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- [00:08]
A
This is Macro Voices, the free weekly financial podcast targeting professional finance, high net worth individuals, family offices and other sophisticated investors. Macro Voices is all about the brightest minds in the world of finance and macroeconomics, telling it like it is, bullish or bearish, no holds barred. Now here are your hosts, Eric Townsend and Patrick Seresna.
- [00:33]
B
Macro voices Episode 525 was produced on March 26, 2026. I'm Eric Townsend. We've got another Macro Voices double header lined up for you as we continue to add extra interviews to cover the developing situation in Iran. MacroVoice's all time listener favorite Lyn Alden returns as this week's headliner. Lyn and I will discuss the Iran conflict, the return to a multipolar world order, the outlook for persistent inflation, the breakdown in private credit market, and what we can expect from monetary policy after Kevin Warsh takes over as Fed Chair. That's assuming of course that he's confirmed and much more. For this week's Iran update, we're bringing back Rabobank's Michael Every who will weigh in on the broader macro implications of this geopolitical upset. Then we'll aim to bring one of our oil experts back next week. Then be sure to stay tuned for our post game segment after the feature interview when Patrick's Trade of the Week will take a look at food inflation and what it could mean for emerging markets. And then we'll have our usual post game chart deck with coverage of all the markets as of Wednesday's close.
- [01:42]
C
And I'm Patrick Surezna with the Macro scoreboard week over week. As of the close of Wednesday March 26, 2026, the S&P 500 index down 51 basis points trading at 65.91. The price action remains weak and distributive. We'll take a closer look at that chart and the key technical levels to watch in the post game segment. The US dollar index down 57 basis points, trading at 9,964 but continues to hold above its 50 day moving average. But still in this multi month consolidation asking the question will we get another bull breakout. The May WTI crude oil contract down 538 basis points, trading at 9,032. The war premium remains as the uncertainty continues. The May r Bob Gasoline down 358 basis points to 296. The April gold contract down 703 basis points, trading at 4552. Another big drop in gold prices driving a deep reversion of that bull phase. The May copper contract down 54 basis points trading at 556 the March uranium contract down 41 basis points trading at 84.40 and the US 10 year treasury yield up 10 basis points trading at 433. Yields continuing to press higher in this post FOMC period. The key news to next week we have the ISM, manufacturing and services, PMIs, retail sales and the much anticipated jobs numbers. This week's feature interview guest is Lyn Alden, founder of Lyn Alden Investment Strategy. Eric and Lynn discussed the shift toward a multipolar world, the economic impact of rising energy prices, the risk of second wave food inflation, and how stresses in emerging markets and private credit could shape the global macro outlo look and stay tuned for a special follow up with Michael every where we break down the broader macro implications of the latest developments in the Middle east conflict. Eric's interview with Lyn Alden is coming up as Macro Voices continues right here@macrovoices.com.
- [04:08]
A
And now with this week's special guest, here's your host, Eric Townsend.
- [04:14]
B
Joining me now is Lyn Alden, founder of Lyn Alden Investment Strategy. Lyn, it's great to get you back on the show. Obviously we've got to start with Iran, which has been the all consuming news. What's your high level take on what's going on and how does this play into some of the writings that you've done in the past about the transition into a multipolar world that we're moving into?
- [04:35]
D
First of all, thanks for having me on. And it's certainly one of those occasions where we all have to be experts on the current thing. Usually that tendency is overblown, but not really. In this case we all have to be on top of it because it's kind of the all consuming news item that affects, let alone human lives. But of course, all the investment topics we would potentially talk about on a program like this and one of the frameworks I've had for a while, and I'm of course not the only one that's had it, is that the world is exiting a peak period of a unipolar power like a hyper power in the world. Obviously after World War II and then especially after the fall of the Soviet Union, the United States basically became the core center of kind of global economy, global military projection power and all that. And that's a historically unusual situation for one country to have such a large relative proportion of the rest of the world. Even for example, during the height of the Roman Empire, the Han dynasty in China and other empires in the world were still pretty significant. And so you still, there's a world where they didn't, obviously in long distances they wouldn't connect that much. But in this kind of post telecom world, this post industrial world, we can get around the world very quickly both digitally and with military projection capability. We've been in this kind of hyper power world. And then also of course that's financial power. That's the global reserve currency, which unlike prior global reserve currencies is. It's different because it's not based on gold, which was the actual reserve currency back for those prior periods. It's all tied to the dollar and the treasury. And so we kind of reach unusual levels of global centralization of multiple types of power, really peaking in the late 90s by many metrics. And ever since then there's been a gradual, very gradual shift toward a little bit more of a multipolar world. We obviously saw the rise of China as a massive economic power and then around the margins, obviously financial power, a military power, but especially that economic and manufacturing power. We saw to a lesser extent the rise of India and other economies. And so the share of US influence across multiple domains is on the decline still, of course, very high. Ray Dalio and others have kind of mapped this outcomes of the US and China. But he's kind of published research that kind of maps out the different metrics that you might analyze an empire by. And they tend to roll over at different paces. So for example, education quality tends to be a leading indicator on the way up. And it also tends to fall early, whereas something like global reserve currency, because it has network effects, that tends to be a later rise, but also kind of one of the last things to decline over time. But all this is to say is that we are kind of falling back toward a world that historically is more usual, which is that you have multiple poles of power that are in competition with each other rather than kind of one central world power. So of course the two biggest poles would be the US and China. Europe's decisions have kind of reduced the size of their pole going forward, I think as far as many analysts can tell. And then there's other large poles of power in India and, and to some extent Brazil and others. And this kind of battle over the Middle east is I think both a symptom of that, which is that empires rarely give up their kind of projection capabilities easily, even when it would potentially be the right thing to do from a strategic standpoint would be to kind of right size from a position of strength rather than kind of fight to always maintain whatever capability you have. But that's where we are. And so I think this is a milestone to watch for, sure, both in terms of current market impacts, current humanitarian impacts, but then also just the relative projection might of different entities around the world.
- [08:33]
B
LYN Something that surprised a lot of people was that precious metals, which we're used to thinking of as a geopolitical risk hedge, it's usually bombs drop, oil goes up, dollar goes up and gold goes up. All of a sudden it's bombs drop, oil goes up, dollar goes up, gold goes down. What happened? What's causing that? How long does it last?
- [08:57]
D
Based on what I can estimate, I think there are multiple factors. One is we can't ignore, of course, the price action that occurred in precious metals before all this happened. We had an unusually strong rise in gold, silver and platinum prices in the year leading up to this event. And some people have used the word bubble to describe it. And while I think that might be valid on the shorter term, like it's a sentiment bubble around those, I mean, the sheer magnitude and speed of those moves is concerning. I don't really view them as fundamentally overvalued, but certainly when something trades that volatile to the upside, there's a risk that it just goes volatile to the downside. So as a long term, nearly decade long, precious metals bull, they kind of hit the price targets that I had years ago. And so my position in my research for months now was I'm not turning into a bear on precious metals per se. I'm not calling them a bubble, but they no longer have that asymmetry that was available at 20 something silver and at 2000 something gold, or before that, even lower for both of those metals. And that now they were in a more kind of balanced range, which is I wouldn't be surprised by a big sell off, nor would I be surprised by a continued march higher because they have been pretty resilient. One is just that price action becomes unreliable when you have such a massive move and sentiment that's almost unbeatable compared to where it was, that just opens the door toward more unusual situations because as you point out, blank sheet of paper. If you ask people what would you think precious metals would do during a war of this magnitude, you'd think they'd be flat to up at least, and they haven't been. The other factor I think, and I'm not the first to bring this up, is that in times of crisis, sometimes entities have to sell what they can not what they want to. And so, you know, gold is a source of liquidity for many market participants, including potentially sovereign participants in this crisis. And the other side of the coin is that usually when we have a crisis occur, we usually see bitcoin not do great. We usually see gold do pretty well. The other side of the coin is that bitcoin is kind of held up oddly well in this environment. There are some that are arguing that it's like showing signs of risk off. Finally, I wouldn't go nearly that far because bitcoin had the opposite price action of gold going into this. So bitcoin had a particularly rough several months leading into this. So it was already largely de levered. Sentiment was already very washed out. A lot of the fast money was out and a lot of the coins were held by pretty strong hands. And so we, I think we've seen kind of a sentiment shift. And then if you want to add a fundamental component, if people find themselves wanting to move portable scarce money, it has, you know, some certain advantages compared to more eternal scarce money that is maybe harder to move across borders or jurisdictions. So I think that there's a fundamental component there potentially. But I personally don't read too much into this kind of multi week action of gold doing poorly, silver doing poorly, bitcoin doing well, just because the price action for both of them was so significant in the months leading up to it.
- [12:09]
B
Lyn, let's move on to the effect of this war and higher oil prices on the economy. Obviously, the experts have told us that there's really no limit to how high oil prices could go if the straight up Hormuz stayed closed indefinitely? Well over $200, I would think, cripple the global economy. Question is, okay, how do you put a number on that if, let's say $1,000 oil would clearly cause a massive global crisis? Is $150 oil something we can tolerate without the economy collapsing? What's the number? What's the threshold? Any thoughts?
- [12:46]
D
Well, yeah, it's a good question. I think there's a couple ways to look at it. One, you can inflation adjust it and say, okay, well, what priority oil price levels damage the economy? And of course we can't just take those nominal figures because depending on how far back you go, money supply has doubled or more. And just the size of the stock market is bigger, the average income is bigger, the average house price is bigger. Just the amount of money going around is bigger. So just because you get back up to $150 oil, which historically has been awful. Anything well over 100 has historically been awful for the global economy. I do think that the economy is resilient enough to handle those types of similar nominal numbers of the past. I think where it runs into danger is when you get into these kind of unprecedented levels like something approaching new inflation adjusted highs, which as you mentioned is potentially in that 200 plus barrel range, which according to the oil experts that I follow, if the strait stays closed long enough and or if these shut ins and the worst case scenario is these severely damaged energy production infrastructure, if multiple of those things together gives us another month or more of a nearly closed straight, then the analysts I'm following are saying that those 200 plus numbers are quite possible if not probable. And that does start, I think become crippling for the economy. Now there's kind of two thresholds to consider. The first one is what is painful for the economy and painful for say lower income consumers or even middle income consumers. I mean we've already touched that. Let's focus on the American consumer for a second. We're already in what other analysts are calling a K shaped economy or two speed economy. And all the data I look at that fully confirms that. So if you're on the right side of AI CapEx or you're on the right side of fiscal deficit spending, the healthcare, the Social Security, the defense sector, those areas are receiving the majority of the deficits and they're on average doing pretty well. So on average older, wealthier Americans are generally doing fine and people that work in certain industries are doing fine. But if you're a new college graduate looking for a white collar job in a world of stalling total payrolls and AI optimization to cut costs on the back end for companies all across the country and of course in other economies as well, it's rough. Same thing as if someone is looking for a home, especially if they're on the low to medium income side, they're going to finance it, they're not going to buy it in cash. The combination of somewhat high mortgage rates and still high average price levels puts that out of reach for a lot of people. And you had insurance prices going up a todd and things were already rough for a lot of consumers. And so you know, gasoline, even before it gets to all time highs, just the fact that it's gone up considerably in a matter of weeks already puts pressure at a time when the shields are kind of down. When you have flat non farm payrolls for the better part of a year, even though you don't have high initial claims yet, even though you don't have any sort of acute signs of issues, you just have kind of a stall speed type of economy outside of those really hot spending areas. So that's already a painful element to the US economy, let alone obviously in developing countries it's often even worse. In Egypt for example, where I actually plan to be in a number of months because I go there every year, they've already announced that because they're natural gas import bill effectively tripled from somewhere in the ballpark of 500 million a month to 1.5 billion a month that they've already effectively had to have rolling power issues, kind of curfews on certain types of businesses that kind of close cafes and other things like that at 9pm at night to try to conserve electricity. Because a lot of that is derived from natural gas. And that's just one example. I mean obviously in countries in the world where they can't quite bid as much to the wealthy nations for energy, these pain points are already there, especially when they happen so quickly. But I think that because of large fiscal deficits as well as high income spending, we've generally seen that the US economy in particular, but also to some extent the global economy is more resilient than many bears think. Which is why I think that just because you have $150 oil doesn't mean the economy can't function. It just generally means that changes have to occur when we're back in a high energy environment. So I think that after a period of friction, the global economy could function on $150 oil because that's not the same thing as inflation adjusted. It's not all time high oil, I think that can be sustained, you just have to adjust to it. But yeah, once you get well into 200 plus oil, a lot of things start breaking down.
- [17:50]
B
Oil is an input cost to the price of everything and therefore a very important inflation driver. At what point let's say we get a really big inflationary pulse out of this war and then the war gets wrapped up in a couple of months. Does that inflation pulse come back out of the system or has it already started a self reinforcing process that can't
- [18:14]
D
be unwound at that point from data we have available? The most persistent type of inflationary pressure is when you have a growth in the money supply because they create more money. There's various mechanisms that get that money broadly out into the public. Which is why for example 2020 was very different than 2008. We didn't just recapitalize banks. If you look at broad money supply during 2008, 2009, it just kind of stayed on its normal trend. Whereas you look at the money supply in 2020 and 2021, it spiked because not only did the Fed print money, but that, you know, that funded direct fiscal injections out to the broad public. And so, and then it took years for that increased money supply to trickle out into various types of prices, which is why we have five plus years of inflation from what was effectively a hyper stimulus for like two years. And but when you have a something that's caused by a supply disruption, that part shouldn't be as persistent. Kind of like how the energy price spike we had in 2022, while very damaging for that, it gave us less persistent effects on inflation. I would argue all those transitory types of inflation that policymakers kept saying things would be, the transitory things did go away or at least diminish in time. It was the persistent increase in the money supply that really solidified the higher price that we see across the board. We saw massive increases in home insurance and health insurance and all sorts of things that have nothing to do with supply chain issues or very little to do with supply chain issues. And so at the moment, let's call it next couple months, there's no particular sign that we're going to get a massive increase in money supply in the US or certain other major economies. And so because of that, should this be resolved, starting with some sort of peace talks in the coming days and weeks, and then it still takes time, unfortunately, for all that shut in energy to come back. We have to see what's going to happen with the insurance markets for these ships. We have to see how quickly the strait will fully open just because it's partially open. So even in the best of scenarios, this seems to looks like it's going to be quite a while. But if there's no kind of massive increase in the money supply, we should over time expect this to mostly go back to baseline. Now it doesn't change the fact that a consumer would have spent more on gasoline during a number of weeks or months that they're never going to get back. It doesn't change the fact that farmers, because of sharp changes in fertilizer prices and things like that, they're not necessarily going to get a season of profits back. So it's not that those things don't have permanent issues on certain parts of the economy. But I wouldn't expect a broad and permanent increase in prices just because you have a multi month spike in energy unless we get some sort of stimulus to help people pay for that energy. That's where you start to get that broad money supply growth. And that of course is all what I'm saying there is compared to the fact that we already have inflation, we already have money supply growth occurring, we already have price aggregate price levels going up, we're still getting permanent inflation. But then I'm taking your question to mean will this energy price spike give us a permanent sharp increase inflation above that baseline. And my answer would be that generally speaking, only if we get that money supply growth kind of accompanying it that's above the current baseline.
- [21:31]
B
While we're on the subject of monetary policy, let's talk about Kevin Warsh. And I guess he hasn't actually been confirmed yet. That's on hold pending criminal investigation of Jay Powell. What a crazy world that we live in. Do you think there is a question as to whether or not Warsh will be confirmed and is there a question? I think Powell's term is set to expire on May 15. Does Warsh definitely take over at that point? We're only a little more than a month away.
- [21:59]
D
Yeah. So Powell's term as Chairman expires, he still has the option to remain on the board, which ironically he might increases the odds that he might stay on it. Based on recent comments he's made because of some of these investigations. I've been operating with the assumption that the new Fed chair is going to be in place by mid May. But I'm not deep in the weeds in Washington politics that could give you a precise answer on that. But he's certainly a candidate that in isolation should be, you know, is, is likely to be confirmed by the Senate. He's not an outlandish candidate or anything like that. And then this criminal investigation adds a new element to it that I'm not really in a position to, to judge. Yeah, I've been operating with the assumption that mid May or you know, maybe with some delay we would have the new Chairman in place. But obviously we live in very unusual times. So I, I wouldn't be high conviction on almost anything, but I think my main focus would be that I don't really perceive a giant difference as we get the new chairman because as listeners know, the FOMC at any given time has 12 voting members in it and they rotate over time. And so while the Chairman is a significant force on setting Fed policy and kind of controlling the microphone, the biggest microphone in the central bank, it's by no means a dictatorship. In addition, I mean, I've kind of analyzed his comments around balance sheet reduction, and while there are certain levers that he and others can pull that potentially give commercial banks the ability to provide a little bit more liquidity, which would reduce the need for the Fed to provide a little bit of liquidity, a lot of these things are at the end of the day, liquidity neutral and not that big overall. So I generally fade his comments on balance sheet reduction other than maybe around the margins. And then I do expect, all else being equal, he would be more dovish on interest rates than Powell would be, but to a moderate extent. And what I don't think changes either way is that anytime you have a acute liquidity stress, either in the treasury market or in inter bank overnight lending market, the Fed's going to step in when needed, starting with their standing facilities, but then also including purchases if needed. So while leadership changes do affect the Fed, I think a majority of it is kind of locked in. While I do expect the Fed rotation to happen at least roughly on schedule, it's not really a thing that any of my investment decisions are going to massively hinge on, per se.
- [24:36]
B
There's one aspect of that that I'm a little curious about, which is my thinking on this was pretty much consistent with yours. Except. Except that I thought that Jay Powell was really not wanting to give President Trump the rate cuts, the policy rate cuts that he wants. And it seemed like Warsh was lined up, very loyal to the President and likely to champion those cuts. It seems to me like it's impossible for any Fed chair to champion rate cuts with what's happened with the Iran conflict, unless there's a complete reversal of the inflation signal that's coming from elevated oil prices. Would you agree with that or do you think that it's still Warsh comes in and starts cutting rates?
- [25:20]
D
I would roughly agree with that. So if you asked me a month ago, I would say that all else being equal, war should be slightly less growth oriented on the balance sheet and slightly more dovish on interest rates would be my base case. But now that we have this war and we have higher energy prices and inflationary pressures in multiple dimensions here, while I wouldn't say it's impossible for him to cut, I mean, it'd be historically very unusual. And again, he'd have to convince other voting members to side with such unusual policy. So I wouldn't quite say impossible, especially because we're in kind of this age of like impossible headlines being true oftentimes I do think that the war actually does kind of narrow the choices they have and kind of narrows the difference between Powell and warship, which I already don't think was huge to begin with. And I think that, to your point, further narrows it because it kind of ties the Fed's hands a little bit, at least until they see more employment damage, you know, as long as unemployment levels are still on the lower side, even when they have softening in total payroll numbers and some of that's, you know, net migration, some of that's demographics, they're really looking at the unemployment rate more so and those numbers are still fine. Jobless claims are still fine. And so if they do have this kind of inflationary pressure from energy, I think it puts them in somewhat of a holding pattern almost regardless of who's in charge, as long as someone who's semi credible is in charge, and I certainly think he's a credible candidate.
- [26:55]
B
Lyn, let's continue on that multipolar theme and talk about some of the other polls. As this war continues, it seems like one of the effects that it's going to have is that it's probably worsening the conflict between the United States and Russia, which is an ally of Iran. What does that mean in terms of the resolution of the Ukraine conflict, and what does it mean with respect to energy and energy policy for Russia's sale of oil, both internationally and particularly with China?
- [27:29]
D
Well, all is being equal. This has been a positive development for Russia. Their energy prices are higher, the sanction pressure is less on them. You know, it's also they're also a major fertilizer producer, so they're potentially going to get benefits in that department as well. And so, you know, as listeners know, I mean, the vast majority of the energy that comes out of the Persian Gulf heads east toward China and the rest of Asia. And but, you know, because these markets have varying degrees of fungibility to them, you know, the economies that we're not getting that particular energy source are especially the wealthier ones. The bigger ones are going to be bidding pretty aggressively for any other sources they can get. And while not all oil is the same, there's many spots to get similar types of oil. Natural gas is one of the least fungible of the energy markets because LNG is so limited and the transportation costs are higher compared to the pricing, which is why we see bigger and more persistent pricing spreads between, say, North American gas and say, European gas back when that war broke out between Russia and Ukraine. So all has been equal. This has been positive for Russia, I would generally consider it negative for China. They generally benefit from stability. They benefit from having fairly cheap energy as an energy importer. But much like the US Economy is often more resilient than bears think. It's also true that China's economy is often more resilient than bears think. They're very flexible in terms of how they kind of are able to keep functioning. On average Chinese citizenry, their experience over the past decades has kind of given them higher economic pain tolerance than Americans because they have more of that uni party system. Political polarization is less of an issue over there. That obviously comes with massive downsides of freedom of speech and stuff. But it's a reality to take into account when we see how these things respond. And so I do think that China's going to be quite resilient as these other inputs get scarce. I mean, they are one of the powers that is capable of bidding pretty aggressively to get much of what they need. And so this is a conflict that is good for very few entities and bad for most entities around the world on average. I think it's. It's significantly bad for Europe. It is bad for China, but like I said, China is quite resilient. I would argue more resilient than Europe on average, economically. And Russia's kind of been one of the outlier beneficiaries. Now, from military experts that I'm somewhat familiar with, I think one of the negative showings was that some of the military equipment that Iran had from Russia and China has not necessarily operated as well as they would have hoped. So if there's a downside to Russia, that might be that, but that's outside of the scope that I'm able to comment on in any sort of. I certainly don't have an edge on that topic.
- [30:31]
B
You mentioned fertilizer in passing there. Let's come back to that. Because one of the things that several experts have predicted is maybe the oil price inflation shock that we're feeling right now is the first wave. But the bigger and potentially more crippling second wave comes from food inflation. And a lot of people don't understand that the Strait of Hormuz is not just an oil passing lane. A lot of the fertilizer in the world goes through the Strait of Hormuz. If that stays closed, we get to a situation where farmers can't grow their crops, food becomes more expensive, and that doesn't go away. The day that the bombs stop dropping, it continues for a full crop cycle. Would you agree with that outlook? First of all, and if so, what are the implications of that? Food price inflation, how does it affect different economies?
- [31:22]
D
So I agree. Of course a lot of raw inputs to make fertilizer come from the hydrocarbon industry. And then even other things, I mean, even like helium and other components that are used for chip making and stuff. There's a whole assortment of things that are now at risk of price spikes and, or outright shortages rather than just oil, gas and other liquids. And so while price of the pump is kind of the first sign we see, and potential shortages of LNG shipments coming in as expected in certain economies, that's kind of all hits first. But I do agree that food inflation is a significant risk. Should this be prolonged? My understanding at the current time is as we see already fertilizer prices go up, farmers are kind of squeezed because they haven't really seen the sharp of a move up in their cash crops yet. So they have higher expenses but not necessarily much higher revenue. But obviously that situation only lasts so long until you either until the situation resolves itself and those expenses come back down or the prices for their crops starts to increase. And food inflation's obviously one of the most damaging types of inflation you can get. In a developing country. The two things policymakers have to try to not mess up are food inflation and energy inflation or shortages. That's how you get revolutions. When people just can't put food on the table or they can't get to work, or they just can't function, or they can't keep their lights on, that's when they go out in the streets. And in a developed country, food inflation, there's less of an acute risk of shortages and people literally unable to eat just because the overall environment's wealthier. But it does squeeze people, especially on the lower half of the income spectrum. So you do get more anger. We're already in the US nearly record low consumer sentiment. We're off the absolute lows we were on, but it's still very low. And a prolonged gasoline spike combined with over time potentially just higher food prices is damaging. And so I do think that's a significant risk and it's going to. But if it's prolonged, it's going to show up in energy, food as well as things that people are not looking for, like supply chain for making things often requires gases or other feedstocks that come out of the Persian Gulf.
- [33:48]
B
What are the implications for emerging market countries that don't have access to a lot of alternatives? It seems to me that there are some countries I know you spend Some time every year in Egypt. There are places around the world where the entire economy depends on certain kinds of imports. And if they get cut off, there's really no backup plan in a lot of cases. What are the potential risks? And I hate to take a humanitarian crisis and turn it into a trading opportunity, but where are the trades there in the sense of emerging markets? Should we be worried about emerging market economies taking this harder than the rest of the world? Are they a short what's the outlook?
- [34:31]
D
I would argue that a decent chunk of it has been priced in, but that of course depends how bearish an investor is on this outlook. The longer and more severe they expect this to go on, the more that shorts become reasonable for the more vulnerable spots of the world. From a purely financial perspective, I got questions from family in Egypt asking why did the Egyptian pound suddenly jump from 47 to the dollar to 52 to the dollar in the week leading up to the war and then especially after the war. And it's in large part, I think because FX traders are looking at this saying Egypt is more vulnerable than the US and other safe haven currencies. Like I mentioned before, long time ago they were an energy exporter, but now they are an importer. They're not a wealthy nation on a per capita basis and they're out there bidding with everyone else. When we saw for example the natural gas price spikes in Europe back in 2022, and really they started in 2021, Europe suffered. But we also saw developing countries like Pakistan would often suffer even more because they would get outbid by comparatively wealthier European buyers that can scramble to get the energy that they need more easily than a poorer country. I don't treat emerging markets as one big group. China is still classified as an emerging market even though it has many characteristics that wouldn't put it in that category anymore. There are also emerging markets that of course are energy sufficient or exporters or fertilizer exporters. But for those that are more tech based or more tourism based, where they have to import their energy, people fly in on very energy consuming jets and things like that. Their economies are at risk the longer this goes on. And that can impact their currencies. That can impact, like I said in Egypt, they're already planning for that rationing stage. Not just higher prices at the pump and pain there, it's just outright just portions of the city shutting down hours earlier. So that impacts everyone. And you'll see that in multiple countries the longer this goes on. And you asked before about the topic of permanent Inflation if spikes for a number of months and then goes back down. The countries that are at risk of permanent inflation are these weaker ones because when you have an already vulnerable country have that kind of energy price spike and it's got its debts denominated in a currency it can't print and other issues like that, that they're more likely to have a big kind of money supply spike after this happens. So they're more likely to actually lock in a lot of that inflation because they're more likely to get a persistent and a higher plateau of money supply resulting from this, not necessarily after these weeks, but after some months.
- [37:27]
B
Lyn I want to change the topic now to something that we haven't really covered a lot on macro voices I've been looking forward to asking you about, which is the private credit crisis that is also breaking out. It's not in the headline as much because of the war, but it's kind of a big deal as I understand it. Basically there's a whole lot of private credit was loaned to software companies. Then Claude Code came along and kind of made it very easy to write software almost automatically and it creates a threat. So this is the first time we've really seen AI pose a threat to, to jobs and to businesses, but not quite in the way a lot of people expected it. Is that what's driving this private credit dislocation or is it something else? And what do you make of the situation?
- [38:18]
D
So I think that's part of it. That is a topic I've been focused heavily on since last year, especially my research service. I've generally been in the camp that is not too alarmist on private credit, at least in terms of its contagion effects. So I think it's without question that there's obviously a lot of issues in private credit for all the reasons you've said. I mean, I think even before the AI and software issue, just if you, if you just look at the total credit creation that was happening in that sector, it was very rapid and whenever you have a, you know, very quickly moving, quickly growing part of the financial economy, the odds are that's where, that's where the next issue is going to be. Just because that's where the most exposure is. That's where generally speaking you're going to get looser lending standards just because there's so much money sloshing around. It's not a tight area. Banks on average have been pretty tight, but non deposit financial institutions, AKA private credit and other types of equity or credit based lenders they have looser regulations and are able to take more risks. And so I do think that for private credit investors it's likely going to be a rough while. I think that's true for private equity as well. Basically you have a lot of illiquid investments on the private equity side, then you have just the risk of bad loans in the private credit side. But one thing I kind of noticed is we already see search activity like Google Trends and stuff for private credit is like roughly as high as subprime mortgage crisis was during the peak of 2008. So it's already getting a lot of attention. And of course what investors are really asking, outside of investors that are directly invested in private credit funds, what broadly speaking investors are asking is what are the contagion risks from this? Should we have multi hundred billion dollar losses in private credit? What does that do to the banking system and what does that do to the broader economy? So after all that kind of bearish talk, the part that I'm not quite as bearish on is the ability for losses in private credit to severely hurt the aggregate U.S. banking system. When we put some numbers into perspective, banks have collectively lent something like 1.9 trillion to non deposit financial institutions, of which a subset is private credit. And that sounds like a giant number. And it is, because all macro stuff's in the trillions these days. But that's in relation to about 25 trillion of total bank assets, which gives you 7 to 8% of total bank assets are held in the form of loans to non deposit financial institutions. And then from there a typical private credit fund would have to have rather massive losses for its investors before it would come back and hit the bank that lent some money to it. So it's not as though as soon as private credit has losses, it's the bank having losses. This is kind of the mechanism where banks have exposure to the space, but they have this risk, reduced exposure to the space compared to the investors that are on the front line investing in those private funds. And so let's say you have multi hundred billion losses, you'd have a much smaller percentage of that hit the banking system. And they've got 25 trillion assets and then even their capital buffer, while a small proportion of that is large enough to absorb just about any kind of reasonable default scenario for private credit. Now there's always a case that you have individual banks that are oddly exposed to a given sector. So you can see individual bank failures, but across the board of the bigger banks, they seem to have their exposure protected so I'm in the camp that while private credit is a problem, especially for investors in that space, I am less worried about contagion risks. Now, of course, when you have multiple crises together, the issue is that one could feed into another. So, for example, I was on Fox Business with Charles Payne, and he put a list of crises on the board and said, okay, which ones are the worst ones? And I said, well, the one I'm most concerned by far about is what's happening in the Strait of Hormuz. Because energy shortages, raw component shortages, if they persist, are one of the worst risks in the world. And I say compared to that, I'm not worried about private credit contagion into the banking system nearly as much, with a caveat that one of the catalysts that can damage private credit is interest rates going up because of these stagflationary issues. So these pockets are not in isolation. Kind of like how high energy prices in a way led to the subprime mortgage crisis. Now, it wouldn't. The high energy prices wouldn't have been nearly as bad. That recession wouldn't have been so severe if the banking system was not so highly levered back then. But basically that was kind of that more inflationary environment. The higher interest rates that followed, that's what kind of popped that particular financial bubble. And so there are risks, of course, that high energy prices will pop any number of other bubbles. But I don't view the banking system as being in the US Nearly as vulnerable at the current time as it was back in 2007. 2008.
- [43:43]
B
Well, Lyn, I can't thank you enough for a terrific interview, but I've got one last question I cannot resist asking, because I think the best advice I've ever heard on macro voices came from you when you said, do not write a book unless you can't help yourself. Now, in fairness, that was advice on business books. Tell me about the Stolgard incident. What happened? Couldn't help yourself?
- [44:08]
D
Yeah, Couldn't help myself. That's my new sci fi book that's out. We all have to have hobbies. And although I analyze markets and financial systems for a living, I mean, my initial background was engineering. And like many people, I'm a big fan of fiction. And so I've had this story in my head for a while and I decided to write a kind of a sci fi thriller, the Stolgard Incident. In a world of bad news, I figured it's a good time for it to come out so people can buy it on Amazon or elsewhere. And I mean it's a dark story, but it kind of projects some of the technological trends, explores some more far fetched areas because that's what sci fi is good for. But yeah, people can check it out if they want to. And I think in general, I would say that certainly don't write a book for money. Like I said, it's like you only do it if you can't help yourself. And that was certainly my case here. But from a perspective of reading books, I think that especially in times like these, we're of course glued to the news headlines. Many of us, our jobs make us have to be and then even other people just trying to figure out how to protect themselves. But over time, of course on average we are more kind of glued to the current thing and headlines and social media and reading is one of those things that's kind of slowly on the decline. And I do think that there's still much to be gained from reading fiction of multiple genres in addition to the nonfiction reading that people do. So while I've benefited a lot from reading nonfiction books, business books and history books and technology books and all that, I've certainly also benefited over the years from reading fiction. And I think it's important.
- [45:45]
B
Well, I'm hearing fantastic things about the book, so congratulations on that. Let's get back to our usual format closing question which is tell us about the services on offer at Lyn Alden Investment Strategy, which is do there and how people can follow your work.
- [46:00]
D
Sure. So that's@lyndalton.com I provide public articles and newsletters so people can sign up to the free newsletter where I provide research every six to eight weeks on the broad macro picture. Then I have a low cost research service for individual investors as well as institutions that comes out every two weeks and provides a little bit more granular detail on what's happening, both macro as well as specific investment ideas. And of course people can also check out my nonfiction book Broken Money, which is about the intersection of money and technology. Thank you.
- [46:34]
B
Patrick Cerezda and I will be back as Macro Voices continues right here@macrovoices.com
- [46:41]
E
Eric
- [46:41]
C
it was great to have Lynn back on the show. Michael Every is next on deck for a special second feature interview on the developing Iran conflict and what it means for the oil markets. Then Eric and I will be back for our usual post game chart deck and trade of the week. Since this extra coverage format seems to be a hit with our listeners, we'll do our best to continue it for as Long as the situation in the Middle east warrants it. Now let's go right to Eric's interview with Michael Every.
- [47:12]
B
Joining me now is Robbo Banks, global strategist for economics and Market's Michael Every. Michael, it's great to get you back on the show. You've of course, as our listeners know, had an exceptional track record in terms of translating President Trump's what he says to what he really means. Boy, what a situation we have in Iran. Tell us your perspective, high level on the conflict, how we got here, what it's gonna mean for markets.
- [47:40]
E
Sure. And for once, all of us, regardless of how well we think we read the room, are in a room filled with the fog of war. So complete disclosure, there's no one you could talk to right now who can give you a complete answer on anything. We're all fumbling our way through it. First point, very quickly, obviously this war is just as polarizing as everything else we see around us. The tail risks in terms of how badly it could go are obvious to the layman, so that you don't need me to underline them. How this plays out is also still very much clouded in fog. But there are optimistic scenarios which may surprise people. There are very pessimistic scenarios of which there are more of them and some of them are very, very ugly. And importantly, not only do we have that fog of war, people are still pumping it into the room. You cannot take seriously a vast amount of what on your phone, your television set or your Bloomberg screen. Just because headline X comes through in the Middle east does not mean that is what's happening or that's what that particular individual or country thinks or is doing. And so that makes it even more complicated.
- [48:55]
B
Let's talk about Monday morning's news flow as it occurred. I'll tell you at least how I received it. And I was very skeptical because it seemed just too impossible to believe. But first, President Trump announced great news. We've got a deal on the table and it looks like we're going to work things out with Iran. And so the 48 hour ultimatum that he issued, he said was extended by five days. And that sounded like great news. The market, I think oil was down $20 in the matter of minutes. And then Iran, and it's not clear who in Iran exactly refuted it and said, no way, we're not having any negotiations with the United States. It didn't happen. It's all a lie. We haven't agreed to anything. It's not true. And everybody thought, well, maybe that's just some fake news out of Iran, because surely that can't be it. Then Israel announced, or at least someone in Israel claiming to represent the official position said, look, we are not aware of any reason to change our stance of continuing to fight the war. We're pressing ahead. We're not aware of any deals. It's kind of amazing that if the US And Israel are allied in this effort, that they would say opposite things within minutes of each other. And it doesn't instill a lot of confidence. Now, is that really what happened, or am I getting fake news or what's going on here?
- [50:26]
E
Again, with the greatest respect, you are underlining exactly why your traditional or one's traditional methodology for looking at news during a crisis like this in a place like the Middle east doesn't help you very much. And the heuristic on that, besides actually knowing the region and saying, have you ever gone to a Middle Eastern bazaar and said, how much is that item over there worth? $2? And to be told, $1,000, and then spend the next couple of hours haggling up and down, screaming at each other before you eventually pay for. Is that if you actually look at the recent run of events here, going back to 2025, when you had Operation Midnight Hammer, the US and Israel have repeatedly managed to fool the world by appearing to not be on the same page. And that Trump's angry, Bibi's angry with Trump, et cetera, et cetera. And then, boom, they coordinate and strike. So every single time, the world seems to fall for this shtick that there's a difference between them. And then something happens where you find out, actually they were working in complete coordination because they knew that everyone would look at the headlines, the Algos would trade the headlines. Therefore everyone else would have to go along with the Algos, and effectively the narrative becomes a reality until the reality is changed by a sharp application of physical force. Now, that doesn't mean it isn't true this time. From a Popperian sense, you never know that anything's true until you disprove it. Right? But don't necessarily believe, as I said, that what you are being told from all sides, whether it's Israel, whether it's the US or whether it's Iran is actually the case.
- [52:01]
B
What is your understanding and analysis of the current state of transit through the Strait of Hormuz? It sounds like Iran has basically announced, well, it's wide open now, except it's a toll road and it costs 2 million bucks per ship in order to go through. Is that really the situation or is that more propaganda?
- [52:23]
E
Again, you raise an excellent point. Iran said that just the other day, but as far as I'm aware, they said the same thing at least a week ago. And yet, if you look at vessel transit numbers, I think the latest data I saw yesterday were that six ships had managed to get through, whereas normally it was like 138 of a given day. My maths isn't the best, but six is a lot less than 138, given that any ship nominally is allowed to go through now for a fee, which is not cheap, but works out to a buck or two on oil, effectively, you know, depending on the size of the vessel. So again, it's very easy to say these things. It's very easy to see them on a screen. It doesn't actually mean that's what the reality on the ground or at sea in that particular area still is. So until you start seeing vessel numbers start to get up to at least high double digit, which would still be a third or half of what they previously are, then regardless of the rhetoric or the statement, it simply isn't happening.
- [53:20]
B
Okay, if it isn't happening, let's talk about the consequences. How long can it be not happening before this turns into a really big global crisis where you've got entire nations that have to shut down because they don't have any fuel and things really grind to a halt? Is that something that's days away, weeks away, months away, years away? What would it mean if there is no improvement and it's just six ships a day that can go through the Strait of Hormuz, let's say for the next two months. What does that mean for the economy?
- [53:53]
E
So the first thing is, it depends on the economy you're talking about. There's a big difference between them. The second thing is it depends on the kind of fuel that they're relying on, because there's a big difference within the oil barrels themselves and what they're turned into. And the last point is it becomes exponential rather than linear. So to cut a long story short, if you are talking about, say two months, and this is purely hypothetical, not any kind of forecast, you are going to see crippling shortages of diesel, of bunker fuel, of jet fuel. And that's going to start obviously in Asia, where it's already being reported. I'm seeing signs of that around me physically in Asia, even though that's panic buying more than actual shortages right now, then it's going to flow back up to Europe and eventually it would hit most people, even in the US but to a much lesser degree and more slowly. And the impact of that would not just be in terms of higher prices for things, because you don't have to be much of an economist to understand that if energy goes up, everything goes up, but it's going to be the shock of, guess what? There isn't any available, regardless of the price. So you don't record an increase in inflation. There just isn't any diesel. Now, what does that mean for the economy? It's an interesting one for the statisticians because the CPI doesn't change, but no one can move anything, no one can do anything, nothing can be delivered. And so things absolutely grind to a halt, which ironically, in some instances can be deflationary, because people are going to be desperate for cash and what might they have to try and sell off to whoever they can, wherever they can, at fire sale prices. And there's one very, very nuts and bolts example of that. I've already seen a story last week in Thailand where a huge truck laden with strawberries coming from the north down towards Bangkok couldn't get any diesel from any of the service stations along the motorway, had to therefore just give up, pull up on the side of the road and just sell the strawberries at whatever price it could to whoever still had fuel, who was passing. That's a very small example of what you could expect to see going on. And the secondary and third order effects are incredible. Just imagine there's no bunker fuel. If there's no bunker fuel, ships don't go from A to B. If ships don't go to A to B, nothing goes from A to B. At which point global trade breaks down.
- [56:16]
B
We've already seen hundreds of filling stations in Australia running out of fuel, and it's already in some localized parts of the world already starting to hit. One of the scenarios that I've thought about is given President Trump's America first policies, is there a scenario where President Trump says, okay, the way we're going to handle this is we're going to outlaw the export of finished products from the United States, we're going to outlaw the export of crude oil from the United States? He could presumably try to do that with just an executive order. If he did those things for the sake of trying to keep US Prices down even as the rest of the world pays higher prices, would create a lot of resentment around the world, but it seems like it would be consistent with some of his policies. Do you think that's a plausible scenario?
- [57:13]
E
I think it would be politically and even geopolitically. In fact, I think it's bang in line with the overall Trumpian direction were it not for the fact that of course the U.S. while it's a net energy exporter, is still a net importer of certain kinds of fuel which it absolutely relies on. For example, the fuel that it gets from Canada and increasingly from Venezuela now, which has to be refined in a limited number of places. And I don't think the refineries are inside the US to get it turned into the distillates and the diesel and the jet fuel and the bunker fuel that's needed. For example, to summarize, the US isn't energy independent on a net basis, even if it is a net exporter. But were you to string together a scenario where you say the US plus a small coterie of countries that could supply it potentially with the right amount of fuel that it needs for its domestic base and the US can somehow compensate them with a like, for like product swap and, or other carrots and sticks, were that to happen in theory, yes. I think in reality there would be a lot of pushback and it would certainly dislocate markets further and we have enormous dislocation. Now I'm sure that people would already have mentioned to you in line with these conversations that you can look at your screen and say, okay, Brent is $100, give or take. WTI is what, let's say 95. There's a spread over that and that can get wider on these kind of rumors. But in Asia, oil where it's available can go for 150 or 160. And if you're talking about jet fuel in Singapore, that's been going for as high as 230, I think it's 200 today. So we already have a broken down market where it's not just the standard plus a spread by different product type across geographies. It's now completely segmented. So yeah, if Trump were to do that and to make it work, that would just completely break the one world market that we have for energy like that. And I don't think you should rule it out, but I wouldn't rule it in as a base case just because it would be so incredibly disruptive. And I'm not quite sure exactly what constellation of countries he'd have to get with him and whether he could persuade them to come along with him in doing it.
- [59:17]
B
Let's talk about the unwind of this and how much lag effect there is. Suppose that this situation persists for a few more weeks. We get to that breakdown situation that you're talking about where things really start to grind to a halt. And there's a tremendous amount of international pressure on the United States from other countries saying, look, you gotta find a way to find the off ramp, wind this thing down, because this conflict that the US and Israel are having with Iran is causing huge amounts of dislocation in Australia and Asia and other places. And let's suppose the US says, okay, we're going to have to do something to appease these people so that we don't make permanent enemies. Okay, I don't think you just throw a switch and everything's back to normal the next morning. How long does it take from a policy change until the system gets back to normal and recovers?
- [60:14]
E
Okay, let me unpack that into two parts and start with the second part. The second part is, first of all, nothing can happen until the war is over. So regardless of what the US and Israel are saying, the war isn't necessarily over just because they go home. First of all, the US can go home. But as I've underlined repeatedly of late, if it were to just go home with its tail between its legs, that's a 1956 Suez style crisis for the US because it won't be fighting anywhere else again on the same scale as this if it can't manage to achieve victory here. So that's a huge setback for the US in every dimension of Trumponomics and the reverse perestroika that I was discussing with you a few weeks ago. Basically everything starts to unravel were that to happen. So that's pretty existential for the us Israel can't go home. And it would be well aware that if it just gave up and said, fine, we're done, Iran would be even angrier and more determined to get a, to get a bomb, either the slow way or to just get one smuggled in from North Korea, et cetera. At which point, there you go, that changes the equation in the region immediately, so there's no incentive for them to stop. And Iran of course, has an incentive to keep escalating to make those two sides try and go home. And at the same time, even if it got that done would then probably start to bully the GCC even more. The Gulf Cooperation Council to say, okay, you sided with the U.S. now it's time to come and kiss the ring here and understand that Tehran runs the Middle East. At which point point it's a geopolitical catastrophe. For the entire West. So it's not necessarily something that any one person can just do because they want to. But even if we click our fingers and say it can be done, boom, there you go, it's all done. It would take months to get energy flows back to where they were. And that's depending on the supply side damage. We don't know how much damage has been done to LNG so far. We're estimating 17% of Qatar's output, but for between three or five years, could be worse, we won't know till the war is over. And equally oil wells that have been shut in, we don't know how much supply comes back online. We really don't know. And things could get worse. If the Houthis start firing in the Red Sea again, then we'll have an even bigger drop off in oil flows because Saudi Arabia can't send them via Yanbu. So everything can get much worse and it will take months to come back online. But just to very quickly address the first part, you said if the US needs to try and smooth things over with people. Yep, okay, that's a very difficult question. I'm not sure what you do do, but if you're in the US position, do you even try and do that or do you say, okay, you desperately need me to sort this out, what are you going to do for me? And I would be gobsmacked if the US in that position, whoever's president, doesn't turn around and try and use that as leverage. Were we in that position or were they in that position than to turn around and say, how do I make nice?
- [62:49]
B
Well, I was saving the other half of the question for next, which is one of the scenarios that President Trump has directly and not just allud to, but laid out very specifically in one of his truth social posts is he said maybe we should just go and make a final strike, obliterate the rest of the Iranian regime and walk away and leave policing the Strait of Hormuz to the countries that rely on it because we don't need it. I disagree with the President that we don't need it, but that seems to be his perspective. If he were to do that basically saying, okay, those countries that didn't send their navies to help, we're going to punish you by teaching you a lesson, by walking away and leaving you to worry about this, we're done, see you later. How much of a mess does that make? And what knock on effects might not have been included in the truth social post that we should be concerned with
- [63:47]
E
a very big mess and more knock on effects than we have time to discuss here. It would be absolutely, you know, it would overturn the tables, shall we say, were that to happen. But equally, and just joining that question there and the previous point I was making before it, Trump has also stated openly and again being mocked in some media. But you have to differentiate signal from noise that maybe the US should run Hormuz or co control Hormuz with Iran. And again, on one level you can say this is just delusional. On the other level, is there something in this that we don't know about? And again, we don't know what's going on. We have a certain narrative, we have certain stories which are being fed to us and we have certain statements which are outright lies from different parties at different times which suit their purpose. What would that do to the world if the US Were to effectively take control of Hormuz? And there are different ways that could play out with different endgames. But that's something really to consider too, because whatever happens now, I think the critical point is the global political architecture or the geopolitical architecture, the geoeconomic and the geo financial architecture rotating around power alliances, energy, which is at the root of everything, finance and currencies that commodities are traded in on the back of energy, all of them are now in the mix. And anybody thinking that they know 100% how it plays out is wrong. And anybody thinking that we just go back to normal after this has all happened, even in a benign scenario that everyone says, okay, fine, let's put that behind us and never talk about it again, they're also wrong. Everything will change. On the other side of this now,
- [65:26]
B
President Trump has not exactly been super cordial with the European Union in recent months. It occurred to me, is there a scenario where Iran rings up Ursula von der Leyen and Xi Jinping and I don't know, Australian leaders and so forth, everyone else and says, look, our gripe is with the US And Israel. If you Western Europe and China and Australia, by the way, we've got you by the short hairs here because you don't really have another choice given, you know, this would be a conversation that would be held after these countries are running out of fuel and really in crisis. If you will publicly denounce Israel and the United States and lobby the the UN to issue sanctions against Israel and the United States. If you do that, we're going to open everything up and we're going to give Europe and we're going to give China, all the oil that they want, we're going to let that flow to you, but we're going to continue to impose these sanctions against the United States and Israel, who are our actual enemies now before this conflict. They would be laughed out of the room if they tried to approach Europe with a proposal like this. That is there a scenario where they don't get left out of the room because the other parties just don't have another choice?
- [66:49]
E
No, but a, part of that is hypothetical and B, I don't think that had been laughed out of the room beforehand. So I think whether we're seeing it or not in headlines and again, I have to reiterate, I'm not trying to be a conspiracy theorist or say everyone's got to go and red pill themselves, but don't think just because you're reading Bloomberg or the Wall Street Journal or, or the New York Times or whatever your go to media is, don't think you're getting the inside scoop on what's going on in a region as double dealing and as important as the Middle east at a time of war when you have 20% of global energy supply flowing through it and everything and everyone turns on that particular pivot point or that particular fulcrum and think that therefore, yeah, you're being told exactly what's going on by the journalists. Right. You're getting fragments of it. But to be blunt, that conversation and that thought process is absolutely playing out. And if you think the US Isn't cognizant of it and isn't thinking about how they can use it to its advantage rather than disadvantage, then again, I think one's not seeing the reality of the realpolitik.
- [67:50]
B
Well, it seems to me that there's a very real risk here of Europe pivoting into a collaboration with China and Iran and really becoming strongly at odds with the United States.
- [68:06]
E
Well, there's a couple of flies in that ointment. One of them is called Russia, which of course is very much in that camp and is currently helping Iran fight the US And Israel. So, you know, maybe that's an Orwellian double think that Europe can cope with at some point, but right now I think that'd be very problematic. And the other one is that of course, as we discussed in previous conversations, like it or not, and obviously they don't like it, Europe is deeply enmeshed with so many American systems, from the Euro dollar to the technology system to NATO for now, because obviously that would mean the end of NATO to American lng because right Now, Europe is still going to be needing American energy. So it's very easy in principle to say, okay, flip a switch and shift to that camp. But there's an enormous transition cost in doing so. And I think the real picture is much, much more complex.
- [68:59]
B
I'm going to hit you with a completely unfair and unanswerable final question in your best guess, Michael, this is over in a week, a month or a
- [69:09]
E
year, couple of weeks. Let me be blunt. I was just saying to someone else this morning that my nature is for those of you who think you understand me and think I'm very gloomy. I'm actually a deep seated optimist. But I'm an optimist wrapped in a pessimist. And I always find that's the most healthy way to approach the world. To say, take the long term view that actually life finds a way. But to recognize that in the meantime, things can get pretty ugly. And you shouldn't just assume that everyone is your friend. I still think there is enough of an outline of things that could be happening through this fog of war that there is a potential way to emerge out of this, which is painful now. Absolutely. Which is disruptive for months ahead in terms of the return to normality, but which actually has a relatively good landing space on the other side of it. But I am fully cognizant that that changes on an hour to hour basis and that the tail risks here, which everyone can see, you don't have to be any kind of expert, everyone can see that the tail risks are extremely, extremely ugly.
- [70:11]
B
And do you have a view in those two weeks as to what the outcome looks like after two weeks?
- [70:16]
E
I think it will surprise people. That's all I can say. But given the existential stakes here for, okay, the Iranian regime and for Israel and also for the US in terms of what it's trying to do under Trump, I think there's a lot more escalation that can come and I expect more escalation. I've been arguing that since day one. But that escalation I think can end up with a scenario which, as I said, looks better than some people might expect. But it depends on which side of that geopolitical balance sheet that you're on.
- [70:48]
B
Michael. The next thing that comes to mind is our conversation in the last feature interview and listeners. You can go to the homepage@macrovoices.com just put Michael's name, Michael every in the search box you'll find that recent interview that was about stablecoin statecraft is there an angle where stablecoin statecraft plays into the resolution of this Iran situation 100%.
- [71:11]
E
It's not something that you're going to see immediately because the physical fighting and the backstage and smoke filled room negotiations are the clear focus for now. But on the other side of this, once one side or the other has basically started to take control of all the Middle Eastern energy de facto, which is what this is about, you will then start to see the emergence of stablecoins US based we spoke about before or US dollar backed are certainly going to be rolled out as part of the new architecture on the back of that or alternative and already happening in the background China's attempt to put out renminbi stablecoins which are of course going to be much more centralized and run by the government versus the US freewheeling private sector version. They are going to be emerging, they are going to be center stage and they are going to be part of the physical architecture which comes up from these foundations of a new Middle east on the other side of this conflict. So if you think all the volatility and all the craziness and the wild headlines are only focused on this, 2026 has got a lot more to offer you yet in terms of what you see day to day, the volatility that we've seen so far is pretty damn clear that making that call would be silly. What you're looking at over a quarterly basis or where you see is the end point on the other side of the crisis is a very, very different matter. And on that front I think we've got room for limited optimism. But in terms of where it will be in a couple of hours, depending on what the next headline comes through, which may or may not be true. Good luck and fasten your seatbelt.
- [72:44]
B
Well, Michael, I can't thank you enough for a terrific update on this developing situation. We look forward to getting you back for another feature interview. Before I let you go, please tell our listeners what you do at rabobank and how they can find out more about the services on offer.
- [72:57]
E
I'm the global strategist within the Economic and Markets department within Rabo Research. I look at the big picture the way that I've just been trying to describe it to you. So I'm not making calls on interest rates or FX exchange rates, et cetera, et cetera per se. I'm looking at the intersection of the global architecture between finance, economics and geopolitics and what the bigger picture will be going forward and what that framework implies for where asset prices might generally trade and then other people fill in the much more detailed gaps in terms of what they expect for the macro numbers and the specific asset targets. So that's what I do. You can look for our work. If you're a Rabobank client at rabobanknowledge, please check that out there. If you're not a client, some of our work and some of my thoughts are available on LinkedIn. You can also look for me on X and my handle is hemichaelvery.
- [73:48]
B
All one word Patrick Suresna and I will be back as Macro Voices continues right here@macrovoices.com.
- [74:00]
A
Now back to your hosts Eric Townsend and Patrick Ceresna listeners.
- [74:05]
C
We'll keep bringing on second guests as condition warrant until the Iran situation eventually settles down. Now you're going to find the download link for this week's Trade of the Week in your Research Roundup email. If you don't have a Research Roundup email, it means you have not yet registered@macrovoices.com just go to our homepage and look for the red button over Lyn Alden's picture saying Looking for the downloads
- [74:30]
B
Patrick Lyn Alden laid out a compelling case that rising energy and food costs could create real stress for emerging markets, particularly those dependent on imports. Is there a clean way to express that view in today's market?
- [74:43]
C
Eric the interesting thing is that I believe you don't actually have to go into traditional emerging markets to express this trade. In this environment, Europe starts to behave like a large import dependent economy where rising energy and food costs create a direct terms of trade shock. So the cleanest way to position for that is the currency, specifically the Euro USD. If Lyn's thesis is right and those second order inflation pressures continue to build, you should see sustained demand for dollars to fund those imports, which puts downside pressure on the Euro. Now for that to play out, you need energy prices to remain elevated and those supply side pressures to persist. If instead oil rolls over, supply chains normalize or global growth stabilizes, then that pressure fades and the trade loses its edge. But as it stands, the Euro USD is one of the most direct and liquid ways to express this Mac. Now for more sophisticated traders, the cleanest way to express this is directly in the CME Euro futures. The June Euro futures currently trading around 116.02, allowing for a pure short macro view on Euro downside tied to the terms of trade deterioration. But given the environment we're in with elevated geopolitical risk, policy uncertainty and the ever present potential For a sudden de escalation headline, it makes sense to pair that directional short with a defined risk hedge. One way to structure that is by overlaying a call spread. For example by buying the May 8th expiration 117 call which is trading around 75 pips and selling the 120 call roughly 15 pips, creating a 300 basis point wide spread for a net cost of about 60 pips with approximately 43 days till expiration. That defines your upside risk over the near term term window where the headline risk is most elevated. On a $125,000 contract, the premium represents a relatively modest cost to cap exposure in the event that the Euro rallies back towards the 120 highs. So the idea here is to maintain a core short exposure on the Euro while using options markets to define and contain the tail risk, essentially converting an open ended short into a more institutional style risk managed position that can withstand adverse headline driven moves without forcing a premature exit.
- [77:21]
B
Patrick Every Monday at Big Picture Trading, your webinar explains how retail investors can put on our most recent trade of the week. For those listeners that want to explore how to put on these trades in greater detail, don't miss out on a 14 day free trial@bigpicturetrading.com now let's dive into the post game chart.
- [77:39]
C
Dick all right Eric, let's talk about these equities.
- [77:42]
B
Patrick the market breathed a huge sigh of relief on Monday after the 48 hour ultimatum postponement announcement from President Trump and I'm not clear on why the market is breathing that sigh of relief. I don't think it's warranted. Monday's news flow was utterly insane and frankly the five day postponement of that 48 hour energy strike threat sounded to me like basically buying time to turn a bluff into a real strike. If anything, the only message that I've heard out of Iran or supposedly from Iran, we don't know what's really going on, as Michael every said in the second interview, but the only messaging that I've seen coming out of Iran is they're denying that there are any talks that are open with the United States. They're vowing to fight to the end and they're saying that there's not going to be any ceasefire. So we're having a breath of relief on the coming ceasefire when the other side says they're not even in talks about any ceasefire. Maybe I'm just getting fake news. That is very, very possible. There's lots of false information floating around, but I haven't seen the side of this where somebody in Iran is saying yeah, we're looking forward to working this out with the United States and getting to a ceasef. I don't know why everybody is not concerned. I am not at all persuaded that the final bottom is in for equity markets. I'm hedged for lower lows and I'm kind of bracing myself for what this weekend might bring.
- [79:14]
C
Now Eric, I always like to put things in context from a probabilities perspective out of volatility index up in the 27 handle we're talking about a situation where we have daily implied ranges of 114s and P points which essentially means that these hundred point swings higher and low that we see on an intraday basis are not technically significant. This is just normal volatility ranges. Overall there's a very clean line in the sand for the bulls to neutralize. The existing downtrend which is the 50 day moving average lies around the 6800 which was the trigger point for systematic selling to begin. We are now in systematic sell mode which is all of Those strategies, whether CTAs volume targeting funds or risk parity funds are all under pressure deleverage. And now with the JP Morgan whale option strike open at the 6475 level, there's a huge gamma exposure down below which would have the dealers having to sell futures into weakness in order to stay neutral the hedge. And so you have a scenario where if this market remains in this, in these lower levels, the path of least resistance is actually still the market to go lower and, and we have to respect that at this stage I'm keeping it simple which is either a, some sort of a catalyst needs to be introduced to create a meaningful turn or we're going to have to see some sort of a capitulation in the markets where a breakdown washes things out, gets things so oversold, forces all the margin calls that the only natural thing to follow would be a a bull sequence on the upside at there's no evidence of that catalyst so we have to be very careful about the downside risks in the market here on the short term from a technical perspective. All right Eric, let's touch on that dollar.
- [81:15]
B
The last two weeks on the Dixie chart are looking more and more like a bull flag pattern. I think that kinetic escalation is likely in Iran maybe as soon as this weekend and that would likely bring a new higher high on the Dixie if it happens. I still see this eventually reversing lower and a downtrend resuming but the conflict is resolved and I don't think it's resolved yet and I don't think it's about to be resolved in the talks that are supposedly happening in the next couple of days.
- [81:47]
C
Well Eric, when I look at this dollar index I see the six month trade range and this 100 level on the Dixie as being the key overhead level of this trade range. With a bull flagging formation forming and us working our way back up to those highs, this is a moment where we could see a potential dollar breakout. And like we talked about in the trade, it would almost certainly be led by a Euro breakdown. So will this break out is certainly the thing to watch. If the dollar index clears this 100 level within these previous highs with any legitimate momentum, we could easily see a push to 102, 103 purely on flows and short covering. It doesn't even need to have a fundamental reason to be happening, but we do certainly see the stresses that could be happening in the Euro which happens to be the biggest weighted currency in this dollar index. All right Eric, let's touch on oil here.
- [82:42]
B
Well Patrick, anything is possible here and frankly this feels to me like the calm before the storm. There is plenty of room to see still a higher high in oil prices. We don't know how this situation is going to resolve yet and I'm hopeful that we'll see it all calm down soon. But unfortunately I don't think that's the base case by any stretch of the imagination. Imagination?
- [83:06]
C
Well Eric, for me the oil volatility does all the talking. We're at a 90% implied. I mean we, I guess we were, I was high as 120% implied on crude but this, this market is certainly still pricing in a pretty fat right tail on the SKUs, which means that the dealers are still positioning for the risk that there could be an upside volatility move Overall. Overall this is one of the scenarios where maximum volatility has to be anticipated. I mean we could be at 75, $80 or lower on one headline on WTI. But at the same time we have a further escalation in real infrastructure damage in any way in the Middle east and we could be north of 120. This is a very interesting time to be considering spread trades because at this stage with a right tail skew, if you want to continue to play the upside of oil, you can have that on with these different types of spreads that actually have good payoff structures. But generally it is a very challenging thing to just be long Delta one on this because you have to be able to stomach some serious swings based on just the next headline. Nonetheless, oil's markets definitely still holding in that risk premium on the short term. All right, Eric, we gotta talk gold. Like what a crazy move we saw in the last week since we did the last episode. How do you size the this up?
- [84:31]
B
Well folks, you've heard me say several times in the last few weeks that I haven't heard a good explanation for why gold suddenly reversed its correlation and stopped acting as a geopolitical hedge at 11pm on March 2, which is what happened. So I spent last weekend digging with a little bit of help from AI and found some answers. The whole story is on my substack@erictownsen substack.com where I wrote a piece about what I think is going on with gold. Very briefly, the oil induced inflation inflation signal pretty much ties the Fed's hands. It means that rate cuts are basically pulled completely off the table until this is resolved and oil is flowing normally through the Strait of Hormuz. Higher yields compete with gold, which of course yields zero. So the mechanism is pretty obvious here. The explanation for gold moving lower as the Dixie moves higher and the Fed's hands are tied, taking the the possibility of rate cuts off the table. It all spells an ugly technical picture for gold in the short run, but boy, what a setup. Step back and ask yourself if the fundamentals have really changed here for gold in the bigger picture. Does this mean all of the sudden that central banks around the world, not in the United States, are going to be more or less likely to want to trust the U.S. dollar and U.S. treasuries as their primary reserve asset? It's the whole world gonna say, well, thanks to President Trump's excellent leadership in this Gulf conflict, we really are gonna just put all of our eggs in that U.S. treasury basket from here on out. I don't think that's where this is headed, folks. Now none of the big banks are reversing their targets for year end prices on gold, which are around $6,000 depends on which bank you're talking to. Correction, they're not revising their targets lower. So I think it's an absolutely incredible buy the dip opportunity. $6,000 gold is coming. Wait a minute. I think $3,000 gold is entirely possible if the Iran situation triggers a much higher Dixie and a much higher 10 year yield and a much higher oil price. And unfortunately, as much as all of those things happening at once is not the norm, these are not normal times. And I think all of those things happening at once is entirely possible. So the move here to make is buy the dip on gold, buy it right at the bottom. Okay? The question then becomes when has it bottomed? Well, the 4100 level, which we hit the other day, the 200 day moving average was a huge line in the sand. The rejection off of that level was vigorous. And we saw oil and gold trading in the same direction again for the time since March 2, but it only lasted a couple of hours. So there's a good argument to be made on a technical basis that the bottom might already be in at 4102. I think it was, was the low print. But if that 200 day moving average doesn't hold, anything is possible. And that would be the point because that line has not been crossed since 2023. Trading below the 200 day average. If it does have happen, you could see a whole lot of people abandoning their positions and we could see a washout all the way down to 3,000, 3,500. Anything's possible. So again, the move here is if you can figure out how to buy the bottom of this correction on gold, that's the trade of the century. The question is when and what price the bottom in this gold market is actually going to occur? I don't know. And neither do any of the people who pretend tend to.
- [88:22]
C
Well, I want to break it again down in a much more simple manner. There was a very distinct two year bull face that blew off with a parabolic rise and a correction. We now decisively broke down after a failed rally attempt, which is now putting gold in a distinct corrective pattern. Yes, those drivers you're talking about will be the ones that will contribute to the potential volatility. But what I would at this stage make very clear, clear. Typically when you see these kind of tops and corrections begin, they don't end in a week. And so what, this pattern of distribution can still be here going into the second quarter of the year. Overall, maybe the downside is going to be much more contained as we've already seen some big drops. But in the bigger picture, the primary trend now is down and we have to be anticipating that some short term stresses to continue here. And this is where being hedged up gold makes a whole lot of sense. All right, Eric, what are your thoughts here on uranium?
- [89:25]
B
Well, the fundamentals are still uber bullish and they're getting better by the day. And our friends at ALO Atomics unveiled their first test reactor which they built in record time at their new facility in Idaho Falls. That's of course on the INL campus up there where they do all of the reactor testing and have for really the whole history of nuclear energy they expect first criticality. That means actually splitting atoms in their new reactor in the next couple of months. So this is moving incredibly quickly. Even the nrc, the Nuclear Regulatory Commission, apparently shamed, having been upstaged by the DOE under the leadership of Chris Wright, has announced the streamlining of licensing approval processes for advanced nuclear reactor technology. So even NRC is starting just barely to get its act together. I still think, I think that Chris Wright leading the DOE is setting the example. I think he should take over or they should replace the NRC with something that's led by Chris Wright so that we could really get our act together. And we're starting to see signs of that happening. So the fundamentals couldn't possibly be better. But this is a very high beta sector. So if we see a major Iran induced negative event in the broader stock market, which I think is very possible, we're going to see uranium stocks take a nosedive. That's going to be a buy the dip opportunity.
- [90:55]
C
And just looking at the uranium price itself, it's been incredibly quiet. For all the volatility we're seeing on almost every other commodity and asset, uranium is just quietly waiting for its next catalyst. At this moment I don't see any reason not to be bullish the the U308 but it really is inactive at the moment and it's not getting any attention on the short term. So we're going to have to see when we have some sort of techn flows start to show some sort of new bull move underway which is just not here. Now I'm just touching on a few more things here. Eric, what's your thoughts here on copper?
- [91:30]
B
Well, we're well below the 50 day moving average now and not a whole lot of headroom left above the 200 day moving average. And if that 200 doesn't hold and Iran is clearly the key to that, you know, it's a signal that a global recession or even depression is not out of the question. And I really think a lot of people are not fully understanding the magnitude of this strait of Hormuz situation. Yeah, there's lots of reasons to think that this will get resolved in the next couple of weeks. As Michael every said, he expects that it likely will. But if this persists for months and months and yeah that's an outlier case, I admit it. But if it were to persist for months and months. The damage that it will do to the global economy is impossible to overstate. It could be utterly crippling to entire nations. And the recovery from the damage that would occur if this continues for months and months would take years, if not decades to fully recover from. So this is a really, really big deal. We need to see this Iran situation get worked out so that traffic is moving through the Strait of Hormuz and we need to see it happen quickly. Copper and the S and P and lots of other things are all approaching very critical levels. And if those levels don't hold, it's a sign that the markets think that the situation in Iran is not going to be timely resolved. And that really spells very, very grim outlooks for the global economy. I'm sorry to be so gloomy folks, but this is a really big deal.
- [93:06]
C
Well, certainly copper remained weak. I was talking about last week the correlation between copper and precious metals, which I'm not sure even fully why it's happening, but overall copper has started to deteriorate in a, in a correction mode. And so at this stage I don't see any reason why this has to bullishly reverse here on the short term. Basically anticipate a little bit deeper consolidation here in the weeks to come.
- [93:32]
B
Patrick, before we wrap up this week's show, let's hit that 10 year treasury note chart.
- [93:37]
C
What a move it's been for the month of March. I mean we had that bullish engulfing candle come off of a retest of the 395 level in the first days of March and since then we've seen a 50 basis point swing in the 10 year yield causing all sorts of stresses in the credit markets. This trend is now in place. The bigger question is where does this stall out? All of the previous highs from 2025 were all in that kind of four and a half to 460 level. On the upside on the short term there could continue to be a little bit of stress on yields. Overall I think, I think that this should be contained but it certainly on the short term has another 10 or 20 basis points risk until it really has a support line to stabilize.
- [94:26]
B
Folks, if you enjoy Patrick's chart decks, you can get them every single day of the week with a free trial of big picture trading. The details are on the last pages of the slide deck or just go to bigpicturetrading.com Patrick, tell em what they can expect to find in this week's research roundup.
- [94:40]
C
Well, in this week's research roundup you're gonna find the transcript for today's interview as well, well as the Trade of the week chart book we just discussed here in the post game, including a number of links to articles that we found interesting. You're going to find this link and so much more in this week's Research Roundup. So that does it for this week's episode. We appreciate all the feedback and support we get from our listeners, and we're always looking for suggestions on how we can make the program even better. Now, for those of our listeners that write or blog about the markets and would like to share that content with our listeners, send us an email and@researchroundupacrovoices.com and we'll consider it for our weekly distributions. If you have not already, follow our main account on X Acro Voices for all the most recent updates and releases. You can also follow Eric on XRricks Townsend. That's Eric spelled with a K. And you can also follow me at Patrick Ceresna on behalf of Eric Townsend and myself, thank you for listening listening and we'll see you all next week.
- [95:49]
A
That concludes this edition of Macro Voices. Be sure to tune in each week to hear feature interviews with the brightest minds in finance and macroeconomics. Macro Voices is made possible by sponsorship from BigPicture Trading.com the Internet's premier source of online education for traders. Please visit bigpicturetrading.com for more information. Please register your free account@macrovoices.com Once registered, you'll receive our free weekly Research Roundup email containing links to supporting documents from our featured guests and the very best free financial content our volunteer research team could find on the Internet each week. You'll also gain access to our free listener discussion forums and research library. And the more registered users we have, the more we'll be able to recruit high profile feature interview guests for future programs. So please register your free account today@macrovoices.com if you haven't already. You can subscribe to Macro Voices on itunes to have Macro Voices automatically delete delivered to your mobile device each week free of charge. You can email questions for the program to mailbagrovoices.com and we'll answer your questions on the air from time to time in our mailbag segment. Macro Voices is presented for informational and entertainment purposes only. The information presented on Macro Voices should not be construed as investment advice. Always consult a licensed and investment professional before making investment decisions. The views and opinions expressed on Macro Voices are those of the participants and do not necessarily reflect those of the show's hosts or sponsors, Macro Voices, its producers, sponsors and hosts Eric Townsend and Patrick Ceresna, shall not be liable for losses resulting from investment decisions based on information or viewpoints presented on Macro Voices. Macro Voices is made possible by sponsorship from BigPicture Trading.com and by funding from Fourth Turning Capital Management, LLC. For more information, visit macrovoices.com.