MacroVoices #456 Jeff Currie: Repricing of Macro Markets
01:07:57 Share

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 er barish no holds bar now here are your hosts eric tow and Patrick season A.

Micro o voice is episode four fifty six was produced a day early this week on wednesday no, every twenty seventh twenty twenty four in observation of the american thanksgiving holiday. I'm eric tencent, former goldman sex commodity s chief and current carlie group chief strategist for energy pathways. Jeff curry returns is this week's feature interview guest. We'll discuss all things macro from treasury yields and credit spreads to a miles pricing across many different asset classes to energy, to copper, to nuclear energy and Chris rights role as energy secretary under the incoming trump s administration.

And on Patrick or as now with the macro score board week over week for wednesday in november twenty thousand, two thousand and twenty four, the december S M P five hundred futures up one hundred and fifty three basis points, trading at six thousand and two thousand eight, the markets are back up to the highs of the year.

Will take a closer look at that chart and the key technical levels to watch in the post game segment, the us dollar index down fifteen basis points, training to one of six forty seven, consolidating at two year high. The january wti crude oil contract up thirty eight places points trading at sixty nine o one IT remains in a primary downtrend but consolidate at support lines established over the last three months. The january r bob gassin down two hundred one basis point and one ninety five.

The february gold contract up eighty three basis points training to twenty six seventy two, remains in a choppy consolidation after putting in its highs over a month ago. Copper up twenty four basis points to four sixteen, uranium down two hundred and sixty five basis points to seventy seven twenty, and the U. S.

Ten year treasury yield down fifteen basis points, training up for twenty six. The key news to watch next week is the ism manufacturing and services PMI and the much anticipated jobs numbers. This week's featured interview guest is jeff curry.

Eric and jeff discussed the post election pronominal safe having an assets, energy, commodities and more. Erik interview with jeff kerry is coming up as macrovoice continues right here. I'm micro robes dot com.

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

joining me now is jeff curry, chief strategist for energy pathways at car. While jeff, it's great to get you back on the show. It's been too long.

Let's start with what's going on post the trump election decision. IT seems to me like there's a lot of anomalous pricing in markets. Lot of things are going in directions not everyone expected, including treasuries particularly. What's driving this is this passive investment versus active investment, is this credit spreads. Why does IT feel like markets aren't quite doing .

what everybody expected? Yeah, I think your point you you know taking IT from a really broad perspective here is it's not just isolated to markets like you know the credit spreads or it's not just isolated that equities where you see thirty nine percent of concentration in the top ten names or in oil that you know fails to get a war premium bid, it's in across the entire air macro space. So that is exciting times.

Lots of opportunity ties are just going to reach when they start. I think because you point IT out to start with treasuries, those are the markets, I think, where you see you know much more Normal pricing. And I think IT begins with the credit spreads.

Know you got a situation in which when you look at U. S. Treasuries sitting there at summer, around four point four percent right down on the ten year versus you know investigate grade running just just shy of five percent.

Um we've never seen such tight credit spreads ever. You know is that an indication that the us. Is a worth credit then potentially investment grain? Now i've made people have made the argument to me. You can see apple trade through through treasuries or is IT, you know, as you point out, you know be being driven by in a passage out there, you know you see IT high yield too, that's running some around seven percent. Um so where are in very a Normal situation right now?

Um but I think you know talk IT about you know in the context of the trump trade, the one thing that four step treasury's was you know a significant concern around all the size of the U S. Deficit, um no, given around tax cuts and terrorist creating inflationary pressures. And that put up with pressure on yields.

But that's just part of the story. You gotta look at what was going on in the corporate, in the tight credit spreads there. You know, the exploitation I hear from credit creators as you had um many corporate holding back supply as they awaited for rate cuts.

Whether or not that's true or not will find out. But I just think IT, let's put that observation in the context of what's going on in the equity markets. And I think you're point about passive investors is is also a really critical one that i'd argue in the post coffee.

There has been the biggest shift in markets. We went into code with passive investors, only less than fifty percent of um us equity markets. We're coming out with passive investors at sixty percent.

Um the thing that grow that is during the lockdown wn we saw all those checks and out and people only had two things, shop online and and invest in equities because fixed income products had a zero percent interest rate and they use these passive etf vehicles to enter the market. And that's how those percinet just got so high. But once they got so high, they crowded IT out the active investor and are now the the dominant player in glory, least U S.

Equity markets. And you know that reinforces this idea that big gets bigger ger, and also most of its concentrated in america. And so if it's big in its american, it's getting bigger, which is why when you look at concentration, you've got thirty nine percent in the top ten names in in the us, which is is is a Normal.

And but that doesn't stop there. We can go. We can talk about all il in other markets. I think they are the key point here is we're going through a major transition in global markets right now where the marginal buyer is changing, the marginal market is changing. I know whether he is looking at currency markets is IT gold or is IT in oil, is IT gas and these other markets. I think you know that I said I say that the way i'm interpreting all these events is um the marginal buyers changing and the marginal market is changing.

I should mention before we get into specific Prices that we're recording this interview on monday morning just after the european and open. So jeff and I don't really have this week Price action. We only know where the markets opened early monday morning in europe.

Jeff, as I look at the dollar index chart, boy friday looks almost like a reversal candle to me by itself. And then as I see the early trading on monday, IT really seems to be confirming that maybe that great big move up to one or eight that we tested on the on friday seems like were below one or seven. Now one of six spot, ninety two is i'm speaking early on monday morning. Well, was at the top? Or is that just taking a breath before the next chair?

Well, I think you know some of that when we look at skat basket is the potential treasury secretary know they're been very vocal about coming up with meta to create a week er dollar to help trade inside of the united states. And when we think about one of the stated goals of the trump administration is combat the strength of the dollar, whether it's, you know, a new version of the plaid cords, i'm not like the expert.

I'm not going to into that. But here again, IT goes to you know a bigger question here, a bit coin and gold talking about you. What is the the marginal measure of of, let's say, a safe haven is the dollar that that that unit that measures to save havens.

Are we seen IT shipping into gold coin and something outside of the U. S. system. Again, going back to my point that the marginal buyer and the marginal markets are beginning to change and is this being captured here? Um but I thinking in terms of looking at the top and we're here to talk about commodities, one of the biggest drags on commodity pricing and I would say particularly, let's take copper.

Why is the copper story that we've been so vocal about not played out one of the bigger drivers putting a cap on Prices as the dollar IT just continuously get stronger? I know will talk about oil a little bit further on, but I think there are two. The dollar has been a big head min for overall community pricing, pretty much with the exception of goal, which is to just as that relationship change.

But I think you know there I have to agree, we're probably at the top there, which would you know argue. And I think a lot of people are looking at the stretch equity valuations for all the reasons we talked about before. The stretch credit valuations that we just talked about before in our commodities, there are the one asset class that you know have been left relative to all the other markets are there in a much Better position going forward. And clearly, with the dollar hitting the top and reversal, that would be really good news for the commodity trade.

I'll come back to oil and the other commodities, including copper, in just a couple minutes, but let's go a little deeper first on bitcoin versus gold and what's going on there. I have to confess, you know, I was the most outspoken voice to say, look, as much as I appreciate what the bitcoin ders want, which is for bitcoin to become a serious currency that competes with the dollar and maybe eventually as a contender for global reserve currency.

I said, look, there's no government that's ever going to allow that. They're going to fight IT to the nail. Well, the trump administration is clearly proven me wrong IT seems that the trump administration may be the one to do a government sponsored and in government sanctioned, hey, let's allow bit going to democractic ze money itself so that governments are no longer in charge of pointing money and that it's decentralized.

I never thought that I would see that come from a government. Is that what's happening? Is that what the trump administration wants and is IT something that the trump s. Administration can even get away with? Or is the, you know, the larger resistance of institutional finance and institutional government going to prevented?

Well, I definitely agree that's been one of the key drivers of this rotation out of gold and you know towards bitcoin more recently, but both of them have been yeah the new stand out in the currency world is representative of that safe haven with respect to the us. Allowing bitcoin to be used as officially sanction currency. I think the key point there is they're going to want to have insight as to who owns what and what that was inside into the custodian of the bitcoin. And that's been some of the the setups that have been looked at before.

So yeah I while I agree with you, this is the best chance bitcoin and crypto currencies in journal have to be officially sanction, but i'm still going to go back to the point where do they ultimately want to see is the that custodian relationship and who owns what? Because I think letting complete control that i'm going to go back to your original thesis, uh, I just don't see a government allowing one hundred percent loss of that control that could be debated doing. But a lot of those different cypher exchanges are are your typical gold style custody and relationships where they can peak into that.

So well, they likely they had that direction. I think your original thesis is probably still gonna call true that the any type of arrangement that put forth will still have some type of custodian in relationship. There will certainly .

be interesting to see how that one plays out because what you're saying really is the government would say, okay, it's okay for you to have bitcoin. We want to reward the bit count coin crowd that supported president truck in the election. But we're going to redefine what that means to be.

You have to hold bitcoin in a way that really goes pretty much against everything the bitcoin was designed to do and designed to be. Um I I I guess the question then becomes how many of the supporters that president trump wants to appeal to are the purest who really understand those arguments? And how many are just people who kind of think number goes up? That going is cool.

I get to have IT now in a custody, an account. I'm happy enough with that. I I guess that's the question is to how well that .

will play out anyway. I think the purest that understand its a pretty small crowd today with gold. Um yeah I be surprised how many actually really understand and the custody of relationship they have on their buying gold.

Let's move on to energy markets. I've talked to several people post the trump election, both on this podcast and elsewhere. I'm noticing a pattern where everybodys kind of scratch on their heads in yeah okay, I explain the oil market um well doesn't quite add up to the same calculus that used to work.

So is this because the chin's stockpiling demand dynamics are changing post the trump election? Um is this because of the the sudden interest in natural gas with the the security issues in europe? What's know is the tail wagging the dog, is the dog waging the tail. What's really driving energy Prices?

I is as an excelled question. And probably I want you are going back to the marginal market, the marginal buyers change in there. My short answer to this is going to be natural gas. Is finally the marginal molecule in the world right now?

You know just take oil, whether it's you know, i've been out there trying to explain Price action by the shift in investors, the market short, by the way, investors are given up on while they are. They're not short. They're not long.

They just left because they don't understand IT so that my explanation is got other ones are going, oh, it's super barish on on the forward outlook. They take the barristers in china expand IT forward. They have argue all the lot misses in last year's non OPEC production gets pushed into next year, and they got these huge increases and they try to explain A A supply driven bear market for next year.

I don't buy that. Why do I not buy that? Is only two times in the history of the oil market have we had a supply driven market. One was one thousand and eighty six, the other one was two thousand and fifteen. Both of these occurred after decades of massive large scale industry.

Um IT was deep border coming out of, you know, in the out of the seventies, in the early eighties and in michale coming out of the two thousands in the early two thousand and ten. We don't have that this time around, and so we don't have this enormous production that is coming on. Um they also argue that OPEC is gone to do a Price war to you know get market share back.

But who's they are going to have a Price war with? We look at the us us production when you look at black oil is related to sleep flat with where I was a year go yeah it's up a few hundred thousand barrels potentially will know at the end of december, but the the year over year in our exit production, not also we're gona be roughley maybe give ver take one hundred thousand bees for that. I could be down.

Both of the growth has been in the actual gas liquid, not in wireless member. These things are light products that create patro chemicals. They compete in the gas market.

They don't make things like disco fuel and and gasoline and the other types of fuels that that are critical to the black oil market. And yeah, we look at Diana, one of the other one. They focus on that investment from a decade ago from that previous super cycle or brazil from the previous super cycle.

So i'm not i'm not in that that camp for a big glad. So what's going on? Why is oil so confusing? Yeah, i'm going to go back to the trump trade and let's go back to really started taking off in september.

And we started this discussion with treasure charge yields when a break event started to increase because people see that trumps gone to be inflationary. And you worried about the large deficits in the us, while oil disconnected with treasuries ever. A lot of you seen the picture of that in break events.

What I want you to go back and look at is the picture of T, T, F in brake VS. T, T, F in U S. treasuries. T, tf is the best measure for global L N G right now and when we think and for any .

enough familiar jeff, please define T T F .

stand for yeah it's the um title transfer location facility. T T F as title transfer facility and IT is in europe. It's like a virtual Price of all these points in netherlands, where you bring in the Allen g from parts of the rest of the world.

Incense europe is the marginal L N G by air that your new marginal L N G pricing up. And so i'll go back to golden sex back in, you know, two thousand. And member, we've all put out the peace, you know, using that rif of the the stone age ended long before we ran out of stones that people would quit Price, you know.

Member, the the story there was peak oil, was peak supply, and that gas was gonna come, the government and at we waited, waited, didn't work. Shale came on. Its not working.

You look at the fact that T T F is now pressing brake given inflations. yeah. You think about what can L N G be used? They can truck IT in for data centres. S you can use L N G are using IT for trucks in china. We're using L N G for everything.

Now this is not a Green thing, is just a low cost fuel that now I can marginally swing around on throughout all the different uses within the global energy system. When we look at cars, we look at evs. Battery EV sales have dropped off tremendously.

One has replaced IT. And what's the best selling car? It's an h pev. It's a hybrid plug in E V.

Why it's got gas? Because you can you can drive your car of natural gas, of oil, of coal, of nuclear. Basically that hybrid can do all the above IT heads.

you. And so we think about the one fuel that can swing between the power grid. Swing, drive your h pev.

Can, your B E V, your cars, your trucks, it's now gas. gas. Is that new martial amount tile that can swing throughout the the ecosystem.

And I think that that's critical here because when we think about the marginal molecule in, you can take T, T, F. And on friday morning, IT is trading around fourteen dollars in mm b two multiple. That by six is getting you over eighty dollars of arrow brands trading at seventy two, seventy three.

So the top of the energy stack is gas now. And I think that what has happened, what we're all telling these stories, try to explain Price action in bread. What has snuck up on us is that marginal molecule is now natural gas in, not oil.

And we have to really rethink how we think about energy markets right now because I know mean fighting the tape on it's you know it's investors leave you in the market, people going there's a big surplus come in the marble way. There's no evidence of the surplus IT tells you we're all grasp mine for stories to explain some Price action. And while we're all arguing in over all is really T T F that's moved into the pole position, I think that's what's happened here.

Now historically, oil markets have been quite efficiently Priced globally. If there's a difference between one part of the world and the other on the Price of oil, it's going to come down to transportation costs. And if IT goes beyond that somebody he's going to orbit, it's all going to get efficiently Priced.

Native, on the other hand, has been all over the map, U S. Henry hub versus european and natural gas, dramatic Price differences that are even with the higher expense of transportation, those Price differences go beyond that delta that exists in production costs, in transportation cost, because there was never really an efficient arbitrament for bringing IT together. A lot of people have predicted the U.

S. Natural gas Prices would go up and european and natural gas Prices would come down as we got Better at transporting natural gas and also as we develop more export terminals in the us. So that we had more city for doing that. Is that part of what's happening here, say, Henry hub versus tt f pricing is going to get efficiently arbitral ged going forward? Or is there more to with them then?

No, it's hundred percent the story because we have more of this moving on, moving around on ships. You go to the L, N, G. ships.

And that's where the marginal growth out of the U. S. Market has been.

I assimilate a lot of the investment in places like the middle east. In the marginal um imported btu into china is an L N G cargo. The one being an imported into europe is an L N G cargo.

But IT doesn't stop with with these three gas terminals. What we're seen as data centers use and that we're seeing trucking in china using IT. Um so IT starting to become probability berated around the world.

And I think you'll point about and I agree with that, you know hinny hub is trading was trading that below three dollars in mm b to you last week and then um you know T T F is was trading at twelve to thirteen dollars and M Y B two and that's your point. In europe, that huge spread is not explained by the buck fifty of transportation costs between the two areas, but use starting to see the pool. U.

S, natural gas is up, you know what? Thirty cents this morning? And is a coding canada driving IT? Or is very large increase in T, T, F Prices over the weekend driving that arbitrage? I am going to put more on the arbitrage, then i'm going to put on some cold way up.

You know in canada, where is hard to get know pipes up to. It's probably the T T, F. And I don't think people are accustom trading U S. And gas market to be. Look at, hey, what's going on in europe today and I think that they're all focus on others.

Some cold going on way up north and in canada um but obviously there's no cold going down in Louisiana where Henry hubs but why is Henry hub a is because it's really cold in europe today and you're getting a bit in that global L N G market. I you know we started this out as being in the thing here as the marginal buyers changing, the marginal markets changing um and I think once again in energy um we need to be thinking differently in the inking broadly here. And trading U S. Natural gas is going require looking to, hey, what's going on in new york today.

Let's talk specifically about whether there's an actionable trade there because at first gLance IT sounds like, boy, long term IT would just make a heck of a lot of sense to be uh long the the U S. Natural gas contract is short, the european uh t tf contract and you know just keep rolling those things and you want to do well the long run but they call the netty contract.

The widow ker for a reason, has to do with the seasonality of that futures forward curve, really throwing some monkey ranches into things. So is a trade like that work? And if not, is there an efficient way that you can put a long term trade on to benefit from? Sounds like what you're predicting as a convergence longer term between us and european and natural gas Prices.

Let's go back to the very first question when you asked about the predominantly of passive investors. Now there in lies. The problem is that to put these positions on and you gotta be, buy and hold. And when we look at um when we look at the available capital in markets today, it's the barbell they're sitting neither in private equity shops with this super long term horizon and other sitting in the i'm talking about the marginal dollar that's bine assets.

They say you know either private I put on one side and you know they're sitting in like the multi stats algos quote funds on the other side, which are all basically moments players, the group in the center, the old so as quantum fun, that would take these big long term type view that there's no, no but no long term punters that want to close those arbitrary mark. And I think IT, you know, let's go to, you know the fact that the passive players are reinforcing, if you're an active investor and you're trying to punt in one of these markets and you got sixty percent of the passive guys buying the video and the rest of them, if you're not sitting there in that wake your your returns during that period where you're waiting for that natural gas trade to work, you're going to get destroyed. You can't hold the position in this day age.

And I think that that's really the key. We so you are absolutely right. There's a great opportunity and their but it's called the window ker.

It'll want to be a widow maker for a few months IT gets cold or warm or something like that. You gotten really go OK. I believe in this trade.

I'm gonna hold IT. It's gonna work. But people in the current environment cannot take that kind of horizon. And you have a lot of trades like this. The you know they're open up all over the place because people are forced to those two extreams.

Either the illiquid ID i'm going to hold that where there is no market to market and I have to take a view over that six to twelve months horizon or they pushed over into into that possibility that I want to make sure sees why if you're an active person trying to hold one of these little maker type positions, you're onna get run over by a free train because the guy that's trading them, the NVIDIA where all the passive bomb animals make no twenty six percent whatever IT ends up being this year holding that position, you waited six months for this thing to close on natural gash. You're going to be left in the cold. And as a result, the people who would Normally trade that get forced into the other trade.

So I think there is absolutely a fantastic opportunity and those types of arbitral ge opportunities that just seem to make a lot of economic sense. But the ability for particularly institutional investors to hold these positions is extremely difficult given that passive structure the market in these anomalies. We started the discussion with jeff.

I've got a question i've really been looking forward to asking you specifically, which is a called the grain versus Brown debate for, let's say, the height of the bite administration esg was king. Everything that had to do with, I don't want to say just Green energy, but Green policy energy and all the trades associated with IT is what would win. And I would say that IT was not the most intelligent energy policy trades. IT was what matched government policy around the sg that was winning. Feels to me like post to the trump l election were seeing a seismic shift in energy trading away from that esg fascination may be back to what I call the old Browns sentiment of, you know, what actually delivers the energy for the lowest Price.

I think that that transition occurred a menu couple years ago, but i'm going to go to a broader point here I like to make that underscores that despite the fact that trump control the house, the senate in the supreme court, he still be holdin to bond markets in the laws of physics.

And if we go back to to the trump one point home, and we look at what happened to Green investment and Brown investment, from contrary to what lot of people think, the world got a lot Greener under trump one point, oh, then I did under biden. why? During trump one point o we had extremely low interest rates in very low oil Prices.

So we saw a very little Brown investment in lots of Green investment because think about Green investments like solar and wind are all a function of leverage because their low risk, highly leverage, plays. And as a result, we saw a substantial investment in Green and not very much in Brown. Then we fast forward to the by administration what was IT characterized by high interest rates in high oil Prices by in saw over the largest increase in Brown um investment.

U S. Production is twenty when you put in the the ng s bayway thirteen at the black oil ad in seven for the natural gas, like which you get up to twenty million barrels per day. Largest oil producer in the world, bigger inside I arabia in russia, actually combine the two of them, combine the us is bigger um I think which is underscores just how large of a Brown producer the united states has become.

So the point being here is these these macro variables in the bond market, in the oil Price being the really big ones where a much bigger driver of how Green or how Brown the economy was in the underline policy is not just be clear about the policies of this current administration. And you listen to Chris, right, the the the most like beyond potential us. Energy secretary, it's more about energy dominance than IT is the Green around.

And when we look at what they're likely do, they gone to repeal the Mandates in the regular or red tape around getting energy investment. By way, it's not just Green Brown. It'll be Green investment as well.

So they'll speed up both types. And if you just listen to the rhetoric, it's about pushing out as much energy as a possible can energy dominance as opposed to um Brown and Green. Let's go back to us.

Is me put in the crude in products, if fits not it's pretty close to be in where sadi abb is overtaking sadi arabia of everything in terms of what's being exported. My last when I talk about is, is what is driving this investment? Again, i'm going to say, is IT environmental policy or is IT energy security?

I want to line up all three major regions of the world, U. S. Europe in china. And will we look at transition rates, who has transitioned out of Brown and integration? The speed china's number one is gone faster than anybody else.

Number two is europe, either though on a level europe is higher than china, but china is. Passages has gone way past the united states, is heading up towards your moving faster than anybody else. The us, when you look at all that oil productions, flat to gone backwards against demand, has gone up a tiny bit.

Is my point that underbid and the world got Browner in the us. Why did they get Greener in china and Greener? And well, I am going to say more renewable focus because they actually in china, they added more coal to fire those ebs.

So it's not great. A bit more renewable focus. Reason why is energy security? Electrons are local, molecules are global. Fact, the whole world of globalization was kicked off by the british when they put coal on ships back in eighteen seventy.

It's when the first globalization occurred um because IT basically portable and storage muscles you as mobile muscle as what carbon is. And when you move to electrons, it's all local and the sunshine everywhere. And so why is china and investing so much and renewables and all of those Green capex stuff is because is doing so because IT can be in a position to be self sufficient. That's why you're doing IT. So I like to go back to the point, is IT energy security that's driving IT or is IT environmental policy i'm going to argue its energy security.

Jeff, you mention copper and you also mentioned by and holds positions. I have to admit, i'm one of the many people who's been in a bion hold. Actually, it's a role forward on a copper futures contracts. I kind of thought that regardless of whether you were Green or Brown, that the argument for copper was very strong. Now I certainly the part of the reason we've seen the weakness and copper recently has to do with trump being elected and the esg focus coming out of the market is that played out is the time to you don't stay long, copper in and hopefully, this is the bottom? Or are we just seeing the beginning of an a new Price regime where maybe we're not going to have that praying um on energy transition tion and expectations about electrification of vehicles and software that existed under the previous administration.

I am an affect we're going to have to go forward with electrification is go back to the energy security. I mean, why are hybrid? They ve got a lot of copper in a hybrid and they've got oil and they got everything, you know.

So as hybrid become the dominant source going for, yes, not as much of a royal d demand before, but it's a lot more bullier's than what the market had tried to Price in locker term. And you got a yet may not be as bullish copper is a pear B, B, E, V strategy, but you still need to have the electricity inside the all the wiring inside of those cars. So but why are people choosing the hybrid IT goes back to energy security.

I don't have range anie. I still get the plugged in. I still can utilize electricity. I still can ul ze oil and gas. I still have my options available. And I think that's the world we're going into, which electricity and electrification of everything will play a very vital role.

And the everything I want to point out about china making all of this investment in Green cap bex goods, luck to find everything is the marginal cost to renewables. And yes, it's more expensive in trying to get onto the grid. If they ever pull IT off in the european and go out that robocall, the U.

S. Would be in a very precarious situation by not making the investments in the electrification ever thing. They'll end up with a lower long term cost on a variable basis.

The upfront, and he guesses what people point, all the upfront cost are huge. I'm not gonna deny that. But the variable cost, and I will think anybody listen, this can deny that really, though.

So if you think about, you know, things like the railroads in the U. S. Now there's many examples of of large scale investments that were super inefficient, were super expensive to make. But once you might pass that ruby on urine in an entirely different world in again from an energy security perspectives, you got A. Keep your eye on this electrification.

And I think that's going back to my point, it's energy security, not environmental ism, that's going to drive a lot of this investment going for ant is still gna be an important part of the energy mix. I'm still a big believer on on the copper story and again must go back to the copper story. IT was not only a demand side story but IT is also a supply side story.

And so we look at the growth and supply over the last um twelve months, this in twenty twenty four, I came from refined copper, not from mine copper. We have that under investment. This is playing out in mine copper.

The only reason we're keeping production levels up is through scrap and through d stocking of concentrate, pushing IT into the refined market in the longer turn, lack of investment and mind is gona bite. That is the core of our revenge of the old economy thesis. And I still think it's very much alive in cooking. Jeff.

I hear you on the copper argument being very strong. I agree, long term, it's gotta be strong because we really do need to electrify the economy regardless of who's in power politically. But hang on a second terms of investments in trades north of volt, which is a big battery manufacturer in europe, as hard as I could tell, just went unexpectedly dly bankrupt over the weekends, surprised a lot of people. IT seems like, at least in the short term, there is gonna a bumpy road for anything that may have been a Green investment before. Am I reading that right?

And what happened with north? You are reading that right. And then I think its industrial policy and the problems that that, that are associated with IT, when we look at industrial policy, and that's ultimately what the europeans are doing in trying to stimulate the investment in Green capex goods like like batteries.

When we think about where industrial policy really works is when you're doing a catchup to um you know existing technologies or you're trying to win a war like in like the second world war with the with the us, industrial policy works fantastic. Now the problem with the Green capex in with you know these batteries, I don't know the specifics, but is that with the batteries you're dealing with technological unknown and I hey, that's someone thing about B E V S. Why the demand is for the hybrid is because we know the technology works and you don't have ranging exited the asics.

The problem with the B E VS is still there's a lot of technological unknown there. And I think that they I get I don't know the details, but now probably there the other some issues around the technological and nuts. So industrial policy does not do that well when you have technological and not again, my point was me IT works great and catch ups, but not the technological unknown.

And I think that, you know, when we think about economics in the Adams invisible hand and allocating capital here, the problem is what europe trying to do is the visible, but verses the invisible hand. And this creates malinvestment. And you whether it's, you know, mistiming of solar farms in places like spain, where you get negative power Prices, which, by the way, from a training perspective or phenomenon, we will resolve those negative power Prices through battery investments and things like that.

And you know is a great opportunity. But it's as timing issues and we use to turn out investment. That's what we mean by my male. And investment is timing issues or a miscalculation on technology. And any case that you said, this is just part of the process you're going and you're undulating up and down and trying to time all this and against a very uncertain backdrop. But that may know what that means is opportunities that you know will be created by pockets of capital that is allocated at different points of time.

So you know the read on on the malinvestment here, which is probably you know probably closer to that, I think the bigger read I take from IT is really the limits of industrial policy and subsidies. They work great when it's a known catch up on technology or a known goal like winning a war. But when he goes to technological uncertainty like we're dealing with the Green transition, IT does have limits .

to have final topic, I want to talk about nuclear energy under Chris, right? Assuming that he his appointment is successful in the new trumpet administration, I see this is a major, major shift in the sense that, look, jen fer grand home, despite having Frankly done a very good job in very recent history of advocating some appropriate nuclear policies, she's never had a clue personally what she's talking about.

Somebody is handing her her lions SHE was famously ambushed by a reporter saying, so a does the U. S. Consume two million or twenty million or two hundred million? And is that a day or a year? And he had no idea. So she's out of touch. On the other hand, a Chris right sits on the board of okay, which is not just a nuclear technology company, but it's an advanced generation for sodium cool, fast neutron spectrum high tech energy company that really is on the leading edge of the right kind of nuclear technology.

What I can't decide is, does that even matter or in these policy making positions? I mean, even Jenny, who didn't really have any idea what which he was talking about, went from dumb nuclear policies to excEllent nuclear policies late in ha tenure in the bite administration, because somebody changed what was on the teleprompter. SHE was reading, how much difference is is going to make to have somebody who actually knows .

what the teleprompter says um I have to say everything i've heard him say. I listening after the potent at last week and I started to listening to some of people responding me have on youtube es um of his presentations. He is extremely knowledgeable of the industry from everything from Green to Brown and I didn't see anything he said that was actually untrod.

And by the way, he doesn't wait into you know the climate doubt argument. He he is smart enough to stay very far away from that. But I think the one thing that goes back to that point, I was saying before energy dominance, and I think that, yes, that's going to be the policy, the united states.

Now as fact, you know, one theory about how is how could trumpet administration in the ukrainian war? They draw the line where the existing lines are in ukraine, and they tell the russians either you accept this or were going to hit you a secondary sanctions. Tell the europeans you're going to accept this and you're going to take U.

S. Energy, or we're just going to, you know pull back out. They got library jump, both sides. And a lot of IT comes from the energy dominance, actually dollar dominance and energy dominance that that allows them to give him that you know because they got the dollar dominance, they can hit him with the secondary sanctions. And the energy dominance, they can hit him with the on the using energy from the us.

But I think bringing them back to your point about nuclear energy is if you're going to be dominant in energy, nuclear is has to be an absolute part of this. And I think a couple things to keep in mind, which is why the previous administration was successful in the new couple. They recognize that the inner rupal resiliency are, you know, the fact that nuclear energy is so reliable, a reliable aspect of IT in the importance of A A data center will lose seven thousand five hundred dollars per minute if IT is power is aneroid.

That's a huge some relative to the Price of power. As a result, they're willing to pay enormous sums to have something like nuclear sitting their power in these data center. So they just simply do not get interrupted, by the way, hydro's way up that list as well.

So they're rather Green type technologies that fit that bill. But I think the one thing the U S. In canada in a good place, as actually Chris write, as in his his writing is that they have the uranium supply.

And by the way, eric, you know this Better than anybody, that the uranium supply is a critical point here. Europe's gona have those problems again. China is going to have those problems.

But the us in particular, is that a pretty good position. Um so I I would definitely think that as we look for with this next administration, um there are going to be in a very good position um across the energy spectrum. And I would be surprised if you know that, that nuclear power is not part of that energy dominant strategy, but it's part of the mix.

I want to go back to what car is in demand right now. It's the hybrid car. Why is the hybrid car in demand? Has no range anxiety.

I mean, the world could run out. You're okay. The world could run out of uranium.

You're okay. You could run out of anything. You're okay. And you listen to Chris, right? I think came with this numbers.

He came up with numbers, you know can't go over twenty five percent. I don't know, I don't. But he he's rational about how far you can take the new story.

And I think IT just goes back to having a baLance portfolio approaches. Let's go back, you know the basic finances, you know having a well about portfolio is the safest bet. And I think IT applies to energy and nuclear is part of that behind portfolio. Jeff.

I can't resist editorializing a little bit here on this point, which is that, boy, all of these fast sodium reactor guys, and I think OK is definitely in this camp, are, in my opinion, all being influenced by a set of beliefs that widespread across the nuclear industry, which is people think you can't make a thermal spectrum greater reactor. They know that you ultimately need to get to greater reactors in order to really have energy dominance.

That's at least ten or fifteen years away. People like Chris, right, understand that, but I think they misunderstand IT. And I think that china doesn't misunderstand IT.

What china understands, what elvan wine berg understood in the one thousand nine hundred and sixties, but very few people agreed with him. And what has now been proven only after twenty twenty two, when the modeling software that allows simulation of nuclear reactors to be performed in computers. It's only recently been proven that you can build a thermal spectrum breeder reactor, but you can only do IT with thorium, not uranium.

And I think a lot of people are misunderstanding china's nuclear policy. They think they're focusing on thora um because they don't have the uranium deposits and they do have the thorium deposits. That's not yet.

China is just a whole lot smarter about nuclear energy policy than the us and everybody else is. So Chris, right? If you're listening, i'd love to talk your ear off about why china is going to steam roll the us.

With a much Better energy strategy than the us has because they understand the economics authorities, nuclear energy. Better than companies like oko in the united states do. Couldn't help that, jeff, any opinion on fast breeder reactors and thermal spectrum thorium reactors .

before we go said, you know this something Better than I do, eric, because we do we can't trade the thorium. So i'm stuck in the old world.

Let's touch on uranium Prices before we close this interview then because this this is one that's baffling a lot of people that look at what's happening with this nuclear renaissance news is off the chart this morning, monday morning. I'm looking at s mr. That's new scale energy, which traded as lowest two dollars earlier this year, thirty two dollars in change.

So that's what sixteen x in a year. That's how much the the nuclear stocks are taking off while meanwhile the spot Price of uranium is flat even as all the analysts who are credible, in my opinion, are saying, there's just no way we can ramp up the uranium demand as fast as this triple nuclear energy initiative is going to happen. IT doesn't make sense. But the bottom line, jeff, is spot uranium m is flat.

It's not moving. Why not? Because the fundamental story is still years away.

And I think we got to remember commodities are spot assets. Financial markets are anticipate tory assets. Comedies have the Price to supply and demand of today.

Financial mark gets get the luxury of pricing tomorrows supplying demand. And that's why you see that there's a share Prices moving in the commodity. Not and I think when we look at you know that the picture is going to take a while before you get there.

But I wanted give you an example. I think everybody should have learned their lesson. What happens with a comedy market moves too soon. Coal botton lytham um I don't know you, eric q probably have some idea or coal bottom lytham um are today in extraordinary low levels right now.

Part of that has to do with the market got super excited back in twenty seventeen and everybody started talking about evs and esg, and they bought up, you know stock piles of cobalt and lithium before the fundamental got tight. And as a result, high Prices and navies, a lot of investment. And so here we are.

It's twenty, twenty four and you have all that investment in the views, the phenomenal stories playing out. However, in that what seven year time period, the world invested a lot in the supply of coal boat with. So what that's telling you this time around the uranium Prices is not moving.

We're not gonna get the investment and we'll see that tight market by way as the reason why I argue you're not going to see the Better market in oil, you try to Price IT in before IT happened. And can I take the key message here, particularly in uranium or oil or lithium or cobalt, you can't Price in the fundamental of a comedy market before they actually happen. So I don't view IT as being a surprise.

Uranium hasn't vote. Well, jeff, I can't thank you enough for a terrific interview before we close any final points that you want to share with our audience.

Let just go where where you started this discussion. You know, the world seems incredibly anonymous right now. And I think it's an indication, you know that the marginal buyers and cellars and the marginal market are changing everywhere.

You know whether if its energy L N G is your marginal molecule pricing and inlaid expectations. Today we look at the marginal buyer of equities in the public market. IT is the the passive investor, by the way, that argues that the active investor is going to be moving to the private space.

So it's no wonder, you know, somebody like myself who was a fundamental ala sitting in the public spaces is now sitting in the private space. And I think that the opportunity set in private markets going forward for active investors is going to be tremendous. And these are these big shifts that are taking place, and I think they're going to continue to get in moments.

But my main message to everybody is start thinking holistically, look around you and o you know, where is that marginal buyer? Where is that marginal seller? Because I think that explains a lot of these alongst ice dynamics that we're seen right now. So interesting times were living in.

Indeed, they are. Jeff, we look forward to getting you back in a few months for another update. listeners. We are working on our year and holiday specials where we will explain what these thermal spectrum breedin reactors are and how they're different from fast sodium reactors and what companies like local, go and others do. So if I lost you on that point, forgive me, but I promise that will clarify IT before the year is out, Patrick's resident and I will be back as macrovoice continues right here that macrovoice does come.

Now back to your hosts, eric towns and Patrick sassa.

Eric IT was great to have jeff back on the show. Now let's get to that chart tech listeners. You're going to find a download link for the post chem china tech inie research round up email if you don't have a research of e mail image of not yet registered at microvolts t com, just go to our home page microvolts 点 com and click on the red button over jeff s。 Picture saying, looking forward, the downloads now eric.

let's have with I don't have an E I, A inventory data this week because we produce the show a day early for the holiday. The overall story is the same as last week. There's plenty of room for more weakness and energy Prices on macro fundamental, but there's also plenty of room for a dramatics bike higher if the geopolitical situation escalate further. I'm flat and I don't see any appealing directional trades from this entry point.

Well, eric, on paged to have that chart of crude oil. And the situation really hasn't changed over the last few weeks where in a primary downturn, trading well below the fifty day moving average and fAiling continuously to beat IT, all almost every rally is met with some degree of selling. But we have over the last three months established a support line that is have been tested numerous times, even going back to two thousand and twenty three.

So the big question here, does that support line act as a base in a floor for crude? The primary downtrend could still theoretically create a short term uh, distribution cycle that could go down to the low sixties and just wash showed any hopeful traders and or drive a new wave of short selling. But generally, I think that this is where there is a fair value zone for oil that could be where we see the stronger and longer term base establish itself.

Even if there was a short term dip down till to say, sixty two dollars overall, there is no new bull trend yet and there is no new accumulation cycle that has started. So we have to respect the prevAiling downtrend is the dominant one while trade along this key support. Now let's move on to the equity markets.

What are you are thought here? Markets are still digesting the trump win and cabinet picks, but it's starting to look like a sustained rally. Higher may be starting still early to tell though the juries out.

Let's keep an eyes on IT. Well, eric, on page three of the M. P. Five hundred chart and the markets here continue to demonstrate accumulation, higher highs, higher lows, every deepest st being bought.

So the prevAiling up trend is intact and and there are numerous measurements that showed sixty two hundred as A A reasonable target for the the short term. So assuming that the market will continue this um to the jobs number will be um probably the path of least resistance. The bigger question, of course, will something like the jobs numbers, uh, which is uh, next friday, be a catalyst to cool off a market that's been pretty hot and persistent up until now.

The breath of the market really at this stage has a somewhat wide, and we continue to see the equal aid index doing incredibly well for the S P. And and sectors like the financials and consumer discretionary and energy stocks have actually hold done incredibly well, widening that breath. But the mag seventh have not participated.

And the interesting thing is, if the market was destined to make a move to sixty four or sixty five hundred, IT would almost certainly need the additional benefit of the mag seven breaking out. And so I think that is gonna a really important thing to watch in the next coming weeks is will this trade range for many of these mag seventh break bulshed to the upside? Or then we have to curb curtail our enthusiasm of how far the market can go.

There's clearly no sign of a reversal yet, and I will likely need a catalyst. And at this point, it's clear that the jobs numbers and maybe the F, M, sea meeting that is coming up in, in a few weeks could be the only real catalist this year on the short term beyond some big geopolitical event. Unless let's move on to the dollar, what are your thoughts here?

The dick I put in an impressive shooting star on friday testing one or eight and may be putting in at least a short term top. So are we turning down here? We just catching our breath before moving higher. Pretty too early to tell.

Yeah, eric, he certainly did have a big burst out to the one of eight level, which is certainly a break out out of a two year trade range. But I think it's more important for us to look a little bit under the hood on some of the cross currencies to Better understand the potential of a us dollar move. I want to look on page five on our chart of the euro USD.

On a weekly charts, we're really going out and looking at the last half decade on the charts, you can see that two year trade range on the ero that was more or less to find between one of five to one twelve and we now have definitively broken below that trade range. Now has this ah now started a new downtrend? Um will we see parity or even ninety five cents in the downside of the year? O this this point technically there is a break and and certainly that window is now open.

The question is, is on the short term oversold where we may spend the next few weeks, i'll say, bouncing back to one or six, one or seven on the upside, just to relief ally from a very oversold move. But generally, I think that this is A A chart that is highly vulnerable for continuation pattern to the downside and and certainly no reason why we can't go back to two thousand and twenty two levels that uh on that hero. So on page six, I have that U.

S. Dollar cat and the canadian dollars just been incredibly weak. Now there's again was this two year trade range. This almost like sending triangle pattern consolidation where all the highs around that, uh, one thirty eight level on the upside one thirty where major resistance levels we now have definitively broken out and have spent even weeks trading above this level. This is the canadian market continues to be weak and the currency is reflecting that.

And so we have a scenario now where the highs from two thousand and twenty up along one forty three, one forty four are the only real next resistance level for where this currency can go. And then on page seven, I have the us. Dollar against the mexican pistol.

And what we can observe here was that there was a very clear us dollar downtrend that lasted several years. Uh, and we have a definitive trend shift that happened in the middle of the year. And and we are now back into the important trade ranges that were established back in two thousand and twenty one and twenty two.

The bottom line is that there is A A lot of these types of currency situations where the us. Dollar can do very well. You know maybe ah the U S. Dollar yen might be able to buck the trend. But beyond that, IT does still make a case that the U S. Dollar has potential on that dollar index ah to head higher and maybe we're onna go back and retest some of those levels in the one one ten, one twelve area on the dicky and less. Let's move on what your thoughts here on gold.

Well, it's Christal clear that the cause of the big sell off on sunday night into monday morning and then all day on monday was rumors of the now official ceasefire between israel and has below. But the market completely ignored the simultaneous ws that the bite administration has discussed, giving nuclear weapons to ukraine.

Just imagine if russia was giving nuclear weapons to the mexican drug cartels to meta mova tips rhetoric couldn't possibly have been stronger, warning that the very discussion of such a scenario is considered by russia to mean that the us. Is preparing to go to war with russia and actually giving such weapons to ukraine would be considered an act, nuclear aggression against russia that would be met with a nuclear response. Yet gold trade IT down on the news.

What that says to me, Patrick, is that the U. S. Market isn't really taking this a nuclear escalation risk seriously. I note that both sunday night into monday and monday night into tuesday, we saw the same pattern where the market sold off kind of gently during the asian session. Then europe bought the dip.

I think people in europe are much more presently aware of the risk of a nuclear escalation and what IT could mean to their safety. They were buying the dip without awareness. As soon as U. S. Markets opened, they were selling gold hard, suggesting that in the absence of objective news media in the united states, maybe traders aren't really taking to hard the seriousness of the geopolitical scala tion that's going on between the united states and russia.

Well, eric, there's no shorter to geopolitical headlines that certainly can be drivers for goal. But i'm keeping IT simple by looking at the technicals. And when we had a very bullish advance since the summer that saw those highs near twenty eight hundred come in since then, gold has over the last month been in a mean reverting correction.

Uh, to me this is just a typical uh, correction in a primary bull market. Could we go as low as twenty five hundred? absolutely. But generally, this consolidation should be bought. The primary trend will be resume.

What i'm looking for is confirmation of a legitimate Price action back above twenty seven hundred to suggest that maybe the next leg of a bullet advance has begun. But realistically, there is an entire possibility that we're going to be waiting until january for this gold consolidation to finish before we will resume bullishly on the upside. Now eric, let's touch on uranium. What are your thoughts here? Well.

the uranium sector continues to perform very well in the speculative issues, but the spot Price of uranium is still stagnant. And the big rally, they're really big rally that we've been waiting for can't begin until the spot Price starts to move. Meanwhile, the trend is still up, but the rsi on slows to chastised s on many of my charts are high and waivers suggesting that a swing trade lower to catch the markets breath may already be in play.

Eric, technically, uranium been in a consolidation all year, and we were obviously seeing an extended basing formation because ever sense basically the middle of the summer uranium stopped going down. IT just hasn't started going up. And so at some juncture, there were probably will be a technical catalyst to drive a bullish break out on spot Prices.

But I still has just not come around at some point when that, that happens. Will technically observe and and and look for that next bold trend to really get going right now. I consider this to be trade ranged found even though uranium equities continue to do actually very well.

The spot Prices uranium simply are not confirming yet, but they will inevitably finally, on page ten, the erick, I wanted to just have a quick peak at at copper. And copper Prices continued to trade along year lows. More importantly, the window at this point is still open to even consolidate another twenty five cents lower back into trade rangers established in two thousand and twenty three and early two thousand and twenty four.

Irrespective, we are now in the midst of a six plus month correction in copper. That is a getting mature. I think even if there is another twenty five cent downside, IT generally is we are much closer to where the bottoms are likely to be established.

The bigger question is when do we transition from this kind of distribution cycle and begin a new bull cycle? And that so clearly is not evident yet um will be watching for those signs. But right now, the rest of year may actually still see some short term technical weakness. But in the bigger picture, I think those are all big buying opportunities.

Folks, if you enjoy Patrick s dark text, 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 slight deck, or just go a big picture trading that com. Patrick, tell him what they can expect to find in this week's research rounded up.

well, everyone, this week's research round up. Our listeners are going to find the transcript, today's interview, as well as a chapbook, which is discussed in the post game, including a number of links to articles that we found interesting, going to find this link, and so much more in this week's research rounded up. So that does IT for this week's episode.

We appreciate all the feedback and support we get from our listeners, and we're always looking for suggestions on how we can make the program even Better for those of our listeners that right or blog about the markets, and we would like to share that content with our listeners. Send us an email at research rounded up at microbes sid com, and we will consider IT for our weekly distributions if you have not already follow our main account on eggs at macrovoice for all the most recent updates and releases. You can also follow erik on x at erik as towson.

That's eric built with a key. You can also follow me at Patrick seasonal on behalf of air town and myself. Thank you for listening, and we'll see you all next week.

That concludes this edition of macro voices. Be sure to tune in each week to hear feature interviews with the brightest minds and finance and macroeconomics. Micro o voices is made possible by sponsorship from big picture trading dot com, the internet premier source of online education for traders.

Please visit big picture trading dot com for more information, please register your free account, add macrovoice 点 com。 Once registered, you'll receive our free weekly research round up email containing links to supporting documents from our vital guest and the very best free financial content or volunteer research team could find on the internet. Each week, you'll also gain access to our free listener discussion forms and research library, and the more registered users we have, the more will be able to recruit high profile feature interview guests for future programs.

So please register your free account today at macro o voices die come. If you haven't already, you can subscribe to macro voices on itunes to have macro voices automatically deliver to your mobile device each week free of charge. You can email questions for the program to malbak at macro voices dot com, and we will answer your questions on the air from time to time.

In our mail back segment, macro voices is presented for informational and entertainment purposes only. The information presented on macrovoice should not be construed as investment advice. Always consult a license and investment professional before making investment decisions.

The views and opinions expressed on macrovoice are those of the participants and do not necessarily reflect those of the shows, host or sponsors. Macrovoice its producers, sponsors and hosts, eric towners and and Patrick season a shall not be liable for losses resulting from investment decisions based on information or viewpoints presented on mro voices. Macrovoice is made possible by sponsorship from big picture trading dot com and by funding from fourth turning capital management L L, C. For more information, visit macrovoice that com.