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cover of episode MacroVoices #452 Darius Dale: No Difference Between Trump & Harris

MacroVoices #452 Darius Dale: No Difference Between Trump & Harris

2024/10/31
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Macro Voices

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Darius Dale
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Eric Townsend
P
Patrick Ceresna
知名金融播客主持人和分析师,专注于宏观经济和金融市场分析。
Topics
Darius Dale: 无论哪位总统候选人胜出,美国都将面临财政赤字恶化,这是第四次转折点(Fourth Turning)的必然结果。这将导致巨额的国家债务增长,无论哪个党派执政,都将面临这个问题。历史数据显示,共和党政府在增加国家债务方面超过了民主党政府。民主党和共和党都对美国债务累积负有责任。美元在全球金融体系中的主导地位以及其他国家对美元的依赖,使得美国目前的债务问题比以往任何时候都更加危险。美联储将被迫采取行动应对美国财政危机,这可能导致金融抑制和货币贬值。第四次转折点带来的财政主导地位将导致货币贬值和金融抑制。长期通货紧缩的时代已经结束,我们正进入一个至少持续十年的长期通货膨胀时期。除非经济衰退,否则通货膨胀不太可能回到美联储的目标水平。由于缺乏表明经济衰退即将到来的指标,通货膨胀不太可能很快下降。美国经济具有韧性,这要归功于强劲的家庭部门、高储蓄率以及对制造业的有限敞口。美联储主席鲍威尔希望实现经济软着陆,并将维持其渐进的加息路径,以实现其价格稳定和充分就业的目标。未来几个月全球流动性将持续增加,这将对资产市场产生积极影响。美国财政部将被迫在2025年初大幅减少其一般账户余额,这将对美国流动性产生积极影响。尽管存在一些负面风险,但未来几个月对风险资产而言可能是积极的。42 Macro 的投资建议完全基于其系统性趋势跟踪流程。尽管黄金的基本面持续改善,但其技术指标显示其处于超买状态。尽管黄金技术指标显示超买,但其基本面和宏观经济环境都对黄金价格有利。 Eric Townsend: 美国大选结果可能出现多种不确定性,市场低估了这些风险。长期来看,黄金价格看涨,但短期内可能出现大幅回调。 Patrick Ceresna: 市场已经计入了共和党获胜的可能性,而民主党获胜则可能导致市场短期抛售。

Deep Dive

Chapters
Darius Dale argues that the outcome of the U.S. presidential election is surprisingly inconsequential for financial markets. He explains why both parties are likely to continue accumulating debt, leading to a fiscal crisis.
  • Both parties practice populist fiscal policies, leading to increased sovereign debt.
  • Republican administrations have historically outpaced Democrats in debt accumulation.
  • The U.S. is on a profligate fiscal path, which is increasingly dangerous.

Shownotes Transcript

Translations:
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This is macro voices, the free weekly financial podcast, targeting professional finance, high net worth individuals, family offices and other other sophisticated investors. Make robots is all about the brightest minds in the world of finance and macro economics. Telling IT like IT is bullish sher barish no holds bar. Now here are your hosts eric tow and Patrick assa.

Macrovoice is episode four fifty two was produced on october thirty first twenty twenty four i'm eric towns and happy halloween forty two micro o founder darius day on returns is this week feature interview guest daria says that with regard to financial markets, IT almost doesn't matter who wins next week's U. S. Presidential election.

He'll explain that view before we move on to persistent inflation. Why daria says the U. S. Economy will remain strong, why the fed wants so badly to engineer a soft landing, and why darius is convinced that liquidity will continue to rise. We will also talk about gold and where he had IT.

And on Patrick oregon, with the macro scoreboard week over week as of the close of wednesday, october thirty at two thousand and twenty four, the december S M P five hundred futures up twenty four basis points, trading at fifty eight fifty two, while flat week over week, we are seeing selling on the first reaction to mag seven earnings will take a closer look at that chart and the key technical levels to watch in the post game segment, the U. S.

Dollar index down thirty one basis points to one or four ten after a four week bullet advance. The dollar is consoler dating into the elections to december. Wti crucial contract down three hundred and five basis points, trading at sixty eight sixty one big geopolitical gap lower has been closing all week i'll take a look at that post came and eric have the ea inventory to december r bob gas slim down two hundred and forty nine basis points training at one ninety six the december gold contract up one hundred and eighty five basis points trading at twenty eight to one.

The buying has been relentless, less in spite of the overbold conditions. Copper up forty six basis points trading at four thirty five, uranium down three hundred nine basis points, training at eighty dollars even and the us. Ten year treasury field up at eight basis points to four twenty eight.

The key used to watch this week is the friday jobs numbers, and next week we have the us. Presidential election. I have some services.

pm. Is the bank of england monetary policy summary and the F M. C. Statement and press conference.

This week's feature interview guest is forty two macro o founder darius dail. Eric and darius discuss the election, fiscal policy, inflation, the business cycle and more. Eric interviewed darius, dale coming up as micro voices continues right here and macrovoice outcome.

And now with this week's special guest, here's your host, eric.

Joining me now is forty two micro founder darius dail. Darius, as always, has prepared a fantastic slide deck to accompany this interview. IT is the full sly deck, which is Normally sent out to darius's paying subscribers accordingly.

We do you need to reduct some of those pages othe wise, those paying sub ribes, we throw a IT. So you'll notice that only the slides that we discuss in this interview will be visible in the slide deck that you can download if you want the whole deck you'll have to follow up with. There is forty two mr.

rode. Outcome theory is great to have you back on the show. Obviously, first topics got to be we're recording on tuesday, seven days before election day in the united states. What should we think about that as investors .

appreciate you have me irk. Thanks again for thanks for the opportunity of my friend. So obviously, the markets are starting to run away the probability of a republican control government as you see here on slide eighty five of our latest microscope report.

Ah we showed the police market ads and now we all know the Polly market is is manipulated by few wales, but those walls are choosing the manipulated market in favor of downdraft. And republicans left for a reason likely for data reasons based on polling, based on early voting results. And so it's really clear and not from our perspective, that the asset markets, both a factor leadership within the stock market and also the broader rate and currencies markets are really movie in interaction of the implications of of the trust policies.

okay. So let's talk about the headline, the click bait, i'll admit um you actually said to me off the year before we recorded IT doesn't matter which candidate wins because they're basically the same. I'm pretty sure that from a social perspective, a lot of americans don't see the candidates is the same. What did you by that statement?

Yeah well, the reason I say that is because we are in a fourth turning. Eric, as you know, you will know you've at my former colleague and and one of my main tours knew how on the show where big believer s in his research from a geopolitical standpoint, uh, we are selves here, forty to macro have done a big deep dive miracle study on what happens to the economy, structure, policy and an asset markets are, and also geopolitics from the before before turning so that we can help our kinds navigate this others SE to cultural period as investors.

And one of the he take away from a fiscal policy respective, as we highlight onside seventy eight is if you look at if you study the evolution of critical fiscal policy time series, like the fiscal baLance gp ratio side of the GDP ratio, interests spend of GDP ratio, what we notice is that there are consistent and antic delta that we tend to observe in for turnings as a function of the for turning itself. The most notably, we tend to see a sharp deterioration. The service fiscal baLance of GDP ratio are particularly we get later in, later in the turning and a sharp as a function of that, obviously a sharp celerity in the sovereign bt GDP ratio.

So those two dynamic are gonna happen irrespective of which party controls congress, at which party takes the White house. And part of the reason for that, if you look at one earth, more populism is the higher probability outcome, because we understand that the social contract here in the U. S.

Is is broken. If you look at the start here, or the blue line shows labor share of national income, the red line shows CoOperation share of national income, and both have deviated substantially from their longer term trends. If you look at labor share of national income, IT average, about, you know fifty six percent of ghost mass income from one thousand nine and sixty eight eight to two thousand, whereas it's currently at fifty two percent currently.

If you look at the cobo profit as a by share of the worst of best income, IT average, about nine percent versus the thirteen percent and all time high that is currently yh and all time low in the terms of labor share currently. And so if you think about that four hundred basis point delta from those averages, that roughly accounts about one point two trillion dollars per anum as a released to loss income from the private sector in terms of the private sector employee and death being saffed into, uh, the coffers of corporate america, guys like elon us. This is a progressive transfer that an opinion was a function of a series of policies, most notably china's entering to the W T, O two thousand one and mexico's empty entry interact or and so we understand that this populism that is fueling the rise of populism on both sides of the out is likely to combine.

And an explosive growth and federal debt. Has we progressed deeper into into this forewarning? And that's why the headline is IT doesn't matter who in the election we're going to wind up with significantly more sovereign debt as U S.

Foreign bt as a function of that. If you look at side eighty two, we see that democrats have historically practice socialism for the poor, and republicans have historically practice socialism for the rit. And either way, both parties are love piling on debt to socializing income of their constitutions.

And I would argue not only the private public ican parties practice social m for the rich, you now have done on trump also practicing socialism for the poor ah. And so in this area here we show government social benefits, develop household income that has been up to the right for decades and decades from a low of six percent in one thousand hundred and sixty two with the current eighty percent share currently. Uh if you look at the effective of converse tax way in the lower panel, that has been declining down into the right for decades, peak out at around forty three percent, one thousand hundred and seventy and is currently only eleven percent total.

And so if you think about the spread between those two lines, is the accumulation of public sector debt are here in the united states. And ultimately, that's going to be a problem from our perspective because we ultimately ized that the were already having this sort of bypass san surge of populist fiscal policy before the actual for turning takes place. I was i'd share you the one final slide here before I move on.

If you look at uh U. S. Fiscal policy in four turnings history, ally, what we found is that the change in the the southern decor GDP in southern score baLance GDP slide eighty eight, you see that in the accused of war returning, we saw they start to draft change in the U.

S. Of fiscal baLance GDP ratio was nine minus nine hundred fifty basis points. So the budget devait got wider by nine hundred and fifty basis point.

Uh, in the world we're two for turning. We specially the budget eva got wider by you almost twenty eight percent points. And right now, we're wider by eleven percentage points, a little bit over almost twelve percentage points currently. And this is before the actual major existent al for turning crisis occur.

And that obviously terrifying in the context of the start to peak change in southern debt, the GDP ratio that we've already accumulated in this current for turning, if you look at the civil war for turning, the server of the gp ratio rose twenty seven percent. Centage points in the world were two, four turning IT rose over one hundred percentage points and currently we're up about the sixty nine percentage points. And again, this is before actual fourth turning crisis occurs.

So I can't stress this enough with the U. S. Is already on a profit fiscal path that is getting increasingly dangerous as a function of the four turning, but also also as a function of the wave of populous fiscal policy are that we continue to see for both sides of the out.

okay. There is I get IT. I totally agree with you that there is a growing trend of popular M. I also agree with you that more sovereign debt for the reasons that your state is likely.

I think the chart eighty eight definitely makes a very compelling argument that, that we're in the middle of a fourth turning, which is defined as a twenty five year period of of not so happy history. I'm also a huge fan of nail house work. I named the company for threading capital management.

I believe in the theory so much so needless to say, we're on the same page um there. And I think the fact that the the big heavy part of fourth turnings happens, right, kind of in the night thinking of the the forth earning, so to speak, and we're not very yet is a really president message. But hang on a second series.

I don't think that this election is really about a democrat versus republic and partisan election the way most people have interpreted because there's plenty of republicans that are much more establishment wing. There's plenty of democrats are all those. Many of them are defecting from the democrats party now who have much more of a populist view. But I see this election as really the populist side represented by Donald trump versus the establishment to need to, you know, historical control of washington, represented by vice president Harris.

So IT seems to me that although I agree with you that there's a trend in the economy that's very much moving towards popular m, the policy intentions of these two presidential candidates in terms of what they've said about or at least what history ally, the biden administration, the biden haris administration has done historically since the present. Biden hasn't said that much about her actual intentions. I'm assuming it's the same as it's been. If you look at that versus former president trumps intentions, they're really kind of polar opposites, at least in they are retorted. And what they say, can you really make the claim that know it's IT doesn't matter?

absolutely. I will. Now I won't even make the claim. I'll let the committee for responsible federal budget make the claim, which in opinion, based on our research here, forty two aco, this is the byte tian thinktank, uh, down in dc as a relates to accurately forecasting the impact of policy upon the budget deficit.

If you go to decide eighty seven, where we show are their analysis that evaluates the various proposals that each candidate has made on the campaign trial. Although we grew a september or third this year, their nosis shows camera haris is proposals says accumulating roughly about an additional three point five trillion dollars in U. S.

Sovereign bt. Over the ten year projection period relative to the baseline of if you add up all the the various proposals from an income and an in spending perspective from the trump campaign, about plus seven point five trillion dogs. The charge on the right in the site shows the ultimate act of those policies on the perspective of the U.

S. At the G, D, P ratio current law, which currently has the U. S.

Tax cuts and jobs at trump tax cuts. Expiring at the end of twenty twenty five. Still has the U.

S. Is debt to GDP ratio accelerating to hundred twenty five percent years time? If you add on trumps are a Harris policy proposals, the U.

S. Had to GDP ratio accelerate to one hundred and thirty three percent ten years time. And ultimately, U. S. Dollar trumps up.

Proposals are likely to cause about one hundred forty two percent death, the GDP ratio in roughly ten years time. And again, I can't stress this enough. These numbers are coming from the committee for responsible federal budget.

It's like the sleepiest White love institution in dc. You got the former head of the cbo, the former head of the senate budgeting process public ican, former head of the house budgeting processes of democrats. It's literally the most bypaths and sleepy thing take down in dc. So I think you do have to take these are estimates at face value in terms of what both candidates are promising.

And he made A A point I do want unpack and which back on a little bit in the context of the trump representing the popular swing of the product king party and kind of hair sort of representing the kind of old guard establishment you elite te down in dc. An we slightly disagree with that. If you look inside any three where we we said we wit back and we did a deep dive empirical study on the growth of sovereign debt and the monitise ation of sovereign bt under various president administration and I was shocked by the conclusions, genuinely shocked by the conclusions.

Because what the conclusions of the data suggest is that in the postwar era, republican administrations have outpace democrats administrations what IT comes to burdening the country with. So the brick in this country around which part is responsible for our um you know our profit fiscal trajectory is wrong. I mean, quite Frankly, I think it's just lazy and misguided.

So if you look at the human tive growth of U. S. Public debt during U. S.

Presidential administrations in the post way or after year, one democrat president is that presided over, signed into law, six percent public debt growth forces five percent of for republican presidents after year to its ten percent for a twelve percent perspectives ly after a year three is twenty two percent per is twenty one percent respectively and then after year four the democrat um medium h is twenty six percent percent the republican medium is thirty nine percent in need of view you exclude the year four from the truth, a presidents which I R R V you should based on the covert experience, the republican media is still plus thirty six percent, a thousand basis points higher than the democrats mean in the postwar U. S. economy.

So there is a real IT risk of A U. S. Fiscal crisis. In our opinion, we don't think republican tax cuts, they are big enough. A discussion topic out there as a lease to the discussion among investor consents. If you look inside ety four, you know we all know the democrats spent too much.

I think about you can disagree with that, but we need i'm trying to use my platform to create a Better discussion globally in global south ern det markets with a very big fixed income lights out there and they know who they are. I want to create a very different discussion about which parties responsible for the debt because the key takeaway is they are both very much responsible for accumulating debt. If you look at the chart on the right here and slight eighty four, where we show the cumulative dick growth of you stop dead during those presidential ministrations, six of the top eight in the postwar U.

S. economy. Or republican presidents, six of the top eight. And so into my pining. And I think investors to be aware that you know, even though Donald trump represents the the now populous link of the real gist of republican party, we also need to represent, understand the fact that he wasn't the only reason we got here from this respective in the ultimate risk of U. S. Fiscal crisis, that we continue to see elevator risk of here in this for turn serious.

I agree empathetically, with everything that you just said, especially the ingredients being in place for a us. Fiscal crisis. Too much debt is not sustainable.

IT can't last forever. Things that can last forever don't. Okay, i'm on board. We're on the same religion. But hang on.

I agreed completely with presidential candidate ross piro back in one nine hundred and ninety two when he said, A U. S. National, that of five trillion dollars is unsustainable. I think IT was right.

But guess what? We've gotten away with IT for so long that most people have just gotten to the point where they roll the eyes and say, another guy must be a libertarian talking about fiscal crisis because of too much debt. The debt doesn't matter for a big country.

The size of the united states has been proven by decades and decades of guys like ross barodia wrong. Why wouldn't someone conclude that you are wrong too right now? What's different about now, this unsustainable debt really does lead to the physical crisis that so many people have predicted for so many years.

Yes, great question. ExcEllent question. To me, it's all about the timing and sequencing of cattle. What's different about now to historical episodes of too much U S. And det is the starting point uh with respect to uh U S you know dollar hedge of money. Um if you go to see forty nine where we show the U S.

Dollar care of global totals in terms of the foregate changes serves being sixty percent, crossed mother bank lending at sixty percent, international dead security at seventy percent, trade invoicing at seventy nine percent, foreign change transactions at eighty eight percent, and they were going backing at ninety nine percent. The world is grossly exposed to the U. S.

Dollar and the us. Dollar, a hegemony in a way that I do IT no longer wants to be. Obviously, last week we had the bricks summit in russia, uh, where the stated objective as a function of the stated objective in the conclusion of the summer was we went out of this system.

Obviously, there aren't any real viable alternatives to move out of the system in mass, but we do know that the system is broken from the respective of a lot of our peer and adversary economies and that they're going to be looking are increasingly for viable alternatives over the long term. And so the key take away from our research in this discussion today, eric, is not to just sound the alarm bail on A U. S.

Fiscal crisis. I think we're already the slow motion fiscal crisis is evidence something in the bomb market that on shortly did not the sound bell, the U. S. Fiscal crisis. To me, it's to sound the alarm bell on how the fed is going to be forced to deal with this. And so that transitions as our our secondary topper, if you would decide ninety four, again citing the a deep dive of piracy study that we did on on the fall turning uh you know if you just want to see the deep time beto study about fifty sixty slides uh of hesitating factual a data with data going back to you know at eighteen hundreds for every time series to understand exactly how these dynamics have evolved in previous for turning episodes, which are generally eighty one hundred years apart.

So was obviously not like we have a tn a data, but we have released a couple cycles to analyze and here on that ninety four, what we find is that you know, the key forth turning monetary policy risks are a whole a lot of financial pression, erik, and a whole a lot of monetary basement. And ultimately, that's likely to cause us to acceleration and money supply that ultimately fate of the value of financial asset. So if you look at slight ninety nine, we have a strong belief that investors should expect incremental financial oppression because banks have ample capacity into the treasury market.

If you go back and you look at commercial banks, uh, treasury and agency security portfolios, uh, they're roughly about eighteen percent of total bank gas sets currently. You go got to go all day back to uh, everywhere as high as roughly fifty percent of total bank assets at the high to last for turning. So we know that the reregulate ors of fed and and other international regulators are going to financial impressed banks into holding more treasury's.

They're very likely to keep the policy rates significantly below likely to be elevated rates of inflation as we progressed deeper and deeper into the sport turning, we also see on site one or two that investors should expect monetary debasement because the private sector, which has been increasingly called upon to capitalize the U. S. Government, will demand hire yids to capitalized apple sam.

So in this chart, we show the fed treasury holdings as a share of the total markable treasure dead outstanding as the blue line. It's been declining for couple years now at only sixteen percent with the red line shows commercial and the holding had been declining for a couple of years with bottom and essentially in two thousand and twenty three and has been grinding higher sense about fifteen percent of the total. The black line shows forever official treasury holding so go a forgn central banks h their shares has been the clinics two thousand and eight now only at fourteen percent.

I saw the residual of that. The rest of IT is the global private. Our share has increased from thirty six percent in late twenty, twenty one of the multiple ple charge market to fifty four percent currently. In an opinion. This an adult tarted on bated rise in the share of U S.

Uh public sector funny car that has been forced upon the know, foisted upon the the global private sector, uh has really caused the big rbi OS in a big backup in religious rates across the curve, not just here in the U. S. But globally.

And so the key takeaway is this from the perspective of where we are, our starting point of the deterioration we already have observed in the terms of us public, such a baLance sheet that is likely to accelerate dramatically. I E, the determination is likely to accelerate dramatically. We recognize that there is only one institution in the world with the baLance sheet large enough to capitalize the U.

S. Public sector debt in a for turning and that effect as the blue line on this chart here inside one or two, we understand that the red line is gonna be force up uh as a function of regulation we got about before coming in next year. That's essentially gona change. The risk waitings enforced the banks incremental out of the credit markets and incremental into severe debt markets. That's another form of financial oppression.

But we realize that they will come a time and and probably multiple times over the next five to ten years where the fed has to dramatically accelerate the growth of its baLance sheet to capitalized of the us of in the us fiscal situation, if not a in a perpetual manner. Um if we start to see eels run away from us. And the final thing I sound this topic is if they don't do IT, the alternative is a collapse in the treasury market, a collapse in the global repo market, a collapse as a function of that in the global financial markets and ultimately collapse in the global economy.

And its our view that these academic wanted the federal serve, the ecb, the bank england sea. They don't want collapse. They want to be credited with saving this in belling out the system. So if you look at side one or three, you know, key, take away of the site is that we're all frogs being bored alive in a part of monetary debasement and financial oppression due to this fourth turning style fiscal dominance that is going to accelerate as we progressed over the next five to ten years.

So in this sharp, we show on the top panel ten year treasury term premium ah that a roughly two basis points while currently are essentially note 2 premium is historical average about a hundred two basis point uh so if you go back and you add that one hundred fifty basis points of missing interpreting me from the bomb market entertainer tenner uh, as a function, in our opinion of the asiatic division reaction function that we have a observed out of the fed over the past ten years. You go back and add that turn from me back to the bomb market. You're talking about a tinor or treasury al, that's close to six percent, then IT is to close up to four percent.

You're talking about a ten year tips break even rate that's close to four percent as opposed to the current you two two point three percent. And you are also talking about a positively sloped ten year treasury, three minute year treasury eo curveted, about one hundred twenty two bases points wide versus the minus twenty six bases points that we currently have. So because of the asiatic ally Davis reaction function that we're already observing here in this war turning, the bond market is already exhibiting signs of financial oppression and is likely to get worse and worse or over the long term, which also means as investors, we need to figure out a way to protect ourselves against that because in mapping, and this is the key structural risk, about time. Okay.

I got IT at the thirty five thousand foot high level view. Let's come down to the ten thousand foot level and talk about some of the major macro drivers, macro backdrop issues. Got to start with inflation and uta areas.

I've been fascinated by the way people are interpreting current data because, as you know, for several years now, I have held the view that the secular disinflation that began in the thousand nine hundred and eighty is over, that we're in a new period of secular inflation that is likely to last for at least a decade in pretty more, uh, you know, in the post covered era, was this whole team transitory debate? I know they had their view. I had my view would disagreed inside.

We will see how that works out. Those guys are all taking a Victory lap now. They're all say, ha ha tolls you so IT was transitory.

I was right. You got IT wrong. And i'm saying, really, that's how you're interpreting the data.

How do you see that there is I is a great question. Can I appreciate you team in that up because I think you and I share a similar of views on inflation and half or for quite a while. So if you go to slide where we are, show our fundamental research summary.

These are is a chonodemaire st of our active themes that we maintain in these monthly microscope tea porch for our clients. I hear forty two mro. The first theme which we authored in january twenty twenty two uh, is our taki inflation ent theme.

And the key tag way there is that we don't have any confidence that influences is going to return doubly to the feds are stated two percent and defect or two point five percent targets in the absence of a recession. In fact, our model has inflation starting to bottom, uh here in q four and angering higher over the course of the next year. So our opinion that could cause problems in asian markets but is unlikely cause problems in asset markets until the fit decides to downgrade the labor market in its reaction function, which IT may not and may not want to run.

All for several months of ninety several quarters. So uh eric, I think a one way we can sort of um you we can do like a rapid fire or each these four themes I hit on the theme give you a couple charts that we can return to the slide to impact each of the other things. Want to charges, if that make sense, make sense to me? awesome.

So let's off the fect to saki inflation. Let's go to slide sixty seven, where we show inflation is the most lagged, indicate the business cycle and is unlikely to dormit return to train apps in a recession. So we did we're getting increasingly famous for doing deep to having miracle le studies.

One thing I found is that there's a lot of myth out there from the set of of what people think about macro, and there's not a lot of factual data. So what we do here for the tomato is really, really get our hands dirty role of our leeves to are really, truly understand the empirics at the statistic properties of all the time series that we and other investors focus on. And the reality is there is a revocate to the business cycle.

It's called the business cycle for reason. IT doesn't just pop out and nowhere. We don't just job in an out recession every the week. There's a reason why the bears have been so wrong in this recession view for so long because we have not happy the dynamics in the business cycle to um the leading the person leading is the business cyl never aligned themselves in a way that suggests recession was going to be a high probability event on a short term time horizon but will impact that. I was really kind of things will get back to inflation.

So in this short here on slice to seven, we show the medium trAiling tenure delta justice this core in months before and after every session begins, uh, in both of these charts. And so essentially what IT is is, is the medium path that each of these cycles takes in and around a recession. And so what we found is that, you know, you go back and you study the twelve postwar business cycles that we have in the U.

S. economy. We are actually have robust dated analyze. What we find is that policy gets restrictive right around fifteen months, head of a recession, then the corner profit ycl breaks down, right around a year ahead of a recession, then liquidity breaks down. Right around three quarters out of a recession, in growth in the stock market break down a simultaneously right around two quarters out of a recession, employment breaks down, right when the recession starts, credit breaks down a quarter after that. And in family, four to five quarters after a recession starts, you get inflation breaking down below trend on a durable basis.

And you can see IT a little bit clear on the slot chart on the right here inside sixty seven, where we show growth breaking down again two quarters out of a recession, headline inflation and corn flakes breaking down about twelve to fifteen months or four, five quarters after, uh, a recession starts. So clearly, if we don't have the processionally indicators of the business eco, a way that suggests a recession is a high probability outcome on a short term time horizon, then we should not be expecting a durable breakdown and inflation uh any time soon um as a function of that. In fact, if you look inside seventy four or we show some of the lady indicator as of inflation, feel the core P P I, core P P I actually bottomed at two percent last year.

That's important because obviously, if you want to mean of two percent from policy perspective, you can put amit two percent and start to reactivate higher from that, that we currently are in terms of the blue line in the site on the seven and it's actually started. You start to see, you know signs of an elevated bottoming process in core C P, I and core P C E, uh, which are the red line in the black lines in the shirt. So to me, I think that need to be very aware that inflation may not do what the fed is expecting IT to do and what other investors are currently expecting you to do as evidence by bomberger.

Finally, shed up on this inflation topic. If you look at five thirty seven where we show our grid model for the united states, we maintain this grid model l for every major country uh, in the world. Our views on growth have been consistent for two years to plus years.

Now on the context economy thing, which will tell you into next growth has been surprising to the upside, is likely to continue surprising to the upside. But as a released inflation, which just the chart on the bottom right, we have inflation bottoming here at q four and again, starting to me under higher over the medium term without the duration of our next old month, forecasts arises IT. Now again, we not necessary think that's going to cause problems in asset markets until the fed starts getting concerned about IT again, which may not occur for you several months, several quarters of not several years. Who know the fact that IT has an asiatics delish reaction function and they made very well.

Want to maintain that. Let's move on to your second major theme, which was resilient U S. economy.

Um we also seeing back in september twenty twenty two, we maintain high condition and that a and the key takeaway is that the U. S. Economy remains results for a variety factors. I'd say the most important factors that relates to uh the resilient to the economy.

We have historical strong household sector at women Carrying the west village montalto effect, which is the elevated stack of savings as a function of the fiscal largest and monetary largest that we've seen in the post cover error, is causing a decline in the flow of savings, which means counsels are now because they have so much more money on the bounce, eet are spending more money into the economy on the flow basis. So that continues to dominate. Uh, we continue to see elevated uh, a sort of ARM income disparity uh, in the U.

S. Economy uh, whereby the cowards that account for the most amount of consumer spending in the U. S. Economy are quite well from the feet of asset Price inflation, home Price inflation, eta. The corporate sector baLanced is quite robust as well that there's no change there.

We've limited explosion to the policy rate in terms of the immunization that we've seen in the private sector from the pool, the level. Policy rate. And then we have very limited exposure to the wall to manufacturing sector.

The manufacturing sector, which is only ten percent of GDP adversus, a peak of uh twenty eight percent back in one hundred fifty three and the uh manufacturing shares as only fourteen percent of not farm payrolls, there is a peak of forty four percent back in one thousand forty three. If you take those numbers and understand that the manufacturing sectors only is accounted for a medium ninety eight percent of net job losses in the twelve post war U. S.

Recessions, you have to understand that because we have such a little, uh, explosion to this, an economic standpoint is highly unlikely that we have a sc downturn in the economy because the sick part of the economy is such a smaller share of the economy. And so one final thing i'll say on this um the limited probability uh of a recession over the medium term h you go to IDE twenty six or we show that similar announced that we were talking about uh going back to slide sixty seven h but we were showing the on the pressure of growth. So the part in the left again is the how the each of these cycles have historically evolved in an around recession.

The change of the right now shows the actual current data for each cycle. And what we have typically find is that we talked about this policy breaks down, you know, over a year, head of recession, follow by profits, all about liquidity, follow by growth, follow by stocks. Right now, the only thing that is consistent with you being a signaling, a leading indicator for a recession is the fact that policy is called in quote, restrictor.

Right now, you can make a case that I may not be just given the limited exposure to the level of policy rate that we were reserved in this business cycle, we don't have corporate profit ycl breaking down. We don't have liquidity breaking down. We don't have growth breaking down. We don't have things breaking down.

So why in the world with investors, fact, a recession to occur any point in time over the medium term time, realizing our answer to that is you shouldn't and ultimately going back to decide thirty seven, if, as you should, expect us growth to continue generally and persistently surprised to the upside over the medium term. So that that's been where we've been for over two years now. We expect to continue to be right on that view of the medium term.

Theist, the next high conviction call, which you made back in november of twenty twenty three, was that fed chairman jay power wants a soft landing.

Yes, yes, he does. In our opinion, this is one of the least understood dynamics, but most important dynamics as release to uh, how financial markets are Operating at the current junction have been since early november of last year when we offered the theme. So if you go to decide twenty four, so lot of us spend way too much time listen to each of these different fed hat talks in chp o it's like a coastline of words.

But the reality is the only person you really need to listen to as a place to the out. The ford outlook of fed policies is chairman jaw. And chairman jaw was very consistent and has been all year about his desire to implement a soft landing in the U.

S. economy. We're all that back in twenty twenty two. He want to pay in two thousand twenty three, he said. And you know, they we're it's progress here. And in Jackson hole in twenty twenty four is very clear, very obvious.

In fact, a few quotes from his most recent commentary or at the national association business economics quote, our goal all along has been restore Price stability without the kind of painful rise in unemployment that is frequently accompanied efforts to bring down high inflation. While the task is not complete, we've made a good deal progress towards that outcome. And then further now said the path to more neutral policy setting is not on a preset course, but reality is IT certainly does feel like it's on a preset course.

In the context of the face estimates for the neutral, the power goes on further to say, we do not believe that we need to see a further cooling in labor market conditions to achieve two percent inflation. And to me, that such an important state, because that ultimately ans that the labor market itself is sacrosanct, the face reaction function, we would argue the changing market is the most important DNA ic drive in the face reaction option. But they are not going to come out and tell you that because that's not their congressional Mandate.

The congressional Mandate is Price stability and maximum employment. So they are going to say, whenever they have to say, in order to maintain, you know, so, a credibility in the eyes of policymakers and in the eyes of investors. If you go to size seventy five, part of the reason we see the fed is immediate diverge.

Reaction function persisting is the fact that the first estimate for neutral is all way down to three percent, right? So obviously the duck pack gets updated every quarter. They survey all something, I want to say, sixteen to twenty ish policymakers on the F M C.

Uh, what their estimates are neutral in the media estimate media. The central tendency of the estimate is costed around three percent. Well, that we have meaningful implications because the current policy rate is currently up at five percent. So right now, instead of looking at the resiliency of the economy that we've been calling for since the timber or twenty and twenty two or the sticky ess of inflation that we've been calling for in january twenty twenty two, they are looking at their estimates of neutral and where they want the policy rate to go and how fast they wanted to get IT there.

So in this chart we show that the up plot the blue bars in each of these panels for twenty four, twenty five, twenty six in the longer run projections, the red line is the current fed funds future yelled for december twenty four or twenty five, twenty six and twenty seven. The black line shows the what the fed pricing in for each of those years. So right now that the plot is currently, uh, forecasting another two rate cuts for twenty twenty four.

So i've seen in november, december this year another four rate cuts in twenty twenty five, another two rate cuts in two thousand twenty six before they ultimately reach their unusual policy set. So the obviously is a gradual approach to getting neutral. But the key takeaway is that this is a federal reserve that despite having above train GDP growth, above train print real final cells growth, above train inflation is already cutting the policy rate and is guiding the rate cuts.

And by the way, going back to june, already revised its balancing policy to get in community device as well. So we've been here, says november twenty twenty three. We ultimately understand that historically, the fed has maintained an ash really Davis reaction function throughout the entirety of the historical four turnings. Obviously, the fed s only bit around for for the most recent for turning.

But throughout that for turning, particularly in the one thousand nine forties, the fed had in a the devious reaction function that ultimately a amounted to a significant amount of financial oppression and monetary basement and explosive growth in the money supply, which told him was incredibly bullish, structurally bullish, with things like stocks and gold. So investors need to be aware of that. That's the vironment that they are Operating in from the U.

S. Monetary policy perspective. And as we talked about uh um you know a slight forty nine, the U. S. Monetary policy really, really matters to the rest of the world.

Going back to page seven, the last three topics we just discuss sticky inflation, resilient U. S. economy. And jay wants a soft landing were all high conviction calls. You've also got a medium conviction call, which you just made last month, which is here comes the liquidity that is correct.

my friend. And so this is the theme. Here comes liquidity is a combination of the theme that we've had uh, that we were early on in terms of china's liquidity impulse, obviously accelerated ating massively in september.

We've been going for that ince the december of last year. But the additional layer of that is the what we see as likely incredibly robust liquidity impose from the us. In the first part of next year. That will be supplemental to what we're observing out of china, another economies around the world.

So if you go to see forty two or we show our global liquidity monitor, eric, if you can score over across the the top of the columns, you can see the liquidity proxy there uh three of these economies, the trains uh in the respect of liquidity proxy for those who may be knew um we track global liquidity and we track liquidity in every major economy in the world through the lands of our liquidity proxy, the forty to macroeconomic proxy. So on a global that's the of aggregated global bank balan chief from all the main economies in the world, all of their broad money supply aggregated and their effects reserves might as gold aggregated. And then we lay er on a bond market volatility overlay to simulate the impact of the repo market upon liquidity dynamic.

And what we find is that if you look at the liquidity proxies for each of these major countries that feed into the global liquidity proxy, you have australian liquidity currently training higher. You have canadian liquidity currently training higher. You have chinese liquidity currently training higher and set to massively accelerate in the months.

You have your own liquidity currently training higher. You have indian liquidity currently training higher. You've japanese is liquidity currently training higher.

You swiss liquidity currently training higher. You U. K liquidity currently training higher and of U S. Liquidity now recently inflecting into a positive trend. So every major economy in the world has its liquidity proxy uh accelerating currently. And so investors need to be aware of that um as an investor and that's likely to actually accelerate from there. So obviously, it's it's one thing to say liquidity going up and equity is going down.

I think, uh, every general on twitter can tell you uh that what they cannot tell you is where is IT headed over the medium term and that's what you need to do math to figure that out. So on side forty three, you know, we found, based on our our analysis that know what actually leads global liquidity of the medium term is stocks, its crypto, it's it's the U. S.

Dollar, it's F, X. Volatility, its interest rate, is big income volatility, its growth, inflation, unemployment. And if you look outside forty four, the aggregation of these key reading indicators of global liquidity currently signal a significant increase global liquidity over the medium term.

Investors need to be aware that based on the movement of these time series, the volatility of the rates of change of these time series, the current movement of those time series based on their historical correlations, that global liquidity is going to catch up in a material fashion over the medium term. So again, we're already currently accelerating and global liquidity in terms. With a brought based acceleration across most of these economies, most of the major economies in the world that contribute our global liquidity proxy.

And that's likely to accelerate over the medium term. Obviously, china being a big uh, driver of that. So that's the global liquidity of proportion. We believe that U S. Equities ity is likely to accelerate uh, significantly as well in the coming months.

So if you jump aside fifty seven where we unpacked the um most recent to the QQ3QRA uh the quarter we are funding announcement of the U S。 treasury. Uh the outlook for U S.

Liquidity mildly positive for q four, we're talking about a hundred and seventy five billion dollar decline in privately held net market worrying q four we're talking about a hundred fifty billion dollars decline in the treasurer general count baLance, uh, here in q four, currently projected by the by the treasury. So those things are a quite positive are on the set of U. S.

Equity ity. But we're are most concerned about us equity ity from the set of being a ball is the look for liquidity. And q one.

So if you got we ve got the part one of the U. S. Two four corner they we're funding announcement ate a on monday this week will get part to tomorrow on wednesday.

And what we find is that the treasury is expecting to incremental crowd out the private sector and drain U. S. equity.

And he what at once line fifty eight where we show uh, the projections for q one with a privately health net market were borrowing estimate of eight hundred and twenty three billion dollars, two hundred and seventy seven billion to where IT is in q four and in the treasure gentle the corner, Eugene q one is one hundred and fifty billion dollars higher than IT is for q four. Well, wait a minute. I just said the outlook for U.

S. Liquidity is about to get wildly positive and you want and the reason for that is they are not going to be able to do what they are put on the screen here on slight fifty to eight. They will get they will run directly to a debt ceiling, uh, the lapis expiring debt ceiling morritt um on january first, that's on side fifty nine.

So on january first, the U. S. Is so the dead silly moratorium that was enacted in june of twenty twenty three h ends on jane first of twenty twenty five. On january second or twenty twenty five, the U. S.

Treasury will no longer have borrowing authority will just only means if you look at size sixty, they're gonna have to spend down that roughly seven hundred billion dollars of treasury journal account in the first few months of twenty twenty five as we deal with another debt ceiling by partisan debt ceiling breaks my ship episode. These things are only going to get more, more partisan, more more brinksmanship. Eat for a lack of a Better word as we progressed deeper in the before turning and the rate of growth of U.

S. Sovereign, bt and deficits start meaningly accelerate so if you look at the last few debt ceiling episodes are the treasury spin down in the twenty twenty one death ceiling was eight hundred and five billion dollars in a span of three and a half months. The treasury spend down in the twenty twenty three uh debt selling uh brakes the ship.

A negotiation period was about five hundred and sixty billion dollars were to spend down so that's about the mean of roughly just seven hundred billion dollars which Janet yelland being the beautiful student to find an economic financial market history as SHE is and obviously being the one who presided over these two G, G, been down a episode. SHE understands that I need about seven hundred billion dollars to get through the members of senate, uh, which you need sixty votes in the senate of legislated dead silence increase to get through their bigger ing for the first few months h of twenty twenty five. And so old money that means is a very positive dynamic from U.

S. Liquidity as well. So with global liquidity currently accelerating, is expected to accelerate meaningfully over the medium term as a function of IT catching up to where the leading indicators of global liquidity as as turn by our math, suggest IT should be.

And then ultimately, we're going to get on top of that roughly seven hundred billion dollars of spin down by the T. G. A. As a function of dead selling brakesman ship in the first part of next year.

So when you go back to slide seven and you go look at our fundamental research things and kind of just see him out loud in order you have thicky inflation resume at U. S. economy.

Jim, want to soft landing. Here comes the liquidity. Most of that stuff is positive, and the three, the last three are positive. The one that is negative doesn't really matter yet because the fed doesn't care about inflation right now. They may be forced to care about inflation at some point to save face and safe work for credibility, safe to maintain some credibility and inflation pricing in the bomb market. But ultimately, that we don't see that dynamic is a near term risk.

We see that dynamic is probably a risk that we have to do as investors starting in q two of next year, particularly on the other side of that, T G A spend down where us equity ity could start to get really owner. So and we're expecting a global refinancing air pocket to develop sometime in twenty twenty five. And that should have some negative implications for asset markets as the evidence by five forty.

But ultimately, we think the next year is called four or five months. Five to six months cause should be quite positive. IT should continue to be quite positive for risk assets, for things like gold.

I want to come back to some of the asset classes that you mentioned in just a minute, but let's just stay on liquidity because obviously, it's so important what makes markets go up and down as when people and buy in cell stuff, not not micro economic. So the availability of the money to buy and sell stuff is is really what matters at the end of the day.

I want to push back just a little bit that want to come back to this election theme because I get what you're saying. You going to do the math very much. Appreciate how data driven you are and and the depth and just, uh, incredible quality of your analysis. But look, this is not your average presidential election.

The views are so extreme that president trumps strongest critics are literally out on the public stage predicting that there will be internment camps where a world war two style, where that abiden supporters or Harris supporters will be locked up and reeducated and president truth is going to declare martial law. And there's people on the other side of this who are saying, look, vice president Harris is so incompetent that she's going to lead us into a global thermo nuclear war and then botched the, the the handling of that so badly that the whole world is vapor ized. People really believe these extreme views, and I think that does Carry over into investor sentiment.

I see lots of people who are Normally very dated, driven, whose own personal politics are very much influencing their market views. Doesn't that mean that when somebody finds out next week that their candidate didn't win, the consequence is there is going to be you know, half of the investors, to the extent that their politics influence their view, are going to conclude that the sky is falling, the world's coming to an end. And that's going to maybe take some of that liquidity out of the system hundred percent.

But I think that's already been positioned for to A A reasonable degree. If you look at the volatile, the risk in man, things like the sock U. S. Equity market are things like the u charge market right now, investors are position for all have breaking loose on the other side of election. So clearly the risk from our perspective is upside risk as a function of those venues lows and those charm flows decaying up from those options decay.

And if you did have all help break loose a potio perspective, we still think you got to buy that dip in the context of those things that we continue to go back to on slide set, the opinion, the election, the noise around the election, and how people will feel about their candidate losing, and may even take to the streets as a function of their candidate losing. To me, that's the tree. The forest is the fact that the U.

S. Economy remains resilient and is likely to continue surprising egon omy consensus expectations to the outside of the medium term. The forest is the fact that the most important institution and person in the world want to engineer soft and the in the U.

S. Economy, and are maintaining an asiedu vish reaction function, not just to achieve that objective, but also to help capitalize the U. S.

Government in an era of explosive growth in foreign bt. And finally, the forest is the fact that U. S.

Global liquidity is currently training higher, is expected to accelerate markedly in the coming months, and U. S. Liquidity is probably going to accelerate markedly starting in the first quarter of next year. So I would be buying dip from a fundamental research perspective and never wrong on that fundamental research views.

Then guess what air we've been talking for? what? Forty five minutes, fifty minutes, zero percent zero accumulative zero of those words has anything to do with the recommendations we make to our clients for the in terms of managing risk in their portfolio.

One hundred percent of the recommendations that we make to our are a function of our systematic trend following processes. Uh, the most coaching evidence of that processes on side fourteen where we show our market regime back tests. So I think I may admitted this a few times to go here and that program. But you know we now cast the market regime. I think the best thing we do for investors is helps them listen to the market and respond to what the market trying to present.

And so in in sort of forty two aco noman pleasure, that just means we now cast the market a regime, and then we provide them exact to civic recommendations on exactly how to position for those marko regimes for the the mark regime, of which there are usually two to three meaningful periods per year. Um so you talking about three to four months of an average in terms of the mark persisting. So on side fourteen, will we show our mark reaching back test over stocks were crippled.

Do we have this maintained for every asic class and to asic class in the world? But just as a key, take away the S M P, five hundred ninety seven percent of the S. M P of hundreds return since a jane of one thousand and ninety seven has come since when our mark regime now casting process has indicated we're in the risk on regime I E gold lox reflation.

Only three percent of the S M P five hundred ds cumulo performance since jan of one hundred and ninety eight has come when our markers now casting process. As indicated, we're a risk off for shape. So of all you did was listen to forty two maco research, say risk on a risk off.

You do a lot Better as investor. I guarantee if you look at the crypto market, the performance is even more string. One hundred and nine percent of the big coin killer of performance since the inception of the asset class has come when our mark region now casting process has indicated where in a risk on marker regime, versus minus nine percent has come on where in a risk of mark regime.

So our marketing newcaster process trade bitcoin Better than IT trade itself. And so the key takeaway is there and for a wrong on these fundamental llah fundamental research views, then our our our our systematic processes, most notably our chip for construction process that slight ten and our direction is manage novelli, which we used their institutional investors to on the right side of market rst. Those processes will rotate us out of a risk on market regime into a risk off the market regime. And as a function of that, take down our our, our exposure to the various sesc classes that we feature in our case before construction process and change the proper trade on slide twelve, associated with the various factors within the equity, fixed income and global macro markets are well.

that's a perfect set up because now I want to come back to gold a boy. Everything we've been talking about gotta be just super bullish for gold. But at the same time, I really want to talk about what your indicators are telling you in terms of that, the trend following signals.

And so fourth, because on almost any technical analysis level in almost all time frames is already flashing overboard to extreme over bot, it's very hard for a technical analysts to justify adding to a gold position here as much as I think the the fundamentals continue to keep getting Better for the precious metals. Um how do you reconcile that? What should somebody who feels like they're unallocated to gold do here? I keep waiting for deeper dips in order to add to my position, and the deeper dips don't seem to be coming.

Well, this is an err. That's a great question air because we are in an error where both the silo macro dynamic in the economy and the structural backdrop, a fiscal monetary perspective are combining to reduce good outcomes in the gold Price. This is arguably the best environment for gold in my career outside of two thousand eleven. So in opinion, we did the gold there.

Is this meaningful outside in gold over the medium term if we were proved to be right on those views and reward IT by that by those rewarded by the markets for those views? So the reason we have confidence in maintaining a maximum position and gold right now, as indicated outside eleven, in for the structure process and just as a design, let me before even finish that unpacked c though our chip constructive process we uses to help our retail investor clients stand the right side mark risk, which is no complicated Normal cator for just basically saying we're tiring on time. A complete we use us three D, F process, keep them, you know, invested in bold markets and ultimately on the sideline and their markets.

And gold is a core feature of that process. Gold right now is that max is one hundred percent of its maximum exposure of thirty percent as a function of the top down in bottom of birth manager novel lazy that we show on side night. And I make sure all these slides are free to review a in in the presentation.

So going back to gold, gold is currently bullish from the perspective of our volatility. Just A A mini signal. Which one is a core feature of the bottom up matter on side history? Ally, eighty nine percent of gold positive performance has come when our vamp signal has been bullish on gold.

So all you did was just belong gold. When forty two macro o says its bullish vans, you make eighty nine percent of the total return you could possibly make in Price of bullion. And so that's why we have a lot of confidence in maintaining the position until the market.

These V R vm signal or V A V R mark login. Now casting process tells us to do something different or go, if you're an institutional investing, you're listen to this conversation. The turn to lie to of an artisan was managed overly. You look at the bottom right, you see gold long max position.

IT is spinning like some version of a long max position for the Better part of a year now that our discretion of many novels pivoted forty two macropore ents till the alongside of gold back in october of twenty twenty three and has maintain a other long half a long position, primarily along max position since then. And so obviously goes up thirty five, forty percent and then and we see continued upside from here as a context of those undammed tal research views. But again, if are wrong, the those fundamental research views are risk management systems which are train following in nature, will cause described dr. Bo here and kiss going back to IDE eleven to take down risk, appropriately enough, with planning enough time to avoid the worst of deep correction or crash, and was super proud of that serious.

We have been teasing our audience for this whole interview with your partially rejected slight deck. This is a working process that you evolve, keep updating this. How often do you paying subscribers get the update to this entire slide? What do you send them in between those updates? And for anybody who is interested in your paid service, both on the retail side and on the institutional side, where do they go to find .

out more about IT you too kind eric. I appreciate, as always, the opportunity. Come connect your audience. I've learned a tremendous amount from listening every microvolts pisos over the past five, six, seven years.

So I want to say thank you for everything that you've done uh, for institutional finance, my friend uh, if the investors want to learn more about you. So living answer the first question, which is how often these presentations updated. We update this presentation every month right after the set of the job support, and then we accompany this presentation with a no sort of about an hour or and fifty minute long webcasts.

Um obviously the presentation is in the same every month. Obviously the research to evolve between months, but the journal speaking this this comes out every month right after the jaws support. Then throughout the month every day, we write out the other morning note, which is our basic and inference process that connects us from the prior monthly macroscopic report to the next monthly microscope ten report.

And then every week on saturday, we have A A A ort of A A C I deep dive ah that sort of an amalgamation of that weeks lead of morning notes. Uh that comes a company with roughly forty five minute uh webcast with me talking to the chart. So it's a very robust process, is a basic and influences process you we like in ourselves to this.

What you would see if you were sitting on a desk trading this at a global macro or hedge fun, they're just not making the charge is pretty. They're just not selling IT to the public. And so we wanted to take you to do what weekend to democratize this kind of research, not just so that our retail investor clients can see what IT is that we do, but so that you know hetch funds of family offices.

I don't have kind of budget like some of our big kinds. You can actually access this kind of material, uh, as well. So I definitely come check us out if you've ve been impressed. Uh, forty two micro dt com, if you been impartially impressive and not quite rated to keep the tires on forty two maco research, go to forty two micro backs. Lass micro class M A C R O C L A S S, you can take our three part micro course.

Where we walk through exactly how we derive a lot of these institutional processes and what to focus on as an investor, how to forecasts the business cycle, how to forecasts the liquidity cycle, what types of indicators should you be looking for that are actually actually an accurate across market cycles in terms of making the saving money in financial market. So they will highly recommend everyone checked that that course out. I'm here for your pm, C, I O or regular retail investor. You're going to learn s but congratulations .

on a terrific dear my friend, I know you've made some terrific calls, Patrick resident, and I will be back as macro voices continues right here that microvolts come.

Now back to your hosts, eric townsend and Patrick sorella. Erik IT was great .

to have there is back on the show. Let's get to that chart tech listeners. You're going to find a download link for the post game chart tech in your research round up email. If you don't have a research up email, IT means you have not yet registered a macrovoice dot com. Just go to our home page macrovoice dot com and click on the red button over dario's picture saying, looking for the downloads now, eric, let's cover crude oil, starting with the E I A inventory.

E I A printed a drawdown of half a million barons of crude. il. This week, cushing, oklahoma, building a desperately needed six hundred and eighty one thousand perils gasoline, drawing down two point seven million barrels.

This still lets drawing down a million bells for a net patrolling um drawing down of a fairly significant for a point two million burns us production holding unchanged at that new high record level of thirteen point five million balls. Hats off to the U S. Oil patch.

I don't really have much to say this week, the same as last week. Barring any inside information, I don't really see any attractive directional trades here. I'm flatten my account and focused on gold and uranium where the action is. Well, eric.

at least for me, crude oil is a little bit interesting. Uh, when we had a the geopolitical event in the middle east, IT obviously caused oil to react three, four dollars lower almost instantaneously. But since then, the crucial market has been consolidating and actually backfilling that move. Now while the primary trend is down below all trend lines, below all moving averages, the sequence of lower highs, lower lows is there there's clear distribution still here, but I didn't open the flood gate to a huge new round of selling.

And in many ways, I view that because the market is pricing in a greater probability of a republican sweep that much of the most barish scenario and crude oil have in many ways already been Priced in, will be interesting to see whether or not a surprise in the elections can actually be a catalyst for potentially strengthened oil conditions. Now that speculation, we're going to have to see other Price action settles. But I do think that there's a reasonable chance these laws from september and october can still act as a very key support, creating the base or the floor for crude oil Prices. Now erik, let's move on to equity. What your thoughts well.

everyone's focused on what I believe is a false binary outcome expectation for the election. Either trumper Harris is going to win and that's who the new the president is gonna be in either of those scenarios where there is a clear win. No big dispute. I think darius is probably going to be proven right that the market will hold these levels and perhaps rally from here without any real big downside risk event, although heroes when surprise is probably barrier h at least in the short term. But few people are talking about other outcomes, which I think Frankly are probably even more likely than those two simple scenarios.

Those include a results being delayed in the outcome being unknown for a weaker, more because of bickering between the parties about how the votes are being encountered, or a trump win, and then an immediate lafin response aiming to disqualify him from taking office, as has already been telegraphed by some democrats. Or there's a trump or herr's win that results in an immediate backlash from the other party's supporters, leading to significant unrest and spooking markets, or a trump win and then having forbid an assassination before the inauguration. I think that big downside risks are those unanticipated scenario.

And while I have no idea how to guess which one of them might actually happen, my sense is that the market is underpricing the risk, that the outcome is not going to be as simple as who one hands down, end of story. Everybody agrees with the president is now in the last few days, IT seems like president trumps lead in the polls is making that uncertain outcome a little bit less likely. So maybe it's going to be a trump sweep.

We'll see what happens. But I still think there's room for a contentious outcome to this election where nobody knows what's happening. We're doing our best to get ready for election coverage next week will be recording our future interview after the election results hopefully will be announced for recording on wednesday. That's the best we can do in order to get the show out to you. So hopefully, we'll have some good election .

coverage next week. Well, eric, what I will agree with you on is the fact that the republican Victory is the most scenario that is being most Priced into the market.

And the one scenario that I think that the market has the least reaction to is if they get what they're been pricing in and if we had the opposite, where there was a democratic sweep, that could almost certainly spur some selling initially as the markets dump, anticipating that would be an unwind of a lot of the trades that are people have been anticipating to be the winners under A A trumpet administration. Now let's talk about the S M. P.

Five hundred itself. We are in the middle of getting those mag seven earnings so far. We have and first reactions are microsoft and meta going lower while google did go higher.

We're recording this before apple and amazon. So we're gonna find out whether that continues to shift sentiment as well. We don't have the jobs numbers out yet.

So there are certainly things that could cause the markets to have some short term pressures. I want to specifically highlight some key technical levels. I think that this correction on a reaction to, let's say, further weak earnings could see a drop all the way down towards twenty seven hundred.

But the likelihood that we have some big flood gate open before the elections below twenty seven hundred would have to be driven by some sort of an outlier that was introduced to the market. Overall, I think that any sell off a down to those levels would spur a reaction, trading the market back to a place where all sell in, waiting for the election results. But what is particularly not worthy is on page four, where I have the breath of the market.

This is the S. M. P. Five hundred percentage of stocks above their fifty day moving averages.

What was particularly important about the summer rally going into october was that the breast kept widening, and we had the S. M. P.

Five hundred equal weight value. We had eighty, eighty five percent of stocks. A in bold trend.

IT was actually a very healthy advance over the last week during a the pig in the python moment of earnings releases. The breath of the market materially turned down. We went from the eighties all the week towards fifty percent.

The breath of the market suddenly has disappeared. And the only way I see this being countered would be if we had a very strong mag seven that could potentially buck the trend. But at least for a breath perspective, this doesn't support a market that is actually to go higher here.

On the short term, we may very well be seeing some bigger topping formations. What's particularly interesting as well on page five, whether the nas chart the nasdaq has failed to beat at summer highs like the S M P five hundred has IT. In fact, there's doing a direct double top retest with some of these mag seventh missing and the breath deteriorate entirely possible that the nasdaq is going to have key overhead resistance and we watching whether this becomes place where there's a bigger topping formation.

I know there's a lot of people that are talking about the surge and liquidity, but IT certainly has not yet reflected in the h in desease like this, breaking to fresh new highs. And that also can be confirmed by looking at the russia small caps. Obviously, the Russell should be a benefactor if trump ended up winning the election.

And they'll be very interesting to see whether or not that actually spurs follow through or whether these small caps have actually already Priced much of that in and the reaction could be negative if they didn't get the anticipated outcome. With that, eric, let's move on to the dollar. What are you seeing here?

We're starting to see signs of what might be a topping pattern just above one of four, which has been a key technical level on the dixi for years. But this could also be just a short consolidation before breaking through that level to the upside. Wednesday's closed just below one or four on the december er contract was an important signal that we might be starting to roll over here, but it's still a little bit too early detail.

The dollar generally has been very indecisive. When you really step back and look at the two year trade range between one hundred to one old six, we are trading essentially right in the dead center of a two year trade range without any clear indication of a new bull train developing. Now there are individual currency pairs like the U.

S. CAD, that has essentially moved to the top end of its ranges and looks like the us. Dollar could break out against IT. Those are some of the kind of individual storylines. But when when you're looking at the euro and the end, we're stuck in the middle of of key ranges without any real catalyst until the elections for continuation pattern to kick in. Now air class talk about gold.

Patrick, I remained super bullish gold in the long term. But as I discussed with darias in the future interview, we are already flashing extreme overboard here. I think a continued rally to twenty nine hundred is likely on a trump win or even in the run up before the election, but we're long overdue for a meaningful correction and later in november, after the election but before the december contract expires, IT seems like a ripe time to me for that correction to occur. Now that said, if post election euphorbia Carries gold above three thousand, then that psychological round number could be get even more buying and even more Price upside. But at some point, we very much need to see a meaningful correction in order to consolidate in heal from the overboard technical conditions that we have now and to pave the way for a healthy bull market to continue from here.

But eric, in the bigger picture over the next many years, i'm super bullish gold as well. I am increasingly a concerned about the how far goal has gone on the short term. I suspect at some stage of consolidation will begin.

That doesn't have to be deeply barish where suddenly, you know, we about five hundred dollars announce but IT would be a pro long period, maybe even into year and where gold starts consolidate sideways and even has short birth of distribution, are kicking in some stop losses and or knocking out traders who were just riding momentum at this stage. I haven't sold that in my gold positioning, but i'm fully hedged in. And so I have that protection while i'm writing this position higher. Look, finally, erick list, just touch on uranium. What you're thoughts here.

September six was almost certainly the low for this nine months long, deep correction in uranium mining shares. Now obviously, another cher noble or focusing a science accident could change sentiment overnight. But short of that, I think the bottom is in. Then we saw a giant forty percent plus rally off those laws, and now the market is correcting from that over exuberance. I see two ways to interpret the tactical here.

The first is to look at the oscillations such as slow to plastics, rsi and so forth, which are all still pointed sharply down on most of the daily charts, but they're nearing oversold levels, suggesting that the correction is almost over and probably here and now it's time to start scaling in to buy this step over the next several trading days. The counter argument would be that there's still plenty of gaps left of the charts well below the current market. So maybe we need a deeper correction to fill those gaps before the bull market resumes.

And on some of the charts, those gaps are still quite away below the current Price. So more downside is entirely possible without invalidating the bottom call. So those are my two potential views.

I'm really not sure which one is right. Patrick, you're the technician in the house, so i'm curious to get your take on those two scenario. Which one do you think is more likely?

Well, eric, in terms of uranium, i'm a little bit more torn because I really was anticipating spot Price. This is the uranium to start confirming the exuberance that we've seen in the equities. Now from purely technical perspective, this consolidation in uranium equities a will lead to the spy on dip and IT should, uh, offer an opportunity turn up.

But I would in mind mind, uh, be validated bunch a more. If we finally saw spot Prices of uranium start to contribute to this, with us trading at the eighty dollar vel on the u three o weight spot Prices, we just simply haven't seen uranium itself contribute to, uh, all of the the momentum that the uranium stocks have been building. Finally, erika wanted to just a touch on that chart on the teniet treasury yield because clearly, we had a very double h market positioning going into the september fmc meeting.

And here we are going into the fmc meeting a few days after the elections, and we're going at the exact opposite end, which is suddenly we attacked on sixty seventy basis points of interest rates. Going into and seeing whether or not power um will maintain his current path will be very interesting to see. Just like we in september, the fomc acted like a pivot for a trend. Will this fmc meeting as well spur some continuation and or turn back down in the uh ten year yield on the markets?

Folks, if you enjoy Patrick s dark text, 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 slight deck, or just go to a big picture trading that com. Patrick. Tell him what they can expect to find in this week's research round up.

Well, in this week's research round up, you're gonna find the transcript for today's interview as well as a slight the darius shared during the interview and the chapbook we just discuss here in the post game, including a link to a number of articles found interesting, so you're onna find this link and so much more in this weeks research rounded up that does IT for this weeks 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. And for those of our listeners that right or blog about the markets, i'm like to share that content with our listeners. Send us an email at research rounded up at macrovoice doc com and will consider IT for a weekly distributions if you have not already follow our main account on x at macrovoice for the most recent updates releases can also follow erik on x at erika townson that erik spelt with A K can also follow me at patch sassa on behalf of air toward to myself. Thank you for listening and we'll see well next week.

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