MacroVoices #470 Michael Every: A Week Where Decades Happen?
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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 470 was produced on March 6th, 2025. I'm Eric Townsend. Robbo Bank's Michael Avery returns as this week's feature interview guest.

We thought Michael's advice to take President Trump seriously, but not necessarily literally, proved to be quite prescient. So we asked him back to comment on this week's overwhelming news flow on so many fronts, from Trump and Zelensky's Oval Office antics, to Canada and Mexico tariffs, to four significant executive orders from President Trump, to crypto, to the U.S. Sovereign Wealth Fund, to the

to the explosion of populism around the globe, to where we stand with China. And I'm Patrick Ceresna with the Macro Scoreboard week over week as of the close of Wednesday, March 5th, 2025. The S&P 500 index down 191 basis points, trading at 5842. So far, all the buy-on dips have been falling flat. We'll take a closer look at that chart.

and the key technical levels to watch in the postgame segment. The U.S. dollar index down 207 basis points, trading at 104.27, the biggest three-day drop we've seen in over a year. The April WTI crude oil contract down 337 basis points, now trading at 66.31, now testing the 52-week lows. The April RBOB gasoline down 228 basis points, trading at 214.00.

The April gold contract down 14 basis points, trading at 2926. Copper up 551 basis points, trading at 479. New breakout on copper, but will it break out above last month's highs? Uranium down 139 basis points, trading at 6405. The U.S. 10-year treasury yield

up one basis point, trading at $4.31. And the key news to watch this Friday are the jobs numbers. And next week, we have the CPI and PPI inflation numbers and the Bank of Canada monetary policy statement.

This week's feature interview guest is Rabobank's Michael Every. Eric and Michael discuss Ukraine, Trump's diplomacy, tariffs, China, and more. Eric's interview with Michael Every is coming up as Macro Voices continues right here at MacroVoices.com. And now with this week's special guest, here's your host, Eric Townsend.

Joining me now is Michael Every, Global Strategist on Economics and Markets for Robobank. Michael, you're back kind of early. We don't normally have someone back just six weeks after your first appearance on Macro Voices where you were super popular. We had another guest booked this week who had to back out. When we went to look for a backup guest, I just thought, wow, as much as it's only been six weeks, your comment when you were on before saying,

Take President Trump very seriously, but not always literally. Proved to be so prescient, it just seemed like such a fit this week. Michael, what the heck just happened in the Oval Office? What's the real agenda? What's going on here? How do we make sense of this news flow around Zelensky and Trump and the falling out and now Europe is befriending Zelensky? And where is this all headed? What does it mean? How do we sort it out? Great question. Good to be back. And I have to say,

Let's be honest, that six weeks feels like six months or six years in terms of the news flow that we've seen and the sheer exhaustion that I think we're all feeling. So there's a lot to unpack there. Should we start with Zelensky? Let's do it. Okay. So, I mean, there are so many different ways that you can look at that and there are such passionate opinions of it from different sides. Clearly what we saw on that fateful Friday in the White House was a diplomatic failure of

of you know historic proportions at the very very highest level that's not how diplomacy is supposed to be done in public i can assure you that's how a lot of diplomacy is done when the cameras are turned off but

That should never have been done like that. And you can blame Trump. Some people have. You can blame Zelensky. And I personally think far more of it since with Zelensky. He didn't realize where he was and the audience he had. And, you know, he was using a lot of the same rhetorical tricks that go down well in Europe and do not work in America. But, you know, the long and the short of it is that trust was already not there and it blew up. But I think the greater likelihood is, and the way things are moving by the time people are listening to this, it could already be true, that

Whilst you've seen today in Asia time, America now pours all military aid to Ukraine to add extra pressure on top. There really aren't many good options for Ukraine other than signing that minerals deal, which is what blew everything up on Friday, and then proceeding to try and flesh out what does or doesn't constitute some kind of security guarantee of sorts.

afterwards because it's not going to happen the other way around. You know, Europe isn't really in a position practically to do it. America has said it won't do it. No one else will. And so it's really that or nothing. So I expect we will return to that. And I think Zelensky, you know, much humbled, even if he doesn't do it in person, will end up signing.

Let's talk about the mineral deal and what it actually means itself, because President Trump repeated the exact same phrase at least a dozen times. Raw earth minerals, R-A-W, earth minerals.

Now, I've been trading commodities for a while. I've never heard of a raw earth mineral. A lot of people talk about rare earth elements, things like neodymium and so forth. The thing is, Javier Blas, very well-respected commodities journalist from Bloomberg, has been very, very vocal saying, hey, Ukraine doesn't have neodymium.

any substantial reserves of any of those, certainly not $500 billion worth. This doesn't make any sense. And then I've seen some other communications where they've talked about these raw earth minerals, such as nickel, copper, and lithium. Last I knew, those were all base metals. And they even mentioned crude oil. So,

What does this mean? It's not really raw minerals? Is it just they want a slice of any natural resource in Ukraine that might have value? What's really going on here? Well, again, this comes back to the seriously but not literally thing. Those who understand this situation from a different angle to the geology side, which is very accurate that you're bringing up there, see it like this. The deal is

was, and if it's signed, will be a fig leaf. There aren't $500 billion worth of those particular resources, however you want to define them in Ukraine. And the amount of time it would take to develop them and get your money back on that, even if it were true, is just ridiculous in terms of any kind of future that Donald Trump is interested in. So that in itself doesn't really mean anything.

But what it does do is tick boxes for Trump. Because first of all, if anyone hadn't spotted, you know, this is abundantly clear, he wants out of this war because it is a major distraction for the US and a drain on resources militarily at a time when it wants to be pivoting 100% to Asia. We've heard the same thing from previous presidents and nothing happened on that front. And he definitely wants to do it. That's one point.

And secondly, and we can discuss this maybe in a moment as a sidebar, he would like to try and achieve some kind of detente with Putin if he can, because he thinks just maybe he can do an inverse Nixon. Nixon, of course, went to China after the Sino-Soviet split. And it's been a logical strategy for the US to pursue for a long time to try and break off Russia from China. Now, I don't think that will work, but I can understand why he would like to try it. So he wants to end the war quickly.

And to do that, he's obviously just trying to get a ceasefire in place just as starters and then avoid having this security commitment which Zelensky was pushing him for and pushing him for on the Friday when everything blew up. Because if they do do that, effectively you've extended the equivalent of NATO Article 5 membership to Ukraine without Ukraine even joining NATO. That, you know, if Russia attacks Ukraine, we will step in.

which is how NATO is supposed to work. So they could never really do that. And even Europe itself, I think, is going to find it difficult to actually come to do that when push comes to shove. So what this was, was an attempt to try and buy time, get everything to just calm down for a while, which suits Russia in terms of their war economy is overheating and it suits Ukraine to a certain degree, suits Europe to a degree and certainly suits the US. And then just dangle

this prospect of some kind of economic integration between Ukraine and the United States, which is incredibly ambiguous in terms of what it would actually mean, as if it's some kind of security guarantee that, you know, Vladimir Putin would never consider breaching in the future. Because at least on that basis, Trump would not be repeating what past presidents did in Iraq and in Afghanistan, where you spend trillions of dollars

occupy the place for years and walk away with absolutely nothing. That's not how Realpolitik works. If you're doing economic statecraft from a Realpolitik perspective and you're there involved militarily, you want to get paid for it.

There needs to be some economic upside, not just a strategic upside in terms of the military dimension. There needs to be some money flowing from it. And this was a fig leaf, I believe, that maybe, you know, in some people's imaginations was a real cash cow. I doubt that's the case, but, you know, I could be wrong. But at least would provide the fig leaf for then a basis for a ceasefire and

and potentially discussions about what security guarantees could mean. But the more people look at the deal and point out how silly it is, the less likely that is to happen. And the more Zelensky has kept saying, well, no, I want security. I want security. The less likely that is to happen. So in some respects, from a US perspective, it was like the best short-term deal that was possible.

Michael, let's keep things rolling as much as there's a lot to talk about in Ukraine. There's also so much more news, though, and I should mention to our listeners, this was recorded early on Tuesday morning. Who knows what will have happened in the two days between now and when you hear this. But as of this moment, the next big change.

piece of news is when everybody thought Canada and Mexico tariffs were going to be one of these things that, you know, every 30 days they get renewed and we're working toward a deal. President Trump, at least as of recording time, has said, nope, not going to waive them this time. They go into effect

I think it's midnight tonight or perhaps it was midnight last night. I'm not sure, Michael. You can fill us in. What's going on? Why has it suddenly turned from a threat to it's really happening? Is it really happening or is it just a bigger threat? What's going on here? Okay, this is a really, really crucial point because the 20% tariffs on China are happening. The executive order there has been signed. That's real. That's in the bag.

The 25%, 10% for energy from Canada and from Mexico, Trump verbally yesterday said, you know, we're still set to go and it's too late for any negotiations. That's purely verbal. You know, nothing would surprise us if there was a sudden pivot there. And why it's critical is not just because this would be very damaging to the Canadian, Mexican and even US economy if it were to occur.

but because it's a pivot point for the overall US grand strategy or what I call the US grand macro strategy. Because bear in mind, Trump has already floated that there could be a tariff exception for Australia, which is a US defence ally in the Asia-Pacific. He's floated that there could be some kind of trade deal with the UK, despite the fact that on paper, he shouldn't get along with a British prime minister at all. And certainly, J.D. Vance probably wouldn't.

And so you say, okay, there are potential exceptions being made here, although China is getting a 20%. Are exceptions going to be made for Canada and Mexico if they give some kind of quid pro quo? And Mexico has suggested, crucially, that if it were to match external tariffs on China, in other words, it will do on China what the US is doing, could it then avoid the US tariff itself?

And there have been US figures, including the Treasury Secretary, who said, yes, that makes sense. So I don't know if Trump's already made up his mind and they're going to press ahead anyway, but it makes much more statecraft sense to not have a tariff on Canada and Mexico, except maybe in certain sectors which are deemed to be national security, but generally not. But to have a joint North American external tariff against China is

So that effectively the USMCA is a closed loop on that front, similar to how the European Union works with its joint external tariff. And that makes sense if you then try and bolt on the UK and bolt on Australia and you start to see the foundations for a North America plus defence allies

the UK and Australia both being in the AUKUS grouping, which Trump, when he was asked by a journalist, didn't know what he was referring to, but I think he just misunderstood the question, as a front against China. But if it is going to be 25% against Mexico and Canada, with no exceptions, and they are not taken off again within days or weeks before the real damage starts, then we're looking at a completely different grand strategy of basically the US alone against everybody,

At which point, yeah, it's incredibly volatile for markets if that happens. I'm not saying it's not volatile if we have a group against China. That's also incredibly volatile, but at least it's a framework you can understand. If it's the US against all, it's far more complex and chaotic.

Let's go a little deeper on that subject of volatility and markets, because that's what our listeners care about is, you know, normally when we talk about how you trade this or how you trade that, it seems like what's going on here is President Trump is intentionally trying to cross.

create kind of a reputation for himself. You never know what I really mean until you find out. That's not something that's easy to trade. So, I mean, is it straddles and vol plays here? What do you do to try to navigate a situation where literally I don't think you or I, Michael, have

any idea whether or not Canada or Mexico tariffs are still going to be a big issue just 48 hours from our recording time when our listeners hear this. It'll either be totally forgotten or it'll be a huge big news deal. And it's impossible to tell. That's very, very difficult. Sure. And look, there are three ways to play it. First of all, you don't play. And that's valid where you can afford not to.

Secondly, as you correctly said, straddle and vault and basically just try and do your best to ride it out with tight stops on everything where you can, hedge where you can. And the last one, and I'm going back to talk my own book here, is to say do both of those and alongside that, try and look at what makes real strategic sense here from the US perspective. And I would still put it to you that whilst America can do okay in the long run without Mexico, without Canada,

It's an enormously stronger force versus China with those two economies bolted on and with Australia bolted on and with the UK bolted on, you know, for all the problems that every one of those economies have jointly, you know, with some internal reforms. That's quite the economic beast. So in that respect, the one thing Trump can't do is look wimpy on tariffs at this stage because they haven't even gone on yet against these, you know, purported allies and trade partners.

But it would make far more sense to scare the hell out of everybody, let people think that he really is serious and even maybe go ahead with it briefly, just have them feel the pain for a couple of days and have people think, wow, he's really serious and then take them off. Only if then the quid pro quo, as I said, is that he builds this bigger block for a larger strategic purpose. So if you're thinking strategically and you can be out of the game where you can do and you can hedge your volatility risk as well, I think that's the most logical way to do it.

Okay, picking up on what you said about understanding the U.S. strategy and kind of trading around that, I want to go over some executive orders that have come out and help us interpret not just what the order means, but what it's going to mean for markets and how you would trade it. Let's start with this America First Investment Strategy executive order. What's going on here? That one was huge, absolutely huge. And there were so many of them coming out.

And the detail in them can be quite nitty gritty. I completely get why many people in markets just start to be, you know, punch drunk and don't pay attention. But that one was absolutely huge. I mean, there are many details in it, but the juiciest ones

were that effectively CFIUS, so the Foreign Investment Screening Board, that's always been there in the US, is now going to make sure that China cannot have any say or investment in a whole swathe of the US economy, including agricultural land, technology, infrastructure. You're out. And if you are a China front man,

you're also out. But leading back to the point I was just making about maybe having a larger view and a different strategy, at the same time, it was made clear, if you go on the US green list by absolutely separating your supply chain and technology chain from China, then you get fast track FDI approval. So you have a two-tier system. If you're China, you're out. If you're a front man for China, you're out. If you're nothing to do with China, you're straight in.

with hardly any paperwork. So that in itself was huge. And the secondary element of the executive order was to do everything that's possible to try and dissuade American capital from investing in the Chinese military. Now, of course, you can't do that directly anyway, but China has what's called a civilian-military fusion, where every civilian company has to cooperate with the state and with the military if they're asked to. So there isn't really a differentiation between the two.

It's a polite fiction. So effectively, if America wants to, it can interpret that executive order to say, you just can't buy Chinese stocks. And that's ironically just as Chinese tech shares have gone through the roof. So that's now there as well. And above and beyond that, one other little morsel, there was a list of countries who were put down as adversaries of America that need to be watched. And Hong Kong was on the list.

So, I mean, that's not a complete surprise to anyone who's seen the changes there over the past few years. But to have that in black and white, that's huge. And as I said, that absolutely speaks to, in principle, the framework of saying, be in Team America and you get fast track approval. Don't be in Team America and your name's not on the list, you're not getting in at all.

Michael, let's move on to the next executive order. What the heck is meant by USTR investigation into Chinese maritime industries? Again, really sounds technical and boring, and it's staggeringly important when you understand the history of it and the implications. So the Biden admin had actually launched a USTR complaint about the fact that if you look at global shipbuilding,

China dominates. We all know that. And control of key ports. China's very, very high up the list there. And in terms of ocean carriers, China's really, really important as well. So basically anything that happens in a civilian sphere

at sea, China dominates in the same way that the US Navy dominates militarily. And a lot of that is with state firms and all of that is with subsidies of different kinds. So the current USTR has said that they're carrying out an investigation. And what they are proposing is after March 24th, and they've had a round of discussions with different people, they are proposing to fight Chinese state control of maritime industries with a number of really radical measures. First of all,

they're going to charge china-built ships which is a huge huge number of the global fleet on entering a u.s port one thousand dollars per net ton up to a one million dollar cap and 1.5 million dollars if it's a china built and operated ship now if you make several port stops from asia to us ports dropping off cargo that really adds up that could be three or four point five million dollars per journey that really makes it expensive to start using those services um and at the same time

They're going to charge people who have got Chinese built ships in their fleet, but don't send them to the US. So say, for example, you're a European carrier and you keep all your Chinese built ships in Asia and you send your European built ships or your Japanese built ships to America and you say, ha ha, nothing to pay. No, they know which ships you've got and who built them and they'll still make you pay.

So in other words, the pressure is to absolutely diversify your fleet away from China by making it more expensive. And then adding on top of that, they're now talking about introducing quotas for American crude and American flag chips to carry a share of total US exports, which could be anything from corn to chips to missiles. So initially, they're talking about 1% of all American exports will have to be carried on those kinds of vessels. That will rise to 3%.

and then to 5% over the next couple of years, at which point 3% of that cargo has to be on an American built ship. And then that will rise to 15% of all outbound cargo and 5% of all the ships have to have been built in America. So you're basically forcing people to build in America and you're making it much more expensive to go with the cheapest, most efficient option.

which is, of course, from a Chinese state-controlled industry. And why this is interesting is if you look back at American history in this area, which I have done, I wrote a paper on it a few years ago called In Deep Ship, and that's with a P. But, you know, you understand the implication. America has used this strategy in the past several times. They used it against the British,

in order to develop a merchant marine just after your independence when, you know, there was no economic logic in doing so. Everyone would have said, just buy your stuff from the Brits on their ships. And America said, no, if we do that, we'll never develop and we'll never be a commercial power and we'll never have, you know, strategic autonomy. So they made it more expensive to bring, to buy things from Britain and they built lots of ships with subsidies. And they did the same thing a couple of times and each time then market forces kicked in and the merchant marine shriveled away to nothing.

So we're basically repeating history. But the implication is you get a sharp bifurcation in the global fleet, you get massive disruption of supply chains, and you get the re-industrialization of America.

Michael, let's keep going on the executive orders. I've got two more of them for you. Cryptocurrency. Seems to me like President Trump gave the crypto community everything they wanted, then crypto sold off. Is that just to sell the news event? What happened? Well, I mean, there are lots of things that could have driven that. The market has been very, very choppy of late. You did have that big hack, which North Korea appears to have been behind. But part of the legislation that's still being drawn up, and we'll find out more in the next couple of days again, suggests

that the assets that Trump wants to put in this crypto reserve have to be made in America, as it were. You can't use non-made-in-America stablecoins, which of course makes a lot of them out there not valuable. Now, they have suggested the names of some that they do want to include, and even those have started to sell off again because people are starting to wonder if it's a continual bait-and-switch. There's a whole discussion that can be had about how crypto and a network of crypto assets can be used effectively

by the US to create fiscal space for themselves out of really, you know, digital magic, to be honest. It remains to be seen. It's certainly an ironic action that you come out as pro-crypto and you end up with crypto selling off. But that really is part and parcel of some of the inverse outcomes that you get from trying to interpret Trump too literally sometimes.

Let's move on to the final executive order and the one that baffles me the most. As far as I understand what a sovereign wealth fund is, Michael, that's for creditor nations. In other words, nations that possess wealth and need to invest it. They create a fund, sort of like a big hedge fund, to invest their wealth. Why does the biggest debtor nation in the history of the world need a sovereign wealth fund? It's a fantastic question. I'm really glad you asked it like that because...

No offense at all. That's exactly how it's asked by people who I think don't get what Trump's trying to do. So let me try and tell you. That's okay. I want to get what he... And I don't get it. You're exactly right. Good call. So, okay. So...

You're absolutely right in that it doesn't make sense from a traditional framework like that. And the US doesn't run a fiscal surplus, so there's no accumulated wealth. And it doesn't run a current account surplus, so there's no accumulated national savings. So how can it be done? Effectively, and I'm going to try and do it as simply as I can here. It's a way to achieve geostrategic goals with as little oversight from Congress as possible, and some of which are in very, very

grey areas and it doesn't count as debt on the balance sheet. So let me give you an example of how it could work. So let's say, for example, you have a piece of land lying around. It's a federal asset and it's worth 6 billion US dollars. Big piece of land in one of the states somewhere.

If you set up this sovereign wealth fund, what they're talking about doing is saying, we will take that six and we will use typical financialization magic because the US is the past master of financialization. And we will strongly encourage the private sector to leverage that up 10 times to the point where we have $60 billion to play with. Then we will give $1 million to everyone who lives in Greenland. And when they have their independence referendum in April, we will strongly incentivize them to become a US protectorate or a US state.

What does it cost the US up front? Nothing. What have they got? Greenland. Is Greenland worth more than $60 billion in terms of the assets and the geostrategic location? I would wager that it is. Now, that's one extreme example. Did Congress have a say? No, because it's a sovereign wealth fund. Can they allocate funds to it or say we're not going to issue them? No. Is there any debt on the balance sheet? No, none whatsoever. And if there is, it's actually from the private sector.

And, you know, obviously debt to GDP does matter when it starts to get high, even in the US. And what have you got? A hard asset. So if you play it right, you actually manage to use the power of financialization, which, as I said, is a US specialization. And it's also one of the reasons why the US is no longer an industrial power because you've financialized and de-industrialized. But you use financialization almost kind of off book.

to buy hard assets like Greenland or ports or other reserves or raw earths, as you were saying. And you suddenly start to transition back to being much more of a physical controller and producer of things. So that's what I think the game is.

That sounds to me more like an executive branch slush fund than a sovereign wealth fund. Do I get it now? Okay. Yeah. That's what it really is. It can be that too. Absolutely. And of course, will it line people's pockets? Well, is this the USA? Yes, of course it will. But can it at the same time manage to strategically shift the US from being purely financialized

to being also an asset holder, a hard asset holder, it can do both at the same time. And it can also feather people's nests if that is the way it goes. Michael, I'm all out of executive orders. Let's go back to this. It's only been six weeks since we had you on Macro Voices. Who would have guessed the 10-year yield would be 50 basis points lower? What gives? So this is another one of those strange inverses because

But Besant, the Treasury Secretary, has said openly they're no longer looking at Fed funds. And by the way, you'll notice all the screams for rate cuts have gone away. But they are looking at the 10-year. That's what they think is the key pivot point in terms of the financial pressure being felt within the economy. That would ostensibly tell you that therefore it would go down.

But of course, nothing that the admin has been doing so far really would encourage that. The only thing you could say might lean in that direction is all the cost cutting from Doge, because people are now starting to worry that if you fire enough civil servants, enough federal workers, enough NGO people, you cut enough spending off in an economy which has been propped up by a vast fiscal deficit, you get a recession, which of course, if the Fed isn't going to move,

which for now it isn't because of the potential inflation risk from tariffs, you are going to see reflected in the 10-year.

So you could say they've done it cleverly via Doge to get the 10-year down and therefore ease pressure on parts of the economy. Or you could say it's happened entirely fortuitously and they had nothing to do with it. It depends whether you're being generous to them or not. But as I said, it's not a complete surprise that you have an admin which says the 10-year is important to us. And suddenly, despite the fact that many policies are inflationary, the 10-year goes down. So again, seriously, but not literally, perhaps that applies.

Let's move on to what I think is maybe the biggest theme of our time, really, which is I perceive, I don't know how to explain this other than I'll call it a contagion of populism. It feels to me like as much as so many people around the world are so incredibly critical of President Trump.

It also feels like the Trump populist revolution is spreading. All of the sudden, the Reform UK party, which nobody took seriously before, is really getting traction. AFD didn't win the German elections, but I think they came in second.

I don't know how Maloney is doing in Italy, but it feels like we're seeing what I'll call a contagion of populism that's spreading around the world. Did President Trump start this? Is he just part of it? Why is it happening and where is it headed? Again, a great question. I wrote a piece in early 2019 called The Age of Rage, specifically saying that I thought there would be a tidal wave of populism which would come sweeping through and initially it would be to the left and then it would move

to the right and that that the rightist argument would win um and the argument i made within that echoing you know other work by far more serious thinkers who have been looking at this for a very very long time is that the historical pattern is you do get waves of populism not just in the us but globally and you get them around technological transitions you get them around uh

phase shifts in terms of how the economy is operating. You get them around demographic waves. There are lots of conflating factors that can all come together. But if you look at economy after economy, and not just within democracies, but right the way around the world,

People are pretty dissatisfied. They all feel that there are various different crises that they're facing in their lives, whether it's the crisis of liberal democracy, the climate crisis, if you come from one particular camp, whether it's the failure of institutions or a globalist elite, if you're from a different camp, pretty much nobody is satisfied with the way things are working at the moment. And young people are the very least satisfied.

And if you look at the job prospects many of them have and how unaffordable housing is, which, by the way, was a deliberate policy choice made by their parents as a generation and their grandparents to say, OK, let's keep the economy going with more expensive housing and assets.

You can understand why they're angry. If you grow up and you see you will have a worse living standard than your mom and dad, and potentially even than your grandparents that into their old age, why wouldn't you be angry? So this isn't just a US phenomenon. It isn't just a European one. It's a global one. And yet the solutions are extremely hard to find. On one level, you have to say we have to cooperate. And yet to cooperate, you have to build the kind of structures which only seem to operate on a basis which increases inequality.

which creates more populism. Or you can say that it needs to be nationalists of the world unite, and everyone goes for a kind of Trumpism. And at the moment, that appears to be the argument that is winning. But of course, that will create masses of volatility of its own. But what worries me the most there is if it fails, or if it succeeds, let's start with that. If it succeeds, then of course, that's entrenched. You can guarantee that will last for a generation.

or a political generation, because it's worked. But if it doesn't work, then I don't think everyone is suddenly going to say, let's go back to the sensible center. Let's go back to acronyms and NGOs and technocrats because they know what they're doing. No, I fear far worse populism is to come if this brand of populism can't manage to achieve some kind of results. And I don't just mean in the States, I mean everywhere.

Michael, what does that mean for the European Union? Because frankly, I am having a hard time imagining Thierry Breton reinventing himself as a populist politician. It seems like in general, the European Union is not set up to embrace or could ever embrace populism. Are we going to see a breakdown of the EU as a result of this? Well, I'm not going to forecast that because no one knows exactly what's

what will occur and no one knows exactly how the EU will mutate. In fact, at the moment, you can see that very much in response to the Ukraine crisis, which we started by talking about, there's an attempt to try and whip up a brand of kind of EU populism, which is to say, you know, let's rally around the flag and around the Ukrainian flag, introduce all the national security kind of changes and defense changes that nationalists have been arguing for for a very, very long time. But let's do that under a European, pan-European umbrella.

So let's, you know, let's all wave the European flag.

So this is an interesting concept to monitor. But yes, Europe itself is doing that because it recognizes that there are nationalist and populist pressures rising, not just from the right, but also from the left in some countries, because that's more of a European tradition. And you are getting around a third of the vote in many European economies going for anti-European populist parties. Now, imagine if you were to have a crippling recession.

I mean, I'm not forecasting one. That's a dangerous base to be building from. Imagine if you were to have a geopolitical crisis, for example, you know, something far worse happening in Ukraine from that basis. Yes, Europe itself is openly saying they understand that there are existential risks here. Macron has used exactly that phrase. So,

things will have to change. And I think Europe will do so. The question is, can it do so in time? And, you know, what intellectual and political baggage will have to be jettisoned in order for it to do so? Michael, I saved the biggest elephant in the room for last. Let's talk about China. China. Okay. Well, it's the dragon in the room rather than the elephant. And

You have to understand what an important week we are talking in, even if listeners are going to hear this on Thursday rather than Tuesday, because not only do we have the backdrop of Europe talking about whether they will or won't increase defense spending, not only do we have the question of whether U.S. tariffs will or won't go on Mexico and Canada, not only do we have that addressed to Congress by President Trump, which some people are suggesting could see him even saying he wants to withdraw from NATO, we also have China's two sessions, which is when they start to set policy.

And what they're talking about is what they can do as a backdrop to what the US might be doing in terms of tariffs and all the executive orders that I've been discussing and just how disruptive they are. We have to wait and see there. And it wouldn't surprise me if China itself doesn't say wait and see as well, because everything is so fluid. They're not quite sure what opportunities might arise. I mean, if the Western alliance really does fragment,

where does China stand vis-a-vis that? So I think they'll play their cards close to their chest. But I want to redirect the question slightly and put it like this. Everything we are talking about from President Trump trying to get out of Ukraine on any terms possible, President Trump trying to

to create some kind of detente with Russia, which I've alluded to. Europe realizing that it may not be able to rely on NATO and saying, okay, we need to rearm and we need to rearm Ukraine. Tariffs maybe or maybe not going up on Canada and Mexico, and maybe we do or don't have a fortress America. That trade block may be being extended to the UK, which means they can't go with Europe and Australia. All of this, all of it factors back to the fact that the US's grand macro strategy is

is laser focused on China, that China as a rival to it and the first country since the Soviet Union to really potentially be ahead of it in some key areas is what everything is about. And all the other factors that you're seeing, all the other stories, they all conflate, they're all linked. Each one of them can drive the other like cogs in a machine.

But China is at the center of the whole thing. So yes, we'll look to see what China says, but you can't ever not have it at the back of your mind, even if you're talking Ukraine or Russia or quote unquote raw earths or tariffs on Canada or Mexico, etc., etc., etc.

Michael, you knew this was coming. We've got so many different topics that we've talked about. I'm going to hit you with the same dirty trick question as last time that I interviewed you. How the heck do you assimilate all of this into a cohesive macro trading strategy?

Well, again, it depends on how many assets or what assets you're playing with, what scale, your risk appetite, your timeframe, all the standard disclaimers. And of course, the other one that I don't give investment advice. I have to make that abundantly clear. I don't manage money and I'm not trying to manage anyone's here in this conversation. But that said, I repeat what I began with and what I just reiterated a moment ago.

that you either have to be a complete expert in your own little micro market. If you're just looking at a particular FX cross and you trade that really well, you've got a good feeling for the momentum in it. Of course, headlines are going to buffet it around at the moment. Of course, you're going to want much tighter stops and to trade it more carefully than usual. But you can keep doing that. That's absolutely fine. If you've got a broader set of assets you're looking at or you're trading global equity markets, etc.,

you have to take a much bigger picture view. And if you're cross asset and cross geography, absolutely you do. And if that's the case, yes, you still need that volatility hedging. Yes, you need to perhaps sit this one out for a while if you really don't know which way it's going. If you can afford to do that for a couple of weeks or a couple of months, that's not the worst thing in the world to do, particularly if you've still got a fairly high T-bill rate like you have in the US and US dollars. But you need to try and have at least

some kind of understanding of what the hell is going on here, which is what my role exists for, specifically that. I'm not the expert on Eurodollar. I'm certainly not the expert on quote-unquote raw earths or the 10-year yield, even though I've looked at many of them in the past in different ways. But what I am trying to do is explain that there is something

a picture here. There is some kind of strategy, chaotic as it may appear, and sometimes the chaos can be part of that strategy. And if you can start to understand elements of that too, you can start to see where you think things will sit in 12 months. Now there can be a hell of a lot of volatility in the next 12 hours or 12 days or 12 weeks, but over a 12 month horizon, which I presume is much more logical for people who are thinking about retirement, it will certainly stand you in good stead.

Michael, I can't thank you enough for another terrific interview. Two in a row is the case, maybe. Before I let you go, please tell us again what you do at Rabobank, how people can follow your work and how they can contact you. Well, I mainly try and get enough sleep in this current environment and I'm not doing very well. But as you said at the beginning, I'm a global strategist and my job is to look cross-asset.

cross-geography and cross-discipline to try and work out what the big global themes are and how they all intersect. And at the moment, it is this statecraft, not economic policy and grand macro strategy. Rabobank itself, obviously, is the world's leading food and agribank. That's the sector in which we specialize. If you want to follow my work, please go and have a look at Rabobank Knowledge. That website has all of our good stuff. If you'd like to follow what I'm saying in particular,

you can look for me on LinkedIn, Michael Every, Rabobank. And if you'd like to interact with me more frequently, because I'm there a bit more often, look for me on X at the Michael Every. And I enjoy a good to and fro on all the topics that we're talking about here. And, you know, you have to keep abreast of it all. This is not something that you can turn off of, you know, for a couple of days and go and do something else. To quote Lenin, there are decades where nothing happens and weeks where decades happen.

And potentially this could be one of those weeks. Patrick Ceresna and I will be back as Macro Voices continues right here at macrovoices.com. Now back to your hosts, Eric Townsend and Patrick Ceresna.

Eric, it was great to have Michael back 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, that means you have not yet registered at Macrovoices.com. Just go to our homepage, Macrovoices.com, and click on the red button over Michael's picture saying, looking for the downloads.

In addition, this week you'll find in the Research Roundup email a link to a recording from Jeff Snyder to supplement last week's interview on the show. Okay, Eric, let's get your thoughts on the equity markets. The S&P bounced nicely off support of the 200-day moving average, but while Wednesday looked like a reversal candle in many ways, we still failed to close above average.

any of the short-term moving averages. So technically speaking, the short-term trend is still down until we get a daily close above 58.75 or so. A daily close below the prior lows around 57.50 would suggest that we could be just beginning a much deeper correction.

So I'd say it's make or break time for the stock market, and we ought to find out fairly soon which way it's headed. Now again, the signals to watch are for a daily close above 58.75 or below 57.50. Now I know that big 75-point spread between those two levels sounds like a very wide margin, but I'm not sure if that's the case.

But with the short-term moving averages pointed down and the 200-day moving average pointed up, it will only be a few more sessions before those key support and resistance levels start to converge. At that point, we'll have to see the market break in one direction or the other.

Eric, I agree with your technical levels. It's going to be critical to see whether the bulls can turn this off of these key levels. We're sitting or approaching a lot of key Fibonacci levels as well that typically would spur on a market bounce. But at least as of this moment, we have yet to see

the buy-on dip traders follow through in any meaningful way. Every bounce is immediately faded. Now, we do have the jobs numbers coming out on Friday morning, and maybe that becomes the catalyst that either spurs the markets higher or really creates a continuation pattern to the downside. And so we'll see what comes of there. But there are some underpinning things that I want to highlight. On page three, I have the chart of the Magnificent Seven.

And what we are clearly seeing is sector rotation. We continue to see all of these Mag7 stocks selling pretty aggressively and that money being redistributed in a number of different sectors, healthcare particularly doing well, a lot of consumer staples doing well.

But these MAG7s are a huge weighting in the market cap weighted S&P. It's very difficult to imagine a scenario where the S&P has any big meaningful rally without the MAG7s putting in short-term lows and starting to turn. And there's really just no sign of that at the moment. So on page four, I have the S&P 500 percentage of stocks above their 50-day moving averages.

just a measure of the breadth of the market. And my argument has always been that if the Mag7s can't drive the rally, then you need a broad rally where the vast majority of stocks are rising. And so we'd need to see breadth increasing. And so instead, though, we have a breakdown of breadth. Not only during this January, February period, have we not been able to get above 60% of stocks rising,

But we're clearly rolled over and turning down. This is happening at the same time as things like the Russell 2000 small cap index is breaking lower lows. And so the breadth of the market isn't there either. This is not a healthy market environment. And even though bottoms can sometimes happen from these kind of oversold levels, there simply isn't a

really oversold condition that says that this is imminent any day. If we continue to have news flow that comes out there that creates confusion amongst traders and uncertainty, there's every opportunity this market sell-off to get much deeper. And so that brings the question of, well, should one insure their portfolios?

And it's something that we do quite actively at Big Picture Trading, buying all sorts of options to hedge out downside risk. But on page five, I have that volatility index, the VIX.

And this is a measure of the volatility premium that is being charged in options. Now, the market is, in theory, right pricing volatility. And so with us at these elevated 23, 24 levels, the implied ranges, daily ranges are even close to in the 50 to 100 S&P point ranges. So huge swings in the market are there. And this makes option premiums more rich.

And so how does one go about hedging when options are more expensive? Well, this is where you can still put on tactical debit spreads and other things that are far more volatility neutral that allow you to have some degree of protection in this period of uncertainty. All right, let's move on to that dollar.

Wednesday's close below 104 on the June Dixie contract confirmed that we're in a new short-term downtrend on the Dixie. But this is all politically driven, so changing news flow could change the trend in a heartbeat. Yeah, on page six, I have that U.S. dollar index, and what a three-day drop.

It really was driven though by simply the Euro and the pound sterling, the European currencies. We're not seeing the same type of velocity in the other cross currencies. And so really that spurt higher in the Euro has driven this drop. We're at this critical 104 level.

And while one can argue that this breakdown is a trend changer, and it certainly has that possibility, we are at a really important moment where if the bulls were going to save it, they would need to see a rally that recovers much of the prior sell-off back to like 106 or 107 in a very short order. If we see that old rally attempts stall out at 105,

and are very heavy, then really there becomes increasing confirmation that the U.S. dollar has some deeper sell cycle ahead of it that may send it right back down to September, October lows near 100. I'm going to really want to size up the price action in the next two, three trading sessions to really size this up. All right, Eric, let's talk oil.

The key technical levels have all been taken out to the downside, so the question now is how low can oil go? Wednesday's low on WTI at 65.20 was almost an exact match of the intraday low on September 9, 2024.

To find a lower low, you'd have to go all the way back to May 3rd of 2023, when WTI very briefly tested 63.65 on a crazy intraday swing, but wound up closing much higher on that day at about 68.15, five bucks higher.

So as far as any kind of closing print or lower price action, it's been several years since we've seen prices as low as they were on Wednesday. But as Michael Every said in the feature interview, this has been one of those weeks where decades happen. So anything is possible from here. Well,

Well, Eric, we are at 52 week lows, but they are long major lows. So on page seven, when we have that chart, you can see all of the lows that oil established here over the last six months. And this could still act as a support line. But when a support line like this is tested this often, there is sometimes a period where the market breaks to lower lows, often

hitting a whole series of stop losses and other things just sitting below that previous support line. If we see a further breakdown, we could see a quick washout to like $63, $62 on the downside.

But we are already quite oversold. And I think that at some point, a reactionary rally, at least back to 70 to 72, would be normal. At this stage, with us being down here, I don't want to already be oversold.

buying betting on that reversal just yet. I think that a quick washout of even another $2, $3 is entirely on the table before we get some proper reactionary bounce. All right, Eric, let's move on to gold.

Patrick, it's really remarkable to see just how quickly all the dips are being bought in gold. And that's true in all different timeframes, short term, medium term, even long term. Now, that's a really bullish long term signal. We were hopelessly overbought on a technical basis a few weeks ago. And the swing correction that we just experienced shook that off, setting up

a new rally. And we've never even got below the 34-day moving average, which so far has marked the bottom of this correction. The 38.2% Fib retracement level was at $28.24, and so far the bottom of this correction was $20 above that level at $28.44. The stage appears to now be set to test $3,000 with the daily RSI still below half-mast at $44 and pointed sharply up as of Wednesday's close.

Well, Eric, definitely gold has been bought on dip and we do get these bullish reactions to the upside, but we still haven't yet broken to a higher high. And so with us in this consolidation, often like you think back to like April or May of last year, gold will go and retest highs and then consolidate back down to lows and stay within a consolidation period or trade range. I

At this stage, with us having more or less tested the 3000 level, and while we didn't print it exactly, we approached it. This is an area where gold has fulfilled its upside targets for the last impulse. And so I'm still open to the idea that this is going to be

consolidation period for gold. Now the one argument you can make for gold is that with this potential US dollar breakdown that could become a new tailwind for gold rising and if that continues to emerge

and we see a breakout to a fresh new 52-week high, that could see a move measure up all the way up to $3,200 to $3,300 on the upside.

Will we see that breakout? At this moment, I still want to see how the dust settles here for this short-term trade range that we're establishing as we approach the previous highs. And we'll see over the next week or two whether the bulls have enough gas in the tank to really get this going. All right, Eric, let's move on to uranium. What are your thoughts here?

Well, it's been yet another week of extremely bullish nuclear news flow and yet another week of new cycle lows on spot uranium and uranium mining shares. There's no doubt in my mind that what we're seeing here is the process of retail capitulation, the well-known tradition of the dumb money selling to the smart money right around market bottoms. The obvious question is whether it's over yet, and nobody knows the answer for sure.

My take is that given the extreme oversold RSI and plenty of signs of capitulation in the tape action, there's a good chance that the cycle bottom might be in this week if and only if the broader equity market correction is also over and the S&P moves above its short-term moving averages to mark a new short-term uptick.

uptrend. But if we see the S&P break and close well below its prior lows around 5750, then all bets are off and lower numbers on uranium and uranium miners would be a near certainty in that scenario. I continue to buy the dips this week and I'll continue buying more if we see new lower lows.

Well, Eric, uranium is still very actively distributed. Someone keeps leaning into that bid and it is seeing some distinct distribution. So at this juncture, with these lower highs and lower lows,

I want to see where the selling subsides, where we see bottoming formations, where the momentum shifts. None of those things are yet evident. At some point, this is going to be a compelling buy-on-dip opportunity. But the question is, does one buy it on price alone or does one wait till the price action starts to shift to show that new accumulation is underway? And as of this moment, you may have a very cheap price.

But there is very little sign that a new wave of accumulation or new trend is anywhere underway. Finally, Eric, I wanted to just touch on copper. And when we take a look at this chart, it was consolidating over the last couple of weeks back down toward its 50-day moving average, down towards $4.50.

And we had a very bullish breakout the other day. And with this breakout, it is attempting to break the February highs and set in motion a trend continuation. What I really want to just see is whether the bulls can hold the gains. Often if these are fake outs,

then this will feed right back to $4.50 within a couple trading sessions. If the bulls can keep this, let's say, north of $4.65, $4.70 on all little pullbacks and the price action goes for another break to new highs, that could go back to testing the May highs that just above $5 on the copper price.

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. 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,

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