MacroVoices #463 Izabella Kaminska: On Why Markets Aren’t Getting The Signal
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This is Macro Voices, the free weekly financial podcast targeting professional finance, high net worth individuals, family offices, and other sophisticated investors. Macro Voices is all about the brightest minds in the world of finance and macroeconomics telling it like it is, bullish or bearish, no holds barred.

Now, here are your hosts, Eric Townsend and Patrick Ceresna. Macro Voices episode 463 was produced on January 16th, 2025. I'm Eric Townsend. Journalist Isabella Kaminska, formerly of FT Alphaville fame, returns as this week's feature interview guest. Izzy and I will discuss everything from the changing face of the media to blowback from Bidenomics to the contagion of populism across Europe.

I also recorded a video interview for the Contrarian Capitalist podcast this week on the future of nuclear energy. You can find that interview linked in your Research Roundup email or on the Contrarian Capitalist YouTube channel. And I'm Patrick Ceresna with the Macro Scoreboard. Week over week, as of the close of Wednesday, January 15th, 2025, the S&P 500 index up 52 basis points, trading at 59.49%.

This was a big bullish reversal day on the CPI numbers. We'll take a closer look at that chart and the key technical levels to watch in the postgame segment. The US dollar index up 7 basis points, trading at 109.09. The bull advance printed 110 on an intraday basis. The February WTI crude oil contract up

up 915 basis points to 80 spot 04. The big short squeeze is underway, but is it sustainable? The February RBOB gasoline up 896 basis points, trading at 219 following crude oil on the breakout. The February gold contract up 142 basis points to 2717, spending an entire week above its 50-day moving average. Asking the question, is a new breakout underway?

Copper up 281 basis points to 439. And uranium up 117 basis points to 7,375. The U.S. 10-year treasury yield down three basis points, trading at 465. A meaningful reversal off the 480 level. The key news to watch next week is the Bank of Japan monetary policy statement, the European and American manufacturing and services PMIs.

This week's featured interview guest is journalist Isabella Kaminska. Eric and Isabella discuss global populism, reform cycles, and the role of transparency in journalism. Eric's interview with Isabella is coming up as Macro Voices continues right here at MacroVoices.com. Macro Voices

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

Joining me now is Isabella Kaminska, who is the editor and publisher of The Blind Spot. Most of you know her back from her FT Alphaville days when Izzy used to do, boy, just some of the best writing, Izzy, I think, in the industry, at least in terms of journalists. A lot of what you wrote, I thought, was much more on par with what I would expect in the quarterly letter from, let's say, a world-class hedge fund manager because you were really deep into the trades industry.

at a level that most financial journalists don't really ever go to. Then something happened. I'm not sure what. You defected to the dark side of the force and became a political journalist. You're running The Blind Spot now. You're also the senior financial editor for Politico. Tell us a little bit about how you got there, but particularly, I really think it's timely. This is part of why I wanted to get you on the show this week.

I think you've made this journey for whatever reasons of your own into political reporting. But I think that finance is being carried much more into politics. If you want to understand macro investing, you better understand politics pretty darn well. At least that's my thought in this environment. Is that what led you to this or what's going on? And what do investors need to know about the increasing politicization of finance?

It's a great question because the truth is that most of my life I've tried to dodge politics. I've always found it incredibly insufferable. Hence, I ended up doing finance because markets don't lie. And I love that you get that sort of immediate feedback and there isn't any, you know, it's honest. So I kind of

avoided politics. It wasn't something I was very interested in. But increasingly, I was being pulled in that direction because obviously everything, money and power all goes together. I left the FT mainly because I felt there was a big transition coming in terms of how mainstream media operates. And I wanted to be part of the sort of

independent media. I was always a contrarian at the FT and I just found towards the end of my time that it was getting harder to be a contrarian. Whereas before, that market attitude of we must explore all sides of any story, that was being constrained a little bit at the FT. I felt that

certainly there wasn't as much tolerance for contrarianism as there used to be. So I left to start effectively a contrarian independent newsletter called The Blind Spot. And whilst I was doing that, I was very happy doing that. I got a call from Politico from another former FT editor over there asking me to join Politico because he felt that

finance was being politicized now. And he wanted me to come and help Politico tell that story to the finance community, because politics is notoriously sort of, you know, bubbly. Everything happens on a very bubble level. Then we had like the Liz Truss fiasco and politics merged with finance in ways it hadn't since then.

the 1980s really, or 2008. And I agreed when he pointed it out, I really agreed with that assessment. I was like, wow, that is so true. The era of financialization is now giving way to politicization. And I wanted to be part of that story. So I was persuaded. And luckily Politico were very nice and allowed me to maintain my little blind spot operation. So I still do that. The day job is Politico with the newsletter on the side. So that is

where I am now. And I think the more I've got to understand how politics works, especially in Europe and in Brussels, I've become utterly persuaded that the financial community is missing a trick.

in terms of not knowing or understanding how politics and what's going on at the policy level. And now is the time that you can't afford to miss out on policy developments because the age of dirigisme is back.

in Europe at least. And if you're not paying attention, you won't make money. I certainly also echo the sort of thoughts of Russell Napier, another very well-known investment advisor, that this is going to be coupled with an age of financial repression in the West. So that's the overview, I would say.

Well, let's talk about what the big theme is, because frankly, I've been going back and forth. There's part of me that says, OK, it seems like we're seeing this great reform cycle across the entire world. It seems to be a breakout of populism that starts with Trump in the United States. Looks like Nigel Farage is gaining a lot of strength with his independence. I forget what the party is called now. It used to be Independence Party.

In the UK, you've got the AFD in Germany suddenly gaining ground. It seems like the establishment that, you know, the Thierry Breton crowd of Eurocrats seem to be under existential threat. And it feels almost like we're about to have this populist led revolution.

revolution across the West. And then I kind of think to myself, well, wait a minute, maybe that's just wishful thinking on some people's parts. And what we're really about to see is what Chuck Schumer predicted and told Rachel Maddow about, which is as soon as Trump gets into office and tries to do any of the things that he's

trying to do or as soon as anyone tries to take on the establishment in the EU, they're just going to get hit in the face with a baseball bat and reset and taught that you can't do things that way. What's happening here? Is there a great reform cycle and where is it headed?

This is the question. Personally, I think we are in a reforms cycle. Ironically, Nigel Farage's party is called Reform. And I think quite consciously, because I think they were inspired by the Canadian political situation for their name, amongst others, the great reform cycle. So, you know, my assessment, and it has been this for a while, is that the West is sort of

sinking in stagnation and has been for a while. And we haven't necessarily recognized this because of all the sort of interventions that we've seen since 2008. 2008 was the big breaking point. And we didn't really repair the underlying economic foundations the way we should have done back then. We doubled down, we threw money at the problem. And now our chickens are coming home to roost. And

And in the interim, we've seen inequality obviously expand and the populist movement started before that in 2016. And I think they're a function of the variables that we had to adopt to basically paper over the cracks that we weren't able to paper over with QE, which is obviously amongst others, there was the big dependence on migration to allow for this sort of Ponzi-nomic system that we created to keep going, which depends on ever more

greater numbers of serfs, I mean, to put it bluntly. So I think that's where we were. And now we've maximized how much productivity we can squeeze out of that. And then coupled with COVID and the Russian war, we can no longer disguise that the system across the board in the West is stagnating. And that accounts, you know, that counts also for America, which I appreciate

has outperformed on the growth side relative to Europe. I think we can discuss this later as to why there is that exception for now, but I don't think it's a long-term exception. I think it's an interim exception. I'm not necessarily convinced Bidenomics was as successful as people are saying. So the situation now is very similar to the situation in the 1980s in the Soviet Union, where

We can no longer deny that the system is broken, stagnating, and it needs radical reform. And the sort of reform it needs is less government intervention, more free market forces and

and a distancing from the sort of quota-based planning mentality that leads to often very perverse and unexpected scenarios that you wouldn't necessarily imagine. I believe in the Soviet Union, there were always anecdotes about how producers were making ridiculously long couches because the quota system was encouraging it and nobody really needed them.

stuff like that. And the other element, I think, that is equivalent to what was happening back there is the sort of creeping corruption across the system that is harder to address or cope with by institutions because it means actually admitting that your systems are corrupt and nobody wants to admit that. So there's a

That in itself then creates an environment rich for factional disputes. And so I think you've seen it across the board politically where in the UK, a lot of our main parties have fragmented. So there isn't necessarily the same united force within the conservatives or within Labour. You have, just like in the Soviet Union, you had the hardliners and you had the progressives or the moderates.

And I think it's quite similar in America where you have, you know, on both sides, the moderates and the hardliners. And that becomes... So the big fight isn't necessarily between the two parties, but between the moderates and the extremes. And I think that's a pattern that's repeating across most of Europe. And yeah, so that's how I frame things. And the other big aspect of that is...

Just like in the Soviet Union, eventually the sort of institutional inclination to cover up the corruption and a lot of the stuff that maybe you don't want the public to know about what you've been doing to maintain an edge. Perhaps some of it is not honorable as you would like it to be.

That encourages an institutional level of lies. And therefore Gorbachev himself realized that if you are going to have reform, if you're going to have perestroika, you have to do it at the same time as encouraging transparency. Because without transparency, you inevitably allow all those crazy behaviors that have come about because of maintaining those lies to continue on. So you have to coincide. It has to coincide with a period of glasnost

And I think that's where we are now. But we are aided in that glasnost process by AI and also by the internet, which has allowed for other perspectives to resonate out there and in a way, break down the barriers with the institutions that still want to hold information back.

But of course, just like in the Soviet Union times, that becomes a very charged and sort of politically sensitive situation. So you're either amongst those who believe the core system is fine and if it needs reform, it just needs a little tweaking, or you're amongst the sort of revolutionary element that just wants to bring it down. And I think

That is the difference in terms of how the reform is going down in Europe relative to America. So I think in America with Trump's win, we've certainly seen the rise of the revolutionary element. I think, you know, I don't know what you think, Eric, but it seems to me that Trump is pretty prepared to tear the old guard down this time around. And as you said, some people think he won't be able to do it, but...

I think this time is different because, you know, my suspicion is that he's not even the one in charge anymore. He's, you know, the difference between Trump 2.0 and Trump 1.0 is that he has this sort of technocratic oligarchy supporting him this time.

And a lot of the push for privatization and limited government is coming from them, not just from Trump. And I think that's very different to, say, Europe, where there is a spirit of reform and deregulation. It's focused more on encouraging more centralization and more capacity for the government to intervene where it needs to, especially in terms of maintaining competitiveness in the market.

So there are two types of reform going on. And the UK is its own story. Okay, you mentioned some skepticism of Bidenomics. I'm going to come back to that with a question about that in a minute. But first, I want to go a little bit deeper on what's going on here, because

In addition to what you've said, a couple of things that have happened in the last week or so. Peter Thiel published an op-ed in the Financial Times that's been getting a huge amount of attention. It seems to say some of these same things about an apocalypse, he's actually calling it, and the old guard losing ground. Your friend Michael Schellenberger was recently complimented by Tucker Carlson, who called Schellenberger the, I think he said, the most controversial.

competent reporter now working. And of course, Schellenberger is a relatively less known independent journalist like yourself. And, you know, he's done a lot of work in the last week to really debunk some of the claims being made about the L.A. wildfires. And Schellenberger is very directly accusing Gavin Newsom, both the governor and the mayor, of really

direct accountability that they should be taking in terms of their failure to be prepared for this event, which he says was entirely preventable. So it seems like we're seeing a change in the direction of media, but that change in the direction of media is very much from what used to be, you know, the bottom rungs, the independent journalists nobody's heard of seem to be trumping the major networks and

And at the same time, you know, you've got a guy like Peter Thiel, who's not very popular with the mainstream being featured in the Financial Times, and that goes viral on the Internet. Seems to me like something is afoot here. So when you said that you think that the finance community is missing a trick, what's the trick that they're missing exactly? What do they need to pay closer attention to? And what do all these trends mean?

So I think there is this paradigm shift. And the fact that the Teal op-ed was featured in the FT in the first place is symptomatic of that paradigm shift. Although I would say it was featured, but if you look at the comments, there's thousands of comments. I mean, I've never seen an article that's been more commented in many respects. I think currently...

1.2 thousand comments on it. A lot of it goes over the head of FT readers who, you know, I think the reaction from some of my former colleagues was, he's mad. What is he talking about? Because he's advocating for transparency for some of the kind of very old, old school scandals, everything from JFK to Epstein and I think COVID.

And his idea is that we need to acknowledge that these things happened and what happened and go for a sort of cathartic episode where we deal with it on a public level and then can move on. I mean, I would equate that to what the Russians had to go through in terms of acknowledging the sins of Stalin. Like these were repressed for many years, decades. And it was only when Gorbachev recognized that those sins

atrocities had to be acknowledged for the system to move on because you cannot encourage growth and productivity when you are continuously having to tell yourself lies about your past because the system just doesn't square up if there are massive lies like that that have to be dealt with.

It hinders productivity. And the same thing, you know, in some respects, Germans had to go through that with the reckoning, the public reckoning they had to deal with the Nazi phenomenon. Right. So I also think, and this is important in terms of what the UK is going through, that whole episode, it's very painful for a society to go through. And these days, because of the nature of the Internet, because of how fragmented it is,

it can take a very long time to acknowledge any sort of public scandal. So at the moment, the UK were going through a reckoning with the grooming gang scandals. And Elon Musk has been drawing a lot of attention to it recently. And it's very divisive. And it's a very historic scandal. It's been going on for decades. But we as a nation never really acknowledged it. And that's not because the information wasn't in the public domain. And this is the market's responsibility.

relevant thing. Like a lot of this information was in the public domain. It's just it never got headlined in a uniform way. It was coming out in bits and pieces here and there. And

you know, like when the media wants to make a scandal out of something, you know, because you turn on the TV and the same story is absolutely everywhere. But with a lot of these stories that the distribution of the story is scattered. And that's largely because there are complications in terms of, I think with, with the grooming scandal, some of that is actually connected to the difficulties in the UK of reporting on court court related stories generally. And, um,

Our approach to legal reporting is very different to the US. So you can be held in contempt for court if you start reporting things

on even the outcome of a specific trial if related parties are still being tried. So that deters that sort of opportunity for a massive singular reaction. And as a result, the average man on the street or your mom doesn't know the story. And that feels like a shortcoming in some ways, and it needs to be overcome. LESLIE KENDRICK

Now that foreigners have noticed what's been going on, now suddenly it's on everybody's radar and it's become an embarrassment. And I think we're having the reckoning with that story we never had. Now, the other story that we had a similar reckoning with just last year was the Postmaster scandal, where a bunch of post office managers, a lot of them went to prison for supposed fraud. And it turned out it was not their fault. It was the IT systems that the post office forced them to use to

that inputted all sorts of errors. And many of these people were accused of being fraudsters. They were totally honest. And whilst that case has been going on for years and years, and many of the outcomes were in the public domain, it wasn't until our broadcaster ITV did a drama series, a completely fictionalized account of the story, not fictionalized, based on truth, you know, but fictional, that it became a top tier story.

front page story and a national scandal. So this is what I'm trying to explain is that these days, because of the fragmentation of the news on the internet, you need more than just public domain distribution of information. You need a sort of collective episode where people all take notice at the same time and acknowledge this story is important.

And so we had it with postmasters. We're having it now with the grooming scandal. But I still think something like COVID, we're now... COVID stuff is just coming out and it's trickling out. It's all in the public domain. All these amazing acknowledgements of what was happening with gain of function in Wuhan and how culpable certain scientists were and...

All this stuff is now public domain. And yet there hasn't been any reaction in terms of outrage because we haven't given it top billing. And I think part of that is because we still have trauma associated with COVID. And it's going to be a while before we are prepared to acknowledge that truth. But also because until there is some sort of third party or some

external force forcing it to the top of agenda, we're going to, it just feels, it's like post-traumatic therapy. Like you're in denial because you don't want to acknowledge the potential mistake you did. Right. So I think that's where we are with COVID. And that is what Peter Thiel is kind of calling for in this op-ed is saying that inevitably we

This is all going to come out and we're going to have to have a reckoning. And that reckoning is important. But for markets, sorry to be, it's a very long winded way to get to the market point is that, you know, markets are based on this idea of information efficiency. And if it's in the public domain, it should be priced in. And yet it's,

It isn't because it isn't enough for the information just to be out there. There has to be, it has to elevate to a certain level of political importance before change can be associated with a particular piece of information that is scandalous, right? Yeah.

And that's where I think markets are missing a trick because it's not just about processing the information. It's trying to understand when you will get that tidal wave reaction that leads to policy intervention and government reaction. And that is less knowable because it really depends on the public mood and when it's ready to resonate with the people who were in denial about it.

I'm going to summarize to make sure I understood this and got it straight. You're saying that overall the trend seems to be the dirt's coming out on a lot of things, whether it be Fauci's involvement in funding gain of function or going way back to the Kennedy assassinations or to any of the other things around the L.A. fires much more recently that are coming out and exposing Fauci.

government incompetence. It seems like the trend is, yeah, the information's coming out, but the mainstream press are not really popularizing it. They're not emphasizing it.

And what you're saying, the trick that financial markets are missing is it's not efficient markets hypothesis that as soon as information is known, it gets discounted by markets. It's almost when it becomes accepted and when the mainstream press starts covering it, not just the independent Michael Schellenberger types that are covering it. That's when it starts to get discounted by markets. Is that what you're saying?

Yeah. So I'm kind of saying, obviously, you can be ahead of the curve by watching, processing the information that is in the public domain, because you will have an advanced clue as to what's coming your way. But it's the timing that you can't predict because you would think if X is known, it will lead to Y and that will lead to Z. But at the moment, X can be known for a very long time. But

But it isn't until it is accepted, it's sort of absorbed by the body politic, that it can lead to the natural reactions you would assume it would have in the market, whether that's moratoriums in terms of gain of function, whether it's legislation that encourages whistleblowing, whatever it is, right? Or investment in X, Y, or Z or whatever.

whatever practical market-related reactions you would expect. That is where the bottleneck is. So the mainstream is prevented from jumping on these stories the way they would usually do. That's the question. Why are they not doing it? Why does it take...

third parties or the sort of samizdat network of the internet before they can put it you know at the top of their agenda that is the big question that is what markets have to answer I think because if you get that timing right then you can make money from it

to be brutal. But I think there's another element in terms of the info apocalypse, as I call it, which is the AI is playing another role in all this because AI provides the tools with which contradictions can be highlighted. So AIs are ultimately logic machines. And

I think because their capacity to absorb so much information, eventually we will be able to find and locate from a journalistic perspective, it's potentially massive. If you can trust these AIs to be truthful, then I think you will have the capacity to highlight buried stories that no human journalist could unearth by themselves without those tools because they have this

capacity to cross-reference huge amounts of facts and in theory show up any contradictions. And where there are contradictions, there's obviously something going on, right? Because it's always the lies you tell on top of the lies that show you up. And whether that's exposing frauds, whether that's exposing secret slush funds, God knows what, it will eventually come out as a result of us engaging and utilizing those tools. Right.

And I think it's already doing so. I think a lot of this information, like with the fires or whatever it is, I haven't been paying attention to the fires, so I wouldn't want to comment on that specifically. But I think the reason we're able to isolate counter-narratives more quickly is precisely because people, especially on the internet and the internet

the citizen journalists, especially, I guess, because they are tapping these tools in innovative ways. And the mainstream, ironically, I don't think are as engaged with these tools as the citizen journalists. That's my impression.

Well, it certainly is the case that the citizen journalists are exposing a lot of what's going on. You mentioned all the recent coverage about gain of function. Now, in May of 2020, that's five years ago almost, Dr. Chris Martinson very clearly made a video saying, look, position, I think it's 568 in the

the sequence of the COVID thing. There's an insert PRRA. There's no possible way that could get there unless it happened in a laboratory attention. Journalists. Here's the exact list of questions to ask in order to box any expert into a corner where they won't be able to deny that this came from a lab. Martinson laid out those instructions for what questions journalists need to ask five years ago. And five years later,

I think Rand Paul is still considered a nutcase by most people for questioning whether perhaps the gain of function research that Fauci clearly funded had something to do with creating this virus. So it seems like.

there is a movement among the popular mainstream media to protect government from culpability at all costs. And it seems to me that it's working and maybe it's starting to fall down. But for the most part, people think, you know, Martinson's a nutcase. They think that this is crazy talk, despite the fact that the facts are all coming out saying it's true. This is what I find infuriating, frankly, is that, you know,

you see all these stories slowly confirming all these educated theories back in 2020. And yet there's no popular reaction. There's no outrage because it just comes out and it's like, oh, yeah, well, we could. And the people who were denying it at the time, like pretend they never denied it. It's kind of infuriating or like they were on the story all along and they weren't. They weren't.

I find it absolutely infuriating. So I totally get it. There was a fascinating story in December in the Wall Street Journal, actually, about the, you might recall when Biden called for a intelligence assessment of whether COVID was lab leak generated or zoonotic.

And only one agency, I think, had a sort of moderate assessment saying it could be a lab leak. And now this Wall Street Journal story unearths that actually there were other agencies that also thought it was possible, but they were encouraged not to come out with that opinion. And there was all sorts of underhanded suppression going on. And you think, wow, in any other circumstances, this would be a national crisis, right?

and a scandal. And yet it hasn't, it hasn't resonated at all. And again, I think part of that is because there's just so much information out there. So unless you're looking for it, you're not going to see it. So part of it is that. And the other part is just this reluctance to look. If you were part of the, maybe not a very diplomatic way to say it, but if you were part of the problem, you're not going to want to look

for stories that confirm you were wrong, you're going to block them out because it's traumatic. You've got cognitive dissonance otherwise, right? So this is what is happening. And since the mainstream media, I think, were much more on that side of the equation than the other side, they were much more closed-minded. Institutionally, they have a block in terms of elevating those stories to the top of the agenda. That's how I view it.

You've written a lot recently about the future of journalism and where it's headed. Let's talk about that and try to keep it tied into the financial markets context. Where is this headed? Because as you say, the mainstream media are not really exposing the truth. It's coming from independent media. And as far as I can see, especially in Europe,

They're getting a lot of public support. I look at something like Thierry Breton being in the news in the last few days saying very publicly, look, if the AFD, this radical party, at least they're being portrayed as a radical party in Germany, were to be democratically elected by the Germans, don't worry, we have mechanisms to overrule that election. We did it in Romania. We could do it for Germany. We won't let the AFD in.

To say something like that publicly and not be held to account for it and almost to be cheered for doing that, it seems like the institutionalization of media around supporting the sitting government no matter what is holding particularly strong in –

the EU where they still have bans on rumble and Russian state media and so forth, where censorship, as far as I can tell, is not really being questioned by the public. And even in the US, it's only barely being questioned. So do you really think that this is changing? And I guess I want to

bring it back to you said the finance community is missing a trick. What is it that asset managers need to know about what seems like inherently a political conversation here? What do they need to know in order to manage money? So I think they just have to acknowledge that just information is warped at the moment and

everything is politicized. So if you are a purist, a market purist, you have to be as dispassionate as possible when you assess the news, right? That is what you have to do because there isn't neutral coverage. It's very hard to get neutral coverage. And if you distance your own personal political opinions or inclinations, then you are going to be a much better trader because you can't risk falling for the

accepted narrative. The accepted narrative has now been proven wrong so many times. It's lost credibility. And, you know, in the UK, a great example, again, it's, you know, I was tweeting about this the other day, it's with Liz Trust. Now, I say this not as a fan of the Tories. I am politically agnostic. And I want to emphasize that I really have...

I think all the political parties have issues, right? But the Liz Trust debacle is a great example of this in play because at the time...

It was just not the done thing to defend trust. The accepted opinion was that she broke the economy because she passed unfunded tax cuts, and that's that. And anyone arguing to defend her was immediately bucketed as either some nutter Tory extremist, because she's deemed like, now post-facto, she's deemed even more extremist. You were sort of...

Right.

And frankly, I didn't think her idea was any worse than anybody else's idea. I don't think anyone else could come up with any alternative options that would really generate growth in any better way. Now we see Rachel Reeves, finally, it's becoming clear that this was the case. It wasn't because Liz Truss was wrong. It's because the underlying economic situation calls for a massive reform, a reform of levels...

you know, we haven't seen for decades. And what Rachel Reeves has tried to do is essentially just lean into the old assumptions about austerity, but at the same time, get away with more spending and upping taxes, right? Doing the same old, same old we've been doing for years and years. But she tried to package it as if it was something new. She completely broke promises to the electorate and

And it's not only backfiring, it's quite clear because now you see guilt yields at the same levels, if not higher than with trust, that this wasn't a question of politics, like my way is better than the market story was pure. Like it was a question of trust.

We have got to a point where we need to completely reform the system. And maybe that last, you know, that sort of Hollywood maneuver, we don't know if it will work, but it's our only last hope. The trust option, which was unfunded tax cuts, maybe that would have been better than the alternative. It was crazy, you know, deemed crazy by many people. But with hindsight, we know it's no more crazy than anything else we've seen.

And so she was blamed also politically for what was ultimately, I would say, a Bank of England issue because it was the Bank of England that failed to regulate the situation with the LDIs and the insurance and pension funds that essentially got... They were the ones that were overexposed to guilt collateral and had to do cash calls they couldn't fund very easily because they couldn't liquidate. So...

I don't think it was necessarily her fault. And only now, this is becoming apparently true. Now, if you'd been a market purist at the time and not been influenced by the politics, you would have been able to navigate that story. And you would have been able also, ironically, to benefit from what was post facto a very good period for Sterling. Because if you'd read the FT...

you would have sold all equity, all sterling assets, because they were positioning the UK as a total basket case, right? Actually...

Once the Bank of England intervened and once Rishi Sunak came back in, it wasn't so much because he instituted different policies. It's because the story that the UK was somehow a uniquely terrible basket case was wrong. The UK was no worse than most of Europe. And this is now becoming apparent. So now when Rachel Reeves is blowing up the gilt market, you see the narrative coming out that it's not...

It's not really about the UK. It's about Europe. So suddenly the same story that I think applied back then with Blue's Trust is being used and wheeled out to justify the terrible performance of Reeves. I don't think that's very fair because I don't think it was very different back then. Long-winded way of saying that.

Izzy, I love your takes on Europe in general. You've mentioned Rachel Reeves in the UK. Let's expand this and also cover the incoming budget crisis in France and, of course, the energy crisis and now the popularism of the AFD movement in Germany. France and Germany, what should we be thinking as investors about those countries and where they're headed?

So I think you have to look at it in the broader context of what's happening in Europe generally. So Europe, I think, has come to, it's having a economic reckoning. Like Mario Draghi, previously the head of the ECB, but also former Italy statesman, he spent a year working on this report that he was commissioned to do by

Commission President Ursula von der Leyen looking at how to increase Europe's competitiveness because it's become abundantly clear that Europe is just stagnating. It has no growth and it has no chance of being autonomous, which is a big thing for Europe. It doesn't want to be under the thumb of anybody. It wants to be autonomous. And he spent a year on this report and he came out with, you know, effectively recommendations to Europe

centralize European functionality, especially market functionality. So things like the single market union, the capital markets union, sorry, and all sorts of measures to enhance cross-border trading and anything to create national champions on a European level rather than on a state level. So this is a big idea. And also investing in tech where we can, like Europe can still compete where China doesn't have the edge. Right.

Amongst his other observations was in areas where China already outcompetes us, perhaps we shouldn't bother trying to beat them anymore. We just give those markets to China because there might not be any

any point in wasting resources, chasing those potentially huge markets for Europe. So one of the big ones is EVs and cars. Now think of what that does to Germany. You're saying officially at the central kind of Brussels levels, we're not going to do anything to support the car industry, because frankly, that boat has sailed and we're just going to give that market to China. That is absolutely just throwing Germany under the bus.

And then there's also the issue of energy and how does Germany function without access to cheap energy because it is the manufacturing hub of the EU. So under this new framework, Draghi foresees a sort of total restructuring of the EU, which hasn't been done really since the 70s because with the UK leaving, there was all sorts of industry specialization that had to be reconsidered because back in the day, there was a loose sort of

loose compartmentalization where Germany was the manufacturing hub, France had agriculture and consumer goods, Italy was fine products and luxury goods, the UK had financial services.

Spain had tourism. So there was this sort of general division of labor within the EU. But once the UK left, they had to rethink all this. Plus, you've got potentially Ukraine coming in, challenging France and its agricultural standing. So that is what the Draghi report came out with. And of course, it is advocating for more centralization and becoming more like China, rather than

we're seeing in America, which is about liberating the markets and liberating the entrepreneur. So I think there's a more streamlined approach in Europe, albeit at the same time, they're recognizing that red tape and regulation has completely stifled the economy and they both want to release some of those forces, deregulation forces, but at the same time, turkeys don't vote for Christmas and

And the EU is essentially, its raison d'etre is making regulations. So it is stuck between a rock and a hard place where you're, at the moment, they're coming up with all these fascinating euphemisms for deregulation, which is simplification or competitiveness rather than saying what it is. But in part...

where does this lead? Where does this ultimately lead us? It leads us into a situation that Russell Napier has often articulated very well, which is where the very thing that makes Europe distinct and valuable, which is its cultural diversity, has to be slowly eliminated because that efficiency cannot come when you have

preference for German sausages in Germany and a preference for French sausages in France. To get those national champions, you have to effectively harmonize entire markets and standardize them in ways that effectively force everybody to be on the same page. And in Europe, that undermines the very thing

it means to be European. And there is no allowance in that market or in that framework for what I call inefficiency as a service, which is actually what Europe is very good at. If you look at the companies that are number one in Europe, they're companies like LVMH, which specialize in luxury goods. So those are companies that are

essentially selling inefficiency as a service. And also just think of the cultural wealth within Europe and this idea of what it means to preserve it.

At the moment, the way we're going undermines all the sort of traditional processes that are attractive to tourism, that are attractive to people who want to come and invest in Europe. There's no way you're going to maintain like Italian nonnas baking meatballs very inefficiently in Italy and the related sort of tourist culture that is associated with that slow moving economy.

Mediterranean attitude if you want to make it hyper-efficient. It contradicts itself and it annihilates what it means to be European. And I don't think Draghi has really been able to reconcile those two facts. And unfortunately, and this is a long-winded way to get to your point about the AFD and all these populist

parties that are emerging, there's a lot of people who don't want to let go of those old ways and for whom culture means more than efficiency. And they're basically saying, well,

I don't care if I'm going to be a bit poorer. I want to preserve our cultural norms. And this is what the AFD, I think, is all about. I think that same thing is happening in France with Le Pen and the same thing is happening in Italy with Maloney and in the UK with reform. You know, the population at heart wants to preserve cultural distinction. And under the framework of the Draghi plan...

That's going to be very hard to do. Final question. You mentioned some concern or some skepticism about Bidenomics earlier. What's on your mind? Well, it's more of a question I have. Like, Bidenomics was really the catalyst, I think, for a lot of this obsession with competitiveness in Europe. So they were very slow to recognize, for example, that

they had to compete with China on this basis because everyone sort of for years just took it for granted that China could undercut everybody's industry and it was all fine. It was all

it was all okay because we got cheap goods as a result of that, right? But it was when Biden came along and started doing very China-style things that suddenly Europe awakened and said, wow, if we don't, we either do the same thing or we're going to completely lose ground and our markets are going to be sabotaged entirely. And so the European response was,

has been more subsidization, more centralization, trying to emulate, but they don't have the firepower of America. So it's been a bit of a damp squib in comparison, and it's also been delayed. But Bidenomics, obviously, it did deliver. I mean, there's no denying that it has helped to boost American growth. So then the question is, maybe

Maybe it's the right pathway. Maybe there is something to emulating this Chinese model. Maybe the Chinese are getting it right. Maybe if we all do it, we can magic growth from anywhere. And perhaps more state intervention and industrial policy is the way forward.

I'm kind of suspicious about this being true. I'm not convinced it is the case. I think that if America has grown on the back of those policies, it's mainly because it's been able to

to do it in a way where it grabs territory and ground from China, but doesn't necessarily create an overall positive sum situation for the world. It's more of a mercantilistic approach where, okay, you've been doing this to us for years, so we're going to do it to you. And so the gains are perhaps a little bit temporary. That's my hunch, but I could be wrong. There are many people, many economists who seem to think that

actually, this proves that the model works and maybe everyone should be doing it. And this is essentially why Europeans are going that way. In the UK, also, Rachel Reeves has, you know, when she came into power, she declared this idea of securonomics. And that was also about grabbing market share back from China and by doing very much what China did.

The irony is, literally this weekend, she's gone to China, cap in hand, asking for Chinese investment and has sort of completely U-turned on this idea of creating independence for the UK and weaning itself off China. So there is a contradiction there. So perhaps it hasn't been as easy to do as possible, as she thought. So the question really for America...

I think, is similar, is that will this eventually lead to autonomy doing this emulation of China, or is it a race to the bottom? Now, if you look at what's going on in China, this is the thing. They are not doing that well. There is a massive deflation facing China right now, and it looks very much like

the economy there is also stagnating. They're going to have to do massive amounts of public spending or stimulus to try and create the consumption they need to get out of the deflation. The problem for China, and I'm not a China expert, but my reading of it is there is a natural conflict in doing that sort of stimulus because the only way China can get out of its problem is by liberating the middle classes and allowing for wealth creation on a multi-generational basis.

And that is something that undermines the control and power of the CCP, which is why China doesn't have really an interest, I don't think, in stimulating consumption domestically. It cannot do it without unlocking all sorts of political instability for itself. So that is the big challenge. And also, if you liberate China and you open China up, because essentially, if you go down that consumption pathway...

you get to this weird situation where China has to, like market forces are forcing it to open up and float the yuan and become more and more open to investment, just at the same time as America, if it follows the course of Bidenomics, which you now know it won't, but had it followed the course of Bidenomics, would be closing up as well as Europe. So it would have been a really interesting role reversal. So again,

Is it just the case that Bidenomics was an anomaly? Is it the case that it was the right pathway that we could win out versus China by becoming the closed system when they become the open system? Or is it a mirage? I kind of think it's a mirage. And that's why the Trump appointment is so concerning to almost everybody. It's because Trump is coming in and sort of saying, well,

We're going to put in tariffs and we'll maintain that protectionist sort of element that Biden had introduced. But we are also going to open up, you know, we're going to limit government. We're going to privatize a lot of stuff that was previously happening on a state supported level. We're going to unleash the entrepreneur. We're going to take on Bitcoin. We're going to do all these things that are very anti-Bidenomics, right? So it's almost like they're opening up internally and

and encouraging competition on the internal basis with the moat up through tariffs. But they're prepared to take the moat down on the basis that you conform to those same laissez-faire rules that they are wanting to reintroduce into the system, which is the restructuring that they want to do.

And the question is, will that work or will it completely collapse the growth that we've seen from Bidenomics? It's a very interesting time. I don't know the answer, but I suspect now is the big pivot point between

Are we going to continue on with this more planning attitude or are we going to go laissez-faire and across the board in terms of Europe and the UK? The irony is that in Europe, they're closing up just as America seems to be opening up. So I don't know.

Izzy, I can't thank you enough for a terrific interview. Before I let you go, tell our listeners, what is The Blind Spot, your website? What can people expect to find when they go there? And how should people follow your work more generally? So The Blind Spot is on the-blindspot.com. And you have different options for different packages, but essentially it's a weekly newsletter plus podcasts.

sort of spotlight features that I do when I can. And it's mainly me and my colleague, Dario Garcia-Ganer, who are working away on that for the last, what, two, three years now.

And we will continue doing that for as long as we can. This week's column was all about essentially what we've just been discussing, the glasnost, the return of market forces and laissez-faire in America. And also, just to tease it, this idea of America falling towards a technocratic model under the auspices of Elon Musk and

So I did a little bit about how his grandfather was a big technocrat. And, you know, there is a question about whether or not some of the stuff coming out of the Trump campaign is administration rather is wittingly on unwittingly emulating the thoughts of the technocracy movement of the 1930s. Patrick Ceresna and I will be back as Macro Voices continues right here at Macro Voices dot com. Macro Voices

Now, back to your hosts, Eric Townsend and Patrick Ceresna. Eric, great to have Isabella on the show. Now let's get to that chart deck. Listeners, you're going to find the download link for the postgame chart deck in your Research Roundup email. If you don't have a Research Roundup email, it means you have not yet registered at MacroVoices.com. Just go to our homepage, MacroVoices.com, and click on the red button over Isabella's picture saying, looking for the downloads. Now, Eric, what do you think?

What are your thoughts here on equities? Patrick, I don't have any short-term view on the equity market, so I'm just going to go to the big picture 50,000-foot view. I'm with Luke Grohman from last week. I think the next few weeks are very uncertain. I could see this as the beginning of a global populist revolution where Donald Trump is successful in all of his campaigns and that

spreads across Europe. We see the Reform Party in the UK and AFD in Germany changing the direction of global politics. Or I could see this going the opposite direction, where Trump gets stopped in his tracks by entrenched deep state Washington, and we see nothing but gridlock. So I think we really need to see how successful Trump is in his second term in being able to do the things that he wants to do before we know which way the markets are headed here.

The other thing I want to mention here at the top of the postgame segment is when Jim Bianco sounds an alarm bell, I listen. What Jim Bianco, who called the COVID pandemic –

and really nailed that call perfectly is saying is, look, the Los Angeles wildfires have pretty much already hit a financial tipping point where the size of these losses, both insured and uninsured, is so big that it's going to lead to a major financial contagion.

Now, that, of course, begs a whole bunch of questions as to, OK, do we get a federal bailout of the insurance system? You know, how is this all going to be resolved? That will take weeks and months to sort out. We're working on getting Jim Bianco back on the show. So we'll line that up.

to get Jim in as soon as we can to talk about this, but start thinking about the possibility. And obviously our hearts go out to our listeners who are affected directly by the Los Angeles fires, but start thinking about this potentially being the source of a major financial contagion. That's going to require major intervention from government, uh,

where that takes the market and what the implications are remain to be seen. Again, we're working on getting Jim Bianco on the show in the next month or so to talk about this situation.

Alaric, looking on page two, I have that chart of the S&P 500. And while it's clear that basically since Christmas and throughout the first few weeks of the year, we've been in some form of a market correction, but it hasn't yet turned into something more ominous. Overall, things like the MAG7 stocks have held above their 50-day moving averages.

And the markets have been more or less consolidating with almost all short-term sell-offs resulting in a quick snapback rally. And so we're really at a crossroad to determine whether a bigger distribution cycle is underway or whether this is just a typical market correction that results in a continuation pattern on the upside. With the market basically trading at its 50-day moving average, it is reasonable

potentially as simple as simply observing whether a new bull trend resumes here with it staying above its averages and breaking out to fresh new highs. If this was to begin a deeper and more pronounced market correction, then we should see the pattern of these rallies failing. So for instance, we had this big move on the CPI number

And so if we, for instance, fade that entire rally and find ourselves back below 5,900, that would be a clear indication that selling is still dominant and a further downside correction may get underway. That could result in testing a 5,700 or lower. But let's first see whether the Bulls can make yesterday's rally stick.

Now, Eric, let's move on to the U.S. dollar index. What are your thoughts here? Well, we're consolidating here around 109 on the Dixie, but the uptrend still looks very healthy and very much in play. So I'm expecting that we'll continue to move to further short-term cycle highs here and find out where this market can eventually top out. I'm really questioning whether we're going to go higher than that previous cycle, which was, what, 116 or something a year and a half ago?

Let's see what happens. Yeah, well, we printed 110 on the upside on an intraday basis, and the dollar remains very clearly bullish. What will be the pattern that I want looking for is whether or not old dips continue to be bought and whether accumulation still persists. Now, we're sort of in a no man's land in a sense that we've

clearly beaten all of the two-year highs that were all down around the 106, 107 level. And the only next major target or resistance level is all the highs up around 112 to 114. But that would entail the euro breaking below parity. And so there's a lot of interesting storylines here in the dollar. Obviously, the bull trend is still very clearly in place and there's zero evidence

new reversal or downtrend has begun. Now, Eric, I want to move on here to crude oil where we have the chart on page four. And after a three-month consolidation that established a very good fair value zone, we had a decisive short squeeze get underway when that descending trend line and the moving averages were beat by

a squeeze of some sort really got underway that has now seen crude oil rip all the way from just under $70 to now over $80 on the upside. Now, such a strong, decisive breakout is certainly bullish from a technical perspective, but

But the bigger puzzle to solve is that was this more of a liquidity short squeeze or is there some underpinning fundamental reason while now crude oil will enter a new accumulation cycle? To me, it's all going to be about the pullback. If we see that all pullbacks are being bought and defended and we don't see price action really get back under $75, $76, then

then it will be interesting to see whether that establishes a continuation pattern that could send oil back up to the highs of 2024. Now let's move on to the gold chart on page five. What are your thoughts here? Well, on Thursday morning, we're just trying to break above or break out to the upside from this triangle formation that's been in play for the last decade.

Oh, I don't know, several months now. Thursday's close should be a good tell. If we get a close over 2740, then it's probably game on for this rally. Gold is strengthening with the dollar index, which is interesting. It's something we've predicted here on Macro Voices for several years that we'd eventually see both the dollar and gold advancing at the same time. Seems to be that that's what's going on here. So it's going to be very interesting to see what happens next.

Well, you're right about that triangle formation. And it's very reminiscent of the consolidation we saw in May and June in gold, which was a couple months where gold took a break from its bull advance and then broke out and re-resumed its trend. Now, have we broken the November-December highs? No, but we are above the moving averages and we're above the triangle descending line.

And so we have a scenario where gold is toying with the idea of breaking out. So it'll be very interesting to see whether the bulls can build on this and get something bigger underway. Now, Eric, put a couple of charts into the chart deck on uranium. What are your thoughts?

Got a couple of really interesting charts that we put in the deck this week. The first one comes from Ocean Wall, and it was upgraded by the Financial Times. And this really, I think, says a lot. What it's showing us is that there is

clearly and incontrovertibly a raging bull market on enriched uranium reactor fuel. That's EUP on the chart, up more than 506% in the last three years. So there's no question that this nuclear fuel bull market that I and so many other people have predicted and been talking about for the last couple of years is on, but

But holy cow, look at that chart. Why is it on in the enriched uranium that we can't invest and speculate directly in? But for U-308, which is the raw uranium oxide that that reactor fuel is made from, it's stagnating. It's just been flatlining for the last year. Look at the fact that in 2008,

In 2024, it's clearly been the most brisk up year in that E.U.P. rally. And again, E.U.P. stands for enriched uranium products. It means the low enriched uranium reactor fuel after it goes through the conversion and enrichment process.

Now, there's a few mysteries about this. What is this chart really telling us? Almost everybody is saying, okay, clearly what it means is any day now, U308 just has to respond sharply to the upside to catch up with EUP.

The question I'm asking is, look, this divergence has been here for more than a year. What is driving the divergence and how long can it last? And I think the answer has to do potentially with the conversion and enrichment bottlenecks that we have in the fuel cycle. Now, there's some mysteries about this. Everybody's been the narrative around conversion and enrichment has been that the bottleneck is more in conversion as opposed to enrichment.

But look at this chart. It's very clearly saying that the price signal the market is sending us is that divergence is between EUP and UF6, which means the output from conversion and the input into the enrichment process is UF6.

The output is EUP. So it's getting from UF6 to EUP where the big price divergence has occurred. That suggests that it's enrichment rather than conversion, which is sucking up all the money here. And I think it is very easy to conclude that in the intermediate to long term,

U308 has to catch up to the upside. The question is, why has this divergence existed for a full year and how long is it going to last? And is it related to a conversion and enrichment bottleneck in the fuel cycle?

Is that the reason that we see the raw uranium not keeping up with the enriched product? So that's a mystery. I want to continue to try to get to the bottom of this and talk to some nuclear guests in upcoming weeks. But I think it's very important to understand that the rally is definitely on. It's confirmed now.

enriched uranium nuclear reactor fuel. It's the raw uranium, the stuff that we're able to speculate on that is not responding. And the reason it's not responding is the mystery. Now, the second chart is one that I think maybe has a little bit of wishful thinking built into it. It's showing us that what's been going on is there was a fair amount of stock of U-308 that the utilities owned previously.

They were using up their own stock, using their stockpiles rather than buying replacements, hoping that the price was going to go back down. Now they're supposedly running out of it and they're not going to have a whole bunch of on hand stocks. They're going to have to buy replacement starting in twenty twenty five.

I don't know who prepared this chart. It says the data comes from UXC, which is definitely a very reputable firm. I don't think UXC prepared this chart. My question is, how do you know with certainty exactly how much uranium they're going to keep on hand for the next year?

10 years. So I'm a little bit skeptical of this chart, but if it's true, we're getting to the point where those utilities have run out of their U308 stockpiles, they're going to have to start replacing it. Is that really true? We'll see, but I want to get some more uranium experts on the show and ask them about these charts and what's causing this big divergence on the first chart and how long it can last. That really is the big question in my mind.

Well, uranium has still technically been quiet, but certainly when a new buy cycle gets underway, it's going to be very interesting for the upside play of where uranium will go. Finally, though, Eric, on page eight, I just have that chart on the 10-year treasury yields.

And what we've continued to see for months now is yields increasing over 100 basis points. Now the question really is, did we see a short-term high? The CPI print created almost a 15 basis point rise.

reversal off the highs. The question was, was just a short-term reaction or are we seeing that this rise in yield cycle has played out and now we're going to start seeing a period where the yields start to stabilize up along these levels?

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 and the chart book we just discussed here in the postgame, including a number of links to articles that we found interesting.

So you're going to find this link and so much more in this week's Research Roundup. That does it for this week's episode. We appreciate all the feedback and support we get from our listeners, and we're always looking for suggestions on how we can make the program even better. Now, for those of our listeners that write or blog about the markets and would like to share that content with our listeners, send us an email at researchroundupatmacrovoices.com, and we will consider it for our weekly distributions.

If you have not already, follow our main Twitter account on X at Macro Voices for all the most recent updates and releases. You can also follow Eric on X at Eric S. Townsend. That's Eric spelled with a K. And you can also follow me at Patrick Ceresna. On behalf of Eric Townsend and myself, thank you for listening, and we'll see you all next week. ♪♪♪

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