining me now is Michael Every, global strategist in economics and markets for Robbo Bank. Michael, it's been a while since we had you on. Obviously, the really big topic this week is going to be the Trump Summit with Putin. Now, we should let our listeners know we're actually recording on Sunday evening US time. So, it's just after the wrap-up of that session. Our listeners are going to have three or four days of news flow that we don't have yet in terms of what's happened afterwards. So, I hate to put you on the spot, but based on what we know now immediately after the wrap-up of these sessions, we don't even have all the news flow out. What's your take on the big picture of where this is headed? Are we about to wrap up and maybe wind down this Ukraine war? Or is this just President Trump kind of, you know, as he puts it, weaving his deals and maybe not really expecting anything to happen quite yet? >> In this job, you and I are both paid to try and look well beyond three, four or five days. So, yes, there is going to be news flow between what we're recording now when people will hear it. But hopefully what we have to say still has value over that particular, you know, time gap. The view that I have is that it's likely to be not the end of the war per se, but the end of a phase of the war. And we could we could address it as a pause to refresh. And then the issue is who is it refreshing? Because obviously we all want a sessation of the terrible violence. President Trump does. Russia certainly does in terms of the fact that its economy is struggling at the moment and it needs that breather. Ukraine is being ground down. Everybody benefits from the fighting pausing but where we go afterwards is a very very different question and I think there are multiple scenarios but the most likely ones which we can unpack are that I think it's probably good for the US on balance. It may be a disaster for Ukraine or it could be very good for Ukraine and it could be very very bad for Europe or extremely difficult for Europe but something that it emerges stronger from in the end. >> That's a lot to unpack, isn't it? There's a whole bunch of things that could go one way or the other way depending. So, we better dive into the depending on what. Basically, I've been saying for a long time that Trump would attempt to introduce what I've been calling a Noxin strategy, which is a reverse Nixon. Because in foreign policy circles, they've been talking about the reverse Nixon. I said, "Well, N O X I N. That's a Noxim where you try and make nice with Moscow in order to peel them away from Beijing, which is of course what Nixon managed to do with Beijing visav Moscow, albeit after they had already had a spat. And here the two haven't had a spat yet. So that makes geostrategic sense, except of course that Moscow and Beijing are currently very very tight. And so I've also been making the quit for many months that Noxin wouldn't work because it starts with no and it's got she in the middle of it. Exi. So that still remains the underlying assumption. But that doesn't mean that Trump can't manage to patch things up with Russia to a certain extent by taking themselves out of the Ukraine loop and giving them some breathing space on that, both Russia and Ukraine. So I think what we'll see at the summit between the UK, EU leaders, President Zalinski of Ukraine and Trump on Monday in DC, and it's Monday here in Asia as as I'm speaking to you, is Trump basically saying, "Look, the deal is going to be this. The land that Russia has already taken is going to remain in Russia. Ukraine cannot get that back. realistically certainly not Crimea and realistically most of the other territory too is now effectively Russia. So the greater likelihood is that the border is drawn along the river Dipper and then there are questions over certain pockets like Don Donetsk oblast for example which Russia doesn't control all of and Ukraine would say well why do we have to give up all of that particular province when Russia only controls half of it etc etc. So there are a few a few questions of where the line draws, but pretty much it's going to be around 20% of Ukraine is going to become Russian at this point, which is a victory for Russia. But for those expecting the US to say, well, we're going to we'll fight Russia absolutely to get that back, which Europe has been very vocal about, too. Clearly, that isn't in the US grand macro strategy interest. They want to pivot to Asia rather than fighting Russia over Ukraine, which is of marginal concern for them strategically. So that's not going to happen. And for those who say, well, the US and Europe together should be sanctioning the hell out of Russia and putting secondary sanctions on everybody else who deals with Russia such that Russia has to surrender. Well, they have to understand that means putting secondary sanctions on China, which means if you think you have an issue with tariff inflation coming ahead in the US, it'll be enormous because you would have to basically lock China out of the global economy straight away to punish them for dealing with Russia. And if anybody wanted to do that, they could have done that for the past couple of years. Nobody wants to. They're too integrated. The pain would be too great. So those sanctions are simp simply not going to happen. I'm not saying whether this is a good thing or a bad thing. I'm just describing it. And the US isn't isn't going to step up militarily. So then Ukraine is going to turn around and say, "Well, we need a security guarantee. We can't just sit here and give up 20% of our land for peace with Russia because Russia can then use that pause to rearm which it certainly will and will come back and nibble again and again and again and start taking more and more and gradually eat us whole. So then what's the security guarantee? What's that going to look like? And here I think the US is going to say Europe over to you. We will sell you as many weapons as you need to defend Ukraine. Uh so that's good for the US military-industrial complex that helps Europe also build up its own factories again which are really struggling at the moment but very much as part of US focused Pentagon focused supply chains. So that kills any hope of European strategic autonomy. Europe becomes a subset of the US from an industrial perspective. And at the same time, the US is already leaning on Europe and others as part of trade deals and saying we expect you to invest hundreds of billions of dollars in factories in the US which surprise surprise will be making inputs or directly those weapons which it sells to Europe. It's what some including myself are calling a reverse Marshall plan where Europe is helping to rebuild the US rather than US rebuilding Europe after World War II. Now the roles are reversed. So if that happens then effectively the US can pivot to Asia. It's selling lots of weapons to Europe. Europe is really kind of subsumed into the US economy. It has to invest in the US and it has to buy from the US. um the US is in a better position and I think we'll discuss this shortly to roll out stable coins and Europe won't be able to say no because its economy and its security framework is based on the US so it can't reject them. Hopefully Europe then says, "Well, with that backing, we are prepared to put troops on the ground in Ukraine and ensure that the 80% of Ukraine remains, you know, a buffer state between Europe and Russia, but it remains perfectly safe and viable as an entity. And if it does that, Ukraine may not, you know, have a future in Europe in the immediate future or in NATO, but it could certainly exist. If Europe doesn't do that, if they can't agree who's going to decide, who's going to pay, how are they going to pay, and who's going to fight, because that's very much on the cards now, or at least in principle, who would fight, then who is going to defend Ukraine? And then really, you see that 20% of Ukraine becomes a 20% peace in our time if you think back to Neville Chamberlain. And it may mean only 20% peace Pac in our time, which is an extremely worrying backdrop. So I've tried to give a very brief summary there, lots to unpack, but there are huge implications for lots of different markets and for geopolitics as part of that. >> What I found most fascinating was you used the phrase pivot to Asia talking about where the US may redirect some of its military might. It seems to me like really the the Iran and Gaza conflict is going to acquire more US attention than China will, at least initially. Am I reading that differently than you are or how do how do you see Gaza and Iran fitting into the chronology of all of this as the US pivots toward Asia? >> Well, remember the Middle East is part of Asia. Technically, it's Western Asia. We often tend to overlook that. What we've already seen play out in the Middle East visav Iran. And what continues to play out in Gaza is the US attempting to put down a very strong footprint as minimally as possible from its own side and that it doesn't want boots on the ground. It doesn't want any repeat the two Gulf Wars but nonetheless ensuring that oilrich energy rich region stays very much in its pocket not in Russia's and not in China's and that is critical in order to gradually advancing towards China and I would say again just as what the US may be about to do today my time you know tomorrow your time as we're recording visa v Ukraine which is going to upsell a lot of people particularly in Europe but what I think is geostrategically advantageous for the US overall and I'm not saying that as a moral judgment I'm just saying that you know objectively looking down helicopter view from above they've achieved the same thing in the Middle East because while again they may be very unpopular uh in terms of what's transpired recently the actions visav Iran demonstrated to Beijing and to Moscow that when push comes to shove even if the US doesn't want a major war As Russia is currently carrying out in Ukraine, it is prepared to use enormous targeted force to get what it wants. Iran was strutting around, you know, a few months ago as part of an alliance with China, with uh with Russia, with North Korea, and trying to expand regionally via its proxies. It's really been put back in its box. I mean, it's rocking on its heels. And in fact, if you read the Middle East news, you'll see that at the moment, Iran is close to running out of drinking water completely. And I'm I'm not exaggerating. They really are running out of water. So on that basis, what what Trump did in striking Iran's nuclear program helps to lay a footprint which says to the Middle East, look, we're still here to stay and we expect you to be in our camp fully. uh except Iran of course, but Iran's going to be in that box. When push comes to shove, if push comes to shove, oil is going to remain priced in US dollars and we're not going to let China make any further inroads there. So, I think people have failed to join the dots on what's already been achieved there and Gaza still grinds on. It's a horrible, horrible process. Once that eventually is resolved and hopefully hopefully very soon then I do think you will see a regional realignment politically which will further back that US footprint. >> Now meanwhile as all of this geopolitical stuff is going on in parallel with that we've got essentially musical Fed chairs where we're having a very public and visible process talking about who might be the replacement for Jay Powell. At the same time, Steve Bessant seems to want 150 to 175 basis points of cuts on Fed funds. And I get the impression that somebody has an idea to essentially rearchitect the pro dollar recycling system as a stable coin recycling system. How do we integrate those things? It seems like there's this economic agenda that the president and Secretary Bessant are working at the same time as this big geopolitical agenda. How do we reconcile those two things and figure out what the market does in between? >> Great question. Let me try and unpack that like this. First of all, I have to rewind back to something we spoke about last time I was on your show, which is we can't look at any one policy area in markets or geopolitics separately. We have to see all of them now as interlin because we have left the previous world of economic policy where you talk about monetary policy, fiscal policy, foreign policy and we've entered the world of economic military and political state craft where the economy, the military and of course politics are all integrated together and every element of the economy is integrated together to try and achieve key strategic national security and foreign policy goals. So what I was just describing in terms of how the Middle East fits in with what's going on in Ukraine visav targeting China and I think many people can probably join those dots once I've put them on the page the way I just did. You have to understand too that the larger question that's always asked there is what is GDP for and clearly in the US case is to make sure that we stay number one and China is a long way behind relative to us and we stay global hedgeim. That's what GDP is for. So if we accept that, what's the Fed for? Well, I can assure you it's not about 2% CPI and it's not about purely maintaining, you know, financial market stability. It's not about maintaining a certain level of unemployment and it's not even about maintaining, you know, moderate borrowing costs longer term, which actually is part of its remit people tend to overlook it. It's far more concretely about helping the US achieve that particular goal. Now, if you're a market purist, you can say, well, the best way to do that is to keep CPI at 2% and low unemployment. And I would say rubbish. Absolute rubbish. It may be a subset in certain fair weather, but your central bank with the enormous power that it provides has to be cognizant of what the US grand macro strategy is and has to work alongside the Treasury and the White House. It's quite insane to imagine that you're implementing a grand macro strategy similar to a wartime footing and the central bank saying, "Well, we're not part of this. We're just going to look at 2% inflation." It's quite frankly ludicrous when you describe it like that. So, very clearly, we have pressure being put on the Fed in terms of the floated appointment of the next Fed chair many many months before Powell is due to to step down. and even some of the names being floated as current FOMC members, which would be incredibly awkward. Imagine you're sitting alongside POW in a meeting knowing you're going to replace him in 9 or 10 months. I mean, what's that going to do for the dynamic? But this is all being done not just to pressure interest rates lower, which is clearly something that the US needs to do to keep paying its bills easily. So, you know, that is a subset of it. I think most people in markets can understand that. but more broadly to get someone sitting there who understands all the tools they have available to them such as Fed swap lines for example and realizing that they can be used very effectively as a weapon and at the moment the Fed doesn't do that and I'm strongly of the view that at some point soon it will start to do that now let's go to the second part I apologize I'm going on a long time here the stable coins issue you mentioned the petro dollar now of course that doesn't really exist anymore it's been replaced by the euro dollar which is just the broader international usage of fiat dollars everywhere. And the key point there is that offshore parties lend dollars to each other. They lend them into existence and you create a huge pile of offshore liabilities for the dollar where only the actual US has the ability to create those real dollars. So you have anywhere like no one knows exactly but it could be 120 trillion of offshore liabilities in dollars and actually you only have around 7 trillion in FX reserves abroad. It's a terrifying ratio and of course the US via the Fed uh and the Treasury can you know step up and pump liquidity in whenever they need to but they're the only ones who can do that. Everyone else can rehypothecate but the only actual dollars they've got are those 7 trillion and half of them are in China and can't be touched. So that's already a powerful weapon. But the quid proquo for that is that the rest of the world gets to create those dollars and in creating them part and parcel of that process very often is earning them from the US via trade. And that has absolutely even though you'll have a long list of other people on this podcast saying it isn't true, it is. that has helped to de-industrialize the US because when the US runs large trade deficits which are a a quid proquo for the fact that everyone internationally needs and demands these dollars that sucks jobs and industry out of the US. It's not the first country to experience it. It won't be the last. But it's an exorbitant privilege which comes at a cost. And right now that cost means it can't actually produce enough military hardware on scale to maintain the top dog military position that it's used to having. For example, you've got a magnificent navy, but you are going to be retiring ships far faster than you can build them at the moment. So the long run horizon for US military power doesn't look good. These are the others if we carry on the path we're on now. Okay. So now we get to stable coins. What are stable coins? I was a skeptic of them for the longest time. as I was most things crypto because I couldn't see what the point of them was. You know, I understood what they were doing, but I couldn't understand why they were doing it. Well, if you're now going to create a legal framework, which you have with the Genius Act, whereby US dollar stable coins must be backed one to one by T bills, you are creating a demand for both T bills at a time when the US is funding itself more and more at the short end of the curve and a demand for stable coins one to one. So they both feed each other. Now that's good for the US front end of the curve as I said and that's good for its for its fiscal framework even if it would look very dodgy anywhere else. But it also means that stable coins can start to be used in international trade. The US could quite literally at some point soon turn around and say right when you sell to the US we are only going to transfer to you a stable coin rather than the US dollar. And the US could lean on Saudi Arabia and the UAE, who are now much more in its pocket again after having bombed Iran, and say, "We want you to tell everyone who buys oil globally, they have to pay you in stable coins." Bingo. You've just managed to recreate demand for stable coins internationally the way there's demand for the dollar now. And how does that benefit the US? Well, one for one, you have to start getting demand to tea bills while you do it. And alongside the tariffs that the US has got and the promises of imward in inward investment from all the countries who are in the new trade deals it's put together, you gradually start to build those countries and those economies into a US dollar or a US stable coin block because people at home or even private businesses in Europe around the world will start having stable coins on their phone in an app outside the banking system. So you can absolutely not dd dollararize as people are talking about. You can red dollarize and the great joy of stable coins above and beyond the fact that I said that they're onetoone with tea bills is you can turn them on and turn them off. You get to control the onoff ramp for them. So effectively you have created a walled compound within which your allies are forced to effectively dollarize and become part of your supply chain and value chain which helps reindustrialize you to help keep you top dog militarily. So it's a pretty clever package if you see all of it together. But you are going to need a Fed chair who understands how to play that game. I'm going to push back a little bit on this because I see it a little differently which is I agree with you that in the short run stable coins clearly the especially with the genius act legislation are onetoone creating that demand for US dollars. So, you know, replacing the petro dollar system, if you want to think of it that way, we've got the US dollar demand. But longer term, it seems to me what you're also doing is you're training all the central bankers and other holders of reserve assets around the world about stable coins and how to use them. Once you've done that, it's so easy to just switch out of your US dollarbacked stable coin into a bricks buck stable coin or some other stable coin that's tied to some other currency. So, I see it as creating an off-ramp further down the road to make it very easy to get out of the one stable coin into a different one if there's a competitor. So, you know, I look at this as why is there no replacement for the US dollar? Because there's no viable alternative. I think we're creating one. >> It's a good point, but let me push back on your pushing backing if I may. In that part and parcel of what I think the US will be doing via this is trying to create the largest network effect as quickly as possible. And as we know from anything techreated as well as finance, once you've got that network effect, it really matters. It will be very hard, you know, without Chinese style Chinese style firewalls for countries all around the world to prevent people just having US dollar stable coins on an app in their pocket. So countries that previously would never allow the dollar to circulate would could effectively dollarize. But I do think very specifically, number one, the US is aiming to use this for allies only. I actually don't think they want geopolitical rivals using this. They don't mind trying to maybe undermine them and have it in private sector pockets but they don't want the governments having anything to do with it or having any kind of official role. So I do think it is deliberately leaning towards a bifurcation. That's part of the strategy to make sure that there are US- ccentric US stable con supply chains and value chains and the other and we don't go near the other. And secondly while the bricks can talk about it and the technology isn't that hard. I mean they're a very technologically capable block. If you look at India and China in particular putting it together so it works on the ground so that you actually have a coherent economic block where supply matches demand where you have upstream and downstream demand and where you don't have some countries running vast surpluses and everyone else running vast deficits because the US will be attempting to narrow its trade deficit by doing this. so that its allies run more balanced trade with it. So it's a more balanced US- ccentric block. The power is with the US but not via running deficits the way it is now. I don't see how the bricks can replicate that. I've made that argument in detail for many years. If you do a very boring trade breakdown of who exports and imports what to whom within the bricks, it's a very simple story. Nearly all of them are major commodity producers. China buys the commodities, makes everything else and sells them to everyone else. Now, on one level, you can call that hub and spokes, but it it isn't good for India and I within the bricks. Uh it doesn't help anybody else industrialize and it means everyone else runs balance of payments deficits over time. So, it's one thing to say the bricks can adopt it. Sure. It's another thing to actually do that on the ground. And even if it did, as I started uh my my argument here by saying, the US wouldn't be unhappy with that, provided they get the lion share of all the countries that they want by by hook or by crook. That's the kind of bifurcation I think they're perfectly willing to live with. >> Now, Michael, you've described this concept of a grand macro plan that sits behind the the various day-to-day events in the macroeconomy. Is Steve Bessant architecting a grand digital asset plan which incorporates stable coins and a strategic Bitcoin reserve and a Fed chair who understands this stuff and a bunch of other things all as part of some concerted strategy that comes together towards some unified goal. I'm starting to get a feeling there's more to this than just uh President Trump's son is interested in Bitcoin. It seems like it's getting bigger than that pretty quickly. >> Well, I've given you two very long answers, so now I'll give you a short one. Yes. >> Okay, Michael, that's fair enough. Let's move on to another topic that I think you'll have a little bit longer answer for, which is, okay, look, European Union, United States, uh, really since the end of World War II, that relationship has been pretty darn tight through thick and thin. Is it winding down and ending? Is it changing in a permanent way? It feels like at least in my lifetime relations between US and Europe are uh not looking really comfortable. >> They're certainly not. If we actually go through the history of it, we've had repeated episodes like this. Um you know, I vividly remember the whole episode with uh with freedom fries rather than French fries. Silly things like that. So, we've been here before, but maybe not to this extreme. And the ironic thing is everything that Trump has told Europe to do, you know, stand up, spend 5% of GDP on defense, stop only exporting to us, buy things more more from us, you know, narrow that trade imbalance are things that every previous US president all the way back to Kennedy had been saying too. And yet they didn't happen for decades and decades and decades. Now, I'm not trying to praise Trump. I'm just saying that's objectively true. Uh, and Europe is now reacting to it. Now they're bitterly resentful and very very unhappy but they are finally pivoting under pressure. Now from the European side there is much talk and frankly Europe does specialize in in rhetoric. Much talk about the fact that they're going to try and strike out and achieve strategic autonomy. Now the shopping list for that is very long. The bill is absolutely exorbitant and I've always said the the possibility of achieving it was like walking a razor's edge. You could do it but incredibly hard to do and it's a very dangerous fall either side. And if we look at what's likely to transpire in Ukraine today or visav Ukraine I'm sorry. uh and if we look at the backdrop visa v stable coins which is really accelerating quickly I think the shopping list and the shopping bill for Europe to achieve strategic autonomy is now ridiculous. I don't see it as realistic anymore. So while Europe may be sullen and angry and resentful, I think that ironically the relations between the US and Europe will grow tighter but not as equals. Europe will absolutely be subsumed into a greater US production system uh and as effectively the lieutenant responsible for guarding Europe within a you know within a US security umbrella and they won't like that you know they'll continually to be chiding about it and that's completely natural uh but I don't really think they have many realistic alternatives at this point to put it specifically I I sat through many angry conversations with Europeans telling me uh that they absolutely would not spend 5% of GDP on defense on NATO. Well, they all they all are except for Spain and I think maybe Luxembourg, maybe Belgium, too. Mostly they are. And then Europe absolutely telling me again and again and again, we will not sign an unfair trade deal. We're just not going to do it. Well, they did. you know, we can be given the next set of we are not going to do XY Z in instructions and and the real politique tells me that yeah, yes, they will. >> Now, meanwhile, the Financial Times, I think, used the phrase inflation nutter to explain uh who they feared might be put in into the Fed position next at the US Federal Reserve. When the FT is talking about the perspective next Fed share as an inflation nutter kind of tells me that their editorial perspective may have become a little bit um I don't know reserved about the their perspective on US monetary policy. What it feels to me like we're kind of in this Europe is stuck. They have no choice but to cave. So, they're going to cave, but they're not going to forget this is kind of the the feeling I'm getting. What could they do if they're going to not forget this to eventually act on it? >> Nothing. >> Now, I'm being flippant, but let's We have to be realistic. And I >> But, but I just want to clarify. Are you disagreeing that they're really not going to like it or are you just saying there's nothing they can do about it? >> There's nothing they can do about it. No, they really don't like it. But listen, I am absolutely on board. I want all listeners to understand it. So I'm on board with very valid criticisms that are pointed uh many of the things that the Trump White House is doing offending recent norms. Okay, I I completely get that. I've worked in markets nearly three decades. I fully get it. What I don't get, and I always try and point out in equal measure, is the absolute hypocrisy of the people saying that about not pointing out how equally ludicrous things have been done by many others that they didn't criticize at the time and are still being done by many others that they criticized too. We have a slew of central banks that are cutting interest rates right now when there's no sign whatsoever the core inflation is fully under control. when there's absolutely every sign that the macro environment that they're living in, particularly in terms of the need for rapid rearmament is going to be inflationary, highly inflationary in some sectors. And yet interest rates come down. Now, you could say this don't know what they're doing. Fair enough. That's very bad criticism, but I don't see that as headlines. I don't see the Financial Times saying this central bank doesn't know what it's doing. Or you could say that they're just pre preferring to look the other way and hoping somehow that by lowering interest rates they can paper over all the cracks and that everything I'm describing in terms of a grand macro strategy won't be necessary and we can just carry on doing things the way we always have which I rather flippantly refer to as because markets which you know I even as someone who's worked in markets as I said most of my life and you know having a markets discussion here I still think is idiotic. the world is not about because markets. There are far larger battles at play literally at the moment and markets uh come secondary to that. They don't determine the outcomes. So yeah, uh that commentary I just wanted to make that feedback on it, but there's nothing nothing really that the rest of the West can do because if they were going to do something about it, it would revolve around a massive structural change in their political economy. But then they're exporters and they net export to the US. Fair enough. If they want to massively expand domestic demand so that they don't need to rely on exporting to America anymore, there you go. Now you can suddenly be more in control of your own destiny. If they decided to spend, you know, three or four percentage points of GDP on their military for the last 20 years rather than on social spending, and I'm not making a value judgment, that's just what they did. They wouldn't be in a position to be begging America for help with NATO. They'd be standing on their own two feet. um you know if they'd acted more strategically in terms of energy resources a long time back like China did they wouldn't there be any kind of domestic energy shortages or energy price issues so all those choices were available to them decades ago they didn't make them and now when you put that that conflation of different issues and problems together on the plate and you say right you've got to digest all of this in order to really do something against America it's almost impossible to conceive they're going to do it because in order to win they would have to get involved in a multi-dimensional span hats with America, which would hurt them far more than just having their wings clipped, which is what's happening at the moment. >> How should we interpret President Trump firing the head of the BLS? Obviously, his critics are saying, "Look, he didn't like the data, so he's, you know, don't like the message, shoot the messenger or castrate the messenger in public uh ceremony to make sure the next messenger knows better than to to make that mistake." But, but wait a minute. I think you've pointed out in some of your writing, the BLS was pretty darn screwed up. Maybe firing the BLS head wasn't such a bad idea after all. >> Yeah. Well, look, again, in terms of commentary, I absolutely understand why the market is freaking out about the fact that the head of the BLS was fired and that we've got a new guy in who is not exactly a fan favorite, shall we say, you know, within the statistics industry. Fair enough. And that certainly fits a certain profile of you know banana republic style economy. But equally as you were just alluding to from to my mind when I'm talking to people who you know work in markets. Those who understand the BLS have been a banana republic style joke for a long time anyway even with the best of intentions sit in one camp and they're the ones I prefer talking to. and everyone else who thinks that every piece of data you're getting from America is absolutely kosher, transparent, completely trustworthy, and absolutely captures what's really going on. I really don't have any time for them because they don't know what they're talking about. It's it's not been like that for the longest time. One very simple fact, and again, I'm not trying to be political here, but let's look at the payrolls report. We all know how important that is. Markets still revolve around it. I presume they probably always will unless they stop publishing it, which is what the new guy is threatening to do. But it's a joke. Payrolls is a joke as a number. You've got like a ndigit US labor force. So say 150 160 million something in that particular range. That's the official number. Anyway, you're talking about a monthly threedigit change and the market trades off of the derivative of that which is normally a twodigit differential from a three-digit number based on a nine-digit number. This doesn't mean anything. It's a rounding error and we're taking it as some kind of signal. They're constantly revising it. It's based on a births deaths model where they assume jobs into creation. It's got a very very low survey feedback right now. So they're having to impute or guess more and more. It doesn't capture structural changes in the economy. And and most incredibly of course and again I'm not trying to be political but it's a you know it's a widely accepted fact. anywhere between 10 and 20 million people arrived in the US in the past four years who aren't officially in the statistics but are somehow being captured or maybe they're not in which case we're not even capturing 10 to 20 million people either way it's a joke so but no one seemed to be prepared to say this month after month traders all sit down wait for that number to come out and trade off the back of it because it's what we do it's just what we do because markets it doesn't fit into a grand macro strategy so I certainly hope we don't go the Banana Republic route where every single month we get great jobs figure and everything's wonderful. That would be a joke. But I certainly think what we have now is also a joke and it would really behoove both America and the rest of the world and everyone to have really good real time economic information that we could use to try and understand where our strong points are and where our weak points are. >> Let's try to assimilate everything that we've talked about into outlooks for markets. It seems like a lot of the things that we're discussing are related to geopolitical risk hedges, things like gold, Bitcoin, Ethereum, uh, silver, and so forth. I've been trying to decide where some of those risk hedges are headed anyway. Cuz on the one hand, you know, you can make the argument if we're really maybe about to wind down the Ukraine war, that should be risk off for gold for it's a risk, it's a risk hedge, we should be unwinding it. But wait a minute, if what we're doing is winding down Ukraine so we can pivot to the next war in a bigger theater, that's not time to to sell your your hedges. So is this a bullish or or bearish moment for precious metals and other hedges. >> First of all, as you know, I don't give investment advice. So full caveat on that. We're just having a hypothetical discussion. I think you frame it very well in that when you see the word peace coming through one's initial market reaction might be in one direction but if you take a bigger picture view and understand that that's only part of resolving one issue and actually by the way passing the buck to Europe and saying yours so that you can then focus further east and that the underlying pressures for a bifurcation of the global system which is what I keep emphasizing here are rising then yeah it still makes a lot of sense to be looking at all kinds of hedges for all kinds of products in all kinds of ways. You know, the very simplest kind of market call that you can see ahead is the Fed's going to be forced to cut rates. Erggo, everything goes up. Yeah, obviously there's some very simplistic validity to that as if things haven't already gone up enormously anyway, which they have. But we are entering uncharted territory because nearly everyone who's working in markets now and I think I made this point to you last time we spoke you know it just by dent of their age has spent all of their working career in an environment in which it was a one world economy one market and sure you know there were certain areas where you had to get in or get out of tactically but the assumption was everything was fully integrated and it's just where do I pick up yield we're going to be heading to a world where certain sectors can't be traded or where returns are fixed by the government either for a higher or low level, usually low, and where certain environments are just completely, you know, untouchable. I mean for example if you look at what's happened at Bridgewater recently reading that particular headline and suddenly you know reversing position on on China very belatedly by the way we can probably expect to see a lot more of that happening if we are moving towards a world in which one has to make geopolitical choices which will be part and parcel of currency systems and clearing systems uh and payment systems. So if if you're going to be within a US stable coin system, maybe you don't get to be in other systems. And if you're in other systems, maybe, as I said, you don't get to be in stable coins. Or if you do, it's via a VPN being naughty in the background rather than with any kind of government permission. And you know, will markets find a way? Sure, markets will find a way, but it's not going to be the same flat world structure where you've got a world map on your wall in most offices and you can put a pin in where whichever part you like. It's going to be complicated. And one very clear example of that just to wrap that point up is previously few years ago tariffs weren't an issue unless you were dealing with one particular complicated emerging market where you have a lot of paperwork to do. You didn't worry about what the tariff was. You know it was going to be so marginal you could ship from A to B. Have you seen the table of US tariff rates now? Like the exemptions and potential changes coming up and country by country, sector by sector. It's a telephone book and that's absolutely deliberate. That's the strategy. Make it complex. Therefore, make people do things more locally. And where you are doing things more locally, money will eventually change hands more locally. Michael, before we close, let's touch briefly on oil prices. We're on the low side, at least compared to the last year or two. Are we headed higher as some people think? We got plenty of backwardation in the market. So, I'm not sure what to make of this. >> We have a really interesting standoff in terms of the go-to research on it, like the IEA versus OPEC plus and what they're what they're both printing. I I think again no geologist whatsoever so I'm not going to get into that side of it. You need to look at the geopolitical backdrop. Now obviously we had that spike earlier in the year around Iran and of course prices came way off once the US got in and got out and sent that message without getting sucked into a war. And I think we need to recognize that low energy prices are a key plank of the Trump grand macro strategy. how that's going to work out within the US energy sector because obviously low prices mean people don't want to produce and Trump doesn't want to be importing. He wants the America to be exporting or at least producing even if prices are low. That remains to be seen. There will have to be some jigory pokery to get that to work. I can assure you there will be. But the secular envelope is that Trump wants to see low energy prices because most upstream commodities to him energy most soap and many others are seen as inputs to more value added production downstream. So in other words, let's get cheap inputs so we can make more cheap outputs and more of those outputs. It's no longer every sector of the economy from upstream to downstream being equal because markets. Some people now are just not as important as others. Some people are there basically to do the equivalent of serving you drinks for very low tips. And you know that's unfair. It's not very nice. That's the way life is. Well, Michael, I can't thank you enough for another terrific interview. But before I let you go, tell us a little bit more about what you do at Robbo Bank, how people can follow your work and what your Twitter handles and so forth are. >> Sure. As global strategists in economics and markets, my job is to think cross asset, cross geography, and cross-d disciplinary. To be honest, to try and draw out what are the big picture themes. So it's not just about whether you're, you know, long this or short that. That's not specifically what I do. is to try and draw all dots together to say what is actually happening and if you assume that's what's happening logically what would then flow on from it. So you're narrative building to an extent rather than telling people how to manage money but it's been a very very successful strategy for the past couple of years in that you know not seeing the bigger picture uh has really been problematic and I think it's going to be more and more important going forward even if I'm talking my own book a bit doing that talking my own book there in in terms of where you can follow me I am on LinkedIn for Rabbo Bank clients uh Rabbo Bank knowledge would be the place to go and check out but you do need to be a client to get our good stuff there and I enjoy conversations and interaction with people on these topics uh on X and my handle is the Michael Every ev all one word and yeah please do just come and join that conversation because I'm always keen to interact with others and to see what you're thinking because when you've got a global role the more input you have the more voices you have the better your view of that picture becomes. 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 Serzna. >> Eric, it was great to have Michael 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 macrovoices.com. Just go to our homepage, macrovoices.com, and click on the red button over Michael's picture saying looking for the downloads. Well, Patrick, it's starting to look like the S&P chart could finally be topping, maybe after hitting my target of 6,500, but we're already bouncing off that 34day moving average. What are the charts telling you, Patrick? Is there more downside still to come? Eric, what a great question. The short answer is yes, but it's about how and what form it's going to occur. What we witnessed here in the last week was a clear sector rotation. What we saw was the selling was predominantly focused in the technology space and the AI space which was down over 3% over the past week. At the same time, that money was redistributed and started to rotate. We saw not only international strength in things like money flowing into the Nikkay or the Euro stock but also in the defensive sectors. We saw a very strong push higher in the health care space in consumer defensive names uh and even in the energy space. And so there was money that was being essentially redistributed. Now imagine these big money managers that are now massively overweight these tech names just simply because they were where the rally was occurring in their portfolios and in a very typical rebalancing and reweing they would sell down some of these positions and reallocate that to where there is u more asymmetry in opportunities and definitely less volatility and so we are definitely seeing that rotation. Now, Nvidia's earnings is going to play a very pivotal role in this next week because if Nvidia in any way disappoints to trigger some distribution to continue, then we will see under the surface this rotation continue. Now, these MAG7s and other big stocks are so huge to the S&P 500. Even though this rotation will be getting underway, it would be generally a drag on the S&P 500 and it certainly would imply that we are likely continuing to see a bigger topping formation where we're going to see substantial overhead resistance and uh and far more of a sideways consolidation. The best example was uh from November of last year through February of this year. there was about a 4mon period where the S&P 500 more or less remained within a several hundred S&P point range trading more sideways. I think that is at least for the next few weeks likely as we get into September uh and we get into the September jobs numbers and the first Fed rate cut. There's all sorts of room for volatility that may ensue going into the fourth quarter of the year. But right now in the short term, while we may see uh the S&P weaken a little bit for f further, let's say down to 6,300 where its 50-day moving averages, I think the bigger theme is how this sector rotation is going to be occurring under the hood. All right, Eric, let's move on to that US dollar index. What are you thinking here? Well, Patrick, my read of the chart is that we're settling into a horizontal consolidation that's centered around 98 even on the Dixie plus or minus two big handles. So, in other words, 96 to 100 is the trade range on the Dixie that I think we're settling into. Most of that happening between 97 and 99. We'll need to see a sustained move above 100 or below 96 to say that that consolidation has ended. And obviously, that's a fairly wide range. My fundamental bias is still strongly dollar bearish relative to both other currencies and hard assets. Yeah. Well, Eric, in my view, the US dollar has clearly found a fair value zone and we certainly have started to see divergent action in a number of the different cross currencies. When the US dollar really starts trending in a meaningful way, we tend to see almost all of the cross currencies correlate and move together in either direction against that US dollar. Here we have a very mixed bag. While the euro and and the pound sterling stayed clearly in uh trend, we see the CAD and the uh Japanese yen very much diverging and therefore making a big muddle and overall uh no real conviction on it. It's very likely that some of these catalysts such as the Jackson Hole and or potentially the first Fed rate cut in September could wake up the currency markets. But at least at this juncture, the activity in the currency markets is very narrow, tight, trade range bound, pivoting right on its 50-day moving average and no conviction of a move yet. uh at this stage I think expecting the next few weeks to have more of this uh types of sideways price action and inactivity to continue in the dollar is certainly in my opinion the highest probability. There will be a bigger move but very likely it's going to be pushed out into the fourth quarter of this year. Now Eric on page four I have that chart of the crude oil. What are your thoughts here? Well, Patrick, so far the market seems to want to hold support on that 100 day moving average, which is 62 spot 59 on the October WTI chart. So, Wednesday gave us the closing print that technically suggests maybe the bottom's in now. But will it hold? Let's see what the market brings. If we can stay above 62 spot 59, that 100 day moving average, then this recoveryy's got some legs to it. Maybe the bottom is in. Well, Eric, I'm not overly bearish crude oil here, but uh it is in a primary downtrend and it's still being distributed. The vulnerabilities of it potentially having a trip to retest the April and May lows, something that cannot be ruled out. At some stage, I do believe that crude oil will bang out a bottom here, but it could probably be a story that takes the remainder of August and early into September in order for us to really establish that. At this stage, I remain neutral crude, but I actually do believe that there's going to be a compelling buying opportunity to come in the weeks and months to come. Just looking for where a meaningful entry point will make sense. All right, Eric, let's move on to gold. What are your thoughts? Well, Patrick, the correction we've just had made perfect sense. The market mood was peace for Ukraine was at least coming into view on the horizon, if not uh almost at hand. So, geopolitical hedges started to unwind. The slow stochastics and the RSI finally bottomed on Tuesday into Wednesday, and I think we may be on the cusp of a surge higher to new all-time highs in gold. I I think we may have just seen that swing low that uh leads us into the next surge higher that hopefully breaks us above the previous 3500 uh or just above 3500 all-time high. Now, of course, anything's possible, but we've gone from extreme overbought on the uh slow stochastics to extreme oversold. And the setup for a breakout to new all-time highs is much better now than it was the last time the market tried but failed to break to new all-time highs. Better yet, we got from extreme overbought to extreme oversold on the slow stochastics without putting in a lower low on the price chart. So, we shook off all of that overbought, got back to extreme oversold, and we're still showing a bullish setup in terms of the pattern of higher highs and higher lows even after shaking off the overbought condition now into extreme oversold. So, that leaves us with bottoming stochastic oscillators coincident with a nice solid recent pattern of higher highs and lows. I like that. I added to my uh gold longs on Wednesday accordingly. I'll cross my fingers and see what happens here. Well, what is clear, Eric, is that gold has been a sideways rangebound wedge for many months and has not yet shown the conviction of breaking to those 52- week new highs to drive that next bull impulse. At the same time, silver has stalled out. We've seen platinum and platium also uh deepen consolidation. The only interesting observation to make here is that gold miners continue to take flows and they continue to show relative strength and continue to actually remain in trend. Be very interesting to see whether gold miners can bullishly continue to diverge from the trade rangebound markets of the rest of the precious metals and continue to drive further new highs. Overall, at some stage, the bigger bull phase of another leg higher in gold will inevitably come. But at least at this moment, there isn't to to me any of the technical signs that this is imminent. All right, Eric, let's talk about uranium and this current correction that we're seeing. What's your thoughts? Well, all sorts of pundits are taking all sorts of different guesses, and I assure you they are all guesses as to what's the proximal catalyst for the very sharp selloff in uranium miners Monday continuing into Tuesday. Well, the reason for the pullback is, drum roll please, because the market was overextended to the upside and needed a pullback, which experienced bulls will welcome as an opportunity to buy the dip. To my thinking, the most likely proximal catalyst to explain why it suddenly broke on uh Monday is peace expectations around Ukraine spooking hot money that never bothered to learn uranium fundamentals in the first place to come to the wrong conclusion. What's going on is peace with Russia is actually bullish uranium, not bearish. We've explained why in past episodes, but the tourists don't know that. They hear that sanctions could be lifted and they're just imagining those stinking Russians flooding the market with all their cheap uranium. Those pinkocomi bastards. Well, uh, little reality check, folks. They don't have any significant uranium inventory to flood the market with. The market doesn't work that way. It's much more about conversion and enrichment capacity. And there's really no reason to think that the peace deal that's on the table would even result in ending the bipartisan Russian uranium import ban in the first place. So the whole logic doesn't make any sense. But the point is there's more of them than there are of us. There's a lot more hot money idiots that are selling hard right now because they don't understand the fundamentals. They're going to beat the price down. I hope we can get down to let's say below 34 on URA. I think that's probably coming and I think it's a great buy range between 32 and 34 or so on the URA ETF. Uh but you know the longerterm bullish story couldn't possibly be stronger. This is the beginning of the long awaited buyable dip. We need some kind of catalyst to bring it on. I'm guessing that catalyst is what I just explained about Ukraine uh war risk coming out of the system. Uh maybe that has nothing to do with it and it's something else. I don't know. Well, there's a bunch of theories about it. One way or another, we're getting the long overdue correction. I still expect in late Q3 and Q4 that this market really takes off to the upside. So, the question is, you know, if you're really good at buying dips, find the bottom. I'll definitely start buying URA at 34 and keep scaling in if it comes down from there. Well, Eric, in my framework, every rally needs to be checked. and uh after such an epic bull run where we saw doubling of uranium stocks between April to uh end of July eventually was going to have some sort of a pause and reversion. Now typically when you have a very strong bull market and this type of a pullback all you always want to make the assumption that pullbacks are buys on dips. The bigger question is will this be a full like 50% retracement where something like the URA drops all the way down to the low30s or will this just be one of these quick corrections where we temporarily break below the 50-day like we currently are and almost immediately gets bought on dip. One way or another, we're in the midst of a correction that should offer the first compelling buy on dip opportunity that we've seen since the rally started back in April. So, we'll see where it settles in. I I would suspect and ideally want to see let's say the URRA trading down to like the uh $34 $35 level and at least there you have some asymmetry even if there is a few dollars of volatility around it where we could be looking for uh the short-term buy and dip traders that uh can take this right back into the 40s on a potential advance. Now, Eric, copper has been relatively quiet here, just consolidating after that big tariff pop and drop. Uh, how do you continue to size this up? Well, the lack of even a full-fledged deadcat bounce is frankly starting to concern me on this chart. The logical mean reversion retrace level on the HG chart was around $5. We're barely holding $450. I can't explain that. I don't see any other recession risk indicators that are telling me that uh there's an oncoming recession and we absolutely positively do need lots and lots of copper to keep growing the global economy. So if the copper market is stagnating that probably means somebody thinks the global economy is about to start stagnating or this copper market needs to recover. Uh again I think this did happen because of tariffs but we ought to be seeing some recovery here and I don't understand why we're not getting it. Finally, Patrick, before we wrap up this week's show, let's hit that 10-year Treasury note chart. Well, Eric, I just wanted to wrap by just touching on that 10-year Treasury yield, which we continued to see lower highs, lower lows. Now, we see a rejection at a basic moving average, fib zone, and the so we clearly have a uh yield that is weakening and a potential bond market that may run. Now, I'm not super bullish bonds, but I also think that if they weren't going to break down and yields blast off north of 5% that we were inevitably work to the bottom end of the yield range, which is down near 3.5%. So, are we about to see a trip down under 4% on the 10-year Treasury yield? it's entirely on the table and certainly of some short-term safe haven in uh some bomb and holdings may be in store. What I particularly like about this Eric is is that it's definitely a contrarian play. It's certainly out of consensus and there's a lot of people that at this stage continue to not like bonds and so typically some of the best moves happen when everyone is offside on these trades. And I don't think right now there's a lot of people looking at these bonds as an 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 the 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 and so much more in this week's research roundup. That does it for this week's episode. We appreciate all the feedback and support we get from our listeners, and we're always looking for suggestions on how we can make the program even better. Now, for those of our listeners that write or blog about the markets and would like to share that content with our listeners, send us an email at researchroundup@macrovoices.com and we will consider it for our weekly distributions. 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