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Foreign.
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This is Macro Voices, the free weekly financial podcast targeting professional finance, high net worth individuals, family offices and other sophisticated investors. Macro Voices is all about the brightest minds in the world of finance and macroeconomics, telling it like it is, bullish or bearish. No holds barred. Now here are your hosts, Eric Townsend and Patrick Surezna.
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Macro voices Episode 532 was produced on May 14, 2026. I'm Eric Townsend. We've got another Macro Voices double header lined up for you this week. Simplify Asset Management's chief strategist and Portfolio manager Mike Green returns as this week's headliner. Mike says it should come as no surprise that the risk of the Hormuz crisis crippling the global economy hasn't even slowed down the S&P 500 500's meteoric rise to new all time highs. Because according to Mike, market flows aren't being driven by macro analysts, they're being driven instead by the machinery of passive investment fund flows. Mike also disagrees with some of our other guests who have predicted persistent secular inflation as a result of this conflict, and also has an interesting take on why Mike thinks Kevin Warsh will be far more likely to aggressively cut rates as opposed to hiking them. And of course, course we'll touch on Mike's specialty, the unintended consequences of passive investment through index funds. After the feature interview with Mike Green, Commodity Context founder Rory Johnston returns for a cameo appearance to provide an update on the Hormuz crisis and how it's affecting global energy markets, including what's yet to come if the strait remains closed. Then be sure to stay tuned for our post game segment when Patrick's Trade of the Week will explore a setup built around Mike Green' view that the market may be underestimating the risk of a sharper economic slowdown and a significant reversal in the future Fed rate path. And then we'll have our usual coverage of all the markets with Patrick's post
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game chart deck and I'm Patrick Ceresna with the Macro scoreboard week over week. As of the close of Wednesday, May 13, 2026, the S&P 500 index up 107 basis points, trading at 74.44 continues to press 52 week highs on SE Semiconductor leadership. 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 up 52 basis points, trading at 9,852 the June WTI crude oil contract up 625 basis points, trading at 101.02 once again pressing above $100 as the standoff at the Strait of Hormuz continues. The July rbob gasoline up 515 basis points to 347 trading at 50 highs. The June gold contract up 26 basis points trading at 4707. The July copper contract up 793 basis points to 667 pressing to all time new highs. The May uranium contract down 23 basis points to 85.80 and the US 10 year treasury yield up 13 basis points trading at 446 treasuries breaking out of a multi month trade range to the upside. The key news to watch next week is the FOMC meeting minutes and the much anticipated Nvidia earnings. This week's feature interview guest is Mike Green. Eric and Mike discuss why passive and systematic flows continue to dominate market behavior, how the energy shock could eventually translate into economic slowdown and weaker employment, and why the market may be underpricing a future reversal in the Fed rate path. Eric's interview with Mike Green is coming up as Macro Voices continues right here@macrovoices.com.
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And now with this week's special guest, here's your host, Eric Townsend.
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Joining me now is Simplify Asset Management's chief strategist and Portfolio manager, Mike Green. Mike prepared a slide deck which only contains one slide, so I guess it's not a slide deck, it's just a slide. But boy it is a doozy. You're really gonna wanna see this chart, so I strongly encourage you to download that to accompany this interview. Mike, it's great to get you back on the show. I've gotta ask you because you've always been a voice of reason in my investing life. I feel like I did at the end of January, beginning of February of 2020. I thought there was just information so obvious that the market had to discount it and it wasn't. And I felt like wait a minute, usually when you're the sees it it means you're wrong. But boy, I was so convinced and I'm convinced now. I don't think that the market gets it, that we've got a really big problem with energy flows. And it seems like, you know, it's just another reason to rally the market. S and P all time highs. I don't get it. Help me.
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Well, the good news is is that rising energy prices increases earnings for the energy companies which have been powering the S and P. I'm totally joking when I say this. No, I mean? Look, you already know what my answer is going to be. Unless the news meaningfully impacts employment and therefore contributions coming from 401ks or other equivalent strategies, I don't see any reason why the marginal pricing behavior for the S and P should change. We have the mindless bid coming from the passive robot, where money is flowing into 401ks on a continuous basis and into retirement accounts. Nobody called Vanguard and said, change your allocation schema. Nobody called BlackRock and said your model portfolios need to change, and as a result they don't. And so when you get a drawdown, as we had from the February 27th until basically the early April lows, that triggers multiple forms of rebalancing. The most important of those, in terms of its initial implementation is going to be a target date fund, which uses a threshold level for rebalancing out of bonds and into equities. Every time you see that anomalous behavior, where equity markets are rising and bonds are simultaneously selling off aggressively, we'll hear all sorts of narratives about the end of bonds, et cetera. But the simple reality is that's just a portfolio that has allocations between bonds and equities that is rebalancing itself at a massive scale. And unfortunately, that's what I think we saw. And I don't see any reason for it to change until unemployment begins to rise significantly, retirements begin to increase significantly, and that bid coming from the passive robot comes to an end or turns negative. Unfortunately. You know, that sounds like I'm bearish because I keep saying the markets are irrational. What I'm reminding people is the Keynesian statement, the markets can remain irrational, quote unquote, far longer than you can remain solvent. We saw that play out fiercely in April where hedge funds decided that they wanted to hold their favored names and instead increase their shorts. And when markets reversed, we had an unbelievable amount of short covering. We saw fast moving strategies like CTAs and to a certain extent, volume control strategies rapidly scale up their exposures. Risk parity had some leveraging up, et cetera. So basically everything hit all at once. That's the chart that I shared with the listeners showing that we had a record one month flow into equity markets and surprise, surprise, we had a record one month performance in equity markets. It had nothing to do with any thoughtful application. It had everything to do with positioning and with a mechanical bid.
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Let's talk then about what would happen next, because I suppose with the COVID pandemic, there was a brief little emotional freakout. But then the Market looked completely through it and we saw as a result of a lot of money printing a rally to fresh all time highs right in the middle of the pandemic. Pandemic. Are we headed into a situation where we do have a major economic dislocation? Things are shutting down all over the world because of an energy dislocation, which I think at least in some parts of the world, as far as I'm concerned, has to be inevitable at this point. Does that just mean that it's time to celebrate and rally to even higher highs on the sp? Because as Louis Gav said last week, it's probably going to be other countries that feel the massive human suffering as a result. Result of this and not so much the bigger developed economies. Does that just mean S and P keeps going up from here?
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The painful reality is that as passive continues to gain share and it owns more and more of the market, the market will behave more and more like a low float stock because Vanguard or BlackRock are not going to change their positioning unless they receive a sell order. And so the simple, you know, the simple math is this gets crazier and crazier. And you know, I have to confess, like when I made that forecast, it was with some trepidation because there's always periods of craziness in markets. It's hard to imagine an environment much more crazy than late 2021 when people were receiving significant stimulus payments. But even more importantly, in that time period, they were getting their paycheck and they were staying at home and they weren't incurring all of the costs that I've identified in things like my poverty line analysis like childcare and transport to work and fancy clothes that you have to wear to work, et cetera. We all wandered around in our pajama and decided to buy stocks with our spare time. You know, the difference is this time we haven't seen the stimulus. What we're seeing is an increase in costs and consumer balance sheets are significantly weaker than they were in the 21:22 time period when we suspended debt payments, et cetera. You know, but within the moneyed class, those who effectively have money and have the capacity to spend it, we're not seeing much of a disruption and I don't think we really will until the Fed ultimately begins cutting interest rates and reducing that income transfer to that cohort. That's a very strange place to be where cutting interest rates could actually be contractionary because of the, give or take, $10 trillion in short term instruments that are linking their payments to The Federal Reserve's policy that's created an extraordinary pulse of income that is really fiscal policy, but not identified as such.
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Let's take a look at the sole chart in your chart deck, which is really staggering for me to look at given the news flow backdrop upon which it happened. Listeners. Again, you'll find the download link in your research roundup email. Mike, what you're showing here is basically the biggest inflow ever in history. And you told me off the air, even though this chart only goes back to 2016, you said there is no prior example of a bigger inflow anytime in US history ever into the S&P 500 other than the one that's happened in the last month or so. On the back of news that we've got a massive global energy dislocation which hasn't quite hit the tape yet, but we know it's coming because we've used up that six week lag of delivery times. We're burning into all the buffers of spare oil that was sitting around in storage. We're about to run out of diesel fuel and jet fuel globally and have a massive crisis on our hands. And that's been, I don't want to say the cause, but that has been coincident with the biggest inflow into the stock market in recorded history.
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Explain. Sounds crazy, doesn't it? Well, part of what I would emphasize on this chart is if you look, look through the discretionary portions here, we're really not capturing anything that is happening other than systematic flows. And so I just want to caveat that, you know, we, we do see flows into things like spy, VOO and IVV on a discretionary basis where people ultimately decide everything is great, we should buy back in. But ironically that was among the smallest parts or smallest contributors to this. So this was really a mechanical bid that was caused by CTAs you know, trend following strategies basically having to rapidly reverse their move into a net sale. They reversed that within a month at a pace that we have candidly never seen before. Volume control strategies as volatility retreated and never really hit the realized levels that the implied volatility was pricing, we were emphasizing at Tier 1 Alpha, where I shared the chart from that, you know, we were behaving like a market that had already crashed. People bid for protection, the discretionary bid was there and it didn't materialize. And so they were forced to cover shorts, they were forced to cover their protection. That led to a collapse in the vix. The VIX itself then becomes a profit center as people Short the vix, creating a synthetic long. All of this has no real thought behind it. Right? I mean that's the frightening part of this is that I don't think it's that people are looking at your analysis and saying it's wrong in principle. I think by and large they're saying, well the market is telling me it's wrong, right? And that means that it's wrong at least in the short term until it actually starts to hit the employment numbers, until it starts to actually hit the flows into the market. But the machines did what the machines do.
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Okay. Now before the inflow happened, I see what looks to be the fifth largest drawdown or outflow from markets. I assume that was the buildup to this current energy event that caused that. So you're saying the market correctly discounted what everybody knew was coming then? Because it takes six weeks to two months for big ships full of crude oil to transit the entire planet. The algorithms and the CTAs didn't really build in that lag effect. So they're recovering and basically going to massive inflow into the market because the market has proven wrong.
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Wrong.
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The prediction that we're going to have a big energy disruption or at least that's what the Algos think is going on. And that's the reason for this, is
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that really it, with the exception of the thinking part, right. They are just mechanically tuned so a trend following strategy will take consideration of volume and volatility in establishing the trend. But most importantly they ended up getting short. Right? They did exactly what you would expect trend following strategies to do. As we flattened out in 2025 and basically no real progress for an extended period of time, CTAs began to take down their positioning. As we sold off, they increased their net short positioning and then as the market reversed rapidly, they were forced to cover that. And as it continued to power higher, driven by the inflows in 401ks because once the discretionary trader has sold their shares, remember the line from speculation, reminiscences of a stock operator, I'll lose my position is why he didn't want to sell in a drawdown because it was a bull market. CTAs are very similar. Hedge funds are very similar. Cover the position and ask questions later. You can construct the narrative at any point in time and candidly I think that's what we've by and large done.
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Okay, what happens next?
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The way we're looking at it is that ultimately those systematic strategies have now returned to basically a fully invested position and so the market has lost ammunition. The 401k flows have shifted strongly in favor of equities. We're now actually potentially looking at a rebalance back towards bonds which have suffered under this environment, as you're well aware. Although for all the hoopla about the directional move in rates, we really haven't gone anywhere there for an extended period of time as well. And so we're starting to see the inflows into fixed income return, but they're not returning at a pace that is yet large enough. And this is particularly true at the back end of the curve. They're not returning at a pace that is large enough to offset the net issuance or lack of demand for that product, particularly as people are moving away from 60:40 type strategies and increasingly embracing things like trend following, which has actually done quite well in its recovery off of the kind of April sell off. You know, the quick answer is that my expectation is, is that our bias should be bullish but in a much more muted fashion for the next couple of months and then we'll see if the idiosyncratic event of an actual energy stock out leads to job losses. Leads to. Or whether it's coming from AI. Right. Whether that actually begins to manifest itself as actual job losses rather than what we've seen so far, which is a low fire, low hire environment that's particularly affecting the.
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Let's talk about scenarios of what happens next as a result of the Iran conflict. I'm going to say it's extremely likely that in many parts of the world there will be an extreme price increase or there will be caps placed on prices, price controls will be put in place and that will lead to shortages where it's impossible to get any supply of diesel fuel and jet fuel particularly. I don't think that that's going to necessarily happen in the United States, but I think it will happen a lot of places around the world. And what remains to be seen is the extent to which there's a price transmission. If the price of diesel fuel in Singapore is $39 a gallon, what is the price of diesel fuel in Santa Monica? I don't know how that's going to play out, but it seems to me like there's going to be at least some price transmission. What would you expect the result of that to be on US Markets if that happens?
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Well, I think there's. So I think you hit on something that's incredibly important. It's one of the reasons why I very much push back on the idea of this is like the 1970s. There's two primary differences. First, in the 1970s, the marginal buyer of oil on the international stage became the United States. We effectively moved from a net exporter to a net importer. That meant that the world's richest consumer was suddenly bidding for oil versus everybody else. That, more than anything else, is what made the 1970s unique. In that framework, the US could afford significantly higher oil prices than the rest of the world could. And they were the marginal consumer for globally traded oil. This time around, it's the emerging markets that are the incremental consumer, the marginal consumer for oil in particular. And candidly, they're kind of tapped out in a lot of ways. You know, you're already starting to see that type of behavior, the demand restrictions, the limitations flowing out through many emerging markets. Many emerging markets are beginning to experience near catastrophic conditions, particularly as it relates to fertilizer and agriculture. They're doing everything they can to avoid those price increases, but they simply are less well positioned than the United States. And I realize this sounds crazy given how bad it was in the United States, but many of those emerging markets are less well positioned to handle these prices. And I hate to say it, but I would somewhat include Europe in that mix as well. The second thing is that there's just not the population pressures that there were in the 1970s. And so, you know, a really interesting chart, I probably should have included it in the chart pack, is looking at real rates relative to population or more accurately, labor force growth. The high real rates or the high rates that we experienced in the 1970s were largely. And the inflation we experienced in the 1970s were largely a function of that oil price shock, as we already mentioned. But then more importantly, just the simple reality that there were boomers and young women streaming into the labor force, demanding the capital that's required to keep a labor capital ratio somewhat constant. If you allow that number to, you know, the quantity of labor to exceed the quantity of capital, you will experience falling productivity. The 1970s were all about trying to maintain that pace of business activity. And it required significant capital that the Federal Reserve candidly stepped in front of and somewhat prevented by raising interest rates as high as they did this time around. You know, labor force around the world is actually shrinking. The United States labor force growth over the last five years, even with the population adjustments from the surge in immigration that has not yet been removed from much of the labor force statistics, it really only hit about 1% versus about 3 1/2% per year in the 1970s. So my hunch is that we're not going to see anything even remotely close to the sort of gasoline or oil price spike that we saw in the 1970s, where we saw 500% sort of increases. But the pain that is going to be felt in the emerging markets is significant. And as you're correctly pointing out, the answer in many situations will be will do. Without. That means that we will likely see dramatically reduced production levels for many foodstuffs, et cetera. We are somewhat fortunate in that we're very well supplied. We've had extraordinarily strong growing seasons. Many forms of soft commodities have been oversupplied for the past couple of years. And so we're looking at inventories that are relatively high there. But there's no question that this is going to flow through as price increases in agriculture, assuming that the harvests, you know, are diminished by the reduced application of fertilizer. Likewise, the ability to get stuff to market if diesel prices are extraordinarily high. The vast majority of agriculture is transported by truck. Truck. That means there will be less shipping available or less transportation logistics available for the delivery of those crops, and some may very well rot in the fields. And less prices are much higher. And so this is the paradox of capitalism, right? In some ways, we should be celebrating higher prices because they're sending a much needed signal and they are allowing agricultural producers to somewhat offset the cost of fertilizer. But, you know, that's painful for households. And in the United States, we're already seeing a growing fraction of households being forced to do things like increase their pawn shop activity at the lower end or their credit card activity. And that becomes very difficult as we look at credit card delinquencies beginning to spike, et cetera. This is creating conditions under which people are just going to have to do with less. And that means lower household formation. It means households are going to decide to move out of a individual apartment and move back in with their parents, for example, where you would reduce your net consumption. We're seeing the signs of all of that. And I, you know, I, I joked on Twitter the other day that BNPL Buy Now, Pay later is actually turning into Buy Now, Pawn later, as households are scrambling for cash.
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Donald Trump is set to meet later this week with Xi Jinping. It seems to me that China's reaction to all of this and Trump's ability to negotiate with China is going to play a major role in it. China has more crude oil and, frankly, everything else stockpiled than just about anyone. So it seems to me if China says Well, look, get some positive PR by coming to the rescue and saving a few smaller countries around the world by sharing some of our strategic petroleum reserves and helping them out in exchange for some concession. That's one thing. If China goes the other way and says every drop of oil that we have is for us and we're going to block any export of finished products to other countries until this mess is over, that's a very different outcome. Am I reading those tea leaves correctly? And how do you think this is likely to play out later this week?
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I agree with how you're reading it. So far, what we're seeing from China is largely every drop is precious. We're not going to share any. That makes sense. China is a very insular society and candidly has always prioritized China over any other country. That's not a bad thing, by the way. I want to be clear. That's part of the process of capitalism, broadly, is we all should be seeking our own self interests, but we need to recognize that that has implications for how we're perceived going forward. In the United States, we see very clearly what's happening in our society and our economy. Our news is very attuned to it. We don't have that sort of transparency as it relates to what's happening in China, or candidly, for that matter, Iran, which is largely in a blackout from the Internet. And so the, the real question that you have to ask yourself is how much is China suffering in this process? And the evidence that we do have is that they are actually being hit quite painfully and they've stayed remarkably quiet in this engagement with Iran. My hunch is, is that Trump will find a relatively receptive Chinese audience that is basically looking to cut some sort of a deal and ameliorate some of the pressures that are being placed on the Chinese economy. The flip side of that is, you know, the, the downside to putting in a mercurial individual like Donald Trump is candidly, I don't think anyone knows what he's thinking as he goes into these discussions and negotiations. And is he going to settle for a quick deal that may be much less than he could otherwise extract? Candidly, we don't know. And I think that's been one of the real challenges for the US Military as well in conducting operations in Iran has been the uncertainty around what policy is going to emerge in the next 24 hours. It's a very challenging environment that in some ways can be helpful. You know, my, my wife used to call it the crazy monkey approach, right? If you just act crazy enough, people will largely leave you alone and try to placate your behavior. But the flip side of that is it makes it very hard for the people that are quote, unquote, partnered with you, like the US Military with the commander in chief, to anticipate the direction that you're going to move. And so, you know, I, this is very much a wild card. But what has been communicated to me is that China is much more interested in this meeting than the US Is.
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Candidly, it seems to me that China is absolutely pivotal to the outcome of the Iran situation, because if China takes the stance. Look, Mr. Trump, we are trying to be patient here, but we're not going to tolerate much more of your interfering with our ability to import oil from the Persian Gulf. And you've got to work this spat out right away, within a certain amount of time, or else you're going to lose a lot in your relationship with China and it's going to only make things worse if it goes in that direction. It seems to me like that's very different than if China says, look, we're willing to cut a deal with you and help you in Iran, which frankly, I don't see as very likely. But it does seem to me that China is in the position of greatest power here. They could throw this Iran situation either direction.
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I think there's definitely some truth to that. I think it would lean more towards if they were to decide enough is enough and basically communicate that to Iran. I agree with you that that seems unlikely given that they have been an active partner with Iran and Iran is a significant source of their crude oil. You know, this is going to be an interesting question. We don't know what the Iranians are thinking at this point. We don't have full transparency in terms of what doing they're. Their actual position is part of the reality of why I would argue entities like the UAE are choosing to leave OPEC is if Iran continues down the current path and damages its oil production capability, China is going to have to recognize that and we'll be looking for alternate sources of supply as well. And so it does feel like this is, you know, that, that we're in a, in a point where the narrative within the United States has been very much about the impact on the United States without significant consideration for how things are really playing out in Iran or China or other regions where we have much less transparency.
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Since you mentioned UAE pulling out of opec, I'm very curious to get your take on what this means to the Future of global oil market reserve or spare capacity. Seems to me like we were already down to the point where really the only OPEC countries that had any spare capacity were UAE and Saudi Arabia. Feels to me like UAE is signaled pretty clearly that they're going to pedal as fast as they can and make as much oil as they can and keep selling it. Does that mean that we've reached a point where either Saudi Arabia is the only spare capacity on the globe? And I would think in that situation they probably pedal as fast as they can too. So it seems to me like maybe that creates an illusion of a recovery in the sense if everybody's making as much as they can coming out of this crisis, it probably drives prices down in the short term, but it also means there is bear capacity going forward. Do I have that right?
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I think you have that right. I want to be careful on that though, because again, the miracle of high prices is that it does stimulate production. And so it is important to recognize that right now we are beginning to see some of the supply response. UAE would be a good example of that. Likewise, we're finding lots of alternate ways out of the Persian Gulf. Pipelines are running at max capacity. By and large, they have not sustained significant damage. And it's becoming very clear that there need to be alternate approaches. And this is going to be particularly true if Iran is successful in articulating that it is in control of the Straits of Hormuz on an extended period of time. The other reality though, and this is something I wrote about in 22, and if you remember, the projections were that we were going to see a surge in oil demand and that oil prices were going much higher, and that as China reopened from the COVID events, that we would see an incredible surge of demand that would power us well above the 106 million barrels that were the forecast. My argument was that we actually had multiple demand curves. The developed world was already in decline in terms of its oil usage. China has proven to be far less hungry for oil, despite the fact that they have been stockpiling. As you pointed out, their demand has disappointed expectations from that time period. And when you see price surges like this, it rapidly leads people to seek ways of conserving oil and trying to do the same thing more effectively. Again, that's the beauty of capitalism. You send a price signal through and people adjust their behaviors to it. My hunch is, if anything, this actually pulls forward the peak oil demand story, with a notable caveat being that you'll likely see some significant restocking demand. But I'm less worried about the supply side in oil in the same way that I'm not that worried about whale oil populations. I'm much more concerned about the demand implications as we look out past the inelasticity of a 3 to 12 month time period.
- [32:43]
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Speaking about longer term trends, let's talk about inflation more generally and where it's headed. We just had an inflation print. You told me off the air you're a little bit concerned about the stale birth death model data. Give us some perspective on that.
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D
Yeah, so there's a couple of narratives that are going on. One is that there has been a re acceleration of inflation again. Another chart I probably should have included, I posted it on Twitter earlier today, is that we are dealing with residual seasonality in our inflation prints. The non atypical seasonality associated with COVID and then the Russian invasion of Ukraine threw off the seasonal adjustments from the BLS quite dramatically to the point that in the fourth quarter and first quarter we're typically printing about half a percentage point higher than the actual inflation is running. That's due to the seasonal adjustments being made against an atypical seasonal pattern. If you look at the second half of this year, you know, I wrote a substack on this called the year was 1816 or 1815, which was the year without a summer. We're not seeing any of the seasonal pressures that we traditionally see on things like rents, et cetera, which make up a far larger portion of the cpi. That is a really critical thing to understand. The second is that the birth death model which you were referring to. This is the assumption of entrepreneurship and new jobs that are created. It has also been the source of the terrible downward revisions that have been made. Birth death was originally introduced as a tool to try to reduce revisions. Unfortunately, a number of technical changes in how data is reported and collected have led to the BLS continually overestimating how many new jobs are being created by new businesses being formed. Those corrections won't emerge until what's called the quarterly census on employment and wages which is the gold standard for measuring that data. We have that through September. That's why we had such terrible downward revisions in the 24 and 25 time period versus what was initially reported. That is on hold until basically next month when we'll get the updated fourth quarter data. My assumption is that the birth death continues to be over reported and adding about 100,000 jobs. And so if you include that in the data, we actually are not really seeing any improvement. We continue to Lose jobs. And importantly, even if you look at the official data, I would highlight that our labor force is now starting to shrink in the United States. We have a drawdown from peak labor force that is roughly in line with the worst recessions that we have seen over the past, you know, 50 years. It's very hard to reconcile those two data points with the idea that the US is suddenly accelerating and that what we're seeing is an overheating of the economy. I think unfortunately we're just, we are dealing with really bad data quality and the revisions will likely pull that lower. All else equal, that suggests that there is less inflationary pressure over the summer and into the fourth quarter. And beyond that point, I don't have the same clarity because I don't have the ability to model fully what the seasonal will do until we receive that data. But it does appear that we are shifting back into a more normal seasonality and all else equal, that should lower both inflation and then we'll get the downward revisions in employment. I continue to think there's a reasonable chance that Kevin Warsh comes in and by September he's suddenly looking at inflation running less than we had anticipated. The tariff surge will have been over at that point. People are highlighting that we anticipated that would flow through in goods. The crazy data is that goods inflation is basically really, really low, which suggests that companies are eating most of the tariff increases either in the United States or in supplying countries. And I think there's a very high chance that Kevin Warsh suddenly wakes up in September, October and realizes that he has to cut and cut more aggressively than anyone had anticipated.
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A
That's fascinating because it seems to me that, that you and I have broadly agreed on what's about to happen energy wise, which is we're going to have a real energy crunch globally as a result of this Iran conflict. If that happens, doesn't that create a fairly long lasting and persistent inflation driver?
- [37:18]
D
Not really. Because if you think about what we're talking about, we're talking about the fastest moving components of inflation and also the most inelastic. And so if we do end up seeing, you know, businesses shut or air flight curtailed, that prevents activity from happening. And I think it's important for people to recognize that unlike Covid, we now do have the potential to work from home. You know, we've discovered that is a solution. And so could I see an oil surge accompanied by another dramatic reduction in people's mobility and reduce demand from transportation, et cetera? I think the answer is yes. And so as you pointed out, one of the key risks becomes a supply response in oil that is met at the same time with a demand reduction. I'm not going to draw the direct analogy to 2008 because I don't think it's actually fair in that analysis. But remember, oil prices can fall just as quickly, if not faster, than they can rise.
- [38:17]
A
Well, that's definitely true. Oil prices increasing is definitely inflationary until they cripple the global economy economy and cause a Great Depression, in which case it's definitely not inflationary at that point.
- [38:28]
D
Definitely not inflationary at that point. And that, that is, that's the uncertainty. And again, most of this pain is being felt outside the United States. And by outside the United States, I'm including California, which has just absolutely absurd restrictions on oil production that make it much more like an Asian, Southeast Asian country in terms of its import patterns. And there we're already seeing pretty strong evidence of behavioral change associated with gasoline prices hitting the levels that they are. In California, where one of my team members works out there and was sharing with me pictures from the pump where they've exceeded $7, I kind of laugh in a crying sort of way that Trump found it appropriate to highlight how cheap gasoline prices had fallen in January, February, and now is basically trying to ignore that they've moved in the opposite direction, putting incredible stress on many of the households candidly that had hoped that Trump would strengthen their position. But, you know, the simple reality is that is the way it plays out. If we end up with actual shortages, meaning that we have to reduce consumption, you could simultaneously see a supply, a positive supply shock shock and a negative demand shock that would manifest as oil prices falling very quickly.
- [39:50]
A
So when you say that Kevin Warsh may by September be in a situation where he unexpectedly has to be cutting aggressively, are you implying that means he'll be reacting to a not necessarily 2008 sized, but a global economic slowdown that would be bringing that about about?
- [40:10]
D
It certainly seems that that's the logical conclusion from what we're experiencing. And that's particularly true, as you point out, if the current disruptions that have been largely ameliorated by the release from Strategic Petroleum Reserves, if we find that we cannot draw those down significantly further. And I would highlight that many countries that have tried to keep pricing, you know, basically keep pricing cap, had their balance sheets stressed already in an attempt to do that in 2022, the UK would be a really good example of that. The capacity to continue to support that is just significantly less. And so, you know, we, we are looking at a situation in which if this continues for an extended period of time, the absolute shortages of oil will really begin to hit those areas that are the marginal consumers, primarily the emerging market markets.
- [41:04]
A
Well, I certainly agree with that. So what happens? Let's say we get to September and Kevin Warsh is cutting rates aggressively because of a global economic slowdown. What happens to your chart then? Do we get an even bigger inflow into semiconductor stocks?
- [41:22]
D
It depends on what happens to employment on our path there. And it depends on the mix of employment as well. So part of the perverse dynamic of the low hire, low fire environment is that by and large we've retained relatively high earning individuals who are fully trained and capable of operating at high productivity. What we're seeing is a reduction in the hiring of new labor force entrants, those who need to be trained, those who don't meaningfully contribute to productivity, but actually disproportionately contribute to marginal demand. You move out of your parents house, when you get a job, you move into an apartment. Somebody had to build that apartment, put a dishwasher and a oven in there and a refrigerator, et cetera. All of those things have to be done in advance of that. We're seeing very weak hiring at the younger level. And unfortunately that means that demand is likely to be relatively hit in those segments. And that certainly is being supported by data we're getting from apartment rents, etc. Era on the flip side of it, you know, it means you continue to pay the 55 year old because now instead of training a 25 year old, they're training an AI. And that has extraordinary value if we're able to pull it off and it turns out to have the productivity impact that many people think it might have. The only analogy I can draw to this is the end of the guild system in the 19th century. Whereas you know where the Industrial revolution began to move from things like textile mills into actual factory production. Many people love Victorian homes without realizing that the popularity of those homes was driven by a collapse in the price of things like filigreed wood. That was driven by the Industrial revolution. That created that growth created a demand surge for the artisans that were already trained so that they could build the factory jigs that could be used to produce those low cost products. But it destroyed the apprentice business. And so unemployment became highly cyclical and very sensitive. In the mid part of the 19th century, in the Panic of 1837, for example, unemployment hit 63% in New York City. I don't think Anything like that's going to happen because we don't have the same rates of population growth, in particular in the United States. But I do think it's really critical to understand that we are basically putting, you know, those who should be rapidly moving up the productivity curve and the learning curve, we've basically put them on ice and told them, you know, congratulations, you've got a, an engineering degree or a degree in French medieval literature from a prestigious institution that qualifies you to work at Starbucks or drive for Uber. That's a real cost and it's similar to what we've seen in recessionary periods where it creates much lower lifetime earnings. And we don't yet know how that is going to play out, but it's showing up very much in the data. The hiring rates for those 55 and up is up 84% year over year. The hiring rates for those 29 and under are down 25% year over year year. It has all the signatures of that sort of breakdown of the guild system and the apprenticeship system. And again, if I told you I knew how it was going to play out, I'd be lying to you.
- [44:48]
A
Let's move on to the subject that you are famous for and in fact have now literally written the book on which is active versus passive investing, or probably more accurately, the potential unintended consequences of the passive investing trend of the last several decades. It seems like this, the chart that we looked at earlier was pretty strong evidence that you're right, that these passive flows do funny things in the market, that it seems to me, eventually lead to potentially very negative outcomes. Am I right to be worried about this? And how worried should I be?
- [45:24]
D
Well, I think you're right to be worried about it. I think we have to acknowledge that we continue to see strong flows and, and we are not yet seeing the negative outcomes. What we are very clearly seeing are the inflationary components of the impact of passive investing, where buying at any price is actually required by fiduciary duty, not by a thoughtful application of discounted cash flow analyses, et cetera. We experienced two remarkable events in our lives, Eric. The first was the transition from defined benefit plans to defined contribution plans. There's a fantastic white paper that was just released in 2025, made it into the Financial Analyst Journal in March of this year by a gentleman by the name of Coimbra. And what he highlighted is the mechanical properties of the importance of that shift when you move from defined benefit plans which guarantee you an income stream, to a defined contribution scheme in which you have to accumulate assets in the hope that either the income from those assets or the sale of those assets are going to allow you individually to secure your retirement. It creates an extraordinary outward shift in the aggregate demand for financial assets. As an individual, I have absolutely no idea when I'm going to die or how long my retirement is going to be. As a result, I have to accumulate as much assets as I possibly can in a defined benefit plan. The statistical properties of a large population allow me to accumulate assets and try to generate income against an actuarial outcome. The reason that system failed in the 1960s and 1970s was because people began living much longer than we had anticipated. The retirements were much longer, longer. Now we're looking at a situation where everybody is basically being forced to assume the worst case scenario. That means that they are both accumulating more financial assets and they are spending less out of that financial asset base than they otherwise might. The traditional 4% withdrawal has been replaced by something closer to a 2% withdrawal, which means that we are hoarding financial assets, which naturally causes prices to rise. The second phenomenon is the growth of passive investing. Because we basically told secretaries and janitors that they needed to become experts at stock picking, we arrived at a conclusion that minimized the amount of activity that they had. Market cap weighting is unique in an index construction and that it doesn't actually require you to continually rebalance your portfolio. The market pricing, by and large, does that for you. The only impact is on the marginal flow, your net contribution or your net sale. That also has an inflationary impact. And so we have had two distinct phenomenon that are related and both inflationary to financial assets over the course of our lives. And because of the demographic bulge of the baby boomers, that's going to eventually reverse, and we will find ourselves selling ourselves, selling those assets in order to secure retirement. The relative shortage of labor suggests that those retirements are going to prove to be much more expensive than people had anticipated. We are likely to see inflation in elder care at the same time that we see much more deflationary pressures in areas where we're beginning to see population growth turn significantly negative. Colleges would be a good example of that, that, you know, we're. We're watching basically the reverse of what happened with the baby boomers coming into the system. When the baby boomers came into the system, we had to build a ton of maternity care, maternity wards. Most hospitals in the United States were built in the 1950s and 1960s primarily to accommodate the surging population and the growing number of births. Now we have a growing number of deaths and we've done a terrible job of preparing for it it. And so it's only logical to conclude that, you know, that which we need less of will likely become less expensive. And that which we need more of, that is end of life care, is likely to become significantly more expensive. And this is one of the real tragedies of where we sit today because old people are candidly scared, understandably so. They don't know how long they're going to live. They don't know what the high volatility asset mix that they have gotten themselves into is ultimately going to yield. And they continue to see headlines from including people like myself that say the expected returns to equities given these levels of valuations should be quite low. If I heard that and I was uncertain about my retirement and I was uncertain about when I might run out of money, I would be less willing to spend as well. And then we have the paradox of thrift, which basically says the lack of spending from the old impacts the income of the young. And so, you know, we've created a condition under which the old people are scared and the young people are really unhappy. And it's not a good mix.
- [50:34]
A
You've written a book on this subject. I know that because as a follower of your substack blog, I've been teased by a number of sample pieces of that writing. The book is titled the Greatest Story Ever the Unintended Consequences of Passive Investing. It looks like it won't be released until the end of June, but it's available right now. For pre order listeners, we've got the pre order link on Amazon linked in your research roundup email. Mike, what is the book about? Tell us what to expect when it's released in June.
- [51:07]
D
So the book is really actually about the destruction of price discovery. The implications of passive investing and the demand for financial assets has created conditions under which the most important price that we really receive in the economy, the price of equity, the price of debt, are increasingly being outsourced to algorithms. And so it brings us full circle back to that chart that I shared where systematic strategies that have never done a discounted cash flow analysis in their lives are dictating the prices that we're seeing on screens. We're trying to attach meaning to that because that's really what price is. Price is the mechanism of information exchange in a market based economy. If you destroy that process of price discovery, the consequences are understandable and foreseeable and perversely create many of the conditions that we now experience in our lives. Everything ranging from gambling and the growth of speculative activity and financial markets can largely be tied to the phenomenon and the choices that we made in how we choose to fund our retirements. Those decisions were made back in the 1970s when we had very poor information on how financial markets actually work work. Since I began my work in 2016, there's been an explosion of academic research that is highlighting the adverse effects on price discovery of the growth of passive investing and the demand for defined contribution plans and the government sponsorship of certain areas as being preferred. What's called the qualified default investment alternative that by and large is directing the retirement assets of the United States into the largest public companies that until very recently had no real reason to receive those inflows. And so the book is actually about the, you know, what happened, why it matters, and what is likely to occur given that we have severely impacted our capability for price discovery in a capitalist economy.
- [53:07]
A
And again, that is available for pre order right now on Amazon.
- [53:11]
D
Mike, you also, with one caveat I just want to actually highlight, that date has been pushed back. We're actually targeting a release on 10-9-19th, which will be the anniversary of the crash of 87.
- [53:22]
A
Oh, okay. So we should not believe the June 30th date on Amazon.
- [53:27]
D
Don't believe the hype. Correct. Okay.
- [53:30]
A
Coming from the source itself. You gotta trust that signal, folks. Let's also talk. You manage several funds for simplify asset management. You also write a substack. Tell us about those as well.
- [53:43]
D
Sure. It is a hedged high yield product and so it attempts to mitigate the impact of credit spreads. That has been a very challenging period. Since April of 2025, we've seen credit spreads by and large tighten significantly even as we're seeing signs of credit deterioration in the broader economy. Part of that is of course due to the passive bid. As money flows into these strategies, they buy the highest price securities disproportionately. That has driven a bifurcation in the high yield market, just like it's driven a bifurcation as we've seen in US markets where there's the 493 and the Mag 7 the. But that product is certainly something that people can check out and take a look at if they are interested in a more protected version of income generation. And candidly, I think this is going to be one of the real critical realizations that people have is that they should be taking advantage of these high prices to rotate into areas in which income can be generated. The sub stack is Yes, I give a fig. It is Yes, I give a fig.com. it's available on Substack. You can search for Michael Green or Yes, I give a figure. It is available weekly. I try to put it out early Sunday mornings, more or less every week. It is the outgrowth of my own personal note taking and thought process, more than a desire to put charts or trades in front of people. And it covers topics ranging from a discussion of the poverty line, a piece that went viral, to the type of work that I'm doing around passive, to insights in terms of markets that people would be more familiar with seeing from other areas. As I describe it, it's basically how I clean out and clear and straighten the attic that is in my mind behind my overly large forehead.
- [55:24]
A
Well, Mike, I can't thank you enough for another terrific interview, listeners. Be sure to stay tuned because we've got Rory Johnston coming up for an update on Gulf oil flows and what comes next in the Strait of Hormuz. Patrick Ceresna and I will be back as Macro Voices continues right here at Macrovoices.
- [55:43]
C
It was great to have Mike back on the show. Now Rory Johnson is next on deck for a special second feature interview for an update on the 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. Now let's go right to Eric's interview with Rory.
- [56:05]
A
Joining me now is Commodity Context founder Rory Johnston. Now, folks, I know it feels like, oh yeah, you guys have had Rory on three times now since this Saran thing started. Yep, we have had Rory on three times, separated by a full month each time. It's been four weeks between each of Rory's three appearances on this conflict. That was going to take less than three weeks in total. We were told in the beginning, Rory, I want to start with. With what you're getting in terms of just reaction from markets. It feels to me like when we first talked about this and you and I were both afraid that it could go on for months, everybody told us we were crazy, stupid and out of touch because it was gonna be a very small number of weeks and it would be over. And the crazy thing is, okay, now it's been months. It seems like we've been proven right. I think most people are feeling like we've been proven wrong because price drives narrative. And what they're saying is, look, the S and P all time highs. You guys were all worried about this, like it's a Big deal. Obviously it's not a big deal. It's all blown over. Is that the reaction you're getting from people? And how does that jibe with your understanding of, I don't know, reality?
- [57:18]
E
Yeah. So thanks for having me back on, Eric. I would agree that obviously, very clearly we've seen the market, that the oil market in particular has been far more patient with this collapse in supply of the Middle east least than I would have expected. And we saw during the first month a lot of panicked up, you know, buying and precautionary demand to ensure against any kind of even larger supply loss. But basically since the end of March, beginning of April, prices have been down, sideways and jagged up and then another, you know, Trump tweet and then back down again. So what's going on? I think, think the most important thing, and we would have spoken last time just after the ceasefire was announced and I think one thing that's important and one thing I, I would say I've started to appreciate more was just how much of that March and early April rally was a real precautionary demand on the tail risk that not just that hor mos would remain closed for another month or two, but that you would see the conflict spiral all into more direct attacks from Iran against Gulf oil production infrastructure in Saudi Arabia and Iraq and uae, et cetera, and that that was just such an important and massive fat tail in the market that it was commanding a decent amount of kind of justified price premium. And when the ceasefire was announced and sure it's been all over the place, but I think at this stage it seems generally likely and at least the market is interpreting it as has the Trump administration and Trump himself does not have an appetite to restart all out war. But if we get back there, you know, based on what we saw in March and April, it seems likely that the market would react very violently to a resumption of open warfare. The other thing is that it's taken a lot longer than I would have expected for those deficits to accumulate invisible inventories. So as you know, Eric, a lot of the data in this market is lagged. We were flying blind a lot of the time in the immediate here and now. And but going into this crisis we had high stock levels, so we had a cushion. And if you moved it away from the kind of the Hormuz of it all, the kind of narrative weight of the Middle east and just look purely at the inventory numbers, yeah, you could justify a non crisis level price for a couple months of drawdown down Assuming you also have the SPR and assuming all in water got drawn down and everything else, you can make that case. I would not have expected the market to have been as patient as it clearly has been. But there's also the fact that anyone that did try and kind of bring forward and incorporate some of this risk got blown out to the downside multiple times by Trump posting on true Social or whatever, you know, saying to a reporter in the, in the White House House that the war was almost done, this was all going to get wrapped and then prices would fall $15 to the downside. So I think it's also made that aspect of it really, really hard for anyone to price forward risk. And instead we're just kind of waiting and we're just drawing down inventory. So now we're just in this process now where we're watching the market, monitoring inventories, monitoring all of our indicators and slowly watching stuff draw down.
- [60:37]
A
Let's take stock of where we stand with respect to the straight now because frankly, the fog of war has made the news very confusing. The strait is still substantively closed. It certainly hasn't had a full reopening, but there are some ships getting through. The thing is, I'm not sure they're all big VLCC ships. So if we just talk in terms of the flow, everybody has heard the statistic that about 20% of the world's oil normally flows through the Strait of Hormuz. How much of that, you know, if there's 20% as a good normal day, how much is still flowing through the strait on ships today and how much is flowing past that position through other means such as through the east west pipeline over to the other side of Saudi Arabia and out through the Red Sea? You know, there's other mitigations in place. So from the 20% that normally goes through the strait, how much is actually making it through the strait and how much is finding its way around the corner and you know, out the other side, so to speak speak, prior to
- [61:45]
E
the blockade from the United States, you had probably about 1 to 2 million barrels a day of mostly Iranian crude and products making its way through the strait. Since the blockade and particularly since the flare up in violence in the strait over the past two weeks, with both multiple instances of US blockade enforcing by kind of striking Iranian aligned tankers as well as Iran attacking or trying to seize tankers in the region as well, trying to enforce its own blockade, that spike in violence depressed levels even further. But relative to pre war levels were, let's say between 130, 150 ships would have normally been transiting the strait. We hit a recent kind of near term high in the kind of like low double digits kind of of like call it 10 to 15 ships around the announcement of the ceasefire in early April. But over the last couple of weeks those have fallen back down into single digits again. So if anything, the situation in Hormuz has gotten a little tighter over the past month. To your question about these offsets, these have mostly been fairly well established now or are flowing well. But relative to the normal or the pre war 20 million barrel a day number, we have gotten around Hormuz to somewhere in the tune of 5ish million barrels a day. It was about 7 when you we had Iranian oil still going through Hormuz. But now that has also kind of been backed up with the blockade. So the most important piece of that was the Saudi SUS pipeline, about four, four and a half million barrels from the Gulf out to the Red Sea. You also the Emirati port linking to Fujairah on the Omanica coast, and also Iraq has a small pipeline that, that allows it to export some small volumes out of the Turkish port of Kaihan. So I think all of that together, non Iranian crude that's still stranded and kind of shut in through the Gulf is around 13 million barrels a day, give or take, 13% of global total. And then you now, you have Iranian oil that has now also been bottlenecked by the blockade. So now based on the latest indications, it seems that they have finally run out of new tanks, takers or empty takers to fill up. So now they're building inventories where they can, and those will, you know, Iran will also begin shutting in production. And if they shut in everything or everything that they were exporting, that 13 million barrel a day, total of shut in production, will rise to give or take 15 million barrels a day.
- [64:14]
A
Okay, so on a normal good day before all this went down, 20 million barrels came out of the region every single day. Now we've got a situation where about 5 to maybe 7 is coming out per day. The remaining 13 is not only just piling up in storage tanks, but the storage tanks, it sounds like, have long since been filled. And those 15 million is not flowing. And it sounds like you're saying 13 of those 15 represent production that's already been shut in, meaning that those wells have been capped and it would take some amount of work to get them flowing again. I'm not nearly as expert as you are on this, Rory, but I know when you shut in and oil well, it's not always possible to just turn it back on. Sometimes it can never be restored to its full prior flow rate and other times it can be, but it takes six months and a whole bunch of capital investment in order to get the thing started up again. Let's imagine that suppose that Xi Jinping and Trump somehow come to some amazing deal this weekend and they come back saying, okay, look, China is going to help intervene in this and we're going to to solve the whole problem and we're going to go back to normal, everybody's going to agree. Starting next week sounds like pretty much all of what is not flowing today cannot start reflowing until that 13 million barrels of shut in production is restarted. Is that right? And if so, how long does it take to restart it?
- [65:52]
E
Yeah, that's absolutely right. And just to your prior question as well, about like there are still some, a handful of VLCCs making their way through. Every once in a while you have seen a couple pass, but it's not a consistent flow. So the other thing here is that not only do we need to get tankers out, but we need to get unladen or empty tankers back into the Gulf because only then will you be able to begin drawing down domestic inventories that have been built up and restarting those wells. So in terms of time, in terms of can they be restarted at all? I would say generally yes. The nice thing about this happening in the kind of core of OPEC is that we know that these producers can cut really, really deeply and turn their production on pretty quickly. We've seen multiple instances of this. Now they've never got quite this deep, mind you, but I think that overall at this stage we don't have any reason to believe there will be large permanent impairment. Now maybe you lose, maybe you only get 95% back in the first year or so. We might, you know, so you might be down half a million to a million barrels a day of production capacity at the upper end. But in the scheme of it, I think the most, I think most of it's going to come back on pretty quickly. I think that when you look at, but it's not going to be the same across the producers. I think when you look at Saudi Arabia and the uae, I think that those members, typically wealthier, more technical expertise, better wells, in many cases they're going to be able to turn that back on. I mean the Aramco's saying weeks and I think that probably within a month you're going to get the majority of their shut in production back online. I think when it, when you look at Kuwait and Iraq, probably more like months, but I think in the scheme of things, from the perspective of the market and the scale of the shock we're facing thing, it, you know, weeks to months I think is, is a reasonable expectation across the board. I've been modeling roughly a scaled back over three months with 70% coming back on the first month, then 20, then 10. I think that's at least a bulb, a useful way of thinking about the pace of returns and I think but that's only going to start when we get empty tankers back in and we can't even get the full tankers out yet. So on top of everything else there was earlier I was at last weekend, I'm losing track of 20 time there was when Operation Project Freedom was going on. There was initially some thought that maybe this was a legitimate deal or plan with the Iranians to begin evacuating the thousand plus ships that are trapped in, that have been trapped in the Gulf for months now in the 20,000 plus seafarers that I think is going to be everything. And I could see an interm period period where you can get those ships out of the Gulf and back home to their families as a humanitarian intervention. Well before we ever get actual new rules and a return to any sense of normalcy through the straight of Hormuz. And it's only that latter benchmark that's really going to allow us to start restarting that production.
- [68:58]
A
Okay, so presumably before they shut in any production on the upstream side of the Strait of Hormuz, they filled all their storage tanks first. So presumably if we could start getting those empty tankers, empty VLCCs back into the Gulf next week, they could fill those tankers up from storage tanks for probably several weeks long enough to get the production restarted. And presumably once we get the strait open, we could resume moving oil pretty darn quickly at full pace back out like it was pre conflict assuming the military situation had changed. Is that that right?
- [69:38]
E
Yeah. And, and assuming the Iranians let them do that. Right. And and I think the other thing is we don't need to get back to full pre war pace because as we were noting earlier, we have the east west pipeline now. I think the Saudis are going to continue using that or at least they will have the option to continue using it. So even if you only got back to say 70% of pre war levels, at least from the oil markets perspective, you get back to. But like, there aren't alternative pipelines for LNG or, or helium or fertilizer or any of the other things that are blocked up. But in oil specifically, you could see a world where you don't need to get back to 100% to kind of get past the crisis. But to your point, it only starts, you only can only begin drawing down those inventories when you get unladen tankers back. And many of those unladen tankers are all over the planet now, so it's going to take weeks or months to get them back to where they need to be to start this process again. On the other side.
- [70:27]
A
I know you're mostly an oil market guy. Do you have any insight or perspectives on helium and fertilizer and the other things beside oil that flow through the strait, how long it's going to take to get those markets back to normal?
- [70:40]
E
This is going to be an interesting question because a lot of those are going to be more products, byproducts of the downstream sector. And when we were saying, when I was saying earlier that we don't think there has been much durable damage to the upstream. So this is like the actual wellheads, the production of oil and gas, fertilizer, helium, petroleum, like refined petroleum products, all these things are products of the downstream. So refineries, petrochemical facilities, etc. Etc. There have been widespread reported attacks against these facilities. And very frankly that a lot of these, you know, the Gulf monarchies keep a lot of this information very close to the chest. So we do not know the full extent of the damage to those facilities. And I, and I accept we will not likely know the full extent of damage to those facilities until we get Hormuz reopened and we get empty ships back in there to see what they're going to fill. Like, for instance, instance, if tankers show back up in Kuwait, it's going to. One of the first things I'll be watching is are they loading crude oil or are they loading diesel and jet fuel? Because that will tell us very quickly what the operational status of Kuwait's refineries are.
- [71:45]
A
Rory, let's continue on that subject of finished products and where they need to get to, Because I think that the crisis that a lot of the market is ignoring is about to get real and get real very quickly. And it's not about. This is gonna change the world forever. Someday we will get the strait reopened. I have no doubt in my mind about that, but the damage has already been done. There are parts of the world where they're already running out of jet fuel and diesel and eventually gasoline, petrol, depending on what country you're in, what you call it, are all going to start running out and it's going to cause massive localized crises. Am I exaggerating to say that that's already bake and as a certainty? I mean it sounds kind of doomerish, but frankly, I think that's what the data is telling us. Am I missing anything there? And how do you see it playing out in terms of where, what parts of the world would be most urgently in demand of those finished products? And is there a Hail Mary? Is there a solution that if we got something open in a certain amount of time, okay, we could get a whole bunch of diesel fuel out of Kuwait or wherever it is and rapidly take it to where it needs to, to be.
- [72:57]
E
I think that particularly in Asia, there have been acute local shortages of products. I think at that stage it's kind of undeniable. And I think one of the things that people are watching right now is this idea of demand destruction. I think because again, I think, you know, we've, as we've chatted about before, Eric, you know, there's so much of this that there's like a price drives the narrative element going on here in the market. So with oil still around, you're not much higher than 100 bucks on a Brent basically basis. Everyone's looking at us and saying like, what did you get wrong? And the first thing they go to quite frequently is because I think at this stage, like it's hard to say that there isn't 13 million barrels a day of oil shutting in the Gulf. Right? Like we can see it, we can see the tankers not being loaded. There's no other physical way to forget the market. So I think that's a pretty safe assumption. We have a lot less visibility on the demand side and a lot less detail tail. So a lot of people will jump to, okay, we've already seen massive demand destruction. The challenge I have with that is that demand destruction is, is a funny thing you've got. Normally when we talk about it, we talk about it in one of two ways. We talk about price elastic demand destruction. So prices are too high at, you know, at the, at the local pump. So maybe we will, you know, we'll take the bus or we'll bike or we'll walk or whatever else. And then there's income elastic demand destruction, which is high oil prices crash the global economy. The firm you worked for went bankrupt. So now you're not Driving to work that has kind of a more macro, top down view on it. Neither of those things has happened yet. We do not yet have high enough prices to destroy that level of, of demand because again, we've had much higher prices very recently in 2022, and we didn't see anywhere near that level of demand, especially destruction. So unless you think that in four years the price sensitivity has completely changed, I do not think that's likely. But what we have seen is this third kind of weirder form of demand destruction, which is just physical barrels not available fast enough in the right places. These kind of, you know, supply chain shortfalls. We are kind of interpreting this war at the speed of tweet. But these tankers take forever to get to where they're going, know, weeks, months in many cases. Like someone had asked me, someone on Twitter had asked me, oh, Rory, why did. Why was there an uptick in the latest weekly data from the eia? A late why was there an uptick in imports from a rock? Why shouldn't a rock be producing or exporting nothing right now? My great question, I looked at the data and I looked at the tanker tracking and it was actually a ship that landed and unloaded in LA this past week that loaded out of a rock, Iraq, on February 22nd. So these tankers are still out there finally getting their destinations. They're mostly gone now, but there are still some. I think that pacing aspect is taking longer to play out than we expected. And then I think the final thing here is that from this view of demand destruction, all eyes right now are on China. And that, I think makes a lot of sense because China is always the center of kind of market fascination in these moments. And as the largest importer of oil in the world, and particularly the largest importer of golf oil oil, it was kind of, kind of be ground zero for, you know, pricing pressure for demand destruction, for trade diversification, everything else. We've seen Chinese imports of crude fall by something like 3 or 4 million barrels a day over the past two months. That has. And people have actually pointed that and said, that's demand destruction. And I say, no, no, no, no, no, no, that's not what a Spanish option is. If you stop importing oil and you start drawing down stocks, stocks, and you can keep prices going. There's been no demand destroyed. It's only when stocks draw down, prices rise to a level that people stop literally consuming the barrels that demand destruction has occurred. And what's weird about this is that imports have fallen. Check US or Chinese Refining capacity or refining activity has fallen off, which we typically treat as a pretty strong indicator of domestic demand. That also seems to be pointing towards demand destruction. But then you start looking at other things and you start looking at flight tracking data again. Everyone's talking about jet fuel is the epicenter of this. So you would expect to see flight activity begin to pull down, but no flight activity is at or above year ago levels. I was just pulling some of the data, the weekly data from China's Ministry of Transport. Rail traffic up, truck traffic up, port traffic up, flight traffic up. All of these indicators are showing mobility at or above year ago levels. But all of our oil market indicators are implying a level of destruction last seen in 2022 and 2023 during China's Covid zero crackdown. So what's happening and the big galaxy brain kind of whispery thing people are talking right now is that China likely has some kind of massive pool of refined product strategic strength stocks that it has been pushing into the market. And that's the only way that we can square how mobility has stayed so robust while all the other indicators are falling off. So what this essentially says is that there has been more of a supply response because I, I treat SPR releases, whether it's from China or from the United States or Japan, as effectively new supply into the market. Now it's temporary supply because it can't go on forever. But the market interpretation it from a pricing perspective as new supply because those are barrels that doesn't need, those don't need to get bit higher. So I think that goes some of the way towards explaining why the pressure is not quite as intense as we expected it to be, and why inventories as well are not drawing down as quickly as we would expected. But still they are drawing down pretty much across the board. And if that continues through the end of May, the end of June, there is still no way that we really get to avoid that pricing pain at the other side because we still will need to destroy that demand durably across the world. And I just don't believe we've done it yet.
- [79:06]
A
Oh, Rory, I strongly agree with you that demand destruction has been misinterpreted in many dimensions during this crisis, not the least of which there's a statistic floating around that 100,000 airline flights have now been canceled because of this crisis. And when. Wait a minute. That's not consumers saying I am not willing to buy an airline ticket. That's airlines that failed to hedge their consumption that sold cheap tickets six months ago. That are canceling those flights that are certain to be unprofitable in order to cover their own tail. It's not a lack of consumer demand. So I agree with you completely that demand destruction is being misrepresented. You touched on China though, and I want to pivot to that because I think that's really the most important thing. I'm going to make a prediction here. I think that this coming weekend is going to be a pivotal moment in the evolution of this crisis. And the reason is I think this sit down between Xi Jinping and Donald Trump could change everything. If China says, Look Mr. Trump, we need you to end this crisis. If you want to negotiate with us on any other subject, you got to get this wrapped up. Because we want to get those several million barrels a day of imports that we were getting from the Persian Gas Gulf. We want them again. It's important to us and we're not dealing on other matters until you fix this mess. That's one message. The other message is, look, we've got more Strategic Petroleum reserve than you do. We can wait this out longer than you do. This is your problem, you sort it out. Which way those discussions go could easily drive either a rapid stand down resolution or a massive escalation of force in the Gulf. What do you think?
- [80:54]
E
Yeah, I would say at this stage it's clear that, that Beijing has been attempting at least publicly to message towards some kind of resolution. But I think also at the same time it has been pretty intense. I mean you have not seen any big announcements out of China about releasing SPRs or doing things that would help alleviate the stress on the global economy. And I think one of the rationales for that was that any of those actions would have reduced pressure on China, Trump to end the war and reopen Hormulos, which is the only sustainable solution to this. At the end of the day. I think that from a kind of, from an immediate economic argument, I think absolutely they want it reopened. But I, from the kind of longer term strategic view of great power, competition and rivalry between Washington and Beijing, I think this is, this war is doing a lot of damage to, to U.S. credibility, to a kind of a view and the, and the kind of cohesiveness of US alliances, particularly in the Gulf, I think that it's an opportunity for China to flex geopolitically in a way that it has not done historically and I think that it's not hating that
- [82:06]
A
final question, something you and I have discussed and agreed on before is that there is a tipping point in A crisis like this where eventually you get to a point where what's already happened, despite that there's a lag effect before the effects are realized, you get to a point where what's already happened is going to create such a big economic disruption that it's going to be incredibly damaging. I don't think we were there yet last time we spoke. Are we getting closer to that point? And how long can the strait remain closed really is the question before we get to irreversible catastrophic damage just has to happen happen.
- [82:47]
E
I think that if Hormuz remains closed to the end of June, we will have drained down a sufficiently large volume of stocks. Though I don't see a way we avoid all time highs now. Does that mean that we're going to kind of go into the full apocalypse mode? I think clearly there are levers that have still yet to be deployed that could buy us more time. You know, for instance, instance there are still more SPRs out there that have yet to be tapped on top of the kind of the 400 million that's already been announced and released by the IEA countries. Clearly China has more in reserve that it can do if this became a real kind of existential drag out. But I again, I think at this stage, you know, my banking now is, you know, my base case and again I basically just keep rolling forward the optimistic bacon case. Now it's June 1st. If that's the case, we'll still have hemorrhaged 1.4 billion barrels of oil from the global system. Sure we'll have some demand destruction and maybe the net effect will be less than that, but that's still, I mean even just upwards of a billion barrels of stock, it's a lot of stock. And as that inevitably gets pulled out of the global system, prices are going to rise. One interesting thing here is that while the front of the country curve h like prompt prices that everyone's seeing have been sideways to lower over the past month, the back of the curve is beginning to rise again. And when you look at December 2026 futures, December 2027 or December 2028, all for Brent, those prices at least as of yesterday, I haven't checked in the last couple hours, but they were sitting at all time or, or crisis level highs rising back to the levels of 2020 too. And I think that is how this is going to go is that as we drag down inventories the whole curve will begin to kind of reate higher even if we're not getting that big swing in backwardation at the front. And I should note, even though backwardation is down, it's still at clearly kind of crisis levels. Anytime that you're measuring backwardation or prompt backwardation, the spread between the first and the second contract, anytime you're measuring that in dollars and not cents, something's already kind of broken. And that I think will remain in that, in that stage. But I think that we may have already been past the crazy backwardated levels that we saw all time highs realized at the end of March and beginning of April when prompt WTI spreads were $15 a barrel like that never even made sense in the moment. It's just so high. So I do think that at this next stage it's going to be more the whole curve needing to lift higher to bring that overall price level higher. Higher.
- [85:23]
A
Well, Rory, I can't thank you enough for another terrific update. I'm hoping that we don't have to do another one of these crisis updates and four more weeks. that point it would be a bigger crisis. Please, before I let you go, tell our listeners what you do@commoditycontext.com what can our listeners expect to find when they go visit that website and what services are on offer there.
- [85:46]
E
And I just wanted to say one last thing because I forgot in my last answer in terms of the big, big kind of flag, you know, the, the signpost along the road to the market re rating higher. I think the one thing that we're going to have to see and I think we will continue to see is US Crude inventories draw down those product inventories are drawing down, crude's drawing down globally. But US Crude stocks have been abnormally high through the crisis and now I think are beginning to draw down more aggressively thanks to the kind of rise in exports. So I think that will be be the big thing that the market will need to see to finally get to those more crisis level pricing. But thank you so much for having me, Eric. I always enjoy chatting for years now and I encourage everyone to come follow some of our research@commoditycontext.com you could follow me on Twitter at Rory Johnston and you can also follow my podcast, the Oil Ground up podcast on any platform you listen to podcasts.
- [86:40]
A
Patrick Seresna and I will be back as Macro Voices continues right here@macro voices.com.
- [86:51]
B
Now back to your hosts, Eric Townsend and Patrick Ceresna.
- [86:56]
C
Eric, it was great to have an update from Rory. Now listeners, 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 go to our homepage and look for that red button over Mike Green's pickup saying Looking for the Download Patrick
- [87:18]
A
for this week's Trade of the Week Mike Green argued that while markets continue to levitate on passive and synthetic flows, the energy shock could eventually lead to slower growth and a sharp reversal in the Fed rate path. So how do you position for that shift in interest rate expectations?
- [87:38]
C
Now Mike Green's argument was that while markets continue to levitate on passive and systematic flows, the underlying economy economy may be weakening much faster than the headline suggests. Mike specifically highlighted deteriorating labor market conditions, overstated payroll data and the risk that the energy shock ultimately translates into demand destruction rather than persistent inflation. As a result, he believes markets may be underpricing the probability of a much more aggressive Fed easing cycle later this year and into 2027. So rather than chasing this short term inflation impulse higher energy prices, this trade is about positioning for a reversal in the future policy rate path through longer dated SOFR futures. Now what makes this setup interesting is that the December 2027 SOFR futures contract has been pushed down to around 96 and a quarter back near one year lows and levels we haven't seen in since early 2024. SOFR futures now imply the market is pricing roughly a 375 forward SOFR rate. In other words, the market has effectively pulled much of the easing out of the curve and is even flirting with the possibility of more restrictive Fed path next year. The trade here is to fade that repricing consistent with Mike Green's view that weaker labor data, demand destruction and slowing growth could force the market to price a more aggressive Fed easing cycle. From this trade construction standpoint, rather than buying SOFR future outright, I wanted to use the bull call spread on the December 2027 contract. Specifically using the December 2026 options. With roughly 211 days till its expiration, the structure buys the 9650 call for around $0.1960 and sells the 97 call for around $0.08, creating a 50 cent wide call spread for a net debit of roughly $0.11. The payoff profile is attractive. Max risk is $0.11 debit while the max profit is $0.39. If the December 2027 SOFR contract settles at or above 97 that creates roughly a 3.5 to 1:1 risk reward profile with the break even being at 9661. The objective is simple if the market merely reprices back towards the high scene earlier this year, before the conflict driven Fed path reset, the spread can capture the reversal with defined downside risk.
- [90:30]
A
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 postgame chart deck.
- [90:50]
C
All right Eric, let's dive into these equity markets.
- [90:52]
A
Well Patrick, the trend is clearly up and it's strong. But in addition to the cautions Mike Green expressed in the feature interview, Nomura's Charlie McElligott was unusually outspoken in recommending a ratio put spread to hedge against a blow off top in the semiconductor stocks which have been the primary thing levitating this market. I personally still have put spread hedges in place on the S&P 500. Now I've come to terms with the entirely likely outcome that those put spreads are going to expire worthless given the current uptrend. But frankly I'm still happy to have insurance in place. The market continues to shrug off an economic shock from the Hormuz crisis that I continue to believe is both certain and imminent. But I'm also starting to come around to Louis Gav's view, expressed last week, that the country' most adversely affected by the Hormuz crisis are not the ones that drive stock index prices, and Mike Green's view that the machine isn't programmed to discount such risks. So I'm still sticking to my guns on the Hormuz crisis leading to a pretty darn significant global energy shock. The question is whether or not that's gonna transmit back to the stock market or if we just keep on rallying and levitating from here on the AI craze.
- [92:13]
C
Well Eric, I want to go a little bit under the hood of the S&P 500 and actually look at the flows driven move that happen. First of all, we're approaching 7,500, which is a weekly chart measured move target on the upside of the market. This is happening when we seen some of the most overbought conditions on semiconductors that we have actually ever seen. This entire move higher has had a huge bullish tailwind from option flows and obvious dealer hedging that has to occur, which is accelerated that upside. We're now coming to a pretty important OPEX and we're going to certainly see with These elevated implied volatilities, whether mean reversion is the name of the game for semiconductors and whether or not that puts in a swing high here on the S&P 500. Now I'm not necessarily bearish thinking that there's a huge decline coming in the market, but we are long overdue for a healthy pullback. And if you just put it into the context of a traditional additional retracement, one that approaches its previous moving averages, what were previous highs of the stock market become support we could easily see a 5 to 7% market correction. That would be a very healthy reset of a primary bull market. The point here is that while we're looking for a pullback here is we're not necessarily trying to imply that that's going to lead to a big bear market decline where the semiconductors here are so overbought that at some stage year mean reversion driven by a correction in semis would be a very natural thing to occur all right Eric, let's move on to the dollar. What are your thoughts here?
- [93:55]
A
The very short term Dixie trend has turned up in the last few days, but we're still trading well below the unfilled gap that still exists above the market up to 99 spot 39 on the Dixie chart. I predict that the Trump Xi talks in China in the next couple of days and the possibility of a military re escalation in Iran this coming week will be remembered as a pivotal moment in the development of both the Iran crisis and the present Dixie chart. I'm just not sure which way that pivot is going to go, leaving me with no directional view on the market. But I think what happens in China is going to pretty much decide what happens next in most financial markets.
- [94:40]
C
For me, Eric, the dollar is all about this intermarket relationship and as oil presses higher, higher and we see stress in yield markets and certainly concerns that areas like Europe may be more directly hit by this closure of the straight and certainly see more economic weakness. At some stage there is room for the dollar to easily trade back to the top of its trade range. I don't want to be uber bullish on the dollar like we're about to see a huge leg higher, but it wouldn't surprise me here if we saw the dollar work its way back to the hundred handle into that previous overhead. Resistan all right Eric, let's dive into the oil markets.
- [95:20]
A
Well, once again I apologize for sounding like a broken record, but I think it all hinges on the outcome of the China negotiations. Frankly, I think China is holding that big handful of cards that President Trump keeps saying the United States is holding. So if China is the one to somehow step in here and say to Iran, look, we're your biggest customer, we want you to do X, Y and Z next because we said so and we're going to make it painful if you don't. I think Iran pretty much has to listen to China. The question is, can President Trump persuade China, can he make a deal with China that causes them to want to use their influence that way? And I have absolutely no idea what the answer is. Absent a solution from China, I think Trump and Iran are locked in a stalemate situation that could easily prolong the crisis for month or more. If that happens, it's going to take oil prices much higher and it's potentially going to have a crippling effect on the economy sooner or later. On the other hand, I think China could bring a very prompt end to this crisis if they want to. So my only prediction is that I do not anticipate a flat, low volume, low volatility trading outcome from here. I think we're going to see a fork in the ring erode pretty quickly here in the next several days. I just don't know which direction it's gonna take.
- [96:45]
C
Well, I wanna just look at this purely technically, obviously we wanna respect the fact that the geopolitical headlines will drive oil. But overall, each pullback on oil has been held by its 50 day moving average and retracement zones. And so while we've seen a lot of volatility, there's actually been a primary bull advance that has been very well respected technically. Now with the straight contin closed and inventories continuing to draw down around the world, there could still be a potential bull impulse. So we're watching to see whether or not we WTI can clear the 100 level legitimately. On the upside, a bigger question is when does the stock market and other markets start to care? I think at this point we would need to see a clearing to 52 week highs before it really starts to create a new wave of nervousness. This stage that resistance is still 10 to $15 higher. So at this moment, while we're looking for oil to strengthen here back into those highs, I don't think there's gonna be a huge intermarket reaction unless it really genuinely made a huge breakout. All right Eric, let's move on here and touch on gold.
- [98:01]
A
We're seeing more and more signs that precious metals are ready to begin a recovery, the strict opposite of crude oil. Price action that we had been seeing seems abating. We're occasionally seeing both gold and crude oil move up together, at least in the very short term. And the weekly RSI and stochastics are starting to move into oversold territory, suggesting that maybe the bottom is already in or is almost in for precious metals. But if there's no resolution from China and the hormuz situation continues, there's still plenty of room for another leg down in gold as the market digests the oil driven inflationary signal. So I'm not quite ready to sound the all clear yet. But if China resolves the crisis with Iran, then I think the bottom's probably in on gold and it's time to potentially lever up and expect a big rally from here. I'm just not sure if we're there yet.
- [98:56]
C
Well, in my mind here, Eric, we had that blow off on gold back in January and we've just been more or less consolidating. There's a lot of pressure from higher yields and dollar dynamics that has just put gold into this no man's land purgatory of trad. In the bigger picture, I do think that gold is going to bullishly break out, but maybe it's gonna still be something that's more like a second half of the year story. I wouldn't be surprised if we continued the rest of this month in this kind of a meat grinder trade range without much resolution. All right, Eric, let's move on to uranium here.
- [99:35]
A
Well, Patrick, as our regular listeners know, I remain super duper bullish on both nuclear energy and on uranium long term. But frankly, I'm starting to get pretty darn concerned in the very short term because the uranium miners just plain have not participated in this gigantic rally that we've seen in the broader market, or I don't know if I should even be saying the broader market in the stock indices, which are frankly being narrowly driven, not broadly driven by semiconductor stocks ever since the March lows. So if the uranium miners are just holding flat in the face of this massive semiconductor rally, what are they going to do if the semis blow off and retrace to the downside, as some observers, including our friend Charlie McElligott at Nomura, have begun to anticipate? I'm not sure, but I'm bracing for a near term correction if that happens. I do think it's a buying opportunity because the bullish thesis is as strong as ever for both uranium and nuclear energy. I just have a feeling that we're maybe about to Hit an air pocket here if the global energy market is upset in the way that I fear it's about to be upset if China doesn't bring an end to this Hormuz crisis.
- [100:48]
C
Well Eric, I share your sentiment towards the your bullishness on uranium. The big question for me is when is there going to be signs of accumulation like that? They have restarted a new bull leg. At this moment uranium is grinding and we haven't seen yet a flows pivot that has really reopened the upside window for another leg higher. At this stage I don't see a big bear decline coming or so it's going to be once again just a scenario of consolidation and just watching for when there's technical signs that in fact the flows have pivoted back into the favor of the bulls. Now Eric, I wanted to just briefly touch on the copper chart on page eight. We had a breakout to all time new highs on copper. Now is there more room for it to run to seven on the upside, absolutely. But on the short term this bull impulse here is going to likely hit some overhead res. But so long as all pullbacks are contained to 25 to 50 cent pullbacks and bought on dip, then I'd be looking for that to be continuation patterns to inevitably see copper trade all the way up to the seven handle. It's interesting that many copper names as individual equities have not yet fully started to participate. But the copper market remains decisively bullish here.
- [102:13]
A
Patrick, before we wrap up this week's podcast, let's hit that 10 year treasury note chart.
- [102:18]
C
Here we have a breakout to multi month highs on the 10 year yield. Now we haven't yet hit the highs of 20, 24, 25 which are in that 460 to 475 range. But clearly the bond market looks like it wants to press to retest those levels driven by the short term inflation fears driven by higher oil prices. At this stage the bond market is pretty ugly and yields continue to press and I don't see any reason why that has to reverse this week. So right now be careful. In the bond markets it's simply the trend is not your friend and there's no immediate catalyst for this trend to reverse.
- [103:03]
A
Folks, if you enjoy Patrick's chart decks, you can get them every single day of the week with a free trial of big picture trading. The details are on the last pages of the slide deck or just go to bigpicturetrading.com Patrick, tell them what they can expect to find in this week's report.
- [103:16]
C
Research roundup well, in this week's Research Roundup, you're going to find the transcript for today's interview, the Trade of the Week chart book, which is 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@researchroundupacrovoices.com and we will consider it for our weekly distributions. If you have not already, follow our main account on X at Macro Voices for all the most recent updates and releases. You can also follow Eric on xericstownson. That's Eric spelled with a K. You can also follow me at Patrick Ceresna on behalf of Eric Townsend and myself, thank you for listening and we'll see you all next week.
- [104:27]
B
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 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.