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This is Macro Voices, the free weekly financial podcast targeting professional finance, high net worth individuals, family offices and other sophisticated investors. Macro Voices is all about the brightest minds in the world of finance and macroeconomics, telling it like it is bullish or bearish, no holds barred. Now here are your hosts, Eric Townsend and Patrick Ceresna.
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Macro voices Episode 534 was produced on May 28, 2026. I'm Eric Townsend. Another week has passed and the Strait of Hormuz is still effectively closed. A few dozen ships got through this week, but we're still well below 10% of normal traffic levels and I don't think we're any closer to a deal than we were a week ago when oil prices were $8 higher and a deal was supposedly just. The key to this is Iran's high enriched uranium, which could be enriched to weapons grade in just a few weeks with operable centrifuges, something Iran may or may not still have. President Trump has from the start of this conflict said that this was the main thing the US simply will not negotiate on. However, never once since the beginning of this conflict has any Iranian official indicated any any willingness whatsoever to negotiate by 1 inch on Iran's position that it will not allow that high enriched uranium to leave Iran under any circumstance. So neither side is willing to negotiate at all on the central issue that has prolonged this war for three full months as of today. To break this down and make sense of it, we've got another Macro Voices double header lined up for you. We try and seek out experts with contrasting views. So by popular listener request, I'm delighted to welcome back best selling author Dr. Pippa Melmgren. Pippa is much more optimistic than I am both about how long it will take to bring a close to this war and how resilient the global economy can be to the strait remaining closed, even if it remains closed for a few more weeks or even longer than that. Pippa doesn't share my concern that we could be headed for $200 crude oil prices if this continues for another. And I think you'll enjoy hearing her rationale for why not. And Pippa has some absolutely fascinating ideas about why she thinks President Trump's interest in Iran's high enriched uranium might go quite a bit deeper than just concern about that country building a nuclear weapon using that material. We'll also discuss several other issues including AI and robotics, whether they're going to take our jobs, nuclear fusion, disappearing scientists, and much more. Then Bianco Research founder Jim Bianco returns for a cameo appearance to talk about the Hormuz crisis in specific. Now, we didn't plan this as an op ed, but it kind of worked out that way. Jim is much more pessimistic than Pippa is, and he'll explain why he still shares my concern that the President's view that time is on our side is misplaced. Then be sure to stay tuned for our Post Game segment after the feature interview when Patrick's Trade of the Week will explore a setup built around Pippa Melmgren's view that the energy shock may accelerate a broader shift toward nuclear power and energy security. And then we'll have our usual coverage of all the markets with Patrick's post Game chart deck. I also have quite a few thoughts of my own on the Iran crisis. I wrote a detailed substack post explaining the importance of Iran's 441kg of 60% enriched near weapons grade high enriched Uran on Saturday and you'll find a link to that post in your Research Roundup email. The spoiler on that? They really do have it folks. It's not in question. It's been inspected by the iaea. The claims that Iran doesn't even have a nuclear weapons program are accurate but misleading. They're speaking out of context. Iran does have the near weapons grade uranium that's needed to make not just one but several weapons. So it really is important to understand this and the press is not covered it. So I encourage you to check out that post on substack, which again is linked in your Research Roundup email. I'll also have plenty more to say in the Crude Oil section of this week's Post Game segment and I'm Patrick
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Ceresna with the Macro scoreboard. Week over week. As of the close of Wednesday, May 27, 2026, the S&P 500 index up 117 basis points trading at 7520. It's pressing all time new highs as semiconductor leadership continue. 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 23 basis points trading at 9935 the July WTI crude oil contract down 975 basis points trading at 88.68 a substantial retracement on the back of optimism that an Iran deal is imminent. The July RBAB Gasoline down 947 basis points, trading at 306the August Gold Contract down 1190 basis points trading at 4481 continues to show distributive price action. The July copper contract down 116 basis points to 634. The June uranium contract up 65 basis points trading at 85.10 and the US 10 year treasury yield down 7 basis points trading at 451. The key news to watch next week is the ISM manufacturing and services PMIs and and the much anticipated jobs numbers. Now this week's feature Interview guest is Dr. Pippa Malmgren. Eric and Pippa discuss broader geopolitical forces behind the Iranian conflict, why the current energy shock could accelerate the shift towards nuclear power and next generation energy systems, and how AI, robotics and new technologies may reshape the global economy. Eric's interview with Dr. Pippa Malgren 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 Geopolitica Institute founder and CEO Dr. Pippa Malmgren. By popular listener request, we've had quite a few emails from people basically saying you've got to get Dr. Pippa back to talk about the Iran conflict. Well, just wait. She's got a whole lot more to tell us than just Iran. But Pippa, it's great to have you back. Let's start with the Iran conflict. I have to tell you, there is so much talk on the table about, oh well, the deal is just we're hours away from closing the deal. The way I'm interpreting this is we're nowhere close to any kind of deal because President Trump has said very firmly and Iran has said very firmly at the same time, Trump says they must turn over their 60% enriched near weapons grade uranium. Iran says no way, not negotiable. We're never going to give it up. It seems to me like until one of those sides caves on that specific point, there is no deal and there is no resolution. Am I reading that right?
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First of all, hi Eric, it's so great to be back on with you. I do love the sessions with you because you let me go deep into the whole breadth of what one needs to understand. And on that we need to start understanding. First of all, the superpowers are negotiating between themselves, right? The us, China, particularly Russia as well. And they are attempting to resolve all of the outstanding geopolitical issues all at once. This is a kind of Rubik's Cube approach where you say you can't fix any one of them independently of the others and therefore it really matters that we understand this, that the US Is basically saying to China, for example, we can negotiate a deal on Taiwan. There are conditions around that. But we accept that Taiwan is in your world and that Cuba and Venezuela are in ours. So you get out of our part of the world, we'll get out a little bit out of your part of the world. Again, the conditions are important because it's not just a clear swap. Part of the conditions are that China needs to become more like Taiwan because the Chinese economy is not functioning very well. And if China's economy glitches, the whole world economy glitches. And so Trump has been reaching out effectively to the Communist Party, saying, you guys have two big choices in front of you, which I personally describe as either Star wars or Star Trek. Star wars is where we go to war with people which between these two superpowers would literally be the end of Earth. Like, nobody can survive that superpower conflict given the level of nuclear weapons that we have today. Or we decide to go to war with problems. That's the Star Trek scenario. And China is absolutely signaling that it prefers Star Trek, no question. But to do Star Trek, China can't run its economy the way it has been. And therefore, not only does it need to be more like Taiwan, but the US Needs to offer China access to the US Market on more preferable terms than have been available in the past. And specifically, China needs to move from a world where everything's stamped Made in China to a world where they're stamped owned by China. In other words, they need to copy the exact same model the Europeans did after World War II, the Japanese did a little bit later, which is you start by exporting cheap goods based on cheap labor, and you end up making goods in the US to the point that you can build global brands. So, you know, Americans, a lot of Americans, they actually think that BMW and Mercedes are American brands these days. Right. And so this is the only way you can raise national income. So the US Is basically saying, well, let's figure out a deal that we can get us all. There's. They've just said they're going to create a board to review which businesses in China can come into the United States on that basis. So Iran. So then Iran is part of this deal. Now, first, who are the Iranians? Is a very important question, because now that the leadership has either left for Moscow or been eliminated by the United States, what's left is not really leadership. It's like the remnants of a structure that no longer exists. It's we could almost say a lot of stragglers that are now competing with each other because they all know that there is a deal coming from the United States and they want to emerge as the guy who gets to shake hands with the United States. Kind of in the same way that the new leader of Syria used to be considered a very bad terrorist guy and now is like a head of state that the United States says good things about. Because the strategy is not regime change. The strategy is conversion. It is to create the conditions that are so favorable that it's not worth remaining where you were. It is worth basically giving up the terrorism in exchange for a place in the world economy and some cash in the bank. So you're right, the uranium's the sticking point, but not for the reasons we think. It's not about the Iranian nuclear program in the sense they know that everyone in the region is opposed to them becoming a nuclear power. They know that China was their ally. But what was left of the IRGC when they made the decision to start lobbying, closing the Strait of Hormuz, who did that hurt most? That hurt China, their own sponsor. So at that point, China becomes extremely pragmatic and says, hey guys, we were on your side, but no, this is not going to work. The President comes in and says, yeah, we agree. So the US and China start collaborating on the conditions under which the Strait of Hormuz can be reopened. And notice that the first ships that came through are all Chinese oil carrying vessels. Also, the US has been very clear with China, of course, China can buy all the oil it needs from Venezuela, from Alaska. Right. We cut a deal to sell Alaskan oil to China during the Trump Xi Summit. But there's a kind of silent parenthesis, which is unless you want to go to war with the United States, in which case the US can now turn the taps off on these things. So that option of Star wars is literally just not even available. So let's not talk about that. Let's go to Star Trek, which is where we all win. So the Iranians understand the real reason the President wants the uranium is because he wants to prove definitively the origin of that uranium. And his belief is that it is American and that it was sent to Iran as part of the various deals cut under the period when Senator Clinton was the Secretary of State, when President Obama was in office and when President Biden was in office. That part of the deal was not just sending vast amounts of cash to Iran, but also quietly, surreptitiously facilitating their nuclear program. Now Obviously, that sounds completely nuts to many people, but this is what he is after, is the receipts. He wants to be able to prove that this nefarious position was even worse than we think. So that's why he also talks about gold dust, right? That the uranium is gold dust. In other words, he only needs a few grams to be able to prove the origin. Also, now that the Iranian leadership, what's left of it, I don't even want to call leadership. It's just sort of, you know, what remains. They started lobbing missiles at all their neighbors and destroying extremely valuable infrastructure, not to mention hitting a nuclear plant. So now everyone in the Middle east is aligned. There is no daylight between them. They all are like, this cannot continue. These guys cannot be allowed to disrupt the entire region. So they have no more friends in that respect. And now that Cuba and Venezuela are shaking hands with the United States and China's not supporting them anymore, what's left? Russia. Russia, like China, is open to a swap. So if they have a choice between Iran and Ukraine, they're going to focus on Ukraine. And the President understands that. China understands that. And that's why the last piece of this Rubik's Cube that's being negotiated is not Iran. That's considered pretty much a done deal. The question is, how long do these folks keep lobbying missiles around in their internal competition to emerge as the winner that gets to shake hands with the world? But the real problem is, how do we get to a resolution over Ukraine? And I think that's a separate conversation we can have. But I think now we have a better context and understanding. And by the way, for those who haven't been paying attention, because I find a lot of people are like, oh, what are you talking about? Cuba is never going to flip. And I'm like, did you notice that the head of the CIA flew into Havana on the very day that Trump and Xi met? And the reason you don't see Secretary of State Rubio there is because the US Is not doing diplomacy in Cuba. The US Is dictating terms, and it's basically said, you can have 100 million in cash, which you need because they have no gasoline, they have no diesel, they have no lights on. So they are in a raise your hand and say uncle moment where they are up the creek and the conditions are being laid out by the U.S. so these things are historic. Any one of them is historic. But you have to understand the whole thing together. It's a Rubik's Cube. It's not about individual locations anymore.
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Wow. So much to unpack here. We'll definitely get back to Ukraine and all the rest of it, but I want to stay on Russia for start. So I'm not following exactly what you're saying about the origin of Iran's uranium. And I think this is something that's been so badly not reported by the mainstream media that I want to start with a little bit of context for our listeners. Iran has 441 kilograms of 60% enriched uranium. It's in UF6, which is the stuff that's a gas when it's in the centrifuge, but it's a solid form at room temperature. It's in about 17 or 18 casks that are each about the size of a scuba tank. So that's the. And that's not speculation. IAEA inspectors have gone and looked at it, put a seal on it and said, we've seen this. So nobody disputes that they have that. The other thing to understand is 60% enriched uranium is never ever something, at least not in that quantity that has any explanation in civilian use. This has everything to do with Iran being what's known as a threshold state. They don't have nuclear weapons, they don't have weapons grade uranium, but they've done 99% of the work necessary to get their uranium to weapons grade. It's only 1% more effort to go from 60% to 90% enrichment if you've got operable centrifuges to do that enrichment in. It's not clear whether or not their centrifuges are still working or completely destroyed or what the status is there. But they've got this uranium. It sounds like you're saying, Pippa, you think that they got it from the U.S. and if so, how would you prove that? I mean, even if you had these 17 canisters or tanks of uranium each the size of a scuba tank, are you saying you do some kind of DNA test on it and figure out who sold it to you?
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Yeah, that's exactly. And I'm not saying that this is my belief. I am saying I believe it is the President's belief and the actions he's taking reflect this belief. But what's even more important is we have to be really careful about this idea of what constitutes a nuclear weapon. You know, when I was in the White House, I was very privileged to get the chance to work on nuclear threats to the domestic economy. So everybody on the National Security Council was out chasing terrorists down globally. But the group that I was part of, we were looking at what would happen if a terrorist hit a shopping mall in America with. Not an icbm, right? Not what you're talking about a nuclear weapon, but something that has nuclear material attached to a traditional old fashioned explosive. That's what we call a dirty bomb. And this is where a lot of the confusion has come in about, you know, how close was Iran to having a nuclear weapon. The answer is they already had it. It's just, are we talking about an ICBM that you can deliver for 5,000 miles, or are we talking about something you put in a backpack and you can destroy an area for 10,000 years? Right. Both of them are serious threats, and both of them are things that the people that we're discussing seem to be perfectly morally content to do. So when we talk about getting the uranium, it's not just how highly enriched it is. You don't even, you can take uranium from a dentist's office refuse, and then you can put that in something. Right? Like, we have to understand that we're talking about a range of nuclear threats, not just one kind. So that's the first thing. And now there's universal agreement. As I said in the Middle east, everybody's like, these guys can't have any of it. None. So that's an overarching understanding we have to have. The second thing is, can you tell where it came from? My understanding is you can. And I think that what the President is aiming at, as you know, he's undergoing an extraordinary effort to go back in time and find out exactly what happened when and why it happened. Because it's ever more clear that there was a massive effort to undermine his first presidency, to prevent him from executing the vision that he had. And he believes that the other side was willing to go to almost any lengths to get their way, and that included start being literally paying the very terrorists that we were supposed to be chasing down. And we know that that's in the public domain now, right? Even when Trump recently entered office, when the excavation of USAID and other such channels began, and everybody's like, wait, why are we sending $40 million a week to the Taliban? What the heck? What's causing that? And it's part of this history of a belief that sometimes it's better to work with an opponent. It's the old, you know, the enemy of my enemy is my friend logic, or the belief that you need an opponent to justify Congress allocating funds, or you're so used to working with an opponent that you've converted some of them and so you have to give them cover stories. Like, there's a million reasons that the people doing all this would say were perfectly legitimate, but in Trump's view, they were not perfectly legitimate. And so I'm just saying that. That one of the reasons that he is insisting on a physical access to this material is because of that. And the people on the other side know this, so they're holding out for the highest possible price. So it strikes me that we're not actually in a state negotiation anymore. We're in a price negotiation. The folks left know that they are not going to be running this country, partly because. Depends how you count it. But something between, let's say 60 and 90 million Iranians are pretty mad about all this and do not want these people in charge. So they're gonna have to face their own public, which is not gonna be pretty. So will they actually survive that? There's a chance they probably won't. That's why a number of them, when they were offered the opportunity to take the. What Russia put on the table, which is take an apartment in Moscow, it's free, have a pension, and live a life where you can have a coffee without worrying. And, you know, Americans are chasing you down. But they didn't offer that to everyone. They only offered that to the really senior people. So the people left didn't get the offer. So where are they going to go? What options do they have? The only real option left is to either join forces with the US and become part of the new world. That was partly the reason that Trump said, okay, everybody joins the Abraham Accords now. Right? Because then everybody becomes an enforcer against this kind of thinking. And so basically, where are you going to run and hide? The whole rest of the Middle east is going to shut you down as well. There's no place to go. That's why I think we are going to end up with a deal. I do think Iran is going to emerge back into the family of nations with new leadership. Is it going to be messy? Yeah. But the US Is not doing what it did in Iraq, which is just to destroy the government and then walk away and hope for the best. They're instead saying, okay, let's all together work on removing the one group of people who have adverse interest to the whole rest of the world, and then try to figure out, how do we create the conditions for Iran to choose their own leadership.
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Pippa, the distinction that you drew at the beginning of that, between what's possible and what the President believes to be possible not being the same thing, seems Central in my mind and frankly, I'm just gonna point out that in the President's most recent truth social post, he was absolutely adamant that the US absolutely positively. There's only two options that he said. One is Iran turns over its enriched uranium and gives it to the United States. The other is that the U.S. atomic Energy Commission be present in Iran and supervise and oversee any down blending or destruction operation that might occur in Iran. Yes, I can't help point out, PIPPA, that the U.S. atomic Energy Commission was dissolved in 1974, 52 years ago. So the President's command of all of these topics maybe leaves a little bit to be desired.
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Yeah, and I hear you, but no, what he means is American atomic energy experts that basically a U.S. team of, you know, our most cutting edge experts to oversee the process.
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Okay, but you think that the motive is not just to make sure that Iran does not possess this nuclear threshold state condition of having this near weapons grade material. You think it is to do a forensic operation to prove that it's really got Barack Obama and Nancy Pelosi's DNA mixed in with that U238 and 235. There's also a little bit of Barack's fingerprints on it somewhere.
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Yes, I think that is the belief of this White House.
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And do you think that any of these nuclear experts, whether they're from whatever IAEA would be the normal agency to do that? Do they believe that it's possible to do? I've never heard of a forensic analysis of enriched uranium to determine its source, so far as I know.
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Well, and also remember, it won't only be about the material, it'll also be about the history. And when you're negotiating and you're offering a lot of money on the table, what you're asking is for people to start singing. You're saying, we'll offer you this money, but we want to know what is the history? Where did things come from? Where did you get the insight? How did you make this leap with your nuclear process? Was this given to you? There's a whole forensic excavation that I think is occurring and going to continue occurring. And so I'm just adding in that this piece of it exists. Now we can argue about whether it's sensible. And I'm not, you know, a nuclear forensic expert by a million miles. But do we think that nuclear forensic experts could do this kind of work? I think the answer is yes. And when you listen to them, their answer is yes. So I just think when we're trying to understand what's going on in the world. We cannot look at this thing the way the media is presenting it, which is the leadership of Iran is negotiating with the leadership of the United States. Because that is not what is happening. It is what is left of what was a command control structure negotiating really now with the various superpowers. Because China is very involved in this as well. And even China agrees and has said we also don't support any nuclear weapons is their fundamental position, whether that's for Russia or Iran. So the US And China are aligned on this piece. And so I just think that's a better frame for understanding the back and forth than the traditional way of looking at it.
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Okay, with that framework in place, let's come back to the current global energy disruption situation. What we have going on is both sides are saying they're not going to back down. Somebody's got to cave on this. Giving over of the enriched nuclear material in order to end this conflict and fully reopen the Strait. Every single crude oil expert that we've spoken with has said the same thing, which is the buffers and safety margins have pretty much been used up. If the Strait remains closed for another month, we're gonna be looking at out of control oil prices. $150, $200 oil prices. This has to get wrapped up in the next month or the world is in a really big pickle with respect to energy. Do you agree with, with that appraisal of the situation? And if so, do you see it, you know, an agreement being made on this nuclear material in the next few weeks? Or how does this resolve? And if it doesn't, what happens to the global energy market?
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Sure. So first thing is we have to understand that the United States is perfectly fine with the strait remaining closed because this forces the whole world to buy these molecules of oil and gas that are currently blocked in the Strait. They have to buy them from America. So the US Is saying, we're open for business. We got all everything the world needs we can sell. Plus the petroleum byproducts. They're all here too. I'll give you an example. I remember a few weeks ago, I was in South Korea and went up to the North Korean border and all the headlines were saying, oh my God, semiconductor production globally is gonna collapse. Because since the IRGC hit the various production plants in Qatar, there was not enough helium for semiconductor production. And I'm like, but the largest helium reserve on Earth is in Texas. They're just going to buy from Texas? And then like three weeks later, headlines, Hynek Samsung Semiconductors closed the deal with Texas. So it's like people don't understand. You can just. Just shift the supply chain. Now, you can't shift it forever because the US doesn't have unlimited supplies forever, but it does have these supplies probably for about two years. So that's one layer. Second layer is part of what the US is trying to do, is shift the whole world away from molecules, molecules to atoms. Because we're trying to enter a world where it's not oil and gas that power our future. It is small modular reactors. It is basically nuclear energy in new safe forms. And I keep referring it to my written work on Substack. As we have to understand, we now can put a star in a box, literally. So, for example, there's a company, there's several, but there's one in California called Valor Atomics. Valor is making a box that's literally half the size of a car. And what's miraculous is that it's not just a small modular reactor, which of course, we've had for decades. That's what powered the US Navy right since the 50s. So we know this works and it's safe, but they're putting them in these small boxes that then you can literally move anywhere you want. So not only can the US now create a nuclear power plant quickly, but we can create a distributed nuclear plant that we could put anywhere you need it. So another one in Austin, where I'm now living, because it's our new tech center, which is quite amazing here, another one called Aloe, which is making small modular reactors. These things are just to be really clear because I think people don't understand. The new technology evolves around what they call triso fuel, which are little tiny pellets the size of a poppy seed which have super hard shells that are almost impossible to break. And inside is the fissile material, the nuclear material, I should say, and so it can't melt down. This is not like Three Mile island or Chernobyl. That risk does not exist. And it takes literally half a handful of triso pellets to fuel, as I'm told, 5,000 homes. I had originally thought for a year, and I keep being corrected and being told no, no, no, indefinitely. Okay? So since the US and China are leading in this new nuclear technology, the US is delighted to be making a ton of money on the oil that it can sell to the world for the next couple of years. In order to finance the transition from the old drill baby, drill approach to let's just use new forms of clean energy, of which by the way, nuclear is just one. There's also a whole bunch of others which are developing super quickly. And by the way, this takes me to, and it's important we all know about the Genesis mission and most people, even investors in the market, they're like, what is that? That's the announcement by the White House that all our national labs, so that's Los Alamos and Lawrence Livermore and the Argonne and all these amazing labs that have had our best scientists since the end of the second World War, they've all been totally classified. None of the data has ever been let out the door, let alone, I mean even internally. They've never been allowed to talk to each other. Right. It's like Apple, right? People who work on the glass can't work on any other part of it. It so that nobody knows how to make a whole iPhone. So the President said, right, this is going to stop. We're going to lift the lid off all of them. We're going to run AI over all the data and we're going to connect the dots within the labs and across the labs and we're betting there's a whole bunch of world shaking technologies that are going to come out of that and massively accelerate the solutions, like new forms of energy. Now related to that is definitely going to be nuclear fusion. And how close are we? So again, you know, I have investors who say, oh, nuclear, that means $30 billion and 30 years. No, in Austin we have one company here that is a startup doing this technology I've described. They have built a small modular reactor with less than 300 people in less than 360 days. Right. The governor said go, go, go. I give approval. I can see that there's no, you know, like health risk here, no meltdown risk. Boom. We're in a different world. So that's why the US is like, okay, I understand everybody's in pain as long as the Strait of Hormuz is closed, but that's not our fault. It's these guys and if these guys would go home, then we could open everything up, up. But as long as they're going to be a pain and keep it closed, the fact is we're a net beneficiary of this process. The US is also going to be able to invest a whole lot more in its own oil and gas while this is going on. Right? There's nothing like high energy prices to stimulate investment and capex and especially in alternative energies, which is definitely happening as well. So you can start to see like, oh, oh. That sort of explains why the White House is not like panicking like everybody else. But of course, if you're European, the idea that you have to buy your oil and gas from President Trump is pretty galling. So they're like, we don't want to do it, but what other options do they have? You can buy from the Russians, who do you prefer? But these guys in the strait are basically saying you can't buy it from anybody in the Middle East. So the US didn't do that. That was their decision.
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A
So many things to unpack here, Pippa. Someday we're going to have to sit down and have a debate on Triso versus not Triso fuel. But I agree with you that ALO particularly, which does not use Triso fuel, is a really exciting startup right next to you in Austin there. They're doing some absolutely amazing things. If we had, the best thing we could do would be to make 25 more companies like Olo because they're really on the right track. And I think we're headed in that, that direction. The thing I'm still missing, and I'm just gonna come very quickly back to it, is we've got about 13 million barrels per day of production shut ins in the Persian Gulf region as a result of the closing of the Strait of Hormuz. The US doesn't have spare capacity to service all of that. There's a little bit that's going through the pipelines and so forth. The east west pipeline in Saudi Arabia is delivering some through the Red Sea. But still we've got to Somehow destroy about 10 million barrels of demand unless that strait gets fully reopened really, really, really quickly. Where do you see that coming from?
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D
So why do you think Trump and Xi just had this meeting? That is exactly. They are in total alignment. Because who will suffer most? China, not the US so you can be sure that China is also putting enormous pressure and incentives for this to stop. And so is everybody else in the Middle East. So again, what are you actually dealing with? Are you really dealing with the leadership of a nation or are you dealing with a bunch of people who understand that the whole world would like them to stop doing this and are willing to pay them to stop doing this. And your incentive is to just sit tight because you'll get a bigger offer tomorrow than today. So that's why the threat of another military action becomes necessary. It's not a costless decision to say no.
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We've got to get to the point where we reopen the Strait. I think we can all agree that the strait needs to get reopened and reopened soon, or the world is going to face a real energy crisis. And as you said, the most powerful nations around the world are all aligned on that. But the guys that have the drones and the missiles right next door to the strait are the Iranian irgc, which has been by its design, separated and decentralized into 32 different command and control regions that all independently are engaged in a religious war. So what's going to bring that to an end?
- [40:57]
D
Exactly. So, and to my point, you have a whole bunch of independent groups that don't have a command control structure. And that's why, like, you'll just see the Wall Street Journal is reporting right now, like, six hours ago, U.S. navy is guiding ships through Strait of Hormuz. Right. They're just quietly coordinating. And everybody understands if you hit one of them, all hell is going to break loose. So this is a way of beginning the process of moving the control away from these kind of warring factions. So I don't know, how long do these warring factions last? When do they finally either just get exhausted, they say yes to the money, they get taken out by a military action? I don't know. But it just strikes me with and all of this alignment between the US all the regional nations, and China, that it's not gonna last that long would be my view.
- [42:00]
A
President Trump has said on several occasions, look, we've got time on our side. And I don't think that that statement is true. I don't think we have time on our side. Does he know better and he's just bluffing and it's part of his negotiating style, or does the President really believe that we've got plenty of time and we don't need to worry about.
- [42:18]
D
Well, I think I just outlined the exact case of why the United States does, in fact, have time on its side. Right. It is exactly why. It's not the world has time on its side, it's the US has time on its side.
- [42:33]
A
So this comes back to, I'm thinking, to something Louis Gav said on this program a few weeks ago when I said, louis, how can it be that the stock market is not freaking out about this energy crisis? And Louis said, unfortunately, the bottom line is that when we get to a real crisis situation, which we probably will, the resources go to the highest bidder. And if millions of people are going to starve to death as a result of this crisis, they won't be in countries that affect Nvidia's earnings. And that's the reason the stock market is not crashing on this, is that basically what's going on here is if there's going to be massive human suffering as a result of this, it won't be in the US it won't be in China, and it won't be any place that affects the earnings of Nvidia.
- [43:18]
D
Well, that's. I do. I know and love Louis. It's a very brutal analysis that you've outlined there. I think it's more that everybody understands that all the players are moving toward a resolution. They have agreed on quite a few issues. Yes, there's some sticking points, but it's not that we're starting from scratch. We've come a long way from day one. So I guess the market is just betting that first of all, when you have that many nations all involved in moving in one direction, these guys can't hang on that long. That's one. And remember, they have no support internally in Iran. Right. Like I said, the reason they don't get thrown out is only because they're the only ones with guns. And are they really religious? Are they really a theocracy? That's also an open question. Some yes, but many no. This is a pragmatic situation. That's why Scott Besant has been very clear about making the conditions such that they would have no paycheck for several months before the military action began, so they'd already be destabilized and vulnerable to negotiations, which I think many of them were. So I also think the world can see that we are quickly moving into a world where we need to be off oil and gas anyway, and we're coming up with new methodologies all the time, even in fertilizers. Right. Everybody was like, oh, my gosh, no one will be able to plant. There won't be enough fertilizer. And then suddenly, you see we're developing all these new forms of things like green ammonia that don't even use any petroleum byproduct. So it's accelerating the technological shifts away from oil and gas. Now, of course, there's a lag. So I'm not saying this happens tomorrow, but it's the same thing. Like a parallel issue is the semiconductor production in Taiwan. And there's this debate right now where, you know, Chemath came out a few days ago and said, yeah, we've only got to rely on Taiwan for another 18 months, maybe two years. And after that, the productions moved to the US and Texas and Arizona, and they'll just take over and then there was an outcry. People said, no, we don't have the expertise, we don't have the capability. It's going to take 10 years, okay, but all you've got is a bid offer spread then. The reality is that the core focus at the cutting edge of technology is going to happen in the us it's not going to be happening in Taiwan the way it did. The US has already moved most of those engineers to the US anyway. These are the things we have to understand. In an AI LED world, the speed at which you can shift from one kind of technology to another is absolutely blinding. And I think actually this is a wake up call to everybody in the oil and gas industry who've been like, ah, yeah, you know, nuclear, that's years and decades away. Nuclear fusion will never happen. And you're like, with artificial intelligence where you can do literally millions of test scenarios in seconds, it is happening and it is going to happen a lot faster than they realize. And, and you are gonna see the building of nuclear power plants at a speed and scale that doesn't match our mental model of 30 billion in 30 years. So I think that's why the markets are like, yeah, we're in a transition, but not the end of the world.
- [47:11]
A
Let's go a little deeper on a topic that I know you're passionate about, which is a lot of people right now are up in arms and there's literally people protesting in the streets, particularly in universities, saying AI is going to take all of our jobs, it's going to destroy the economy, we're going to have mass unemployment, because AI is just the worst thing that's ever happened. I personally think that they're wrong, but give me your take. How should we think about both AI and robotics? Are these the greatest productivity enhancers ever or are these the greatest threats to employment ever?
- [47:49]
D
First, all technologies cut both ways, right? The car can safely transport you and your family from A to B and it can kill everybody in your family as well, mow you down. So all technologies, it depends how you use them and we need to be careful about that. But you have to understand the key thing about AI and robotics is we live in a world where the debt burden for all the major players for the United States, for Europe, for Britain, for China, is so massive that a regular human being who needs to sleep at night can't outrun this thing. So again, the superpowers are looking at this going the only way that we can get ahead of this terrible hole that's been created is to go to a whole new level of production. And this is not the same as productivity, because we're not talking about productivity. We're talking about how do we get to a world where energy doesn't cost anything. We're literally the star in a box with triso. Fuel is permanently powering 5,000 homes and nobody is having to really pay more than pennies for that. That world is now within reach because of AI and robotics. People have a hard time with that. They're like, wait, what? And I keep pointing out, look, every single person that's probably listening to this podcast, they all have a washer and a dryer. Those are robots. But they're not sitting around saying, oh gosh, I really miss the old days when I had to hand wash all the clothes. No, they're doing it for you. And nobody misses this task. So in a sense, we're confusing jobs and tasks with income and standard of living. And the disconnect is happening. And it's hard for the, especially the older generation to imagine a world where you don't have to work very hard to get a high standard of living because the cost of supplying it is collapsing. I'll give you a practical example here in Austin as well, there's this amazing company called Icon which is doing 3D printed homes and in fact 3D printed neighborhoods. And I've driven through the neighborhood where you can buy a three bedroom, absolutely stunningly beautiful house that's got perfect wiring and has a Tesla power wall. So you're already not really paying for your electricity and have the capacity to start selling your electricity back to the grid. Which means your 3D printed home is paying the mortgage on your behalf now, not 100% today, but that will come. And I would add in, we're making big advances in some other new forms of energy, like wireless transmission of energy, space based solar power. Japan has just made a big breakthrough. There's this is going to happen. So now you're not even dependent on the power grid anymore because we can move energy without it. So imagine a Life where that 3D printed home is only going to cost 100 grand, because that's where we're heading, right? It costs kind of the same, or actually a little bit less now than a three bedroom house that already exists in Austin. But once they get the hang of doing this, then the price is going to collapse so suddenly. Then you can have a really nice house, not have to pay very much for the energy, if anything, actually maybe earn enough that it pays your mortgage or Part of it, how hard do you have to work? The answer is not so hard. In other words, AI and robotics are about freeing us up from these basic tasks like laundry, washing. Do it on our behalf at a scale that's not achievable by a human, and suddenly we could devote our time and attention to much more serious and interesting problems. But this creates some social dislocation, to say the least, because we're so accustomed to having our identity tied to our job. The idea that now you won't even be working for one company with one income stream, but you'll have a portfolio of activities and you don't even need to earn that much to have a high standard of living. This means you have to start defining who you are without reference to a job title. And I think that is not well articulated or even understood. But that is the bigger problem than even the I won't have a job, right? I won't have a job means I won't have an income. But people are already figuring out how to get AI to generate income without us even having to do very much. So, of course, not everybody's going to figure it out. So I'm not saying everyone progresses at the same speed, but when you watch, especially young people starting to get the hang of it, they're creating crazy businesses. I'll just give you one that just personally kind of tickles my funny bone. I just think it's so interesting some kid somewhere figured out that he could record the sound of the rain and then uploaded as a track onto Sano, set up AI agents to go market this thing as a, like a. What do they call it, AMSR or ASMR. And suddenly he's making like 10 grand a month and you're like, we have to open our imaginations to what this stuff can do. Which is very hard to do if you're all locked into. I am terrified that I am going to lose my job. And by the way, why is your job all tasks? And if it is all tasks, let the robotics and automation and AI do it and figure out what's the more important problem that needs to be solved. Because that's where a human excels. A human is the most brilliant problem solver ever to walk on the face of earth. So it's about restoring our confidence in our capacity to be, you know, epic problem solvers, as opposed to cogs in a machine that are just conducting narrow tasks for a paycheck.
- [54:17]
A
Pippa, last topic I want to touch on, at risk of being what might sound a Little bit conspiratorial. Something's going on, and I'm not sure what. But, you know, you've talked quite a bit in past interviews about there being lots of different ways that warfare has evolved in. And things don't really happen in terms of soldiers in trenches shooting at each other anymore. The hybrid warfare is much more sophisticated. There's a couple of stories that don't get a lot of attention. One is oil infrastructure all over the world, refineries and so forth. Some of them have been attacked as part of military conflicts, but there's a lot of other ones that just have had these mysterious accidents, like too many to explain by chance probability. And then there's all these scientists that keep disappearing. It feels like we're back to 1960s spy movies where somebody's taken out the oil infrastructure and the smartest people who know how to fix things are suddenly disappearing. I know that sounds conspiratorial, but is there something real to this?
- [55:24]
D
Have written a bit on these in my Substack column lately. So I think, look, there are a few things on the infrastructure. When you have old infrastructure, that's very hard to just walk away from because the capital investment has been so enormous and the cost of decommissioning is so high. You know, it's a very human tendency that things just burn down. Oh, my goodness. And then you have insurance, and then you start again, right? This has been happening throughout the course of human history. So that's not new, but maybe it's accelerating. In a world where people can see that all these new technologies are arriving soon, so rapidly that old infrastructure is redundant much faster than it used to be. So I'd put a little bit down to, oh, my goodness, the darn thing burned down. Gosh, there's that, you know, that I've been arguing since 2021. I started to say, I think we are now in World War Three. And at that time, it really sounded completely out there. People are like, what are you talking about? But now I think we can see in retrospect that it was beginning, right? We started to see when the Russians started to cut the sub cables in the Arctic, which I've talked about a lot, in order to try to disrupt the global flow of information. That was a kind of precursor to the tanks rolling into Ukraine Brain. That event now in retrospect, is clearly part of what was a global conflict, but wasn't recognized as that at the time. So today, it's funny, we're living in a world people are like, oh, My God, we're in World War iii. And I'm like, actually, we've been in it, and I think now it's beginning to be resolved. Like, we're coming to the end of this episode. But others have only just recognized it. Anyway, if either way, it's not crazy to assume that your opposition isn't just going to try to deal with you on neutral ground or expected places. So, you know, are there Russian or Chinese or Iranian operatives in the US that might have an interest in disrupting US Critical infrastructure? I mean, I think Homeland Security under every single president would say yes. So are they successful? Sometimes, probably, yes. Does anyone want to explain it as that's what it was? No, because then everyone would be totally scared because the idea that there's a conflict here in the US Is too terrifying. So instead you just have these accidents. But I'm sure that people in that, that world of strategic security think a certain percentage of them might be from opponents of the United States. So the good news is that it seems pretty contained, right? We so far haven't had something that is on a scale that the public has really registered. So I think that's something. So I think there are many reasons why we might be seeing this happen. But again, what's so extraordinary is all these events occurring and the markets are still pretty solid. So obviously the markets aren't too worried about the loss of the physical infrastructure, even in a war zone like what we see around the Strait, let alone adding onto it critical infrastructure of oil and gas in the U.S. it's kind of actually encouraging that you could remove that much capacity and everybody goes, okay, we'll just move on from here, right? So that's one thing. The scientists are a related matter, in my view. This is a more, to me, more interesting, more important subject because we have maybe now something between 12 and 15 of the most senior American nuclear scientists or people who were working on materials related to nuclear capability have literally just disappeared or suddenly been killed in very odd ways, statistically unlikely ways. And maybe the tell has been that for a long time there was no investigation. And you're like, wait, how can our most senior people, you know, people who running things like the Air Force Research Lab, just suddenly be gone? And nobody asks any questions, so what's going on? And I think the answer is nobody knows. We have started to realize this is not only happening in the United States, it's also happening in China. A lot of their senior scientists have suddenly disappeared, or especially younger ones died under strange circumstances. So again, I Look at this. And I'm like, well look, we're having extraordinary events happen right now. Not only the Genesis mission, which is where, like I said, all those super classified technologies around nuclear are suddenly going to be revealed, made available to the public in what the President will no doubt view as a kind of Robin Hood move, right? Take it out of the control of, of the traditional military industrial complex and put it into the control of the public who paid for it. But are there gonna be people who don't want that to happen? Sure, it's nice having a monopoly on certain technologies. So is there a pushback going on? Is this about removing the people who know how to do these things? Is that. I don't know, I'm a little bit hopeful that it might be the opposite, that maybe there's a gathering of the best scientists on the plan on this subject in anticipation of announcements from both the US and China that we've had massively important breakthroughs. So is this then tied as well to, or is it pure coincidence that you have a President who suddenly announced and is in fact executing the declassification of all the documents and evidence related to the famous, this uap, ufo, call it what you will, anomalous phenomena subject. And I think they are intertwined, it's difficult to disentangle them. And so the public is beginning to see, and you know, let's face it, a billion people have now looked at the declassified website that the White House put together. And I thought personally it was a very important signal. When the White house set up two websites, alien.gov and aliens.gov and everybody laughed and said, okay, the President's losing his marbles and da, da. And I'm like, oh, this is maybe very clever because I bet a bunch of these scientists who've been working on these super hyper classified subjects probably have developed patents around their knowledge. Maybe not on the exact thing they're working on, but on tangential aspects. Because this is what scientists do, right? But under US law, if the origin of a technology is not human, then the patents are not valid. So is this an effort by the President to say, you guys who've had access to all this technology and didn't share it with the public, I'm going to not only take it off you, but I'm not going to allow you to say that you still own it through some patent claim and instead you're going to find out that because there's a possibility that it has a non human origin, that the patents are nullified? Could that be Part of the story. I'm not saying that's definitively the case. I think it's an interesting thing to think about. And so now, as this stuff is being declassified, we have to ask, why would anybody be upset about all this? And notice the speech that the President gave a couple of months ago to the defense community where he basically said, you guys have been optimizing for share buybacks and for profits, and this is going to end. You're now going to optimize for the creation of defense equipment that actually works at a reasonable price. And so the old game is over. Which, by the way, is the same position he has with the pharma companies where he said, you guys were charging Americans three times as much for drugs as you charged anybody else in the world. This is over. And that's just the way it is. And they said that's what we're going to do. So it's a kind of a general strategy to reduce costs on the American budget and the American taxpayer. So even if it's not true, let's say there is no non human intelligence. This whole thing is a ruse. It's still an interesting strategy for reorienting the balance of power over technology. It's still an interesting strategy for bringing technologies that have been, you know, outside of public use into public use. Now, whether or not you believe there's intelligence beyond humans is a different matter. But I think this is also an extremely important, interesting question to ask at a time when AI is accelerating and we all can feel it as we're talking to the AI. It sure feels like an intelligent, maybe more intelligent, something is on the other side. And as I'm talking to you, I'm looking out a window at a bunch of trees and I'm thinking, we're so arrogant as humans when we say, is there intelligence? Non human intelligence? And you're like, trees move in the direction of the sunshine. That is an intelligence, right? We know that trees migrate their roots together and they share information through that root network. That's intelligence. So this idea that, you know, we're alone and there's nothing else this intelligent, that is actually not right. And can I just. I know it's taking a little time, but can I just tell you one quick story about whales? Because this is just my favorite one. AI has recently cracked one of the whale languages. They discovered that these whales have specific and shared nicknames for the marine biologists who study them.
- [66:42]
E
Them.
- [66:43]
D
So of course, the marine biologists are all like, oh my God, what's its nickname for me. And I'm like, guys, did anybody ask the whales what do they think? We just want to know what is it calling me? Because we're so darn egotistical. So are we at a moment with this declassification process that was forcing humanity to recognize that we are not the only intelligence in this universe. There's plenty of it right outside our window if we just look at it it and reframe it in a different way. And what possibilities does that open to our understanding of the world? So I think it's a very, very exciting time in technology and this is the reason I'm not so down on the oh my God, we're all going to have a recession. I think that we are coming into something that is bigger than the Industrial Revolution for all of humanity. So I want to be clear. I may be the most optimistic economist on the planet at the moment, but somebody has to walk through the upside because everybody else has covered the downside.
- [67:52]
A
Pippa, I can't thank you enough for a terrific interview. We do have to call it there in the interest of time, but for our listeners who want even more, we do have more coming up in the sense that Pippa and I and Jim Bianco will be doing a video discussion for Zero Hedge about Kevin Warsh on the Fed and what that's going to bring, monetary policy, a whole bunch of things we don't have. Unfortunately, as of our publication, or at least as of we're recording this interview, we don't actually have a date for that from Zero Hedge, but it should be next week sometime. So follow Zero Hedge Debates on X if you want to find out about that one. We'll try to get it into this week's Research Roundup email, but I'm not sure that we'll get a date from Zero Hedge before we go to air on Thursday. Meanwhile, we do have, by pure coincidence, Jim Bianco coming up for a cameo appearance. Coming up next to talk about an update on the Iran conflict. Pippa, before I let you go, I want to come back to your Pippa's Pen and podcast, which is your fantastic substack, I'm addicted. For people who don't know about it, we've got a link on the Research Roundup email where you can click to connect to it, tell people what they can expect to find there and how they can sign up.
- [69:11]
D
Yeah, so this is where I like to write about all these things that are going on in the world economy and to help people widen the aperture of the view through which they see the world. You know, the lens gets made smaller every day by all the algorithms that only give you more of what you like and they fence off what you don't like. So I'm trying to like widen the view and that's what I write about on in the Call.
- [69:37]
A
Patrick Seresna and I will be back as Macro Voices continues right here@macrovoices.com Eric
- [69:45]
C
it was great to have Pippa back on the show. Now Jim Bianco is next on deck for a special second feature interview with an update on the Iran conflict, the straight or Hormuz and what it means for oil, inflation, the Fed and broader 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 Jim.
- [70:10]
A
Joining me now is Bianco Research founder Jim Bianco. Jim, I'm really curious to get your take on this. I wrote a substack on Saturday in which I said to me, this is really clear that we are in dire straits. The buffers have been used up. We're basically down to we've really got us get the straight opened. And I don't think we're any closer to a deal than we were a month ago. And the reason I say that is because both trades, Trump and Iran, have been absolutely adamant on this issue of handing over Iran's enriched nuclear material. If they can't come to terms on that central issue, it seems to me that we don't ever have a deal. And what really bothers me is the president has said, look, time is on our side. We've put together a MOU where we're going to take 30 to 60 days to negotiate the nuclear stuff, the part that nobody can agree on on, and we're going to sort it all out. Everybody calm down. And I'm thinking 30 to 60 days. I think we've got $200 oil within 60 days if we don't get the strait opened. And to my surprise, a lot of people that are very well respected are saying the opposite, that they're really not that concerned about it and the time is on our side. What do you make of this? Jim?
- [71:29]
E
I'm on the side that time is not on our side. And I am very concerned about this. And I think it comes down to a couple of things. I've been worried that Wall street has viewed the strait as being an untenable situation. And since it's untenable for Wall street, they think it's untenable for everybody, including the Iranians. So nobody wants the strait to be closed, so therefore it won't stay closed. And I think that that is a fatal assumption. I also disagree with the assumption that time is on the US Side because we have no forcing mechanism to force a deal, which is why this thing is taking forever, supposedly, just to put together a memo of understanding. And a memo of understanding, as far as I can tell, doesn't change anything. It just says we're going to start negotiating on whether or not we can get the nuclear material. A couple of things. First of all, the nuclear material, as far as I've seen and understand, that's going to take months to get the nuclear material. It is buried underground under several hundred feet of rock from when we bombed them last June. That the first step in getting the nuclear material might very well be to send in the engineers to build a landing strip so we could land heavy equipment to dig down and get the nuclear material. And we're not going to give them reparations or money or any other deal until we get that. And that might not be till next year. So it's not like there's this little box in the Ayatollah's office and you go, okay, we agree. Here, take the box. Here's the nuclear material. We're done. That is a long, expensive, arduous process. Second of all, when I said that there was no forcing mechanism, I will come back and reiterate something. I talked to you the last time I was with you. I think that a lot of people are not appreciating the change of war in the 21st century and what cheap, attritable drones have done to turn war upside down. I remind everybody that the Houthis closed the Bab El Mandab at the southern point of the Red Sea, and the French and the British went in and they tried to open it and they couldn't. And to this day, it's still not open that these cheap, attritable drones defeated the French and the British Navy. We can't get the Strait of Hormuz open. Russia. Russia cannot make any progress with Ukraine. And I'll go you one step further. I don't think that China is in a position to be able to attack Taiwan even if they wanted to. And what people have to memorize a memory about cheap, attritable drones is I only need a hundred of them. And why do I only need 100 of them? Because the average US destroyer, which costs $3 billion, has 96 vertically launched missiles. And even if they're 100%, my last four get through. And that is. And if you say, well, they've got close in weapons systems, okay, fine, I'll put another 20 or 30 after that. And they never stop. And we saw this with Operation Protect Freedom. The way it's being portrayed, I think is a little bit different than what I've seen. The US sent three destroyers into the strike straight and they needed 100 airplanes to fly 24, 7 at a cost of $100,000 an hour for an F35 in order to keep a defensive shield on those three destroyers. After two days, they spent about $100 million. And of those three destroyers, two of them had to come back out because they ran out of missiles and they had to go get reloaded. And the Iranians were not only shooting at our planes and our destroyers and our planes and didn't hit any of them. We were worried that the magazines were going to run down. They were shooting at the other Gulf countries. And the other Gulf countries said to the U.S. you got to do something about this. And the U.S. said, we kind of have our hands full right now. We can't help you. And they got so mad, they said, fine, then you can't use our, you can't use our air bases anymore. And that effectively ended Operation Protect Freedom after two days. And this is the biggest problem we have. This is a different type of war. We are not set up for it. Now, you could criticize Trump and you could criticize the US Military all you want, but neither is the French, neither is the UK neither is Russia, and I would argue neither is China. War has changed a lot right now, and I don't think we're really appreciating how much it's changed. And that's why we have no forcing mechanism to open the strait.
- [76:03]
A
Jim. On Wednesday, oil futures sold off and sold off hard on news that Iran had tendered an MoU that was going to, you know, first people thought it was going to be the end of the war. It was very quickly revealed that what the MOU said is exactly what I predicted it would say on my substack. I wrote on Saturday, which is we're not going to agree to hand over any nuclear material that's off the table. And as soon as the White House saw that, they got very upset and said, this is rubbish. We're insulted that they did this. Iran has never once at any time during this conflict, no Iranian official has ever indicated any willingness whatsoever to budge on this nuclear issue. Yet for some reason the market seems just so eager. We've seen very bullish news since last week from the standpoint, and I don't mean bullish in a good way. I mean up in price at the peril of the world. I think that what we've seen is Iran really digging in and saying there's no way we're going to budge on this. Yet still we're down almost 10%. $8 front month, WTI from last week. What do you think is driving this hopium in the market that they just don't seem to be reacting to the same signals that you and I are seeing?
- [77:24]
E
I think that there's an overwhelming belief in the market that this has to get resolved or this will get resolved, this will go away at some point, and you don't want to be caught long oil or short the stock market on a belief that this is going to get bigger and become a bigger problem. Why do people think that? My best guess is if you look at the last six years, they were warned that Covid was a big deal and they sold the bottom of the market. They were warned 9% inflation was a big deal and they sold the bottom of the market. They were warned Silicon Valley Bank's failure was a big deal. They sold the bottom of the market. They were warned Liberation Day was a big deal. They sold the bottom of the market. Now they're being warned that the Strait of Hormuz being closed is a big deal. And they're saying, aha, I'm not going to fall for that again. And they're rationalizing it by saying it has to open. It can't stay this way forever. Now, I agree with that, I guess if you're using the qualifier forever. But that doesn't mean it has to open in June. That doesn't mean it has to open in July. This could drag on a lot longer than people think. The other thing I think is happening too is oil inventories are being run down quite a bit, whether it's SPR releases or whether it's private inventories. And we're able to continue to supply the world with the oil that it needs, needs through running down inventories. Well, there's a finite limit as to how far those inventories can go, and that is better measured as like June or July before we need to get resupplied. Otherwise there's going to have to be real demand destruction, meaning higher prices to get people to stop consuming as much oil. So this comfort level, we've seen it before. I Mean, I could go back to 2007 when everybody was convinced that this subprime thing was nothing. Chairman Bernanke called it, you know, largely contained. At that point. The stock market made new highs. Everybody was told, if you're selling stocks because you're worried about subprime, you're misplaced. And then 2008 happened. So this is not unusual for markets to kind of try to stare down what seems to be obviously bad news and then eventually it catches up with them.
- [79:42]
A
Let's talk about the catching up with them part. Let's imagine a month or so from now that it's still not resolved. And we do get to the point where the only way to resolve that demand destruction is through the price mechanism. And it really is $200 oil at that point. If that happens, and I'm not predicting that, but if it did happen, does the stock market crash or is it just a cause for celebration that, hey, the Fed's gonna definitely stimulate, cut. It's all uphill for the stock market because the stimmy jacks are flowing?
- [80:16]
E
Well, there's two parts to that question, and I'll answer with the first part going. Let's not forget that the dominant theme in the stock market right now is still AI and it is still, you know, whether or not AI is going to fulfill its promise, all of the spending that's going on, the coming IPO of SpaceX and anthropic and possibly OpenAI. So that is the dominant story, and that will continue to be the dominant story. The secondary story for the stock market is still whether or not we have a big squeeze in oil. Now, you're right. If this does drag on and we get to the point where inventories get to operational lows and we either need demand destruction or we need more inventory, prices are going to have to go up. What I fear is President Trump's even opened up the idea of a holiday for the gas tax and other kind of subsidies. Now, I'm not against that, but the reality is if I need somebody to stop buying oil because there's not enough of it, that's demand destruction. And I hand them money to pay for higher prices, then the prices have to go even higher to get them those demand destructions to kick in. And so if we're going to try and subsidize high oil prices, we're just going to make it worse in the long run. The fix is more supply. The fix is not subsidizing those prices. And you're right, the stock market will continue to say, don't pay attention to the oil thing. Look over here at what's going on with AI. Look over here what's going on with SpaceX and with anthropic and with OpenAI. And pay attention to that. And at least for the near term, I think that that story will continue to dominate over the oil story.
- [82:06]
A
Jim, let's talk about how the Fed plays into this. Imagine that we do have a situation where there is an oil price driven inflation signal, but at the same time there's pressure from the White House to cut, cut, cut rates because we've got to stimulate the economy in order to overcome these high oil prices. What happens next?
- [82:22]
E
Well, that's a good question. Cause you also gotta throw in the other wildcard is that we have a new Fed chairman who's been on the job for less than a week. His last public speech was last year. Yeah, I know he gave his confirmation hearing, but he really didn't explain anything in his confirmation hearing. And last one we heard from him last year, he wanted to cut rates. We assume he still wants to cut rates, but the market is pricing in rate hikes. The concern here is that if the Fed wants to say high oil prices are hurting the consumer. True. So therefore we need to give the consumer relief by stimulating the risk you run is the bond market says you don't care about inflation. It's already going to be, most of the estimates are that the CPI is going to be over 4% when the main numbers come in. If it's already at 4% and you're stimulated, you're okay with 4%. I'm not okay owning your bonds. That's why we've seen interest rates since the war started drifting higher and we could continue to see interest rates drift higher. So if the administration wants to scream, Fed cut rates. The problem with that is, is that the market is not there for the Fed to cut rates and it could actually backfire on them. And I'll come back to what I said before. There's a fix more supply, that is the fix. All the financial engineering and all of the subsidies are going to just produce higher prices. Because if the world wants to consume 105 million barrels a day, which is roughly what it consumes, and we're only capable of supplying 90 to 95 million barrels a day, we have a mismatch and we need to fix that mismatch. Now. We're, like I said, we're fixing it now through running down inventories. But we can't do that for maybe another month or so. But if we're going to say, okay, now the prices are going up and we're going to try and stimulate, cut rates, hand out subsidies to people to pay for this, we could wind up just having oil prices spiral to the moon.
- [84:25]
A
Jim, I can't thank you enough for a terrific update on the Iran situation. Before I let you go, tell us a little bit about what you do at Bianco Resources.
- [84:34]
E
So we're an institutional research firm. You can find out more about us@biancoresearch.com Orco research on all the socials being YouTube or X or LinkedIn. And we also have an index, a fixed income index at Bianco Advisors different website and there's an ETF that tracks it under the ticker WTBN with our partners at WisdomTree, WisdomTree, Bianco. Nancy is the ticker again.
- [84:58]
A
Patrick Seresna and I will be back as Macro Voices continues right here@macrovoices.com.
- [85:09]
B
Now back to your hosts, Eric Townsend and Patrick Ceresna.
- [85:13]
C
Eric, it was great to have Jim back for an update. 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 just go to our homepage and look for the red button over Pippa's picture saying looking for the download Patrick
- [85:34]
A
for this week's Trade of the Week, Pippa Malmgren argued that the energy shock may accelerate a much bigger transition in how countries think about long term energy security. For investors who subscribe to that view, what's the most practical way to express that in the market?
- [85:51]
C
Now, Pippa's argument is that the energy crisis is not just about the next move in crude oil. It's a part of a much larger transition away from vulnerable hydrocarbon supply chains and toward more secure, scalable energy systems. Her phrase was essentially from molecules to atoms move from oil and gas dependency toward nuclear power, small modular reactors and advanced energy technologies. So rather than trying to trade the next headline around the Strait of Hormuz, this week's Trade of the Week is about positioning for strategic energy response, renewed interest in nuclear power and the uranium fuel cycle cycle. From a trade construction standpoint, I want to express the view through the ura, the Global X Uranium etf, which provides broader exposure to uranium miners and the nuclear fuel cycle. With ura trading around $49.58, the structure uses the 1-15-2027 options with roughly 232 days to expiration. Specifically, I'm looking at buying the $60 call for about 5 doll and selling the $70 call for about $3.50, creating a $10 wide bull call spread for a net debit of roughly $2.20. That defines the downside risk while maintaining meaningful upside exposure. If the uranium and nuclear energy theme continues to reprice later this year from a payoff structure, the maximum risk is limited to $2.20 debit paid while the maximum profit is $7.80 per cents. If URA is above $70 at expiration, the attraction is the asymmetry for a relatively modest defined risk debit. The spread offers roughly a three and a half to one risk to reward profile. If the nuclear energy and uranium fuel cycle thesis continues to gain traction, the result is a defined risk way to participate in the longer term nuclear energy security theme without needing to absorb the full volatility of outright uranium equ Exposure
- [88:07]
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 post game chart.
- [88:25]
C
Dick all right, Eric, let's dive into the equity markets.
- [88:28]
A
Patrick the stock market rally continues to astound with semiconductors leading the way. Now, I continue to fear a worse outcome from the Iran conflict than most people assume is possible, but frankly I'm on the fence about whether that is going to necessarily cause a stock market crash or if the stock market might actually just celebrate expectations of government stimulus in the event of a really bad outcome. So I'm not sure what's next for the market, but it's clear that this rally is on and it's on strong, at least for now.
- [88:58]
C
Eric for me it's super simple. The market is assuming that the Straight or Hormuz is going to be resolved and that this is very much an AI and semiconductor bubble story that continues to work. And everyone needs skin in the game. When you look at the breadth of the market, we remain very close to 50%. Rarely do we see a market that is trading at 52 week highs for such a prolonged period. With the breadth of the market not participating. Usually we can get up to 70, 80% of the stock market participating. We haven't seen any of that. This continues to be an incredibly concentrated story in The AI theme, the question and the puzzle to solve is will we see a sector rotation story where we're going to see breath widen as money potentially profit takes some of the semiconductor story and redistributes into the broader market? Or do we see a more violent mean reversion as the breadth of the market stays bad as we see profit taking inevitably start in the nasdaq? This is the puzzle to solve at this stage. I'm gonna give the bulls a benefit of the doubt that we're gonna see some form of a rotation. And the question is, will we see areas of like healthcare, defense contractors and financials get some of the money flow when inevitably some profit taking starts in the semiconductors? All right, Eric, let's touch on that US dollar.
- [90:22]
A
Patrick. We're holding 99.50 and the chart looks like it's set to challenge the top of the trading range, which is about 100 spot 50 on the Dixie chart. I expect another round of fighting in the Iran conflict as people figure out that there really is no deal close at hand. And I don't think there's frankly much room from everything I can see for one to come about. I'll explain why not in the crude oil segment momentarily. So as far as the dollar is concerned, I think we're probably going to get back to the high end of that range, if not break out above it on the next round of military escalation in Iran. That's assuming I'm right about that. If there really is a deal on the table and this is all going to get resolved, I think the dollar takes a turn south at that point, but I don't think we're there yet.
- [91:07]
C
Eric, the dollar story to me is about the cross currencies. Right now everyone is very complacent about Japan and Europe because their belief is that the oil will start to flow in these countries that require huge energy imports and huge food imports. Everything will go back to normal very quickly. But if we see a situation where this continues to escalate and there is no immediate resolution, you have to believe at some point the euro and the yen are going to start to reflect that. And that could in itself be the bullish tailwind that drives the US Dollar higher. And so right now the US Dollar is slowly edging higher. But I'm watching that euro breakdown below 116 as the first kind of warning that potentially a dollar move may be underway. All right, Eric, let's dive deeper into the oil markets here.
- [91:58]
A
Patrick, I think most market participants and definitely 100% of the mainstream media are missing the story, missing the point, because there simply has been no agreement whatsoever on Iran's high enriched uranium, the near weapons grade material. Briefly, the story there is Iran definitely has that material. When you hear somebody say, wait a minute, you know, Tulsi Gabbard already testified that Iran doesn't have a nuclear weapons program. Well, that's true. They don't have a nuclear weapons program. But building the weapon is not the hard part. The hard part is getting a hold of the enriched uranium that's needed to build that weapon. What they've done is they've enriched 441kg. That's enough for up to maybe as many as nine or 10 bombs. They've enriched that to 60%. Now, at 60, okay, you need 90% in order to make a bomb. So it sounds like they're really not very much there yet or they've still got a third of the way to go. The thing is it, it doesn't work that way. Uranium enrichment is not a linear process in terms of the separative work units required. So the way to understand this is Iran has done 99% of the enrichment activity necessary in order to get enough enriched material to make several nuclear bombs from. It's not enriched to weapons grade yet, it's only enriched to 60%. But getting it from 60% to 90% would only take a few weeks with operating centrifuges. Now, does Iran still have any operable centrifuges or were they all destroyed in Operation Midnight Hammer back last summer? That's not completely clear, although it's unlikely that they have certainly anything close to the full capacity that they used to have. So there's a little bit of a question mark there. But the point is that is they do have near weapons grade material. This is what's called a threshold state strategy, where Iran does not want to be perceived as having a nuclear weapon because so many other countries would perceive that as an intolerable risk. What they want to do is be so close to it that everyone knows it would only take them a few weeks of further enrichment in order to get to the point where they could build a nuclear weapon if they wanted to. Now that's not subjective opinion. It's not made up. The IAEA has gone and physically inspected this 441 kg of 60% enriched uranium. They verified that it's there. It's not in question. Nobody on either side of the conflict disputes that Iran has or had that material. Now, it's probably Buried under half a mile of crushed rock after all of the bombing campaigns. But exactly where it's stored isn't necessarily known to anyone other than the Iranians. It's a couple of pickup truck loads full of canisters about twice the height of gas grill cylinders. That's enough if they enriched it the rest of the way to make several nuclear weapons. That's what everybody is so up in arms about. President Trump has said it is an absolute red line. The reason we got into this conflict is Iran is not allowed to continue to have that material. When President Trump says they can't have a nuclear weapon, what he really means is we're not going to allow them to continue to have the near weapons grade uranium that would allow them to build a weapon with only a few weeks. When he talks about weeks away from a weapon, that's actually a misstatement. What Iran really is, is if they had the centrifuges that we don't know that they have, and it's likely that they don't, then they would be just a few weeks away from enriching the high enriched uranium that they have at 60% all the way to 90% where it becomes weapons grade. Now, at that point, building the weapon is not that hard. Iran does not have a nuclear weapons program because it looks good to be able to say that they don't have one. The point is spinning up that program in order to build a weapon if they wanted to, wouldn't take so long. So this really is a risk factor. The question is, is President Trump says absolutely no way. They can't keep that material. We're not going to let up on this conflict. We're not going to make any deal until Iran gives up that material to the United States. Originally was the hard line. Now he's saying to another country might be acceptable, but they can't keep it. Never once, ever during this conflict has any Iranian official ever said, intimated or remotely come close to agreeing to Iran ever giving up any of that material. In fact, the Supreme Leader just last Thursday issued a new directive reiterating that that material cannot leave Iran under any circumstance. So there's no agreement whatsoever. All of this talk about how we're just hours away from a deal, it's just a few words. It's one sentence on a memorand. It's all a bunch of bullshit. It's propaganda. It's not real. The reality of the situation is President Trump has been clear, The Iranians have been clear. Neither side is willing to budge one inch on this issue, somebody's going to have to budge at some point. When they do, that's going to decide what really happens next. But we're not there yet. So that's the big thing to watch for, is when one side or the other is willing to budge. On the question of Iran giving, giving up its 60% high enriched uranium again, I wrote a detailed substack explaining threshold states, nuclear hedging and going into much more detail about the enrichment process and how this all works. That's linked in your Research Roundup email. It's on my sub stack. So now let's come back to what this segment is supposed to be about, which is crude oil. What does all that have to do with crude oil? Well, most analysts are saying that if this goes on for another month or so, it's going with no traffic moving through the strait or substantially no traffic. What we have now is less than 10% of normal flows. And by the way, those flows that we have are almost all Chinese flagged vessels. So it seems pretty clear that when President Trump met with Xi Jinping, there was probably some unannounced side agreement that said, look, China's going to tell Iran to start sending more oil to China. Mr. President, you better not get in the way of that if you want to have a good relationship with China. And it appears that the US Is allowing that to happen. That Chinese ships are moving oil out of the strait, whether that's Iranian oil or some other oil is not completely clear. But there is oil that's going to China moving through the strait. Very little other traffic is moving. If it stays this way for another month or more, most analysts are saying that puts us squarely at 150 to $200 oil. Oil in order to create the demand destruction necessary to destroy or I should say cause the decline of at least 10 or 15 million barrels of oil. Now, I did get a contrasting view. I spoke this afternoon to Dr. Anas Alhaji. He's saying, wait a minute, people are getting this wrong, at least according to Dr. Alhaji. He's saying they're right, that in order to get 10 or 15 million barrels of demand destruction, that would be $150 to $200 oil. But Anas thinks that it's really not that much because we've already seen a little bit of demand decline as a result of the price rise that's already occurred. We've seen some workarounds where Saudi Arabia has been able to move a lot of their oil through the east, west Pipeline and get it out through the Strait of Bab El Mandeb. So Anas says yeah, there is going to be need to be a price reaction in order to cause some demand dec decline if this continues. But it's not 10 million barrels or even close to it. He thinks it's more like 3 million barrels. Dr. Annis is the only one who seems to think it's that small. But even if you take Annas's view, he's agreeing with me that if this goes on for another month, oil prices go up. He just doesn't think they go up nearly as much as some people fear that they could. So there's a couple of different contrasting views. I don't know who's right on that, but I am convinced that we're not going to see any resolution to this until one side or the other is willing to make a major, major concession that so far neither side has been willing to make on the enriched uranium which frankly the press has done a horrible job of explaining.
- [101:13]
C
Well Eric, there's no shortage of conflicting opinions out there as to the impact of the closure of the strait and how this all resolves itself. I mean Morgan last week had some very clear views as to how he thinks this will play out on the short term. There's no denying that some of the risk premiums being out on optimism. The bigger question is that is it a big buy on dip? So as far as I'm concerned this continues to be a buy on dip even if there is a resolution just like Morgan was talking about last week. Odds are that oil markets will stay tight as there has to be an inventory replenishment cycle and it's going to take a while for things to work themselves out on the short term here. A liquidity and flows driven sell off has occurred as some of the optimism has come in. But I believe that oil has every opportunity to trade back toward a hundred plus. So I'm using this weakness to be buying dips. All right Eric, moving on. I want to look deeper at the gold markets and how the price action has been developing here. What are your thoughts Patrick?
- [102:15]
A
The obvious expected bottom for a correction on this market would be the 200 day moving average. That's where we saw the bottom was at the 200 day moving average back when the first really big leg down on this correction which was back in the middle of the March. That took us down to about 4100 which is where the 200 day moving average was at that time in March. 200 day moving average is up now to just over $4400. And that's exactly about where we are at recording time. So I think we're going to hit the 200 day moving average. Normally that would be the bottom. Frankly, if what happens next is what I think is going to happen next, which is nobody budges on the nuclear deal and we continue to see the straight closed and oil prices move higher, I don't think it's going to hold. I think we're very likely going to retest that $4,100 low from early March and maybe even take it out to the downside for lower numbers still. If we did get the $150 to $200 oil prices that some analysts fear, hey, that could take us down to $3,000 oil. You never know what's possible. I think when this is all over and the strait is fully reopening opened, it's going to be an absolute bull market in gold. But until then, I'm not sure that there's really any clear downside limit. And I'll be surprised if the 200 day moving average which we're testing right now holds this. Unless we get some kind of, you know, one side or the other budges in the nuclear, we get a real deal on Iran and then indeed that would make perfect sense for this to be the bottom and it's all uphill from here. So I think it really hinges on what happens next in the oil cool crisis.
- [104:01]
C
Well, to reiterate the point I was making last week, the price action continues to be incredibly distributive. But what is confirming to me on that is the entire precious metals market is showing that distribution there was a false breakout on silver that was being given fully back. Platinum and palladium remain along their monthly lows and very distributive in price action. And even the gold miners are under stress at this moment. There is no money flow going that it's not being supported and that makes it relatively vulnerable for further distribution. At some stage this is going to be a screaming buy on dip. But as of this moment, there's very little evidence that this is that moment here in late May, maybe we'll be looking into July and August for a period where a catalyst may turn the gold markets back up. For now, it's more of the same. Now Eric, what are your thoughts here on uranium?
- [104:55]
A
Patrick, as I think everyone knows, I'm super duper bullish long term. The short term weakness subsided in many of the uranium issues which are bouncing now. But frankly that recent strength in the last few days pales in contrast to the much greater strength we've seen in the S and P and particularly in semiconductors. So I don't know if we get an escalation in the oil crisis, if that's going to bring the broader market down, the broader stock market. If it does, I'm concerned, at least in the short term, about what that would do for uranium stocks. But at least for now, what we're seeing is a bounce and maybe it'll be a sustainable yeah, so as we
- [105:34]
C
put on that uranium trade in our trade of the week, I do think that there's an opportunity here to use this weakness to position for a bigger turnaround later this year. But on the short term there is a very few sectors in the market that are getting any love and uranium, gold and so on are just continuing to meet some short term distribution as money continues to only focus on what's been working and chasing this AI trade.
- [106:03]
A
Patrick, before we wrap up this week's podcast, let's hit that 10 year treasury note chart.
- [106:07]
C
Finally touching on the 10 year treasury yield, we continue to see some of the pressure being relieved, but the question is, is that going to be short lived? There's a lot of vulnerability that an unresolved situation here will certainly stress oil and it would certainly cause inflation to remain elevated and the 10 year yield continue to be under pressure. So at this moment I'm not optimistic about coming off too strongly and it's very likely here that we could see the 10 year yield just come right back up toward the highs from last month.
- [106:43]
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 research roundup.
- [106:57]
C
Well, in this week's research roundup you're going to find the transcript for today's interview as well as the trade of the week chart book we just discussed here in the post game, including a number of links, 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 already, follow our main account on X Acro Voices for all the most recent updates and releases. You can also follow Eric on xericastownsen. That's Eric spelled with a K. And you can also follow me at Patrick Ceresna on behalf of Eric Townsend and myself, thank you for listening and we'll see you all next week.
- [108:05]
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 the Internet's premier source of online education for traders. Please visit bigpicturetrading.com for more information. Please register your free account@macrovoices.com Once registered, you'll receive our free weekly Research Roundup email containing links to supporting documents from our featured guests and the very best free financial content our volunteer research team could find on the Internet each week. You'll also gain access to our free listener discussion forums and research library. And the more registered 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 delivered to your mobile device each week free of charge. You can email questions for the program to mailbagrowville 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 investment professional before making investment decisions. The views and opinions expressed on Macro Voices are those of the participants 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.