MacroVoices #478 Luke Gromen: Trump Tariff Policy Will Drive Gold Even Higher
01:13:28 Share

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 478 was produced on May 1st, 2025. I'm Eric Townsend. Forest for the Trees founder Luke Grohman returns as this week's feature interview guest. We'll discuss the market's Trump tariff tantrum, and Luke will make the bold call that President Trump has a realistic chance of successfully raising enough tariff revenue to be able to excuse the bottom 90% from paying federal income tax.

Needless to say, President Trump's popularity would be increased if he actually eliminated taxes for most taxpayers. And I'm Patrick Ceresna with the Macro Scoreboard. Week over week, as of the close of Wednesday, April 30th, 2025, the S&P 500 index up 361 basis points, trading at 5569. The market continues to

crawl higher as it attempts to break above the 50-day moving average for the first time since February. 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 15 basis points, trading at 99.63%.

bouncing from an oversold condition with retracement targets toward 101 to 102. The June WTI crude oil contract down 652 basis points trading at 5821, a material breakdown in oil towards April lows as recession risks rise. The June RBOB gasoline down 242 basis points trading at 202. The

The June gold contract up 76 basis points, trading at 33.19. Gold is now retracing the April advance, asking the question, is this a big buy-on-dip?

The July copper contract down 475 basis points, trading at 461. Uranium up 305 basis points, trading at 6765. This is the first positive price action we've seen in months. The U.S. 10-year treasury yield down 21 basis points, trading at 417. And the key news to watch this week is the U.S. jobs numbers. And next week we have the ISM services PMIs.

the FOMC Statement and Press Conference, and the Bank of England Monetary Policy Statement. This week's feature interview guest is Forest for the Trees founder, Luke Roman. Eric and Luke discuss tariffs, China's gold buying, and the perception versus reality in building U.S. infrastructure. Eric's interview with Luke Roman 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 Forest for the Trees founder, Luke Groman. Luke, I've been particularly looking forward to getting you on the show. It seems to me this might be the year when all of those

crazy nutcase things that only Luke Groman thinks could ever come true came true. At least that's the way it's starting to feel to me. Why don't we start with President Trump and the tariffs and talk about what's going on, where it's headed. Seems like President Trump's not unwilling to break things. Is he going to break this market more than he has already? Thanks for having me back on. Yeah, I

I think the Trump tariffs are the snowflake that triggered the avalanche on some level, right? The old metaphor of you never know which snowflake is going to trigger the avalanche. I think maybe we're starting to get some idea that that might be the avalanche. I think the tariffs are super interesting on a number of fronts. When paired with, when he came in late January, was inaugurated, immediately both he and Besson started talking about the tariffs.

And talking about fundamentally reversing the trade flows and capital flows that had defined the dollar-centric system as we know it for the past 50 years. So when we wrote a report about it for clients at the end of January, we said, look, with Trump saying we're going to fund more based on tariffs and cut income taxes and Besant saying we're going to ramp up tariffs,

That was very much a fundamental reversal of flows. And in other words, it used to be we send our factories and jobs to China. China sends stuff here. We send China dollars. China recycles those dollars into our capital markets. And that's sort of the virtuous cycle of trade. And that's sort of what's defined certainly the last 20 years and replaced China with

any number of, you know, Europe and Japan and others. And that's kind of been how the broad stroke flows, capital flows of the dollar centric system have really happened over the last 40 years or so. And late January, Trump says, OK, we're going to do more tariffs and we're going to try to cut income taxes. And that is

Starts to be a reversal of that. And then Besant talks about tariffs and both of those comments in late January, early February, noteworthy, but markets didn't really pay attention. And I think that the thing to me that really grabbed my attention in a big way was the America First investment policy memo that Trump, the Trump administration put out late January.

On Friday night, February 21st, we wrote a report about it for clients on February 25th, highlighting that essentially what this report was doing was saying, China, take your money and go home. We don't want you recycling your dollars into U.S. capital markets anymore. And more broadly, China,

The deal appeared to be, the goal appeared to be raising the cost of carry for holding treasury bonds and for reinvesting dollar surpluses back into U.S. capital markets with the goal of trying to redirect those flows into real assets, Main Street, not Wall Street, as Besant has said repeatedly. The next clue to our eyes is,

about what the Trump administration is trying to accomplish came when White House Council of Economic Advisers Chairman Stephen Myron gave a speech at the Hudson Institute where he reiterated essentially the goal of

the America First Investment Policy Memo, which is, look, if you do trade with us, you're going to end up with dollars and you're welcome to reinvest those dollars into our physical infrastructure, property, plant equipment. You are welcome to cut us a check for tariffs, cut a check to treasury, buy some weapons from us.

The other thing that Myron didn't say, and I don't know if he was thinking it, I certainly understand why he wouldn't have said anything about it. But the final clue, I think, in everything that has really grabbed our attention most about this whole tariff episode over the last month.

has been that Trump put tariffs on basically everybody and everything. Draconian, higher than expected, certainly higher than we thought. I mean, he tariffed an island full of penguins, if I remember reading properly. But the one thing he didn't put tariffs on that everybody was sure he was going to put tariffs on was gold. No tariffs on gold. Tariffs on everything and everyone else, but no tariffs on gold, which was very curious, because

Because when put together with higher cost of carry on treasuries and U.S. financial assets and what Myron said, it starts to look, when you paint with broad strokes, like...

hey, the old deal is off. We're no longer want you recycling your dollar surpluses into our financial asset markets. You're welcome to invest them in U.S. factories. You're welcome to buy U.S. weapons. You're welcome to cut the U.S. Treasury a check. You're welcome to pay the tariffs or there's no tariffs on gold either. And so you can buy gold to your heart's delight.

that works for us too, because that's going to bid up gold relentlessly. And as gold rises, it's going to effectively drive more of a settlement and a neutral reserve asset dynamic that we've been discussing for years and years and years together, Eric. And as gold gets higher, the dollar will weaken over time against creditor currencies that are quote unquote manipulating their currencies like the Chinese Yuan, like the Japanese Yen. And lo and behold,

Over the last month, look what's happened. Dollar is down against the yuan a little bit. It's down against the yen fairly notably, and it's down big against gold. So I think we are in, I can see in broad strokes what the Trump administration is trying to do here.

which is effect. We termed it closing the financial asset window in a nod to Nixon closing the gold window in 71. Well, we wrote for clients about a month ago. We said Trump just closed the financial asset dollar window, which is a say, take your dollar surpluses. We don't want them in the NASDAQ. We don't want you bidding mag seven from 50 times sales to 75 times sales anymore.

buy our, you know, build factories here, buy our weapons, pay our tariffs or buy gold. And so that's the kind of price action we've seen in markets over the last month, last week and a half, except that there's been a lot of confusion on Wall Street. We've never seen this before, most of us in our careers.

Even those of us that have been doing it for a long time, which is dollar down, stocks down, bonds down. That's capital outflow price action. And that is precisely what you'd expect to see, especially when married with gold up big, based on what I just laid out. So that's what I think the Trump administration is trying to do in all of this. Basically,

Main Street, not Wall Street, making America more competitive again, reshoring and weakening the dollar. But they are admittedly blunt instruments with high degrees of difficulty and very high degrees of executional risk in what it appears they are trying to accomplish, in my opinion. Let's go a little bit deeper on gold, Luke, since you brought that up. I'll have

one of the things that several analysts have said is this is mostly about China doing the buying for its own central bank purposes. They've analyzed the daily capital flows and so forth. And they're saying, look, the, the action is going on in the Shanghai market. We should be taking this as a signal. It's all about that. Now, what you just said is maybe Shanghai is buying it, but they're buying it perhaps at the behest of Trump from a policy perspective. Um,

Is it one of those two things? Is it both of those things? Is it something else? And particularly given the incredible price action that we saw with that near parabolic rise up to $3,500 on the price of gold, you know, are we just getting started? Is it over? What inning are we in, do you think, in this gold market? I think we're still in the early innings of the gold market because I am not hearing basically anybody other than a small cadre of investors

people suggest that the catalyst, the ultimate catalyst for what has happening to gold is that it is coming back into the system as a neutral reserve asset to replace treasuries. That's what's happening. And the U.S. is not just fine with that. It's the goal. And I think by virtue of that, absolutely, I wouldn't be surprised at all if China's driving it. You know, there was a very interesting, I ended up on my X feed the other day,

Shanghai gold premiums were at 2% and rising last week on Thursday and post COVID anytime Shanghai gold premiums are 2% and rising. It's usually a really bad time to try to short gold. And yet sort of like ever, you know, a lot of traders out there were saying, Oh, it's, you know, now technically it was, I think, I don't know, 60% above its 200 day moving average or something crazy like that. You know, I get it on sort of the pullbacks with that said, you know,

Those short term traders were not focusing, in my opinion, on something really important that had happened, which is not only was Shanghai gold premiums around 2 percent and still rising, but historically post-COVID, when you've seen 2 percent plus premiums in gold in Shanghai, you're

It has been it has happened with a decline in the gold price or at best a flat gold price. Right. So you get, you know, some sort of some some sort of paper selling in the West. And then the Chinese feel like, wow, there's a great deal to be had here. And structurally, maybe there's some limits to how much is the PBOC is letting people bring in. And so you get a premium that builds up in China. And so you see these premiums. But it's always been a premium in China of two percent plus.

when the price of gold is flat to down and sometimes been down pretty notably. Except for this instance, we're seeing the price of gold, as you just noted, rising rapidly in dollars. And yet the Shanghai gold premium is also rising rapidly. And so to me, when you get these kind of correlation breaks, these pattern breaks, there's informational value there. Why is that happening? I think it ultimately speaks to

I think it speaks to the shift that I described before. And look, I also think it's an important piece of data from the standpoint of the narrative we're getting in these markets, which is from some people, which is the Chinese are running out of dollars and all we need to do is just squeeze them a little harder and they're going to just come crumbling down. And that

The problem with that narrative as it relates to gold and what we just discussed is that historically nations that are running out of dollars are selling their gold to get dollars. We saw that in the late 90s when you saw Korea and Indonesia and the Southeast Asian crisis, they were selling gold very rapidly to get dollars. Russia, 98, 99, 2000, selling dollars or excuse me, selling gold to get dollars. 2008, when oil prices collapsed, Russia sold gold to get dollars.

You saw it elsewhere in, you know, currency crisis. Sell gold, get dollars. You've seen it in America over the last 20 years. You know, you can go to the mall and see, you know, we use cash for gold, right? Americans have been selling gold for dollars. And so I think there's just when you take a step back, when you see the flows into China, it's a pretty big fly in the ointment for the, you know, the Chinese are running out of dollars and they're about to collapse crowd if, you

the Chinese are buying so much gold that they have now basically taken control of the gold price from the West, which is what that dynamic of rising Shanghai premiums with a rapidly rising price in the West, that's what that tells you. It tells you China's got control via the physical market. And the fact that they're doing that suggests that

I'm sure they are hurting with the tariffs, but they're not about to tip over because if they're about to tip over, they'd be selling gold to get dollars or et cetera. So I do think there's a number of very interesting threads to pull or tease out of the gold flows into China. If it is what you think it is, that is to say, if China is doing a lot of this buying for strategic reasons, then

just confirm my assumption here. I'm guessing that means they've got plenty of room to keep doing more of this and to drive the price quite a lot higher up. I would think so. I think the, you know, when you're hearing, when somebody tells you they want to choke you out and use their currency to choke you out, I'd believe them. And what they're hearing from the U.S. officials is that, hey, we want to use the dollar system to choke you out.

And the Chinese of the Chinese government is another one of these paradoxes that the communist Chinese government has been encouraging its people to buy the currency of freedom for over 20 years. Gold rights. Warren Buffett's father, Howard Buffett, congressman from Nebraska, wrote a paper and in 1948 says human freedom rests on gold convertible money.

And so here you have the autocratic Chinese Communist Party encouraging its citizens to buy gold for the last 20 plus years and presumably continuing to do so because we're seeing the flows. If they didn't want those flows coming in, they wouldn't be coming in, presumably. So, yeah, I would think those flows are likely going to continue.

especially because I don't think it's against the U.S.'s interests. I think the U.S., one of the, you know, we keep hearing over and over, and it's from the Trump administration, the Biden administration, Trump administration, Obama administration, China needs to stop being a currency manipulator. China needs to strengthen its currency. Well,

China is not going to strengthen their currency the way the Japanese did, which was just straight against the dollar, render themselves much less competitive against the dollar. China is, forget about is likely, they are devaluing the yuan against gold. If you look at a price of gold in Chinese yuan, it's down 50% in the last, I want to say year,

which is to say the price of gold and Chinese yuan has doubled, maybe it's in the last two years. But the point is that I think gold is being used as the pivot. And I think the U.S. government, by their actions, is saying that's fine. That works for us. We want a stronger yuan. We want a weaker dollar. Great. Let the price of gold go up in yuan and let it go up faster in dollars, excuse me.

And look, right now, the Chinese yuan I was looking at the other day, I think it's 24,000 yuan per ounce and it's whatever, $3,400 in dollars. Let's get crazy here. Let's say Trump really wants a stronger yuan and a weaker dollar to balance China being a currency manipulator. Well, if gold in China goes from 24,000 yuan to say 30,000 yuan,

And gold goes to $7,500 in dollars through the gold pivot, 30,000 yuan, $7,500. That's four yuan dollar cross rate. That's a much stronger yuan, but it is a much stronger yuan that isn't just straight devaluing against the dollar. Right.

It's a compensated devaluation from the standpoint that gold has gone up in yuan terms. It has gone up a ton in gold terms, and that allows a recapitalization via the gold holdings of the Chinese populace. All of a sudden, they're going to have a lot more money in their pockets. It will help compensate them or recapitalize the consumer balance sheet from what has happened with their property crisis or the property sell-off over

Over the last several years, it helps recapitalize their banks. It obviously helps recapitalize or further capitalize their sovereign balance sheet. And so it's a I think there's a deal to be had between the two nations using gold as a pivot to rebalance currencies and go from there. And to my eyes, both sides have been taking steps to facilitate that.

Luke, it seems to me that if what you describe is what's going on, then if you want to be a gold speculator, the best way to analyze this is to put yourself in China's shoes and say either, you know, what are their policy objectives that they're trying to accomplish? Or if you want to look at it maybe from a more realistic perspective, what are their policy objectives that they're being forced by the Trump administration to take on? And what

what is their target likely to be? Where are their targets likely to be and what they need to do with their currency? And start watching gold in Chinese yuan as your benchmark and say, well, I'm waiting for this target because I think that's what China needs to do in order to accomplish its goals. Is it possible to do that kind of analysis and figure out what

what the magic number is to watch? And if so, who's doing that? I think in broad strokes, that's, I think, if not the right approach, I think a very valid approach. I mean, I think it's a part of the approach, part of a mosaic. For a long time, you and I've talked about it. I've talked about it ad nauseum. For me, China's goal regarding gold has always been a

about a defensive nature. In other words, China has long understood the dollar sensitivity it has, the oil and food sensitivity it has. And what I mean by that is, famously, Kyle Bass went on, I think CNBC or something, and he said, look, this was probably 2019.

And he said, you know, the Chinese import whatever they, you know, X million barrels of oil per day and oil goes up every year and they have a finite number of dollars. And so as they keep growing their economy to support their debt, they're going to have to import more oil and other commodities and food. And all of those are only priced in dollars. And so at some point, presumably,

presumably oil prices keep rising over time. And when they do, they're going to eventually run out of dollars. And when they run out of dollars, they're going to have a currency crisis like Southeast Asia and the Yuan's going to fall sharply and they're going to devalue it. And it's going to be a big mess like it was in Southeast Asia in the 1990s. And I think China's goal with gold has long been avoiding that outcome and using gold to

to gain the ability to buy oil and commodities on the margin in yuan rather than in dollars. And they've been successful in doing that.

And I'm not speculating about that that's the goal with gold. That is specifically what PBOC officials said at a Singapore LBMA meeting. I've got the receipts back in 2015. So the goal of China is to internationalize the yuan. What does that mean? An internationalized currency has the ability to invoice oil and gas in its own currency. We are using gold to...

internationalized the renminbi. And so I think the goal has always been with gold, with China, has been the ability to buy oil and gas in their own currency, to a lesser extent copper and other commodities.

On the margin, not the people say, well, it's going to take them forever and you get the majority. That's not the goal here. The goal here is to give themselves another lever to be able to manage the yuan dollar cross rate, to ensure that they cannot run out of dollars because an extremist, they can always buy in yuan and adjust the gold rate in yuan to do that. And there are times on charts over the last five years in particular where

where you can see that China looks like they used gold effectively to defend the yuan. And so I think tying this all back to your question about what is the right number, I don't think the right, the focal point necessarily is the price of gold and yuan over time as much as it is the gold to oil ratio over time. Because ultimately,

With oil being priced in both yuan and in dollars, and at least China offering gold net settlement of any offshore yuan balances that build as a result of them buying some of their oil in yuan, what you end up with over time is a rise in the gold to oil ratio. And so it's fascinating that 2008,

Putin starts buying more, adding more gold reserves. The gold to oil ratio in 2008 was I think seven barrels an ounce, something like that. So seven barrels of oil per ounce of gold. Well, last week it was 55 barrels per ounce of gold or per ounce of gold. So the gold to oil ratio in the last 15, 16 years has risen eight X, which is an enormous move.

And I think ultimately, as long as you continue to have this multi-currency energy pricing with net gold settlement being provided for by China, as they've been talking about for 10 years, you're going to continue to see a rise in the gold to oil ratio.

For a simple reason, that is that gold or oil, excuse me, even though the gold to oil ratio has gone from seven barrels to 55 barrels over the last 15 years, oil is still like eight times bigger than gold. With annual production of oil in physical dollar terms versus annual production of gold in physical dollar terms, oil is still about eight times bigger than gold. So my view has long been the gold to oil ratio would rise and rise and rise as gold

as, as multi-currency oil pricing with net gold settlement gain traction. That's exactly what's happened. And so I think that price target or that, that price movement, one of the gauges of this is that gold oil ratio. I think ultimately the gold oil ratio is going to continue to rise. It's 55. Now I think it, I think it's going to a hundred over time. It might go to 200 over time, maybe even higher. But,

And because U.S. shale can't produce much below 60 bucks and U.S. shale has been 80, 90 percent of global oil production growth over the last 10 years. I don't think the gold oil ratio as it rises toward 100 or more in coming years. Again, this isn't like, you know, by Christmas kind of thing. I think it's just over time. I think the gold oil ratio going to those numbers is mostly going to happen via a rise in gold prices relative to oil because gold

Oil dropping much below 60 bucks is going to start taking U.S. shale offline, and that's counterproductive for global growth, global financial stability, et cetera. So kind of a long winded answer through the past there. But I

That's what I think China has always been trying with gold is gold is not about gold or trying to tip over the dollar. It's about trying to defend the yuan from being tipped over by the dollar and by giving themselves national sovereignty over their energy bill, which they've been able to do. Luke, it appears to me that one of the goals of the Trump administration with respect to tariffs is they want to eliminate tariffs.

income tax, not for everybody, but I'll say for everybody that matters from a voting electorate standpoint. In other words, you know, you're not going to completely eliminate taxes on the wealthiest Americans because that's who pays 90 percent of the taxes to start with. But if you can, for the most part, eliminate income taxes, you know, for all the people that are making less than a quarter million dollars a year.

That pretty much is everybody when you're counting the votes in terms of, you know, who gets elected to office and so forth. Although it certainly is not everybody from a...

capital-based standpoint. Do you think that's what they're trying to do? And if that is what they're trying to do, it seems like it would make the president incredibly popular. You know, if you're the guy who eliminated income tax by getting rid of it in the public's perception, some genius tariff thing that most people don't understand, but it seems to have worked, it's hard to ask for a bigger win than that. Why?

What worries me about this is, boy, you've done a lot more work than I have, Luke, on analyzing balance of payments and tax receipts and so forth. But it seems to me that to achieve that goal through tariffs doesn't seem terribly realistic, although I haven't done any work to it's just a hunch. Yeah, you know, it's interesting because I saw him say that the other day and my initial I guess yesterday he was he was tweeting it or truth social posting it. My initial reaction

reaction was like, yeah, right. Everyone under 200,000, come on. And so then I started noodling around and, you know, we have data, IRS data, and it shows, you know, the top 1% of U.S. taxpayers. So let me back up. Individual income taxes payments cover about half of total federal receipts come from individual income taxes.

So of that half that comes from individual income taxes, the top 1% pay about 42%, the top 5% pay about 62%, top 10% pay 74%, and the top 25% of taxpayers pay 89% of individual income taxes, which is then half of overall receipts roughly.

And so it was kind of interesting to me when I compare that to say, let's say the top, the top, what did I say? 10%. Bear with me here. The top 10%, yeah, are 74%. So top 10% pay 74%. That means the bottom 90% are only 26% of total individual income taxes.

And so the bottom 90%, if you assume 5.2 trillion of federal receipts last year, again, roughly half are individual income taxes. That's a very blunt, but that's good enough for good enough for government work. So that's roughly 22.6 trillion, right? Half of 5.2 trillions, 2.6 trillion individual income tax receipts. 26% of that are the bottom 90%. So that's,

bottom 26% of 2,600. It's only like $676 billion. And so what that tells you is if he can raise $676 billion from tariffs, assuming no other counter tariffs and no slowdown in the economy, and those are huge, huge, huge caveats, make no mistake, but just

trying to keep it overly simple, if he can come up with $676 billion in tariffs, he can cut income taxes for the bottom 90% of people to zero and be revenue neutral. Again, assuming no hit to the economy from the tariffs and no counter tariffs, et cetera. So

When you start looking at those numbers, again, I wouldn't take those as absolute concrete numbers, but what they tell you is he's not crazy on this. Like those are in the neighborhood. It is not out of the realm of possibility for him to get, you know, 676 billion in tariffs. I think that's more than what I've seen, but it's not a ton more than some of the upside cases I've seen. I mean, that's what, 55, $56 billion a month in tariffs. That's not crazy.

And in the meantime, holy cow, can you imagine being able to go to the bottom 90% of the voters in this country and say, hey, you don't pay income tax anymore. It's all on tariffs.

And so it really actually is very much a Main Street, not Wall Street. Let's rebalance things. It's very it to my eyes, it could be it's a very, very populist move. It may have issues, you know, political issues go down the line in terms of. But it's it's it it could work. The math could work. Look that simplistically.

It's fascinating because it really does appear to me that, at least with the rhetoric that he's using on this issue, President Trump...

seems to be, as you say, really vying for that electoral influence, you know, to get himself reelected. The thing is, this is his second term. So either, you know, you think he's going to somehow, you know, bring about a constitutional amendment to allow a third term. I don't think even President Trump is foolish enough to think that's possible. I know he said that a couple of times. I think when he says those things, he's just trying to, you know, coerce

cause some commotion just to upset the Democrats, but I don't think he really believes that. So why would he be doing things that seem to be very much focused on, you know, securing votes for the next election when he's not eligible for the next election? You know, to me, the Occam's razor explanation, and some of this is based on, you know, people I know that have

spent a lot of time with him is I, I, I think he really wants to do right by his electorate. The people, I think he really means what he says about rebalancing things. And, and, and this would be a huge step in that direction. And I think for him, it's legacy building. Like there's a way that all of this could go and,

And I think it's a narrow needle to thread with a lot of executional risk. But if this goes well and is managed fairly well, he could end up being like, and I'm sure people are going to laugh at this, but he could end up being on the pantheon of sort of loved presidents of U.S. history. And I think that for him is a huge deal. Like that is, I think that is what is motivating him in this case. And, you know,

It reminds me of a joke that FDR used to tell. So FDR used to tell a joke and revel in it. He said there was a paper boy in New York City and every day this wealthy Wall Street tycoon would stop on his way up to his skyscraper office and

And he would stop by the paper boy's papers. He'd pick up a paper. He'd look at the front page. He'd grump to him, you know, say, huh, put the paper back down, walk on. Next day, repeats the same routine. This routine goes on for a few weeks at a time or for a few weeks more. And finally, the paper boy summons up the nerve to ask the Wall Street titan, say, sir,

Every day you come to my stand, you pick up a paper, you look at the paper, you look at it for a second, you say, Humph, you put it back down and then you leave. What what are you looking for in the paper? I might be able to help you. And the Wall Street Titan says, son, I'm looking for an obituary.

And Paperboy says, oh, well, sir, obituaries aren't going to be on the front page. They're in the back pages is where all the obituaries are. And the Wall Street Titan says, son, the obituary for the son of a bitch I'm looking for be on the front page. And FDR would tell the story and laugh and laugh and laugh and laugh. And so my point is that.

a big chunk of American society and some of the wealthiest and most powerful people in America hated him, hated him. But he was loved by the deplorables of today, by the bottom 50, 60 percent. Obviously, we were in a depression at the time. And so, again, by way of background, I just think that, you know, I think

may very well be what the goal is here. It's not about a third term. It's not about, I think it's about

doing what he said he would do for the people that put him in that office twice and potentially establishing a legacy that, again, if it goes well, boy, it could go really, really well. And he will go down very, very favorably remembered paradoxically relative to what a lot of people think about him today.

Luke, let's go back to China and the U.S. relationship to China and where that's all headed. Something that I just sometimes I feel like I'm the only person paying attention in all of finance markets to what's going on with Chinese nuclear energy policy. They just announced another 10 reactors that they're building today. Now, admittedly, Luke, these are, you know, we're

Nuclear reactors get built over a course of years to decades. And by the time that the policy changes that I see going on in China really start to take effect, we're talking 20 years out. But I see China moving to an energy dominance that could easily conquer the world. And it scares the hell out of me. And I feel like nobody else is noticing it.

To what extent do you think people are noticing it? And when does that start to matter? You know, is it really just, well, you know, if it takes 20 years to build all the reactors, it doesn't matter until then? Or is it when the U.S. figures out that China has a strategy that's going to make it completely energy independent, where it can no longer be blockaded for energy imports because it doesn't need any more energy imports, when they figure that all out,

Oh boy, that's when things start to get wild. How does this work? What should we expect? And do you have any thoughts on Chinese nuclear energy strategy? Because to me, they're just kicking ass both on conventional and advanced nuclear. And it seems like nobody's noticing. Yeah, I mean, some of what I've read on China, one of the things culturally they have always done really well going back centuries under the emperor's

is building infrastructure and, and sort of realizing, okay, we have a problem. And so we need to, you know, we have too much water here and not enough water there. Let's build the infrastructure to move the water from where we don't want it to where we want it to improve the lives of our people. And this is a tradition going back a long time. Um, I think that

moving water from where they don't want it to where they want it to improve the lives of people is a metaphor for what they are doing with energy policy. And I think it's a counter metaphor for what the U.S. has done with energy policy, which is to say, I think they are making allowance for, hey, look at what we're using in AI to

Look how much the growth of energy is in AI and electric vehicles, etc. And we're just going to plan forward. That means we need this many by this year, this many by that year and so on and so forth. And that's I think they're basically sticking with the plan. And in contrast, the U.S. is.

saying, look, we've, you know, we can see the growth in AI, electric consumption. We can see what we're trying to do with electric cars. And maybe the tooth fairy will show up and, you know, build nukes for us on a compressed time scale because capitalism and hashtag America. And as an American, it's, it's very frustrating to watch domestically, uh,

You know, Josh, he gave a testimony to Congress two years ago. I'll have to try to find it offline. But, you know, he laid out, look, Chinese are building nuclear power plants way faster. They cost one sixth the cost of ours. And they're going to start exporting the technology, which will then also loop in economically and via energy and component dependence and expertise a lot of the world. And so, you know, I think there's two components of what the Chinese are doing. It's not just

It's many components, right? It's the energy dependent side that you talk about, which is they are going to reduce their liquid fuels dependence through it. I think it's AI. I mean, you can't be AI dominant if you don't have the grid and you don't have the generation. And the U.S., from some of the stuff I've seen, is in a position where

We, our grid, barring some miracle technology is not, I mean, forget if we want to, forget if we have the scientists, forget if how well we compete versus the Chinese on these AI type models. We don't have, we may not have the generation capacity in five to seven years. And problem with that is like if we, you know, I'm an investor in a private equity electrical distribution company.

And so when I talk to these execs, hey, how long does it take? If I wanted to build a new power plant in America now, when's it going to go live? Like 10 years minimum. Like in five to seven years, we may be bumping up against the constraints of our grid, barring some sort of productivity miracle. So you can see a different sort of there's actually an order of operations being put in place by the Chinese government.

that so far we're not seeing with the U.S., where it's, hey, we've got the dollar, we've got the dollar rails, and so we can just print money. And it's like, great, but you can't print electricity. You can't print nuclear power plants. You've got to make them. I mean, you can print the money to do it. That creates a separate issue for your bond market. But at some point, you actually have to do that. So it is troubling to me from the competitive standpoint

Because when I see, hey, we're going to reshore and we're going to bring all this back. And then I see, you know, we wrote about it for clients several weeks ago. And on March 25th of this year, the heads of the seven different regions of the U.S. electrical grid had a hearing in Congress. And they said, we are getting critical. We are in a critical stage now. We are, you know, we are going to have shortages in a few years. We need to do something, you know, if we continue on this growth of AI.

And yet, like, what are we talking about? You would think it reminds me so much of when I was February of 08. And I like I knew the financial system was coming unhinged as we speak. I was seeing it in the research in our firm. The economy was coming unhinged. And I'm watching Congress hold hearings about steroids and baseball with Roger Clemens. And it was it's the same kind of thing where you can see.

how fast the technology is moving. You can see we are in a competition regarding it and you can see the installed base now and forecast going forward and the forecast usage of those installed bases and where we are is like the U.S. is going to lose because we're not building the stuff we're going to need and we're going to bump up against our ceiling. So

There should be a lot more sense of urgency than there is. And look, maybe there's some miracle technology that, you know, that I'm unaware of and we're going to declassify it imminently. And when we do, hey, we're fine. Great. But like, if we're going to flop that Trump card and, you know, pun intended, it's going

we're starting to get late in the game to flop it. We need to flop it soon because, you know, unless we don't need wires and infrastructure and et cetera to move the electricity or the energy that's generated, then there's this, there's this order book that has to happen. And it is a, it's a, it's a long lead time process with massive capital needs and

And there's just I'm not seeing the serious discussion around it in America like you're seeing what you're highlighting in China.

Well, it does seem that Chris Wright, our new energy secretary, gets it. But I'm not sure how much they can realistically do to compete with China. I mean, China is ahead on the technology. And we are a country that, unfortunately, is not as good at large bespoke public works projects as we used to be.

And I think people just don't want to admit that reality. No, I think that's right. And that's one of the things to me, it's one of the biggest variant perceptions I see and sort of, you know, tie it back to the trade war, which is, look, if you ask anyone in New York or Washington, who's going to win, who's going to lose? Like, oh, America's going to win. We always win. And it's almost like unpatriotic to say anything else. And yet when I sit down with people out here in flyover country USA and the Rust Belt,

you know, like we wrote about for clients a few weeks ago, is a very big marquee industrial project here in Ohio. The sponsor of it or the builder of it basically has an unlimited budget. The cost is not an issue. And so like recently, a major portion of this industrial project showed up. We're talking hundreds of millions of dollars of equipment showed up and it didn't have a right part.

And so, okay, there's a scramble, get it figured out. Like, okay, well, where's, you know, which, you know, who's the supplier, who's their supplier that supplied the supplier. And so, you know, they find a few suppliers down the supplier and,

And the suppliers like, oh, yeah, that was that was that was Joe. Joe died of a heart attack last week. Suddenly he was 70. We don't know the password to get into his computer to figure out how to fix what you need fixed. And Joe was only here at age 70 because we brought him out of retirement.

Because he does something in this in the sort of skilled trade slash engineering world that we don't really train people anymore. And so we don't know what to do to help you. And this is where the rubber meets the road, where you get away from the sort of rah, rah, hashtag America, we're going to win stuff. When you get down to the nitty gritty and start going, great, who's going to weld it?

Great. Who's going to build it? Great. Who are the engineers? And, you know, Mike, Mike Rowe, the dirty jobs guy, right, who's been harping on this for years and years and decades. He's like, listen, I know exactly where all the welders are. We need to do all this reshoring. And someone said, where are they? He goes, they're in eighth grade. They're in eighth grade. You're going to if you teach them well, they'll be ready in six years.

And so that's this variant perception. It's like a splinter in my brain around sort of this whole trade war reshoring thing. And remember, this is not like some little, you know, sort of marginal project with sort of a poorly financed or capital, you know, capital constrained builder. Like this is somebody who can afford to spend whatever they need to spend. And they're getting held up by, sadly, Joe dying of a heart attack.

And now like the whole project gets held up and there's no other Joe's because you know what, who needs Joe for the past 40 years? We have the dollar. We can, you know, we can, you know, who needs to be in engineering? We can create mortgage derivatives. And like, this is when you do this for a long period of time, you end up with dollar Dutch disease. And this is, this is dollar Dutch disease. And so not only is it,

There are real physical constraints at the ground level that are simply not being discussed by people on Wall Street and in Washington because in their world, the answer is always, well, just print the dollars. And you can't print Joe. You can't print Joe's password. You can't print the welders. And so it's a very... When you look at this competition...

There is a massive gap between perception and reality. And perception and reality are going to close probably in the next few months. And when that happens, it's going to be really interesting. But I agree with you that there is...

there's a really big fundamental problem that can only be fixed with hard work and time. You know, this is not 2009 where you can have Ben Bernanke wave a wand and hit a few keystrokes and everything's okay or 2020 kind of same thing. Like if we are going to do this, there are,

There's no amount of money printing per se that can fix it. It's, yes, some money printing because you're going to need to put the bond market under yield curve control. But then after that, it's going to need to be hard work and time. It's like Shawshank Redemption, right? Pressure and time. That's what is need to be done here. And the first step to doing that is having an adult conversation with the adults in the room about that. And I'm not hearing the quote unquote adults in the room even broach the subject at this point.

Well, Luke, on that note, I can't thank you enough for another terrific interview. Before I let you go, though, please tell our listeners a little bit more about what you do at Forest for the Trees and what they can expect to find at fftt-llc.com. Yeah, sure. Thanks, Eric. We connect dots. We aggregate a large amount of publicly available information.

in an unconventional manner, trying to identify developing economic bottlenecks. And if we put out a number of different reports, if people would like to learn more about our mass market and institutional research products, they can check us out at fftt-llc.com. And as you know, I also have a fairly active X feed at Luke Groman. 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 Luke 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 Luke's picture saying looking for the downloads. Okay, Eric, what are your thoughts here on equities?

Well, Patrick, the rally has been quite impressive, needless to say, and there are plenty of fundamental arguments that you could make to explain why we could be headed back toward all-time highs. But the fact remains that we're still below, only a little bit below, the 50-day moving average.

in a market that is learning to cope with White House policy uncertainty, including sudden and large important policy change announcements with no advance warning or hint as to what's coming. Now, that could mean the risk of tail events on either side, both big moves up or big moves down. So I see plenty of good arguments for why we could get all

new all-time highs in the next few weeks. And I can also imagine plenty of scenarios that take us down to 3,000 on the S&P in a week.

So frankly, I don't have a lot of strong directional conviction other than Vol trades are the place to be here. What I am delighted to say is that I was filled just about an hour or two before recording time on the final tranche of my hedge position. So I'm now fully hedged in case we're about to take a turn south. I'm not predicting that's happening. It's been several weeks now, though, since the Trump administration hit the market with a thousand point downside curveball.

So I suppose maybe we're overdue for the next one. On the other hand, that next curveball could be an upside curveball. So let's wait and see what happens. As Lynn Alden said, it is a headline-driven market. So I think where the market goes next will depend in large part on what the next headline says.

Well, Eric, I do think that there are downside risks and Trump will continue to be a factor moving forward. But I do believe that if we do see that kind of downside that you're talking about on the markets,

It is going to be far more about whether or not the indications are that we are moving toward a U.S. economic recession and therefore something that impacts corporate earnings and can see corporate earnings contractions, which is usually something that is needed.

for there to be a bigger and deeper bear market. So what are those recession risks? Well, I do like looking at the poly markets, betting markets for U.S. recession risks because that's where people are voting with real money. And we have that now at a 66% chance of a U.S. recession after that advanced GDP number was released.

And so recession risks are growing. And that is why things like the jobs numbers coming out tomorrow are going to be really important. Are there going to be continued indications that we're moving towards that economic recession? Now, on page three, I have that chart of the S&P 500. And we can see now

that we've gotten to that 50-day moving average and we've now entered the Fibonacci retracement zones of the prior decline. Now, on the short-term reactions to the MAG7 earnings will drive flows for the next couple of trading sessions, but the

bigger puzzle to solve is that is this a bear market rally? Because if this is a bear market rally, we shouldn't see much progress beyond, let's say, 5,700 or 5,800 on the upside. And so the question here is that will we in the coming weeks see

Thanks for watching.

which I think if we see the tone of our concern come from the FOMC, that somehow the market risks are growing and that they're going to have to tilt dovishly moving forward, that is going to be a

I feel a big factor that could drive the next major market move. To me, the asymmetry is completely skewed against the bulls. There's arguably a limited upside potential, though the trend can continue, but limited upside potential with a lot of things that can go wrong off these levels. And so to me, lightening up into this strength is a prudent thing. All right, Eric, let's move on to the U.S. dollar index.

Well, I guess the most bullish thing we can say is the dollar index is holding up 99 this week. I don't know what else to say other than we're overdue for a dead cat bounce and maybe there's good reason to expect one sometime soon. 100 was an important psychological level on the Dixie. So whether or not we stay below it now that we are below it will be an important tell for whether or not a relief rally is in the works.

I remain strongly of the view that the dollar will keep falling until it falls as far as Trump and Besant want it to. And I suspect that that number is a lot lower than 100.

Well, on page four, I have that dollar index chart and we did definitely break last year's lows on the downside, which is really making the downtrend of the U.S. dollar the predominant one. But we are very oversold on the dollar and looking for it to retrace maybe even back to 101 or 102 temporarily just to unwind oversold state interest.

is still the path of least resistance. We talked about it last week's show, and I still think this is the path of short-term least resistance. But if we see that the dollar bounce is very weak, it fails to follow through, making no real progress above there, staying below the 50-day moving average,

then maybe later in the month of May or even early June, we could see the U.S. dollar re-resume its bearish downtrend. And that will be the kind of puzzle to solve. But on the short term, I think the bounce can continue. Now, Eric, let's move on to crude oil. What a move. What are your thoughts here?

Well, Patrick, OPEC is signaling that they can live with lower oil prices and they're not going to pursue any aggressive hiking campaigns in order to try to stave them off. Okay, that opens up a whole hornet's nest of follow-on questions.

Why are Saudi Arabia and OPEC suddenly taking this change of policy? Is this a concession that they're making to President Trump? And if so, what's the quid pro quo? That's the biggest question on my mind. And if this is not something that they're doing for President Trump's benefit, why would they suddenly be wanting or welcoming lower oil prices? You're ready for my great

The grand fundamental brilliance on this, I have no clue. But I do know who to ask, which is Dr. Anas Al-Haji. I have his WhatsApp. I'm going to do my best to get a full briefing on what's going on. He is one of the very first people that the Saudis will contact.

tell whatever messaging they want the West to hear about this event. So I'll try to get an update from Dr. Anas, and we'll get that before next week's show. Our producers have also reached out to try to get him back on for a Macro Voices interview as well.

For now, my early instinct is that this is a very important signal that we need to dig beneath the surface to figure out what the important reveal is likely to be. Is that a quid pro quo? If so, what's the quid pro quo? What is the Trump administration giving up in order to get lower oil prices? What deal did they make with MBS? Now, I'm just making guesses, but my friend Dr. Anas Al-Hajji has personal contacts both in OPEC and

and in Saudi royalty. So he'll get to the bottom of this, and I'll get full details for you for next week's podcast. Well, Eric, the crude oil price action is incredibly weak. It's one of the ugliest charts out there in the markets.

All the rallies are failing below Fib zone, staying below its moving average. What were previous highs act as overhead resistance, very quick to roll over. On a closing basis, we're already breaking to a lower low. A number of the different measured moves all leave the vulnerability for us to temporarily trade down even as low as $50. And I want to say temporarily because I'm not so sure that

that we would stay down there. You know, there's a lot of reasons why I think oil can be back in the 60s and trading within these ranges over any intermediate period of time. What is the short-term path and the trading risks on the short-term? Definitely to the downside, definitely vulnerabilities all the way down towards $50 on there. And you don't want to stand in this thing's way until we see where the bottoms really start to get banged out.

All right, Eric, let's move on, though, to gold. Patrick, I remain cautiously bullish for much higher gold prices before we eventually reach a final top for this cycle. But as I've said before, we're into the treacherous parabolic phase now where it's easy to lose your shirt if you get the timing of the cycles wrong.

So I'm frankly most hopeful for more consolidation and less upside price action. Let's shake off that last parabolic thrust up and get this bull market back into a healthy setup for a long and sustained rise without a blow off top.

reversing the major trend, which is the fear that I've had here. So I'm really hoping that we're beginning a consolidation phase that's going to allow us to shake off these elevated RSI and stochastic levels and get this market set up for a sustained move to higher numbers.

Well, as we're recording this, we're getting a 70 plus point down day as we slowly heading down towards 3200 on gold. This is actually a really important point here around 3200 for me. It's a Fibonacci retracement zone that 50 day moving average is slowly creeping up.

This is the typical buy zone in bull trends and this is why this is such an important moment. We still haven't seen whether the buy on dip trader is going to come in here but that's certainly the thing to watch in the next two or three trading sessions.

Will $3,200 be defended? Will the buy and dip traders reverse this and get this back above $3,300 in a short window of time? This is important because if we see $3,200 hold and we see we're back above $3,300 next week sometime, then the window opens right upside to the upside again for a push up to $3,500, $3,600 on the upside.

And that's the bull case. Now, if $3,200 doesn't hold, then in my mind, that indicates to me that gold has entered some sort of a more intermediate consolidation that could take two or even three months before

Maybe we could see numbers as low as $3,000 in a consolidation. But I'm not going to build the kind of analog for that kind of a correction yet. My first approach here is that the $3,200 will be bought on dip. So we're going to watch closely whether or not this support line holds in here. All right, Eric, let's dive into uranium here.

Well, Patrick, we've seen plenty of false bottom calls in this treacherous market in terms of investor sentiment. But several uranium issues moved and closed above their 50-day moving averages this past week, and that was for the first time in more than five months. So at a minimum, we're seeing at least beginning signs that the bottom might

be in and that a new bull market might be beginning. But I want to defer to you, Patrick, as the technical analysis guru in the house. I know that you've cautioned many times that while the fundamentals might be impeccable, there just wasn't a valid technical case to buy uranium miners when the prevailing trend was clearly and obviously down. Patrick, what technical signals do you need to see from the uranium markets

to tell you not only that the bottom might finally be in, but also that there's enough upside momentum and technical accumulation patterns that are forming and starting to kick in in this market, which would make you feel like, okay, now it's finally time to load up and start buying for the next major bull run in uranium. That's a great question, Eric. So let's start off on page seven where I have the Sprott Physical Uranium Trust and

And what we see here is that this is the first time it's attempting to close above its 50-day moving average since rolling over back in late fourth quarter of last year.

Now, what we want to watch is whether or not we see signs of a basing or bottoming formation, all dips being bought, it beating key technical hurdles. We want to see that there's some new accumulation occurring and a good basing formation developing. And on page eight, I have the chart of the global ex-uranium ETF, the URA ETF.

And from a technical perspective, I always find it a very good positive initial sign when a rally occurs that wipes out the entire last wave of selling. And so when we look in the last few days of March into April, when the URA had its big drop from $25 down towards $20, we've now seen that entire sell-off completely reversed.

Now, what typically then you want to see from a trading perspective is that when we pause here and correct that we don't see it make lower lows. We want to see that a new accumulation has begun and that the trend, the big downtrend that's been in place now for six months has in some way or another reversed trend.

And that's something that I think will take a deep into the month of May for us to sort. One way or another, there was a very ugly sell sequence and it now is taking a break and starting to consolidate. So this is some initial positive signs that will make the second quarter pretty interesting here in the uranium space.

all right eric i want to wrap up by on page nine looking at the three months so for futures i particularly wanted to go out to december 2026 more than a year and a half out

And this is a great place to look at what the market is anticipating for short-term rates to be, such as the Fed funds at that point in the future, a great way of kind of gauging how many rate cuts are coming in. And so what's interesting thing, what's interesting to me here is that

Going back even two, three years, we've seen this kind of 3% level around the 97 level act as a pretty significant overhead resistance. But we're now in a situation where recession risks are rising significantly.

And the idea that the Fed may be engaged in policy error that could result in the market at some point having to price in more rate cuts when they are forced to give a dovish tilt.

This is a really interesting resistance level to watch, especially considering we're going into the FOMC meeting. If we see that the tone from Powell has shifted and the markets start to price in more,

more dovish Fed, we could see this potentially even break this three-year resistance line and potentially make a move even toward 98. Now, will we see that? I mean, there's a lot of things that need to happen for that to play out, but that's one of the technical things I'm watching is certainly going to continue to feed the recession risks if that was to happen.

Folks, if you enjoy Patrick's chart decks, you can get them every single day of the week with a free trial of Big Picture Trading. The details are on the last pages of the slide deck or just go to bigpicturetrading.com. Patrick, tell them what they can expect to find in this week's Research Roundup. Well, in this week's Research Roundup, you're going to find the transcript for today's interview as well as the chart book we just discussed here in the postgame, including a number of links to articles that we found interesting.

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

for our weekly distributions. If you have not already, follow our main 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 spelt with a K. 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.

That concludes this edition of Macro Voices. Be sure to tune in each week to hear feature interviews with the brightest minds in finance and macroeconomics. Macro Voices is made possible by sponsorship from BigPictureTrading.com, the Internet's premier source of online education for traders. Please visit BigPictureTrading.com for more information.

Please register your free account at MacroVoices.com. Once registered, you'll receive our free weekly Research Roundup email containing links to supporting documents from our featured guests and the very best free financial content our volunteer research team could find on the internet each week. You'll also gain access to our free listener discussion forums and research library.

And the more registered users we have, the more we'll be able to recruit high-profile feature interview guests for future programs. So please register your free account today at MacroVoices.com if you haven't already.

You can subscribe to Macro Voices on iTunes to have Macro Voices automatically delivered to your mobile device each week free of charge. You can email questions for the program to mailbag at macrovoices.com and we'll answer your questions on the air from time to time in our Mailbag segment.

Macro Voices is presented for informational and entertainment purposes only. The information presented on Macro Voices should not be construed as investment advice. Always consult a licensed investment professional before making investment decisions. The views and opinions expressed on Macro Voices are those of the participants and do not necessarily reflect those of the show's hosts or sponsors.

Macro Voices, its producers, sponsors, and hosts, Eric Townsend and Patrick Ceresna, shall not be liable for losses resulting from investment decisions based on information or viewpoints presented on Macro Voices. Macro Voices is made possible by sponsorship from BigPictureTrading.com and by funding from Fourth Turning Capital Management, LLC. For more information, visit MacroVoices.com.