MacroVoices #455 Daniel Lacalle: Is The Trump Trade Over?
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This is macro voices, the free weekly financial podcast, targeting professional finance, high network individuals, family offices and other s sophisticated investors. Make robots is all about the brightest minds in the world of finance and macro economics. Telling IT like IT is bullish h er barish no holds bar. Now here are your hosts eric tow and Patrick season A.

Macrovoice as episode four fifty five was produced on november twenty first twenty twenty four. I'm eric tenant trust chief economist Daniel luca returns as this week's feature interview guest, Daniel and I will discuss the trump trades, whether they're over or just starting and what comes next for markets.

And on Patrick sassa with the macro score board week over week as of the close wednesday, november twenty thousand, two thousand and twenty four, the december S P five hundred futures down one hundred and thirty one basis points, trading at fifty nine, thirty seven. The market has now retraced half of the gains of the post election rally will take a closer look at that chart and the key technical levels to watch in the post game segment, the U.

S. Dollar index up fourteen basis points, trading to one of six sixty three, consolidating at two year highs. The january wti crucial contract up forty seven basis points, trading at sixty eight seventy five IT remains in a primary downtrend, but consolidating at support lines established over the last three months.

The january r bob gasoline up two hundred fifty eight basis points, trading at one ninety nine. The december gold contract up three hundred eighty basis points, trading at twenty six fifty after a quick correction, has started to work its way back towards twenty seven hundred. Copper up three hundred and forty nine basis points, trading at four fifteen.

And while we bounced, it's still deep in a correction testing key support lines. The uranium upper hundred twenty eight basis points, trading at seventy nine thirty in the us. Ten year treasury yield down four basis points, trading up four forty one key used to watch this week as friday's european and us flash manufacturing and services pm s.

And next week we have the U. S. Preliminary GDP, the core PC Price index and the fca meeting minutes.

This week's feature interview guest is trusted chief economist and best selling author Daniel akai. eric. Can Daniel discuss the U.

S dollar geopolitics, terf s. Trade wars and more. Eric interview with Daniel luka, I is coming up as macrovoice continues right here and macrovoice dot com.

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

Joining me now is tressie chief economist and fund manager and of course, best selling author, Daniel luca. Daniel IT feels to me like maybe the various trades, whether to be a dollar north or gold south, the things that happened in reaction to the election of president elect donal trump feels to me like maybe those trades are running out of steam.

What do you think? I think it's probably run too fast. And we need to at least take a little bit of time to analyze whether the strength of the U. S. Dollar is going to continue and particularly the very a complacent view of equities, considering that the earning season is coming and that there may be some a chAllenges, particularly in the russia two thousand, which has had a phenomenal bounds thanks to the election trade. I understand that there's a there is a strong element of fun flows.

I I witnessed in different competitors and friends that uh uh there was A A conscious decision to h get into bonds with, uh, higher duration ation, a reduce exposure to the united states, increase exposure to asia and maybe to the euro area. And that obviously has has worked horribly. no.

So so there is certainly a double wmi right now happening on the one side, people are balancing their portfolios to earn over weighing the united states and reducing those exposure that I just mentioned. And at the same time, the sort of uh uh in case h anyone misses out uh the fear of missing out of a of a very aggressive change in the economy. I don't think we can expect a very aggressive change in the economy, let alone in the earnings profile short term.

And therefore, we need to be a little bit cautious about that. Maybe the dollar, which has been a huge underweight among investors, is the one that probably has uh, some room to go from where we are today. And we may see some at least coming down in the equity and the and the more, sort of check local socks。 Let's talk a little .

bit more about the U. S. Dollar in specific IT touched one on seven that looks like on wednesday a clearly, it's taking a breather here. Does that mean we're just catching in our breath before you know the next push higher we go in all the way back to one sixteen or whatever that previous cycle high was? Or do you think that was at one or seven?

Uh, well, I think that it's reflecting a couple of things and not just the trump trade, it's certainly one of the main drivers. But we must also remember that the dollar started to recover quite fast uh, already uh h when what we were seeing in the europe area and in japan was the evidence of persistent inflation and weakening economic growth. Now the dxy are ultimately seventy percent euro and a yen.

no. But what i'm interested in is the strength of the U. S. Dollar, the trade weighted nominal basket.

Now, uh, because what that is shown is that the strengths has been significantly higher and that there's been unable mediately opening of the gap between the dxy and this and the basket of the nominal trade weighted A U. S. Dollar index. And that shows basically that the dollar strength in relative to the currencies with which IT trades the most and strengthening faster than a relative to the euro and the and the end. So I think that, that probably shows that there is more room to go in the dxy.

Remember that there was A A big shot in the market h against the dxy based on the idea that the euro area was bottom ing uh, down and there four things were going to start getting Better, that the japanese, a weakness of the year was over because of the back central bank of japan policies. So there was a lot of, let's say, more desire than reality in the trade on the side of the euro and the yen. However, what has happened is actually the opposite.

Now what has happened is that the demand for U. S. Dollars globally has has started to go up instead of down.

And that the chAllenges of the of the central bank of japan with the yen continue despite the the sale of billions of of U. S. Dollars and the euro area economy is, is, is, is a disaster, an unmitigated disaster. And there's nothing that can be done quickly. Short term.

Geopolitics heated up over the weekend with president biden announcing that the us would authorize the use of us attackers missile systems to strike targets deep inside of russia. Now, of course, the red line that putin drew was not so much biden making that statement, but what biden has just authorized ukraine to do would be crossing that red line. Putin specifically said, I don't have the date that he said IT in front of me.

Unfortunately, he said, if ukraine were to launch american missiles into russia, which is something that biden has just authorized them to do over the weekend, that would mean, as far as russia is concerned, that the U. S. And russia are at war, and that russia would respond with the use of nuclear weapons.

So putin laid a very clear red line in the sand, saying, we're going to respond with nuclear weapons if we get hit with these kinds of strikes. Biden has just authorized zille skii. If he wants to go ahead and do that, he can do IT.

At least that's my understanding of the news. And I should also mention for listening ers, we're recording just before the european open on monday. So Daniel and I don't have any news is to how the markets have reacted to any of this yet.

We only have the the news flow over the weekend. What do you think this seems like a big deal? Gold is differently bouncing in reaction to IT. Where is this headed?

Well, I think that it's it's a very dangerous move because um it's certainly not advisable for reim administration that is on the way out to make drastic decisions about its position in a in a war that has been going on for a prolong period of time. Furthermore, it's not the most logical decision when the uh when the policies of the french and the german are actually to try to find a some level of common ground that will allow negotiations.

So I think that, that is in its sales quite concerning. I think that the other concerning element here is why accelerate the geopolitical tensions when elections have passed is basically almost like trying to trip over and h make decisions that will affect the next administration even though there has not been a transition of power. So that is dangerous in itself because it's also if the russian government and the and and the ukraine government perceive that there is a window of opportunity, uh, because there is a transition period and the ukraine government perceives that this is an opportunity to do things that prior seem to be very difficult and the russian government sees that this is a window opportunity because in a transition period, the U.

S. Government is doing things that they were not doing before the election. Then IT can get really heated. And that's why I think what i'm saying, the futures this morning um markets are quite choppy and at the same time gold is coming back. It's it's logical now uh, IT does not make any sense whatsoever for the biden administration to make such a such a lead in terms of the escalation of the conflict that uh basically contradict everything that they had been doing and that nature had been doing and that the european countries had been doing in the past seven months. It's it's really staggers no IT seems like the like IT almost seems if we were to be suspicious, like biden wants to make a final decision that is going to uh escalate the conflict to a full blown war, hopefully this will not happen. But I think IT is certainly very, very dangerous.

I'm very concerned about that two denial. I would love to hear the counter argument. Of course, the right wing of the the online discussion about this is saying that biden has intentionally done this for no reason other than two sabotage.

President elect trumps promised that he would end the war within the few first few weeks by escalating IT to a major military potentially nuclear conflict during the lame duck session before inauguration day. That's the kind of thing that having been born in the united states, I really don't like that kind of talk unless it's true. And i've really, really like to hear the counter argument to say, no, that's nonsense because can you fill in the because .

I think it's difficult, but let limit try to make the case of why I don't think IT is uh that I think that biden wants to end his tenure with a geopolitical decision that will phase him in history as somebody that sort of advance the position to end the uh the conflict in the way in which he and the democratic party and the and the abiden administration and general perceive that should be done.

I think that is basically a sort of last hora type of decision, not basically trying to sort tech or maybe um not try try to sabotage but try to sort of make very clear what that the biden administration did see the the war and the the conflict as IT is right now as the only solution. I either there is no no possibility of negotiation, but I think is basically you I think it's more likely than what we are seeing. And basically is is is president bite and trying to make something, let's say, that is going to be perceived by the future voters of the democratic party as the right thing to do at the right time, no matter what knows, try to present himself as somebody that continues as he tends to say, to do the job.

okay. It's difficult for me to understand .

how doing this decision at this time.

right?

Let's do our job .

and stay focused on financial markets and out of taking sides on the politics. Let's assume that what you're just said is right, this is not a sabotage effort, but rather this is a case of president biden feeling very strongly that his patriotic duty to his country is to see through what he started and to do the right thing, which he believes is to empower ukraine.

And perhaps what he sees is he feels that ukraine is about to be abandoned by president electrum p, and he wants to come to ukraine's aid before that happens. That's about the nicest spin I can manage to put on IT myself. Let's assume that that's the case. And what would IT mean for financial markets that presumably gold looks IT does IT mean gold his bottom does IT is IT mean it's time to pile back into gold here? Um what other consequences in applications will this have .

on market that would certainly unwind the long euro trade fertik ated on the idea as A D, C, B is going to be David and the economy is bottoming out. I would certainly take positions in gold now that investors can take the opportunity of the recent small correction to. To purchase the some gold, which, which works very well as a sort of cushion to chAllenging geopolitical environment.

And certainly, the other element that I would be interested in looking at is the energy spec from no, I think that this is going to be very positive in terms of stocks to a for uh, the energy complex, both on the renewable side and on the fossil fuel side. Now certainly that is uh, what I would be looking at. I would certainly be very aware uh, and reducing exposure to european banks and certainly reducing exposure to european industrial.

Now what about oil itself?

Well, I think that the great thing that we have now is, is a tremendous understanding of how oil has been reacting to geopolitical events. And I think that what we can see is that the the the fight between oversupply and geopolitical tensions, where IT does, certainly is to leave a comfortable bottom at which oil Prices sort of settled even in an environment of weakness of demand or weakening economic growth in china is set.

So I think that geopolitical tensions have been generating this sort of support level for oil Prices that help invests. At least understand that it's very unlikely that we are going to see a prolonged bounce in oil Prices because of geopolitical tensions. Geopolitical tensions set a bottom but not a ceiling considering the oversupply and the under level of weakness of the manufacturing sector globally, that is certainly hurting h demand growth.

And that's why OPEC reacted that way in the in the past in the past meeting. So therefore, I think that it's it's a very good trading opportunity. Oil no said you certainly can set some of a sort of A A bottom around the seventy three dollars a brand and move between eighty and that level and take a short term bets.

According to news flow coming on the geopolitical site, I don't think it's going to rise to nineteen ninety five hundred dollars a barrel because of the even if the if the geological tensions increase. We also must remember that the already very, very weak manufacturing sector and industrial sector globally would get even weaker or so. Demand is is playing in a very significant role in the Price formation these days. So I would say that it's it's more of a trading opportunity. But certainly, if things escalate the way that we have been talking about, I would I would see oil Prices moving back to the resistance level was set with the seventh of october attacks.

Now the stage appears to be set that if you put yourself in the lensky shoes, presumably he knows that once president trump takes office in january, that likely zeeland ds, he's going to get a lot less support from the united states. So he's presumably going to want to do whatever he's going to do as quickly as possible while he still can. Well, he's still able to use U.

S. Weapons to his advantage and so forth. That could mean a rapid escalation of whatever happens next.

And it's happening at the same time of year, which in past years, europe's economy in particular was extremely vulnerable to an energy Price shock. How is that true again this year? Or is europe more resilient? Because people saw this coming?

I don't know. Because people saw this coming up, because europe is taking, uh, important preemptive policies to reduce IT, but because mild weather and storage are going to come back to to help the europe area and the european union instead of policy. No, uh, storage is very, very strong.

And right now the level of storage in the in european and countries is uh, reaching record levels. So that is is going to mitigate the impact. Obviously, storage doesn't solve everything.

But the other thing that is certainly helping and is is that is that is already an exceedingly mild winter and IT is expected to be uh a mild went or throughout, therefore, just like in the energy crisis of twenty twenty uh one twenty twenty two, where we probably will not see A A significant disruptions in terms of supply because of those factors. However, the european union has done nothing to really strengthen its energy supply chain. It's basically just relied on the fact that U S L L N G.

Liquefied natural gas was going to continue to to come, that the nigerian, algerian gas was going to continue to flow into europe without a problem. But h tensions like this, and certainly what you've just mentioned, if ukraine decides that they need to do everything quickly and as much as they can, then the likelihood of chAllenges to this, to the supply of gas are likely to increase very, very quickly. no.

And obviously, the european union is not prepared for for another energy crisis. It's already germany is already suffering from the misguided decision of shutting down the nuclear terminals. And it's going to be quite, quite a quite a problem, uh, certainly of an economic problem. So maybe the supply problem may not arise because of the storage levels.

However, the economic problem is certainly going to arise because what has happened in the last four years is that we have seen gas Prices, natural gas Prices go through the roof because of the ukraine war, and then come down very, very quickly because of the supply of liquefied natural gas from the united states, another, another, another countries, and the very weak demand from the industrial sector. However, what's interesting is that in that period, what we are talking about is the spot Price that we see in markets. However, what industries, what citizens are paying, I has basically remained very, very elevated.

no. So the economic problem is piling up. The uh european union is basically uh almost giving up to the fact that this is going to pay a significant a significantly higher Price for energy and that is going to continue to be erode competitiveness and disposable income of families. So uh, the problem I think is not going to be one of A A sort of short term abrupt crisis, but a prolong ged crisis, which is what we are, uh, living right now.

Now the official statement from the White house was that this was in reaction to north korea sending troops to russia. I'm not even familiar with north korea's military capability. They certainly don't have any aircraft Carriers.

How significant is the north korean participation? What is in north korea is is rumored to be at least mostly A A nuclear state. We know they have nuclear weapons.

We don't know how capable they are of delivering them long range with. Is, is this a major destabilizing event where we need to worry about the U. S. Ending up at war with north korea as well?

I don't think it's going to be the U. S. Ending up with the war with north korea. But but I think of the pile administration is sort of uh analyzing and at least concluding is that if north korea sending troops to the ukraine to support russia, that means that china is entering in the conflict full blown because north korea is a subsidize state by the chinese government now is is completely inviable as as a as an independent state so nobody can believe that north korea sending troops because they have just decided to they have certainly received the OK from china now so I think that maybe the position of the Better administration is that this is a sort of uh indirect um way of stating the china is entering the ukraine war in a sort of round about way in terms of the change uh, for russia and it's a availability of equipment.

Uh technology forces such a north korea, to be fairly honest, means nothing is is is look across to think that north korean troops or north korean military equipment are going to make a significant impact for russia that has one of the strongest um if if not one of the most most diversified as well a military equipments and and and systems in the world now. So I don't think that bringing north korea to the picture makes a big difference in terms of the of of russia's capability because they already have more than strong capability and and is proven to be that way. I think that IT is probably the the the understanding that this has been approved by china. I think that, that is probably what has sort of changed to the position of the of the administration.

I think that that connection that you just made to china approving of this is a perfect segway to the topic of trade wars because president trump, needless to say.

has had A A very colorful .

campaign talking about how the word tariff is his favorite word in the english language, to the point where some of his followers have have even suggested that he ought to abolish the income tax in in favor of a new system where we replay taxes with tiffs. Needless to say, that was really setting the stage for what I thought before.

All of this happened would be a pretty darn tense moment when trump took office to sit down with sheening soon there, after after having campaigned on a platform that was all about tariff is the best word in the english language. I thought trump really had A A tough job ahead of him to to smooth things over with sheemale didn't get any easier just now. Where is this headed? What is he going to mean for Marks?

I think that it's likely to continue to a drive markets in a very different way depending on the indices. Now I think it's you know, I I would not want to be overweight the emerging market index. I certainly would not want to be overweight to the european and index and banks in particular and the bifocal between the united states and chinese indices are going to likely persist.

Uh, you've mentioned something that I think is is very important, a trumpery negotiator, but it's going to be very difficult to negotiate with this added sort of barrier on the on the table now. So I think that what this means is the idea that tariff s don't have an economic impact in the world is basically impossible to defend. Now tariffs do have negative implications for trade, for economic growth and for productivity and for productivity growth.

Tariffs are not inflationary because they don't imply more units of currency being issued, and they certainly mean more demand for us. dollars. But terriers are not the, are not the, uh, sort of a magic one that is going to solve everything and allow the U.

S. To abolish all taxes. The fiscal problem of the u of the united states is significantly larger than that, and IT comes from spending mostly. So what I think is that trump is going to use tariff as an negotiation tool or as a, uh, revenue generating tool if negotiations work in favor of the united states and mutual beneficial agreements, then tariff s will be limited. But what a is very unlikely happened in my view.

And and considering what is going on on the geo l on the g political front is that there is going to be any way in which tariff are not going to be implemented in the case of china. And negotiations may happen with some of the of of some of the trade in partners, but I don't think that there's. Enough room in terms of confidence in each other in terms of support for free trade between both countries that will avoid tariffs.

china. So I think that that is likely to escalate the trade war as we know IT. The trade war didn't disappear and nobody has talked about the trade war with the biden administration, but the trade war has continued.

So I think that that tension between the united states and china is going to continue. Considering that the world that the financial market isn't, is if you want to summarize the financial marketing, a couple of words is a long everything short dollar trade. Well, that means that is gonna a short squeak on the U. S. dollar.

You mentioned inflation a couple of times that I want to come back to that because we've talked about inflation in several of your past interviews. Needless to say, a president elect trump is inherited an inflation problem, which I would say the general populist, the masses of american citizens, are probably more in touch with than some of these ea territory of political conflicts that you and I pay attention to.

So IT seems to me like president trump has a stronger impetus to do something about inflation. Then he needs to do something about anything else. But I don't hear him talking about austerity, danny. Also, what is he going to do to tame inflation? Well, still fulfilling the other promises that he's making.

Well, it's going to be a tough job if he does not implement by your cuts. And there is plenty in the budget that can be cut, remembered as the budget has just been ballooning for four years non stop and that he needs to address the fact that discretionary spending needs to be cut significantly because, and this is the most important thing in the U. S.

Budget, no matter who wins, Mandatory spending is going to increase. So this, knowing that Mandatory spending is going to increase, that the deficit is a, that is a spending problem, and that he needs to cut taxes in order to spur growth, while at the same time reducing inflation. His entire administration and and from day one, his policies need to be about strengthening the U.

S. Dollar, which is deflationary, strengthening the competition and open landscape internally. Now I E eliminating, regulate burdens that make some of those Prices rise faster than they probably should un particularly.

And health care, for example, we know that in the united states there are some regulations that limit the number of health care providers, uh, to a very short number. And therefore, the benefits of competition don't transfer to, uh, premiums. So the so reducing regulatory burdens and reducing the barriers to investment do help, but you need to cut directionally spending.

We need to see what is what's going to come out of the office that elon musk is going to lead. But that is a very, very important factor. A the other important factor obviously is that, uh, he needs to a pay uh, significant attention to the demand for U S.

Dollars globally. That's why he is so focused on the on the tariff side because he knows that tariff, albeit having uh, a negative impact on trade, are certainly going to mean massive increase in the demand for U. S.

Dollars globally. And that is deflationary. Now what I think is that it's going to have to be a combination of deregulation, budget cuts and certainly strengthened to the demand for U.

S. dollars. And with IT obviously increasing the productive growth of the U. S. Economy, not GDP growth, which is irrelevant when it's floated by government spending, but productive growth of the private sector.

Let's talk a little bit more about this doge department that elan and vivacity rama swamping are going to head up on the surface. The announcement that they made is that they're very aggressively going to fire half of the government employees in the first month or something like that. That does not sound to me like something that would just happen without a whole lot of opposition, legal chAllenges and so forth.

Is this just political grandstanding? Is, is this really happening? Do you expect that elon in vac are really going to you end entire agencies and and do this kind of surgery on the on the government? Is their advertising .

who we need to understand that their department is going to be an advisory department, doesn't have power to do those things. IT will advise those things, and then I will be the president and the and the government that implemented them. And the legal chAllenges are quite limited, quite limited.

We have seen very aggressive increase in government jobs. It's been about forty, forty three thousand a month every months for the past four years. And most of those government jobs are not the ones.

They are going to generate a legal chAllenge if they decide to let them go a because they were mostly directionally. They are not sort of you know processes for like we see, for example, in the police, so things like that. So that's one thing that maybe they can do quickly.

But to be fairly honest, the reduction in headcount is part of the solution, but is not the solution at all, is not the solution at all. The you need to look at the budget and and the problem of the budget is that interest expense is is, is running completely out of control and Mandatory spending is rising no matter what the mask and ramabai office do. Therefore, what they certainly need to do is to convince trump that there have to be very significant items of the budget in which the cuts need to be implemented surgically and rapidly.

And that is up to debate. A lot of people say that they will not achieve anything because trump increased expenditure in two thousands. sixteen. That was a different way of looking at the economy from his side in in two thousand and sixteen, what he was looking for was a sort of a immediate radical impact on economic growth. I E, more government spending, lower taxes, higher deficit, using the deficit to spur growth.

Would we have in twenty twenty one is that the deficit was used to increase the size of government in the economy, regardless of the previous increase coming from twenty twenty. Therefore, I think that they have plenty of room to cut. What we need to see is how those recommendations sit with members of the cabinet that are going to be having to deal with both the reduction in the budget and maintaining essential services.

The recent meeting that truck and elon mosque had with hayami should give them some examples and some a lessons of what you can actually do in a government that on the one hand brings IT quickly to, uh, uh, budget surplus and at the same time doesn't the reduce the essential services for families and for businesses and coming from the public sector. So the way to do IT is instead of looking at the large items and thinking, oh my god, this is way too large and I cannot cut IT because, you know, defense, interest expense, medicare, medicate. Instead of doing that, you need to go and that's why I like the idea of auditors.

You need to go granular 嗯 and look at all those hundred thousand dollar bills coming from the public sector that you know， when you look at such a large budget, he say, well, that's that's irrelevant. But if you start cutting, you know, on all those small items that allegedly mean nothing, but when you put them all together, they actually start building up to billions and trillions, uh, then you can do something now. So I think that bringing what do you think about IT if the biden administration, without improving the uh services for for the population in the united states, has increased spending by almost half a itri um that half a trillion can easily go I know what you need to do and if you reduce the budget by half trillion and at the same time you let the inflation reduction act, which has been the inflation perpetuation act, die its own death, uh, not spending any more money.

That is almost another two hundred thousand, two hundred and fifty billion in the next three years now so little by if you let the inflation reduction, act, if you let the bill back Better, uh, act, which was the the casion dig holes and and fill them up again. Act if you let all of those programs sort of die down and you read and you cut back the increase in in public jobs and in public expenditure that the biden administration implemented in a growth period twenty twenty one to twenty twenty four, you can actually make a very significant ent. And you can actually bring the deficit to one trillion, which is still large, but is not something that is going to be a inflationary, be detrimental to the to the demand for us treasury's globally. Daniel.

one of the announcement s president elect trump has yet to make is who's going to be the next treasury secretary. And I find IT fascinating. There's a basically a brawl breaking out.

We're on one side. Elan musk and bobbi Kennedy junior are pushing for Howard latinic. That's a cyp to currency guy, the counterfeits geral C E.

O. Well, meanwhile you've got kyle best and some other people pushing Scott best. I think it's fascinating that we're even considering the idea for the job, which is all about being in charge of the us.

Government currency system, the U. S. dollar. What people are pushing for is the guy who might be incline to say, hey, maybe we should take that global reserve currency role that the U.

S. Dollar is in and IT divided up between the dollar and bitcoin. Let's have a strategic bitcoin reserve so that our central bank assets are not just treasury bonds, but also bitcoin. The guy who's got that view in the role of U. S.

Treasury secretary, I will admit, is something that I not only never saw coming, but I made very bold predictions in my book in twenty eighteen that no government would ever allow that to happen. IT seems like president electrum might be inclined toward allowing IT to happen. What do you think?

I think it's incredibly interesting and fascinating. And as I and I agree with you because I I would not imagine in a million years time, uh uh if I had if you had asked me a few years ago that there would be a government talking about having reserve a bitcoin at the uh federal reserve baLance sheet um and I think that what is interesting about the idea, the way that is that is presented, please, that is both positive for the U. S.

Dollar and positive for bitcoin, but it's negative for everybody else. Fiat currency. Therefore, on the one hand, in the feared currency world IT strengths the role of the U.

S. Dollar as a world reserve currency, and in the crypto to world IT strengthens bitcoin related to all other crypto assets or crapo currencies. So I think that IT IT sort of make sense if you know, if you know that on the one hand, the U.

S. Fiscal problem is very chAllenging in that there's going to be a competition globally to issue more units of fiat currency, I E, more debt now, and that, uh, you want to maintain the world reserve currency in the feared world. But at the same time, you know that there is a fiscal problem. Then the only way in which you can achieve that is obviously, first, significantly reducing the fiscal problem, as we mention before, but also by conducting monetary policy the way that IT has always been in the field world, which is not about who wins but who loses. Monetary policy is not about who wins, but who loses.

So if you as the uh world reserve currency strengths in the baLance sheet of the federal reserve with a decorate related asset, light a bitcoin and you add some gold, that would be more than advisable IT set a IT immediately becomes evident that other competing reserve currencies, the yam, the pound, the euro, are going to be not just weaker but significantly weaker. And therefore, you increase the demand for U. S.

Dollars and you increase the demand for bitcoin. It's sort of the l cl adoors bucket. I thought, no.

How are we go into strength and hour position and on both sides without without trying to put a barriers to innovation and to anti technology, which is what the federal reserve, uh, economists and the E C, B economists have been writing about all day. Ban bitcoin, evolve sh all crypto currencies. No, doesn't never gonna.

Now, uh, what you need to do is actually embrace IT now. So I find IT very, very interesting. I particularly think that basset is uh is a tremendous IT would be a tremendous choice, uh, but either either or going to be a completely different approach to the to the job than we have seen in the past.

What we have seen in the past, our basically yelling, even manucho where all the good things that he did and IT is such a but we have seen are basically treasury secretaries that are basically receiving sort of their passive no, they're receiving the fiscal imbaLances and trying to sort of manage their way with the already preexisting fiscal imbaLances. I think that both bent and lutnick are candidates that may actually taken active role in something that has not been discussed throughout the the campaign, but that was a key part of the of the economic plan of trump, which is to maintain the us. Dollar as the world reserve currency.

So we may have, for once, treasury secretary that is going to have as a key objective to defend the purchase in power of the curacy instead of defending the small erosion of the producing of the currency. And that's a big difference between munchin or yelling and these these two candidates. I think that whatever whatever, uh h both are are really good.

But I don't think that kill bass is going to be the candidate. But I would be very, very happy. But was so we taught .

earlier about geopolitics. Let's talk about what i'll call geo monocle, by which I mean the monetary policy of the european union, as you say, is very much not favor a crypto assets and so forth. What would IT mean if we saw a further division where there's a fair amount of CoOperation that has to occur in order to keep the the machinery of the global monetary system working with the fed and the eb work closely together?

What if you had a treasury secretary and an overall trump s administration that decided he lets go ahead and take this populist agenda all the way to where I thought I could never go, which is let's go ahead and really embrace bitcoin as a alternative to government money democratized money itself. Um IT seems to me that the close collaboration between the E C B and the fed might be, you know, subject to the same kind of political breakdown that you have when there's a breakdown of negotiations between countries. Is that the right way to think about IT? And what would IT mean if the e cb stopped talking to the fed and stopped collaborating on swap lines? And so for in reaction to monetary event.

I completely agree and I think that it's a bad position for the E C B because the E C B does not have the luxury that the federal reserve has in terms of, uh, liquidity and in terms of the demand for euro. no. So one of the big mistakes of the euro and the E, C, B in the past years, and I road extensively about IT at the time, was to believe that they could play the fed without paying attention to the global demand of euros.

So if the fed stops collaborating with the E, B, the way that they are doing today, in which basically they just marry each other and they continued to do things, and i'm not saying that they would not collaborate, but not to say aligning themselves in monetary policy, that's that's where I think that there would be a disruption. They would not align themselves in monetary policy if the fed starts going uh for uh, bitcoin as a as an asset that were that was worth having in the baLance sheet and if the fed started to really defend the purchasing power of the U S. Dollar, the E C, B has no way of counteracting that.

It's impossible on a political level because the C B is much. If we criticize sometimes the fed for being too politicize, imagine the the E, C B. The E, C B does not have the possibility of telling governments stop spending, stop, uh, stop entering into these enormous physical imbaLances. Furthermore, the C B has started moving into uncharted territory by talking about, uh, including climate change in their monetary policy and things like this.

So ultimately the problem for the E, C B is that if the fed decides to this, disconnect its monetary policy from the E C B S and the B O J S, neither V C B or the B O J have an option to counteract that in a way that strengthens their h that is, that is, to me, the the, the key pot. Will they continue to contribute and to and to collaborate on all other aspects, the technical aspects that you mention? What lines it's a try? Absolutely they would.

But the idea that if the E C B cuts fifty basis points, the fed cuts fifty basis points and uh the they are basically almost mirrors each other all the time so that the euro doesn't go below parity and the euro doesn't go too high, uh, and the dot, you know that that sort of that that is probably probably gone. I think that is going to be very important. Uh, when uh, we see changes at the federal reserve in march. But IT, but I would pay a lot of attention to that because I would not like to be an an overweight europe position in an overweight european union financial assets and financial sector a into that into that uh, chAllenge that we're talking about. Danel, I can't thank .

you enough for a terrific interview, but before I let you go, I want to talk a little bit more about what you do IT traces. You are a fun manager there. In addition to being chief, how can qualify institutional investors and accredited investors contact you if they want to tear sheet? And you're also a published or you ve got a big twitter feed that's very popular. How can people follow your work?

Thank you. I think that the easiest way is to contact us at Daniel dot lua at trees dot com, and we will certainly get in, uh, give them all the information that they need a that's my work email. My team would that email, uh, I don't respond personally.

And in order to follow me, I would suggest my website, W W W dot d lai dot com slash in my twitter feed is at or exceed at d lakia underscore I A and my youtube tunnel. Uh, Daniel lara, in english, I always say that it's easier to find me and to avoid me. Usually if you put Daniel like a year on google, you will find both my twitter feed, my website, my youtube tunnel, and remember that english speak people, that all there is always an english version in both.

And for english speakers, that Daniel, luckily, L A C A, L L A. Thank you so much. Daniel petrick, arrest that. And I will be back as macrovoice continues right here that macrovoice that come.

Now back to your hosts, eric towns and Patrick serez. A eric IT was great to have Daniel .

back on the show, but now let's get to that chartered listeners. You onna find the download link for the postgame chartered in your research rounded up if you don't have a research round up, email IT means you have not yet registered at macrovoice dot com, just go to our home page macrovoice com and click on the red button over Daniel's picture saying, looking forward, the downloads now, eric, let's start with crude oil.

I don't have ei a inventory this week due to my travel schedule. I haven't been able to pick up the data in time for this report. The vigorous bounds that we're seeing off the lows is a result of rising geopolitical attention after president biden Greenlighted strikes using U.

S. Weapons deep into russia, something that he swore he would never do because he understood that IT was provocative and risked causing a nuclear war. Apparently these changed his mind or forgot that's what he said or something.

Since those promises were made early in the conflict, in my opinion, the us. Is acting incredibly recklessly and irresponsibly right now. IT appears to me to be as simple as trying to sabot president elect trump. S promises to end the war by escalating IT in a way that would make IT impossible to end. I don't have any other explanation.

eric. When we look at the crude oil chart on page two, I drew on there the a support line that was established over last three months down around the sixty seven dollar area. And so what we have is a scenario where crude oil has found support but is still in a primary downturn. We is the pattern of lower highs, lower lows, all rallies fading has not yet changed. And so with this bounds that we saw crude il, we're going to to get a very important test here where there's a descending trend line moving averages that we're coming into and retracement zones all around the seventy seventy one dollar area.

And if crude oil fails in the seventy seventy one dollar area and rolls back down, not only is there room for you to retest that low, but that support line, after being tested so many times, may very well give out for one quick, crucial wash out that could see a quick drop down into the low sixties. Even if that kind of a technical breakdown did happen, I would view that as a short term buying opportunity to fade back into this trade range. Overall, I think that this is A A fair value of crude oil.

And what the only thing that is there are just hasn't started anything bullish. Sha, and this may be the story for the remainder of the year. At some point, there will be an opportunity, make money on upside of crude, but we're going to be looking for the technical signals that, that trend has shifted, none of less. Let's move on aquatic or thoughts here on equity markets.

Patrick. Markets are still digesting the trump win in the cabinet picks and what it's going to mean for markets. I don't see any real strong directional trend here. I don't have any strong opinion myself.

Well, eric, on page three, I have the chart of the S. M. P.

Five hundred and drew on that rising wedge formation that the S. M. P has been following in upwards fashion. Now we have a big event with in video's earnings that hasn't created a big reaction, but certainly was an event that everyone was much anticipating. I look at this in a very simple way.

This is exactly the levels right around this fifty eight fifty to fifty nine hundred area where the market should find support and be bought on dip if the mechanical l on the upside will remain attacked, and that would open the window for a rally to sixty one to sixty two hundred on the upside. These support lines, though, do need to hold now in video. Was that important IT was the idea that I could potentially be a trend shifter that could have broken this market at least at the time we're recordings ness that hasn't been the case.

And if in video doesn't become the then the flows of the market could end up keeping this market in this channel deep into the holiday period for the next three to four weeks. On page for I do have that chart of in video, and you can observe the same type of a rising wedge formation. Now the initial reaction on NVIDIA, the time this recording has been a little bit of a lower open by by no means a big percentage move um in in this same situation so long as in video doesn't have any meaningful breakdowns below one hundred and thirty dollars on the downside.

And then um you can still assume that the stock is a maintaining its primary trend and the window for an upside move would not be closed at this moment, that this is going to become pivotal for driving the sentiment of the markets in the bigger context. Now I on page five, have the chart of the euro stock fifty. Now europe has been incredibly weak, has been rolling over.

And I have a bigger thesis that the global developed markets have been going through one big topping formation throughout much of the year. The only performance has really been in the S M. P five hundred and or the nasdaq.

And and what we see here is that the S P still continues in its primary trend, but these indications simply have not performed since the first quarter of the year. So every glitz move on and look at that U S. Dollar index.

The dicky is consolidating between one or six and one or seven.

That begs the question, is the trump trade as IT played out, meaning the dollar is topping out here and maybe it's about to reverse to the downside? Or is IT just pausing to catch his breath before moving even higher? I don't have any really strong view on which it's feeling to me like maybe it's topping out, but let's wait and see daily close below one of six or above one of seven on the dicky is the tale to watch for yeah.

page six. I have the chart of the U. S. Dollar index and I very clearly drew on this two year trade range, the high and lows. And we are directly testing a key overhead resistance.

Last week, we talked about that year o trading right down to a very critical one of five level. Now typically, this type of a resistance level should stall or pause the Price action and IT has. And so where this is actually a very critical moment because give the big picture, macros, es conditions have genuinely changed because of the change of the administration.

And then we could see this two year trade range broken. And this is actually incredibly important to sea, because if the us. Dollar breaks out above the one of seven level, there really is no resistance for IT to stop until IT reaches its two thousand and twenty two levels up in the one twelve to one fourteen area on upside. And if a dollar started that kind of a rally is if this can be a huge macro implications on almost all asset pricing. That said, eric, let's move on and talk about gold.

Already, we have seen more than one hundred and thirty dollar bounce off the lows so far. So the question is, is this just a dead cat bounce before lower numbers are still to come or has the trump trade bottom out? And it's all appealed from here.

I had previously been leaning toward the scenario that this was likely just a bounced, and we might not have put in the final law yet. But president batten's aggressive provocation of russia, seemingly trying to start what could turn into a nuclear conflict before trump can take office, could easily take us to new all time highs. Similarly, if cooler heads intervene to stop this U.

S. Provocation of war against a nuclear state, something I don't think is advisable. Well, if that we came to our senses and stopped doing those things, we could see a downside reversal in gold.

I do think it's because of this geopolitical tension that we've seen such a vigorous bounce here. We are above that point where I thought that the bounce was going to stall out. So maybe IT has legs. Let's let's see what happens. I think it's going to depend on the geopolitical news flow.

Yeah, eric. When thinking about what happened here in the last couple weeks in gold, the sentiment a few weeks ago was just so bullish. The consensus was that gold can only go up and inevitably, there becomes a period where the market tests the resolve of people to stay in those trades and create some sort of a short term corrective washout.

We now have done of fifty percent retrace down towards its one hundred day moving average. And that has now initially found a key support bounce in gold. We're now approaching what I think is a very key level at twenty seven hundred. Twenty seven hundred was this big target that we all talked about the for most of the year as an upside kind of level to to be looking for goal to achieve. And here we are now approaching at twenty seven hundred level again.

In my mind, if the balls can beat twenty seven hundred and consolidate us in the twenty seven hundred and twenty eight hundred level in the coming weeks, that leaves the window wide open for goal to even make a move to three thousand going into january. At the same time, if twenty seven hundred isn't beat, uh, then that means a gold remains in some sort of corrective pattern, a corrective pattern like for insinuation, one we had through April all the way through june was like this three month consolidation. IT was more sideways than IT was downwards by IT was a consolidation period absorbing uh the previous bullet advance and anything um below ed twenty seven hundred would leave gold in this uh a kind of meat grinder trade ranges that in consolidate potentially for the maintain of the year.

We're literally approaching twenty seven hundred and we're going to get a big toe here very shortly. Now moving on, eric. I wanted to just touch on copper.

And really, I just wanted to highlight that IT was quite a breakdown that we saw on the last couple weeks. And while we are getting these little short term bounces overall, the primary trend now is in the cell cycle. And now while it's a downtrend and IT is actually pretty barish Price action to counter that, we're approaching some pretty key support lines below.

You know is there room for you know twenty five cents more on the downside of cop? sure. But we're well off of the five dollar level up at the top side.

So inevitably, we're going to reach a point where copper is going to establish a bottom and be a cheap in terms of a long term investment. And so I think it's more than scenarios where it's likely coppers gonna be in this grinding trade ranges for potentially the remainder of the year. But these Price levels will probably end up being levels where some really good opportunities will emerge in the first quarter of next year.

Now moving onto uranium. My position is pretty straight forward in terms of the fact that we've been in a sixty nine months correction in spot uranium page online, we see that a sport uranium physical trust and this is the type of conditions from which a bull break out could happen. We'll see whether the u three o aid spot Prices can sustain in up into the mid to high eighties. And this start breaking back above twenty eight dollars to really show some sort of bigger accumulation cycle is under way. Certainly, uranium equities are getting a lot of love here, and so be interesting to see whether spot Prices uranium start to confirm that.

Folks, if you enjoy Patrick dark texts, 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 sly deck. Or just go to big picture trading that com. Patrick, tell him what they can expect to find in this week's research up.

Well, in this week's research rounded up, you're going to find the transcript for today's interview and the chart deck, which is discuss here in the post game, including a link to a number of articles that we found really interesting. You're going to a find this and so much more in this week's research rounded up 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 for those of our listeners that right or blog about the markets and would would like to share that content with our listeners. Send us email at research round up at macrovoice dotcom, and we will consider IT for our weekly distributions. If you have not already follow our main x account at macrovoice for the most recent updates and releases, you can also follow eric on x at erik s towson that eric spelt with a key. You can also follow me at Patrick sassa behalf of a eric counted in myself. Thank you for listening, and we'll see you all next week.

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