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[music] >> Now, back to your hosts, Eric Townsend [music] and Patrick Ceresna. >> Eric, it was great to have Jim back for an update. Listeners, you're going to find the download link for this week's trade of the week in your research roundup email. If you don't have a research roundup email, it means you have not yet registered at macrovoices.com. Just go to our homepage and look for the red button over Pippa's picture saying looking for the download. >> Patrick, for this week's trade of the week, Pippa Malmgren argued that the energy shock may accelerate a much bigger transition in how countries think about long-term energy security. For investors who subscribe to that view, what's the most practical way to express that in the market? >> Now, Pippa's argument is that the energy crisis is not just about the next moving crude oil. It's a part of a much larger transition away from vulnerable hydrocarbon supply chains and toward more secure, scalable energy systems. Her phrase was essentially from molecules to atoms. Move from oil and gas dependency toward nuclear power, small modular reactors, and advanced energy technologies. So, rather than trying to trade the next headline around the Strait of Hormuz, this week's trade of the week is about positioning for strategic energy response, renewed interest in nuclear power, and the uranium fuel cycle. From a trade construction standpoint, I want to express the view through the URA, the Global X Uranium ETF, which provides broader exposure to uranium miners and the nuclear fuel cycle. With URA trading around $49.58, the structure uses the January 15th 2027 options. With roughly 232 days to expiration, specifically I'm looking at buying the $60 call for about $5.70 and selling the $70 call for about $3.50, creating a $10 wide bull call spread for a net debit of roughly $2.20. That defines the downside risk while maintaining meaningful upside exposure if the uranium and nuclear energy theme continues to reprice later this year. From a payoff structure, the maximum risk is limited to $2.20 debit paid while the maximum profit is $7.80 if URA is above $70 at expiration. The attraction is the asymmetry. For a relatively modest defined risk debit, the spread offers roughly a three and a half to one risk to reward profile if the nuclear energy and uranium fuel cycle thesis continues to gain traction. The result is a defined risk way to participate in the longer-term nuclear energy security theme without needing to absorb the full volatility of outright uranium equity exposure. >> Patrick, every Monday at Big Picture 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 post-game chart deck. >> All right, Eric, let's dive into the equity markets. >> Patrick, the stock market rally continues to astound with semiconductors leading the way. Now, I continue to fear a worse outcome from the Iran conflict than most people assume is possible, but frankly, I'm on the fence about whether that is going to necessarily cause a stock market crash or if the stock market might actually just celebrate expectations of government stimulus in the event of a really bad outcome. So, I'm not sure what's next for the market, but it's clear that this rally is on and it's on strong, at least for now. >> Eric, for me it's super simple. The market is assuming that the uh Strait of Hormuz is going to be resolved and that this is very much an AI and semiconductor bubble story that continues to work and everyone needs uh skin in the game. When you look at the breadth of the market, we remain very close to 50%. Rarely do we see a market that is trading at 52-week highs for such a prolonged period with the breadth of the market not participating. Usually, we can get up to 70 80% of the stock market participating. We haven't uh got seen any of that. This continues to be an incredibly concentrated story in the AI theme. The question to and the puzzle to solve is will we see a sector rotation story where we're going to see the breadth widen as money potentially profit take some of the semiconductor story and redistributes into the broader market or do we see a more violent mean reversion uh as the breadth of the market stays bad as we see profit taking inevitably start in the Nasdaq. This is uh the puzzle to solve at this stage. I'm going to give the bulls the benefit of the doubt that we're going to see some form of a rotation and the question is will we see areas like healthcare, uh defense contractors, and financials get some of the money flow uh when inevitably some profit taking starts in the semiconductors. >> All right, Eric, let's touch on that US dollar. >> Patrick, we're holding 99.50 and the chart looks like it's set to challenge the top of the trading range, which is about 100.50 on the Dixie chart. I expect another round of fighting in the Iran conflict as people figure out that there really is no deal close at hand and I don't think there's frankly much room from everything I can see for one to come about. I'll explain why not in the crude oil segment momentarily. So, as far as the dollar is concerned, I think we're probably going to get back to the high end of that range if not break out above it on the next round of military escalation in Iran. That's assuming I'm right about that. If there really is a deal on the table and this is all going to get resolved, I think the dollar takes a turn south at that point, but I don't think we're there yet. >> Eric, the dollar story to me is about the cross currencies. Right now, everyone is very complacent about Japan and Europe because their belief is that the oil will start to flow in these countries that require the huge energy imports and huge food imports, everything will go back to normal very quickly. But if we see a situation where this continues to escalate and there is no immediate resolution, you have to believe at some point the euro and the yen are going to [snorts] start to reflect that and that could in itself be the bullish tailwind that drives the US dollar higher. And so right now, the US dollar is slowly edging higher, but I'm watching that euro breakdown below 116 as a the first kind of warning that potentially a dollar move may be underway. All right, Eric, let's dive deeper into the oil markets here. >> Patrick, I think most market participants and definitely 100% of the mainstream media are missing the story, missing the point because there simply has been no agreement whatsoever on Iran's high-enriched uranium, the near-weapons-grade material. Briefly, the story there is Iran definitely has that material. When you hear somebody say, "Wait a minute, you know, Tulsi Gabbard already testified that Iran doesn't have a nuclear weapons program." Well, that's true. They don't have a nuclear weapons program, but building the weapon is not the hard part. The hard part is getting a hold of the enriched uranium that's needed to build that weapon. What they've done is they've enriched 441 kg. That's enough for up to maybe as many as nine or 10 bombs. They've enriched that to 60%. Now, it's 60, okay, you need 90% in order to uh to make a bomb. So, it sounds like they're really not very much uh there yet, or they've still got a third of the way to go. The thing is, it doesn't work that way. Uranium enrichment is not a linear process in terms of the separative work units required. So, the way to understand this is Iran has done 99% of the enrichment activity necessary in order to get enough enriched material to make several nuclear bombs from. It's not enriched to weapons grade yet, it's only enriched to 60%, but getting it from 60% to 90% would only take a few weeks with operating centrifuges. Now, does Iran still have any operable centrifuges, or were they all destroyed in Operation Midnight Hammer back last summer? That's not completely clear, although it's unlikely that they have uh certainly anything close to the full capacity that they used to have. So, there's a little bit of a question mark there, but the point is, they do have near weapons grade material. This is what's called a threshold state strategy, where Iran does not want to be perceived as having a nuclear weapon because so many other countries would perceive that as an intolerable risk. What they want to do is be so close to it that everyone knows it would only take them a few weeks of further enrichment in order to get to the point where they could build a nuclear weapon if they wanted to. Now, that's not subjective opinion, it's not made up. The IAEA has gone and physically inspected this 441 kg of 60% enriched uranium. They verified that it's there. It's not in question. Nobody on either side of the conflict disputes that Iran has or had that material. Now, it's probably buried under half a mile of crushed rock after all of the bombing campaigns, but exactly where it's stored isn't necessarily known to anyone other than the Iranians. It's a couple of pickup truck loads full of canisters about twice the height of gas grill cylinders. That's enough, if they enriched it the rest of the way, to make several nuclear weapons. That's what everybody is so up in arms about. President Trump has said it is an absolute red line. The reason we got into this conflict is Iran is not allowed to continue to have that material. When President Trump says they can't have a nuclear weapon, what he really means is we're not going to allow them to continue to have the near weapons grade uranium that would allow them to build a weapon with only a few weeks. When he talks about weeks away from a weapon, that's actually a misstatement. What Iran really is is if they had the centrifuges that we don't know that they have, and it's likely that they don't, then they would be just a few weeks away from enriching the high enriched uranium that they have at 60% all the way to 90% where it becomes weapons grade. Now, at that point, the weapon is not that hard. Iran does not have a nuclear weapons program because it looks good to be able to say that they don't have one. The point is spinning up that program in order to build a weapon, if they wanted to, wouldn't take so long. So, this really is a risk factor. The question is President Trump says absolutely no way they can't keep that material. We're not going to let up on this uh conflict. We're not going to make any deal until Iran gives up that material to the United States. Originally was the the hardline. Now he's saying to another country might be acceptable, but they can't keep it. Never once ever during this conflict has any Iranian official ever said, intimated, or remotely come close to agreeing to Iran ever giving up any of that material. In fact, the supreme leader just last Thursday issued a new directive reiterating that that material cannot leave Iran under any circumstance. So, there's no agreement whatsoever. All of this talk about how we're just hours away from a deal, it's just a few words, it's one sentence on a uh memoranda, it's all a bunch of It's propaganda. It's not real. The reality of the situation is President Trump has been clear. The Iranians have been clear. Neither side is willing to budge 1 in on this issue. Somebody's going to have to budge at some point. When they do, that's going to decide what really happens next, but we're not there yet. So, that's the big thing to watch for is when one side or the other is willing to budge on the question of Iran giving up its 60% high enriched uranium. Again, I wrote a detailed Substack explaining threshold states nuclear hedging and going into much more detail about the enrichment process and how this all works. That's linked in your research roundup email. It's on my Substack. So, now let's come back to what this segment is supposed to be about, which is crude oil. What does all that have to do with crude oil? Well, most analysts are saying that if this goes on for another month or so, it's going with with no traffic moving through the strait or or substantially no traffic. What we have now is less than 10% of normal flows. And by the way, those flows that we have are almost all Chinese flagged vessels. So, it seems pretty clear that when President Trump met with Xi Jinping, there was probably some unannounced side agreement that said, "Look, China's going to tell Iran to start sending more oil to China. Uh Mr. President, you better not get in the way of that if you want to have a good relationship with China." And it appears that the US is allowing that to happen, that Chinese ships are moving oil out of uh the Strait. Whether that's Iranian oil or some other oil is not completely clear, but there is oil that's going to China moving through the Strait. Very little other traffic is moving. If it stays this way for another month or more, most analysts are saying that puts us squarely at $150 to $200 oil in order to create the demand destruction necessary to destroy, or I should say cause the decline of at least 10 or 15 million barrels of oil. Now, I did get a contrasting view. I spoke this afternoon to Dr. Anas Al He's saying, "Wait a minute. People are getting this wrong." At least according to Dr. Al he's saying, "They're They're right that in order to get 10 or 15 million barrels of demand destruction, that would be $150 to $200 oil." But, Anas thinks that it's really not that much we because we've already seen a little bit of demand decline as a result of the price rise that's already occurred. We've seen some workarounds where Saudi Arabia has been able to move a lot of their oil through the East-West pipeline and get it out through the Strait of Bab el-Mandeb. So, Anas says, "Yeah, there is going to be need to be a price reaction in order to cause some demand decline if this continues, but it's not 10 million barrels or even close to it. He thinks it's more like 3 million barrels. Uh Dr. Onassis is the only one who seems to think it's that small, but even if you take Onassis' view, he's agreeing with me that if this goes on for another month, oil prices go up. He just doesn't think they go up nearly as much as some people fear that they could. So, there's a couple of different contrasting views. I don't know who's right on that, but I am convinced that we're not going to see any resolution to this until one side or the other is willing to make a major major concession that so far neither side has been willing willing to make on the enriched uranium, which frankly the press has done a horrible job of explaining. >> Well, Eric, there's no shortage of conflicting opinions out there as to the impact of the closure of the strait and how this all resolves itself. I mean, Morgan last week had some very clear views as to how he thinks this will play out. On the short-term, there's no denying that some of the risk premiums being taken out on optimism. The bigger question is that is it a big buy on dip? So, as far as I'm concerned, this continues to be a buy on dip even if there is a resolution just like Morgan was talking about last week. Odds are that oil markets will stay tight as there has to be a inventory replenishment cycle and it's going to take a while for things to work themselves out. On the short-term here, a liquidity and flows driven sell-off has occurred as some of the optimism has come in, but I believe that oil has every opportunity to trade back toward 100 plus. So, I'm using this weakness to be buying dips. All right, Eric, moving on, I want to look deeper at the gold markets and how the price action has been developing here. What are your thoughts? >> Patrick, the obvious expected bottom for a correction on this market would be the 200-day moving average. That's where we saw the bottom was at the 200-day moving average back when the first really big leg down on this correction, which was back in the middle of March. That took us down to about 4,100, which is where the 200-day moving average was at that time in March. 200-day moving average is up now to just over $4,400, and that's exactly about where we are at recording time. So, I think we're going to hit the 200-day moving average. Normally, that would be the bottom. Frankly, if what happens next is what I think is going to happen next, which is nobody budges on the nuclear deal, and we continue to see the strait closed and oil prices move higher, I don't think it's going to hold. I think we're very likely going to retest that $4,100 low from early March, and maybe even take it out to the downside for lower numbers still. If we did get the $150 to $200 oil prices that some analysts fear, uh hey, that could take us down to $3,000 oil. You never know what's possible. I think when this is all over and the strait is fully reopened, uh it's going to be an absolute bull market in gold. But, until then, I'm not sure that there's really any clear downside limit, and I'll be surprised if the 200-day moving average, which we're testing right now, holds this, unless we get some kind of, you know, one side or the other budges on the nuclear, we we get a real deal on Iran, and then, indeed, that would make perfect sense for this to be the bottom, and it's all uphill from here. So, I think it really hinges on what happens next in the oil crisis. Well, to reiterate the point I was making last week, uh the price action continues to be incredibly distributive, but what is confirming to me on that is the entire precious metals market is showing that distribution. There was a false breakout on silver that was being given fully back. Platinum and palladium remain along their monthly lows and very distributive in price action, and even the gold miners are under stress. At this moment, there is no money flow going there. That's not being supported, and that makes it relatively vulnerable for further distribution. At some stage, it's going to be a screaming buy on dip, but as of this moment, there's very little evidence that this is that moment here in late May. Maybe we'll be looking into July and August for a period where a catalyst may turn the gold markets back up. For now, it's more of the same. Now, Eric, what are your thoughts here on uranium? >> Patrick, as I think everyone knows, I'm super duper bullish long-term. The short-term weakness has subsided in many of the uranium issues, which are bouncing now. But frankly, that recent strength in the last few days pales in contrast to the much greater strength we've seen in the S&P and particularly in semiconductors. So, I don't know if we get an escalation in the oil crisis, if that's going to bring the broader market down, the broader stock market. If it does, I'm concerned, at least in the short-term, about what that would do for uranium stocks. But at least for now, what we're seeing is a bounce, and you know, maybe it'll be a sustained bounce. >> Yeah, so as we put on that uranium trade in our trade of the week, I do think that there's an opportunity here to use this weakness to position for a a bigger turnaround later this year. But on the short-term, there is a very few sectors in the market that are getting any love. And uranium, gold, and so on are just continuing to meet some short-term distribution as money continues to only focus on what's been working and chasing this AI trade. >> Patrick, before we wrap up this week's podcast, let's hit that 10-year Treasury note chart. >> Finally touching on the 10-year Treasury yield, we continue to see some of the pressure being relieved. But, the question is is that going to be short-lived? Uh there's a lot of vulnerability that unresolved situation here will certainly stress oil, and it would certainly cause inflation to stay remain elevated, and uh the 10-year yield continue to be under pressure. So, at this moment, I'm not optimistic about uh yields coming off uh too strongly. And, it's very likely here that we could see the 10-year yield just come right back up toward the highs from last month. >> Folks, if you enjoy Patrick's Chart Decks, you can get them every single day of the week with a free trial of Big Picture Trading. The details are on the last pages of the slide deck, or just go to bigpicturetrading.com. Patrick, tell them what they can expect to find in this week's research roundup. >> Well, in this week's research roundup, you're going to find the transcript for today's interview, as well as the Trader of the Week Chart Book we just discussed here in the post-game, including a number of links that articles that we found interesting. You're going to find this link and so much more in this week's research roundup. So, that does it for this week's episode. We appreciate all the feedback and support we get from our listeners, and we're always looking for suggestions on how we can make the program even better. Now, for those of our listeners that write or blog about the markets and would like to share that content with our listeners, send us an email at researchroundup@macrovoices.com, and we will consider it for our weekly distributions. If you have not already, follow our main account on X @macrovoices for all the most recent updates and releases. You can also follow Eric on X @erictownsend. That's Eric spelled with a K, and you can also follow me @patrickceresna. On behalf of Eric Townsend and myself, thank you for listening, and we'll see you all next week. >> That concludes this edition of MacroVoices. Be sure to tune in each week to hear feature interviews with the brightest minds in finance and macroeconomics. 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Trade of The Week – MacroVoices #534
Summary
Download Big Picture Trading Chartbook : https://bit.ly/4nX9PP1 ✓Sign up for a FREE 14-day trial at Big Picture Trading: …Transcript
[music] >> Now, back to your hosts, Eric Townsend [music] and Patrick Ceresna. >> Eric, it was great to have Jim back for an update. Listeners, you're going to find the download link for this week's trade of the week in your research roundup email. If you don't have a research roundup email, it means you have not yet registered at macrovoices.com. Just go to our homepage and look for the red button over Pippa's picture saying looking for the download. >> Patrick, for this week's trade of the week, Pippa Malmgren argued that the energy shock may accelerate a much bigger transition in how countries think about long-term energy security. For investors who subscribe to that view, what's the most practical way to express that in the market? >> Now, Pippa's argument is that the energy crisis is not just about the next moving crude oil. It's a part of a much larger transition away from vulnerable hydrocarbon supply chains and toward more secure, scalable energy systems. Her phrase was essentially from molecules to atoms. Move from oil and gas dependency toward nuclear power, small modular reactors, and advanced energy technologies. So, rather than trying to trade the next headline around the Strait of Hormuz, this week's trade of the week is about positioning for strategic energy response, renewed interest in nuclear power, and the uranium fuel cycle. From a trade construction standpoint, I want to express the view through the URA, the Global X Uranium ETF, which provides broader exposure to uranium miners and the nuclear fuel cycle. With URA trading around $49.58, the structure uses the January 15th 2027 options. With roughly 232 days to expiration, specifically I'm looking at buying the $60 call for about $5.70 and selling the $70 call for about $3.50, creating a $10 wide bull call spread for a net debit of roughly $2.20. That defines the downside risk while maintaining meaningful upside exposure if the uranium and nuclear energy theme continues to reprice later this year. From a payoff structure, the maximum risk is limited to $2.20 debit paid while the maximum profit is $7.80 if URA is above $70 at expiration. The attraction is the asymmetry. For a relatively modest defined risk debit, the spread offers roughly a three and a half to one risk to reward profile if the nuclear energy and uranium fuel cycle thesis continues to gain traction. The result is a defined risk way to participate in the longer-term nuclear energy security theme without needing to absorb the full volatility of outright uranium equity exposure. >> Patrick, every Monday at Big Picture 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 post-game chart deck. >> All right, Eric, let's dive into the equity markets. >> Patrick, the stock market rally continues to astound with semiconductors leading the way. Now, I continue to fear a worse outcome from the Iran conflict than most people assume is possible, but frankly, I'm on the fence about whether that is going to necessarily cause a stock market crash or if the stock market might actually just celebrate expectations of government stimulus in the event of a really bad outcome. So, I'm not sure what's next for the market, but it's clear that this rally is on and it's on strong, at least for now. >> Eric, for me it's super simple. The market is assuming that the uh Strait of Hormuz is going to be resolved and that this is very much an AI and semiconductor bubble story that continues to work and everyone needs uh skin in the game. When you look at the breadth of the market, we remain very close to 50%. Rarely do we see a market that is trading at 52-week highs for such a prolonged period with the breadth of the market not participating. Usually, we can get up to 70 80% of the stock market participating. We haven't uh got seen any of that. This continues to be an incredibly concentrated story in the AI theme. The question to and the puzzle to solve is will we see a sector rotation story where we're going to see the breadth widen as money potentially profit take some of the semiconductor story and redistributes into the broader market or do we see a more violent mean reversion uh as the breadth of the market stays bad as we see profit taking inevitably start in the Nasdaq. This is uh the puzzle to solve at this stage. I'm going to give the bulls the benefit of the doubt that we're going to see some form of a rotation and the question is will we see areas like healthcare, uh defense contractors, and financials get some of the money flow uh when inevitably some profit taking starts in the semiconductors. >> All right, Eric, let's touch on that US dollar. >> Patrick, we're holding 99.50 and the chart looks like it's set to challenge the top of the trading range, which is about 100.50 on the Dixie chart. I expect another round of fighting in the Iran conflict as people figure out that there really is no deal close at hand and I don't think there's frankly much room from everything I can see for one to come about. I'll explain why not in the crude oil segment momentarily. So, as far as the dollar is concerned, I think we're probably going to get back to the high end of that range if not break out above it on the next round of military escalation in Iran. That's assuming I'm right about that. If there really is a deal on the table and this is all going to get resolved, I think the dollar takes a turn south at that point, but I don't think we're there yet. >> Eric, the dollar story to me is about the cross currencies. Right now, everyone is very complacent about Japan and Europe because their belief is that the oil will start to flow in these countries that require the huge energy imports and huge food imports, everything will go back to normal very quickly. But if we see a situation where this continues to escalate and there is no immediate resolution, you have to believe at some point the euro and the yen are going to [snorts] start to reflect that and that could in itself be the bullish tailwind that drives the US dollar higher. And so right now, the US dollar is slowly edging higher, but I'm watching that euro breakdown below 116 as a the first kind of warning that potentially a dollar move may be underway. All right, Eric, let's dive deeper into the oil markets here. >> Patrick, I think most market participants and definitely 100% of the mainstream media are missing the story, missing the point because there simply has been no agreement whatsoever on Iran's high-enriched uranium, the near-weapons-grade material. Briefly, the story there is Iran definitely has that material. When you hear somebody say, "Wait a minute, you know, Tulsi Gabbard already testified that Iran doesn't have a nuclear weapons program." Well, that's true. They don't have a nuclear weapons program, but building the weapon is not the hard part. The hard part is getting a hold of the enriched uranium that's needed to build that weapon. What they've done is they've enriched 441 kg. That's enough for up to maybe as many as nine or 10 bombs. They've enriched that to 60%. Now, it's 60, okay, you need 90% in order to uh to make a bomb. So, it sounds like they're really not very much uh there yet, or they've still got a third of the way to go. The thing is, it doesn't work that way. Uranium enrichment is not a linear process in terms of the separative work units required. So, the way to understand this is Iran has done 99% of the enrichment activity necessary in order to get enough enriched material to make several nuclear bombs from. It's not enriched to weapons grade yet, it's only enriched to 60%, but getting it from 60% to 90% would only take a few weeks with operating centrifuges. Now, does Iran still have any operable centrifuges, or were they all destroyed in Operation Midnight Hammer back last summer? That's not completely clear, although it's unlikely that they have uh certainly anything close to the full capacity that they used to have. So, there's a little bit of a question mark there, but the point is, they do have near weapons grade material. This is what's called a threshold state strategy, where Iran does not want to be perceived as having a nuclear weapon because so many other countries would perceive that as an intolerable risk. What they want to do is be so close to it that everyone knows it would only take them a few weeks of further enrichment in order to get to the point where they could build a nuclear weapon if they wanted to. Now, that's not subjective opinion, it's not made up. The IAEA has gone and physically inspected this 441 kg of 60% enriched uranium. They verified that it's there. It's not in question. Nobody on either side of the conflict disputes that Iran has or had that material. Now, it's probably buried under half a mile of crushed rock after all of the bombing campaigns, but exactly where it's stored isn't necessarily known to anyone other than the Iranians. It's a couple of pickup truck loads full of canisters about twice the height of gas grill cylinders. That's enough, if they enriched it the rest of the way, to make several nuclear weapons. That's what everybody is so up in arms about. President Trump has said it is an absolute red line. The reason we got into this conflict is Iran is not allowed to continue to have that material. When President Trump says they can't have a nuclear weapon, what he really means is we're not going to allow them to continue to have the near weapons grade uranium that would allow them to build a weapon with only a few weeks. When he talks about weeks away from a weapon, that's actually a misstatement. What Iran really is is if they had the centrifuges that we don't know that they have, and it's likely that they don't, then they would be just a few weeks away from enriching the high enriched uranium that they have at 60% all the way to 90% where it becomes weapons grade. Now, at that point, the weapon is not that hard. Iran does not have a nuclear weapons program because it looks good to be able to say that they don't have one. The point is spinning up that program in order to build a weapon, if they wanted to, wouldn't take so long. So, this really is a risk factor. The question is President Trump says absolutely no way they can't keep that material. We're not going to let up on this uh conflict. We're not going to make any deal until Iran gives up that material to the United States. Originally was the the hardline. Now he's saying to another country might be acceptable, but they can't keep it. Never once ever during this conflict has any Iranian official ever said, intimated, or remotely come close to agreeing to Iran ever giving up any of that material. In fact, the supreme leader just last Thursday issued a new directive reiterating that that material cannot leave Iran under any circumstance. So, there's no agreement whatsoever. All of this talk about how we're just hours away from a deal, it's just a few words, it's one sentence on a uh memoranda, it's all a bunch of It's propaganda. It's not real. The reality of the situation is President Trump has been clear. The Iranians have been clear. Neither side is willing to budge 1 in on this issue. Somebody's going to have to budge at some point. When they do, that's going to decide what really happens next, but we're not there yet. So, that's the big thing to watch for is when one side or the other is willing to budge on the question of Iran giving up its 60% high enriched uranium. Again, I wrote a detailed Substack explaining threshold states nuclear hedging and going into much more detail about the enrichment process and how this all works. That's linked in your research roundup email. It's on my Substack. So, now let's come back to what this segment is supposed to be about, which is crude oil. What does all that have to do with crude oil? Well, most analysts are saying that if this goes on for another month or so, it's going with with no traffic moving through the strait or or substantially no traffic. What we have now is less than 10% of normal flows. And by the way, those flows that we have are almost all Chinese flagged vessels. So, it seems pretty clear that when President Trump met with Xi Jinping, there was probably some unannounced side agreement that said, "Look, China's going to tell Iran to start sending more oil to China. Uh Mr. President, you better not get in the way of that if you want to have a good relationship with China." And it appears that the US is allowing that to happen, that Chinese ships are moving oil out of uh the Strait. Whether that's Iranian oil or some other oil is not completely clear, but there is oil that's going to China moving through the Strait. Very little other traffic is moving. If it stays this way for another month or more, most analysts are saying that puts us squarely at $150 to $200 oil in order to create the demand destruction necessary to destroy, or I should say cause the decline of at least 10 or 15 million barrels of oil. Now, I did get a contrasting view. I spoke this afternoon to Dr. Anas Al He's saying, "Wait a minute. People are getting this wrong." At least according to Dr. Al he's saying, "They're They're right that in order to get 10 or 15 million barrels of demand destruction, that would be $150 to $200 oil." But, Anas thinks that it's really not that much we because we've already seen a little bit of demand decline as a result of the price rise that's already occurred. We've seen some workarounds where Saudi Arabia has been able to move a lot of their oil through the East-West pipeline and get it out through the Strait of Bab el-Mandeb. So, Anas says, "Yeah, there is going to be need to be a price reaction in order to cause some demand decline if this continues, but it's not 10 million barrels or even close to it. He thinks it's more like 3 million barrels. Uh Dr. Onassis is the only one who seems to think it's that small, but even if you take Onassis' view, he's agreeing with me that if this goes on for another month, oil prices go up. He just doesn't think they go up nearly as much as some people fear that they could. So, there's a couple of different contrasting views. I don't know who's right on that, but I am convinced that we're not going to see any resolution to this until one side or the other is willing to make a major major concession that so far neither side has been willing willing to make on the enriched uranium, which frankly the press has done a horrible job of explaining. >> Well, Eric, there's no shortage of conflicting opinions out there as to the impact of the closure of the strait and how this all resolves itself. I mean, Morgan last week had some very clear views as to how he thinks this will play out. On the short-term, there's no denying that some of the risk premiums being taken out on optimism. The bigger question is that is it a big buy on dip? So, as far as I'm concerned, this continues to be a buy on dip even if there is a resolution just like Morgan was talking about last week. Odds are that oil markets will stay tight as there has to be a inventory replenishment cycle and it's going to take a while for things to work themselves out. On the short-term here, a liquidity and flows driven sell-off has occurred as some of the optimism has come in, but I believe that oil has every opportunity to trade back toward 100 plus. So, I'm using this weakness to be buying dips. All right, Eric, moving on, I want to look deeper at the gold markets and how the price action has been developing here. What are your thoughts? >> Patrick, the obvious expected bottom for a correction on this market would be the 200-day moving average. That's where we saw the bottom was at the 200-day moving average back when the first really big leg down on this correction, which was back in the middle of March. That took us down to about 4,100, which is where the 200-day moving average was at that time in March. 200-day moving average is up now to just over $4,400, and that's exactly about where we are at recording time. So, I think we're going to hit the 200-day moving average. Normally, that would be the bottom. Frankly, if what happens next is what I think is going to happen next, which is nobody budges on the nuclear deal, and we continue to see the strait closed and oil prices move higher, I don't think it's going to hold. I think we're very likely going to retest that $4,100 low from early March, and maybe even take it out to the downside for lower numbers still. If we did get the $150 to $200 oil prices that some analysts fear, uh hey, that could take us down to $3,000 oil. You never know what's possible. I think when this is all over and the strait is fully reopened, uh it's going to be an absolute bull market in gold. But, until then, I'm not sure that there's really any clear downside limit, and I'll be surprised if the 200-day moving average, which we're testing right now, holds this, unless we get some kind of, you know, one side or the other budges on the nuclear, we we get a real deal on Iran, and then, indeed, that would make perfect sense for this to be the bottom, and it's all uphill from here. So, I think it really hinges on what happens next in the oil crisis. Well, to reiterate the point I was making last week, uh the price action continues to be incredibly distributive, but what is confirming to me on that is the entire precious metals market is showing that distribution. There was a false breakout on silver that was being given fully back. Platinum and palladium remain along their monthly lows and very distributive in price action, and even the gold miners are under stress. At this moment, there is no money flow going there. That's not being supported, and that makes it relatively vulnerable for further distribution. At some stage, it's going to be a screaming buy on dip, but as of this moment, there's very little evidence that this is that moment here in late May. Maybe we'll be looking into July and August for a period where a catalyst may turn the gold markets back up. For now, it's more of the same. Now, Eric, what are your thoughts here on uranium? >> Patrick, as I think everyone knows, I'm super duper bullish long-term. The short-term weakness has subsided in many of the uranium issues, which are bouncing now. But frankly, that recent strength in the last few days pales in contrast to the much greater strength we've seen in the S&P and particularly in semiconductors. So, I don't know if we get an escalation in the oil crisis, if that's going to bring the broader market down, the broader stock market. If it does, I'm concerned, at least in the short-term, about what that would do for uranium stocks. But at least for now, what we're seeing is a bounce, and you know, maybe it'll be a sustained bounce. >> Yeah, so as we put on that uranium trade in our trade of the week, I do think that there's an opportunity here to use this weakness to position for a a bigger turnaround later this year. But on the short-term, there is a very few sectors in the market that are getting any love. And uranium, gold, and so on are just continuing to meet some short-term distribution as money continues to only focus on what's been working and chasing this AI trade. >> Patrick, before we wrap up this week's podcast, let's hit that 10-year Treasury note chart. >> Finally touching on the 10-year Treasury yield, we continue to see some of the pressure being relieved. But, the question is is that going to be short-lived? Uh there's a lot of vulnerability that unresolved situation here will certainly stress oil, and it would certainly cause inflation to stay remain elevated, and uh the 10-year yield continue to be under pressure. So, at this moment, I'm not optimistic about uh yields coming off uh too strongly. And, it's very likely here that we could see the 10-year yield just come right back up toward the highs from last month. >> Folks, if you enjoy Patrick's Chart Decks, you can get them every single day of the week with a free trial of Big Picture Trading. The details are on the last pages of the slide deck, or just go to bigpicturetrading.com. Patrick, tell them what they can expect to find in this week's research roundup. >> Well, in this week's research roundup, you're going to find the transcript for today's interview, as well as the Trader of the Week Chart Book we just discussed here in the post-game, including a number of links that articles that we found interesting. You're going to find this link and so much more in this week's research roundup. So, that does it for this week's episode. We appreciate all the feedback and support we get from our listeners, and we're always looking for suggestions on how we can make the program even better. Now, for those of our listeners that write or blog about the markets and would like to share that content with our listeners, send us an email at researchroundup@macrovoices.com, and we will consider it for our weekly distributions. If you have not already, follow our main account on X @macrovoices for all the most recent updates and releases. You can also follow Eric on X @erictownsend. That's Eric spelled with a K, and you can also follow me @patrickceresna. On behalf of Eric Townsend and myself, thank you for listening, and we'll see you all next week. >> That concludes this edition of MacroVoices. Be sure to tune in each week to hear feature interviews with the brightest minds in finance and macroeconomics. 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