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Transcript
This is Macrovoices, the free weekly financial podcast targeting professional finance, [music] high- netw worth individuals, family offices, and other sophisticated investors. Macrovoices [music] 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 Szna. >> Eric, it was great to have Robert back on [music] the show. Listeners, you're going to find the download link for that 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, macrovoice.com, and click on the red button over Robert's picture saying, "Looking for the downloads." Patrick, what's on deck for the trade of the week this week? Eric, what really came through in Robert K's interview is how politicized and unstable the oil backdrop has become. The White House is laser focused on keeping gasoline prices down into the midterms. While at the same time, you've got Russia, Ukraine, Venezuela, and broader geopolitical shocks in the background that could easily send energy prices sharply higher. This is exactly the kind of regime where I don't want to pick a direction in crude. I want to own volatility. The chart on page two shows how oil is at a key technical inflection point. Either the low holds for a sharp rebound or a break to a fresh low opens the floodgate for the next level down. As oil trades at this inflection point, as seen on the chart on page three, we have not seen a material jump in oil volatility as we remain in the trade ranges of the previous four months, suggesting long gamma is still reasonably priced. To express the view on a sizable move in crude oil over the next 30 days without taking a directional stance, I'm structuring a long iron condor using $3 wide wings. Specifically, I'm buying the January 14th, 2026 expiration, the 53x50 put spread, and the 58x61 call spread for a combined net debit of a dollar. Both verticals are $3 wide for a maximum payoff of $2 if we finish in the money on either wing against a defined maximum loss of a dollar if crude oil expires between the inner strikes and both spreads expire worthless. In other words, I'm laying out $1 to make $2 in a long ball structure that monetizes a break in either direction. The details are broken down on page four of the chart deck. Patrick, every Monday at Bigpicture Trading, your webinar explains how retail investors can put on our most recent trade of the week. For those listeners that want to explore how to put on these trades in greater detail, don't miss out on a 14-day free trial at bigpicturetrading.com. Now, let's dive into the postgame chart deck. >> All right, Eric, let's dive into the equity markets. Patrick, I don't have a strong opinion on the short-term outlook for the stock market other than perhaps to say that the widely anticipated Santa Claus rally into new all-time highs into year end, well, it hasn't happened yet, so if it's supposed to happen, I guess it better happen soon. I'm going to use this time instead to zoom out to the much bigger picture of what I'm thinking 2026 on whole should look like for all markets, not just equities, and where I think the best trades are going to be. If there's anything I've learned from trading, it's to recognize and seize those extremely rare moments where the market hands you a certainty that markets have yet to discount because it's difficult for people to get their heads around it. The COVID pandemic was a perfect example. By February 1st of 2020, it was absolutely certain that a global pandemic was coming and that crude oil prices had to collapse. But the market didn't even start to respond until the middle of March. a true gift from the market that many Microvoices listeners and I myself profited from handsomely. After really thinking about Jim Biano's comments last week, I'm struck with the realization that a dovish policy error by the Fed and might become certain. We'll have to watch the players, the dots, the messaging, and so forth over the next few weeks, but I'm close to getting to full conviction that a dovish policy error is inevitable and certain in 2026. Now, I'm not quite there yet. And let's face it, folks, neither President Trump nor his new Fed chair, whoever that turns out to be, are likely to heed Jim Biano's warnings that the back of the curve could very well revolt with higher rates out of inflation fears in reaction to a cut in policy rates or excessively aggressive cuts to policy rates. So, they're going to cut policy rates aggressively because that's what Trump wants and he's not going to put a chair in who's not going to be loyal to that. End of story. So, I predict that's going to end badly if that's what happens. Now, I have no idea how long it's going to take or what the outcome will be, but I'm convinced that the Fed, if they really cut rates aggressively, as I expect the chair is going to push for in 2026, if they continue to do that well beyond the point where the grown-ups in the room start dissenting loudly that those cuts are imprudent, it's going to set up an incredible trading opportunity on the same scale as that COVID opportunity where you've got a certain outcome that hasn't yet been discounted by markets. The counterargument that's still there and I still see it is the one that Robert Khan made in today's feature interview which is and it was actually echoing what Jim Biano said last week which is the Fed is more than just the chair and as Jim Biano mentioned last week the dot plots show that a lot of the voting members that's the current voting members remember the voting member roster changes when the Fed chair changes in May the current voting members a lot of them were really signaling that they don't think there should be any more rate cuts after the one they just did. So that's where the current board sits. But I think at the same time, the handwriting is pretty clear on the wall that anybody who doesn't join in the policy rate cutting party is going to bear the wrath of revenge from President Trump. So I want to wait this out a little bit longer because frankly I don't feel any great urgency to miss a trade. I remember that COVID trade. I was panicking in that last week of January to sell crude oil futures just as hard and as fast as I possibly could, thinking the market was going to wake up in any moment to the obvious reality that crude oil had to go lower. Took more than a month before the market even started to react to the downside. I actually had to go through a very painful loss initially as the market continued to rally into most of February completely blind to what was obviously coming. So, I don't think there's any rush to get into the kind of trade that I'm thinking about because we don't yet know what the governors as a group are going to do, but especially if we start to see more messaging suggesting that the group consensus is going to follow what the chair wants. And I think that's the direction, if I'm reading the the tea leaves correctly here, I think that's the direction we're headed in. It says to me that maybe we get a setup where, you know, for sure that there's going to be a doubbish policy error. you know, it's going to take months for it to play out. You know that that's a a non-conensus view or that people don't have really strong conviction about that and it gives you time to plan a trade. So, that takes you to the key question. What is the trade? Well, long gold is the painfully obvious answer. But because it's painfully obvious, that means it's already a very, very crowded trade that could easily retrace hard to the downside if anything panics the hot money out of that trade because it's already been on for so long. So, that brings you back to the real key question. What's the variant perception trade that nobody's thought of yet or that most people haven't thought of yet that delivers a grand slam if the Fed commits a dovish policy error? Well, you could go to the Jim Biano I won't say prediction because he didn't make a prediction, but you could take the risk scenario of the back end of the curve revoling and you could bet with let's say a curve steepener. Well, wait a minute. We don't know for sure that that's going to be the reaction. That was just one scenario that Jim suggested was possible. So, what's the certain outcome if there is a serious dovish policy error on the Fed's part that asymmetrically delivers a grand slam return? Patrick, I think you've got many weeks left to figure out for your asymmetric trading challenge. What's that grand slam asymmetric trade? Because I think there is one there somewhere. I just don't know what it is yet. Again, folks, I don't have the answer to that $64 trillion question, but I do plan to spend the next several weeks trying to figure it out. Again, the caveat is I'm not yet completely convinced that that policy error is inevitable because there might be a revolt from the other voting members of the Fed. But if the chair has their way or if President Trump is able to uh influence the rest of the committee, I think that policy error is very likely and could become certain. And if it does become certain, I want to have already figured out what is the that grand slam trade. Don't know yet. Patrick, I welcome your ideas. >> Well, Eric, there certainly is the potential for some substantial volatility in the 2026 year like you're suggesting, but let's uh frame the next few weeks and see what's going to happen here on the short term. We have two substantially shortened holiday weeks where volumes materially back off while there clearly is options expiration gamma that can potentially play a role in pinning the market over those holiday periods. While this makes me likely want to call this a trade rangebound market over the holidays, there's a curveball and the curveball is the cracks in the AI market. On page six, I have the semiconductor ETF, which is actually breaking back down below its 50-day moving average, and the selling pressure driven by some of the headlines from uh Oracle and Broadcom and and more is actually starting to stress this space. We're talking about such huge market capitalization in these names that if we suddenly saw Nvidia break to a lower low or any other type of factor like this, there would certainly be a huge drag on the S&P 500 that would keep it well off of its highs. Now, overall, I don't think that there's a high risk of a major breakdown, but you got to watch these AI stocks because if this somehow turns into a volatility catalyst, we have to be prepared with some sort of structural hedging. I want to leave listeners with a couple of simple levels to watch. If the SMH semiconductor index starts breaking below 340 and the S&P 500 rolls over through the 6700 level at the same time, that opens a door for much more volatile environment and would have me firmly on guard for downside risk. All right, Eric, let's dive into the dollar. Well, Patrick, the Dixie selloff continues in what has now become a wellestablished downward price channel, just as we anticipated here on Macrovoices. My outlook remains bearish with the caveat that a big policy announcement from Trump and Bessant could change that in a heartbeat. But absent a policy announcement looks to me like you know the trend is down is probably going to continue. Well Eric over the last year the primary downtrend of the dollar is very clear including the last few weeks that has uh had the dollar weaken back below the 50-day moving average. And in my mind, 98 is a critical level to watch because if that level is broken, we have the potential for a dollar downside acceleration. At the same time, if that isn't broken, this entire pullback would still just be a Fibonacci retracement, leaving the window open for the dollar to remain in a trade range to finish off the year. Overall, I while I do think that 2026 has plenty of room for the dollar bear to re-res, it is entirely plausible that we bounce back to 99 toward the 50-day moving average and settle in here for the rest of the year considering there are no major news announcements on the monetary or fiscal side. All right, Eric, we got to touch on oil. Monday and Tuesday's selloff in crude oil futures was a big deal. Now, don't fall for the false logic that, well, wait a minute. You know, April 8th and then again May 5th, we had tests of that same $55 handle on WTI. It didn't last then, so it's not going to last now. Wait a minute. That's comparing apples to oranges. Those were intraday panics based on headline news that painted gigantic hammer candles after the market reversed intraday and closed above 57 in both cases after testing a 55 handle midday. Tuesday afternoon this week we closed near the low of the day just barely a few ticks above 55 even. So, that was a new closing low for I don't know uh since how long. It goes off the left edge of my my chart here. I'd have to uh expand it or scroll uh left to figure that one out. It says to me that maybe a move lower is in the works and we haven't seen the worst of this yet. Now, at the same time, the bounce that we've seen, well, first of all, a bounce was inevitable, but the bounce is looking reasonably healthy. We got all the way up to the 8day moving average, then came back down to the five. And as of recording time, we're still above that 5day moving average at 56 spot 25 WTI. We really need to get above 58 WTI or so in order to get above the short-term moving averages to say that okay, it looks like this rally has legs. Maybe the the bottom is in at least for the short term as of uh recording time, especially if we stay below the uh 8day moving average at 56 spot 88 and that's on the February contract. I've rolled over now from uh January onto the February contract. If we can't get above that level, I think we could be headed back now down to new lower lows. And if we close below 55, I think it could signal a move lower maybe to test 50 even. Again, I don't know exactly what's going to happen. It could change in a heartbeat on news, but I think President Trump is very, very strongly incented to try to keep energy prices down through the November elections. I think that's one of the reasons he's working so hard to get peace with Ukraine and Russia. I think it's because he wants to have an excuse to relax sanctions on Russia and let more of that Russian oil flow to help solve the affordability crisis, which is really what's going to affect him in the midterm elections more than anything else. Now, having said all of that, what I should say is I did start to nibble on the long side of the oil trade here because I couldn't resist that $55 number when I saw it actually go below $55 uh for a minute. I went ahead and bought some time spreads, specifically the December 26, December 27 time spreads, which I was able to get for a $1.75 contango. So that's minus 1.75 to buy that spread in contango already back up to $147 at recording time. The rationale there is this nature of the crude oil futures curve is such that you know there are three possible outcomes. we we could see a return to pronounced backwardation if there's another geopolitical upset. In that case, my trade here going long those time spreads is a grand slam because I'm buying them in a reasonably steep contango of oh, I don't know about 15 cents per month uh at $1.75 on the year. Uh so it's a reasonably steep contango that I'm buying. I think it might go into steep backwardation if we get a geopolitical escalation. But if we don't and we keep the current structure right now, the first 12 months of the curve, because there's a little bit of backwardation at the beginning of the curve, then there's a little bit of contango. It ends up being a net contango in that first year out. But one year out, you're looking at about 12 cents of contango on that 12-month spread. From January 26, which is the current front month contract, to January 27th, the 12-month spread that that I bought was minus one spot 75 compared to 12. So, if we just get back to the current market, I go from 175 contango to 12 cents. That's a great big gain right there. I don't need a shift into backwardation in order for the trade to be profitable. Now, of course, the third potential outcome is that we get into a full structural contango all the way to the front of the curve and that contango deepens from here and it's more than $1.75 by the time that spread is ready to expire when right around just after Thanksgiving when the market should be discounting the the elections being over. So, I think the timing on that Z6 Z7 spread from the long side is pretty good. I like the entry that I got at 175. As I said, it's already back to 147. I won't be surprised if I get a chance to buy it at maybe even steeper contango than $2. I'll buy more if that happens. We'll see. But, uh, that would only be if the market plums even deeper lows from here. Getting all the way to next Thanksgiving without that contango at least flattening somewhat will surprise me. But uh it's always possible. >> Eric, like I suggested in the trade of the week, uh I am expecting substantial volatility. We did a direct retest of the lows from liberation day. And this is a inflection point where either this support line holds and we're going to get a material bounce that could see easily five plus dollars on the upside of oil. or any technical breakdown puts us in no man's land where simply stop losses and selling pressure will just kind of spill oil to the downside. One way or another, this is a very important support line and we're going to see whether it's broken here within the next few trading sessions. Now, Eric, gold's been strong. What's your thoughts here? Well, the move higher seems to be on just as we anticipated here on Macrovoices. The market initially rejected the strong resistance level at the previous all-time high just below 4,400. Oh my god. What does it mean? What does it mean? It means this, folks. Ready? Drum roll, please. That's why they call it a resistance level. Pretty clear, pretty simple. We're going to bump our head on that resistance level until we break through it or until we get a firmer rejection. But so far, what I see is a nice steady, wellestablished short-term upward price channel. The trend is up. We're bumping our heads on the previous all-time high at 4,400. Of course, we are. It might last a little longer. We might see a dip a little lower before it's over, but I anticipate we'll probably break above it. If we do, if we get a close above 4,400. The next measured move target is 4930 to 5140, depending on where you measure the beginning of that move from in terms of which low you go back to in order to start the uh the measured move upward. So, there's another 500 bucks at least of upside if we can get that close above 4,400. And I think we probably will. Let's cross our fingers and see what happens. Well, here we have gold trading at its 52- week highs. But at the same time, we saw platinum, platium, and silver. Oh, rip. The entire precious metals market is is running, which uh certainly leaves the window open for gold to join the party with a break to fresh new 52- week highs. The big question in this holiday shortened period and especially if the dollar doesn't immediately break down, does gold initially just bump its head along this previous high and just consolidate into uh setting this up for a 2026 move? Right now, the entire precious metals market is so hot. On page 10, I have that silver chart which is just showing this exponential rip on the upside. We're stone throw away from that 70 level. At this stage, silver continues to be the rock star in the precious metal space and uh and it's certainly driving the sentiment toward uh the metals. All right, Eric, let's touch on uranium. Well, as I'm listeners, I'm sure, are getting sick of hearing me say, I couldn't possibly be more bullish about the long-term fundamentals. Last week, I mentioned the weekly stochastics are really looking great as a setup on URRA, but boy, the daily stochastics were still overbought last week. Well, this week's sell-off in sympathy with the AI baskets took us back down to both daily and weekly stochastics in oversold territory. That's a great setup for a move higher to begin, but the risk is still a panic out of the AI trade. We're seeing a little bit of rollover here with the uh at recording time, the S&P 500 futures are flirting right with that key 50-day moving average. Again, if we end up moving substantially below it, and especially if we take out the 100 day moving average, which is now up to 6670, if we took that out to the downside, I'd start to get really worried that the AI trade is unwinding and could take the U miners way the hell down with them. But outside of that, I think this is a bullish setup. I'm uh adding to my longs on URA and other uranium miners here. And uh you know, I could be wrong, but I think it's a good setup. The safer play though would be on US spot un that's the spat physical uranium trust won't have as much upside leverage as the miners will but I think it's a much safer play in terms of much more limited downside because that's tied directly to the spot price of uranium. So the safety play or or the safety speculative long play if you want to think of that as a safety play is long spot. The more risky play is long urra and I think it looks like a good setup. Patrick, what do you think? Well, Eric, technically, uh, we had a scenario where the URRA tried to break back above its 50-day moving average and approached its 50% retracement of the last decline. And what's interesting here is that as uranium here just rolled over, it did so in the similar window from which the semiconductors started to break down. And one of my bigger concerns about this uranium story is how much is it being basketed with the AI story and the data center power story because if we see distribution in the AI basket will it result in selling pressure in these uranium names irrespective of their long-term bullish positioning. Overall that correlation is probably my bigger concern at this stage. One of the most important things is to watch whether the previous low can hold and whether or not it can march the beat of its own drum or whether it's going to be basketed with the rest. Patrick, before we wrap up this week's show, let's hit that 10-year Treasury note chart. And finally, that 10-year, we saw the consolidation now above the 50-day moving average. uh in for the first time in 6 months we have seen yields make a higher high and holding uh the that turn. So what we now see is a very clear shift in the trend that's been in place for the second half of this year. Will this perpetuate in 2026 is the puzzle to solve. 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. That concludes [music] this edition of Macrovoices. Be sure to tune in each week to hear [music] feature interviews with the brightest minds in finance and macroeconomics. Macrovoices [music] is made possible by sponsorship from bigpicturetrading.com, [music] the internet's premier source of online education for traders. Please visit bigpicturetrading.com for more information. Please register [music] your free account at macrovoices.com. Once registered, [music] you'll receive our free weekly research roundup email containing links to supporting documents from our featured [music] guests and the very best free financial content our volunteer research team could find on the internet each week. 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Trade of The Week – MacroVoices #511
Summary
Download Big Picture Trading Chartbook : https://bit.ly/492eOqi ✓Sign up for a FREE 14-day trial at Big Picture Trading: …Transcript
This is Macrovoices, the free weekly financial podcast targeting professional finance, [music] high- netw worth individuals, family offices, and other sophisticated investors. Macrovoices [music] 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 Szna. >> Eric, it was great to have Robert back on [music] the show. Listeners, you're going to find the download link for that 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, macrovoice.com, and click on the red button over Robert's picture saying, "Looking for the downloads." Patrick, what's on deck for the trade of the week this week? Eric, what really came through in Robert K's interview is how politicized and unstable the oil backdrop has become. The White House is laser focused on keeping gasoline prices down into the midterms. While at the same time, you've got Russia, Ukraine, Venezuela, and broader geopolitical shocks in the background that could easily send energy prices sharply higher. This is exactly the kind of regime where I don't want to pick a direction in crude. I want to own volatility. The chart on page two shows how oil is at a key technical inflection point. Either the low holds for a sharp rebound or a break to a fresh low opens the floodgate for the next level down. As oil trades at this inflection point, as seen on the chart on page three, we have not seen a material jump in oil volatility as we remain in the trade ranges of the previous four months, suggesting long gamma is still reasonably priced. To express the view on a sizable move in crude oil over the next 30 days without taking a directional stance, I'm structuring a long iron condor using $3 wide wings. Specifically, I'm buying the January 14th, 2026 expiration, the 53x50 put spread, and the 58x61 call spread for a combined net debit of a dollar. Both verticals are $3 wide for a maximum payoff of $2 if we finish in the money on either wing against a defined maximum loss of a dollar if crude oil expires between the inner strikes and both spreads expire worthless. In other words, I'm laying out $1 to make $2 in a long ball structure that monetizes a break in either direction. The details are broken down on page four of the chart deck. Patrick, every Monday at Bigpicture Trading, your webinar explains how retail investors can put on our most recent trade of the week. For those listeners that want to explore how to put on these trades in greater detail, don't miss out on a 14-day free trial at bigpicturetrading.com. Now, let's dive into the postgame chart deck. >> All right, Eric, let's dive into the equity markets. Patrick, I don't have a strong opinion on the short-term outlook for the stock market other than perhaps to say that the widely anticipated Santa Claus rally into new all-time highs into year end, well, it hasn't happened yet, so if it's supposed to happen, I guess it better happen soon. I'm going to use this time instead to zoom out to the much bigger picture of what I'm thinking 2026 on whole should look like for all markets, not just equities, and where I think the best trades are going to be. If there's anything I've learned from trading, it's to recognize and seize those extremely rare moments where the market hands you a certainty that markets have yet to discount because it's difficult for people to get their heads around it. The COVID pandemic was a perfect example. By February 1st of 2020, it was absolutely certain that a global pandemic was coming and that crude oil prices had to collapse. But the market didn't even start to respond until the middle of March. a true gift from the market that many Microvoices listeners and I myself profited from handsomely. After really thinking about Jim Biano's comments last week, I'm struck with the realization that a dovish policy error by the Fed and might become certain. We'll have to watch the players, the dots, the messaging, and so forth over the next few weeks, but I'm close to getting to full conviction that a dovish policy error is inevitable and certain in 2026. Now, I'm not quite there yet. And let's face it, folks, neither President Trump nor his new Fed chair, whoever that turns out to be, are likely to heed Jim Biano's warnings that the back of the curve could very well revolt with higher rates out of inflation fears in reaction to a cut in policy rates or excessively aggressive cuts to policy rates. So, they're going to cut policy rates aggressively because that's what Trump wants and he's not going to put a chair in who's not going to be loyal to that. End of story. So, I predict that's going to end badly if that's what happens. Now, I have no idea how long it's going to take or what the outcome will be, but I'm convinced that the Fed, if they really cut rates aggressively, as I expect the chair is going to push for in 2026, if they continue to do that well beyond the point where the grown-ups in the room start dissenting loudly that those cuts are imprudent, it's going to set up an incredible trading opportunity on the same scale as that COVID opportunity where you've got a certain outcome that hasn't yet been discounted by markets. The counterargument that's still there and I still see it is the one that Robert Khan made in today's feature interview which is and it was actually echoing what Jim Biano said last week which is the Fed is more than just the chair and as Jim Biano mentioned last week the dot plots show that a lot of the voting members that's the current voting members remember the voting member roster changes when the Fed chair changes in May the current voting members a lot of them were really signaling that they don't think there should be any more rate cuts after the one they just did. So that's where the current board sits. But I think at the same time, the handwriting is pretty clear on the wall that anybody who doesn't join in the policy rate cutting party is going to bear the wrath of revenge from President Trump. So I want to wait this out a little bit longer because frankly I don't feel any great urgency to miss a trade. I remember that COVID trade. I was panicking in that last week of January to sell crude oil futures just as hard and as fast as I possibly could, thinking the market was going to wake up in any moment to the obvious reality that crude oil had to go lower. Took more than a month before the market even started to react to the downside. I actually had to go through a very painful loss initially as the market continued to rally into most of February completely blind to what was obviously coming. So, I don't think there's any rush to get into the kind of trade that I'm thinking about because we don't yet know what the governors as a group are going to do, but especially if we start to see more messaging suggesting that the group consensus is going to follow what the chair wants. And I think that's the direction, if I'm reading the the tea leaves correctly here, I think that's the direction we're headed in. It says to me that maybe we get a setup where, you know, for sure that there's going to be a doubbish policy error. you know, it's going to take months for it to play out. You know that that's a a non-conensus view or that people don't have really strong conviction about that and it gives you time to plan a trade. So, that takes you to the key question. What is the trade? Well, long gold is the painfully obvious answer. But because it's painfully obvious, that means it's already a very, very crowded trade that could easily retrace hard to the downside if anything panics the hot money out of that trade because it's already been on for so long. So, that brings you back to the real key question. What's the variant perception trade that nobody's thought of yet or that most people haven't thought of yet that delivers a grand slam if the Fed commits a dovish policy error? Well, you could go to the Jim Biano I won't say prediction because he didn't make a prediction, but you could take the risk scenario of the back end of the curve revoling and you could bet with let's say a curve steepener. Well, wait a minute. We don't know for sure that that's going to be the reaction. That was just one scenario that Jim suggested was possible. So, what's the certain outcome if there is a serious dovish policy error on the Fed's part that asymmetrically delivers a grand slam return? Patrick, I think you've got many weeks left to figure out for your asymmetric trading challenge. What's that grand slam asymmetric trade? Because I think there is one there somewhere. I just don't know what it is yet. Again, folks, I don't have the answer to that $64 trillion question, but I do plan to spend the next several weeks trying to figure it out. Again, the caveat is I'm not yet completely convinced that that policy error is inevitable because there might be a revolt from the other voting members of the Fed. But if the chair has their way or if President Trump is able to uh influence the rest of the committee, I think that policy error is very likely and could become certain. And if it does become certain, I want to have already figured out what is the that grand slam trade. Don't know yet. Patrick, I welcome your ideas. >> Well, Eric, there certainly is the potential for some substantial volatility in the 2026 year like you're suggesting, but let's uh frame the next few weeks and see what's going to happen here on the short term. We have two substantially shortened holiday weeks where volumes materially back off while there clearly is options expiration gamma that can potentially play a role in pinning the market over those holiday periods. While this makes me likely want to call this a trade rangebound market over the holidays, there's a curveball and the curveball is the cracks in the AI market. On page six, I have the semiconductor ETF, which is actually breaking back down below its 50-day moving average, and the selling pressure driven by some of the headlines from uh Oracle and Broadcom and and more is actually starting to stress this space. We're talking about such huge market capitalization in these names that if we suddenly saw Nvidia break to a lower low or any other type of factor like this, there would certainly be a huge drag on the S&P 500 that would keep it well off of its highs. Now, overall, I don't think that there's a high risk of a major breakdown, but you got to watch these AI stocks because if this somehow turns into a volatility catalyst, we have to be prepared with some sort of structural hedging. I want to leave listeners with a couple of simple levels to watch. If the SMH semiconductor index starts breaking below 340 and the S&P 500 rolls over through the 6700 level at the same time, that opens a door for much more volatile environment and would have me firmly on guard for downside risk. All right, Eric, let's dive into the dollar. Well, Patrick, the Dixie selloff continues in what has now become a wellestablished downward price channel, just as we anticipated here on Macrovoices. My outlook remains bearish with the caveat that a big policy announcement from Trump and Bessant could change that in a heartbeat. But absent a policy announcement looks to me like you know the trend is down is probably going to continue. Well Eric over the last year the primary downtrend of the dollar is very clear including the last few weeks that has uh had the dollar weaken back below the 50-day moving average. And in my mind, 98 is a critical level to watch because if that level is broken, we have the potential for a dollar downside acceleration. At the same time, if that isn't broken, this entire pullback would still just be a Fibonacci retracement, leaving the window open for the dollar to remain in a trade range to finish off the year. Overall, I while I do think that 2026 has plenty of room for the dollar bear to re-res, it is entirely plausible that we bounce back to 99 toward the 50-day moving average and settle in here for the rest of the year considering there are no major news announcements on the monetary or fiscal side. All right, Eric, we got to touch on oil. Monday and Tuesday's selloff in crude oil futures was a big deal. Now, don't fall for the false logic that, well, wait a minute. You know, April 8th and then again May 5th, we had tests of that same $55 handle on WTI. It didn't last then, so it's not going to last now. Wait a minute. That's comparing apples to oranges. Those were intraday panics based on headline news that painted gigantic hammer candles after the market reversed intraday and closed above 57 in both cases after testing a 55 handle midday. Tuesday afternoon this week we closed near the low of the day just barely a few ticks above 55 even. So, that was a new closing low for I don't know uh since how long. It goes off the left edge of my my chart here. I'd have to uh expand it or scroll uh left to figure that one out. It says to me that maybe a move lower is in the works and we haven't seen the worst of this yet. Now, at the same time, the bounce that we've seen, well, first of all, a bounce was inevitable, but the bounce is looking reasonably healthy. We got all the way up to the 8day moving average, then came back down to the five. And as of recording time, we're still above that 5day moving average at 56 spot 25 WTI. We really need to get above 58 WTI or so in order to get above the short-term moving averages to say that okay, it looks like this rally has legs. Maybe the the bottom is in at least for the short term as of uh recording time, especially if we stay below the uh 8day moving average at 56 spot 88 and that's on the February contract. I've rolled over now from uh January onto the February contract. If we can't get above that level, I think we could be headed back now down to new lower lows. And if we close below 55, I think it could signal a move lower maybe to test 50 even. Again, I don't know exactly what's going to happen. It could change in a heartbeat on news, but I think President Trump is very, very strongly incented to try to keep energy prices down through the November elections. I think that's one of the reasons he's working so hard to get peace with Ukraine and Russia. I think it's because he wants to have an excuse to relax sanctions on Russia and let more of that Russian oil flow to help solve the affordability crisis, which is really what's going to affect him in the midterm elections more than anything else. Now, having said all of that, what I should say is I did start to nibble on the long side of the oil trade here because I couldn't resist that $55 number when I saw it actually go below $55 uh for a minute. I went ahead and bought some time spreads, specifically the December 26, December 27 time spreads, which I was able to get for a $1.75 contango. So that's minus 1.75 to buy that spread in contango already back up to $147 at recording time. The rationale there is this nature of the crude oil futures curve is such that you know there are three possible outcomes. we we could see a return to pronounced backwardation if there's another geopolitical upset. In that case, my trade here going long those time spreads is a grand slam because I'm buying them in a reasonably steep contango of oh, I don't know about 15 cents per month uh at $1.75 on the year. Uh so it's a reasonably steep contango that I'm buying. I think it might go into steep backwardation if we get a geopolitical escalation. But if we don't and we keep the current structure right now, the first 12 months of the curve, because there's a little bit of backwardation at the beginning of the curve, then there's a little bit of contango. It ends up being a net contango in that first year out. But one year out, you're looking at about 12 cents of contango on that 12-month spread. From January 26, which is the current front month contract, to January 27th, the 12-month spread that that I bought was minus one spot 75 compared to 12. So, if we just get back to the current market, I go from 175 contango to 12 cents. That's a great big gain right there. I don't need a shift into backwardation in order for the trade to be profitable. Now, of course, the third potential outcome is that we get into a full structural contango all the way to the front of the curve and that contango deepens from here and it's more than $1.75 by the time that spread is ready to expire when right around just after Thanksgiving when the market should be discounting the the elections being over. So, I think the timing on that Z6 Z7 spread from the long side is pretty good. I like the entry that I got at 175. As I said, it's already back to 147. I won't be surprised if I get a chance to buy it at maybe even steeper contango than $2. I'll buy more if that happens. We'll see. But, uh, that would only be if the market plums even deeper lows from here. Getting all the way to next Thanksgiving without that contango at least flattening somewhat will surprise me. But uh it's always possible. >> Eric, like I suggested in the trade of the week, uh I am expecting substantial volatility. We did a direct retest of the lows from liberation day. And this is a inflection point where either this support line holds and we're going to get a material bounce that could see easily five plus dollars on the upside of oil. or any technical breakdown puts us in no man's land where simply stop losses and selling pressure will just kind of spill oil to the downside. One way or another, this is a very important support line and we're going to see whether it's broken here within the next few trading sessions. Now, Eric, gold's been strong. What's your thoughts here? Well, the move higher seems to be on just as we anticipated here on Macrovoices. The market initially rejected the strong resistance level at the previous all-time high just below 4,400. Oh my god. What does it mean? What does it mean? It means this, folks. Ready? Drum roll, please. That's why they call it a resistance level. Pretty clear, pretty simple. We're going to bump our head on that resistance level until we break through it or until we get a firmer rejection. But so far, what I see is a nice steady, wellestablished short-term upward price channel. The trend is up. We're bumping our heads on the previous all-time high at 4,400. Of course, we are. It might last a little longer. We might see a dip a little lower before it's over, but I anticipate we'll probably break above it. If we do, if we get a close above 4,400. The next measured move target is 4930 to 5140, depending on where you measure the beginning of that move from in terms of which low you go back to in order to start the uh the measured move upward. So, there's another 500 bucks at least of upside if we can get that close above 4,400. And I think we probably will. Let's cross our fingers and see what happens. Well, here we have gold trading at its 52- week highs. But at the same time, we saw platinum, platium, and silver. Oh, rip. The entire precious metals market is is running, which uh certainly leaves the window open for gold to join the party with a break to fresh new 52- week highs. The big question in this holiday shortened period and especially if the dollar doesn't immediately break down, does gold initially just bump its head along this previous high and just consolidate into uh setting this up for a 2026 move? Right now, the entire precious metals market is so hot. On page 10, I have that silver chart which is just showing this exponential rip on the upside. We're stone throw away from that 70 level. At this stage, silver continues to be the rock star in the precious metal space and uh and it's certainly driving the sentiment toward uh the metals. All right, Eric, let's touch on uranium. Well, as I'm listeners, I'm sure, are getting sick of hearing me say, I couldn't possibly be more bullish about the long-term fundamentals. Last week, I mentioned the weekly stochastics are really looking great as a setup on URRA, but boy, the daily stochastics were still overbought last week. Well, this week's sell-off in sympathy with the AI baskets took us back down to both daily and weekly stochastics in oversold territory. That's a great setup for a move higher to begin, but the risk is still a panic out of the AI trade. We're seeing a little bit of rollover here with the uh at recording time, the S&P 500 futures are flirting right with that key 50-day moving average. Again, if we end up moving substantially below it, and especially if we take out the 100 day moving average, which is now up to 6670, if we took that out to the downside, I'd start to get really worried that the AI trade is unwinding and could take the U miners way the hell down with them. But outside of that, I think this is a bullish setup. I'm uh adding to my longs on URA and other uranium miners here. And uh you know, I could be wrong, but I think it's a good setup. The safer play though would be on US spot un that's the spat physical uranium trust won't have as much upside leverage as the miners will but I think it's a much safer play in terms of much more limited downside because that's tied directly to the spot price of uranium. So the safety play or or the safety speculative long play if you want to think of that as a safety play is long spot. The more risky play is long urra and I think it looks like a good setup. Patrick, what do you think? Well, Eric, technically, uh, we had a scenario where the URRA tried to break back above its 50-day moving average and approached its 50% retracement of the last decline. And what's interesting here is that as uranium here just rolled over, it did so in the similar window from which the semiconductors started to break down. And one of my bigger concerns about this uranium story is how much is it being basketed with the AI story and the data center power story because if we see distribution in the AI basket will it result in selling pressure in these uranium names irrespective of their long-term bullish positioning. Overall that correlation is probably my bigger concern at this stage. One of the most important things is to watch whether the previous low can hold and whether or not it can march the beat of its own drum or whether it's going to be basketed with the rest. Patrick, before we wrap up this week's show, let's hit that 10-year Treasury note chart. And finally, that 10-year, we saw the consolidation now above the 50-day moving average. uh in for the first time in 6 months we have seen yields make a higher high and holding uh the that turn. So what we now see is a very clear shift in the trend that's been in place for the second half of this year. 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