Behind the Charts

Welcome to a Behind the Markets podcast. I'm your host, Jeremy Schwartz, Global Cellulism Tree. Alongside Warrior and Fines Professor Jeremy Siegel, who's also a senior economist for Wisdom Tree, we tackle the latest market trends every week. I'm also joined by my deep-rooted macro colleagues Samuel Rines, Jeff Winniger, and Chris Gannati. Let's dive into this week's show.

Welcome to a special edition of Behind the Markets. We're gonna have a special guest, Macro Charts, joining our normal crew of Chris Gannati, Jeff Winniger, Sam Rheinz. But we'll lead off with the professor as always. Professor, you're I've been seeing. Some headlines from CNBC making some waves um saying there's maybe more of a chance of a at least the headlines are saying more chance of a hike than a cut. Uh we got our new inflation.

release uh and and you sort sort of outlined last week a little bit more defensive, cautious, thinking it's a bit shoppy. Give us your updated views. How do you think these headlines that are interpreting your comments on C N B C Yeah, I... Uh and and uh yeah, I did um And in fact I didn't plan to do that, but I when when they sort of asked me, uh I I said, I'll tell you I'll tell you what is sort of tipping me towards this is um

The rapid increase in the money supply. Um, again, uh we get the deposits on a weekly basis. Uh I'm that I mean it's possible there could be special circumstances. Some people say tax refunds, however Once it's in your deposit, if you buy it at something at the store, then the store has it, the money. It doesn't disappear. The only way you can make the money disappear is raise raise rates uh to lower loan demand. Um I it's nothing

You know, it's just the beginning and I don't want to overemphasize it. When I said more of a chance, I don't think it's going to come. I I think Jay Powell is good and that's something critical happens, gonna stay Uh firm on uh on his last meeting, which I think is going to be his last meeting as chair. Uh I do think Warsh is going to be confirmed um and we'll take over the reins in the June meeting and we'll be presented with uh maybe a very difficult choice. Now

Um what first of all we thought we we we got today's CPI. It was actually fairly good. The nine tenths was expected on the overall. We were one tenth Shy on the core and the year over years were a little bit better. What was interesting is we

uh had about a three basis point spike downward in the tenure and that all got disappeared right away. I don't know what detail people were looking at to think that, oh, maybe this isn't as good as as we thought. I mean the major thing is uh Uh th this was taken at the middle of the month when gasoline and many of these other prices were moving up and they've moved up, as we know, a lot more.

Um, so I mean, you know, the the the the the the the the it's not just the money supply, it's commai prices, it's oil prices probably staying high for a long Uh long time. Um uh uh uh uh I don't know what it could be agreed to in the weekend. I don't know if the market is over Uh excite I I do know I mean it it it's surprisingly resilient, but it's very low volume this rally. And I think it's a lot of uh no one wants to be short. Um

People who were short Tuesday on impending doom, of course, got the announcement of a two-week delay and and had a cover. No one wants to be short. and get a a uh deal um that uh is struck that is favorable. Um I think the probability of such a deal is low, but if it could happen, people don't want to be stuck. So as a result, you get a lot of short covering on that and you got that uh snap back in the in in the market. Um, I also said I think the market, uh, until we really get a deal.

is gonna be mostly sideways because I think this inflation is gonna s uh is gonna filter in. Um we got jobless claims moved up to the middle of our uh four uh two hundred to two forty range. Um we just got some Bank of America spending data that was quite good for the month of March. Again, um Yeah um uh if you take it in the middle of the March prices had only moved up so much. Um the the Strait of Her Moose

is not just going to be oil. It's going to be fertilizer, uh, diesel, which is up more than gasoline, affects commercial trucking and therefore shipping and those expenses. Um, and I believe That uh uh unless you you know, when I see this the deposits increase with all these cost pressures. Um, that's why I believe that the next move could be up. Now I'm not guaranteeing it. I mean, I'm uh I you know, you know, I said 55, 45, 60, 40.

I'm not th this isn't you know no way and I don't see any move in the interim. Uh I don't see any move until June and we'll have a big clarity on i in the in the June situation. The economy, you know, is is is remaining f fairly strong. I mean the tax refunds are offsetting the OI. To some extent there was uh some calculation that for low income people the tax refunds can uh take care of gasoline for five months, higher income people

uh middle upper. I mean the tax refunds because the upper upper did not get any increase did did not get any refunds. There was no tax cut there. But um uh the upper middle has ten months of uh of of uh of uh higher gasoline prices uh uh that they have uh on that. Uh so you know again I I just um it's it's It's very hard to move down when you don't see deterioration. You see spending. And you have to worry about the fact that if if if if if it stays around ninety.

uh for a while, um that that that uh is still gonna filter into a lot of prices that are gonna go on. And the Fed if it sees the might have to move up a quarter. We'll we'll see. I d as I said, I I I I I I certainly caused waves there. Um I mean shelter Still looks good, although it was up um, I think it was at three tenths in in the latest. It was either two tenths or three tenths.

I mean, if we take a look at uh year over year rent, so we took a shake case shower, that looks good. Um, but other things are beginning to look like they are not quite as good. as uh they were before and um Uh those are the things that I worry about in terms of of lowering uh the rates. Now, right now we have four thirty on the ten year, you know, a hundred basis points below is three thirty, which is one cut.

below if you want to go to the average. But if there's going to be inflationary pressures, uh that is something that the Fed would would have to consider. It's gonna be a very difficult situation, obviously in June. A war's promising to, you know, um Trump expecting declines. But I think we'd have to see oil down in the eighties.

Um long term oil is in the seventies. I don't think we're gonna see fifty sixty oil for a long time. Uh, and that's uh pressure upward on a certain seg segment of good price.

Yeah, so the the I guess the best case I would get you to be more optimistic is just something that gets oil to move much better than the current the current uh I mean we uh we we we we have to get the opening of it. Now, you know, i uh a two da uh uh a two million uh I I uh someone said a two million dollar uh e c e expend um tax by Iran Uh they that an a a big tanker can hold uh a million barrels.

Which um then is two dollars per barrel excise tax. I mean, given how much oil has risen per barrel, which is, you know, thirty, forty dollars, that's not that much extra.

But um uh you know, in terms of that, although but that's a point of contention right now. I I mean I I I I d I I see the sides as farther apart than than ever. I d I don't see how in You know, the weekend can bring about a settlement, but who knows uh you know w uh what uh what what Like uh what could happen if oil starts flowing with a two dollar

Uh circuit and that's that's relatively minor. Then you just have to repair the some of the um um I mean you have to restart the oil wells that have been shut down, do some repairs on some of those And then you're gonna get with risk premiums built in and the threat that this could happen again and is not really solved, you know, I mean, I I just don't see fifty, sixty dollar oil. I mean, then you're gonna get to seventy, eighty dollar oil, which the US can stand.

I mean, we could do all right on seventy, eighty dollar oil. Um, that's near the long term average. Um, but we are not there now. And um, you know, clearly uh, you know, that the peak of price surge as a result of this slowdown, I think, is still to be felt. in the next two or three months, which is unfortunate for the Republicans coming into the midterms in November. Um

Uh we'll have to see how that uh uh how th how that goes. So, you know, as a result, um uh uh we'll we'll see. We'll just see how how how high uh things will have to go.

Well, if we think about portfolio allocations, you know, it sounds like You're not making a strong case for bonds. Um diversifier. It sounds like commodities are like one of the key things that hedge some of the the risk. risk. Yeah. I mean commodities uh uh uh are are are are definitely uh a a hedge here. I mean they only You know, that that that's there. I mean, I you know, I'm still like real uh real estate and and and a lot of I mean, la anything real base.

Uh we had gold had its huge run, overrun, and that's why it really went it got pipe peaked out, went down during the around law because it got overbought. So I'm not saying go into the precious metals. I'm not seeing, let's let's be very clear. Um what we had in two thousand to two thousand twenty two was uh uh um two years of the biggest increase is the money supply that we've experienced ever and uh sparked that inflation. Right now I see one month, uh not two years.

Uh and uh, you know, so uh you know, we're not off to that yet, but I'm just wondering if there's credit that can uh uh rise people are borrowing the because Um, although natural gas is actually down because we can't load it on the LNG, which is a which is important despite the fact that oil is up. Natural gas is actually down uh for uh delivery. Um

So that is uh we're oil independent. We're gonna get some gains as far as that's concerned. It's just a consumer shock and whether particularly we're gonna see on freight and whether we're gonna see on fertilizer and particularly airfares. And anything that uses the commercial uh di you know, uh re refined derivatives, uh, we're gonna see those increases uh move on in the next two or three months. Well it's always great to get your takes, even if it's a little cautious here.

It's a little cautious. Let me say. I I wouldn't expect I mean the market seems to be ready to spring to action. I said if we get a good deal You know, this market will go to all time highs. Um uh I I don't know whether we're gonna get that good a deal coming up. Um and um although, you know, I mean, uh, as I said, uh a surtax

is still only two dollars a barrel or more, a little bit more, but that's um still not going to be the deal that uh President Trump has um stated. So we're gonna have a lot lot a lot a lot to see. Lot of headlines to watch. Professor, thanks for kicking us off to start the show.

Well, Sam, I think that's a good transition to you based on we haven't had you on in a few weeks. Uh What do you think of the professor's odds here? I you gave our team a bit of your assessment of the odds of the ceasefire sticking, lasting, a blowing up. What's your current reaction to all that you heard from the professor and what you what you see as sort of longer term oil dynamics.

Sure. So I I would I'd be a little more optimistic going into this weekend based on the Trump administration's comments in particular, that while there's ten and fifteen point plans being bandied about The administration is more than likely just looking for a couple of those uh points uh to be uh call it the a quote unquote good deal from their perspective. One is uranium and two Yeah. is the relative opening of the straight. And I think it's I think it's really important.

to kind of take a look at what the energy markets are anticipating. Right. So you look at Uh I always like to look at the six month forward on WTI and the twelve month forward on WTI. Uh the six month forward is sitting at seventy t uh uh is sitting at seventy six. uh 50 give or take and the 12 month forward is sitting at 72. Right. Both of those numbers are telling you that the market really isn't baking in.

and hasn't baked in and tends to be correct on these matters, uh, any sort of longer term problem uh with the straight or with the energy markets more broadly, uh, for perspective. when Russia invaded Ukraine, it was a much different story. Uh the twelve month and six month uh went to a hundred and almost a hundred and ten respectively. Right. So that was a much more I call it a deep issue uh than what the market is pricing in at the moment.

And part of that is that the Middle East has oddly done what a lot of the rest of the world has done, and that is become much more resilient. uh when Iran and Iraq had their war in the eighties, uh Saudi looked at that and said, Hmm, maybe the Strait of Hormuz is not always going to be open. We should build a pipeline from the west to the east so that we can load uh boats in the Red Sea if something were to happen. So they have a seven million barrel per day pipeline to the Red Sea to bypass it.

Uh in the early two thousands, uh the uh UAE saw kind of a similar scenario and built themselves a pipeline to get around the Strait of Hormouth. I would be very, very concerned if I were Iraq that if you negotiate too hard here, the Strait of Horror moves is all of a sudden going to be a non factor in energy exports in five years.

It is not as though the Gulf countries are poor and it is not as though they are oblivious to the issues there. Saudi Arabia could build another pipeline right next to its existing pipeline and all of a sudden it's not exporting a single barrel. through the Strait of Hormuz. UAE, very similar. Even uh Iraq and some and Kuwait uh could build toward the Mediterranean. So I'd be I would be very careful if I were going into the negotiation with the US this weekend.

Uh if I were Iran because all of a sudden the straight of or moves could be a beautiful stretch of water that has nothing to do with oil very, very quickly. Uh these these countries are very good at building energy infrastructure. So I think that's a negotiating point that the US is going to bring to the table. I think another negotiating point that the US is going to bring to the table is hey.

We don't have to have, you know, we can kind of both back away here and we can kind of both claim victory. We'll take the uranium and The one wild card is what Israel does, and I think it's a signal that Israel is serious about a ceasefire. uh when they agreed to talks with Lebanon. Uh that was a very critical point that I think was a little overlooked yesterday. Uh that that statement by the Israelis is critical uh to the longevity of this.

I do put it at about an 80% uh give or take uh probability that the US Iran ceasefire holds. Uh I I think you have to kind of set Israel aside into a different sort of category on whether or not that holds. But if if you look at the US and the US in particularly the administrations want for this to be the end of the war. You have to put a very high probability on this being at least an extended ceasefire with negotiations ongoing.

And probably positive headlines for Monday. Uh, that tends to be the way the Trump administration navigates this uh conflict in particular. is take the weekend uh to do the nitty gritty and come out with the positives on Monday. So it it wouldn't surprise me at all. On the uh the one thing that I would would point out

is we've had a few early indications from earnings as to how the US consumer and how the global consumer is reacting to this. I would say it's incredibly positive and much better than anticipated on a number of fronts. You had fast retailing, they own Uniglo announced earnings uh well yesterday. Um And what you saw was blowout numbers in the US, blowout numbers even in Europe, and even an improvement in China. Uh you had Levi's report earnings, good numbers in the US.

Good numbers in China, good numbers in Europe. I would suggest that maybe the US consumer is not feeling it as much as markets think uh the US consumer is feeling it. Red book, uh, you know, same store sales gets a lot of flack, but it gets weekly and it's year over year.

And if you include the Easter shift, you're still seeing an acceleration in underlying same store sales. Costco, strip out gasoline in FX, seeing an acceleration and or steadiness, depending on what uh area you look at in same store sales. And those are numbers that include the month of March. Those are those are numbers that say, hey. Maybe the US consumer is a lot more resilient than we give it credit for.

Well that's a good positive Vibe ending uh uh from Sam. Chris, if if we say geopolitics is the top story, the other major story of you can't avoid is the SAS pocalypse, um, you know, the big moves in all these software stocks getting destroyed by just other clawed headlines of things going, but You got some big moves in tech this week. What what's your take of all things that's been happening this week in the tech world?

I I think um, you know, if we break it down to sort of two uh takeaways uh as as we sit here on uh on Friday. Uh one was uh it was it was very interesting to see what Andy Jassy uh decided to reference and how he presented uh a few weeks before Amazon is gonna put forth its uh quarterly earnings. Uh the the view of the company through the sort of annual shareholder letter

process, uh sort of prognosticating uh certain elements like uh their effort towards custom ships, the train effort. That's that's probably the word that people are most familiar with, but they have inferential, they have graviton. Uh they have all sorts of uh interesting custom silicon efforts that are moving

forward uh in interesting ways. Google is really still the standard with the TPU in that particular line of business, but uh Amazon is progressing in a way that if if you look at Meta, if you look at Microsoft, the these companies have announced designing chips, but you don't really know uh that they're moving towards a full-on deployment. Whereas Amazon is is taking important steps in that direction, also taking important steps toward physical AI, uh the robotics of uh logistics.

Um people like to compare Amazon to Walmart. Uh it's it's interesting to kind of think like which

company might be a bit further ahead in terms of uh the physical AI stack and and you've kind of got Amazon as the contender in native AI, uh building the whole company around technology. You've got Walmart, where the first thing they did was, you know, try to put a store within a certain number of miles of most major population centers across the US, uh, which gives them certain last mile logistic uh advantages.

And it'll be interesting to see in the coming quarters uh as we get more and more information, A, how the companies are presenting, if if they believe they have an advantage in physical AI uh in any way, how they decide to uh present that.

And and B how uh the the differences and valuations uh continue to uh ultimately involve. Very different businesses, but at the end of the day, if you're buying something in the US, there's a very good chance you're either looking at Amazon or you're looking at Walmart.

Now moving to the the Claude uh discussion where um, you know, it's it's really no different than uh a lot of what we've seen this year. Uh Anthropic makes a certain announcement, a certain swath of the software universe just immediately goes down. The the announcement I was most uh intrigued by, and I I kind of see it as a positive.

uh was uh it was referred to as uh mythos. Uh I I like how they name things with like uh the idea of Greek mythology uh at times, but uh that this uh mythos model which is designed to help in finding vulnerabilities across sort of key areas of software. And I think in the banking sector, it even rose to the level potentially of even Bessant.

uh talking to some of the banks about uh some of these vulnerabilities. I I think overall this is a very good thing in the sense that no software is invulnerable. So everything that we use has some vulnerability somewhere. Uh and it's just a matter of can attackers actually find it. and exploit it, which is not always easy. Uh having a tool that helps you find those vulnerabilities with the idea that you can then patch them up and deal with them. Uh this is to me an unequivocal uh positive.

Uh and if companies like your CrowdStrike's and your Z Scalers and your Cloud Flares and your Palo Alto Networks, You know, th to me to me there's a synergy there. Now the market is not behaving as though there's a synergy. The market is uh behaving as though, you know, there's something wrong with uh the SaaS business model, which we've seen largely uh this year. And if if you sort of break it down, you say there's the cybersecurity aspect, which has never been in greater demand.

And then there's the fact that a lot of these companies over time had gotten really expensive, high valuations, very high margins. There's gonna be more competition. And maybe as we move forward, the growth rates aren't gonna be as high, the margins aren't gonna be as high.

And you're seeing this overall readjustment and realignment with what's going on on the ground business wise as we continue to improve our understanding versus uh the SaaS business model. So cybersecurity is sort of Never had more demand, but the SaaS business model continues to be uh under fire, making it very difficult, even if you think there's an opportunity in some of these socks.

It's very difficult to uh to trade this volatility when you know there can always be another announcement from uh a major AI lab. Yeah, a lot of these companies, like company like Adobe, Salesforce, keep hitting these new lows. Um, you haven't seen it really slow down the revenue yet. There's this sort of fear of completely obsolescence for for some of these things with the new the new models. So it's gonna be

You know, they're gonna have to keep showing that they can compete with the new AI startups and are they gonna be able to keep up with the innovation w with their legacy infrastructures? It's gonna be very interesting on different dynamics on on many of these places.

Macro charts has been waiting in the wings. You you've been patient hearing our team give some opening comments. We've got Jeff Whinnegar, who's our own chart master on the uh Twitter. But Um, Macro, let me turn to you because you do a lot of work. Uh, we've been a big fan of yours. You've been on

The pod. I think this is the third time in three years, um, but not you don't you don't find him on the pods a lot. He writes a very interesting sub stack that that we get that has all sorts of great technical setups on the market. Macro, welcome back to Behind the Market. Thanks for having me back, Jeremy. Uh happy Friday to all T GIF.

Yeah. Well give us your lay of the land. What's how as you're reading the charts, you're reading the technical setups, what's the most important things you're watching as as you form, you know, your your baseline outlook here? Where we're to begin. Let's see. I guess socks, no? Yeah, high level overview. How how are you looking at the big uh Factors here. I mean, let's just set the table really quickly. How do we get here? So late last year, beginning of 26.

We published um a bigger core framework series. I don't usually write about big, big multi-month um themes and and i i often, right, because they don't re very you know, change very usually very regularly. So When we do make a big change and start publishing a series of reports towards an objective, then it's probably because there's a meaningful confluence of signals that we want to discuss and we've been collecting and waiting in the wings to

to publish. And so late last year we viewed and early beginning of this year we viewed sort of the dollar in a moment where, you know, really anything could trigger a re rating or a rebound in some in some sense. Uh, we viewed tremendous value within a bigger, you know, I'm I'm on board the bigger commodity bull uh market cycle. I think there's a lot of value still to come over the next few years.

And commodity markets are notorious for rotations. You don't have usually um all the different markets r running in sync. You usually have rotations between energy and the metals or energy and the ags or vice versa. And so we saw tremendous value in or oil and energy at the at the end of last year.

And responded accordingly and just thought, well, this probably puts a floor on bond yields. We we stayed cautious on bonds into the end of last year, beginning of twenty-six. And we, because of all these. puzzle pieces, we s sort of thought, well, maybe it's time to consider

a prudent reallocation, quote unquote, out of precious metals, which were extended and maybe into energy. And and that has worked well. All these teams have worked quite well in the last few months. And so the question is, what's the next big

move here, what's priced in. And so we're finally, it's been quietly watching all these trends for the last four or five months. You know, we're working on a big update on all this stuff. And what I can say is First of all, I agree. wholeheartedly with Professor Siegel in that the path to normalization in the oil market will be the most important, I think, theme for the rest of the year. And it will affect probably every single market in sequence. Um in a way so far

Backtracking to the beginning of March when we had the initial spike in oil. Um We there was every indication that the peak in oil was already in at the beginning of the month of March, but there would be lingering signals and it would just take time because oil tops take time to to develop.

And now we've had, you know, multiple weeks of development. And there's a case to be made. I'm not high conviction yet on it, but there's a case to be made that we've seen possibly the high for oil this year.

And but what does that mean? Does that mean we go back, you know, to to the way things were humpty dumpty back together again? I don't think so. I think the path to normalization will be tricky, will be bumpy, but that creates, I think, enormous um opportunities uh in the investment spectrum meaning If this trend takes six to twelve months to normalize, just looking at the fundamentals and the complications of reopening and supply chains and just rebuilding infrastructure, then

There are a number of investment ideas that I think are on the table, some of which may bring us back to the easy times that we experienced at the end of 2025. Others may take time to to develop. And so What what I wanna do as sort of an investor is balance, you know, the the near term noise, the near term difficulties and technicalities of getting back to normal with we probably will go back to normal and think about what What what gets us there and what could go right? And so

Yes, there's gonna be a lot of intra intraday volatility. Yes, there will be tweets and back and forth. And now we're talking about ceasefire breaking and now the ceasefire is back on. And but this is no different than, for instance, you go back to twenty twenty five coming off the lows of the tariff um crisis.

And, you know, there were negotiations that were going back and forth and now all of a sudden they're failing and you know, th but that didn't really matter. So I think ultimately markets are on a path potentially where

things getting less worse or the tail risk being removed or reduced. I think that matters more near term. And we'll have to see how the fundamental trajectory shapes up uh over time. Um I could make the case that if if the top for the dollar of sorry for the the for oil is in for the year, then There's a case for inflation fears to be kind of like looked through by the market. I can make the case for consumption remaining resilient, beating down consumer discretionary stocks.

have have been doing quite well recently, right? Coming off like pretty depressed levels. And so, you know, I w just like we did last year coming or like we would do in every a situation where the market's coming off of a you know a a difficult bottom or bottoming pattern.

We want to be looking out for new ideas as they join the rally. And so like right now, we already see some leadership in the market. We see the semis are back to doing what they've been doing. We see memory stocks doing back to you know going back to what they've been doing. Um, but we also see that, as you guys mentioned earlier, you know, software isn't quite there yet. Um, there's a number of areas that are still sort of lingering with their own idi i i idiosyncratic issues.

And so how do we gauge the potential for those to join the rally eventually, or how do we gauge this, the sustainability, right, of of this market advance? over time. I I mean I can tell you my sh very near term, kind of short term views ideally. We don't, you know, the markets don't care what I think, but On a very short term basis, I think maybe prices are hitting

a top of a range here. And I think Professor Siegel's view that, you know, we we get choppy and we have to deal with the next two weeks. And that that could be a a potential path out of this.

Um, I for one, I know I know what I'm looking for in terms of like if if we get pullbacks or if we get consolidation in some of our, you know, favorite area areas and teams, you know, I uh we we know where we wanna get involved because Um those there are there are levels slightly lower that would provide pretty nice asymmetries in terms of like, you know, tight risk control with potentially uncapped upside if if things eventually continue to normalize.

Yeah, maybe for people who are are are hearing you um haven't been on the the earlier pods from you, give give people a little bit about your frameworks for how you look at the types of things you watch and uh y you know, your your sort of technical approach to to looking at things. Yeah, so ultimately, you know, I obviously I watch markets intraday. I'm following the news constantly, but ultimately my my implementation, my goal as an investor, managing my own capital is

to really focus on what are the two big, three, four biggest trends in any given year. Try to stay on the right side of those moves. Try to constantly f assess, you know, do can we go higher? I is it crowded? Do the fundamentals justify it? Um, is there dislocation between sort of what market participants are thinking is gonna happen and what the market is actually doing in terms of price action?

And so I'm constantly listening to what markets are are are producing, the signals that they're producing, and trying to filter into a framework or a structure that gets me Decision. ob objective decision making and more importantly, just risk control. So, you know, I'm not I'm not a trader. I don't consider myself to be a trader. Um I consider myself to be more of a swing portfolio manager, um, trend follower.

W it it it interests me greatly as as a trend follower to try to identify and I and I really put a lot of my attention and effort towards towards this specific goal, which is to identify You know, when there's a potential shift occurring in a market, or m even better globally across many markets at once, with b potentially long-lasting implications and Once that trend begins to be confirmed.

You know, staying disciplined, showing up every day and saying, okay, what what do we do next? How do we compound capital towards this objective? How do we continue to you know, energy was an example, right? Energy was probably um The second or third. Most آمين

favorable setup for at oil and energy that I have seen in the last twenty, thirty years. Um the it's certainly in the last decade, I was probably as bullish Um at the end of twenty five, as I was at the end of twenty twenty-one, as we began the reopening. post COVID, except here, you know, we were looking for signs of the cyclical acceleration and energy prices were extremely depressed. So

You know, the the opportunity to get into the involvement of those trends back in October, November, as you saw, but then constantly showing up to work every week and saying, okay, well, this these stocks are ready to go. Oh, the oil fine the the refiners are leading now. the oil services are now getting into play. So there's a there's a whole narrative evolving. It's not just, hey, buy buy the buy low, sell the sell the top. No, there's there there are opportunities created along these trends.

That can continue to work for an investor that's willing to, you know, show up every day listening to the market. That's that's really what we try to do.

No, no, in some of our own strategies we looked at we we you know, we were making similar concepts at the end of November, December. We we looked at things like Chevron and you know, opportunities with the Venezuela access and and uh And and made some good gains in that this year. Um I'll shout to Sam for helping shape our views on on all that.

Um but we recently trimmed some exposure in energy thinking that, you know, a lot of the big move happened that you get this, you know, forty percent plus spread between energy and

lot of the laggards like tech, that that was, you know, sort of we banked some of those gains. Are you are you how do you think about that top Uh or or uh you know, you can say, hey, there's still all this geopolitics and and it may continue, but do i have you thought about reducing that type of energy exposure as well, or where where where do you sit in that? Yeah, I I've been I've been uncomfortably long for the last two, three weeks and we gradually began publishing the case for, you know

the good times are not gonna last forever. You know, just know, understand that, you know, this this too will pass and energy is a classic cyclical theme. And, you know, planting the seeds with readers saying, like, you know, these are some of the things that we're looking at. This is well past historic expectations, well beyond what we thought would would happen, and now pushing, you know, to to to extremes in a number of measures. And I I I do think that with the news that we saw this week.

in terms of a potential path forward and a and an off ramp uh for this conflict. I I I do think that we've seen most of the upside in in energy, possibly uh on the lookout for a a bigger topping structure over the next few weeks. Um but yeah, we've we've we we've cut our we've cut our exposure this week. And for the first time really s since October, we've just been adding and adding uh consistently throughout this trend.

But y yeah, I mean these these are not just, you know, i intraday thoughts where we just went in and out and and and made quick changes. You know, we we we're we're pretty focused and objective about like how we approach this. We had already planted the seeds several weeks in advance and

With this catalyst, I think it really does accelerate the potential for energy to be forming a pretty significant top here. Um whether it's a six month top Like we've seen in some cases before, within a much bigger upcycle, whether it's you know, a a multi year top where we get gradual uh normalization. We'll have to see there's some similarities to both throughout history, you know, uh just comparing prior cycles.

Um I'm open minded to it. Um, but ultimately, you know, uh our job uh here is, you know, as at least in the equity book is like what's going well, how can we uh overweight certain themes that have the potential for outperformance versus the market. And so we try to make different

prudent bets that some of them will give us a shot at outperforming the market any given year. And I I think at the at the the probably the base case scenario here is like energy as an outperforming trade is probably over. Maybe there's a few percentage points of upside, but my guess that I I think it's time to move on. It's not a goodbye. I recently wrote um earlier this week. It's not a goodbye forever. It's just a goodbye for now.

Yeah, very interesting. Jeff, you've been quiet so far. Um how how are you th anything you want to hop in on for for macro charts or any just that things you want to add to the conversation so far? Yeah sure, sure, absolutely. And and you know, at the risk of going back to something that Sam said earlier on the call, I think it's absolutely critical to make a parallel.

Um with something that we did just observe inside the last four years, which is country A Exhibits some level of hostility towards country B or C or D. And country B, C, or D says, okay, I need to figure out a new way to get energy. And in this case, you take the prime example is, uh oh, we're getting all of our natural gas from the Russians. We, the Germans, need to do something. We spend three or four years figuring out how to greatly reduce your your reliance on Russian natural gas.

And, you know, what Sam basically said is sooner or later the Saudis are going to say, tell what the Strait of Hormuz, I'm going to build a pipeline. And Sam's absolutely nailing it on this. Um, eventually if I put a a a roadblock up on I-95, I gotta figure out a different way to get from Florida to Maine. I mean, it's it's very simple. So you spend a few years figuring it out.

Um, and so I think that's something that's absolutely critical for the for the long term situation in terms of energy dynamics is that We're going to be sitting around in 2030 or 2035. And the Strait of War moves probably will not be nearly as critical in the conversation because even if we've resolved this tomorrow, fool me once. Right? The old the old George Bush, fool me once, fool me twice situation. So that's something I think is important. Now

In terms of near-term dynamics, Jeremy, there are some interesting concepts. Look, the market changes and evolves with you. And you you never thought you'd have the day where somebody says If you like bonds, you also like consumer discretionary. If you think about that, can you imagine somebody saying, Yeah, bonds look good, get long duration, and also Cond is gonna beat SPX, you know, something like that. So but if you think about the dynamics to the extent that

Where are we on WTI? Something like ninety seven, ninety eight dollars. And that we do find some respite on that, which I think is is the case. Um, you know, Sigal says nobody uh it's gonna be well till we get down to fifty, sixty dollar oil. I'm not sure. I could see that. I could definitely see fifty or sixty dollar oil because for no other reason than we were there in January.

We were there. Um, that might be a normal equilibrium type situation in some deal after we get through the shortages that were created in the last five or six weeks. So now the pain trade is everybody was absolutely just out of consumer discretionary for the last month, month and a half. Everybody hates the sector and everybody hates bonds.

Everybody except for probably a few people on this podcast. So the one that could really upset the apple cart for the last several months or for the last, you know, eight months of the year. is you get a rally in bonds at the same time as some of these risk on assets inside the market are working. Um now if you look elsewhere in the market's internals.

I think we also have at the same time, and you don't necessarily have to be throwing caution to the wind in terms of a uh a a big relief rally, bust up through seven thousand again, the the old January highs on the S P five hundred, which is Very, very near happening. Maybe it happens next week at this point because we're at high sixty-eights on the index.

Um does not necessitate the kind of junk rally that we had in 2025. Off the old April 8th lows of last year, which we've now passed, we've now anniversaried that. That was a really garbage rally. We had inside MSCI USA, our own Matt Wagner over at Wisdom Tree was finding that there was fifteen hundred basis points of outperformance last year between unprofitable and profitable.

I don't think that that comes to pass. Um, but I think you can be long some of these risk on beta type groupings, industrials, discretionary, and at the same time be okay with bonds here. I I think that's something that's Even I have to wrap my head around it sometimes, but I think that's satisfactory. It's a re it's a reasonable uh portent for the rest of the year.

MC, I wanna come back um to you on you know one of the We the professor we talked about well, he he didn't love bonds. Um Jeff Jeff's like You know, on on the the y one of the notes that that caught my attention a few weeks ago was your your commenting on gold and the the setup with gold and miners and you know, miners definitely

um if they what you know, they have an input of of energy prices. So a little bit of pullback in energy prices, very helpful for the miners. But gold setup, as you think about sort of long term and short term nature. of gold. How how do you look at that precious metals worldview and and the setup in gold? So broadly speaking, I I am on board.

of a a a bigger commodity sort of bull cycle ongoing. I think you have to pick your spots. January was a terrible time to be invested in gold. And consequently, you know, we've seen the the correction.

It's gonna take time, I think, for gold to rebuild momentum, you know, to to the degree that we had before. But I think the path is up fr generally from here. And my goal is to You know, not like like Jeff said, not throw caution in the wind, but look for tactical smart pullbacks to the to deploy capital incrementally here as we sort of build out the next leg up, if that's really the the the goal of the market.

I'm pretty excited. I think the next six months could could provide, I think, multiple multiple fresh opportunities, not just in gold, but gold miners, silver, platinum. I mean, some of these charts are looking better than they were before. Just early signs of momentum coming back in. Maybe a little bit short term vol, but yeah, I I think that definitely fits into a bigger portfolio. One one thing that I would add, I really love some of the things that Jeff just said.

And he has a reputation, sterling reputation for putting some like fascinating and sharing ideas and this idea in the bonds. I think you guys are gonna love my my framework report that I'm gonna be publishing the next few days. But what I will say is I remember exactly when Jeff published back in October of last year the spread between quality and low quality stocks.

and how it was like at a almost like a 30 year high versus like the dot com peak in 2000. And and at the time I was looking at pretty similar indications that garbage stocks which had led, you know, pretty much most of twenty twenty five, were near um, you know, an insane probably bubble like uh peak. And it's and and, you know, I think

consistently since then we've said we've been saying, you know, this is not the part of the cycle anymore where you want to be embracing low quality or like hope stocks. This is, you know, let's get back to earnings and show me the money, show me the money. And and as a result, I mean, I think Jeff basically nailed the top and that garbage stuff. Some of those stocks are they're still down seventy, eighty percent and they haven't even bounced on the way down. So props to you for that. I mean

I have a new best friend. I have a new best friend guys. You guys off the pod. You're all off the podcast from now on. Jeffrey Macro are taking over. Thank you for listening. mean I'll be invited back. Yeah, yeah, I appreciate you. Does this mean I'll be invited back? Anyway, so um What I was i you know, it's what's what's fascinating about charts is you can look at a chart and instantly see where the r risk reward is in some situ not always, but you get those moments where it's just like

I know what not to do here. Maybe I'm not gonna go, you know, levered long on quality stocks. I'm gonna pick my spots, but I'm not gonna be in garbage stocks anymore here. And the the you know, the trend is near the end. So it's sort of like it brings me back to what Bruce Covener used to say, which was, and he was a chartist too, you know, I have the ability to imagine the world in a vastly different configuration than it is today and actually believe that it could happen.

Yeah, that makes a lot of sense. We haven't talked anything international yet. We focused on a lot of the setups here in the US, tech and the oil store.

How how is your view on is there markets that you find most interesting outside the US at the moment? What are the be the key things you're watching there? I mean, I would say everything hinges on oil, right? So what's the path to normalization in the oil market? How slow could it be? How quick could it be? You know, ultimately a normalization in the oil market will translate one to one, maybe more than one to one, in the terms of trade dynamic of some of these Asian countries.

China, um, and even more so, Japan, Korea and all the affected nations, pr most affected nations from this conflict. So what I would say is The emerging market story, the emerging market undervaluation story, the emerging market profit story, profit growth story, all of those things combined could still have legs. And you know, once this oil shock sort of dissipates.

It'll be too late, I think, to latch on to these things and say, oh, you know, but let's go invest in emergency. Now now it's all clear. Let's go invert invest in these things. I think the markets will have already readjusted long before that. Uh I wanna come back we we we gave Chris a a a quick moment to talk tech at the beginning but focused on the AI and y you know, sort of SaaS apocalypse but

If you think about the biggest stocks in the market, um, you know, one of the big stories has been just the compressed valuations. Um, we're talking technicals with with MC here, but from a fundamental perspective, you know, SP 20 times earnings now. Is has has is back to where we act you know, when S when I talk about long term fair value on the S P we actually say twenty times is what we say is the the long term fair value equilibrium type.

Pricing. So it's not expensive really at that at that level. Um, interestingly, the tech premium has come down. Many of the big Mag seven names are not far from twenty times. You got Meta below twenty times. You got Nvidia a little bit above twenty times. Microsoft twenty-one times. Now I we're I was I'm at a tech conference this week. And we were bantering with a bunch of the PMs and and people talk about and and w like, you know, Microsoft twenty one times, but it's products just like

Their AI products are just so it's so, I would say, you know, I think our narrative is that so bad. Like, you know, they c they can't get out of their own way on some of these things, their slow development cycle and all sorts of things. Meta got some kudos this week. on a new AI model. So they've been lagging and all that um, but you know, cheaper than the market. Um I I guess

Macra, you put out a piece on positioning. Maybe talk through uh what you put out on Twitter this morning on just positioning and then I'll I'll I'll I'll come to our team for some comments on how that ties into the tech valuation story and and positioning for earnings season here.

Sure. So just on a on a high level, systematic CTAs and trend following funds are Extremely short the market. Various the measures of positioning from institutions and options markets are. J just show that overall there's there's been a pretty significant deleveraging already and pretty high amount of underinvestment. And some of our work also also shows that I'll send you some charts later after the after our chat. You know.

I thought there would be a little bit more volatility. I didn't I didn't you know, I of course I didn't see that we would have an immediate um ceasefire or anything like that, but we were certainly in the sort of in the range Of a capitulation or getting close to a capitulation, and some areas did get wiped out. So we saw flows, for instance, of

of investors, ETF based investors going into cash based ETFs or like short term treasuries and money market type ETFs. You know, we've we haven't seen Yeah. many of these historically these are very infrequent occurrences. Which generally marks.

you know, a a a a a bottom or a bottoming range for the market, sometimes with more retests of the lows, what have you, sometimes with a little bit more residual chop before a bigger uptrend, sometimes just a V shape back to the highs, depending on just how extreme they were. Um and so you know I've been I had been

with a constructive sort of overall mentality, um, in the last few weeks, but you know, still waiting for a little bit more capitulation, a little bit more clearings. But I guess that's sufficient here. To put a floor in the market. What whether or not we'll revisit that floor or we just chop around here for the next leg up, I don't know. Maybe there's enough underinvestment here.

where systematic investors have to continue buying regardless. And so I think there's a couple of charts from Goldman this morning that I shared. I think they're projecting a pretty significant amount of buying over the next week, even if markets stay flat. So that just sort of adds support to the view that.

You know, worst case scenario, we stay in a choppy range here where just position gets sort of flushed around without much progress. But but ultimately it seems like you probably resolve out of here. towards higher highs and maybe even the all time highs. Certainly some sectors are already leading the way. So the question is can we Yeah, more participation, can we get the really big

um i all of the big movers participating, right? Um and ultimately even the beaten down stuff, you know, don't don't don't give up on on SaaS just yet. Um, you know, we've seen this so many times where Stocks get going and some of the stuff gets left behind, but eventually in the rally

you know, some of the weaker stuff finally f builds out the bottom, starts to show a little bit of positive momentum, and sure enough, here come the buyers and they really start to rip. So I I want to keep my eye on on SAS. I want to keep my eye on all pretty much all of the areas that are still lagging behind because I think they'll have their day two at some point.

Yeah, that makes a lot of sense. Uh Sam, do you wanna give your your uh favorites in within that sort of tech beaten down, low valuation but under positioning story there? Sure. Well, I mean it's it's it should be obvious at this point that I do think that Meta is one of the underrated uh companies out there. Because quite frankly, they don't really care about being the next open AI or anthropic, et cetera. They care that their AI is really good at

taking the data they have within their system and delivering really, really good and targeted ads, right? That's their business model. Um more ads times more rev times more cost per ad equals revenue. let's go I I do think that meta it and the launch of their latest model is very, very intriguing. Uh, particularly when you think about it from the way that they make money, uh, which is advertising.

And if you can all of a sudden utilize the three point whatever billion people's data that are on your platform and deliver very, very good ads, you're going to be very, very tempting. uh moving forward for having advertising execs, particularly in a world where volumes are difficult to come by, where it the consumer packaged goods, the CPG market, they spend a lot of money on ads. They spend a lot of money on marketing.

brand building, et cetera. Where do you go if you want to do that? Where do you go when times get tough and you've already priced a a lot in the system over the last five years? Uh, you go to where the best advertising is and I would say that that's alphabet and meta. And that's that's gonna be pretty tough to overcome. So I like those two.

I I do think it's underrated how good this year could be for them, given the Olympics already happened. You're going to have the World Cup, then you're going to have an election. That is a lot of revenue uh going into these systems for various types of advertising. Uh on the other side, I would say I like some of the software group here, uh nibbling on them.

Uh, and beginning to pick up things trading at twelve to fourteen times earnings that aren't going anywhere. I have very, very good balance sheets. And worst case scenario, they return the market cap to you over the next 10 years. via share buybacks and dividends. I I love that type of dynamic and I love being able to pick it up in this type of dips dislocation in particular.

Uh but uh frankly at the moment I am far far more bullish on discretionary uh names and the the the the amount that they have been sold off because of higher oil prices. seeing the prints uh that have come through already, I think it's going to be a very, very difficult time to be a bear during the coming earnings season. And it's going to be a little bit of a whiplash. That is I yeah, I loved how you opened up on the fast retailing anecdote. Big biggest uh

One of the biggest companies in in the Nikkei over there in Japan. And uh in the and the Levi's and Red Book story also. Those are all great uh great positive sentiment checks on just the earnings environment coming up as we as we enter earnings season start to get

These prints. MC, again, we can't uh thank you enough for coming on the pod, sharing your views, give people a shout where they can follow you and and any other sort of closing words on on your frameworks that you want people to know as they they look to follow you on Substack. Yeah, so just for on substack at macrocharts.com and really appreciate all of you today. Thanks for having me. Look forward to the next time we meet.

That's great. Chris, Jeff, Sam, always a pleasure. Thanks. We'll we'll do it again next week. See you guys. Thanks. Please subscribe and leave us a rating to help others find the show. You can follow and engage with us on Twitter. I am at Jeremy D Schwartz, Sam is at Samuel Rhines, and Jeff is at Jeff Winninger. Jeff, Chris, and I are registered representatives of Forside Fund Services. Our discussion today was not tied to the offer sale of any investment products. Have a great week.