MacroVoices #485 Jeff Currie: The Joule Order
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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 485 was produced a day early this week on Wednesday, June 18th, 2025 in observance of the Juneteenth holiday. I'm Eric Townsend.

Carlisle's Jeff Curry, formerly Goldman Sachs' chief commodities strategist, returns as this week's feature interview guest. We'll discuss what Jeff calls the new Joule order, and that's Joule spelled J-O-U-L-E, the unit of energy, not the gemstone. And we'll also discuss why Jeff says there's really no limit to how much higher the price of gold can go with the current macro backdrop.

And be sure to stay tuned for our postgame segment after the feature interview. Patrick will have his chart deck and I'll also have an update on what caused the sudden spike up in uranium prices on Monday and where I think the market is headed from here. And I'm Patrick Ceresin with the Macro Scoreboard week over week as of the close of Wednesday, June 18th, 2025.

The S&P 500 index down 70 basis points, trading to 59.80. Markets finding heavy resistance above after a historic two-month run higher. 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 up 37 basis points, trading at 98.94, bouncing off that 98 support line. But will it hold longer term?

The July WTI crude oil contract up 729 basis points, running at 73.12. Geopolitical headlines continue to drive daily volatility. The July Arbob gasoline up 556 basis points to 228.

The August gold contract up 123 basis points trading at 33.84. The July copper contract up 83 basis points trading at 485. And uranium up 650 basis points to 74.55. The first meaningful rise in months.

The U.S. 10-year Treasury yield down one basis point, trading at 439. And the news to watch next week, we have the European and U.S. flash manufacturing and services PMIs, the Fed Chair Powell testimony, the U.S. GDP, and core PCE price index.

This week's feature interview guest is Carlisle's Jeff Curry, formerly Goldman Sachs chief commodity strategist. Eric and Jeff discuss capital rotation, commodities and energy rotation, gold, energy policy, and more. Eric's interview with Jeff Curry 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 Carlyle's chief strategist for Energy Pathways Investment, Jeff Curry. Jeff, it's great to get you back on the show. It's been way too long. You just penned a great article that is all about capital rotation and why you think we're in one now and Europe is going to be the big benefactor. Tell us more.

Well, it's a pleasure to be back. And the piece was focused on European defense in the sense that it's going to create a need for a large-scale investment in old economy, asset-heavy type industries. And the real catalyst to this was the lifting of the debt break in Germany.

Now, this piece that we put out is a follow-up to the new jewel order that we put out a few months ago. And in the new jewel order, we made the argument that the Bretton Woods system is breaking down, the U.S. is retreating, and this is going to have a significant impact on the dollar market.

energy, and military investment. And this piece he put out yesterday was really about the military investment component. But I want to go talk about this breaking down of the Bretton Woods system and the retrenching the U.S. And the way I like to think about it is if the dollar was the heart of the system,

And the oil was the blood going through the veins of the system. The U.S. Navy was the muscle of the system. In other words, for the last 75 years, the U.S. has used its military might to protect global sea lanes for global trade. The dollar was used as the medium of the exchange.

And when you think about if you had protected sea lanes, you will start importing oil as your primary energy source. It is the most portable, the most storable. And as a result, we had supply chains that stretched all around the world with previous adversaries, and the biggest commodity being shipped was energy. That's your strategically most important commodity. And as the U.S. retreats,

It brings all of these into play. And I like to call it bombs, barrels, and bombs. The bonds are the dollar, the barrels are the oil, and the bombs are the U.S. military. All three of these are under pressure. And talking about this now in the context of the capital rotation,

is as the U.S. retreats, Russia is getting more aggressive. And as a result, the situation in Europe, it is now existential that they need to make these kind of investments. And when we look at the potential return in old economy, they're undervalued tremendously. Europe specifically is undervalued by about 40%.

And all the complaints about Europe being the superpower of regulation, what did it get out of it? The lowest debt to GDP ratio. It has the highest level of income and wealth equality of the major regions in the world. And instead of having crippling market concentration, like most parts of the world,

It has consumer surplus. So it has all of the requirements and plus a steep value discount to track that capital. And what we saw going into the events in Iran and in Israel on Friday is the dollar was weakening tremendously. Part of that is we saw the outperformance of Europe. I'd like to point out since chat GPT,

was first announced in November of 2022, Europe has outperformed the U.S. by 20%. Meaning what's going on in Europe right now is likely bigger than AI. In fact, AI's CapEx since that announcement has been 500 billion. German defense alone is going to be more than 1.5 trillion already announced. So this is big. And one last point I want to make here is that when we think about

Silicon Valley and AI.

They are simply an extension of the U.S. military industrial complex. It started out with DARPA, creating the internet that created AI. Think about Silicon Valley. Where does the name come from? It comes from the use. They needed to come up with a material that would not melt in a B-70 bomber and a Minuteman missile. And they had to came up, Fairfield Semiconductors came up with the silicon chip. And that's where it came from.

So thinking about why does Europe not have a Silicon Valley? It never had military industrial coal. So this is huge. And we think it creates a productivity boost there. And again, going back to the steep valuation discounts. And I think the point being is I think this rotation is all around the way. And if you put it in context of...

previous rotations, we saw one in 2002, 2003 when capital left the dot-com boom and went to BRICS. Again, you had overvalued tech and undervalued commodities in asset-heavy sectors. And then the next one was 2014, 2015 when money left BRICS and went back to Silicon Valley for the MAG-7.

And again, it was overvalued commodity heavy asset plays in China and undervalued tech in the U.S. Now we're kind of in the same point here where you have undervalued heavy asset commodity sectors

against relatively steeply valued tech sectors. So this is probably a process that's going to go on for a while and is pretty consistent with things we've said in the past. But I think the catalyst here is really European defense and the potential there with the lifting of the debt break. They have the spare physical capacity. They have industrial capacity. All the ingredients are there.

Jeff, I'm absolutely fascinated by your attribution of the German debt break as causation for this, because everything you're saying makes perfect sense to me. I was expecting you to say this was all because of President Trump's unusual personality, personality

bold policy initiatives and style issues, which some politicians in Europe have taken exception to, I've perceived this capital rotation as a lot of institutional capital rotating out of the U.S. and into Europe because they're becoming uncomfortable with the U.S. government leadership and its policies.

You're saying it's a totally different cause. Actually, I don't want to attribute it all to the German debt break. That was the culmination of events recently that occurred. But you can't attribute it to any president in any foreign capital anywhere. These are longstanding trends.

that have been in place now for decades. In fact, I would argue that the 0% interest rate environment masked the severity of the imbalances. And I think the surprise here is not that the U.S. is retreating, is that why did it take so long for the U.S. to retreat? And, you know, the way I like to think about it is, you know, the world was considered

Two things characterize the world over the last 35 years, and I would argue even 75 years. The world was safe, and capital was abundant, and it was cheap. Those two assumptions are out the door right now. This is my point. It doesn't matter who really was in power. I have to even point out, going back to Obama threatened this retreat.

Trump 1.0 threatened this retreat. Biden threatened this retreat. Trump is finally executing on it. And why is he finally executing on it? It's not a coincidence that he steps into office with nearly a 5% 30-year yield. It's too expensive to maintain the status quo. And I think that that reality is

has stuck. But the bottom line is Europe has a better debt to GDP ratio. Europe has better income and wealth equality, you know, in terms of it's got room to run. And so I would argue it's these longstanding trends of higher cost of capital, the retreating, forcing a retreat of the U.S.,

which makes the world a more dangerous and more expensive place. So it's now existential that Europe does something about it. So that's, you know, I would say, you know, Trump is being really the agent of the change that the trends were put in place long ago.

Jeff, let's talk about all of this in the context of commodities, which is your specialty and what it's going to mean. As you said earlier, energy is the most important commodity to the economy. What is all of this going to mean? You know, it seems to me like we're talking about this conversation in the context.

of a capital rotation in equity markets out of U.S. and into Europe. But it seems like the related conversation is the question of, is the petrodollar system either breaking down or being replaced or being re-architected or what's happening there with respect to the U.S. needing to persuade foreign countries to invest in its treasury market? I think that this is

Probably the single most important question. That's why I call it bombs, barrels, and bombs. All three of them are extremely interconnected. You know, the question, your point, let's just start, that is the petrodollar system, as you point out, bombs, barrels, and bombs. That's the way the system worked basically from 1971 until now. When we think about, let's start with the bombs.

I think one of the biggest shifts here is your marginal buyer of U.S. treasuries has shifted tremendously. It was the Chinese and the Japanese, they're both done. The Germans are now going to have to spend on their own defense. You lost your foreign bid. Then you lost your foreign bid.

Then when you look at big U.S. commercial banks, they're not really interested in owning bonds because they're afraid of the capital depreciation that could occur if the interest rates go up. So that's really going to leave you with pretty much U.S. retail as that new bid. But I don't think we completely understand what the implications of this are.

Because that foreign bid that you were referring to as being, you know, the petrodollar system, that has been there for 75 years. It's now gone. And we're going to find out where that new bid's going to be. But at the same time, when we think about global trade...

is there's going to be less flow of goods moving around, you know, as dollar terms that are going to be creating those foreign dollars to buy those. That was the petrodollars, to create those foreign dollars to buy those treasuries. And I think this goes to a point, you know, I'll probably talk about nuclear energy and energy transition.

is, you know, everybody's pronouncing the energy transition as dead or whatever. I want to emphasize the energy transition started in 1973 with the first oil crisis. And it went lightning fast when people were scared.

And I like to point out when security is put above affordability and put above the environment in compassion, you end up with really good outcomes. Higher returns, faster transition. And that was when France built all that nuclear power because they were terrified of the security of their energy. In fact, I like to point out France has the lowest carbon footprint ever.

and carbon intensity of any major industrialized country in the world, and it didn't get there 'cause it wanted to save the planet. It got there because it was scared. It was driven by security and by fear. So this transition to security is going to limit the interest in owning oil. Why didn't you wanna own oil in the '70s and the '80s? It's because you were scared

of being exposed to supply chains in the vagaries of moving oil around the world. If you built nukes, and by the way, solar was built and during this time period, it was innovated in that time period because you wanted to be self-sufficient, not moving big tankers of oil around the world. And so I think this is going to accelerate the energy transition. And, you know, you and I have talked in the past, Eric, nuclear power is the

solution here because you don't have to move. Moving a small amount of uranium around is a lot safer than moving a lot of oil. So the oil is going to get hurt in this process for the same reasons as it did in the 70s and the 80s. And then finally, going to your point on bombs,

is the U.S. is not going to be sitting there protecting these global sea lanes. And so when we think about the world, we've got wars of conquest, weaponization of war,

global supply chains. We saw the Chinese do it with rare earth metals a few weeks, you know, last week, which forced the U.S. administration's hands in that trade war very quickly. So as the U.S. retreats, you know, your point about this Bretton Woods system or the petrodollar system, we got to come up with a new solution to replace it. And I think that, again, Europe's going to be in a central position to be able to develop that new global framework that we're moving into.

Jeff, I want to drill down on this need you're describing for Europe to, I'll say essentially to architect a replacement for the petrodollar system, which everyone has grown frustrated with. It seems to me like we used to have a system and we don't have a replacement yet. There is no existing alternative. I agree with you that Europe has to create one.

Seems to me like we used to have an old system before the new system that was called gold. The way it used to work is exporters of crude oil and other commodities would sell their stuff to the rest of the world essentially in exchange for gold. They keep the gold at the end of the day. They get richer.

It was the U.S. that sort of changed that and said, no, we'd really like it much better if you were to treat U.S. Treasury bills as being better than gold. And they kind of talked him into it. Seems to me like there's an argument to be made here that we could be on the cusp of gold, maybe initially just getting called up as a stand in, if you will, until that new system comes about. But maybe that doesn't.

ends up fomenting a return to a gold standard. Yeah, I mean, it's to your point here,

is it was the Nixon shock in 1971 that forced that transition off of the gold standard into the petrodollar system that we've been in now for quite some time. And I'd like to point out those three legs of the stool, the bombs, the bonds, and the barrels, all three of them are interconnected. One of the legs falls off, the other two also fall, which is why it's critical to replace it. Now, to answer your question,

Gold was already replacing all of this, going back to the Russian invasion of Ukraine when the U.S. seized the Russian central bank assets, because that became very clear to everyone that those U.S. treasuries and those U.S. denominated assets were no longer sacred.

And if you were an EM central bank at that point in time, you started moving out of U.S. treasuries, out of U.S. dollars and into gold. And that's essentially what we've that environment we've been in since 2022. And I, you know, in the fact of the matter is I don't see that.

where the ending gold is in terms of the upside. It doesn't have a natural price elasticity demand. Yeah, that exists in the jewelry market, but for monetary reasons,

ownership of gold, there is not that price elasticity. And we're seeing that dynamic play out. So to answer your question, I don't see us ever going back on the gold standard or anything like that. But as the U.S. retreats and you lose that balancing system of U.S. treasuries and energy and trade,

gold is going to, and I put crypto into that mix as well. And that's part of the reason why the two have performed so extremely well. I'm not going to go out on a limb and talk about what the new environment's going to look like. I would actually argue it'll probably be a bunch of pockets of different types of treasuries. And by the way, when you think about how well

German boons have traded through this, they're acting like they have the exorbitant privilege right now. I mean, Germany just announced a 1.5 trillion plus euro spending package and their bonds didn't even move. The U.S. attempts to pass a new budget in the 30-year yield soared above 5%, which tells you, you

that passing of the torch or moving into that new world. We're probably heading that direction already. But I think it'll probably be a more balanced world where you see, you know, the potential for cross-border bond issuance in Europe. Let me remind everybody here, Europe did this last week. They issued those safe bonds for military investments. So we're moving in that direction. I mean, we got a long ways to go. But in the meantime,

I think gold is going to be the biggest benefactor. I mean, you've already crossed $3,500. I don't know, $4,000, $5,000. I don't know where we're going to go on gold. All I know is I want to be long, hang on for the ride until we start to get more information. Jeff, as we talk about where gold is headed and where it can go and so forth, it seems to me like the obvious question is, well, wait a minute. Digital currency is kind of a big deal right now for a lot of good

good reasons. Nicolas Maduro had the crazy idea of creating a oil-backed digital currency. Frankly, it was a great idea. It was not credible coming from Venezuela and Nicolas Maduro. But imagine if that had been the Gulf Alliance and that was Saudi Arabia and UAE and Qatar that were jointly basically saying, look,

our replacement that we're creating for the petrodollar system is the petro currency system. It's a digital currency that the Gulf Alliance is going to manage, and it's going to be what we're going to replace the U.S. Treasury with. That's what we're going to be investing all of our oil profits in. We're going to create a new digital currency for that purpose.

Seems to me like something along those lines would be the smartest way for those Gulf countries to kind of assert power and negotiate with the United States in this new world order that we're forging. Does that make sense?

Absolutely makes sense. And I think one of the biggest issues facing crypto or whatever store of value we see as being the dominant one is the issue around custody. I mean, bottom line, you try to move dollars from Singapore to Vietnam, be my guest, that's really difficult to do right now.

And things like, you know, stable coin or something like that, they're a lot easier to move. So the question is, whatever type of store of value, whether, you know, and I also agree with this idea of, you know, somebody like group like the GCC countries in the Gulf creating that oil backed coin is the question.

The question is, who's your counterparty? What's your custody risk? Do they have a really high credit rating? Something of that nature, because a lot of this is going to be corporates wanting to move balances around the world. And so having that security to know that your capital is in a very safe custodian, I think is going to be critical here.

And so, you know, is it a JP Morgan type entity that could launch something like this? I think that question around the custodial relationship, I think, is going to be. And that's always been my view on on.

on crypto and even gold is it's got longstanding custodial relationships in your ability to move it around and trust the entities that are involved. And that took decades, if not centuries, to develop. And I think that that's probably the biggest open question here. And here's the other point, too. If you end up with an asset

that has got restrictions around all of the different central banks around the world, you're under the same difficulty of trying to move the crypto or what coin or whatever it might be as you had previously with the dollar. So I think I agree with you and I think that the idea is clever, but I think the issue is what kind of custodial relationship would be installed around whatever dominant cryptocurrencies

that crypto or coin ends up being the store of value. And let's talk about how that process would work, Jeff. Is it possible for the Gulf Alliance, say, to come up with a system, design something? Is this about designing a custody system that works and meets the needs of a custody system? Or is this really more about a geopolitical negotiation with the United States for a

We're changing the game here. I think you need to have both and they go hand in hand. The reason why the U.S. dollar was in such a strong position post-World War II, one was there was no other alternatives.

than the U.S. It was the only region of the world with buildings still standing in industrial capacity. And by the way, a lot of the tariffs and the GATT and everything was put in place to help the rest of the world rebuild, force those dollars through New York to create. The World Bank was the development bank for this, and the IMF was the monetary policy around it.

And that was the environment we lived in for four generations. So you need to create the type of trust in the system that then leads to that custodial relationship. So we're definitely on the cusp of having to find this, but I don't think we're in any place to say that we can talk about what the new replacement will look like. That's why I think moving back to, and I think anybody listening, go, Jeff, that's impossible,

about Europe issuing European cross-border bonds as being one of these substitutes. They have moved toward a few weeks ago, but likely, and I think the right answer here, it's going to be a basket. Think about what is a stable coin? It's just a basket, a bunch of

of different types of risk and assets. And, you know, as it ends up being some U.S. dollar bonds, some European bonds, a GCC type coin, and it ends up being something that is more diversified. And that was one of the key conclusions we came from our new jewel order piece, where we talked about security driving the energy transition. You want to own a basket of different types of energies.

And I think here, when we think about what's going to replace the dollar, it's probably going to be a basket of a bunch of different assets so that you diversify.

that credit risk and you diversify the financial risk that they're embedded in in these different parts of the world. So most likely it'd probably be a basket of these different solutions. Or it's a digital currency, which is backed, hard backed by a basket of different assets, both crude oil and gold potentially. It seems to me, I mean, digital currency for so many reasons is superior. It is the

the right thing to do next. I thought governments were going to usurp the crypto boys and essentially steal their idea and take it over and say, no, this is going to be U.S. government controlled. Didn't work out that way. I was surprised they didn't do that, but it didn't.

I was surprised, too. I thought so. I was 100 percent believer in that view. I don't. And by the way, I'm still kind of go back to it. Well, it seems to me like the next obvious thing is it's a fait accompli that China and Russia are new global strategic partners. I think that's going to last for decades. They need a new non-dollar currency. They've been struggling with, you know, Sergey Glazyev has been trying to figure out how to make that happen for 20 years.

So they're working hard on this. All of a sudden, you've got this changing oil landscape. All it takes is for Xi and Putin to call MBS and the UAE boys up on the phone and just say, hey, guys, look.

let's do an asset-backed digital currency that has both gold and oil behind it. It's going to be invincible. That's the only way anybody's ever going to take on the U.S. dollar, which has had the hegemony over the global financial system for almost 100 years now. The only way we're ever going to take it on is a really strong digital currency that's backed by both gold and oil. Let's do it together. I mean, it's...

the perfect team of people. It's the perfect solution. Why wouldn't that work? And it seems to me like once the U.S. government figures out that that's a real risk, that they're really going to do that, all of a sudden, I think the priority of Fed coin goes up a lot.

Yeah, and I think you're going exactly the logic why I think we'll go back to our original thesis that the government, particularly the U.S. government, usurps all of this. And I think once they start to see a legitimate, very large scale, trillions of dollars of market cap challenger, they'll get really serious about it.

Well, let's take that exact concept and apply it to energy policy because I see the exact same thing happening there. I think what's going to happen is energy is kind of the most important thing for the reasons that you cited earlier. China is developing an absolutely fantastic nuclear energy policy, which is going to give them energy dominance in the future. I'm absolutely convinced

convinced of that, the question is going to be, okay, where does it leave them with respect to the rest of the world? And I think we're forging a new world order, which is going to be defined by energy policy. And it makes perfect sense if you think about China's need to assert itself as saying, look, we're going to have more power than the U.S., more economic power. We want that power. We

All it takes is the combination of a digital currency system that is backed by a combination of gold and oil and a policy from China that just says we're going to continue to focus on peacefully being smart about energy policy and getting a better, stronger economy as a result.

I hate to say it, Jeff, but the way I see this going is it keeps going. We keep screwing up. We keep botching this and not noticing that we're not competing like we should in energy policy. Then we eventually realize how big of a risk it is and we nuke them just because we can't

chance letting them get ahead. It doesn't make me feel like we're the good guys in this story. Is that where it's headed? You know, I think you highlighted, I think, you know, the most critical development is China's focus on energy security. When we look at the U.S., it has energy dominance.

And it does that because it's endowed with enormous amounts of oil and gas reserves. And by the way, I like to point out that someplace like Texas has got a lot of solar, sun, and wind. So it's got everything out there, kind of like what the Middle East has as well. And it's now exporting gas.

By the way, for the first time, after World War II in 1946 is when the U.S. became energy dependent and the whole world became dependent upon oil sitting in boats traveling around the world. By the way, pre-World War II, everybody was energy independent. So that dependency started there.

And with the Bretton Woods agreements in 1947, 48. And by the way, when did the Bretton Woods kind of end was when they became energy dominant and exported it, which really occurred right after COVID.

So we're clearly in a new environment. But I think the one is China, as you pointed out, they have been driven by energy security for 25 years. They didn't develop cutting edge EV technologies, nuclear technologies, solar and wind because they wanted to save the climate. They did because they were focused on energy security. So everybody understands that when you look at the energy transition story.

It started in 73, was driven by the fear of running out of oil. Peak oil was, you know, we're going to, supply is going to peak and come off. They were concerned about climate back then, but they thought it wouldn't matter because you're going to run out of oil. That happened up until the shale revolution there because, uh-oh, now we have too much of it. We better come up with an idea of peak oil being peak demand. And that's when you got

the Paris agreements. And then it became, you know, we're going to run out of oil and the environment drove that decision. Now we'd argue it's peak oil being driven by, I'm not going to, I won't be able to get it in trades to Danes.

But I think the key point there is the Chinese were driven by that security decision going way back in. They're light years ahead of the West in these different technologies. You look at it, whether it's BYD, by the way, here in London, there's BYDs all over the roads now.

You know, so it's growing quickly. And I think that dominance is going to be critical. Now, let's bring it to your point. OK, so they get the energy dominance and that's going back to your old Bretton Woods system. And you had the barrels and the commodities driving that global trade. Now, the one caveat about the U.S.,

or China ever being in U.S.'s position to be able to create that dynamic of owning that reserve currency

is you need to have, you need to be an importer. That's what made the U.S. special in this. It was importing all those goods being produced by other players in the world. It was willing to take them in. That, it was critical. And that's what created that exorbitant privilege in that U.S. consumer to be able to consume unlike any consumer ever in the history of mankind.

China, in the more isolated world we're moving in, I'm not so sure China can ever be in that kind of dominant position that the US was because you gotta import everything. And for the most part,

The U.S. was the primary consumer of all that. That's part of the reason why, you know, the motivation behind these tariffs and everything else is those imbalances were by design. They weren't a flaw. And can China ever create that same type of imbalance in the modern world? I think it'd be really, really difficult.

Which goes back to that point. I think it's got to be, you know, your idea that the Federal Reserve wants something that is, you know, a hybrid of a bunch of different ones. I don't know, but I would be really suspect if China could ever, they can dominate in energy. And by the way, the other point, and you and I will probably get to nuclear technology. If the rest of the world doesn't wake up to this, they got a serious problem.

This is like the railroads in the United States in the 1800s. When they connected the Pacific with the Atlantic, it was game over for the rest of the world.

If China gets to the point they can install all this nuclear capacity plus renewables, their marginal cost of energy goes to zero. It's game over for the rest of the world until they can catch up. So this is existential for the rest of the world. But I think my main point here is, you know, even if, you know, they get to that point, the world can't really look the same in that reserve currency of being like a dollar because they aren't going to be taking everything in.

And balancing a current account deficit via, you know, a goods trade account imbalance with a current account imbalance in the capital account going the other direction. That's what the Americans did in, you know, a very unique environment.

I want to challenge this a little bit, Jeff, because I don't think it's a question of will China or could China. I think it's a done deal. I think China has already succeeded at doing the research and the planning from everything I can see. They've got the energy strategy figured out.

out in spades. It's going to take him a good solid decade plus from here to implement that before this is realized. But I think it's a done deal. I think this is a zombie story that China is already set irreversibly. I wouldn't say irreversibly. You can always have a nuclear war. But barring some profound outside, you know,

changing force. I think China's already done the good work that they need to do in order to put themselves into a position of economic dominance over the rest of the world for the next 100 years. I think it's just about 10 years away. The one caveat I'll give to this, let's go back to Europe. They

They've had a lot of stumbles recently, but places like Germany, they're at 60% renewable capacity. France was the global leader in nuclear power for so long. They were up to 80% of their grid being nuclear power.

They get their acts together, create a more favorable regulatory environment. They could start to play catch up rather quickly. So I agree with you 100 percent. China is light years ahead of the West on all of this. And it's a warning shot, should be a warning shot to every Western government. They really need to focus on this.

But I would say Europe is, you know, they got really far in this. You know, they got all that installed capacity. They got problems because they can't store it. The grid is inadequate.

But I think that, you know, the basic ingredients are there and the core capacity is there. The knowledge is there. So, again, I think they would be in a good position to be able to start to challenge China. I'd like to point out when we look at security driving everything, energy security is going to drive, you know, it's driving that decline in petroleum imports in China.

Energy security is what got Europe to where it is. The fact that the U.S. is endowed with all of this, they're probably going to be the last one to realize the importance of being self-sufficient with these low-cost, marginal technologies like nuclear and renewables.

But yeah, in general, I agree with your point. If they don't realize this, how far along China is, they got serious problems in the future.

Jeff, before we close, let's tie all of this together and just talk about your outlook and forecast for various different commodities. We haven't even talked about copper and other base metals like iron ore is yet. Why don't we start with the energy commodities, oil and gas and so forth, precious metals, base metals, just to run through the list. Where do you see all this stuff headed? Okay. Yeah, let's start with oil. The

The consensus view, I think it was like six months ago we were doing this. The consensus view then was a mega surplus coming. Six months later, it's still not here. And six months before that was a mega. The consensus view is we're going to be swimming in oil. And the market had even priced in a contango on the back of the curve where it had priced in a huge surplus. The bottom line, inventories are really tight. Demand surprises to the upside.

The drill baby drill has turned into cut in capex because of the emphasis on lower prices. So drilling is off in the U.S. Production looks to be rolling over in the U.S. Russia has not been spending on greenfield, just brownfield. They probably have a few hundred thousand barrels per day of capacity left, and then they're likely to go into decline.

Even their own government says they're likely to go into decline. Non-OPEC has disappointed. So the supply is not there. Demand is surprising to the upside. Inventories are tight. Backwardation is on the front end of the curve, extremely tight. And the market is short. And now you have potential for a disruption in the Middle East, given everything that's going on in Iran. I'll take the upside on oil from here.

And because you got to get a point to where you start drilling again. And, you know, at this point, we're just not there. And then finally, on the OPEC spare production capacity, I want to remind everybody, nobody's ever seen that six million barrels per day. It's all speculation.

And you look at places like Saudi Arabia, they've cut rigs tremendously. You know, one of my favorite points about Aramco, and this was in first quarter, was they had a $31 billion dividend that they were paying the government against $9 billion of cash flow. That's not sustainable. So they took the dividend down to like $19 billion against $7 billion of cash flow. That's not sustainable ever. And so when we look at the environment,

on the spare production capacity. One other point here is despite the fact that we've seen the increases from OPEC Plus announced now, it's going back to April, exports have remained subdued.

It's not translating into new inventory. Yeah, people go, oh, there's floating storage out there. Yes, yes, there is floating storage out there, but it doesn't offset the tightness that we're seeing on shore out there. And so, you know, I would be very cautious of that bearish view in oil right here. And on copper, I've been saying, you know, that this thing's got to go to the upside. One of the biggest headwinds has been the dollar.

That's no longer a headwind anymore. You've moved a lot of material into the U.S. for the tariffs. Protect, you know, once the copper tariffs go into place after the Section 232 investigation, you see it in LA. It means the rest of the world doesn't have a lot of inventories.

And as a result, as you start to see, you know, recovery in demand, and the one caveat, not only was the weakness in the dollar or the strength in the dollar, it was a headwind of copper. Also, you had the property markets in China. No way I'm going to say, you know, that, you know, the outlook's clear right now on Chinese property. But the bottom line is,

Chinese development has fallen behind demand. You're going to need those properties again. It's probably too extreme. The CAPEX, global CAPEX, green CAPEX demand for copper, it hasn't gone away. So, you know, there I'm quite positive. It goes to this whole idea of an asset rotation back to asset-heavy, commodity-intensive, old economy-type industries, and copper is evident to that. One last point on copper.

is even the data center AI demand in the US, what's the biggest constraint on the hyperscalers growing more is that they need to have access to transformers. Two thirds of the transformers are imported from copper elsewhere in the world. All, you know, a transformer is just one big chunk of copper.

You get the point there. And then finally, on the precious metal side, on gold, there, nothing has changed. You still have a lot more upside there.

driven by diversification out of the dollar into some other type of asset that's less exposed to the vagaries of the U.S. political system. And it's going to be coming from central banks. That's why when you look at spec positioning in gold, the specs are not super long in gold, but the price keeps going up. These are institutional buyers of gold. Things like central banks that need to diversify their reserves. I don't see that stopping either.

So again, I want to be long commodities here. And if you just look at relative valuations, everything else, monies are cheap.

old economy asset heavy sectors are cheap. So, you know, that's part of our view of a asset rotation. All of these groups are going to be the big benefactors here. Jeff, I can't thank you enough for another terrific interview. Before I let you go, please tell our listeners a little bit more about what you do at Carlyle. Everybody kind of knows you as the Goldman Sachs commodities chief from way back when. So tell us about the new role, what services are on offer and how people can follow your work.

Great. Well, I mean, we put out the piece, the new jewel order, where we talked about security being the primary driver of the next, the third stage of the energy transition, where peak oil is peak trade. And you can find that on our, you know, the Carlyle website. We published a piece yesterday about the asset rotation in the Carlyle Compass, and we'll be putting out a piece more

More, you know, future that the new Marshall Plan that is focused on, you know, this idea of European defense as being, you know, that next leg that we need to focus on. Going back to bombs, barrels and bonds, the new general order was about, you know, the new energy system that's going to replace oil. The new Marshall Plan is going to be about the need for a new bombs related system.

hierarchy. And obviously, there's a story about bonds here that you and I were hinting at, Eric, and that's going to be one of the next. But I think the key point here is I think these three sectors are going to be the biggest investment opportunities

going forward because we know we need to replace them. And that's really a focus that we put our attention here in Energy Pathways at Carlyle on. And again, most of the research and work that we do here, you can find on the Carlyle website. So I really appreciate that, Eric. 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 Jeff 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 Jeff's picture saying looking for the downloads. All right, Eric, let's start off with your thoughts on these equity markets.

Patrick, I don't really have a strong directional view here. What I do have is a view that this feels like a good opportunity for buying left tail hedges. So that's what I'm doing. All right, Eric, while you adjusting your hedges makes a lot of sense here, because to me, the market is asymmetrically skewed against the bulls. We had a 70 day market rally that was almost 1300 S&P points, 26%.

on the upside in a short period of time, the market has reached a point of exhaustion. That doesn't necessarily mean that there's a huge immediate downside risk. But as we now approach, as we see on chart number two of the S&P 500, the previous highs, the risk of resistance along those previous highs is very high. So maybe there's a

100 S&P points upside potential if the news pivots that way. But at the same time, we are long overdue for a market correction. Now, does that mean the market correction has to come right here, right now? Well, first off, a typical market correction is about 5%. And so you're talking about close to a 300 S&P point drop. Now, a

About 150 points lower from here, around the 5900 area, going into the June 30th is the option strike for the JPMorgan Whale, which is a very large fund that has a huge open interest to the tune of $20 billion of notional exposure on S&P call shorts.

Now the dealers have to hedge this out which creates a gamma pinning and therefore it acts like a magnet drawing markets to gravitate to it. So the idea that this month in June we have a big downdraft doesn't make a lot of sense but what would certainly be a very natural thing here is for the market to drop 100, 200 S&P points and get sticky around that level going into the month's end. At that stage

The market could snap back in early July. But really at that point, July earnings and other factors like that are going to come into play that's going to ultimately decide whether we have a third quarter market correction. And so really at this stage, it's more about the markets coming in here and settling down from after such an epic run. And then we'll see later in the month how things are shaping up. All right, let's move on to the dollar here. What are your thoughts?

Well, we had three daily closes below 98 this week. That pretty much confirms that the primary trend is in fact down, even though we were just barely above 98 at recording time mid-session on Wednesday.

I say the primary trend is and will continue to be lower, but we're also coming due for another counter trend technical relief rally. So don't be surprised if it's a bumpy ride. Well, there's no denying that the primary downtrend of the U.S. dollar is still intact. Lower highs, lower lows, every rally immediately fades. So there's no disputing that. But we are also incredibly oversold.

And we now tested a very key level of the April lows. So we'll establish something like a double bottom along here. Well, one of the things that makes me believe that it's far more likely to be range bound where we rally back to May highs and then trade sideways is the fact that there isn't a broad participation in the currency side. At this stage, the euro did break down.

to a higher high and the pound sterling has been trending but the yen has settled in and a lot of the other currencies are coming in major support lines and so when we're talking about a broad basket like the dollar index it's far more likely here that it's going to get chewed up in a trade range than it is to make a big trend move so right now I'm siding towards support lines holding and just a bounce to the top in the range

I think it's going to take a lot of time to determine if there's going to be, let's say, a U.S. dollar bull trend. I think it's way too premature to even start speculating on something like that. All right, Eric, let's move on to crude oil. What are you seeing here? Well, Patrick, what happens next with oil is definitely going to depend almost entirely on how the geopolitical situation unfolds with Iran and Gaza and Ukraine and everything else.

Certainly, we're at elevated prices right now, so there's room to come back down if this all settles down. And there's lots of room to go much higher if things really get dicey from here. So we're going to have to watch the news flow to see what happens. My term structure trade is performing beautifully, and I'm pleased to say that I'm getting a tailwind from the way that this geopolitical situation is developing.

Yeah, that's the tricky part here, Eric. Like down along the bottom when I was looking for that double bottom and the flagging formation for a potential breakout or short squeeze, that was before all of this news came out. And it was a blessing as the oil long came in pretty solid. But really at this stage with oil having already moved $10, $12 off that low, we now are sort of in a

mid-level where exactly like you're saying geopolitical news flow is going to drive the next move making it a very challenging market to try to place the next trade and so if there's continues to be escalation or the straight shut down you have a scenario where that could obviously get oil prices up towards those highs of January near $80 and

at the same time if things settle down which is not really looking like that a test of 65 dollars in the downside could happen next i really don't want to make a high conviction call on oil i loved it a few weeks ago for the setup it was a great trade at the time really hard to make a call on it here okay let's move on and touch on these gold charts

Well, Patrick, I'm actually delighted that the pace of upside price action has slowed down here. It feels more sustainable to me at the rate we're going now than what it felt like a month ago. As Jeff Curry said, I'm long and I have my seatbelt fastened for whatever comes next.

I think there's plenty of room here to go much, much higher on price. But there's also plenty of room for President Trump and Secretary Besant to throw us another curveball that takes the market down a couple hundred bucks before we move higher. So prices are definitely high here, probably headed higher. And if they go significantly lower, I think it's a buy the dip opportunity.

On page five of that chart of gold and it's testing major highs, but so far every dip is being bought supported along an ascending trend line above all its moving averages and the rest of precious metal markets are hot.

As far as I'm concerned, we have to respect the prevailing trend. And here's the key. A breakout above that overhead resistance of all those previous highs, just below 3,500, opens the window for an immediate breakout. So I'm sure the most immediate upside target is this kind of 3,600, 3,700 level.

bigger measured move is all the way up to $3,900. So let's see if that breakout happens because when something makes a fresh new all-time high like that, it really opens up room for momentum and the type of momentum we're seeing in these other precious metals market may just

over. So what am I talking about when saying that? Well, on page six, I have that silver chart, which is now broken. It's a six month trade range where it was putting in its highs near $35. Now that we've broken to 52 week highs, the key whenever you see a break to new highs is do the bulls hold it. And here we are like a week later and the

bulls are holding it and even pressing higher highs. This is a legit breakout on silver. And it really now has the window open for moves all the way to $39 or $40 on the upside. And then on page seven, I have that platinum chart. And the platinum has become one of the hottest markets. It went from being dead in a two, three-year trade range here on the

Page seven, I have a weekly chart. So we're zooming out, looking close to a decade here. And you can see this prolonged multi-year consolidation. And with this breakout here on the upside, we have now broken to decade highs. This rip is just nonstop.

and the squeeze is well underway. It'll be very interesting to see how much they can build on this, but don't ignore this because there's lots of room for them to tack a couple hundred more on the upside of this, just purely on momentum. But the interesting chart on page eight is Palladium.

And Palladium has come to life in the last week or two, gaining some traction from the entire precious metals complex, picking up steam. But again, I have a weekly chart here. You can see this vicious trend.

three-year bear market where we saw a 60-70% wipeout of Palladium prices and we're now just seeing it starting to turn up. Is there a new Palladium trend starting? It's very premature to already call it a new bull market but this is how bull markets begin and this is all of our listeners should be watching closely as to whether or not this is where the action is beginning.

All right, Eric, spot uranium prices jumped $5 higher to $75 on Monday, and suddenly everyone's talking about the spot off-market capital raise. What's going on, and why the sudden excitement about uranium? Well, Patrick, let's start with how spot works. It's not an ETF, and it doesn't really operate like a closed-end fund either, because a closed-end fund...

unlike an ETF, can trade at either a premium or a discount to its net asset value. Now, the way Spot works is it's basically a closed-end fund, so it can trade at a discount to its net asset value. It can't really trade at a premium to its net asset value. And the reason is that the fund documents are structured to allow the fund itself to issue new shares as soon as it starts to trade at a premium to its

nav so that basically created a trading pattern which has emerged over the last few years where basically the smartest pro traders wait for spot to get almost almost up to nav then they short it aggressively they wait for it to get back down to about a 10 or 12 percent discount to nav and they buy it aggressively then they just rinse and repeat that same cycle

So they're long on the way up, they're short on the way down, and they may be delta hedging those positions to eliminate their market risk by taking an equal and opposite position in the spot market if they're physical traders. So there's lots going on that's kind of manipulated this and frustrated people.

so many people, almost everybody that I've talked to who's very knowledgeable about trading who understand who really understands this market is saying the same thing, which is we've got the spot price, which is really determined only by very thin trading. It's not really the primary market, but the spot price has fallen substantially below the term price. And that's the reason this market has been stuck in broken. We've got to do something to get spot back,

above the term price in order to get the market to really take off. Well, if we've got all the smart pro traders, every time Sput gets almost back up to trading at no discount to its NAV, well, that's the moment when it's really important that we allow it to trade up

to its NAV because it's when spot's trading at its NAV that it can start stacking more pounds of uranium. The way that they issue new shares is that they use those new shares to buy physical uranium on the physical spot market, and then they keep it. They don't sell it again. They just stack it and hang on to it.

So in order to get spot back into the mode where it was a couple of years ago, where it was buying and it was actually the speculative interest among traders buying spot, spot in turn buys physical metal that pushes the spot price higher. That gets more excitement going. The market continues to feed on itself and it moves higher and higher.

we got into this crazy trading environment where the spot price is broken below the term price just because it's a thinly traded market and because sentiments in the wrong place.

how do we get back to where we need to be? What are we going to do to get back? Well, it seems that a bunch of really responsible and ethical traders noticed this problem and said to the operators of the spot trust that's broad, look guys, we'd be happy to consider participating in a direct private placement, not at a discount, which is the usual way that private placements entice investors into the market, but

At NAV. Why would we do that when we've had the opportunity in the last couple of months to buy at a discount to the NAV? And we know we probably will in the future because we want to see spot actually buying physical in the market, not just trading up and down and changing its discount level, but actually buying more physical uranium in the market.

That seems to be the motivation for this. And I'm going to suggest that retail investors listening kind of take a buy spot for the team campaign under advisement. Obviously, what's better for you is to wait till spots trading at a discount when you buy it. You had an opportunity two months ago to buy it at a 15 percent discount.

But if you buy it at a discount, it's not going to do anything to help move the spot price back to where it needs to be to really help this market take off. So for investors who are able to, and I'm doing this myself, I recommend that you consider if you're adding to your uranium positions as we get a little pullback here, do it by buying spot. That's U.U or U.UN are the ticker symbols, depending on whether you want to pay in U.S. dollars or Canadian dollars.

by buying at the market while we're trading up here at NAV, your buying is going to allow Spot to buy more physical uranium, and I contend that's going to help to really get this market moving. I think that's the reason they did this capital raise, and I think that we could help it by adding some buying support, not only institutional investors who have already pre-subscribed to Canaccord's bought deal financing, but

Anybody else who's buying on the screens, if you choose to buy spot rather than one of the other uranium shares, while we're at this critical moment in the market, it's going to help everyone else. So that's the do-gooder PSA for this week's episode.

The trend really has turned around. We've seen a prolonged 15-month bear market in uranium prices that have gotten it basing out back in April. And now we're finally seeing price action that is legitimately demonstrating a potential new bull trend getting underway at this stage recently.

We've been waiting for the actual uranium spot prices to finally start participating. And it really could be the beginning of that right here, right now. Patrick, before we wrap this week's episode, let's hit that 10-year Treasury note chart. Yeah, finally, I want to just touch on those 10-year U.S. government Treasury yields. And here in the post-FOMC, we have the 10-year Treasury yield relatively unchanged and flat in a very tight trade range today.

We really have seen the long bond and the 10-year really consolidate into a trade range. It'll be very interesting to see what the next big move is. But right now, this tight range is consolidating and is not showing its hand. I'll be looking for a breakout above those yields of $4.60 if we see some sort of bond stress. But at this stage, it's not a given. The

Though moving on, what is interesting is on page 11, I have that three months SOFR futures going out to the December 2026 contract. Now this is looking at the Fed path essentially for the next 18 months. And currently they're pricing in three and a quarter percent interest rates.

in going out 18 months. The thing is here that the Fed is in a situation where they continue to stubbornly keep interest rates unchanged, certainly creating stresses with Trump. And the question becomes, is there going to be some pressure or is something going to break that is going to force the Fed to pivot more dovishly and force this chart to start pricing in an extra 50 or 100 basis points of cuts

that the market currently isn't got in there. This continues to be an interesting trade setup, and I think it's one that I'm going to continue to focus on in the weeks and months to come. 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.

and we're always looking for suggestions on how we can make the program even better. Now, for those of our listeners that write or blog about the markets and would like to share that content with our listeners, send us an email at researchroundupatmacrovoices.com, and we will consider it for our weekly distributions. If you have not already, follow our main account on X at Macro Voices for all the most recent updates and releases. You can also follow Eric on X at

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.

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