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 ER Townsen and Patrick cesna macro voices episode 470 was Produced on March 6th 2025 I'm Eric townsand Robo Banks Michael Evy returns as this week's feature interview guest we thought Michael's advice to take president Trump seriously but not necessarily literally proved to be quite preent
so we asked him back to comment on this week's overwhelming news flow on so many fronts from Trump and zalinsky Oval Office Antics to Canada and Mexico tariffs to four significant executive orders from president Trump to crypto to The US Sovereign wealth fund to the explosion of populism around the globe to where we stand with China and I'm Patrick sesna with the macro scoreboard week over week as of the close of Wednesday March 5th 2025 the S&P 500 Index down 191 basis points trading at 5842 so far all the Buy on dips have been falling
flat we'll take a closer look at that chart and the key technical levels to watch in the postgame segment The US dollar Index down 207 basis points trading at 10427 the biggest three-day drop we've seen in over a year the April WTI Crude oil contract down 337 basis points now trading at 6631 now testing the 52e lows the April rbob gasoline down 200 28 basis points trading at 214 the April gold contract down 14 basis points trading at 2926 copper up 551 basis points trading at 479 new breakout on copper but will it break out
above last months highs uranium down 139 basis points trading at 6405 the US 10-year treasury yield up one basis point trading at 431 and the key news to watch this Friday are the jobs numbers and next week we have the CPI and PPI inflation numbers and the Bank of Canada monetary policy statement this week's feature interview guest is Rabel Banks Michael ever Eric and Michael discuss Ukraine Trump's Diplomacy tffs China and more Eric's interview with Michael Evy is coming up as macro voices continues right here at macr voices.com and now with this week's special guest
here's your host Eric Townsen joining me now is Michael Evy Global strategist on economics and markets for robo Bank Michael you're back uh kind of early we don't normally have someone back just six weeks after your first appearance on macro voices Where you were super popular we had another guest booked this week who had to back out when we went to look for backup guest I just thought wow as much as it's only been six weeks your comment when you were on before saying take president Trump very seriously but not always literally proved to be
so precient it just seemed like such a fit this week Michael what the heck just happened in the Oval Office what's the real agenda what's going on here what How do we make sense of this news flow around zalinski and Trump and the falling out and now uh Europe is befriending zalinski and where is this all headed what does it mean how do we sort it out great question good to be back and I have to say let's be honest that six weeks feel was like six months or six years in in terms of the
news flow that we've seen and the sheer exhaustion that I think we're all feeling so there's a lot to unpack there Should we start with zalinski let's do it okay so I mean there are so many different ways that you can look at that and there are such passionate opinions of it uh from different sides clearly what we saw on that face for Friday in the White House was a diplomatic failure of you know historic proportions at the very very highest level that's not how diplomacy is supposed to be done in public I can assure
you that's how a lot of diplomacy is done when the cameras Are turned off but that should never have been done like that and you can blame Trump some people have you can blame zalinsky and I personally think far more of it since with zalinski he he didn't realize where he was and the audience he had and you know he he was using a lot of the same rhetorical tricks that go down well in Europe and do not work in America but you know the long and the short of it is that trust was already
not there and it blew up but I think the greater likelihood is and the way things are moving by the time people are listening to this it could could already be true that whilst you've seen today uh in Asia time America now pours all military aid to Ukraine to add extra pressure on top there really aren't many good options for Ukraine other than signing that minerals deal which is what blew everything up on Friday and then proceeding to try and flesh out what does or doesn't Constitute some kind of security guarantee of sorts afterwards because
it's not going to happen the other way around uh you know Europe isn't really in a position practically to do it uh America said it won't do it no one else will and so it's really that or nothing so I expect we will return to that and I think zalinsky you know much humbled even if he doesn't do it in person will end up signing let's talk about the mineral deal and what it actually means Itself because president Trump repeated the exact same phrase at least a dozen times raw Earth minerals R aw Earth minerals
now I've been trading commodities for a while I've never heard of a raw Earth mineral a lot of people talk about Rare Earth elements things like neodium and so forth the thing is Javier blast very well-respected Commodities journalist from Bloomberg has been very very uh vocal saying hey Ukraine doesn't have any substantial Reserves of any of those certainly not $500 billion worth this doesn't make any sense and then I've seen some other Communications where they've talked about these raw Earth minerals such as nickel copper and lithium last I knew those were all base metals and
they even mentioned crude oil so what does this mean it's not really raw minerals is it just uh they they want a slice of any natural resource in Ukraine that that might have value what what's really Going on here well again this comes back to the seriously but not literally thing those who understand this situation from a different angle to the geology side which is very accurate that you're bringing up there see it like this the deal was and if it's signed will be a fig Leaf there aren't $500 billion do worth of those particular
resources what however you want to Define them in Ukraine and the amount of time it would take to develop them and get your money Back on that even if it were true is just ridiculous in terms of any kind of future that Donald Trump is interested in so that in itself doesn't really mean anything but what it does do is tick boxes for Trump because first of all if anyone hadn't spotted you know they this is abundantly clear he wants out of this war because it is a major distraction for the US and a drain
on resources militarily at a time when it wants to be pivoting 100% to Asia we've heard the Same thing from previous presidents and nothing happened on that front and he definitely wants to do it that's one point and secondly and and we can discuss this maybe in a moment as a sidebar he would like to try and achieve some kind of Deton with Putin if he can because he thinks just maybe he can do an inverse Nixon Nixon of course went to China after the sinos Soviet split and it's been a logical strategy for the
US to pursue for a long time to try and Break off Russia from China now I don't think that will work but I can understand why he would like to try it so he wants to end the war quickly and to do that he's obviously just trying to get a ceasefire in place just to stars and then avoid having this security commitment which zinsky was pushing him for and pushing him for on the Friday um when when everything blew up because if they do do that effectively you've extended the equivalent of NATO Article 5 membership
to Ukraine without Ukraine even joining NATO that you know if Russia attacks Ukraine we will step in which is you know how NATO is sposed to work so they could never really do that and you know even Europe itself I think is going to find it difficult to actually come to do that when push comes to shove so what this was was an attempt to try and buy time get everything to just calm down for a while which you know suits Russia in terms of their War Economy as overheating and it suits Ukraine to to
a certain degree suits Europe to a degree and certainly suits the US and then just dangle this Prospect of some kind of economic integration between Ukraine and the United States which is in incredibly ambiguous in terms of what would actually mean as if as if it's some kind of security guarantee that you know Vladimir Putin would never consider Breaching in the future because at least on that basis Trump would not be repeating what past presidents did in Iraq and in Afghanistan where you spend trillions of dollars occupy the place for years and walk away with
absolutely nothing that's not how real real politic works if you're doing economic statecraft from a real politic perspective and you're there involved militarily you want to get paid for it there needs to be some Economic upside not just a strategic upside in terms of the military Dimension there needs to be some money flowing from it and this was a fig Leaf I believe that maybe you know in some people's imaginations was a real uh Cash Cow I doubt that's the case but you know I could be wrong but at least would provide the figle for
then a basis for a ceasefire and potentially discussions about what security guarantees could mean but the more people look at the Deal and point out how silly it is the less likely that is to happen and the more zilinsky has kept saying well no I want security I want security the less likely that is to happen so in in some respects from from a US perspective it was like the the best short-term deal that was possible Michael let's keep things rolling as much as there's a lot to talk about in Ukraine there's also so much
more news flow and I should mention to Our listeners this was recorded early on Tuesday Morning who knows what will have happened in the two days between now and when you hear this but as of this moment the next big piece of news is when everybody thought Canada and Mexico tariffs were going to be one of these things that you know every 30 days they get renewed and we're working toward a deal president Trump at least as of recording time has said nope not going to wave Them this time they go into effect I think
it's midnight tonight uh or perhaps it was midnight last night I'm not sure Michael you you can fill us in what's the going on why is it suddenly turned from a threat to it's really happening is it really happening or is it just a bigger threat what's going on here okay this is a really really crucial point because the 20% tariffs on China are happening the executive order there has been signed that's real that's In the bag the 25% 10% for energy from Canada and from Mexico Trump verbally yesterday said you know we're still set
to go and um it's too late for any negotiations that's purely verbal you know nothing would surprise us if there was a sudden pivot there and why it's critical is not just because this would be very damaging to the Canadian Mexican and even US economy if it were to occur but because it's a pivot point for the overall us Grand strategy or what I call The US Grand macro strategy because bear in mind Trump has already floated that there could be a tariff exception for Australia which is a US defense Ally in the Asia Pacific
he's floated that there could be some kind of trade deal with the UK despite the fact that on paper he shouldn't get along with the British prime minister at all and certainly JD Van's probably wouldn't and so you say okay there are potential exceptions being made here although China is Getting a 20% our exceptions going to be made for Canada and Mexico if they give some kind of quid pro quo and Mexico has suggested crucially that if it were to match external tariffs on China in other words it will do on China what the US
is doing could it then avoid the US tariff itself and and there have been us figures including the treasury secretary percent who said yes that makes sense so I don't know if Trump's already made up His mind and they're going to press ahead anyway but it makes much more statecraft sense to not have a tariff on Canada and Mexico except maybe in certain sectors which are deemed to be National Security but generally not but to have a joint North American external tariff against China so that effectively the usmca is a closed loop on that front
similar to how the European Union works with its joint external tariff and that makes sense if You then try and bolt on the UK and bolt on Australia and you start to see the foundations for a North America plus defense allies the UK and Australia both being in the orcus grouping which Trump when he was asked by journalist you know didn't know what it was referring to but I think he just misunderstood the question as as a front against China but if it is going to be 25% against me me and Canada with no exceptions
um and they are not taken off again you know Within days or weeks before the real damage starts then we're looking at a completely different Grand strategy of basically the us alone against everybody uh at which point yeah it's incredibly volatile for markets if that happens I'm not saying it's not volatile if we have a group against China that's also incredibly volatile but at least it's the framework you can understand if it's the us against all it's it's far more complex and chaotic let's go a little Deeper on that subject of volatility and markets because
that's what our listeners care about is you know normally we talk about how you trade this or how you trade that it seems like what's going on here is President Trump is intentionally trying to create kind of a reputation for himself you never know what I really mean until you find out um that's not something that's easy to trade so I mean is it straddles and Vault plays here what what do you do to Try to navigate a situation where literally don't think you or I Michael have any idea whether or not Canada or Mexico
tariffs are still going to be a big issue just 48 hours from our recording time when our listeners hear this it'll either be totally forgotten or it'll be a huge big news deal and it's impossible to tell that's very very difficult sure and look there are three ways to play it first of all you don't play and that's valid way you can afford Not to secondly as you correctly said you know straddle involve and basically just try and do your best to ride it out with tight stops on everything where you can HED where you
can and the last one and you know I'm going back to talk my own book here is to say do both of those and alongside that try and look at what makes real strategic sense here from the US perspective and I would still put it to you that whilst America can do okay in the long run without Mexico without Canada it's an enormously stronger Force versus China with those two economies bolted on and with Australia bolted on and with the UK bolted on you know for all the problems that every one of those economies have
jointly you know with some internal reforms that's that's quite the economic Beast so in that respect the one thing Trump can't do is look wimpy on tariffs at this stage because they haven't even gone on yet Against these you know purported allies and trade Partners but it would make far more sense to scare the hell out of everybody let people think that he really is serious and even maybe go ahead with it briefly just to have them feel the pain for a couple of days and have people think wow he's really serious and then take
them off only if then the quidd proo as I said is that he builds this bigger block for a larger strategic Purpose so if you're thinking strategically and you can be out of the game where you can do and you can hedge your volatility risk as well I think that's the the most logical way to do it okay picking up on what you said about understanding the US strategy and kind of trading around that I want to go over some EX executive orders that have come out and help help us interpret not just what the
order means but what it's going to mean for markets and how you would Trade it let's start with this America First investment uh strategy executive order what's going on here that one was huge absolutely huge and there are so many of them coming out and the detail in them can be quite nitty-gritty I completely get why many people in markets just start to be you know punch drunk and don't pay attention but that one was absolutely huge I mean there are many details in it but the juiciest ones were that effectively cyphus so the Foreign
investment screening board that's always been there in the US is now going to make sure that China cannot have any say or investment in a whole suede of the US economy including agricultural land technology infrastructure you're out and if you are a China front man you're also out but leading back to the point I was just making about maybe having a larger View and a different strategy at the same time it was made clear if you go on the US green list by absolutely separating your supply chain and Technology chain from China then you get
FastTrack FDI approval so you have a two-tier system if you're China you're out if you're a frontman for China you're out if you're nothing to do with China you're straight in with hardly any paperwork so that in itself was huge and the secondary element of the executive order was to do everything that's possible to try and dissuade American Capital from investing In the Chinese military now of course you can't do that directly anyway but China has what's called a civilian military Fusion where every civilian company has to cooperate with the state and with the military
if they're asked to so there isn't really a differentiation between the two it's it's a it's you know it's a polite fiction so effectively if America wants to it can interpret that executive order to say you just can't buy Chinese stocks And that's ironically just as Chinese you know teex shares have uh have gone through the roof so that that's now there as well um and above and beyond that one other little morsel there was a list of countries who were put down as adversaries of of America that need to be watched and Hong Kong
was on the list so I mean that's not a complete surprise to anyone who's seen the changes there over the past few years but to have that in black and white That's that's huge and as I said that absolutely speaks to in principle the framework of saying be in team America and you get fast track approval don't be in Team America and your you know your name's not on the list you're not getting in at all Michael let's move on to the next executive order what the heck is meant by USR investigation into Chinese Maritime
Industries again really sounds Technical and boring and it's staggeringly Important when you understand the history of it and the implications so the Biden admin has actually launched a US complaint about the fact that if you look at Global ship building China dominates we all know that and control of key ports China's very very high up the list there and in terms of ocean carriers China's really really important as well so basically anything that happens in the civilian sphere at Sea China dominates in the same way that the US Navy dominates militarily and a lot of
that is with State firms and a lot of that is with subsidies of different kinds so the current USR has said that they're carrying out an investigation and what they are proposing is after March 24th and they've had a you know a round of discussions with different people they are proposing to fight Chinese State control of Maritime Industries with a number of really radical measures first Of all they're going to charge China built ships which is a huge huge number of of the global Fleet on entering a Us Port $1,000 per net ton up to
$1 million cap and $1.5 million if it's a China built and operated ship now if you make several Port stops from Asia to us ports dropping off cargo that really adds up that could be three or 4.5 million do per Journey that really makes it expensive to start using those Services um and at the same time they're going to Charge people who have got Chinese built ships in their Fleet but don't send them to the US so say for example you're a European carrier and you keep all your Chinese built ships in Asia and you
send your European built ships or your Japanese built ships to America and you say ha nothing to pay no they know where they're they know which ships you've got and who built them and they'll still make you pay so in other words the pressure is to absolutely diversify your Fleet away from China by making it more expensive and then adding on top of that they're now talking about introducing quotas for American crude and American Flag ships to carry a share of total us export which could be anything from corn to chips to to missiles so
initially they're talking about 1% of All American exports will have to be carried on those kinds of vessels that will rise to three and then to 5% over the next couple of years at which point 3% of that cargo Has to be on an American built ship and then that will rise to 15% of all outbound cargo and 5% of all the ships have to have been built in America so you're basically forcing people build in America and you're making it much more expensive to go with the cheapest most efficient option which is of course
from a Chinese State controlled industry and why this is interesting is if you look back at American history in this area which I have done I wrote a paper on it A few years ago called in deep ship and that's with a p but you know you understand the implication America has used this strategy in the past several times it used it against the British in order to develop to develop a Merchant Marine just after your Independence when you know there was no economic logic in doing so everyone would have said just buy your stuff
from the Brits on their ships and America said no if we do that we'll never develop and we'll never be a Commercial power and we'll never have you know strategic autonomy so they made it more expensive to bring to to buy things from Brit from Britain and they built lots of ships with with subsidies and they did the same thing a couple of times and each time then Market forces kicked in and the Merchant Marine shriveled away to nothing so we're basically repeating history but the implication is you get a sharp bifurcation in the global
Fleet you get Massive disruption of Supply chains and you get the reindustrialization of America Michael let's keep going on the executive orders I've got two more of them for you cryptocurrency seems to me like President Trump gave the crypto Community everything they wanted then crypto sold off is that just to sell the news event what happened well I mean there are lots of things that could have driven that U the market has been very very choppy of late you did have that Big hack which you know North Korea appears to have been behind but part
of the legislation that's still being drawn up and we'll find out more in the next couple of days again suggests that the assets that Trump wants to put in this crypto Reserve have to be made in America as it were you can't use non-m made in America stable coins uh which of course makes a lot of them out there not valuable now they have suggested the names of some that they do want to Include and even those have started to sell off again because people are starting to wonder if it's a a continual bait and
switch that there's a whole discussion that can be had about how crypto and a network of crypto assets can be used by the US to create fiscal space for themselves out of really you know digital digital magic to be honest it remains to be seen it's certainly an ironic action that you come out as Pro crypto and you end up with crypto Selling off but that really is part and parcel of some of the inverse outcomes that you get from from trying to interpret tum too literally sometimes let's move on to the final executive order
and the one that baffles me the most as far as I understand what a sovereign wealth fund is Michael that's for creditor nations in other words Nations that possess wealth and need to invest it they create a fund sort of like a big hedge fund to invest their Wealth why does the biggest deor nation in the history of the world need a sovereign wealth fund it's a fantastic question I'm really glad you asked it like that because no no offense at all that's exactly how it's asked by people who I think don't get what Trump's
trying to do so let me let me try and that's okay I I want to get what and I don't get it you're exactly right good call so okay so you're absolutely right uh in that it doesn't make sense from a Traditional framework like that and the US doesn't run a fiscal Surplus so there's no accumulated wealth and it doesn't run a current account Surplus so there's no accumulated National savings so how can it be done effectively and I'm going to try and do it as simply as I can here it's it's a way to
achieve geostrategic goals with as little oversight from Congress as possible and some of which are in you know very very gray areas and it doesn't count as debt On the balance sheet so let me give you an example of how it could work so let's say for example you have a piece of land lying around it's a federal asset and it's worth six billion US do big piece of land in one of the states somewhere if you set up this sov and wealth fund what they're talking about doing is saying we will take that six
and we will use typical financialization magic because the US is the past Master at financialization and we will strongly Encourage the private sector to leverage that up 10 times to the point where we have $60 billion to play with then we will give $1 million to everyone who lives in Greenland and when they have their independence referendum in April we will strongly incentivize them to become a US protector or a US state what does it cost the US up front nothing what have they got Greenland is Greenland worth more than $60 billion in terms of
the assets and the geostrategic location I would wager that it is now that's one extreme example did Congress have a say no because it's a sovereign wealth fund can they allocate funds to it or say we're not going to issue them no is there any debt on the balance sheet no none whatsoever and if there is it's actually from the private sector um and you know obviously debt to GDP does matter when it starts to get high even in the US and What have you got a hard asset so if you play it right it
you actually manag to use the power of financialization which as I said is a US specialization and it's also one of the reasons why the US is no longer an industrial power because you're financialized and de-industrialized but you use financialization almost kind of off book to buy hard assets like Greenland or ports or or other reserves or raw raw Earths as you were saying um and you suddenly start to transition back to being much more of a physical controller and producer of things so that's what I think the game is that sounds to me more
like an executive branch slush fund than a sovereign wealth fund is corre do I get it now okay that's that's what it really is it can be that too absolutely and of course will it line people's pockets well uh is this the USA yes of course it will um but can it at the same Time managed to strategically shift the US from being purely financialized to being also an asset holder a hard asset holder it can do both at the same time and it can also you know feather people's nests if that is the way
it goes Michael I'm all out of executive orders let's go back to this it's only been six weeks since we had you on macro voices who would have guessed the 10-year yield would be 50 basis points lower what Gives so this is another one of those strange inverses because bent the treasury secretary has said openly they're no longer looking at fed funds and by the way you'll notice all the screams of rate Cups have gone away but they are looking at the tenure that's what they think is the key pivot point in terms of uh
the financial pressure being felt within the economy that would ostensibly tell you that therefore it would go down but of course Nothing that the uh admin has been doing so far really would encourage that the only thing you could say might lean in that direction is all the cost cutting from Doge because people are now starting to worry that if you fire enough civil servants enough federal workers enough NGO people you cut enough spending off in an economy which has been propped up by a vast fiscal deficit you get a recession which of course if
the FED isn't going to move which for Now it isn't because of the potential inflation risk from tariffs you are going to see reflected in the 10e so you could say they've done it cleverly via Doge to get the 10-year down and therefore ease uh you know pressure on parts of the economy or you could say it's happened entirely fortuitously and they had nothing to do with it um it depends you know whether you're being generous to them or not but as I said it's not a complete surprise that you Have an admin which is
the 10 year is important to us and suddenly despite the fact that many policies are inflationary the 10 year goes down so again seriously but not literally perhaps that applies let's move on to what I think is maybe the biggest theme of our time really which is I perceive I don't know how to explain this other than I'll call it a contagion of populism it feels to me like as much as so many people around the world are so incredibly critical of President trump it also feels like the the Trump populist Revolution is spreading all
of the sudden the reform UK party which nobody took seriously before is really getting traction afd didn't win the German elections but I think they came in second I don't know how Maloney is doing in Italy but it feels like we're seeing what I'll call a contagion of populism that's spreading around the world did President Trump start this is he just part of it uh why Is it happening and where is it headed again a great question um I wrote a piece in early 2019 called the age of Rage specifically saying that I thought there
would be you know a tidal wave of populism which would come sweeping through and initially it would be to the left and then it would move to the right and that that that the rightest argument would win um and the argument I made within that echoing you know other work by far more serious thinkers who have Been looking at this for a very very long time is that the historical patternn is you do get waves of populism not just in the US but globally and you get them around technological transitions you get them around uh
phase shifts in terms of how the economy is operating you get them around demographic waves there are lots of conflating factors that can all come together but if you look at economy after economy and not just within Democracies but right the way around the world people are pretty dissatisfied they all feel that there are various different crises that they are facing in their lives whether it's the crisis of liberal democracy uh the climate crisis if you come from one particular Camp whether it's the failure of Institutions or a globalist elite if you're from a different
Camp pretty much nobody is satisfied with the way things are working at the moment and young people Are the very least satisfied and if you look at the job prospects many of them have and how unaffordable housing is which by the way was a deliberate policy Choice made by their their parents is it as a generation and their grandparents to say okay let's keep the economy going with more expensive of Housing and assets you can understand why they're angry if you grow up and you see you will have a worse living standard than your mom
and dad and potentially even Than your grandparents did into their old age why wouldn't you be angry so this isn't just a US phenomenon it isn't just a European one it's a global one and yet the solutions are extremely hard to find on one level you have to say we have to cooperate and yet to cooperate you have to build the kind of structures which only seem to operate on a basis which increases inequality which creates more populism or you can say that it needs to be nationalists of the World Unite and everyone goes for
a kind of trumpism and at the moment that appears to be the the argument that is winning but of course that will create masses of volatility of its own but what what worries me the most there is if it fails or if it succeeds let's start with that if it succeeds then of course that's entrenched you you can guarantee that will last for a generation or a political generation because it's worked but if it doesn't work then I don't Think everyone is suddenly going to say let's go back to the sensible Center let's go back
to acronyms and Nos and you technocrats because they know what they're doing no I I I fear far worse populism is to come if this brand of populism can't manage to achieve some kind of results and I don't just mean in the states I mean everywhere Michael what does that mean for the European Union because frankly I I am having a hard time imagining Terry Bruton Reinventing himself as a populist uh politician it seems like in general the European Union is not set up to to embrace or or could ever Embrace populism are we going
to see a a breakdown of the EU as a result of this well I'm not going to forecast that because no one knows exactly what will occur and no one knows exactly how the EU will mutate in fact at the moment you can see that very much in response to the Ukraine crisis which we started by Talking about there's an attempt to try and whip up a brand of kind of EU populism which is to say you know let's rally around the flag and around the Ukrainian flag introduce all the National Security kind of changes
and defense changes that nationalists have been arguing for for a very very long time but let's do that under a European paneuropean umbrella so let's you know let's wave the European flag so this is an interesting concept to to to to Monitor but yes Europe itself is doing that because it recognizes that there are Nationalist and populist pressures Rising um not just from the right but also from the left in some countries because that's more of a European tradition and you are getting around a third of the vote um in many European economies going for
anti-european populist parties now imagine if you were to have a crippling recession I mean I'm not forecasting one that's a dangerous Base to be building from imagine if you were to have a geopolitical crisis for example you know something far worse happening in Ukraine from that basis yes you Europe itself is openly saying they understand that there are existential risks here macron has used used exactly that phrasee so things will have to change uh and I think Europe will do so the question is can it do so in time uh and you know what what
intellectual and political uh baggage will have to be Jettison for in order for it to do so Michael I saved the biggest elephant in the room for last let's talk about China China okay well it's the dragon in the room uh rather than the elephant and you have to understand what important week we are talking in um even if listeners are going to hear this on on on Thursday rather than Tuesday because not only do we have the backdrop of Europe talking about whether they will or won't increase defense spending not Only do we have
the question of whether us tariffs will or won't go on Mexico and Canada not only do we have that addressed to Congress by President Trump which some people are suggesting could see him even saying he wants to withdraw from NATO we also have China's two sessions which is when they start to set policy uh and what they're talking about is what they can do as a backdrop to what the US might be doing in terms of tariffs and all the executive orders That that I've been discussing and just how disruptive they are we have to
wait and see there and it wouldn't surprise me if China itself doesn't say wait and see as well because everything is so fluid they're not quite sure what opportunities might arise I mean if the Western Alliance really does fragment where does China stand Visa that so I think they'll play their cards close to their chest but I want to redirect the question slightly and put it like this Everything we are talking about from president Trump trying to get out of Ukraine on any terms possible president Trump trying to create some kind of donon with Russia
which I've alluded to Europe realizing that it may not be able to rely on NATO and saying okay we need to rearm and we need to rearm Ukraine tariffs maybe or maybe not going up on Canada and Mexico and maybe we do or don't have a a fortress America uh that trade block may be being extended to the UK which means they can't go with Europe and Australia all of this all of it factors back to the the the fact that the US's Grand macro strategy is is laser focused on China that China as a
rival to it and the first country since the Soviet Union to really potentially be ahead of it in some key areas is what everything is about and all the other factors that you're seeing all the other stories they all conflate they're all linked each one of them can drive the Other like cogs in a machine but China is at the center of the whole thing so yes we'll look to see what China says but you can't ever not have it at the back of your mind even if you're talking Ukraine or Russia or quote unquote
raw Earths or tariffs on on Canada or Mexico etc etc etc Michael you knew this was coming we've got so many different topics that we've talked about I'm going to hit you with the same dirty trick question as last time that I Interviewed you how the heck do you assimilate all of this into a cohesive macr trading strategy well again it depends on how many assets you or what what assets you're playing with what scale your risk appetite your time frame all all the standard disclaimers and of course the other one that I don't give
investment advice I have to make that abundantly clear I don't manage money um and I'm not trying to manage anyone's here in this conversation but that said I repeat what I began with and what I just reiterated a moment ago that you either have to be a complete expert in your own little micro Market if you're just looking at a particular FX cross and you trade that really well you've got a good feeling for the momentum in it of course headlines are going to Buffet it around at the moment of course you're going to want
much tighter stops um and and to trade it more carefully than usual but you can keep doing that That's absolutely fine if you've got a broader set of assets you're looking at or you're trading Global Equity markets Etc you have to take a much bigger picture of you and if you're cross asset and cross geography absolutely you do and if that's the case yes you still need that volatility hedging yes you need to perhaps sit this one out for a while if you really don't know which way it's going if you can aford to do
that for a couple of weeks or a couple of Months that's not the worst thing in the world to do particularly if you've still got a fair Fairly High T Bill rate like you have in the US in US dollars but you need to try and have at least some kind of understanding of what the hell is going on here which is what my my role exists for specifically that I'm not the expert on euro dollar I'm certainly not the expert on quote unquote raw Earths um or or or the 10-year yield even though I've
looked at many of them in The past in in different ways but what I am trying to do is explain that there is a picture here there is some kind of strategy chaotic as it may appear and sometimes the chaos can be part of that strategy and if you can start to understand elements of that too you can start to see where you think things will sit in 12 months and there can be a hell of a lot of volatility in the next 12 hours or 12 days or 12 weeks but over a 12-month Horizon
which I presume is much More logical for people who are thinking about retirement it will certainly stand you in good stead Michael like can't thank you enough for another terrific interview two in a row as the case may be Before I Let You Go please tell us again what you do at Robo Bank how people can follow your work and how they can contact you well I mainly try and get enough sleep in this current environment and I'm not doing very well but as you said At the beginning I'm I'm a global strategist and my
job is to look cross asset cross geography and cross cross discipline to try and work out what the big Global themes are and how they all intersect and at the moment it is this statecraft not not Economic Policy um and Grand macro strategy rabo Bank itself obviously is the world's leading food and agry Bank um that's the spect sector in which we specialize if you want to follow my work please go and Have a look at rabo bank knowledge that website um has all of our good stuff if you'd like to follow what I'm saying
in particular you can look for me on LinkedIn Michael Evy rabo Bank uh and if you'd like to interact with me more frequently because I'm there a bit more often look for me on X at the Michael ever and I I enjoy a good two and Thro on all the topics that we're talking about here and you know you have to keep a breast of it all this Is not something that you can turn off of you know for a couple of days and go and do something else to quote Lenin there are decades where
nothing happens and weeks where decades happen and potentially this could be one of those weeks Patrick cesa and I will be back as macrovoices continues right here at macro voices.com now back to your hosts Eric Townsen and Patrick cesna Eric it was great to have Michael back on the show now let's get To that chart deck listeners you're going to find the download link for the postgame chart deck in your research Roundup email if you don't have a research Roundup email that means you have not yet registered at macro voices.com just go to our homepage
macro.com and click on the red button Michael's picture saying looking for the downloads in addition this week you'll find in the research Roundup email a link to a recording from Jeff Snyder to Supplement last week's interview on the show okay Eric let's get your thoughts on the equity markets the S&P bounced nicely off support of the 200 day moving average but while Wednesday looked like a reversal candle in many ways we still failed to close above any of the short-term moving averages so technically speaking the short-term trend trend is still down until we get a
daily close above 5875 or so a daily close below the prior lows around 5750 would suggest that we could be just beginning a much deeper correction so I'd say it's make or break time for the stock market and we ought to find out fairly soon which way it's headed now again the signals to watch are for a daily close above 5875 or below 5750 now I know that big 75 point spread between those two levels sounds like a very wide margin but with the short-term moving averages pointed down and the 200 Day moving average pointed
up it will only be a few more sessions before those key support and resistance levels start to converge at that point we'll have to see the market break in One Direction or the other Eric I agree with your technical levels it's going to be critical to see whether the Bulls can turn this off at these key levels we're sitting or approaching a lot of key Fibonacci levels as well uh typically would spur on a market bounce but as Le At least as of this moment we have yet to see the Buy on dip Traders follow
through in any meaningful way uh every bounce is immediately faded now we do have the jobs numbers coming out on Friday morning and maybe that becomes the Catalyst that either Spurs the markets higher or uh really creates a continuation pattern to the downside and so we'll see what uh comes of there but there's some underpinning things things that I want to highlight on page three I Have the chart of the Magnificent 7 and what we clearly seeing is sector rotation uh that we continue to see all of these mag s stocks selling uh pretty aggressively
and that money being redistributed in a number of different sectors healthc care particularly doing well a lot of consumer staples doing well but these mag sevens are a huge waiting uh in the market cap weighted S&P it's very difficult to imagine a scenario where the S&P in has any big Meaningful rally without the mag sevens putting in short-term lows and starting to turn and there's really just no sign of that at the moment so on page four I have that S&P 500 uh percentage of stocks above their 50-day moving averages just a measure of the
bread of the market and uh my argument has always been if if the mag sevens can't drive the rally then you need a broad rally uh where the vast majority of stocks are rising and so we need to see breath Increasing and so instead though we have a breakdown of breath not only during this January February period have we not been able to get above above 60% of stocks Rising but we're clearly rolled over and turning down this is happening at the same time as things like the the Russell 2000 small cap index is breaking
lower lows and so the breath of the market isn't there either this is not a healthy Market environment and even though bottoms can sometimes happen from These kind of oversold levels there simply isn't a really oversold condition that says that this is imminent any day if uh we continue to have uh news flow that comes out there that create uh creates confusion amongst Traders and uncertainty there's uh every opportunity Market selloff to get much deeper and so that brings the question of well should one ensure their portfolios uh and it's something that we do quite
actively at Big Picture trading Buying all sorts of uh options to hedge out downside risk but on page five I have that volatility index the vix and this is a measure of the volatility premium that is being charged in options now uh it's uh the market is in theory right pricing volatility and so with us at these elevated 23 24 levels the implied ranges daily ranges are even close to uh in in the 50 to 100 S&P Point ranges so huge swings in the market are there and this makes uh Option premiums more rich and
um and so how does one go about hedging when options are more expensive well this is where you can still put on tactical debit spreads and other things that are far more uh volatility neutral that allow you to have some degree of protection in this period of uncertainty all right let's move on to that dollar Wednesday's close below 104 on the June Dixie contract confirmed that we're in a new short-term downtrend On the Dixie but this is all politically driven so changing news flow could change the trend in a heartbeat yeah on page six I
have that US dollar Index and what a three-day drop uh it really was uh driven though by simply the Euro and the pound sterling the European currencies uh we're not seeing the same type of velocity in the other cross currencies and so really um that spurt higher in the Euro has driven this drop we're at this critical 104 level and While one can argue that uh that this breakdown uh is a trend changer and it certainly has that possibility uh the we are at a really important moment where if the Bulls were going to save
it they would need to see a rally that recovers much of the prior sell off back to like 106 or 107 in a very short order if we see that uh all rally attempts stall out at 105 and and are very heavy then uh really there becomes increasing Confirmation that the US dollar has a some deeper cell cycle ahead of it that may uh send it right back down to September October lows near 100 I don't uh I'm going to really want to size up the price action in the next two three trading sessions to
really size this up all right Eric let's talk oil the key technical levels have all been taken out to the downside so the question now is how low can oil go Wednesday's low on WTI at 65 spot 20 was almost an exact Match of the intraday low on September 9th 2024 to find a lower low you'd have to go all the way back to May 3rd of 2023 when WTI very briefly tested 63 spot 65 on a crazy intraday swing but wound up closing much higher on that day at about 68 spot 15 five bucks
higher so as far as any kind of closing print or or uh lower price action it's been several years since we've seen prices as low as they were on Wednesday but as Michael every said in the feature Interview this has been one of those weeks where decades happen so anything is possible from here well Eric we are at 52e lows but they are a long major lows so on page seven when we have that chart you can see all of the lows that oil established here over the last 6 months and this could still act
as a support line uh but and when a support line like this is tested this often uh there's sometimes a per period where the market breaks to lower lows uh often uh Hitting a whole series of stop losses and other things just sitting below that uh previous support line uh if we see uh a further breakdown we could see a quick wash out to like 6362 on the downside but we are already quite oversold and I think that at some point a reactionary rally uh at least back to 70 to 70 2 would be normal
uh at this stage where with us being down here I don't want to already be U buying betting on that uh reversal just yet I Think that uh a quick wash out of even another $23 is entirely on the table uh before we get some proper reactionary bounce all right Eric Let's uh move on to Gold Patrick it's really remarkable to see just how quickly all the dips are being bought in gold and that's true in all different time frames shortterm medium-term even longterm now that's a really bullish long-term signal we were hopelessly overbought on
a technical basis a few weeks ago and the swing Correction that we just experienced shook that off setting up a new rally and we never even got below the 34-day moving average which so far has marked the bottom of this correction the 38.2% FIB retracement level was at 2824 and so far the bottom of this correction ction was $20 above that level at 2844 the stage appears to now be set to test 3,000 with the daily RSI still below half mast at 44 and pointed Sharply up as of Wednesday's close well Eric definitely gold has
been bought on dip and uh we do get these bullish reactions to the upside but we still haven't yet broken to a higher high and so with uh us uh in this consolidation often uh like you think back to like April or May of last year gold will go and retest highs and then consolidate back down to lows and stay within a consolidation period or trade range uh at this stage With us having more or less tested the 3,000 level and while we didn't print it exactly we approached it uh this is an area where
uh gold is fulfilled uh its upside targets for the last impulse and so I'm still open to the idea that this is going to be a consolidation period for gold now the one argument you can make for gold is that with uh this uh potential US dollar breakdown uh that could become a new Tailwind for gold Rising uh and um if that continues to Emerge uh and we see a breakout to a fresh new 52- we High uh that could uh see a move measure up all the way up to uh 32 to 3300 on
the upside uh will we see that breakout at this moment I I still want to see how uh the dust settles here for this uh short-term trade range that we're establishing as we approach the previous highs and uh we'll uh see over the next week or two whether the Bulls have enough gas in the tank to really get this going all right Eric Let's uh move on to uranium what are your thoughts here well it's been yet another week of extremely bullish nuclear news flow and yet another another week of new cycle lows on spot
uranium and uranium mining shares there's no doubt in my mind that what we're seeing here is the process of retail capitulation the well-known tradition of the dumb money selling to the smart money right around Market bottoms the obvious question is whether It's over yet and nobody knows the answer for sure my take is that given the extreme oversold RSI and plenty of signs of capitulation in the tape action there's a good chance that the cycle bottom might be in this week if and only if the broader Equity Market correction is also over and the SNP
moves above its short-term moving averages to Mark a new short-term uptrend but if we see the S&P break and close well below its prior lows around 5750 then all bets are off And lower numbers on uranium and uranium miners would be a near certainty in that scenario I contined to buy the dips this week and I'll continue buying more if we see new lower lows well Eric uranium is still very actively distributed uh someone keeps leaning into that bid and uh it is seeing some distinct distribution so at this juncture uh with these lower highs
and lower lows uh we want to I want to see where uh the selling subsides where we see bottoming Formations where the momentum shifts none of those things are yet evident at some point this is going to be a compelling Buy on dip opportunity uh but the question is does one buy it on price alone or does one wait till the price action starts to shift to show that new accumulation is underway and that as of this moment you may have a very cheap price uh but there is very little sign that a new uh
wave of accumulation or new trend is anywhere underway finally Eric I wanted to just touch on copper uh and when we take a look at this it was consolidating over the last couple of weeks back down toward its 50-day moving average down towards $4.5 and uh we had a very bullish breakout uh the other day and uh with this breakout it is attempting to break the February highs and set in motion a trend continuation what I really want to just see is whether the Bulls can hold the gains often if these are fake outs Uh
then they this will fade right back to $45 doar within uh a couple trading sessions um if the Bulls can keep this let's say north of 465 470 on all little pullbacks and the price action goes for another break to new highs that could go back to testing the May highs that just above $5 on the copper price 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 bigp pictur trading.com Patrick tell them what they can expect to find in this week's research Roundup well in this week's research Roundup you're going to find the transcript for today's interview and the chartbook we just discussed here in the post game including a number of links to articles that we found interesting you're going to find this link and so much more in this week's research Roundup 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
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