D (6:49)

Well, I think that. Well, first of all, thank you for having me on the show. I don't know if I can answer this question. I don't think anyone can really answer the question. I think the election process has always been a little bit of a wild west. And part of it is because in the United States of America, there isn't actually any constitutional provision. There isn't any real law for how parties select their leaders. In fact, almost every four years, they issue new rules and regulations, which parties go first, which go second. There's a state law on running primaries, on running, like, local elections. And so, you know, it's a mess. And it's exacerbated by the fact that, you know, President Biden has Covid, and he is 81 years old. He was born in November of 1942. First of all, that means he was a voting adult when LBJ quit the election in 1968, if you sort of want to think about it that way. But the other issue is that it probably reveals his vulnerabilities to being a candidate in this election, because getting Covid in 2024 for most of us is not a big deal. But for him, it may really be. And that may be the reason that they're taking it a little bit more cautiously in terms of, you know, him speaking to the public.

A (8:08)

Marco the Secret Service performance in this is obviously something that's going to come under a lot of scrutiny. Secret Service director Kimberly Cheadle was adamant yesterday, saying she absolutely will not step down. She's done nothing wrong. Everything, you know, she did nothing wrong. Then she resigned this morning. It seems pretty clear that she was probably pressured by someone to resign, and I think that she should have resigned. A lot of people were very upset in the testimony when Kimberly Cheadle said under congressional oath, I believe under congressional subpoena, she said, look, if the people in charge at the Secret Service had any idea that there was a risk like this, they never would have allowed President Trump to take the stage. And it was one of the congressmen who then called her a liar directly and said, we know it is well established now that the Secret Service had at least three reports that there was a man on the roof with a gun before President Trump ever took the stage. My, you know, a lot of people are saying they're calling foul and they're saying that Ms. Cheadle had perjured herself and so forth. I don't get that impression. I think she's actually that out of touch with reality that she didn't know that her own organization wasn't aware of the shooter on the roof when the president took the stage. At the time that question was asked during the congressional testimony. I don't think she lied. I think she's actually that out of touch with what her organization is doing. And I think it really reflects a lack of readiness on the part of the US Secret Service, which has achieved, by the way, to their credit, new accomplishments, new achievements in the area of diversity, equity and inclusion, they're doing an excellent job on that front. But with respect to their readiness to protect the people who they are put in place to protect, it seems like there's a serious question of whether or not they're up to this. In an election where the guy who's the front runner is kind of a polarizing personality who a lot of people don't like.

D (10:21)

You know, this is a difficult case. It's a difficult case because President Trump enjoys open air events and he's clearly very good at them. President Biden did not. And so it was in a way easier to secure his events than those of President Trump. But I think what was the most telling to me was that Cheadle basically accepted responsibility yesterday, which was Monday, and then didn't resign. And that was very, very confusing. And so today she has resigned because when you accept responsibility for something that went horribly wrong, you have to resign. It's, it's become sort of a Washington, D.C. standard, vacuous thing to say, I accept total responsibility. And then do nothing with that. And so, at least to her credit, you know, 24 hours later, but she did then realize what the words accepting total responsibility mean, and so she resigned.

A (11:21)

I want to talk about something next that no one else seems willing to talk about. So trigger warning. If anybody's super sensitive to talking about, about macroeconomic events that are likely to affect financial markets in the next six months, that's what we do here on Macro voices, whether they're sensitive or not. If that offends you, fast forward now. But, Marco, we've got still several months before this election. We have a Secret Service which at best has just been badly humiliated and is suffering from some performance and capability limitations. We have Donald Trump, who, as you just said, is a, a personality who is likely to insist on opening, you know, he's not going to be told not to go out on stage because of security risk. He's the kind of guy who's going to take the risk. We have a situation where the perception, the division that exists in society is so extreme that I saw One poll where 30% of Democrats polled actually believe that the entire Trump assassination is a hoax. It was staged by President Trump to try to get more votes. It never really happened. It was all a fake. And I guess the guy who died must have been faking it, too. And then there's on the opposite side. I don't have a statistic for this, but there certainly seems to be quite a few voices on the other side who were saying that they are so convinced that the incompetence and malfeasance of the Secret Service allowing Trump to almost be killed that way was so egregious that it cannot be explained by incompetence. It could only be explained as and intentional. They stood down to allow the CIA to conduct a kill operation or some such thing. Now, look, I don't think we should be subscribing to any of these conspiracy theories, Marco. I don't think that's the responsible way for us as financial journalists to talk about this. But I do think that it is extremely relevant that the division in the United States is so great that we have large numbers of people forming these wildly opposing views. Those are the ingredients for civil war. I hate to say it, but they are.

D (13:35)

This has been the case for a while now. So there have been conspiracies on both sides. And generally speaking, the number you, you, you quoted, 30%. I haven't heard that. But generally speaking, that is the number across different, you know, beliefs, very unorthodox beliefs. That tends to come back that there's about a one third of individuals in the United States who are just misinformed. And when you say it's an ingredient for civil war, I think it's an ingredient for continued suboptimal political outcomes. So, you know, I, I, I kind of chuckled at your, at your trigger warning there at the beginning of this podcast where you said, hey, if you're going to be rankled or, you know, bothered by discussions of politics in a macro podcast, you should fast forward. If you're going to fast forward, you're not a macro investor. I'm sorry. The world we live in today is one where politics and geopolitics is increasingly becoming very relevant to asset returns. Now, I have a kind of a unconventional view where I think in the short term, actually politics and geopolitics is less relevant than in the longer term. So that's like my framework. But I do believe that we need to talk about these things. And the fact that a third of all, let's say Democratic voters believe that Trump staged the assassination, you know, and there were all sorts of conspiracy theories about Hillary Clinton in 2016 as well, that the Republicans believed, that just tells you that a third of the electorate is making decisions based on not just poor information, but, you know, really propaganda. Not even propaganda. Propaganda would assume that there is some sort of a, you know, higher power delivering this misinformation. It's almost more grassroots nuttiness. And that's a problem because when you think about our primary electoral system, only about 20 to sometimes 40, but very rarely percent of the electorate turns out for actual primary elections. And those are usually the very, very motivated people, quite often who are either ideological zealots or political activists. It's not necessarily your run of the mill regular voter who has, like two kids and a job, you know, they miss the primary election. So when somebody tells you that the average primary election in the United States of America during a presidential year, the turnout is around 30%. And you also hear that about 30% of Americans believe in a conspiracy theory. There may not be recipe for a civil war, maybe that's too high of a bar, but it certainly is a recipe for getting candidates in on both parties who are not of such a high quality and who in fact motivate voters to come out and vote for them based on, you know, again, misinformation and all sorts of sort of coded signals. So, yeah, I think there's definitely a problem of the electorate believing all sorts of things. And the reason that matters Is it matters because when policy is put together, it's not necessarily coherent in long term. It doesn't take into account the long term.

A (16:55)

Okay. I think I need to be a little bit more specific in the risk scenario that I'm concerned with, because I think a lot of people are not putting two and two together, probably because it's such an unpleasant thought to think about. But generally speaking, human nature is such that if someone tries and fails at something, they try, try again. There's lots and lots of people who feel so strongly they've been told that for President Trump to return to the White House would literally end American democracy. I'm not quite sure what the logic of that rationale is, but there are people who believe that so strongly that they would do anything to keep him out. One attempt has been made on his life. It was unsuccessful, but very close to successful. And the entire world has learned that the U.S. secret Service, at least in this instance, was very, very, very poorly prepared to defend the president. It seems to me that all of the ingredients are there for someone to try, try again, for there to be at least one more assassination attempt on President Trump's life. And frankly, if one were successful, which is entirely plausible as far as I'm concerned, because the Secret Service seems to be asleep at the switch. Not really, although doing it in a very DEI enabled way. If the Secret Service is not ready to do their job and people who, you know, you had public officials in some cases and a lot of Hollywood celebrities lamenting that the shooter missed, wishing that it had been successful, there's plenty of people in the country who still want to conduct a murder of President Trump, and they've got plenty of time left to do it. And frankly, in my opinion, President Trump's personality is such that he's not likely to cower and hide behind the glass shield to make sure he's safe, he's likely to be out on stage where he's at risk, taking that chance. So it seems to me that there's a very real risk that we could end up in a situation where President Trump is assassinated before taking office, either before being elected or after being elected and before taking office. And if that were to happen, given the lack of confidence or the shaking of confidence that's already occurred in this presidential race, I think it would open the United States up to a moment of vulnerability where it could fall into hard civil war, actual, you know, fighting in the street stuff. And for people who are convinced that China is looking for an opportunity to come and nuke us, frankly, I think that's paranoia. I don't think China really has that intention. A lot of people do, though. And if you're worried about those things, if ever there was a moment of vulnerability when another nation might try to disable or disarm the United States, it would be when you're in this mayhem where you're not sure who the next president of the United States is. Both of the two guys that were running that nobody was particularly impressed with, either one of them. One got killed and one dropped out. That would be a really bad situation that I think could throw the entire world into a complete financial upset. Markets don't like uncertainty, and uncertainty doesn't get any more uncertain than that. Now, it's absolutely not a prediction. I'm not saying that's about to happen, but I am saying that I think the probability of someone somewhere attempting in some way to kill President Trump again before the election has got to be at least 50%. Now, hopefully, we'll get the Secret Service to get their act together, and they won't have any chance of actually being successful, and it won't matter. But I don't think anybody's willing to talk about this, Marco, and it could happen.

D (20:38)

I'm in a. I'm an investor. I'm a macro investor. So how do we disaggregate everything you've said? Like, how do we incorporate this into some sort of a view of the markets? Because that's ultimately what we're doing here. I would say, first of all, that I've had the view that polarization in the US Is very, very high and that chances of unrest are rising. You know, that's something that I've written about since 2014, 2015. I actually said that by 2020, there likely would be significant unrest. And this ended up happening. You know, 2020 was a very, very difficult year for a number of different issues that were going on at the time. Obviously pandemic, exacerbating them. So there is a structural and a secular reality which creates higher probability of domestic unrest and conflict. Someone like Peter Turchin, for example. Professor Turchin, I don't know to what extent your listeners know him. They should Google him. He's written this in several books. He talks about overproduction of elites and this context of instability. And I think he's really nailed it. And I think the consequences of this higher level of domestic tensions, the consequences have been articulated in fiscal policy in the United States. So that's how this stuff matters. It actually matters. In a secular sense, we have today the higher inflationary outcomes that we have because American policymakers don't know how to legislate, they have no legislative solutions to the domestic political problems. So what they do is they just kind of hose the population down with handouts. That is, and I'm being very glib here, obviously, but that's the mechanic that has articulated itself. That said, your point that President Trump could be there could be another assassination, that's a more tactical concern. It's a more of a shorter term thing. And you cannot trade that. You can't really hedge that successfully. It's a moment in time that's impossible for anyone to predict. So while I don't disagree with you that there could be another assassination attempt, I think that the much bigger picture here is that we have come to a point in American history where it's 2024 and you have an anti establishment candidate it who is at higher risk of being assassinated. You see what I mean? That is the moment. That is the sort of a temporary tactical reality that we live in. The secular reality is that we've been living in, in that kind of a world for the past, I would say, eight to 10 years. And so what investors have to take from this is, well, President Trump could be assassinated again. What do I do in that situation? That's not a trigger for civil war, or rather that is the trigger for civil war potentially, but that is just a spark. The kindling has been pretty dry. There's a secular reason why we're in the moment that we're in in the first place. And it's the fact that over the last, really since 2008, since the great financial crisis, you had secular stagnation, jobless recovery. You had austerity complemented with private sector deleveraging, which created a very, very difficult and painful recovery. That is why Americans voted for a game show host as their president. And I'm being purposely glib just to be dramatic about it. The roster of establishment politicians was insufficient. Why? Well, because the establishment wasn't working for the median American in 2014, 15, 16. So they picked Donald Trump. He became the champion of that anti establishment. But there's a reason for it. It because the economy wasn't working. And then of course, the pandemic happened. Somebody else came to power. He's now a front runner again. So that context that I'm describing has actual macro consequences. And I would argue that it's very difficult to explain the current environment that we're in, including the, you know, the recovery, which has been strong, but also the inflation that has come with it, without understanding that secular context. And that secular context is one where policymakers kind of of swing from one extremes to another, from austerity from 2010 to 2015 to dramatic fiscal stimulus from 2020 to 2024. That has given us the macro context that we're in now. Whether a civil war would occur because President Trump was shot. I think the probability of civil war in America, as, again, as Peter Turching has written, and as I've also opined, certainly it's not zero. I also don't think it's as high as in, for example, where I was born, in my homeland of Yugoslavia. And one difference between, say, Yugoslavia and the United States of America is state capacity. And so one thing I would say is that if one of the candidates was assassinated, I don't see the cleavages within the various institutions in the United States of America, mainly the military and law enforcement. I don't see the cleavages within those institutions that would allow it to become a civil war. Now, whether you're listening to me on this and believe me or not, let's say you do believe me, you're like, oh, Mark Popich makes a good point. I'm not sure to what extent that's going to make anyone feel better about the society they live in, but I don't see a civil war breaking out. I don't think you can have an organic civil war in the United States, America, because state capacity is just. The state capacity, which is a political science term, is overwhelmingly powerful.

A (26:13)

I wasn't aware of that. State capacity phrase. I'm assuming that's a euphemism, meaning we got a shitload more guns than you do little people.

D (26:21)

That means we have an F22. Yes.

A (26:24)

Okay, got it. I think that we're thinking about this slightly differently because I agree with you that there's no reason to expect. Okay, let's suppose, heaven forbid, Trump or Harris or somebody, you know, there's a successful assassination, one of the candidates is taken out on the stage, and of course, that causes a massive panic. Everyone is concerned and so forth. I'm not saying that Civil War 2.0 breaks out the next morning. What I see is a vicious cycle beginning where other central banks around the world that have been for the last five years scratching their heads saying, boy, we really can't afford to leave this dollar system because the whole world runs on it, but, boy, we really wish that we were more independent from the US Dollar. They finally, that's their forcing function. They get off the US Dollar and they dump the US Dollar as reserve currency. That has the effect of reducing foreign Demand for dollars, that is the effect of increasing U.S. borrowing costs. That has the effect of increasing U.S debt. And it becomes an economic spiral. It gets worse and worse. Eventually it probably does descend into full. Looking at it more as a global reaction to the United States becoming unstable. If you think about what happened when the fall of the Soviet Union occurred, everybody's mind was on the same thing, which is the nukes. What are we going to do if the nukes fall into the wrong hands? How do we make sure we secure them? And I could see if you had President Trump, you know, executed on a debate stage with Kamala Harris. Other countries started to get really nervous about what's going on with control of US Nuclear weapons when it doesn't seem like the situation in the United States is very stable. Now, I'm not saying anybody's going to start a war over that, but I am saying that other nations would start doing things like saying, maybe we shouldn't be so dependent on the U.S. maybe we shouldn't be dependent on the U.S. dollar as our reserve currency. You've got guys like Sergey Glazier of who are designing strategies to try to unseat the US Dollar as the world's reserve currency. Nobody used to listen to them. Well, maybe now they're going to start listening to them. And I think that begins a vicious cycle which eventually comes back and does lead to potential mayhem in the United States. Again, not a prediction. I'm just saying I think that the risks associated with this presidential election just went up by a lot, not down. Everybody else seems to be be breathing a breath of disrelief that. Well, thankfully they missed President Trump. So there's nothing to worry about now. I wouldn't say there's nothing to worry about.

D (29:05)

My counter to that is exactly what I said earlier, which is that everything you just said has already happened over the last decade, literally, verbatim. Every point you made, which is debt is going to go up, deficits are going to be chronic, like the US Dollar will start losing some, some appeal. This, this is literally, empirically are all already happening. The U.S. debt is at $37 trillion. U.S. deficit is basically at six and a half percent at the end of an economic cycle, not after a recession. I mean, a recession could be coming in 12 months. Where are we going to be then at 12%? 13. Why there's no pandemic. Why is it at six and a half percent this late in economic cycle, then the dollar in terms of its role as currency reserve in central banks, vaults. So not in terms of other things like being used as a financial asset for transaction where it's still very robust, but in terms of being used as a store of value, the US has dropped from 70% at the end of the millennium in 1999 to about 58, 57, 56% now. So that's a pretty dramatic drop. And so what I would say, again, just to reiterate, we are in a process of US domestic political volatility that's been acting already, that there has already been an outcome, and that outcome has been the inflation that we live in today. I believe that the inflationary world we live in today is product of American policymakers dealing with an electorate that is extremely agitated already and at a brink of, you know, just like this sense of social unrest is just under the surface and that's had the consequences we have today. I mean, let me put it this way. Why did we stimulate as much as we did during COVID You cannot empirically convince me that Americans cared about COVID more than any other people on the planet. And yet in the United States of America, by far the US by far not. It's not even like it's off the charts. The US Stimulated the most as percent of gdp. And so there's no way to really tie the fiscal response to the pandemic to some sort of a measure of how much Americans cared about the virus. Because we all know that, you know, Americans, when it came to Western countries generally were more on the Swedish, Switzerland side of not caring than more on the sort of Australia, New Zealand side of really caring about COVID So then you cannot explain the fiscal stimulus of 2020, 21, 22 in terms of COVID It was something else. There was some other variable that was motivating policymakers, which by the way, doesn't include just Biden, but also Trump, to lubricate social stability through fiscal spending. And that alternative explanation, of course, is everything you just listed, which is this high level of social tensions in the U.S. and so, yes, I do agree with you that if President Trump or Vice President Harris were assassinated, it would just exacerbate the sort of very trend line that we've been on, I would argue, for the last 10 years. But we are on this trend line. And so the reason I keep going back to the secular point is because six months from now, someone might listen to this podcast and say, wow, these guys are really dumb because nobody was assassinated and there wasn't even a single attempt after this one probably, unfortunately, mentally deranged young kid trying to assassinate former President Trump. No, not a single assassination attempt happened, and therefore this podcast is completely useless. And my counter to that would be, I actually think we're already in this world that you're describing. If another assassination attempt doesn't happen, it doesn't mean that we're not living through the macro reality as investors of higher social unrest. I hope that makes sense.

A (33:02)

Well, Marco, it does make sense, and unfortunately, I think it's a recipe for continuing unresc and continuing problems. What else do you see on the horizon, let's say between now and the election or through the election and including the election? What should investors be thinking about that might not be obvious or might not already be on their mind?

D (33:20)

So, first of all, I think Kamala Harris is a very suboptimal candidate for the Democrats. And there's an empirical track record of this. You know, her, her legislative and career accomplishments are, you know, I would say in the bottom 50% of policymakers in the United States of America. They're just not that impressive. And her performance in the 2019 Democratic primary, like we have empirical track record of Kamala Harris running for office. If you look at the Polling during the 2019 Democratic primary, President Biden was consistently polling better than everyone else. But Twitterati, as I like to call them, were agitating for an alternative to President Biden. And so everybody kind of had their moment in the sun. Elizabeth Warren, Bernie Sanders. Kamala Harris's moment in the sun came when she attacked Joe Biden on stage for his various sort of racial policies throughout his career year. And then she basically catapulted herself to be the primary challenger. That lasted about as long as it takes me to drink a cup of coffee. Because at the very next debate, when the focus was on her as the Joe Biden challenger, this was the summer of 2019, she performed extremely poorly. There's a reason that the White House has kept her off the airwaves. I mean, I don't remember the last time she made a nationally televised speech. Joe Biden kind of has at least an excuse for why he is gaffe prone. He is a very elderly gentleman. Kamala Harris does not.

A (34:58)

Do you think the reason that. That Biden is not stepping down as president is because they don't want Kamala Harris to show us her. Her talents as president? In other words, they think she's more electable? If people don't know what they're getting.

D (35:15)

No, I mean, listen, I don't think there's enough time for, for you to get a taste, maybe an amuse Bush, if you will. But like, I don't think there's enough time for anyone to get a sense of Camilla Harris as the president, by the way, she would be so busy campaigning. Anyways, I don't think that's it. I think Joe Biden is looking at his legacy. He doesn't want to resign. Very few presidents in history have resigned. You mentioned LBJ earlier. Yes, he, he did the same thing as Joe Biden. Not this late. By the way, I would mention to, to, to all your listeners that LBJ decided to resign in March of 1968. So March, not, you know, almost August. No, I think, look, I think just the Democratic Party has just.

A (35:56)

Well, but hang on a second. Let's go back to that moment in March of 1968 when that happened and LBJ resigned. There was a great big sigh of relief. Everybody felt like, okay, that means this beginning of a year that we thought might be kind of tumultuous isn't going to be so bad after all.

D (36:11)

All.

A (36:12)

And then you got the summer of 68, which for people who are not old enough to remember, was probably the most on, on par with. Was it 2020 or 2021?

D (36:24)

When. 2020.

A (36:25)

Yeah, on par with 2020 in terms of civil unrest and crazy things happening in the United States of America. Second biggest year. Or maybe those two years are tied. That all happened in the same year after LBJ pulled out. Out. Should we therefore draw a conclusion? Well, okay, the reason all this civil unrest happened was because of a president pulling out of a race. And therefore we should be concerned that there's going to be more civil unrest this summer. Or is that unrelated?

D (36:51)

No, I don't think it's unrelated. I mean, I think part of the reason why the Democratic Party has so quickly coalesced around Harris, which I think is a mistake. Many others. Atlantic, again, as I said, just published an editorial about this. Nate Silver, who I respect quite a bit as a commentator and pollster, has said the same thing. The Democrats are losing an opportunity to have a democratic process at the convention, to maybe have some irreverence, some showmanship, some pageantry, and have an actual American Idol style competition, which I think would be positive in this particular moment. But there, I think is skewing it because of what you just said, because the convention in Chicago, by the way, which it is again, the convention in 1968 led to violence. And I think the Democrats are just saying like, look, let's just package and resell Kamala Harris as the obvious choice, which I think is a very, very big mistake for them. But they're probably thinking along your lines. Last time this happened, it didn't turn out well. We don't want to have a democratic process over three days. It's too risky and we don't know who's going to emerge out of that convention if that were to happen.

A (38:01)

Marco, let's translate this whole complex picture, and I appreciate it is a very complex picture and doesn't translate directly, so to speak. But let's talk about what investors care about, which is what things can we take away from this very big complex situation that helps us with our portfolios either in terms of where the opportunities are or more likely what needs to be or can be hedged in terms of risks associated with what's going on in the election and the fallouts and knock on effects from the election.

D (38:32)

Yeah, no, that's a great question. So first of all, let's, let's think about the arc right now. I think that the mainstream media and the Democratic Party and the White House are going to work very hard to build Kamala Harris into a strong candidate. And I think that will be successful over the next two to three months. And therefore I fully expect President Trump's probability to continue to decline in the sort of betting markets. So he was at 70% probability of winning on July 15th. Today, on July 23rd, Tuesday, a week later, it's down to 57%. I think it will go down to 55, 54, 53. As Kamala Harris's sort of tailwinds take her higher, that's probably going to change. Media is fixed. They like to build people up and then deconstruct them. And then there's a debate in September where I assume Kamala Harris will likely not do very well. And then, you know, you could have probability of President Trump rising again. Why does this matter? It matters because currently very few investors are short and we can see that from positioning data. So there is a almost universal consensus in the market market that we are in a scenario of soft landing. And what you need for a soft landing scenario, this kind of goldilocks is you need growth and inflation to come down, but not, not into recession level but down enough to allow the Federal Reserve to cut interest rates. And it also does something else. It brings bond yields down long end of the curve comes down, which means that borrowing costs for consumers and for businesses Decline, allowing soft landing to become a sustainable bounce back. So it's like a mid cycle slowdown, if you will, like what happened in 2015 and 16. It doesn't become a recession. This is what everybody, and I mean generally speaking, we can quantitatively measure and prove this. The majority, the vast majority of institutional and retail investors believe this. This is the case. So then why does the election matter? I don't think it's just general political volatility. It's not about assassination attempt, as I argued. It's not about that kind of volatility. It's about volatility of certainty of outcomes. And last week was very important, the week of July 15th. So if you're listening to this podcast many, many weeks later, go back to the 15, 16th, 17th, 18th and 19th of July. Those five trading days. Those were the five trading days where we had certainty of outcome. It was like a petri dish of a Trump administration. It was five days during which we had a window into market reaction to President Trump being the president because his probability of winning was at 70%. It was before Biden bowed out. It was right after the assassination attempt. So the sympathy for the former president was high. And how did the market react? Not very well. Now Trump supporters are going to dismiss this as well. It was just five trading days. I agree you do not want to do a PhD dissertation on this. You certainly do not have statistically significant data, but I don't think we should discount it. And I think that the reason that the market didn't do well, the rotation narrative about going from tech to small caps, didn't really work out because on Thursday and Friday of that week, small caps also got killed. Value stocks got killed. What happened, I think, is that President Trump and his election upsets the Goldilocks soft landing narrative. You know, well, because there's nothing soft about President Trump and in particular his stimulative policies, which the market cheered in 2016 and 17 for good reason. We needed stimulus at the time. There was no growth in 2016 and 2017. Trump was God's retribution against austerity. He was a mean reversion fairy against the secular stagnation of that era. In 2024, 25, I'm not sure we need any more growth at all. There is no need for growth because with growth comes something else. And that something else is inflation. And so that's where I think that what you saw over the course of those five trading days is that the dollar actually did relatively poorly. So the US Dollar did poorly. Stocks didn't do well. And bonds, you know, bond yields were actually quite well positioned. They did not come down. Bond yields arrested. They're nice and gentle move down, which is what soft landing is all about. And I think that's something to worry about. President Trump wants to stimulate the economy. He wants to cut taxes. I know that vast majority of your listeners are going to say, look, that's going to be great for stocks. I disagree. I disagree. Because it's not clear to me that the US Economy needs any more growth. And if you add growth and inflation to it, bond yields may not come down as the vast majority of investors who are betting, who are long want them to come down. And so that's the risk number one. The risk number two is that over the next three, four months, we're not going to get any of this. We had that window, that window has passed. And from now until the election day, we could very well have what is perceived to be a close election. And so the risk becomes trading the election outcome, when really the only thing that matters are mark macro fundamentals. So investors should watch very carefully what the consensus is. And I think that over the next two months, at least, the consensus will be, well, this is a close election again. Again. And so in that context, it's very dangerous to be trying to trade the election outcome.

A (44:42)

I don't think that trading, I can't speak for other investors, trading the election outcome does not interest me. Hedging potential risks from the election outcome does interest me. And I don't think so much in terms of if this guy wins or if that guy wins. I wonder more about what if there's an upset that whether it be an assassination or a terrorist event or something else, because it seems like the geopolitics are heating up and heating up quickly. If we get to a situation and it's not like this just didn't happen recently in Ukraine, where it's. Well, the sitting party has decided that it's necessary for the good of the nation to delay the election unconstitutionally because of special circumstances. I mean, that's when you get a complete loss of confidence on the global stage. And unless other nations are freaking out and really getting scared, I'm not saying that's going to happen. I'm saying we're closer in terms of risk conditions to something like that being a real possibility than we've ever been before in my lifetime. And, and that concerns me.

D (45:45)

I would actually say that I'm maybe more concerned than even you because I don't think we need no, no, I'm.

A (45:50)

More concerned than you are, buddy. Let's you take it outside.

D (45:53)

Yeah, no, I just. I just don't think we need an assassination attempt to get to a point. I think the biggest risk to the US is that there's $37 trillion worth of debt and the budget deficit is in six and a half percent for no good reason at all whatsoever. And so the risk to the US Is the dominance of a single party when there's no checks and balances. Because we've seen what happens when that is the case, especially in the first two years of President Biden's term. Basically, he could pass whatever he wanted, similar to how Trump could pass whatever he wanted in the first two years of his term. 2016. 17. And what we know from the performance of both parties is that they tend towards profligacy, towards unconstrained spending in both camps when they are not checked by the opposition. So this is why a Democratic Swedish sweep or a Republican sweep should be concerning to investors. Now, Democratic sweep is extremely unlikely. Okay? Like, that's, you know, not gonna happen. Maybe Michelle Obama runs, maybe then something happens. But we all know the math, and the math is that the Senate is going to go to the Republicans. It just. It's a bad year for Democrats. We all understand this. So this is why nobody really in the markets is talking about a Democratic switch sweep.

A (47:19)

Now, when you say maybe Michelle Obama runs, it sounds like you have a different understanding of where we are in this process than I do. I thought that. Oh, okay. I can't tell at this point who's joking, because it does seem possible to me that we go into maybe the first debate or whatever, and it becomes really painfully clear that Kamala Harris cannot possibly win. And they decide, okay, we gotta drop this DEI thing. We really do have to put Newsom in. How are we going to do it?

D (47:50)

I don't think that's possible. I think the first debate is in September. And, you know, I mean, she's the vice President of the United States of America. So everyone's. Look, if they don't run a convention, a contested convention, if they don't run that as an American Idol type of event, then it's over. Like, by. By. By Labor Day weekend, this will be over. We will have a candidate. They won't have any more time to kind of, like, pull in another reserve. And because she's the vice president, United States of America, like, it's just, you know, like, it makes sense. It's her. But from a performance perspective, it probably doesn't. But what I'm getting at with this is something very important to me. It's not about risks, such as an extraordinary event that we don't expect. To me, the risk is that on January 20, we will inaugurate the President who has no checks and balances. That's the risk. You know, it can be a Democratic president, it can be a Republican president. Now, the reality of mathematics is that.

A (48:51)

So you think a sweep is the biggest risk?

D (48:53)

Yes, yes. Now, I want everyone to listen to me very carefully because I'm going to make a lot of conservatives very mad right now. I don't care what party party. It can be green, yellow, can be an elephant, it can be a donkey, it can be a tiger, it can be an alien race that invades us. It doesn't matter. A sweep is a risk because it's about material constraints to policy. And a sweep means the President will have no constraints. Now, the mathematical reality of 2024 is that the odds of a Democratic Party sweep are what? They're zero. You know, they are very low. And that's why I'm not worried about that. The reason that I do think investors should think about how excited they are about Donald Trump in 2024 is that we are in a different macro context. This is a podcast about macro. Well, let's discuss macro for a second. When Donald Trump became the president with a GOP sweep, he did so at the time when the 10 year yield was 1.6. He did that after eight years of suboptimal growth where R star had been unnaturally lowered by several factors, including austerity policies of the Tea Party and the Obama administration together allied. And also the fact that the private sector was deleveraging. So when President Trump came and said he was going to cut taxes and said he was going to basically boost growth, there was absolutely nothing for anyone to worry about except how fast are you going to sell bonds and buy some stocks? Because that was unequivocally bullish given the macro context. But in 2024, 2025, that is not what the economy needs. Yeah, I mean, it sounds great. Corporate tax is going from 21 to 15%. Seems pretty good for stocks. I don't think it is. Why? Because we have all the growth we need and we have inflation as a risk that it can rear its head again. So that's where the macro context really matters. I mean, this is kind of like, you know, your own personal life, your diet and what's healthy for you depends on the body Type, how much exercise you have, what age group you're in, all sorts of things. Similarly, policies are not always unequivocally bullish for stocks. And so my number one risk is that if we do get a sweep by the Republican Party, or again, just for the sake of people not being mad at me, Democratic Party, which is not going to happen. The risk is that we get the Liz Truss scenario. The risk is that we have the French election scenario where the market basically says, wait a minute, we don't actually want more growth. What is the Fed going to do now that you're bringing all these tax cuts, that you're going to have higher growth outcomes and higher inflation outcomes? And by the way, this happened again. It happened to Liz Truss in the United Kingdom, it happened in France. Why couldn't it happen in the United States of America? And that would be something to think about. And I think that what we got a Preview of on July 15, 16, 17, 18, 19, those five trading days, again, go back and look at them and look at the market performance. I know a lot of fans of Donald Trump will ignore it, but the reality is that the markets absolutely vomit it. The one week we had President Trump's probability reach 70%. Why? Because 70% probability of getting elected assumes he will carry the House and the Senate. And so I think we got a little bit of a preview. And this is a very controversial take, and I don't think anybody else really sees it that way, but I think that the macro context really does matter, and it's just different from 2016. 17. We don't need tax cuts, we don't need growth. We probably need some budget consolidation, we probably need some austerity policies. And it's not clear to me that policymakers of either party are going to do that unless they're forced to by the markets.

A (52:52)

Well, you're right that that is an unconventional viewpoint, but, boy, this is a time in history when a lot of unconventional views are being proven true. So I'm going to be watching carefully to see see what happens. Marco, I can't thank you enough for a terrific interview, but before I let you go, I want to talk about another news item that went unnoticed, which is you've changed. You were with a different firm last time we talked to you. You're now taken over as chief strategist for BCA Research. What are you doing there? What are you working on? How can people follow your work and generally tell us what's happening?

D (53:26)

Yeah, so I've left the buy side and I'M now back at home. This is actually the firm where I started my career in finance and so I'm writing an investment strategy called GeoMacro. The premise of this is exactly what your preamble to our podcast is. If you don't have the stomach for incorporating politics and geopolitics into the markets, you shouldn't be listening to podcasts, you shouldn't be reading my strategy, and you should probably not be a macro investor. As I very boldly and hyperbolically said, in my view, we need to incorporate geopolitics in politics and I have a very particularly, I think, differentiated way to do that in the tactical time horizon. I tend to fade geopolitical reaction by the market when it comes to strategic and longer term investing. I believe that there's almost nothing that matters other than politics and geopolitics. And you got a little bit of a taste of this by the way. You were focusing on the assassination attempt attempt or successful assassination. I was focusing on the context that has gotten us to this point. So I do believe that the world we live in today, the R star, the inflation expectations, market performance, is almost all an outcome of this 8, 10 year period that we've been in that has produced fiscal outlays, pro cyclical fiscal policy, relatively dovish monetary policy. A lot of things that have happened, happened can be explained, I think politically. So yeah, that's what I'll be doing at BCA Research. If anyone's interested, you can just come to the website bcareasers.com take a look at it. You can also follow me on Twitter. But yeah, I mean, thank you so much for the platform and really appreciate you shouting out the job change as well.

A (55:08)

Well, Marco, we'll look forward to getting you back on the show for an update at some point. And I sure hope it's not to talk about another assassination attempt.

D (55:16)

I hope so too. I hope that we definitely never have to talk about that again. Instead, what I hope we can do is do a little analysis of an American Idol style convention for the Democratic Party. I think that would be awesome. I think they could bring in some guest judges. Like why not have Mitt Romney be a judge at a Democratic Party American Idol? You know, they could have fun with this. They could be irreverent. But I don't think we're going to.

A (55:44)

So you think the Democratic Party should employ democracy in their, in their methodology? Copy that.

D (55:51)

Yeah. Not just that it's not just democracy. I think it's something else. You know what we need? We need some humor, you know, and what I've seen is that both sides are starting to eschew humor and irreverence and they're way too serious. You know, obviously assassination attempt is serious serious and it's terrible. But at the same time, the contest itself could be fun, you know, and I think that when too many people are serious, that's when you get serious fights. And I think the Democratic Party had a chance to have some fun with that convention, but clearly they've gone the other way because, you know, they've been telling the American public that this election will determine, you know, the future of democracy in America. And I mean, I think that that that has set the tone for the election. That definitely sharpens tensions.

A (56:41)

Patrick Ceresna, Nick Galarnik and I will be back as Macro Voices continues right here@macrovoices.com.

B (56:54)

Now back to your hosts, Eric Townsend and Patrick Ceresna.

C (57:02)

Eric, it was great to have Marco back on the show. Now joining us again in the postgame segment is Nick Galarnik. Now let's get to that Chart Deck listeners. You're going to find the download link for your post game Chart Deck 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 macrovoice.com and click on the red button over Marco's picture saying looking for the downloads now, Eric, let's start with crude oil and the EIA inventory.

A (57:30)

EIA printed another gigantic drawdown this week. It was 3.9 million barrels, not quite as big as last week's drawdown. Cushing, Oklahoma, drawing down another 1.6 million barrels this week. But the big news is on finished products. Now remember last week there were those big builds on finished products that offset the crude oil drawdown, resulting in a net petroleum build. What I said last week is keep a close eye on this, folks, because that turnaround in the crude may lead to a turnaround in the products. Sure enough, that's what we've got this week with a gigantic 5.6 million barrel drawdown on gasoline, another 2.8 million barrels of distillates. Add that with the crude and you end up with a net petroleum drawdown of 12.3 million barrels. US production still holding steady at 13.3 million barrels. That is the plateau level. I believe it's an all time high. There might have been one print at 13.4, but I don't think so. The market had already sold off. Well, below its 200 day moving average before inventory came out. The big drawdown arrested that falling knife of selling. But the bounce back above the 200 day moving average was kind of muted and not all that convincing. We got up to 78 bucks and back down to 77.50 as I'm recording. So, you know, let's see how it goes from here. Overall though, the outlook is improving with this week's inventory trend confirming last week's initial trend change indication and product following suit with crude on the drawdowns. But just as one data print doesn't make a new trend, just two data prints doesn't confirm a new trend. So in my mind, the jury's still out on whether the broad stock market weakness that's dragging the s and P 500 and copper for that matter, much lower on Wednesday. Is that just the beginning of something that's going to get worse? Are we going to drag crude oil all the way down to new lows as we as we get into a panic, sell off in equities due to uncertainty fears going into the election? Or am I the only paranoid one who's worried about that? Well, I guess we'll find out. The market will tell us, won't it?

C (59:39)

Yeah, Eric, I was approaching this pullback as a potential buy on dip opportunity. But what really is now happening in the bigger landscape is we're seeing very direct and broad distribution in the entire commodity space and risk off in both commodities and equities. And so oil didn't hold my key buy zone area and continues to deteriorate. That doesn't make me overly bearish. I think that oil is very clearly established some key support lines and at this stage maybe that support line next support line is going to be the June low. But overall that buy zone I was looking for didn't work out. And so let's see where crude oil settles in here. Okay guys, so let's move on to equities. Eric, I know you had some thoughts here on the S and P. What are you thinking?

A (60:29)

I think equity markets are repricing the election risks and I don't think that that process of repricing those risks has yet completed. After President Biden was forced out of the presidential race, the market at first began to reprice a near certain Trump win and a full Republican sweep after Tucker Carlson went to the RNC and said Trump's already won. Look, markets hate uncertainty and at first market participants thought that news flow meant that the presidential election outcome was almost already decided in Trump's favor. But I believe that cooler minds are now finally starting to take over and think this through. And as I emphasized in the feature interview with Marco, this situation is anything but. Certainly former President Trump has more enemies who are committed to keeping him out of the White House at any cost than probably any other presidential candidate in our lifetime. Certainly, and maybe in the nation's history. It now seems clear that their favored tactic of lawfare is not going to keep Trump out of the White House. And as awkward as it might be to talk about such horrible things on a podcast, that's our job here. We need to look at the risks, and this election is a whole lot less certain than it was three weeks ago, not more certain. We know for a fact now that the US Secret Service is challenged in its ability to protect Mr. Trump from a 20 year old kid who we're told we should believe was acting alone without any significant assistance. And it would be irrational to assume that there will be no further attempts on President Trump's life after the whole world has just learned that it might be easier than everybody assumed as the market slowly digests this information, which most people don't even feel comfortable thinking about because it involves life and death and horrible crimes. Well, once people calm down and recognize that we do have to think this through, I think we're going to recognize that there's a risk of a very significant risk off event between now and the election. And I'm not being partisan saying I want my guy to win instead of the other guy. It's not about parties or who wins the election. The point is a sane analysis tells you that Biden is already out of this race, Harris is a very weak candidate, and we don't know for certain what's going to happen next with President Trump. But we do know for certain that the security services who are assigned to protecting him have not performed particularly particularly well thus far. As the emotion and hysteria drains out of the system, I think these cooler heads are going to realize that left tail risks just got a whole lot bigger. And it's a far left outlier risk. To be sure. It's definitely not the base case. I'm not making any dire predictions here, but as horrible as it feels to even talk about such things, another act of violence upsetting this historic presidential race is not something that we should consider to be out of the realm of possibility. In fact, I'll go on record as saying that I think the odds are far higher than 55.0percent that at least one more attempt will be made by Someone somewhere on President Trump's life before the election or inauguration. Now, I certainly hope that that does not happen and I certainly hope that if there is an attempt that the government gets their act together and provides adequate protection so that it can't possibly succeed. But to think that the election outcome is right now, in this moment, much more certain than it was a few weeks ago is foolish. And I think that's starting to be discounted by the market. Whether this turns into a really big risk off event or just a little hiccup is going to depend on whether the I'm the only person crazy enough to see it this way. So let's see what happens. I definitely have an extremely non consensus view right now, but honestly I think the only reason for that is because the consensus is freaked out by the news flow at not wanting to face the risks that are staring us in the face.

C (64:43)

All right, I want to get Nick involved in the conversation. Nick, let's just start off by talking about the levels on the S&P 500.

E (64:49)

Yeah, Patrick. So right now SPX is at approximately 54.30 and we have an implied move for the August 16th monthly OpEx of plus minus 170 points, which is actually up from last week as implied volatility is expanding right now. Now, right now the upper implied move for that monthly OPEX is 5600 and that lower implied move is 5360, just below the key support level of 5400. Right now key resistance is at all time highs at 5,670 and I'm inclined to think we see a further Decline lower toward that 5350 area perhaps before seeing a bounce higher.

C (65:27)

Nick, to me this is an incredibly important inflection point. From a short term swing trading basis, we have reached an oversold state on the hourly charts. That basically would often be the turn point for where we get a market bounce. This corresponds with a 50% retracement of the June to July rally and as well where the 50 day moving average lies. And so this is a very logical place for the market to offer a reaction higher, particularly if the market goes into a whole holding pattern into next week's earnings, where we have that next wave of MAG7 earnings coming out. And maybe that will be the next major trend driver starting on Wednesday of next week. The part that though is what makes this an inflection point is that we've really reached quite a sensitive moment when you look at systematic trading, when you look at broad equity positioning, the weighting in CTA portfolios, volume targeting funds, how they were positioned, all the short gamma that dealers may be holding. This is a moment where the market needs to hold because if the level gives out here and we start seeing a breakdown from here, the systematic selling might just take over and we might have a bottleneck liquidity event as people are just being forced, whether market margin calls, compliance departments or whatever else is coming in and suddenly we have a little bit of a spill in the market. Now I agree with you on the level. Like if, if the 50 day moving average here doesn't hold and offer the support line, the most logical place for the S P to target next is what were the March and May highs around that 5300 level. But really once we're under this 5400 area, the animal spirit and investor psyche could really take over and we could have a little bit of a bigger spill. Overall. I'm not thinking that this is where a big, big crash happens, but I don't think investors are positioned for more market volatility. And if it was to arise, that's where we could see big spikes in the VIX and some real fear kick into this market. What I wanted though, Nick, talk about is the Russell, because on page four, the Russell seems to have, you know, been a little bit of a safe haven. What, are you still bullish here?

E (67:53)

Yeah, Patrick, I'm still bullish here. I think that we can see some outperformance in the small caps as they've underperformed for the past year or so. And I've been saying the past few months that I thought big tech would roll over and that money would roll into the small caps. And right now I think we see some upside in the Russell toward that, that 2400 area. All time highs on Russell as the big tech names roll over and that money goes into those small caps.

C (68:20)

You know, I, I get the idea of the Russell outperforming. And if you're looking at as a factor where you're taking the Russell long against a QQQ short, then the outperformance of the Russell against the Q's is likely to prevail. The bigger question is, is can we see almost like a negative correlation where the rest of the markets are selling and the Russell is rallying in that environment and my confidence level of that is not so high. While I do think that there'll be relative outperformance of the Russell, I think that if the market here downturns that almost any equity market is not going to be a place to hide and I would be expecting the Russell to give it back. But like we were talking about earlier on equities, this is an important inflection point and the market should bounce here. This is, this is a 50 day moving average. This is where it's on the short term oversold. And sure, if the market here bounces off the support level on the S P and rallies higher then yeah, maybe the Russell outperforms on in the upside on that. But if we get a liquidity event of any form, Russell I don't think is going to be a place to hide. Nonetheless, let's move on to page five where we have the NASDAQ QQQ Q chart up here. What levels are you watching here bud?

E (69:36)

So right now spot price on Q's is approximately 462. And we have an implied move for the August 16th monthly OPEX of plus minus 20 points which is up from last week as implied volatility has expanded on the decline. The implied move to the upside is therefore 482. And the downside it is 442. And right now we have key resistance at all time highs at the 504 area and key support just below the current price at 460 or so. So right now looking for is perhaps a decline a bit further toward the 450 area on QS. But I do see a small bounce happening in the next few weeks as earnings come in. You know, Google's earnings were poor, so were Tesla's. But if Nvidia blows it out of the water again as well as say for example Apple and Amazon, we might see some upside.

C (70:25)

I mean that really is the case, isn't it? And that's why I was thinking the market here could bounce. Because I think this stage it makes a lot of sense for the market to, to wait to see what happens on those big earnings. Overall, I think that market participants are trying to read whether or not the bigger AI capex spending cycle has played itself out. We're already in the fifth quarter of the CapEx expansion, sometimes after four to six quarters is where these things pause. And I think the earnings are going to play an important, important tell as to whether or not we're turning that point. And so the NASDAQ here settling in somewhere on the short term and waiting for those earnings announcements makes a lot of sense. Nonetheless, let's move on to page six where we have the volatility index and finally some volatility driven fear being back in the marketplace. We're Back to those April highs during the last market correction. And again, a very interesting moment because just like the April high that marked that short term low of the correction and we find ourselves at a 50 day moving average with this type of a spike, is this going to be kind of that short term peak in the VIX or does this spill into one of those bigger moves that ends up getting up to the 2530 level on the VIX is where real carnage starts to be priced into the market. Market. What are, what are levels? Are you watching here on the Vix?

E (71:52)

So right now with the Vix at about a 19 handle, we can expect to see intraday top to bottom moves of about 1.25% on the S and P. And I've been saying for the past few months that if you're holding a long portfolio that correlates heavily to the S&P 500, it would be very, very wise to buy some insurance when it's very cheap. Especially as we roll into that election cycle toward the end of this year. And right now we have a few anomalous events that have happened over the last couple of weeks with the Trump assassination attempt as well as Biden dropping out of the race. Now we have Kamala Harris as the Democratic nominee. And this has kind of thrown a bit of uncertainty into the market which the market does not like at all. So hedging right now would be prudent, but hedging, you know, last week or the week before would have been more prudent when insurance was much cheaper. That being said, if you're still heavily correlated with the S&P 500 in your portfolio, it makes sense to look at some hedges because again, with uncertainty, we may see some for the downside overall. Now, Patrick, previously you had that webinar about hedging about a month ago or so. I'm curious as to your thoughts right now as to how you'd hedge.

C (72:56)

Yeah, it's interesting. A lot of the hedges are coming through like the straddle's already up 100. But the thing is, is that with the Vix already up here, it's certainly not cheap to begin brand new hedging. This is where we change our strategies in how have to use some sort of theta offsets. And this is where you get into taking advantage of the steeper skews in the options market and implement things through things like debit spreads. It's something I talk about with my members all the time. There is still opportunity, but it's no longer just going long. Gamma with puts that's gonna work. Volatility premium is starting to spike, making these premiums a little more rich. Now moving on to the dollar index, I just wanted to quickly highlight the dollar itself's not doing much. A little bit of a pullback in the euro Euro. But the big move has to be what's happening in the US dollar yen. And that yen has been ripping as the US dollar against the yen has been going through a material decline. We're now actually approaching a very key support line in the 150 to 152 on the US dollar yen. And I actually think that this is where there's a very good likelihood that the short term support will offer at least a reactionary bounce. Maybe not, not a change in trend or a new US dollar rally, but certainly I think the very short term kind of bloodbath that's been happening in this forex cross really is likely to have run its short term course.

E (74:20)

And moving on to page eight, we have that gold futures chart. What are you guys thinking here?

A (74:25)

Well, what we've seen so far was the market sold off to approximately its 50% retracement level of this recent rally. That was just a recent around 2390 or so. I think the actual low was 23.87 or 6 or something like that. That was the 50%. We got a nice big beautiful bounce off of that, which maybe gave the bulls a little bit of reassurance. Was it 35, 40 bucks all the way up just to the eight day moving average where the rally stalled and reversed on Wednesday. Now I do think that this is all happening because. Because gold is selling off in sympathy with the stock market and everything else, copper, everything else that's selling off today. But look folks, history teaches us that when the fundamentals say gold should go up and other stuff like stocks and commodities should go down, what almost always happens is gold gets dragged down with everything else. Because when you have to sell, you sell what you can. Because when you're forced to sell, you sell what you can, not what you want to do. And that's what's always happened before. 2008 was a prime example of that. So if there's a big risk off event in the stock market, I expect it to take the gold market with it, at least temporarily. Now, eventually, I think all the reasons that there are big risks in the stock market are also very, very bullish for gold in the longer term. But fundamentals come second only to liquidity. And any reasonable analysis of how much levered Link length exists in this gold market clearly concludes that a big risk off event across all markets is going to take gold down, even if the fundamentals suggest it ought to be going the other direction. So bottom line, I remain super duper bullish gold long term, but I'm not persuaded that the swing low is in yet for this correction. And I think that if the risk off event in the equity market gets a lot worse from here, it's going to take gold with it, at least initially. And that's not for a day or two, that's for weeks to months, months before eventually the fundamentals force gold up as other things sell off.

C (76:32)

Well, listen, we had a bullish breakout to an all time new high. But what was really interesting about is it wasn't confirmed by the other precious metals. Silver didn't move, you didn't see platinum and palladium moving with that little bit of a bump in some of the gold equities, but really not the follow through that one would have really wanted to see. Now what is happening this morning at the time of recording is we have a $50 down day breaking fib zones, but at least still supported by its 50 day moving average. I think the biggest blow to the bulls would be is if we sold all the way back down to the June low because that would nullify this as a breakout and then put gold back into the trade range and even leave it on the table that it may sell still. Correct More overall I'm super bullish gold, but what we were trying to decipher is whether this breakout to an all time new high was the beginning of another new bull trend. On the upside, this 50 day moving average in my mind is going to be a critical line of support and we'll see whether it holds.

E (77:36)

And moving on to page nine, we have that uranium chart. Eric, what are your thoughts here?

A (77:40)

My view of the uranium mining shares market usually mirrors that of our good friend Justin hune over@uneumsiuminsider.com, almost exactly. Exactly. But our views are starting to diverge with respect to the timing of the coming bottom in uranium shares, which Justin and I both agree is coming sooner or later. We're in agreement that the nuclear renaissance is on and it's on strong and that the outlook for uranium is super bullish long term. But for now we're stuck in the summer doldrums where there's almost no trading action on the physical spot market. Justin thinks that we're really getting close to the end of this correction which has lasted all Year, year. He's cautiously anticipating a possible bottom this week or next week. And he's saying, hey folks, look at the seasonality of what happened last year. Maybe we're going to see a similar pattern now. I think he's got exactly the right idea of what's going to happen. I just disagree slightly on the timing. Where we differ is the charts are already looking awful from a technical perspective. And given my view that broader markets frankly should be looking at a bigger risk off event because I think that the election risks are bigger than most people do, well then it would logically make sense that we would see that risk off event continue. And just as I explained that gold would be dragged lower by the stock market. Uranium shares, which have extremely high retail participation, are more likely to be the location of a panic event among retail traders. They're going to sell off harder than the broader stock market. So Justin and I are exactly on the same page. That uranium has already sold off more than the fundamentals suggest that it should, that it's bargain priced right now and hopefully that there will be a recovery soon. The place where we differ is I see a very significant risk that this uranium situation just gets worse for weeks to months before it gets better. And it will get better, but it doesn't need to get better until the physical market really forces the rest of the hand. Now already sput, that's the Sprott Physical Uranium Truck Trust, is trading at such a discount to its own net asset value that the implied price of uranium, if you buy the SPUT shares, even though the current market price of uranium is around 83 bucks or so, you're buying for about 74, 75 bucks. Hey, wait a minute, that's less than the long term term contracting price in the main market. So obviously we're at bargain levels here and I think Justin is making an excellent call that this is a bargain level place where, you know, this might be the bot really close. I'm just really nervous about this election thing and I'll be the first to admit that I have stronger views than most people. So if you think I'm a nutcase on the election, I would follow Justin's advice that right here, right now is the opportunity to buy. Bottom line, I'm not selling anything here. I'm already very much overweight uranium mining shares and I'm extremely confident that I will eventually sell them much higher than I bought them. But I'm kind of bracing for something to come next that might be painful. Let's see what happens.

C (80:45)

Eric, Just technically looking at this uranium physical trust, it's being distributed there. Everyone keeps hitting the bid. All rallies are failing at the moving averages. There's some sort of distribution cycle getting underway. Now. Overall, the bull thesis on uranium is very strong and at some point there will be the next start of the bull phase. But the way that this price action is behaving on the short term, it means that the distribution cycle has not fully played out yet and we still have to see where the lows will come in, where the, where the buying and accumulation cycle starts. I think investors in the uranium space have to be a little bit more patient here as this develops. The last thing I wanted to touch on page 10 is that US 10 year treasury yield and we have it once again turning back down. It's trading around 422 right now. And what we really see is the fact that bonds are to some degree or another behaving as a bit of a safe haven. And this is something that has been a part of my bigger thesis. I'm not super bullish bonds where I think, you know, bonds are going to rip with a huge return on the upside, but I also don't think that they're going to be selling on the downside with the rest of the markets the way they did through 20, 22 and 23. And so to me, this is a place to hide, pick up yield, yield and find some safe haven during these difficult market periods.

A (82:09)

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.

C (82:23)

Well, in this week's research roundup, you're going to find the transcript for today's interview as well as a chart book we just discussed here in the post game, including a number of links to articles that we found interesting. So you're going to find this and so much more in this week's research roundup.

E (82:37)

Well, that does it for this week's episode. We appreciate all the feedback and support we get from our listeners and are always looking for suggestions on how we can make this program even better. For those of our listeners that write or blog about the markets and would like to share that content with our listeners, send us an email@researchroundupacrovoices.com and we will consider it for our weekly distributions. If you have not already. Follow our main Twitter account acrovoices for all the most recent updates and releases. You can also follow Eric on Twitter rickstownsend, that is Eric spelled with a K and follow Patrick trickseresna On behalf of Eric Townsend, Patrick Suresna and myself, thanks for listening and see you all next week.

B (83:29)

That concludes this edition of Macro Voices. Be sure to tune in each week to hear feature interviews with the brightest minds in finance and macroeconomics. Macro Voices is made possible by sponsorship from BigPicture Trading.com the Internet's premier source of online education for traders. Please visit bigpicturetrading.com for more information. Please register your free account@macrovoices.com Once registered, you'll receive our free weekly Research Roundup email containing links to supporting documents from our featured guests and the very best free financial content our volunteer research team could find on the Internet each week. You'll also gain access to our free listener discussion forums and research library. And the more registered users we have, the more we'll be able to recruit high profile feature interview guests for future programs. So please register your free account today@macrovoices.com if you haven't already. You can subscribe to Macro Voices on itunes to have Macro Voices automatically delivered to your mobile device each week, free of charge. You can email questions for the program to mailbagrow 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 macrovoices are those of the broken 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 4 Fourth Turning Capital Management LLC. For more information, visit macrovoices.com.