Natural Gas Investment Insight: The podcast highlights a significant underpricing of natural gas due to AI-driven power demand, suggesting that natural gas, rather than nuclear, will meet this demand in the short term.
Investment Strategy: Instead of trading volatile natural gas futures, the podcast recommends the 12-month natural gas fund (UNL) for more stable, long-term exposure.
Market Outlook: The discussion suggests that geopolitical tensions, such as potential escalations in the Russia-Ukraine conflict, could lead to inflationary pressures, impacting stock markets and commodity prices.
Stock Market Analysis: Despite recent strong performance, the podcast warns of potential corrections, highlighting the importance of the 6600 level as a key technical indicator.
Currency Market Insight: The US dollar is discussed as being in a bear market, but recent strength suggests a potential rally, which could impact commodities and equities.
Oil Market Perspective: The podcast predicts eventual higher oil prices due to geopolitical factors, despite short-term volatility and technical resistance levels.
Gold Market Volatility: Recent swings in gold prices are attributed to geopolitical tensions, with a long-term bullish outlook despite potential short-term consolidations.
Uranium and Nuclear Energy: The podcast emphasizes a bullish outlook on uranium, driven by potential policy changes and increased demand for advanced nuclear fuel.
Transcript
This is Macrovoices, the free weekly financial podcast targeting professional finance, high- netw worth individuals, family offices, and other sophisticated investors. Macrovoices is all about the brightest minds in the world of finance and macroeconomics telling it like it is. Bullish or bearish, no holds barred. Now, here are your hosts, Eric Townsend and Patrick Serezna. Eric, it was great to have Adam back on the show. Now, listeners, you're going to find the download link for the postgame trade of the week in your research roundup email. If you don't have a research roundup email, that means you have not yet registered at macrovoices.com. Just go to our homepage, macrovoices.com, and click on the red button over Adam's picture saying looking for the downloads. Patrick Adam made a key point in this interview that almost nobody is talking about. AIdriven power demand over the next five years, probably the next 10 years, is going to be met primarily by natural gas, not nuclear. And yes, nuclear is the right solution long term, but it takes a long time to bring new nuclear capacity online. That's a big insight that the market is not pricing yet. So, where's the trade here? And please be sure to explain why Natty has the reputation as the widowmaker contract in the futures markets. Well, Eric, right now natural gas is trading near decade lows. On page two of the slide deck, I've included a continuous futures chart that really illustrates how depressed pricing has become. Gas has quietly been left for dead, while uranium and other long-term energy plays have captured all of the attention. But the setup here is starting to look asymmetric. US gas prices have been compressed back toward marginal production costs just as new LG export capacity ramps up into 2026. Layered on with an AIdriven surge in electricity demand, which will rely on gas as the swing fuel. And you've got yourself now the early stages of a tightening market that almost no one is positioned for. Now, trading natural gas futures directly is not for the faint of heart. It's a market defined by extreme seasonality with a term structure that can whip violently on small changes in weather or storage forecasts. That's why the front contracts have earned their infamous nickname, the widow maker. So, trading natty futures directly can be a big mistake unless you're really an expert on term structure, seasonality, storage, and logistical costs. So rather than trying to time the volatility through the futures, I want to look how to own the theme intelligently. The easiest retail product is the United States Natural Gas Fund symbol UNNG, but it is structurally flawed. It holds only the front month contract, forcing it to sell low and buy high as it rolls through the contangoed curve. That negative role yield creates persistent bleed, making the UNNG a poor vehicle for a long-term hold. Instead, I want to highlight a better alternative, the 12month natural gas fund, symbol UNL, which holds a laddered portfolio of the next 12 monthly Henry Hub contracts. That structure spreads the exposure across the curve, smoothing out seasonality and sharply reducing the roll decay. It's still a pure play on natural gas, but it gives you a cleaner exposure to the underlying long-term fundamentals rather than the front month weather noise. It is very easy to see the benefits by looking at the chart on page three of the chart book where I overlay the UNNG and the UNL. It is clear to see that the bleed on the UNL makes it a poor vehicle for long-term investors. Now, while I usually prefer to build asymmetric payoffs through options, UNL's options are thinly traded. So, the cleanest expression here is simply a delta 1 long position anchored on the asymmetry of the entry price. One can simply use a technique of entering a starting position and scaling the position larger when technical trend following signals suggest a new bull cycle has started. In short, natural gas looks cheap both in absolute and relative terms and the fundamentals are quietly improving. You've got demand growth for LNG exports, AI data centers, and industrial reshoring all hitting just as production growth flattens. If this market starts to repric, it could surprise people with how far it runs. And for investors looking to capture that upside without getting caught in the futures curve volatility, UNL is the smarter way to play it. That explanation worked for the pros and of course our retail audience can get the full briefing by attending Patrick's Monday webinar which always dissects the trade of the week in detail. Macrovoic's listeners can get a free trial at bigpicturetrading.com. All right, Eric, let's get into the charts. Let's start talking equities here. What are your thoughts? Well, Patrick, the market is still freaking out about what Trump and Bessant's next moves will be, just as we anticipated that it would. My strong view is that what happens next will be headline driven and therefore is impossible to predict without inside information. Obviously, if Secretary Besson's uh Wednesday threats towards Russia were to lead to a major escalation in the Russia Ukraine conflict as was threatened. Well, that would uh potentially mean a whole lot more downside at least in the short run. But remember, wars are always inflationary. So even if we see an escalation here, look, we were already facing a formative secular inflation. And once the panic subsides, even a war escalation will be a tailwind for the stock market. So I don't see anything that is inherently fundamentally bearish here. Other than the potential that we could have a panic in investor sentiment if there's a major escalation, I think it's more likely that uh we'll get to some kind of negotiation and the threats will be taken off the table, but we'll see what happens. All right, Eric, this is a really interesting market. You know, I heard a great argument about the seasonality of markets, which is essentially during the six months between uh May and October, the markets substantially underperform and that November to April period is some of the best performance the stock market. A lot of people from a seasonality perspective are now anchoring that the stock market uh should do well. But in ma in my mind one of the big contributors to the strength that often happens from that seasonality is because those six months were so weak. Yet when you look at the performance from May to October we had one of the most extraordinary bull runs in 6 months up 35 plus% uh over a six-month period. This market is at elevated level. the idea that from these elevated levels you have some sort of alpha of further gains on the upside. I think at this year could be marginalized. Now overall this market still has not yet seen a 5% correction. That one day drop we had was closer to 4% from peak to trough and did test the 50-day moving average. So, a lot of the criteria is there, but overall we haven't had yet that proper multi-week month or multimonth correction that typically happens even three or four times a year. And so, uh, at some stage here, we're going to get a hiccup in these markets. The bigger question is, did we see the start of that? Now, well, we do have a couple of things that will decide this. Clearly, we're now uh in the pig in the python moment of earnings. We're going to get the majority of those big mag seven earnings coming out here in the next week or so and we're going to determine whether or not this becomes a huge tailwind for the market or whether it becomes an excuse for some profit taking. We continue to see overall the market breath deteriorating which is usually not a plus for the bulls but at the same time after we get through earnings comes the share buyback tailwind which uh will inject new money in there. So we have a market here that you can try to build an argument either way but I want to keep it super simple at this stage. The 6600 level technically is pretty significant. Not only was that where the lows came in uh from uh the previous weeks, but it also is where a basic trend following technique of 50-day moving average lies. If the bulls are going to stay in control of this market, we will not see that level violated. And so, you want to in some degree or another give the bulls the benefit of the doubt. and so long as we can see them break these markets to a fresh new 52- week high and uh and make let's say a punch up to 7,000. But if we see that the selling in any way after or during this earning season uh has a feat kicked out below 6600, we have a lot of systematic selling that could get triggered. Not only have we already seen vault targeting funds degrossing as realized volatility spiked, but many CTAs uh are going to start selling as we see that uh that market start to pivot uh with all the dealer gamma there. We could actually see a stock market air pocket develop that could create some downside volatility, but to me that only all happens below 6,600. So that's the pivot to watch for all of our listeners. All right, Eric, let's touch on that dollar. Patrick, the Dixie has firmed up toward the high end of its recent consolidation range, but we haven't seen a breakout yet. Lots and lots of pundits are calling for one, and they've described the risk of a face ripping dollar rally of certain Trump Bessant policy risks play out. I think that's a very real risk and it would be bearish for most other asset classes in the short term, but I think those will be viable dips more so on commodities than equities. Well, Eric, in my mind, the US dollar has been in a bare market all year, but really stopped declining close to four months ago. We've not only seen a double bottom form on the dollar index from its July and September lows, but quietly, we have now seen a sustained period where the dollar index has been trading above its 50-day moving average, making higher highs and higher lows, and generally the sentiment has remained decisively bearish. You have charts like the US dollar yen clearly turning up, deterioration in the pound sterling, deterioration in the euro, the um uh Canadian dollar continues to weaken, the Aussie dollar continues to weaken, and uh and we haven't seen obviously some very key technical levels broken on those, but they'll be very interesting to see whether the dollar can pull off a counter trend here uh for and it's really easy at this point to simply watch whether the Dixie can make a break above the 100 level because that will certainly catch everybody's attention as it would be making new six-month highs and uh certainly would start to squeeze out any shorts that overstayed their their positioning. Uh will that dollar rally happen is certainly the puzzle to watch here. All right, Eric, let's touch on crude oil. Remember what I said a few weeks ago here on Macrovoices that I thought President Trump's desire for lower oil prices would bring lower oil prices, but I didn't expect it to last. And that's exactly what's happened. I said, "Give them time and they'll either start another war or escalate one of the several that they already have in progress, and that will of course bring much higher oil prices." with Secretary Bessant's Wednesday afternoon declaration of major sanctions against two of Russia's biggest oil companies if Russia doesn't immediately cave to US demands and end the war. Well, my prediction, it seems, is about to be realized. Of course, this might all blow over and another deal might be struck to forget about all that sanctions talk and that would bring oil prices right back down. But it won't last. Adam Rosen Schwag and Anis Alhaji are among the smartest people in the oil markets and I agree with their bullish intermediate to long-term outlook. As far as short-term, anything's possible. You don't want to be long here unless you're willing to ride out potentially a $10 swing lower depending on how the politics play out. But eventually, we're going to see higher oil prices. Well, Eric, I'm going to just look at oil technically here for a moment. So when we go and look, we can see that oil retested its year lows. And so uh we got a double bottom bounce here. Now the bounce hasn't gotten above its 50-day moving average. It has not beat its fib zone. So no way that I want to in any way imply that oil has pivoted to a bull cycle. But we're going to get some very big tells here around this $60 to $62 level where we're currently trading. uh as oil trades up here, if this was a false start, then we should easily see the market return right back down below $60 and stay there. But the way I look at this here is that this is actually a pretty technically significant base. So if any structural new buying starts coming in here driving prices to the mid60s that could be enough to pivot uh this uh very bearish looking chart to being more neutral and one that is actually starting to demonstrate a basing uh now it may take months for oil's chart to turn more bullish and obviously a a geopolitical catalyst could accelerate that. Uh but it to me oil's incredibly asymmetric. I continue to subscribe to the oil bull case. Obviously Adam and Nas both shared some very strong convictions and I think that overall it'll be right. Um I think that uh next year will be a great year for oil. The question of course is that have we seen the lows and is it now the the turning point for these crude futures? And that's uh the puzzle we're going to continue to solve here in the weeks to come. All right, Eric, we got to talk gold now. Well, we had a roller coaster ride in gold futures this week. Down 150 bucks in a single day, fully retracing the next day, then down even harder by more than 200 bucks the day after that. My best guess as to what caused this is that some traders had inside information, limited inside information, just whispers of an imminent resolution to the Russia Ukraine conflict, which probably lacked any real detail until Secretary Bessant's Wednesday afternoon briefing made the administration's intentions clear. Now that I know what's on the table, I'm not at all on the side that this is a bearish development for gold. I strongly doubt that Russia would just cave to such demands. And frankly, I think that what Trump and Bessant just did was incredibly risky, signaling a potential move much higher on gold, not lower. Now, of course, if I have the geopolitics wrong and Trump magically negotiates an end to the war with no further kinetic escalation, he'll have earned that Nobel Peace Prize that he wants so badly. And I'll take a big loss as the geopolitical premium collapses in gold prices. But I don't mind being on the other side of that trade. I'm pretty sure the traders who are assuming that Putin will just cave to Trump and Bessant's demands have probably never dated a Russian. Yeah, Eric, gold had a a peak to trough move of $378. It was just an extraordinary swing. Uh look, uh whenever the velocity of a rise accelerates the way gold did, uh then the volatility to the downside is always reflexively proportional to the the speed and magnitude of the rise. So having huge downside, volatility is not a shocker. We've seen the implied volatilities of gold double, you know, from being in the teens to being close to 30%. And so overall, gold volatility and these huge swings are likely here to stay for the next little bit. The bigger question is uh is this now going to settle it into a a bigger more prolonged consolidation? I want to remind everyone that over the last year we have seen uh these two threemonth pauses in gold. There was the one that started back in November of last year lasting into January of this year and then again this summer we went into a consolidation from April that lasted all the way into July August in a sideways manner. There's these periods where the gold bursts higher and then takes a break and and consolidates. uh have we seen the beginning of one of these consolidations? And because of the magnitude of this rise, will the consolidation be deeper than the previous ones? These are all the puzzles to solve. At this moment, I wouldn't be shocked if we spent a little time back below 4,000 in this consolidation. I remain big picture, very bullish. And once we go through a consolidation, it almost always leads to the next major buying opportunity. And so, uh, I'm going to be watching closely, uh, what happens in terms of, uh, the the magnitude of this decline. We may spend a very good part of the fourth quarter in a consolidation, but, uh, it should, uh, continue its primary bull phase because there's a macro backdrop that is fundamentally bullish gold. And I think we can all agree that we haven't seen some macro pivot to suggest that the future of gold is going to be any different than we've talked about in the past few years. All right, Eric, let's talk uranium. Well, we've obviously just had a big correction and yes, I'm buying this dip in size. Now, it could definitely go much lower from here, especially if the AI story starts to unwind or even if the market figures out that net gas rather than nuclear is going to be the immediate benefactor of the AI story. But there's no way that this uranium bull market is over. It's just getting started. There was also what I think was a very important announcement this week which was almost completely ignored by the market. What they announced was that weaponsgrade plutonium that's left over from the Cold War and the US stockpiles. We don't need to build, you know, thousands more nuclear warheads. We've got too many already. They're going to make some of that plutonium up to 19,000 metric tons of it available to advanced reactor companies in order to avert the coming expected crunch on Halo fuel. H A L EU which stands for highass assay lowenriched uranium. In other words, it's 20% of the good stuff U235 as opposed to just 3 to 5% in conventional reactor fuel. Why is this so important? The 1976 presidential race was very much about the so-called plutonium economy. A lot of smart people understood correctly that by taking the plutonium that we know how to manufacture in nuclear reactors and using it as fuel for more nuclear reactors and particularly building a kind of nuclear reactor called a breeder reactor which takes the unused nuclear waste in today's reactors, converts it into plutonium and then burns it all in one fuel cycle. That's the way to go. That's the what we need to get to. It has been impossible to make any progress on that for the last 50 years in the wake of what frankly was a a ridiculous, emotionally charged, irrational political debate in the 1970s. My take on this is energy secretary Steve Bessant is going to deliver a nuclear renaissance beyond even my wildest dreams. I think they're going to really make some meaningful changes on policy. Hopefully, they'll eventually get around to reforming section 123, which prevents other c countries from being able to reprocess their uh spent nuclear fuel in order to extract plutonium and make more fuel out of it. Only France does that today. And it's not because only the French think that's important. It's because the US forbids almost everyone else by treaty from doing it. It's called section 123. Go dates back to 1954 and it never made sense. We are prohibiting the recycling and the responsible processing and recycling of spent nuclear fuel. Now, Charl de Gaulle had the good sense to refuse to sign the 1968 nuclear non-prololiferation treaty until France became a recognized nuclear weapons state in the early 1990s. That is the real reason that France is the only country that in the west at least that reprocesses their spent nuclear fuel. It's because they're allowed to and they're not constrained by ownorous and unreasonable US policy. I think Secretary Steve Wright is the first guy in government to come along in my lifetime who understands this at least as well as I do and is about to change it all for the better. So, I really hope I'm right about this. I think we're on the cusp of some major policy changes and we could completely redefine how nuclear energy works. If we could somehow get over this nonsensical belief that spent nuclear fuel presents a much larger weapons proliferation risk than it really does. Yeah, certainly we've now had some sort of a correction underway. I I continue to be in the camp where I'm a buyer of uh uranium prices themselves as a commodity with that through things like the SPAT physical trusts. Uh I think that they're still incredibly reasonably priced. But in regards to equities, I'm increasingly concerned that they may be correlated with the AI baskets. And if we see that there's going to be some sort of uh mean reversion in that space, I wonder whether we would see some heightened volatility in those equities uh that have run so much already. And so I'm at this stage much more focused on the uranium commodity itself where I think there's more asymmetry. Eric, let's touch on copper here. Well, it looks like copper is catching a bid finally, and I'm glad to be long in size. China policy has to be central to what happens next. So, another deep dip on more China geopolitical who knows what happens next news is entirely possible, but that would be a very viable dip and I'd probably add to my already overweight position if such a move were to materialize. Well, overall, copper has been bought on dip, held the 50-day moving average, is attempting to break out. I mean, is there still a chance here we're going to punch up towards 5 and a/4 to 550? It's still on the table. Overall, there's a a bullish tailwind here. It has uh shown some sensitivity to the selling that we saw in the broader commodity space over the last week or two. Uh, it'll be very interesting to see whether copper can just continue to march the beat of its own drum or whether it's going to correlate with a bigger basket. >> Patrick, before we wrap up this week's show, let's hit that 10-year Treasury note chart. >> I think that this in itself a red flag for me for the equity markets. Generally what we have seen is that prior to a turn in the markets often for even several months you have uh bond markets leading with uh rising bond prices and and declining yields that precede that of a a market turn. The fact that we see this kind of flows and demand coming into the bond markets at minimum is uh something that we have to pay attention to uh to see whether or not this has some repercussions on the other markets. Folks, if you enjoy Patrick's chart decks, you can get them every single day of the week with a free trial of Bigpictur Trading. The details are on the last pages of the slide deck or just go to bigpicturetrading.com. That concludes this edition of Macrovoices. Be sure to tune in each week to hear feature interviews with the brightest minds in finance and macroeconomics. Macrovoices is made possible by sponsorship from bigpicturetrading.com, the internet's premier source of online education for traders. Please visit bigpicturertrading.com for more information. Please register your free account at macrovoices.com. Once registered, you'll receive our free weekly research roundup email containing links to supporting documents from our featured guests and the very best free financial content our volunteer research team could find on the internet each week. You'll also gain access to our free listener discussion forums and research library. And the more registered users we have, the more we'll be able to recruit high-profile feature interview guests for future programs. So, please register your free account today at macrovoices.com if you haven't already. You can subscribe to Macrovoices on iTunes to have Macrovoices automatically delivered to your mobile device each week free of charge. You can email questions for the program to mailbag@macrovoices.com and we'll answer your questions on the air from time to time in our mailbag segment. Macrovoices is presented forformational and entertainment purposes only. The information presented on macrovoices should not be construed as investment advice. Always consult a licensed investment professional before making investment decisions. The views and opinions expressed on Macrovoices are those of the participants and do not necessarily reflect those of the show's hosts or sponsors. 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Trade of The Week – MacroVoices #503
Summary
Transcript
This is Macrovoices, the free weekly financial podcast targeting professional finance, high- netw worth individuals, family offices, and other sophisticated investors. Macrovoices is all about the brightest minds in the world of finance and macroeconomics telling it like it is. Bullish or bearish, no holds barred. Now, here are your hosts, Eric Townsend and Patrick Serezna. Eric, it was great to have Adam back on the show. Now, listeners, you're going to find the download link for the postgame trade of the week in your research roundup email. If you don't have a research roundup email, that means you have not yet registered at macrovoices.com. Just go to our homepage, macrovoices.com, and click on the red button over Adam's picture saying looking for the downloads. Patrick Adam made a key point in this interview that almost nobody is talking about. AIdriven power demand over the next five years, probably the next 10 years, is going to be met primarily by natural gas, not nuclear. And yes, nuclear is the right solution long term, but it takes a long time to bring new nuclear capacity online. That's a big insight that the market is not pricing yet. So, where's the trade here? And please be sure to explain why Natty has the reputation as the widowmaker contract in the futures markets. Well, Eric, right now natural gas is trading near decade lows. On page two of the slide deck, I've included a continuous futures chart that really illustrates how depressed pricing has become. Gas has quietly been left for dead, while uranium and other long-term energy plays have captured all of the attention. But the setup here is starting to look asymmetric. US gas prices have been compressed back toward marginal production costs just as new LG export capacity ramps up into 2026. Layered on with an AIdriven surge in electricity demand, which will rely on gas as the swing fuel. And you've got yourself now the early stages of a tightening market that almost no one is positioned for. Now, trading natural gas futures directly is not for the faint of heart. It's a market defined by extreme seasonality with a term structure that can whip violently on small changes in weather or storage forecasts. That's why the front contracts have earned their infamous nickname, the widow maker. So, trading natty futures directly can be a big mistake unless you're really an expert on term structure, seasonality, storage, and logistical costs. So rather than trying to time the volatility through the futures, I want to look how to own the theme intelligently. The easiest retail product is the United States Natural Gas Fund symbol UNNG, but it is structurally flawed. It holds only the front month contract, forcing it to sell low and buy high as it rolls through the contangoed curve. That negative role yield creates persistent bleed, making the UNNG a poor vehicle for a long-term hold. Instead, I want to highlight a better alternative, the 12month natural gas fund, symbol UNL, which holds a laddered portfolio of the next 12 monthly Henry Hub contracts. That structure spreads the exposure across the curve, smoothing out seasonality and sharply reducing the roll decay. It's still a pure play on natural gas, but it gives you a cleaner exposure to the underlying long-term fundamentals rather than the front month weather noise. It is very easy to see the benefits by looking at the chart on page three of the chart book where I overlay the UNNG and the UNL. It is clear to see that the bleed on the UNL makes it a poor vehicle for long-term investors. Now, while I usually prefer to build asymmetric payoffs through options, UNL's options are thinly traded. So, the cleanest expression here is simply a delta 1 long position anchored on the asymmetry of the entry price. One can simply use a technique of entering a starting position and scaling the position larger when technical trend following signals suggest a new bull cycle has started. In short, natural gas looks cheap both in absolute and relative terms and the fundamentals are quietly improving. You've got demand growth for LNG exports, AI data centers, and industrial reshoring all hitting just as production growth flattens. If this market starts to repric, it could surprise people with how far it runs. And for investors looking to capture that upside without getting caught in the futures curve volatility, UNL is the smarter way to play it. That explanation worked for the pros and of course our retail audience can get the full briefing by attending Patrick's Monday webinar which always dissects the trade of the week in detail. Macrovoic's listeners can get a free trial at bigpicturetrading.com. All right, Eric, let's get into the charts. Let's start talking equities here. What are your thoughts? Well, Patrick, the market is still freaking out about what Trump and Bessant's next moves will be, just as we anticipated that it would. My strong view is that what happens next will be headline driven and therefore is impossible to predict without inside information. Obviously, if Secretary Besson's uh Wednesday threats towards Russia were to lead to a major escalation in the Russia Ukraine conflict as was threatened. Well, that would uh potentially mean a whole lot more downside at least in the short run. But remember, wars are always inflationary. So even if we see an escalation here, look, we were already facing a formative secular inflation. And once the panic subsides, even a war escalation will be a tailwind for the stock market. So I don't see anything that is inherently fundamentally bearish here. Other than the potential that we could have a panic in investor sentiment if there's a major escalation, I think it's more likely that uh we'll get to some kind of negotiation and the threats will be taken off the table, but we'll see what happens. All right, Eric, this is a really interesting market. You know, I heard a great argument about the seasonality of markets, which is essentially during the six months between uh May and October, the markets substantially underperform and that November to April period is some of the best performance the stock market. A lot of people from a seasonality perspective are now anchoring that the stock market uh should do well. But in ma in my mind one of the big contributors to the strength that often happens from that seasonality is because those six months were so weak. Yet when you look at the performance from May to October we had one of the most extraordinary bull runs in 6 months up 35 plus% uh over a six-month period. This market is at elevated level. the idea that from these elevated levels you have some sort of alpha of further gains on the upside. I think at this year could be marginalized. Now overall this market still has not yet seen a 5% correction. That one day drop we had was closer to 4% from peak to trough and did test the 50-day moving average. So, a lot of the criteria is there, but overall we haven't had yet that proper multi-week month or multimonth correction that typically happens even three or four times a year. And so, uh, at some stage here, we're going to get a hiccup in these markets. The bigger question is, did we see the start of that? Now, well, we do have a couple of things that will decide this. Clearly, we're now uh in the pig in the python moment of earnings. We're going to get the majority of those big mag seven earnings coming out here in the next week or so and we're going to determine whether or not this becomes a huge tailwind for the market or whether it becomes an excuse for some profit taking. We continue to see overall the market breath deteriorating which is usually not a plus for the bulls but at the same time after we get through earnings comes the share buyback tailwind which uh will inject new money in there. So we have a market here that you can try to build an argument either way but I want to keep it super simple at this stage. The 6600 level technically is pretty significant. Not only was that where the lows came in uh from uh the previous weeks, but it also is where a basic trend following technique of 50-day moving average lies. If the bulls are going to stay in control of this market, we will not see that level violated. And so, you want to in some degree or another give the bulls the benefit of the doubt. and so long as we can see them break these markets to a fresh new 52- week high and uh and make let's say a punch up to 7,000. But if we see that the selling in any way after or during this earning season uh has a feat kicked out below 6600, we have a lot of systematic selling that could get triggered. Not only have we already seen vault targeting funds degrossing as realized volatility spiked, but many CTAs uh are going to start selling as we see that uh that market start to pivot uh with all the dealer gamma there. We could actually see a stock market air pocket develop that could create some downside volatility, but to me that only all happens below 6,600. So that's the pivot to watch for all of our listeners. All right, Eric, let's touch on that dollar. Patrick, the Dixie has firmed up toward the high end of its recent consolidation range, but we haven't seen a breakout yet. Lots and lots of pundits are calling for one, and they've described the risk of a face ripping dollar rally of certain Trump Bessant policy risks play out. I think that's a very real risk and it would be bearish for most other asset classes in the short term, but I think those will be viable dips more so on commodities than equities. Well, Eric, in my mind, the US dollar has been in a bare market all year, but really stopped declining close to four months ago. We've not only seen a double bottom form on the dollar index from its July and September lows, but quietly, we have now seen a sustained period where the dollar index has been trading above its 50-day moving average, making higher highs and higher lows, and generally the sentiment has remained decisively bearish. You have charts like the US dollar yen clearly turning up, deterioration in the pound sterling, deterioration in the euro, the um uh Canadian dollar continues to weaken, the Aussie dollar continues to weaken, and uh and we haven't seen obviously some very key technical levels broken on those, but they'll be very interesting to see whether the dollar can pull off a counter trend here uh for and it's really easy at this point to simply watch whether the Dixie can make a break above the 100 level because that will certainly catch everybody's attention as it would be making new six-month highs and uh certainly would start to squeeze out any shorts that overstayed their their positioning. Uh will that dollar rally happen is certainly the puzzle to watch here. All right, Eric, let's touch on crude oil. Remember what I said a few weeks ago here on Macrovoices that I thought President Trump's desire for lower oil prices would bring lower oil prices, but I didn't expect it to last. And that's exactly what's happened. I said, "Give them time and they'll either start another war or escalate one of the several that they already have in progress, and that will of course bring much higher oil prices." with Secretary Bessant's Wednesday afternoon declaration of major sanctions against two of Russia's biggest oil companies if Russia doesn't immediately cave to US demands and end the war. Well, my prediction, it seems, is about to be realized. Of course, this might all blow over and another deal might be struck to forget about all that sanctions talk and that would bring oil prices right back down. But it won't last. Adam Rosen Schwag and Anis Alhaji are among the smartest people in the oil markets and I agree with their bullish intermediate to long-term outlook. As far as short-term, anything's possible. You don't want to be long here unless you're willing to ride out potentially a $10 swing lower depending on how the politics play out. But eventually, we're going to see higher oil prices. Well, Eric, I'm going to just look at oil technically here for a moment. So when we go and look, we can see that oil retested its year lows. And so uh we got a double bottom bounce here. Now the bounce hasn't gotten above its 50-day moving average. It has not beat its fib zone. So no way that I want to in any way imply that oil has pivoted to a bull cycle. But we're going to get some very big tells here around this $60 to $62 level where we're currently trading. uh as oil trades up here, if this was a false start, then we should easily see the market return right back down below $60 and stay there. But the way I look at this here is that this is actually a pretty technically significant base. So if any structural new buying starts coming in here driving prices to the mid60s that could be enough to pivot uh this uh very bearish looking chart to being more neutral and one that is actually starting to demonstrate a basing uh now it may take months for oil's chart to turn more bullish and obviously a a geopolitical catalyst could accelerate that. Uh but it to me oil's incredibly asymmetric. I continue to subscribe to the oil bull case. Obviously Adam and Nas both shared some very strong convictions and I think that overall it'll be right. Um I think that uh next year will be a great year for oil. The question of course is that have we seen the lows and is it now the the turning point for these crude futures? And that's uh the puzzle we're going to continue to solve here in the weeks to come. All right, Eric, we got to talk gold now. Well, we had a roller coaster ride in gold futures this week. Down 150 bucks in a single day, fully retracing the next day, then down even harder by more than 200 bucks the day after that. My best guess as to what caused this is that some traders had inside information, limited inside information, just whispers of an imminent resolution to the Russia Ukraine conflict, which probably lacked any real detail until Secretary Bessant's Wednesday afternoon briefing made the administration's intentions clear. Now that I know what's on the table, I'm not at all on the side that this is a bearish development for gold. I strongly doubt that Russia would just cave to such demands. And frankly, I think that what Trump and Bessant just did was incredibly risky, signaling a potential move much higher on gold, not lower. Now, of course, if I have the geopolitics wrong and Trump magically negotiates an end to the war with no further kinetic escalation, he'll have earned that Nobel Peace Prize that he wants so badly. And I'll take a big loss as the geopolitical premium collapses in gold prices. But I don't mind being on the other side of that trade. I'm pretty sure the traders who are assuming that Putin will just cave to Trump and Bessant's demands have probably never dated a Russian. Yeah, Eric, gold had a a peak to trough move of $378. It was just an extraordinary swing. Uh look, uh whenever the velocity of a rise accelerates the way gold did, uh then the volatility to the downside is always reflexively proportional to the the speed and magnitude of the rise. So having huge downside, volatility is not a shocker. We've seen the implied volatilities of gold double, you know, from being in the teens to being close to 30%. And so overall, gold volatility and these huge swings are likely here to stay for the next little bit. The bigger question is uh is this now going to settle it into a a bigger more prolonged consolidation? I want to remind everyone that over the last year we have seen uh these two threemonth pauses in gold. There was the one that started back in November of last year lasting into January of this year and then again this summer we went into a consolidation from April that lasted all the way into July August in a sideways manner. There's these periods where the gold bursts higher and then takes a break and and consolidates. uh have we seen the beginning of one of these consolidations? And because of the magnitude of this rise, will the consolidation be deeper than the previous ones? These are all the puzzles to solve. At this moment, I wouldn't be shocked if we spent a little time back below 4,000 in this consolidation. I remain big picture, very bullish. And once we go through a consolidation, it almost always leads to the next major buying opportunity. And so, uh, I'm going to be watching closely, uh, what happens in terms of, uh, the the magnitude of this decline. We may spend a very good part of the fourth quarter in a consolidation, but, uh, it should, uh, continue its primary bull phase because there's a macro backdrop that is fundamentally bullish gold. And I think we can all agree that we haven't seen some macro pivot to suggest that the future of gold is going to be any different than we've talked about in the past few years. All right, Eric, let's talk uranium. Well, we've obviously just had a big correction and yes, I'm buying this dip in size. Now, it could definitely go much lower from here, especially if the AI story starts to unwind or even if the market figures out that net gas rather than nuclear is going to be the immediate benefactor of the AI story. But there's no way that this uranium bull market is over. It's just getting started. There was also what I think was a very important announcement this week which was almost completely ignored by the market. What they announced was that weaponsgrade plutonium that's left over from the Cold War and the US stockpiles. We don't need to build, you know, thousands more nuclear warheads. We've got too many already. They're going to make some of that plutonium up to 19,000 metric tons of it available to advanced reactor companies in order to avert the coming expected crunch on Halo fuel. H A L EU which stands for highass assay lowenriched uranium. In other words, it's 20% of the good stuff U235 as opposed to just 3 to 5% in conventional reactor fuel. Why is this so important? The 1976 presidential race was very much about the so-called plutonium economy. A lot of smart people understood correctly that by taking the plutonium that we know how to manufacture in nuclear reactors and using it as fuel for more nuclear reactors and particularly building a kind of nuclear reactor called a breeder reactor which takes the unused nuclear waste in today's reactors, converts it into plutonium and then burns it all in one fuel cycle. That's the way to go. That's the what we need to get to. It has been impossible to make any progress on that for the last 50 years in the wake of what frankly was a a ridiculous, emotionally charged, irrational political debate in the 1970s. My take on this is energy secretary Steve Bessant is going to deliver a nuclear renaissance beyond even my wildest dreams. I think they're going to really make some meaningful changes on policy. Hopefully, they'll eventually get around to reforming section 123, which prevents other c countries from being able to reprocess their uh spent nuclear fuel in order to extract plutonium and make more fuel out of it. Only France does that today. And it's not because only the French think that's important. It's because the US forbids almost everyone else by treaty from doing it. It's called section 123. Go dates back to 1954 and it never made sense. We are prohibiting the recycling and the responsible processing and recycling of spent nuclear fuel. Now, Charl de Gaulle had the good sense to refuse to sign the 1968 nuclear non-prololiferation treaty until France became a recognized nuclear weapons state in the early 1990s. That is the real reason that France is the only country that in the west at least that reprocesses their spent nuclear fuel. It's because they're allowed to and they're not constrained by ownorous and unreasonable US policy. I think Secretary Steve Wright is the first guy in government to come along in my lifetime who understands this at least as well as I do and is about to change it all for the better. So, I really hope I'm right about this. I think we're on the cusp of some major policy changes and we could completely redefine how nuclear energy works. If we could somehow get over this nonsensical belief that spent nuclear fuel presents a much larger weapons proliferation risk than it really does. Yeah, certainly we've now had some sort of a correction underway. I I continue to be in the camp where I'm a buyer of uh uranium prices themselves as a commodity with that through things like the SPAT physical trusts. Uh I think that they're still incredibly reasonably priced. But in regards to equities, I'm increasingly concerned that they may be correlated with the AI baskets. And if we see that there's going to be some sort of uh mean reversion in that space, I wonder whether we would see some heightened volatility in those equities uh that have run so much already. And so I'm at this stage much more focused on the uranium commodity itself where I think there's more asymmetry. Eric, let's touch on copper here. Well, it looks like copper is catching a bid finally, and I'm glad to be long in size. China policy has to be central to what happens next. So, another deep dip on more China geopolitical who knows what happens next news is entirely possible, but that would be a very viable dip and I'd probably add to my already overweight position if such a move were to materialize. Well, overall, copper has been bought on dip, held the 50-day moving average, is attempting to break out. I mean, is there still a chance here we're going to punch up towards 5 and a/4 to 550? It's still on the table. Overall, there's a a bullish tailwind here. It has uh shown some sensitivity to the selling that we saw in the broader commodity space over the last week or two. Uh, it'll be very interesting to see whether copper can just continue to march the beat of its own drum or whether it's going to correlate with a bigger basket. >> Patrick, before we wrap up this week's show, let's hit that 10-year Treasury note chart. >> I think that this in itself a red flag for me for the equity markets. Generally what we have seen is that prior to a turn in the markets often for even several months you have uh bond markets leading with uh rising bond prices and and declining yields that precede that of a a market turn. The fact that we see this kind of flows and demand coming into the bond markets at minimum is uh something that we have to pay attention to uh to see whether or not this has some repercussions on the other markets. 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